CONTINENTAL ADVISORS SA
50, VAL FLEURI
L-1526 LUXEMBOURG
MASTER SELLING AGREEMENT
15 September 2005
CONFIDENTIAL
AccuPoll Holding Corp.
15101 Red Hill Avenue - Suite 220
Tustin, California 92780
ATTENTION: WILLIAM NIXON, CHIEF EXECUTIVE
OFFICER
Gentlemen:
THIS LETTER OF AGREEMENT (THE "AGREEMENT")
SHALL CONFIRM THE ENGAGEMENT OF
CONTINENTAL ADVISORS SA, ("CONTINENTAL
ADVISORS") BY ACCUPOLL HOLDING CORP. OR
AFFILIATES (THE "COMPANY"), AS THE
COMPANY'S MASTER PLACEMENT AGENT TO ARRANGE
AND NEGOTIATE A PRIVATE PLACEMENT (THE
"PRIVATE PLACEMENT") OF CERTAIN DEBT OR
EQUITY SECURITIES OF THE COMPANY (TOGETHER,
THE "SECURITIES") THROUGH OTHER
DESIGNATED PLACEMENT AGENTS. THE PRIVATE
PLACEMENT SHALL BE MADE PURSUANT TO ONE
OR MORE EXEMPTIONS FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ANY
APPLICABLE SECURITIES LAWS OF ANY STATE
OR OTHER JURISDICTION (THE "BLUE SKY
LAWS"). THE PRIVATE PLACEMENT WILL HAVE
AGGREGATE GROSS PROCEEDS OF APPROXIMATELY
US$20,000,000. THE PRIVATE PLACEMENT
WILL BE SUBJECT TO THE FOLLOWING TERMS AND
CONDITIONS.
1.
Retention.
Subject to the terms and conditions of this Agreement,
the Company hereby appoints Continental Advisors to act on a
"best
efforts" basis as its master placement agent during the
Authorization Period (hereinafter defined) to privately place
the
Securities in the
Private Placement, in amounts and on terms and
conditions satisfactory to the Company. Continental Advisors
hereby
accepts such agency and agrees, subject to the terms and
conditions
of this Agreement, to use its best efforts during the
Authorization
Period (as defined in section 2 below) to arrange the sale of
the
Securities through the Private Placement. Continental Advisors
intends to sell the Securities to Non-US Persons pursuant to
Regulation S or Regulation D, to be determined, and to negotiate
and
arrange the sale of the Securities through other placement agents
in
both the US and Europe.
It is initially intended that the terms of the Private
Placement
will either be a sale of Convertible Preferred Shares (the
"Preferred Shares", term sheet attached as Exhibit A, or as
amended)
or Convertible Promissory Notes (the "Notes"), due in six
months
from the date of issuance, and convertible into common stock of
the
Company at the rate of US$_______ per share, or a sale of
common
stock of the Company at US$_______ per share, to be determined.
The
Company shall have the right to extend the maturity of the Notes
one
time for an additional six months, in its sole and absolute
discretion by providing written notice to the holders of the
Notes
at any time prior to Maturity.
<PAGE>
The Company will agree to file a
registration statement with the US Securities
and Exchange Commission, upon which the
common stock issuable from the
conversion of the Preferred Shares in
accordance with the terms and conditions
as defined in the term sheet, or if Notes
within 90 days following the closing
of the Private Placement shall the common
stock issuable be registered. The
Company shall use its best efforts to have
such registration statement declared
effective by the Securities and Exchange
Commission as soon as possible after
filing.
The Company understands and agrees that in
soliciting offers to purchase
Securities from the Company pursuant to
this Agreement and in assuming its other
obligations hereunder, Continental Advisors
is acting solely as agent for the
Company and not as principal, and that
Continental Advisor's responsibility in
respect of its engagement hereunder is
limited to a "best efforts" basis in
placing the Securities, with no
understanding, expressed or implied, on
Continental Advisor's part of a commitment
to underwrite or purchase the
Securities or any other securities of the
Company.
If the Company should unreasonably fail to
deliver or make available securities
to a purchaser whose offer the Company has
accepted by execution of a
subscription agreement in respect thereof
which purchaser is not in breach of
such subscription agreement and all of
whose funds to purchase such Securities
have been delivered, conditioned only upon
the delivery or Securities, to the
Company or an escrow agent, satisfactory to
the Company and for the benefit of
the Company, the Company (i) shall hold
Continental Advisors harmless against
loss, claim or damage arising from or as a
result of such failure by the Company
and (ii) shall pay to Continental Advisors
any fee to which Continental Advisors
would be entitled hereunder in connection
with the sale of such Securities as if
such sale had been consummated.
During the Authorization Period, the
Company shall be prohibited from directly
or indirectly offering any of the
Securities (or securities substantially
similar to the Securities from, or
otherwise contacting, approaching or
negotiating with respect thereto with, any
person introduced to the Company by
Continental Advisors. The Company shall
promptly refer to Continental Advisors
all offers, inquiries and proposals
relating to any placement of the Securities
made to the Company at any time during the
Authorization Period.
It is understood that Continental Advisors
is being engaged hereunder solely to
provide the services described in this
Agreement to the Company and that
Continental Advisors is not acting as an
agent or fiduciary of, and shall have
no duties or liabilities to, the equity
holders of the Company or any third
party in connection with its engagement
hereunder.
2.
Authorization Period. Continental Advisor's engagement
hereunder
shall become effective on the date hereof and, unless extended
writing by the company and the Continental Advisors, shall expire
on
the earlier of (i) the final closing date of the Private
Placement,
and (ii) 15 September 2006 (the "Termination Date"; the period
from
the date thereof through the Termination Date being hereinafter
referred to as the "Authorization Period").
<PAGE>
3.
Offering
Documents. The Company, with the assistance of Continental
Advisors, shall prepare a Confidential Offering memorandum, and
such
amendments or supplements to each as Continental Advisors and
the
Company may reasonably deem to be necessary, to effectuate the
sale
of the Securities (the Offering Memorandum, and any such
amendments
or supplements, are collectively referred to herein as the
"Offering
Materials") . The Company authorizes Continental Advisors to
transmit the Offering Materials to potential purchasers of the
Securities, and shall furnish to Continental Advisors copies of
the
Offering Materials in such quantities as Continental Advisors
may
from time to time reasonably request. The Company shall prepare
forms of purchase agreements or subscription agreements
containing
terms and conditions customary for private placement transactions
to
be entered into by the Company and each purchaser of
Securities,
which forms shall be provided to offerees only upon the review
and
reasonable approval of both the Company and Continental
Advisors.
The Company shall provide a copy of any and all subscription or
purchase agreements entered into between the Company and any
person
or investor introduced to the Company by Continental Advisors.
4.
Compensation. As compensation for Continental Advisor's
services
hereunder, the Company shall pay Continental Advisors the
finder's
fees set forth herein: (a) 13% of the Aggregate Consideration
(as
defined below) received by the Company in connection with the
Private Placement, payable in cash promptly on the closing date
on
which such Aggregate Consideration is paid, (b) a warrant to
purchase a number of shares of common stock of the Company equal
to
thirteen percent (13%) of the total number of shares of common
stock
issuable upon conversion or exercise of the Securities at an
exercise price equal to the conversion price of the Securities,
if
they are convertible securities, or the offer price of the
Securities, if they are shares of common stock, (c) an additional
4%
of the Aggregate Consideration for up to the first one million
dollars ($1,000,000) received by the Company in connection with
the
Private Placement commencing September 15, 2005, payable half
in
cash (2%), and at the Company's full discretion, half (2%) in
either
cash or warrants as described in (a) above, and (d) a warrant
to
purchase six million (6,000,000) shares of common stock of the
Company through cashless exercise.
The Aggregate Consideration, for purposes of calculating
Continental
Advisor's fee above, include all amounts received by the Company
for
Securities sold by the Company in the Private Placement, as
applicable, to purchasers including any amounts paid into
escrow,
any amounts payable in the future and any amounts payable upon
conversion, exchange or exercise of any Securities sold in the
Private Placement, as applicable, as received by the Company
without
conditions or limitations inclusive of all amounts received by
the
Company for Securities sold directly or indirectly by placement
agents in both the US and Europe.
<PAGE>
5.
Disbursements. Regardless of whether the sale of any Securities
is
consummated, the Company will pay or cause to be paid the
following
expenses in connection herewith: (i) the fees and disbursements
of
the Company's counsel and other representatives and advisers;
(ii)
the expenses in connection with the preparation and printing of
the
Offering Materials and amendments and supplements thereto and
the
mailing and delivering of copies thereof; (iii) the cost of
printing
the purchase agreements or subscription agreements, if any, and
any
other documents in connection with the offering, purchase, sale
and
delivery of the Securities; (iv) the cost of distribution of
the
materials outlined in this paragraph; (v) the expenses in
connection
with the qualification of the securities for offering and sale
under
state securities laws, if any, including any and all filing
fees;
(vi) the costs of preparing certificates representing the
Securities; (vii) the costs and charges of any transfer agent
or
registrar; and (viii) all other costs and expenses incident to
the
performance of the Company's obligations hereunder and under
the
purchase agreements or subscription agreements (including,
without
limitation, any taxes payable in connection with the issuance,
sale
and delivery of the Securities).
6.
Expenses.
In addition to the compensation payable to Continental
Advisors
hereunder and regardless of whether the sale of any of the
Securities is consummated, the Company shall reimburse
Continental
Advisors, upon requests made from time to time, for all of its
reasonable out-of-pocket expenses incurred in connection with
its
engagement hereunder, including the fees, disbursements and
other
charges of Continental Advisor's legal counsel (which
reimbursements
shall be limited to actual out-of-pocket fees, disbursements
and
other charges not to exceed $5,000 in the aggregate) and any
travel
that may be necessary. All such expenses owed to Continental
Advisors at the time of the first closing and at subsequent
closing
of the Private Placement will paid from the gross proceeds at
the
closing(s).
7.
Tail
Period. In addition, if the Private Placement is not completed,
the Company shall pay to Continental Advisors a fee, which shall
be
equal to the fee which would have been payable to Continental
Advisors if the securities discussed below had been sold by the
Company during the Authorization Period, based upon the
Aggregate
Consideration received by the Company with respect to any
Securities
(or securities of the Company substantially similar to the
securities) sold to any party at any time prior to the expiration
of
180 days after the Termination Date if such party is one
identified
to the Company by Continental Advisors during the Authorization
Period, and set forth in writing as delivered to the Company on
or
prior to 30 days following the Termination Date.
8.
Representations, Warranties and Covenants of the Company. The
Company represents and warrants to, and covenants with,
Continental
Advisors as follows:
a. During
the Authorization Period, the Company shall not use,
disseminate, publish, distribute or refer to any materials in
connection with any offering of Securities, including without
limitation, any Offering Materials, without Continental
Advisor's prior consent except for internal use among the
Company's personnel and representatives, which consent shall
not be unreasonably withheld or delayed.
<PAGE>
b. The
Company has not taken, and will not take, any action,
directly or indirectly, so as to cause any of the transactions
contemplated by this Agreement to fail to be entitled to
exemption from registration under all applicable securities
laws in jurisdiction in which Continental Advisors and the
Company agree to seek such an exemption. The Company shall
ensure that neither itself, nor any of its affiliates, nor any
person acting on behalf of the Company or any such affiliates,
has engaged or will engage in any general advertising or
general solicitation (as those terms are used in Regulation D
under the Securities Act) with respect to the Securities.
c. The
Company shall, from time to time, take such action as
Continental Advisors may reasonably request to quality the
Securities for offering and sale as a private placement under
the securities laws of such states or other jurisdiction as
Continental Advisors may reasonably request, except for those
states in which the Company will be required to qualify or be
subject to be qualified as a foreign corporation or subject to
service of process, and to comply with such laws so as to
permit such offers and sales.
d. The
Company shall make available to Continental Advisors
and/or shall agree to have professionally prepared at the
Company's exp
