INVESTMENT MANAGEMENT TRUST
AGREEMENT
This Agreement is made as of ______, 2005 by and
between AFFINITY MEDIA INTERNATIONAL CORP. (the "
Company ") and AMERICAN STOCK TRANSFER
& TRUST COMPANY (the " Trustee
").
WHEREAS , the Company's Registration Statement on Form
S-1, File No. 333-________ (the " Registration
Statement "), for its initial public offering of
securities (the " IPO ") has been declared
effective as of the date hereof by the Securities and Exchange
Commission (the " Effective Date ");
and
WHEREAS , Maxim Group LLC ("
Maxim ") is acting as the representative of
the underwriters in the IPO; and
WHEREAS , as described in the Company's Registration
Statement, and in accordance with the Company's Certificate of
Incorporation, $17,400,000 of the gross proceeds of the IPO
($20,010,000 if the underwriters over-allotment option is exercised
in full) will be delivered to the Trustee to be deposited and held
in a trust account for the benefit of the Company and the holders
of the Company's common stock, par value $.0001 per share, issued
in the IPO as hereinafter provided and in the event the Units are
registered in Colorado, pursuant to Section 11-51-302(6) of the
Colorado Securities Act. A copy of the Colorado Securities Act is
attached hereto and made a part hereof (the amount to be delivered
to the Trustee will be referred to herein as the "
Property "; the stockholders for whose
benefit the Trustee shall hold the Property will be referred to as
the " Public Stockholders ," and the Public
Stockholders and the Company will be referred to together as the "
Beneficiaries "); and
WHEREAS , the Company and the Trustee desire to enter
into this Agreement to set forth the terms and conditions pursuant
to which the Trustee shall hold the Property;
NOW, THEREFORE , in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
1. Agreements and Covenants of Trustee
. The Trustee hereby agrees and
covenants to:
(a) Hold the Property in trust for the Beneficiaries
in accordance with the terms of this Agreement, including the terms
of Section 11-51-302(6) of the Colorado Securities Act with respect
to Public Stockholders in Colorado, in a segregated trust account
(" Trust Account ") established by the
Trustee at a branch of JPMorgan Chase NY Bank selected by the
Trustee;
(b) Manage, supervise and administer the Trust
Account subject to the terms and conditions set forth
herein;
(c) In a timely manner, upon the instruction of the
Company, to invest and reinvest the Property in any "
Government Security ." As used herein,
Government Security means any Treasury Bill issued by the United
States, having a maturity of one hundred and eighty days or
less;
(d) Collect and receive, when due, all principal
and income arising from the Property, which shall become part of
the " Property ," as such term is used
herein;
(e) Promptly notify the Company of all
communications received by it with respect to any Property
requiring action by the Company;
(f) Supply any necessary information or documents
as may be requested by the Company in connection with the Company's
preparation of the tax returns for the Trust Account;
(g) Participate in any plan or proceeding for
protecting or enforcing any right or interest arising from the
Property if, as and when instructed by the Company to do
so;
(h) Render to the Company and to Maxim, and to such
other person as the Company may instruct, monthly written
statements of the activities of and amounts in the Trust Account
reflecting all receipts and disbursements of the Trust Account;
and
(i) Commence liquidation of the Trust Account only
after receipt of and only in accordance with the terms of a letter
(" Termination Letter "), in a form
substantially similar to that attached hereto as either Exhibit
A or Exhibit B , signed on behalf of the Company by its
Chief Executive Officer or President and Secretary, and complete
the liquidation of the Trust Account and distribute the Property in
the Trust Account only as directed in the Termination Letter and
the other documents referred to therein. The Trustee understands
and agrees that disbursements from the Trust Account shall be made
only pursuant to a duly executed Termination Letter, together with
the other documents referenced herein. In all cases, the Trustee
shall provide Maxim with a copy of any Termination Letters and/or
any other correspondence that it receives with respect to any
proposed withdrawal from the Trust Account promptly after it
receives same.
2. Agreements and Covenants of the
Company . The Company
hereby agrees and covenants to:
(a) Give all instructions to the Trustee hereunder
in writing, signed by the Company's Chief Executive Officer or
President. In addition, except with respect to its duties under
paragraph 1(i) above, the Trustee shall be entitled to rely on, and
shall be protected in relying on, any verbal or telephonic advice
or instruction which it in good faith believes to be given by any
one of the persons authorized above to give written instructions,
provided that the Company shall promptly confirm such
instructions in writing;
(b) Hold the Trustee harmless and indemnify the
Trustee from and against, any and all expenses, including
reasonable counsel fees and disbursements, or loss suffered by the
Trustee in connection with any action, suit or other proceeding
brought against the Trustee involving any claim, or in connection
with any claim or demand which in any way arises out of or relates
to this Agreement, the services of the Trustee hereunder, or the
Property or any income earned from investment of the Property,
except for expenses and losses resulting from the Trustee's gross
negligence or willful misconduct. Promptly after the receipt by the
Trustee of notice of demand or claim or the commencement of any
action, suit or proceeding, pursuant to which the Trustee intends
to seek indemnification under this paragraph, it shall notify the
Company in writing of such claim (hereinafter referred to as the "
Indemnified Claim "). The Trustee shall
have the right to conduct and manage the defense against such
Indemnified Claim, provided , that the Trustee shall
obtain the consent of the Company with respect to the selection of
counsel, which consent shall not be unreasonably withheld. The
Trustee may not agree to settle any Indemnified Claim without the
prior written consent of the Company. The Company may participate
in such action with its own counsel; and
(c) Pay the Trustee an initial acceptance fee of
$1,000 and an annual fee of $3,000 (it being expressly understood
that the Property shall not be used to pay such fee). The Company
shall pay the Trustee the initial acceptance fee and first year's
fee at the consummation of the IPO and thereafter on the
anniversary of the Effective Date. The Trustee shall refund to the
Company the fee (on a pro rata basis) with respect to any period
after the liquidation of the Trust Fund. The Company shall not be
responsible for any other fees or charges of the Trustee except as
may be provided in paragraph 2(b) hereof (it being expressly
understood that the Property shall not be used to make any payments
to the Trustee or be subject to any setoff or claim by the Trustee,
under such paragraph or under any other section of this
Agreement).
3. Limitations of Liability . The Trustee shall have no responsibility or
liability to:
(a) Take any action with respect to the Property,
other than as directed in paragraph 1 hereof and the Trustee shall
have no liability to any party except for liability arising out of
its own gross negligence or willful misconduct;
(b) Institute any proceeding for the collection of
any principal and income arising from, or institute, appear in or
defend any proceeding of any kind with respect to, any of the
Property unless and until it shall have received instructions from
the Company given as provided herein to do so and the Company shall
have advanced or guaranteed to it funds sufficient to pay any
expenses incident thereto;
(c) Change the investment of any Property, other
than in compliance with paragraph 1(c);
(d) Refund any depreciation in principal of any
Property;
(e) Assume that the authority of any person
designated by the Company to give instructions hereunder shall not
be continuing unless provided otherwise in such designation, or
unless the Company shall have delivered a written revocation of
such authority to the Trustee;
(f) The other parties hereto or to anyone else for
any action taken or omitted by it, or any action suffered by it to
be taken or omitted, in good faith and in the exercise of its own
best judgment, except for its gross negligence or willful
misconduct. T
