Document:

Unassociated Document

    

    PLACEMENT UNIT
      AGREEMENT

    

    PLACEMENT UNIT
      AGREEMENT (this
      “Agreement”) made
      as
      of this ___ day of February, 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, directly or through nominees, 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.
      The
      closing of the purchase and sale of the Placement Units (the “Closing”) will
      take place at such time and place as the parties may agree (the “Closing Date”),
      but in no event later than the date on which the SEC declares the Registration
      Statement effective (the “Effective Date”). On the Effective Date, the
      Purchasers shall pay the Purchase Price by wire transfer of funds to an account
      maintained by the Company. Immediately prior to the closing of the IPO, the
      Company shall deposit $1,425,000 of the Purchase Price (including a portion
      of
      the placement fee as described in Section 3 below) into the trust account
      described in the Registration Statement (the “Trust Account”). 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.

     

    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, or purchasing a combination of substantially all plus a
      minority interest in 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, or assets 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 sue 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 S-4,
      S-8 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.
      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 __
      day
      of February, 2006.

    

    
      	
               

            	
              AFFINITY
                MEDIA INTERNATIONAL CORP.

               

              By:  _______________________________                                                                            

              Howard
                Cohl,

              President

               

               

               

              MAXIM
                GROUP LLC

               

              By:  _______________________________                                                                                   

               

               

              PURCHASERS:

               

               _______________________________                                                                       

              [         ]

               

               _______________________________                                                                      

              [         ]

               

               _______________________________                                                                       

              [         ]

               

               _______________________________                                                                       

              [         ]

            

    

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    SCHEDULE
      AUnassociated Document

    AFFINITY
      MEDIA INTERNATIONAL CORP.

    

    

    
      	 	 	
              __________,
                2006

            
	 	 	 
	[name]	 	 
	[address]	 	 

    

        

    RE:     Warrants
      of Affinity Media International Corp. (the “Company”)

    

    To
      whom
      it may concern:

    

    This
      letter will confirm our agreement that, at
      any
      time after the consummation of a “business combination”, if the Company’s
      publicly-traded common stock reaches a volume weighted average trading price
      of
      $6.60 per share for each day during any five-day trading period, the Company
      will issue to you warrants, on mutually agreeable terms, allowing you to
      purchase up to an aggregate of ____________ shares of the Company’s common stock
      for $.10 per share. If, at any time after the consummation of a “business
      combination”, the Company’s publicly-traded units begin trading
      separately,
      the
      Company’s publicly-traded common
      stock reaches a volume
      weighted average trading price
      of
      $7.20 per share or more for
      each
      day during any five-day trading period,
      the
      Company will issue to you additional warrants, on mutually agreeable terms,
      allowing you to purchase up to an aggregate of ____________ shares of the
      Company’s
      common
      stock, for $.10
      per
      share.
      All
      warrants granted pursuant to this agreement will be exercisable for a period
      of
      5 years from the date of issuance.

    

    As
      used
      herein, the term “business combination” shall have the meaning set for the in
      the Company’s registration statement on Form S-1, as amended. 

     

    
      	 	 	 
	 	Very truly yours,
	 	 
	 	AFFINITY
              MEDIA
              INTERNATIONAL CORP.
	 	 
	 
 	 
 	 
 
	Date: 	By:  	 
	 	
              
Name:
              Howard Cohl
	 	Title:
              President 

    

    

    AGREED
      TO
      AND ACCEPTED BY:

    

    
      
        

      

    

    Name:

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