PLACEMENT UNIT AGREEMENT
PLACEMENT UNIT
AGREEMENT (this
“Agreement”) made
as
of this 5th day of April, 2006 by and among Affinity Media International Corp.,
a Delaware corporation (the “Company”), Maxim Group LLC (“Maxim”) and the
undersigned (the “Purchasers”).
WHEREAS,
the Company has filed with the Securities and Exchange Commission (“SEC”) a
registration statement on Form S-1, as amended (File No. 333-128707) (the
“Registration Statement”), in connection with the Company's initial public
offering (the “IPO”) of up to 3,162,500 units (including up to 412,500 units
issuable upon exercise of an overallotment purchase option granted to Maxim
by
the Company), each unit (“Unit”) consisting of (i) one share of the Company's
common stock, $.0001 par value (the “Common Stock”), and (ii) two warrants (each
such warrant a “Warrant”), each Warrant to purchase one share of Common Stock;
and
WHEREAS,
the Company desires to sell in a private placement to the Purchasers (the
“Placement”) an aggregate of 250,000 units (the “Placement Units”) substantially
identical to the Units being issued in the IPO pursuant to the terms and
conditions hereof and as set forth in the Registration Statement, except that
the Placement Units, Common Stock and Warrants to be issued in the Placement
shall not be registered under the Securities Act of 1933, as amended (the
“Securities Act”);
WHEREAS,
each Purchaser desires to acquire the number of Placement Units set forth
opposite his name on Schedule A hereto;
WHEREAS,
the Warrants included in the Placement Units shall be governed by the Warrant
Agreement filed as an exhibit to the Registration Statement; and
WHEREAS,
the Purchasers are entitled to registration rights with respect to the Common
Stock and the Warrants comprising the Placement Units and the Common Stock
underlying such Warrants (collectively, the “Registrable Securities”) on the
terms set forth in this Agreement; and
WHEREAS,
Maxim is acting as placement agent for the Placement.
NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto do hereby agree as
follows:
1. Purchase
of Units.
The
Purchasers hereby agree to purchase an aggregate of 250,000 Placement Units
at a
purchase price of $6.00 per Placement Unit, or an aggregate of $1,500,000 (the
“Purchase Price”). Such purchases shall be in the names and amounts set forth on
Schedule A hereto.
2. Closing.
2.1 The
closing of the purchase and sale of the Placement Units (the “Closing”) will
take place two (2) business days prior to the date on which the SEC declares
the
Registration Statement effective (the “Effective Date”; the date two business
days prior to the Effective Date, the “Closing Date”). On the Closing Date, the
Purchasers shall pay the Purchase Price by wire transfer of funds to an escrow
account (the “Escrow Account”) maintained by the Company’s transfer agent (the
“Escrow Agent”). Immediately prior to the closing of the IPO, the Escrow Agent
shall deposit $1,425,000 of the Purchase Price into the trust account described
in the Registration Statement (the “Trust Account”), and shall wire $75,000,
representing a portion of the placement fee payable to Maxim referred to below,
to an account to be designated by the Company. The certificates for the Common
Stock and Warrants comprising the Placement Units shall be delivered to the
Purchasers promptly after the closing of the IPO.
2.2 If,
for
any reason, the Purchase Price remains in the Escrow Account for more than
seven
(7) business days after the Effective Date, on the eighth business day following
the Effective Date, the Company shall order the Escrow Agent to wire the
Purchase Price back to the Purchasers, without interest or setoff.
3. Placement
Fees.
The
Company agrees that Maxim is entitled to the following compensation in
connection with the Placement: (i) a non-accountable expense allowance equal
to
1% of the Purchase Price, payable on or before the 4 month anniversary of
today’s date; and (ii) a placement fee equal to equal to 8% of the Purchase
Price. Of such 8% placement fee, Maxim agrees that 4% of the Purchase Price
($60,000) will be deposited into and held in the Trust Account and will be
payable to Maxim upon the consummation of a Business Combination (as defined
herein) as described in the Registration Statement, and the remaining 4% shall
be payable on or before the 4 month anniversary of today’s date.
4. Voting
of Shares.
If the
Company solicits approval of its stockholders of a Business Combination, the
Purchasers shall vote all of the shares of the Common Stock acquired by the
Purchasers (i) pursuant to this Agreement, (ii) in the IPO and (iii) in the
aftermarket following the IPO in favor of the Business Combination and therefore
waive any redemption rights they might have with respect to certain of such
shares. As used herein, a “Business Combination” shall mean the Company
acquiring,
merging with, engaging in a capital stock exchange with, purchasing all or
substantially all of the assets of, or engaging in any other similar business
combination with a single operating entity, or one or more related or unrelated
operating entities in the publishing industry located in the United
States.
5. Waiver
of Liquidation Distributions.
In
connection with the Placement Units purchased pursuant to this Agreement, the
Purchasers hereby waive any and all right, title, interest or claim of any
kind
in or to any liquidating distributions by the Company in the event of a
liquidation of the Company upon the Company's failure to timely complete a
Business Combination. For purposes of clarity, any shares of Common Stock
purchased in the IPO or the aftermarket by the Purchasers shall be eligible
to
receive any liquidating distributions by the Company.
6.
Rescission
Right Waiver and Indemnification.
6.1
Each
of
the Purchasers understands and acknowledges that an exemption from the
registration requirements of the Securities Act requires that there be no
general solicitation of purchasers of the Placement Units. In this regard,
if
the offering of the Units in the Company’s initial public offering were deemed
to be a general solicitation with respect to the Placement Units, the offer
and
sale of such Placement Units may not be exempt from registration and, if not,
the Purchasers may have a right to rescind their purchases of the Placement
Units. In order to facilitate the completion of the Placement and in order
to
protect the Company, its stockholders and the Trust Account from claims that
may
adversely affect the Company or the interests of its stockholders, each of
the
Purchasers hereby agrees to waive, to the maximum extent permitted by applicable
law, any claims, right to xxx or rights in law or arbitration, as the case
may
be, to seek rescission of his or its purchase of the Placement Units. Each
of
the Purchasers acknowledges and agrees that this waiver is being made in order
to induce the Company to sell the Placement Units to the Purchasers. Each
Purchaser agrees that the foregoing waiver of rescission rights shall apply
to
any and all known or unknown actions, causes of action, suits, claims, or
proceedings (collectively, “Claims”) and related losses, costs, penalties, fees,
liabilities and damages, whether compensatory, consequential or exemplary,
and
expenses in connection therewith, including reasonable attorneys’ and expert
witness fees and disbursements and all other expenses reasonably incurred in
investigating, preparing or defending against any Claims, whether pending or
threatened, in connection with any present or future actual or asserted right
to
rescind the purchase of the Placement Units hereunder or relating to the
purchase of the Placement Units and the transactions contemplated hereby
(collectively, “Losses and Expenses”).
6.2
Each
Purchaser agrees not to seek recourse against the Trust Account for any reason
whatsoever in connection with his purchase of the Placement Units or any Claim
that may arise now or in the future.
6.3 The
Purchasers acknowledge and agree that the stockholders of the Company are and
shall be third-party beneficiaries of the foregoing provisions of this
Agreement.
6.4
Each
Purchaser agrees that to the extent any waiver of rights under this
Section 6 is ineffective as a matter of law, each Purchaser has offered
such waiver for the benefit of the Company as an equitable right that shall
survive any statutory disqualification or bar that applies to a legal right.
Each Purchaser acknowledges the receipt and sufficiency of consideration
received from the Company hereunder in this regard.
7. Lock-Up
Agreement; Deposit with Maxim.
The
Purchasers shall not sell, assign, hypothecate, or transfer any of the Common
Stock or Warrants purchased pursuant to this Agreement until the consummation
of
a Business Combination. In order to enforce this covenant, the undersigned
agree
to deposit the Placement Units in an account to be established at Maxim, to
be
held in such account until the consummation of a Business
Combination.
8. Representations
and Warranties of the Purchasers.
Each
Purchaser hereby represents and warrants to the Company that:
8.1 The
Purchaser is an “accredited investor” as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act.
8.2 The
Placement Units, Common Stock and Warrants are being acquired for the
Purchaser's own account, only for investment purposes and not with a view to,
or
for resale in connection with, any distribution or public offering thereof
within the meaning of the Securities Act.
8.3 The
Purchaser has the full right, power and authority to enter into this Agreement
and this Agreement is a valid and legally binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms.
9. Registration
Rights.
9.1 Demand
Registration.
At any
time and from time to time on or after the date on which the Company consummates
a Business Combination, the Purchasers or their transferees holding a
majority-in-interest of the Registrable Securities may make a written demand
for
registration under the Securities Act of all or part of their Registrable
Securities (a “Demand Registration”). Any demand for a Demand Registration shall
specify the number of Registrable Securities proposed to be sold and the
intended method(s) of distribution thereof. The Company will notify all holders
of Registrable Securities of the demand, and each holder of Registrable
Securities who wishes to include all or a portion of such holder's Registrable
Securities in the Demand Registration (each such holder including shares of
Registrable Securities in such registration, a “Demanding Holder”) shall so
notify the Company within fifteen (15) days after the receipt by the holder
of
the notice from the Company. Upon any such request, the Demanding Holders shall
be entitled to have their Registrable Securities included in the Demand
Registration.
The
Company shall, as expeditiously as possible and in any event within sixty (60)
days after receipt of a request for a Demand, prepare and file with the SEC
a
Registration Statement on any form for which the Company then qualifies or
which
counsel for the Company shall deem appropriate and which form shall be available
for the sale of all Registrable Securities to be registered thereunder in
accordance with the intended method(s) of distribution thereof, and shall use
its best efforts to cause such Registration Statement to become effective as
promptly as practicable, but in no event prior to the consummation of the
Business Combination.
The
Company shall not be obligated to effect more than two Demand Registrations
in
respect of Registrable Securities.
9.2 “Piggyback”
Registration Rights.
Subject
to the last sentence of this Section 9.2, at any time after a Business
Combination, if the Company shall determine to proceed with the actual
preparation and filing of a new registration statement under the Securities
Act
in connection with the proposed offer and sale of any of its securities by
it or
any of its security holders (other than a registration statement on Form X-0,
X-0 or other limited purpose form), the Company will give written notice of
its
determination to the Purchasers or their nominees. Upon the written request
from
a majority-in-interest of the Purchasers, within 15 days after receipt of any
such notice from the Company, the Company will, except as herein provided,
cause
all of the Registrable Securities covered by such request (the “Requested
Stock”) held by the Purchasers making such request (the “Requesting Holders”) to
be included in such registration statement (each, a “Piggy-Back Registration”),
all to the extent requisite to permit the sale or other disposition by the
prospective seller or sellers of the Requested Stock; provided, further, that
nothing herein shall prevent the Company from, at any time, abandoning or
delaying any registration. If any registration pursuant to this Section 9.2
shall be underwritten in whole or in part, the Company may require that the
Requested Stock be included in the underwriting on the same terms and conditions
as the securities otherwise being sold through the underwriters. In such event,
the Requesting Holders shall, if requested by the underwriters, execute an
underwriting agreement containing customary representations and warranties
by
selling stockholders and a lock-up on Registrable Securities not being sold.
If
in the good faith judgment of the managing underwriter of such public offering
the inclusion of all of the Requested Stock would reduce the number of shares
to
be offered by the Company or interfere with the successful marketing of the
shares of stock offered by the Company, the number of shares of Requested Stock
otherwise to be included in the underwritten public offering may be reduced
pro
rata (by number of shares) among the Requesting Holders and all other holders
of
registration rights who have requested inclusion of their securities or excluded
in their entirety if so required by the underwriter. To the extent only a
portion of the Requested Stock is included in the underwritten public offering,
thoseshares of Requested Stock which are thus excluded from the underwritten
public offering and any other securities of the Company held by such holders
shall be withheld from the market by the Holders thereof for a period, not
to
exceed 90 days, which the managing underwriter reasonably determines is
necessary in order to effect the underwritten public offering. At such time
as
the provisions of the registration rights agreement filed as an exhibit to
the
Registration Statement covering the shares of Common Stock acquired by the
Purchasers prior to the IPO may be exercised, the exercise and procedural
provisions of such agreement, rather than the provisions of Sections 9.2, 9.3
and 9.4 hereof, shall govern the Registrable Securities with respect to
Piggy-Back Registrations.
9.3 Registration
Procedures.
To the
extent required by Sections 9.1 or 9.2, the Company will:
(a) prepare
and file with the SEC a registration statement with respect to such securities,
and use its best efforts to cause such registration statement to become and
remain effective until the earlier of the date on which all of the Registrable
Securities included in the registration statement have been disposed of in
accordance with the intended method(s) of distribution set forth in such
Registration Statement or three years from the effective date;
(b) prepare
and file with the SEC such amendments to such registration statement and
supplements to the prospectus contained therein as may be necessary to keep
such
registration statement effective until the earlier of the date on which all
of
the Registrable Securities included in the registration statement have been
disposed of in accordance with the intended method(s) of distribution set forth
in such Registration Statement or three years from the effective
date;
(c) furnish
to the holders participating in such registration and to the underwriters of
the
securities being registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other documents
as
such underwriters may reasonably request in order to facilitate the public
offering of such securities;
(d) use
its best efforts to register or qualify the securities covered by such
registration statement under such state securities or blue sky laws of such
jurisdictions as the holders may reasonably request in writing within 20 days
following the original filing of such registration statement, except that the
Company shall not for any purpose be required to execute a general consent
to
service of process or to qualify to do business as a foreign corporation in
any
jurisdiction wherein it is not so qualified;
(e) notify
the holders, promptly after it shall receive notice thereof, of the time when
such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been
filed;
(f) notify
the holders promptly of any request by the SEC for the amending or supplementing
of such registration statement or prospectus or for additional
information;
(g) prepare
and promptly file with the SEC and promptly notify such holders of the filing
of
such amendment or supplement to such registration statement or prospectus as
may
be necessary to correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be delivered under the
Securities Act, any event shall have occurred as the result of which any such
prospectus or any other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances in which they
were made, not misleading; and
(i) advise
the holders, promptly after it shall receive notice or obtain knowledge thereof,
of the issuance of any stop order by the SEC suspending the effectiveness of
such registration statement or the initiation or threatening of any proceeding
for that purpose and promptly use its best efforts to prevent the issuance
of
any stop order or to obtain its withdrawal if such stop order should be
issued.
The
Purchasers shall cooperate with the Company in providing the information
necessary to effect the registration of the Registrable Securities, including
completion of customary questionnaires.
9.4 Expenses.
The
Company shall bear all costs and expenses incurred in connection with any Demand
Registration pursuant to Section 9.1, any Piggy-Back Registration pursuant
to
Section 9.2, and all expenses incurred in performing or complying with its
other
obligations under this Agreement, whether or not the Registration Statement
becomes effective, including, without limitation: (i) all registration and
filing fees; (ii) fees and expenses of compliance with securities or “blue sky”
laws (including fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities); (iii) printing expenses; (iv)
the
Company's internal expenses (including, without limitation, all salaries and
expenses of its officers and employees); (v) the fees and expenses incurred
in
connection with the exchange listing of the Registrable Securities; (vi)
National Association of Securities Dealers, Inc. fees; (vii) fees and
disbursements of counsel for the Company and fees and expenses for independent
certified public accountants retained by the Company (including the expenses
or
costs associated with the delivery of any opinions or comfort letters); (viii)
the fees and expenses of any special experts retained by the Company in
connection with such registration and (ix) the fees and expenses of one legal
counsel selected by the holders of a majority-in-interest of the Registrable
Securities included in such registration. The Company shall have no obligation
to pay any underwriting discounts or selling commissions attributable to the
Registrable Securities being sold by the holders thereof, which underwriting
discounts or selling commissions shall be borne by such holders. Additionally,
in an underwritten offering, all selling shareholders and the Company shall
bear
the expenses of the underwriter pro rata in proportion to the respective amount
of shares each is selling in such offering.
10.
Waiver of Claims; Indemnification. Each
Purchaser hereby waives any and all rights to assert any present or future
claims, including any right of rescission, against the Company, Maxim or the
other underwriters in the IPO exclusively with respect to their purchase of
the
Placement Units hereunder, and each Purchaser agrees to indemnify and hold
the
Company, Maxim and the other underwriters in the IPO harmless from all losses,
damages or expenses that relate to claims or proceedings brought against the
Company, Maxim or such other underwriters by such Purchaser of the Placement
Units arising solely out of the purchase of the Placement Units
hereunder.
11. Counterparts;
Facsimile.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and all of which taken together
shall
constitute one and the same instrument. This Agreement or any counterpart may
be
executed via facsimile transmission, and any such executed facsimile copy shall
be treated as an original.
12.
Governing Law.
This
Agreement shall for all purposes be deemed to be made under and shall be
construed in accordance with the laws of the State of New York. Each of the
parties hereby agrees that any action, proceeding or claim against it arising
out of or relating in any way to this Agreement shall be brought and enforced
in
the courts of the State of New York or the United States District Court for
the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. Each of the parties hereby waives any
objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum.
13.
Assignment.
Prior to
the Closing Date, Purchasers may assign their obligation to purchase Placement
Units hereunder (i) to another Purchaser or Purchasers; (ii) to an entity
wholly-owned by such Purchaser or another Purchaser or Purchasers; or (iii)
to
an entity over which such Purchaser or another Purchaser or Purchasers have
sole
voting or dispositive power. In each such case, the entity or entities to which
such assignment is made shall agree to become party to this Agreement, and
shall
execute such other documentation as the Company may reasonably
request.
14.
California
Release and Waiver. Execution
by a Purchaser of this
Agreement constitutes an express waiver and release of any and all claims
which would otherwise be preserved by operation of section 1542 of the
California Civil Code. California Civil Code section 1542 provides in
pertinent part:
“A
general release does not extend to claims which the creditor does not know
or
suspect to exist in his or her favor at the time of executing the release,
which
if known by him or her must have materially affected his or her settlement
with
the debtor.”
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the
5th
day of
April, 2006.
| AFFINITY MEDIA INTERNATIONAL CORP. | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxx | |
|
Xxxxxx Xxxx, |
||
| President | ||
|
|
||
| MAXIM GROUP LLC | ||
| |
|
|
| By: | /s/ Xxxxxxxx Xxxxxx | |
|
Xxxxxxxx
Xxxxxx
Director of Investment Banking
|
||
| PURCHASERS: | ||
| /s/ Xxxxx Xxxxx | ||
|
Xxxxx Xxxxx |
||
| /s/ Xxxx Xxxxxxx | ||
|
Xxxx Xxxxxxx |
||
| /s/ Xxxxx Xxxxx | ||
|
Xxxxx Xxxxx |
||
SCHEDULE
A
|
PURCHASER
|
AMOUNT
|
PURCHASE
PRICE
|
|
|
||
|
Xxxxx
Xxxxx
|
83,334
Units
|
$500,000
|
|
Xxxx
Xxxxxxx
|
83,333
Units
|
$500,000
|
|
|
||
|
Xxxxx
Xxxxx
|
83,333
Units
|
$500,000
|
|
TOTAL
|
250,000
|
$1,500,000
|
