REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.4
This
Registration Rights Agreement (this “Agreement”)
is made
and entered into as of _____, 2007, by and among Equicap, Inc., a Nevada
corporation (the “Company”),
the
investors signatory hereto (each an “Investor”
and
collectively, the “Investors”),
vFinance Investments, Inc., as placement agent (“vFinance”)
and
the shell holders specified on Schedule A hereto (each a “Shell
Holder”
and
collectively, the “Shell
Holders”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as the
date hereof among the Company and the Investors (the “Purchase
Agreement”).
The
Company and the Investors hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in
the
Purchase Agreement will have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms have the respective
meanings set forth in this Section 1:
“2007
Delivery Date”
means
the date on which the 2007 Make Good Shares are required to be delivered to
the
Investors by the Make Good Pledgors pursuant to the Make Good Escrow
Agreement.
“2008
Delivery Date”
means
the date on which the 2008 Make Good Shares are required to be delivered to
the
Investors by the Make Good Pledgors pursuant to the Make Good Escrow
Agreement.
“Advice”
has
the
meaning set forth in Section 6(d).
“Additional
Portion” means
the
positive
difference of the number of Shell Shares which could have been included in
such
Registration Statement pursuant to the operation of Section 2(h)(i) minus the
number of Shell Shares calculated in accordance with Section
2(h)(iii)(A)(1).
“Allowable
Maximum”
has
the
meaning set forth in Section 2(h).
“Commission
Comments”
means
written comments
pertaining solely to Rule 415 which
are
received by the Company from the Commission, and a copy of which shall have
been
provided by the Company to the Holders and the Shell Holders, to a filed
Registration Statement which limit the amount of shares which may be included
therein to a number of shares which is less than such amount sought to be
included thereon as filed with the Commission.
“Common
Stock”
means
the common stock of the Company, par value $0.001 per share, and any securities
into which such common stock may hereafter be reclassified or for which it
may
be exchanged as a class.
“Demand”
has
the
meaning set forth in Section 2(h).
“Effective
Date”
means,
as to a Registration Statement, the date on which such Registration Statement
is
first declared effective by the Commission.
“Effectiveness
Date”
means
(a) with respect to the
Registration Statement required to be filed under Section 2(a), the earlier
of
(i) the 150th
day
following the Closing Date, and (ii) the fifth Trading Day following the date
on
which the Company is notified by the Commission that such Registration Statement
will not be reviewed or is no longer subject to further review and comments,
(b)
with respect to a Registration Statement required to be filed under Section
2(b), the earlier of: (i) the 60th
day
following the Filing
Date for any
Registration Statement required to be filed under Section 2(b),
and (ii)
the fifth Trading Day following the date on which the Company is notified by
the
Commission that such Registration Statement will not be reviewed or is no longer
subject to further review and comments, (c) with respect to a Registration
Statement required to be filed under Section 2(c), the earlier of: (i) the
60th
day
following the date on which the Company becomes eligible to utilize Form S-3
to
register the resale of Common Stock; provided,
that, if the Commission reviews and has written comments to such filed
Registration Statement that would require the filing of a pre-effective
amendment thereto with the Commission, then the Effectiveness Date under this
clause (c)(i) shall be the 90th
day
following the date on which the Company becomes eligible to utilize Form S-3
to
register the resale of Common Stock, and (ii) the fifth Trading Day following
the date on which the Company is notified by the Commission that the
Registration Statement will not be reviewed or is no longer subject to further
review and comments, (d) with respect to a Registration Statement required
to be
filed under Section 2(d), the earlier of: (i) the 90th
day
following the 2007 Delivery Date; provided, that, if the Commission reviews
and
has written comments to such filed Registration Statement that would require
the
filing of a pre-effective amendment thereto with the Commission, then the
Effectiveness Date under this clause (d)(i) shall be the 120th
day
following the 2007 Delivery Date, and (ii) the fifth Trading Day following
the
date on which the Company is notified by the Commission that the Registration
Statement will not be reviewed or is no longer subject to further review and
comments and (e) with respect to a Registration Statement required to be filed
under Section 2(d), the earlier of: (i) the 90th
day
following the 2008 Delivery Date; provided, that, if the Commission reviews
and
has written comments to such filed Registration Statement that would require
the
filing of a pre-effective amendment thereto with the Commission, then the
Effectiveness Date under this clause (e)(i) shall be the 120th
day
following the 2008 Delivery Date, and (ii) the fifth Trading Day following
the
date on which the Company is notified by the Commission that the Registration
Statement will not be reviewed or is no longer subject to further review and
comments.
“Effectiveness
Period”
has the
meaning set forth in Section 2(a).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
2
“Filing
Date”
means
(a) with respect to the Registration Statement required to be filed under
Section 2(a), the 45th
day
following the Closing Date, (b) with respect to any
Registration Statements
required
to be filed under Section 2(b),
each
such Registration Statement shall be filed by
the
earlier of (i) for
the
initial Registration Statement required to be filed under Section 2(b),
the
six-month anniversary of the Effective Date of the Registration Statement
required to be filed under Section 2(a) and for
all
subsequent Registration Statements, the six-month anniversary of the Effective
Date of the immediately preceding Registration Statement required to be filed
under Section 2(b), as applicable, and (ii) for the initial Registration
Statement required to be filed under Section 2(b),
the
60th
day
following such time as 75%
of all
Registrable Securities which are included in the Registration Statement required
to be filed under Section 2(a) have been sold
and for
all subsequent Registration Statements, the 60th
day
following such time as 75% of all Registrable Securities which are included
in
the immediately preceding Registration Statement required to be filed under
Section 2(b) have been sold, as applicable,
(c)
with respect to a Registration Statement required to be filed under Section
2(c), the 30th
day
following the date on which the Company becomes eligible to utilize Form S-3
to
register the resale of Common Stock, (d) with respect to the Registration
Statement required to be filed under Section 2(d), the 45th
day
following the 2007 Delivery Date (provided that if the Company is then eligible
to utilize Form S-3 to register the resale of Common Stock, the Filing Date
under this clause (d) shall be 30 days following the 2007 Delivery
Date)
and (e)
with
respect to the Registration Statement required to be filed under Section 2(e),
the 45th
day
following the 2008 Delivery Date (provided that if the Company is then eligible
to utilize Form S-3 to register the resale of Common Stock, the Filing Date
under this clause (e) shall be 30 days following the 2008 Delivery
Date).
“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to time of Registrable
Securities, except that for purposes of Section 2(f), the term “Holders” will
not include Registrable Securities issued or issuable to vFinance.
“Holders’
Percentage” means
the
percentage (expressed as a decimal) that the Registrable Securities included
in
a Registration Statement as initially filed represent of the aggregate of the
Shell Shares and Registrable Securities included in such Registration Statement
as initially filed.
“Indemnified
Party”
has the
meaning set forth in Section 5(c).
“Indemnifying
Party”
has the
meaning set forth in Section 5(c).
“Losses”
has the
meaning set forth in Section 5(a).
“New
York Courts”
means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.
“Proceeding”
means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.
“Prospectus”
means
the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
3
“Registrable
Securities”
means:
(i) the Shares, (ii) any shares of Common Stock issued or issuable to vFinance
(including upon the exercise of warrants issued to vFinance (the “Placement
Agent Warrants”))
as
compensation in connection with the financing that is the subject of the
Purchase Agreement, (iii) the 2007 Make Good Shares, as applicable, (iv) the
2008 Make Good Shares, as applicable and (v) any securities issued or issuable
upon any stock split, dividend or other distribution, recapitalization or
similar event, or any price adjustment as a result of such stock splits, reverse
stock splits or similar events with respect to any of the securities referenced
in (i), (ii), (iii), (iv) or (v) above.
“Registration
Statement”
means
the registration statement required to be filed in accordance with Section
2(a)
and any additional registration statement(s) required to be filed under Section
2(b), Section 2(c), Section 2(d) or Section 2(e), including (in each case)
the
Prospectus, amendments and supplements to such registration statements or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference therein. Registration Statement will also include any other required
or acceptable form and any successor form promulgated by the
Commission.
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
424”
means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Shares”
means
the shares of Common Stock issued or issuable to the Investors pursuant to
the
Purchase Agreement.
“Shell
Percentage” means
the
percentage (expressed as a decimal) that the Shell Shares included in a
Registration Statement as initially filed represent of the aggregate of the
Shell Shares and Registrable Securities included in such Registration Statement
as initially filed.
“Shell
Shares”
has
the
meaning set forth in Section 2(a).
4
| 2. |
Registration.
|
(a) On
or
prior to the applicable Filing Date, the Company shall prepare and file with
the
Commission a Registration Statement covering the resale of
the
Registrable Securities (other than in the case of the Registration Statement
to
be filed under this Section 2(a), the 2007 Make Good Shares and the 2008 Make
Good Shares) not already covered by an existing and effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule
415,
on Form S-1 (or on such other form appropriate for such purpose). The
initial Registration Statement to be filed under this Section shall be filed
to
include all of the Registrable Securities (other than the 2007 Make Good Shares
and the 2008 Make Good Shares) and all of the shares of Common Stock specified
on Schedule A attached hereto (collectively, the “Shell
Shares).
Such
Registration Statement shall contain (except if otherwise required pursuant
to
written comments received from the Commission upon a review of such Registration
Statement) the “Plan of Distribution” attached hereto as Annex
A.
The Company shall cause such Registration Statement to be declared effective
under the Securities Act as
soon as
possible but, in any event, no later than its Effectiveness Date, and shall
use
its reasonable best efforts to keep the Registration Statement continuously
effective under the Securities Act until the date which is the earliest of
(i)
two years after its Effective Date (and for purposes of a Registration Statement
contemplated in Section 2(b), Section 2(c), Section 2(d) and/or Section 2(e)
hereof, two years after the Effective Date therefore), (ii) such time as all
of
the Registrable Securities covered by such Registration Statement have been
publicly sold by the Holders, or (iii) such time as all of the Registrable
Securities covered by such Registration Statement may be sold by the Holders
pursuant to Rule 144(k) as determined by the counsel to the Company pursuant
to
a written opinion letter to such effect, addressed and acceptable to the
Company's transfer agent and the affected Holders
(the
“Effectiveness
Period”).
By
5:00 p.m. (New York City time) on the Business Day immediately following the
Effective Date of such Registration Statement, the Company shall file with
the
Commission in accordance with Rule 424 under the Securities Act the final
prospectus to be used in connection with sales pursuant to such Registration
Statement (whether or not such filing is technically required under such Rule).
(b) If
all of
the Registrable Securities and Shell Shares to be included in the Registration
Statement filed pursuant to Section 2(a) cannot be so included due to Commission
Comments, then the Company shall prepare and file by the applicable
Filing
Date for such Registration Statement(s),
such
number of
additional Registration Statements
as may be necessary in order to ensure that
all
Registrable Securities and
Shell
Shares (other
than the 2007 Make Good Shares and 2008 Make Good Shares, unless the 2007
Delivery Date or 2008 Delivery Date, as the case may be, shall have occurred)
are
covered
by an existing and effective Registration Statement.
Accordingly, if for example, an initial Registration Statement is filed under
Section 2(b) to register shares taken off a Registration Statement filed under
Section 2(a) due to Commission Comments and Commission Comments again require
shares to be removed for such newly filed Registration Statement under this
Section 2(b), then the Company will prepare and file additional Registration
Statements until such time as all such required shares are covered by effective
Registration Statements. Any Registration Statements to be filed under this
Section shall be
for an
offering to be made on a continuous basis pursuant to Rule 415, on Form S-3
(or
on such other form appropriate for such purpose). Such Registration Statement
shall contain (except if otherwise required pursuant to written comments
received from the Commission upon a review of such Registration Statement)
the
"Plan of Distribution" attached hereto as Annex A. The Company shall cause
such
Registration Statement to be declared effective under the Securities Act as
soon
as possible but, in any event, by its Effectiveness Date, and shall use its
reasonable best efforts to keep such Registration Statement continuously
effective under the Securities Act during the entire Effectiveness Period.
By
5:00 p.m. (New York City time) on the Effective Date, the Company shall file
with the Commission in accordance with Rule 424 under the Securities Act the
final prospectus to be used in connection with sales pursuant to such
Registration Statement (whether or not such filing is technically required
under
such Rule).
5
(c) Promptly
following any date on which the Company becomes eligible to use a registration
statement on Form S-3 to register Registrable Securities and Shell Shares for
resale, the Company shall file a Registration Statement on Form S-3 covering
all
such Registrable Securities and Shell Shares (or a post-effective amendment
on
Form S-3 to the then effective Registration Statement) and shall cause such
Registration Statement to be filed by the Filing Date for such Registration
Statement and declared effective under the Securities Act as soon as possible
thereafter, but in any event prior to the Effectiveness Date therefore.
Such
Registration Statement shall contain (except if otherwise required pursuant
to
written comments received from the Commission upon a review of such Registration
Statement) the “Plan of Distribution” attached hereto as Annex A. The Company
shall use its reasonable best efforts to keep such Registration Statement
continuously effective under the Securities Act during the entire Effectiveness
Period. By 5:00 p.m. (New York City time) on the Business Day immediately
following the Effective Date of such Registration Statement, the Company shall
file with the Commission in accordance with Rule 424 under the Securities Act
the final prospectus to be used in connection with sales pursuant to such
Registration Statement (whether or not such filing is technically required
under
such Rule).
(d) On
or
prior to the Filing Date, the Company shall prepare and file with the Commission
a Registration Statement covering the resale of the 2007 Make Good Shares on
Form S-3 if the Company is then eligible to utilize such Form (or on such other
form appropriate for such purpose) and shall cause such Registration Statement
to be filed by the Filing Date for such Registration Statement and declared
effective under the Securities Act as soon as possible thereafter, but in any
event prior to the Effectiveness Date therefore. Such Registration Statement
shall contain (except if otherwise required pursuant to written comments
received from the Commission upon a review of such Registration Statement)
the
“Plan of Distribution” attached hereto as Annex A. The Company shall use its
reasonable best efforts to keep such Registration Statement continuously
effective under the Securities Act during the entire Effectiveness Period which
is applicable to it. By 5:00 p.m. (New York City time) on the Business Day
immediately following the Effective Date of such Registration Statement, the
Company shall file with the Commission in accordance with Rule 424 under the
Securities Act the final prospectus to be used in connection with sales pursuant
to such Registration Statement (whether or not such filing is technically
required under such Rule).
(e) On
or
prior to the Filing Date, the Company shall prepare and file with the Commission
a Registration Statement covering the resale of the 2008 Make Good Shares on
Form S-3 if the Company is then eligible to utilize such Form (or on such other
form appropriate for such purpose) and shall cause such Registration Statement
to be filed by the Filing Date for such Registration Statement and declared
effective under the Securities Act as soon as possible thereafter, but in any
event prior to the Effectiveness Date therefore. Such Registration Statement
shall contain (except if otherwise required pursuant to written comments
received from the Commission upon a review of such Registration Statement)
the
“Plan of Distribution” attached hereto as Annex A. The Company shall use its
reasonable best efforts to keep such Registration Statement continuously
effective under the Securities Act during the entire Effectiveness Period which
is applicable to it. By 5:00 p.m. (New York City time) on the Business Day
immediately following the Effective Date of such Registration Statement, the
Company shall file with the Commission in accordance with Rule 424 under the
Securities Act the final prospectus to be used in connection with sales pursuant
to such Registration Statement (whether or not such filing is technically
required under such Rule).
6
(f) If:
(i) a
Registration Statement is not filed on or prior to its Filing Date covering
the
Registrable Securities required under this Agreement to
be
included therein (if the Company files a Registration Statement without
affording the Holders the opportunity to review and comment on the same as
required by Section 3(a) hereof, the Company shall not be deemed to have
satisfied this clause (i)), or (ii) a Registration Statement is not declared
effective by the Commission on or prior to its required Effectiveness Date
or if
by the Business Day immediately following the Effective Date the Company shall
not have filed a “final” prospectus for the Registration Statement with the
Commission under Rule 424(b) (whether or not such a prospectus is technically
required by such Rule), or (iii) after its Effective Date, without regard for
the reason thereunder or efforts therefore, such Registration Statement ceases
for any reason to be effective and available to the Holders as to the
Registrable Securities to which it is required to cover at any time prior to
the
expiration of its Effectiveness Period for more than an aggregate of 30 Trading
Days (which need not be consecutive) (any such failure or breach being referred
to as an “Event,”
and for
purposes of clauses (i) or (ii) the date on which such Event occurs, or for
purposes of clause (iii) the date which such 30 Trading Day-period is exceeded,
being referred to as “Event
Date”),
then
in addition to any other rights the Holders may have hereunder or under
applicable law: on each such Event Date, and on each monthly anniversary of
each
such Event Date (if the applicable Event shall not have been cured by such
date)
until the applicable Event is cured, the Company shall pay to each Holder an
amount in cash, as partial liquidated damages and not as a penalty, equal to
1.0% of the aggregate Investment Amount paid by such Holder for Shares pursuant
to the Purchase Agreement; provided, however, that the total amount of partial
liquidated damages payable by the Company pursuant to all Events under this
Section shall be capped at an aggregate of 10% of the aggregate Investment
Amount paid by the Investors under the Purchase Agreement. The partial
liquidated damages pursuant to the terms hereof shall apply on a daily pro-rata
basis for any portion of a month prior to the cure of an Event, except in the
case of the first Event Date. In no event will the Company be liable for
liquidated damages under this Agreement in excess of 1.0% of the aggregate
Investment Amount of the Investors in any 30-day period. The Company will not
be
liable for liquidated damages to the Placement Agent or the Shell Holders under
this Agreement with respect to any Placement Agent Warrants, shares of Common
Stock issuable upon exercise of any Placement Agent Warrants or Shell Shares.
For the avoidance of doubt, the Company shall not be liable for liquidated
damages under this Agreement as to any Registrable Securities which are not
permitted by the Commission to be included in Registration Statements due solely
to Commission Comments until the provisions of this Agreement as to the next
applicable Registration Statement required to be filed hereunder are triggered,
in which case the provisions of this Section 2(f) shall apply, if
applicable.
(g) Each
Holder and
Shell
Holder agree
to
furnish to the Company a completed Questionnaire in the form attached to this
Agreement as Annex B (a “Selling
Holder Questionnaire”).
The
Company shall not be required to include the Registrable Securities of a Holder
or a Shell Holder in a Registration Statement and shall not be required to
pay
any liquidated or other damages under Section 2(f) to any Holder who fails
to
furnish to the Company a fully completed Selling Holder Questionnaire at least
two Trading Days prior to the Filing Date (subject to the requirements set
forth
in Section 3(a)).
7
(h) In
the
event that the Company receives Commission Comments limiting the amount of
shares of Common Stock which may be included in any such Registration Statement
(such number of shares of Common Stock which the Company may include in such
Registration Statement in accordance with the Commission Comments, the
“Allowable
Maximum”),
the
number of Registrable Securities and Shell Shares sought to be included in
any
such Registration Statement shall be cutback as follows:
(i) the
Shell
Shares shall be cutback and removed from such Registration Statement until
the
aggregate number of all Shell Shares to be included in such Registration
Statement equals 30% of the aggregate number of Shell Shares included in such
Registration Statement as initially filed, but not more than as needed such
that
the total number of Registrable Securities plus Shell Shares not so cutback
would not exceed the Allowable Maximum
(it
being understood that such cutbacks will be applied pro rata among the Shell
Holders in accordance with each Shell Holder’s portion of the aggregate number
of Shell Shares initially sought to be included in such Registration Statement);
then
(ii) the
Registrable Securities shall be cutback and removed from such Registration
Statement until the aggregate number of such Registrable Securities to be
included in such Registration Statement equals the Allowable Maximum minus
the
number of Shell Shares which have not been cutback and removed from such
Registration Statement in accordance with Section 2(h)(i) (it
being
understood that such cutbacks will applied pro rata among the Holders in
accordance with each Holder’s portion of the aggregate number of Registrable
Securities initially sought to be included in such Registration
Statement);
then
(iii) in
the
event that the percentage of Registrable Securities being registered in
accordance with Section 2(h)(ii) is less than 30% of the aggregate number of
Registrable Securities included
in such Registration Statement as initially filed,
then
(A) notwithstanding the operation of Section 2(h)(i) above, the number of Shell
Shares which can be included in such Registration Statement shall equal (1)
the
product of (x) the percentage (expressed as decimal) of the quotient obtained
by
dividing the number of Registrable Securities which can be included in such
Registration Statement pursuant to the operation of Section 2(h)(ii) by the
aggregate number of Registrable Securities proposed to be included
in such Registration Statement, as initially filed
and (y)
the aggregate number of Shell Shares sought to be included in
such
Registration Statement as initially filed plus
(2)
the product of (x) the Additional Portion and (y) the Shell Percentage
and
(B)
notwithstanding the operation of Section 2(h)(ii), the number of Registrable
Securities which can be included in such Registration Statement shall equal
the
sum of (1) the number of Registrable Securities which can be included in such
Registration Statement pursuant to Section 2(h)(ii) and (2) the product of
(x)
the Additional
Portion and (y) the Holders’ Percentage.
For the
avoidance of doubt, (i) the
amount of Registrable Securities which can be included in a Registration
Statement pursuant to the operation of this Section 2(h)(iii) shall be allocated
pro
rata
among the Holders in accordance with each Holder’s portion of the aggregate
number of Registrable Securities initially sought to be included in such
Registration Statement and
(ii)
the
amount of Shell Shares which can be included in a Registration Statement
pursuant to the operation of this Section 2(h)(iii) shall be allocated
pro
rata
among the Shell Holders in accordance with each Shell Holder’s portion of the
aggregate number of Shell Shares initially sought to be included in such
Registration Statement.
8
For
example, if the initial Registration Statement as filed included a
total
of 10,000,000 shares of which 8,400,000
are
Registrable
Securities and 1,600,000
are
Shell
Shares (with an Allowable Maximum of 2,000,000 shares due to Commission
Comments), then this Section 2(h) would work as follows: (i) the number of
Shell
Shares which could be included in such Registration Statement pursuant to
Section 2(h)(i) would equal 480,000 Shell Shares (1,600,000 Shell Shares
multiplied by 30%), (ii) the number of Registrable Securities which could be
included in such Registration Statement pursuant to Section 2(h)(ii) would
equal
1,520,000 Registrable Securities (2,000,000 shares (Allowable Maximum) minus
480,000 Shell Shares) and (iii) since the Holders could only include 18% of
the
aggregate number of Registrable Securities included
in such Registration Statement as initially filed
(obtained by dividing 1,520,000 Registrable Securities by 8,400,000 Registrable
Securities), (A) the number of Shell Shares which can be included in such
Registration Statement shall be proportionately decreased to equal the sum
of
(1) 288,000 Shell Shares (which is 18% of 1,600,000 Shell Shares) and (2) 30,720
Shell Shares (which is the product of 192,000 shares (the Additional Portion)
and .16 (the Shell Percentage)) and (B) the number of Registrable Securities
which can be included in such Registration Statement shall be proportionately
increased to equal the sum of (1) 1,520,000 Registrable Securities and (2)
161,280 Registrable Securities (which is the product of 192,000 shares (the
Additional Portion) and .84 (the Holders’ Percentage)).
Accordingly,
upon the operation of Section 2(h)(iii), if applicable, the Holders would be
permitted to include a total of 1,681,280 Registrable Securities in such
Registration Statement and the Shell Holders would be permitted to include
a
total of 318,720 Shell Shares in such Registration Statement. The sum of 318,720
Shell Shares and 1,681,280
Registrable Securities equals 2,000,000 shares which is the Allowable Maximum
in
this example.
Notwithstanding
the foregoing, while the Shell Shares will be afforded piggy-back registration
rights on any Registration Statement to be filed under Sections 2(d) and 2(e),
any cutbacks arising from Commission Comments with respect to such Registration
Statements shall be applied first to the entirety of any such Shell Shares
prior
to any cutbacks to the Registrable Securities to be included
thereon.
Subject
to the terms of this Agreement, commencing on the date on which all Registrable
Securities are either (a) covered by effective Registration Statements or (b)
may be resold by the Holders thereof in accordance with Rule 144(k), as
determined by the counsel to the Company pursuant to a written opinion letter
to
such effect, addressed and acceptable to the Company's transfer agent and the
affected Holders, whichever of (a) or (b) occurs first, the Shell Holders then
holding a majority of the remaining outstanding Shell Shares which are not
then
covered by effective registration statements (including Registration Statements)
may request the Company in writing (each a “Demand”)
to
effect a registration with the Commission under and in accordance with the
provisions of the Securities Act of all or part of such Shell Shares. Any
registration statement to be filed at the request of the Shell Holders shall
be
subject to the piggy-back registration rights of the Holders set forth in
Section 6(e), but any cutbacks to such registration statement shall be applied
to ensure that the Holder’s Registrable Securities will be afforded the same
priority as set forth in this Section. The
Company shall cause any registration statement filed pursuant to the foregoing
to be declared effective under the Securities Act as soon as possible and shall
use its reasonable best efforts to keep such registration statement continuously
effective under the Securities Act until the date which is the earliest of
(i)
two years after such registration statement is declared effective by the
Commission, (ii) such time as all of the shares of Common Stock covered by
such
registration statement have been publicly sold by the holders thereof, or (iii)
such time as all of the shares of Common Stock covered by such registration
statement may be sold by the holders thereof pursuant to Rule 144(k) as
determined by the counsel to the Company pursuant to a written opinion letter
to
such effect, addressed and acceptable to the Company's transfer agent and the
affected holders.
9
3.
Registration Procedures.
In
connection with the Company's registration obligations hereunder, the Company
shall:
(a) Not
less
than four Trading Days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto, the Company shall
furnish to each Holder and Shell Holder copies of the “Selling Stockholders”
section of such document, the “Plan of Distribution” and any risk factor
contained in such document that addresses specifically this transaction or
the
Selling Stockholders, as proposed to be filed which documents will be subject
to
the review of such Holder and Shell Holder. The Company shall not file a
Registration Statement, any Prospectus or any amendments or supplements thereto
in which the “Selling Stockholder” section thereof differs in any material
respect from the disclosure received from a Holder or Shell Holder in its
Selling Holder Questionnaire (as amended or supplemented).
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement continuously
effective as to the applicable Registrable Securities and Shell Shares for
its
Effectiveness Period and prepare and file with the Commission such additional
Registration Statements in accordance with Section 2(b) in order to register
for
resale under the Securities Act all of the required Registrable Securities
and
Shell Shares; (ii) cause the related Prospectus to be amended or supplemented
by
any required Prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible
to
any comments received from the Commission with respect to each Registration
Statement or any amendment thereto and, as promptly as reasonably possible
provide the Holders true and complete copies of all correspondence from and
to
the Commission relating to such Registration Statement that would not result
in
the disclosure to the Holders of material and non-public information concerning
the Company; and (iv) comply in all material respects with the provisions of
the
Securities Act and the Exchange Act with respect to the Registration Statements
and the disposition of the Registrable Securities and Shell Shares covered
by
each Registration Statement.
10
(c) Notify
the Holders and Shell Holders as promptly as reasonably possible (and, in the
case of (i)(A) below, not less than three Trading Days prior to such filing
and,
in the case of (v) below, not less than three Trading Days prior to the
financial statements in any Registration Statement becoming ineligible for
inclusion therein) and (if requested by any such Person) confirm such notice
in
writing no later than one Trading Day following the day (i)(A) when a Prospectus
or any Prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed; (B) when the Commission notifies the Company
whether there will be a “review” of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement (the Company
shall
provide true and complete copies thereof and all written responses thereto
to
each of the Holders that pertain to the Holders as a Selling Stockholder or
to
the Plan of Distribution, but not information which the Company believes would
constitute material and non-public information); and (C) with respect to each
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to a Registration Statement
or Prospectus or for additional information; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or Shell Shares
or
the initiation of any Proceedings for that purpose; (iv) of the receipt by
the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities or Shell
Shares for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (v) of the occurrence of any event or passage
of time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in such Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material
fact
or omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
(d) Use
its
reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities or Shell Shares for sale
in
any jurisdiction, at the earliest practicable moment.
(e) Furnish
to each Holder and Shell Holder after request, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto and
all
exhibits to the extent requested by such Person (including those previously
furnished) promptly after the filing of such documents with the
Commission.
(f) Promptly
deliver to each Holder and Shell Holder, without charge, as many copies of
each
Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request. The
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders and Shell Holders in
connection with the offering and sale of the Registrable Securities and Shell
Shares covered by such Prospectus and any amendment or supplement
thereto.
11
(g) Prior
to
any public offering of Registrable Securities and/or Shell Shares, register
or
qualify the Registrable Securities and Shell Shares for offer and sale under
the
securities or Blue Sky laws of such jurisdictions within the United States
as
any Holder or Shell Holder may request, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable
the
disposition in such jurisdictions of the Registrable Securities and Shell Shares
covered by the Registration Statements.
(h) Cooperate
with the Holders and Shell Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities and Shell Shares
to
be delivered to a transferee pursuant to the Registration Statements, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
of all restrictive legends, and to enable such Registrable Securities and Shell
Shares to be in such denominations and registered in such names as any such
Holders or Shell Holders may request.
(i) Upon
the
occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed
to
be incorporated therein by reference, and file any other required document
so
that, as thereafter delivered, no Registration Statement nor any Prospectus
will
contain an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances under which they were made, not
misleading.
4.
Registration Expenses. All fees and expenses incident to the performance
of or compliance with this Agreement by the Company shall be borne by the
Company whether or not any Registrable Securities or Shell Shares are sold
pursuant to a Registration Statement. The fees and expenses referred to in
the
foregoing sentence shall include, without limitation, (i) all registration
and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with any Trading Market on which the Common
Stock
is then listed for trading, and (B) in compliance with applicable state
securities or Blue Sky laws), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and
Shell Shares and of printing prospectuses if the printing of prospectuses is
reasonably requested by the holders of a majority of the Registrable Securities
and/or Shell Shares included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for
the
Company, (v) Securities Act liability insurance, if the Company so desires
such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated
by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation,
all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities and Shell
Shares on any securities exchange as required hereunder.
12
5.
Indemnification.
(a) Indemnification
by the Company. The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder and Shell Holder, the
officers, directors, agents, investment advisors, partners, members and
employees of each of them, each Person who controls any such Holder or Shell
Holder (within the meaning of Section 15 of the Securities Act or Section 20
of
the Exchange Act) and the officers, directors, agents and employees of each
such
controlling Person, to the fullest extent permitted by applicable law, from
and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable costs of preparation and reasonable attorneys'
fees) and expenses (collectively, “Losses”),
as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in any Registration Statement, any Prospectus
or
any form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus
or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (1) such
untrue statements or omissions are based solely upon information regarding
such
Holder or such Shell Holder furnished in writing to the Company by such Holder
or by such Shell Holder expressly for use therein, or to the extent that such
information relates to such Holder or Shell Holder or such Holder's or Shell
Holder’s proposed method of distribution of Registrable Securities and/or Shell
Shares and was reviewed and expressly approved in writing by such Holder or
Shell Holder expressly for use in the Registration Statement, such Prospectus
or
such form of Prospectus or in any amendment or supplement thereto (it being
understood that the Holders and Shell Holders have approved Annex A hereto
for
this purpose) or (2) in the case of an occurrence of an event of the type
specified in Section 3(c)(ii)-(v), the use by such Holder or Shell Holder of
an
outdated or defective Prospectus after the Company has notified such Holder
or
Shell Holder in writing that the Prospectus is outdated or defective and prior
to the receipt by such Holder or Shell Holder of an Advice or an amended or
supplemented Prospectus, but only if and to the extent that following the
receipt of the Advice or the amended or supplemented Prospectus the misstatement
or omission giving rise to such Loss would have been corrected. The Company
shall notify the Holders and Shell Holders promptly of the institution, threat
or assertion of any Proceeding of which the Company is aware in connection
with
the transactions contemplated by this Agreement. The action or inaction of
any
Holder or Shell Holder shall not impair the indemnification rights of any other
Holder or Shell Holder hereunder.
(b) Indemnification
by Holders and Shell Holders. Each Holder and each Shell Holder shall, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within
the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act),
and the directors, officers, agents or employees of such controlling Persons,
to
the fullest extent permitted by applicable law, from and against all Losses,
as
incurred, arising solely out of or based solely upon: (x) such Holder's or
Shell
Holder’s failure to comply with the prospectus delivery requirements of the
Securities Act or (y) any untrue statement of a material fact contained in
any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising solely out of or based solely upon
any omission of a material fact required to be stated therein or necessary
to
make the statements therein not misleading to the extent, but only to the extent
that, (1) such untrue statements or omissions are based solely upon information
regarding such Holder or such Shell Holder furnished in writing to the Company
by such Holder or by such Shell Holder expressly for use therein, or to the
extent that such information relates to such Holder or Shell Holder or such
Holder's or Shell Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
or
Shell Holder expressly for use in the Registration Statement (it being
understood that the Holders and Shell Holders have approved Annex A hereto
for
this purpose), such Prospectus or such form of Prospectus or in any amendment
or
supplement thereto or (2) in the case of an occurrence of an event of the type
specified in Section 3(c)(ii)-(v), the use by such Holder or Shell Holder of
an
outdated or defective Prospectus after the Company has notified such Holder
or
Shell Holder in writing that the Prospectus is outdated or defective and prior
to the receipt by such Holder or Shell Holder of an Advice or an amended or
supplemented Prospectus, but only if and to the extent that following the
receipt of the Advice or the amended or supplemented Prospectus the misstatement
or omission giving rise to such Loss would have been corrected. In no event
shall the liability of any selling Holder or Shell Holder hereunder be greater
in amount than the dollar amount of the net proceeds received by such Holder
or
Shell Holder upon the sale of the Registrable Securities (or Shell Shares,
as
the case may be) giving rise to such indemnification obligation.
13
(c)
Conduct
of Indemnification Proceedings. If any Proceeding shall be brought or asserted
against any Person entitled to indemnity hereunder (an “Indemnified
Party”),
such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party
and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination
is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying
Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of
the
Indemnified Party, effect any settlement of any pending Proceeding in respect
of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
14
All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section) shall be paid to
the
Indemnified Party, as incurred, within ten Trading Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it
is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
(d) Contribution.
If a claim for indemnification under Section 5(a) or 5(b) is unavailable to
an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder or Shell Holder
shall be required to contribute, in the aggregate, any amount in excess of
the
amount by which the proceeds actually received by such Holder or Shell Holder
from the sale of the Registrable Securities or Shell Shares subject to the
Proceeding exceeds the amount of any damages that such Holder or Shell Holder
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties
15
6.
Miscellaneous.
(a) Remedies.
In the event of a breach by the Company or by a Holder or Shell Holder, of
any
of their respective obligations under this Agreement, a Holder or Shell Holder
or the Company, as the case may be, in addition to being entitled to exercise
all rights granted by law and under this Agreement, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company and each Holder and Shell Holder agree that monetary
damages would not provide adequate compensation for any losses incurred by
reason of a breach by it of any of the provisions of this Agreement and hereby
further agrees that, in the event of any action for specific performance in
respect of such breach, it shall waive the defense that a remedy at law would
be
adequate.
(b) No
Piggyback on Registrations. Except as and to the extent specified in Schedule
3.1(u) to the Purchase Agreement, neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include
securities of the Company in a Registration Statement other than the Registrable
Securities, and the Company shall not during the Effectiveness Period enter
into
any agreement providing any such right to any of its security
holders.
(c) Compliance.
Each Holder and each Shell Holder severally and not jointly covenants and agrees
that it will comply with the prospectus delivery requirements of the Securities
Act as applicable to it in connection with sales of Registrable Securities
pursuant to the Registration Statement.
(d) Discontinued
Disposition. Each Holder and each Shell Holder severally and not jointly agrees
that, upon receipt of a notice from the Company of the occurrence of any event
of the kind described in Section 3(c), such Holder or Shell Holder, as
applicable, will forthwith discontinue disposition of such Registrable
Securities or Shell Shares under the Registration Statement until such Holder's
or Shell Holder’s receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement or until it is advised in writing (the
“Advice”)
by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.
(e) Piggy-Back
Registrations. If at any time commencing
on
the
initial
Effectiveness
Date
under Section 2(a), there
is
not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to
be
issued solely in connection with any acquisition of any entity or business
or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of
such
determination and, if within fifteen days after receipt of such notice, any
such
Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights.
16
(f) Amendments
and Waivers. The provisions of this Agreement, including the provisions of
this
Section 6(f), may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless
the
same shall be in writing and signed by the Company and the Holders of no less
than a majority in interest of the then outstanding Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
certain Holders and that does not directly or indirectly affect the rights
of
other Holders may be given by Holders of at least a majority of the Registrable
Securities to which such waiver or consent relates.
Notwithstanding the foregoing, any amendment, modification or supplement to
Section 2 of this Agreement (other than as to Section 2(d), Section 2(e) and
Section 2(f) hereof and as to waivers of the scheduled Filing Date or
Effectiveness Date) shall require the written consent of a majority in interest
of the Holders and Shell Holders (which for such purposes equals no less than
50% of the aggregate of all Registrable Securities and Shell Shares taken as
a
whole).
(g) Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile (provided the sender receives a
machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section prior to 6:30 p.m. (New York City time) on
a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than
6:30
p.m. (New York City time) on any Trading Day, or (c) upon actual receipt by
the
party to whom such notice is required to be given if sent by any means other
than facsimile transmission. The address for such notices and communications
shall be as follows:
|
If
to the Company:
|
Equicap,
Inc.
|
|
c/o
Usunco Automotive Limited
|
|
|
00000
Xxxxxxxxx Xxxx
|
|
|
Xxxxx
Xxx, XX 00000
|
|
|
Telephone:
000-000-0000
|
|
|
Facsimile:
000-000-0000
|
|
|
Attn.:
Xx. Xxxxx Xxxx
|
|
|
|
|
|
With
a copy to:
|
Xxxxxxxx
Xxxxxx
|
|
000
Xxxxxxxxx Xxxxxx, 00xx
Xxxxx
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Facsimile:
000-000-0000
Attn.:
Xxxxxx X. Xxxxxxx, Esq.
|
|
|
|
|
|
If
to an Investor:
|
To
the address set forth under such Investor's name on the signature
pages
hereto.
|
|
|
|
|
If
to a Shell Holder:
|
To
the address set forth under such Shell Holder’s name on the signature
pages hereto.
|
17
If
to any
other Person who is then the registered Holder:
To
the
address of such Holder as it appears in the stock transfer
books of the Company
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person.
(h) Successors
and Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties and shall inure
to
the benefit of each Holder and Shell Holder. The Company may not assign its
rights or obligations hereunder without the prior written consent of each
Holder. Each Holder may assign its respective rights hereunder in the manner
and
to the Persons as permitted under the Purchase Agreement. The Shell Holders
may
assign their rights hereunder only to persons who are affiliates of such Shell
Holders.
(i) Execution
and Counterparts. 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 Agreement. In the event
that any signature is delivered by facsimile transmission, such signature shall
create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
(j) Governing
Law. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard
to
the principles of conflicts of law thereof. Each party agrees that all
Proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party
hereto or its respective Affiliates, employees or agents) will be commenced
in
the New York Courts. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any New York Court, or that such Proceeding has been commenced
in an improper or inconvenient forum. Each party hereto hereby irrevocably
waives personal service of process and consents to process being served in
any
such Proceeding by mailing a copy thereof via registered or certified mail
or
overnight delivery (with evidence of delivery) to such party at the address
in
effect for notices to it under this Agreement and agrees that such service
shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably waives,
to
the fullest extent permitted by applicable law, any and all right to trial
by
jury in any Proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a Proceeding
to
enforce any provisions of this Agreement, then the prevailing party in such
Proceeding shall be reimbursed by the other party for its attorney’s fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.
18
(k) Cumulative
Remedies. The remedies provided herein are cumulative and not exclusive of
any
remedies provided by law.
(l) Severability.
If any term, provision, covenant or restriction of this Agreement is held by
a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
(m) Headings.
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.
(n) Independent
Nature of Investors' and Shell Holders’ Obligations and Rights. The obligations
of each Investor and Shell Holder under this Agreement are several and not
joint
with the obligations of each other Investor and Shell Holder, and no Investor
or
Shell Holder shall be responsible in any way for the performance of the
obligations of any other Investor or Shell Holder under this Agreement. Nothing
contained herein or in any Transaction Document, and no action taken by any
Investor or Shell Holder pursuant thereto, shall be deemed to constitute the
Investors or Shell Holders as a partnership, an association, a joint venture
or
any other kind of entity, or create a presumption that the Investors or Shell
Holders are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement or any other
Transaction Document. Each Investor and Shell Holder acknowledges that no other
Investor or Shell Holder will be acting as agent of such Investor or Shell
Holder in enforcing its rights under this Agreement. Each Investor and Shell
Holder shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement, and
it
shall not be necessary for any other Investor or Shell Holder to be joined
as an
additional party in any Proceeding for such purpose. The Company acknowledges
that each of the Investors and Shell Holders has been provided with the same
Registration Rights Agreement for the purpose of closing a transaction with
multiple Investors and not because it was required or requested to do so by
any
Investor.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES TO FOLLOW]
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
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EQUICAP,
INC.
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| By: | ||
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Name:
Xxxxx Xxxx
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Title:
Chairman and President
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19
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
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INVESTORS:
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| By: | ||
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Name: Title:
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ADDRESS
FOR NOTICE
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[REMAINDER
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FOR
OTHER INVESTOR FOLLOWS]
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
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VFINANCE:
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| By: | ||
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Name: Title:
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ADDRESS
FOR NOTICE
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[REMAINDER
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FOR
OTHER INVESTOR FOLLOWS]
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
| Solely as to the applicable Sections: | ||
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SHELL
HOLDERS:
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Name:
Title:
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ADDRESS
FOR NOTICE
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[REMAINDER
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FOR
OTHER SHELL HOLDERS FOLLOWS]
Annex
A
Plan
of
Distribution
The
Selling Stockholders and any of their pledgees, donees, transferees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of Common Stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be
at
fixed or negotiated prices. The Selling Stockholders may use any one or more
of
the following methods when selling shares:
| · |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits Investors;
|
| · |
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
| · |
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
| · |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
| · |
privately
negotiated transactions;
|
| · |
to
cover short sales made after the date that this Registration Statement
is
declared effective by the Commission;
|
| · |
broker-dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
| · |
a
combination of any such methods of sale;
and
|
| · |
any
other method permitted pursuant to applicable
law.
|
The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
Selling Stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.
The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the Shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell shares of Common Stock from time to time under this prospectus,
or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933 amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus.
A-1
Upon
the
Company being notified in writing by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of Common
Stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to
this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such Selling Stockholder and
of
the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such the shares of Common Stock were sold, (iv) the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference
in
this prospectus, and (vi) other facts material to the transaction. In addition,
upon the Company being notified in writing by a Selling Stockholder that a
donee
or pledgee intends to sell more than 500 shares of Common Stock, a supplement
to
this prospectus will be filed if then required in accordance with applicable
securities law.
The
Selling Stockholders also may transfer the shares of Common Stock in other
circumstances, in which case the transferees, pledgees or other successors
in
interest will be the selling beneficial owners for purposes of this
prospectus.
The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Discounts, concessions, commissions and
similar selling expenses, if any, that can be attributed to the sale of the
securities will be paid by the Selling Stockholder and/or the purchasers. Each
Selling Stockholder has represented and warranted to the Company that it
acquired the securities subject to this registration statement in the ordinary
course of such Selling Stockholder’s business and, at the time of its purchase
of such securities such Selling Stockholder had no agreements or understandings,
directly or indirectly, with any person to distribute any such securities.
The
Company has advised each Selling Stockholder that it may not use shares
registered on this Registration Statement to cover short sales of Common Stock
made prior to the date on which this Registration Statement shall have been
declared effective by the Commission. If a Selling Stockholder uses this
prospectus for any sale of the Common Stock, it will be subject to the
prospectus delivery requirements of the Securities Act. The Selling Stockholders
will be responsible to comply with the applicable provisions of the Securities
Act and Exchange Act, and the rules and regulations thereunder promulgated,
including, without limitation, Regulation M, as applicable to such Selling
Stockholders in connection with resales of their respective shares under this
Registration Statement.
The
Company is required to pay all fees and expenses incident to the registration
of
the shares, but the Company will not receive any proceeds from the sale of
the
Common Stock. The Company has agreed to indemnify the Selling Stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
A-2
Annex
B
EQUICAP,
INC. (Usunco)
OFFERING
OF COMMON STOCK
INVESTOR
QUESTIONNAIRE
NAME
OF INVESTOR: _________________________________
In
connection with your purchase of shares of common stock (the “Securities”)
of
Equicap, Inc. (the “Company”)
in
various transactions (the “Offerings”),
please provide the Company with the following information for the Company’s use
in preparing a Registration Statement (the “Registration
Statement”)
relating to the Securities acquired by you which you are asking the Company
to
register.
A. General
Information
1. (a) Please
state your or your organization’s name exactly
as it should appear on the Registration Statement.
(b) Please
state your or your organization’s address exactly
as it should appear on the Registration Statement.
2. Please
provide the Tax Identification Number of the person or entity listed in response
to Item 1 above.
3. Have
you
or your organization had any position, office or other material relationship
within the past three years with the Company or any of its affiliates (other
than as a participant in the Offerings)?
If
yes,
please indicate the nature of any such relationships below:
4. Does
the
Plan of Distribution attached to this Questionnaire as Annex A accurately
reflect the means by which you ultimately intend to dispose or sell the
Securities?
5. What
is/are the name or names of the person or persons that exercise dispositive
and
voting authority over the Securities.
B. Securities
Holdings
Please
fill in all blanks in the following questions related to your beneficial
ownership of
the
Company’s capital stock. Generally, the term “beneficial
ownership”
refers
to any direct or indirect interest in the securities which entitles you to
any
of the rights or benefits of ownership, even though you may not be the holder
of
record of the securities. For example, securities held in “street name” over
which you exercise voting or investment power would be considered beneficially
owned by
you.
Other examples of indirect ownership include ownership by a partnership in
which
you are a partner or by an estate or trust of which you or any member of your
immediate
family is
a
beneficiary. Ownership of securities held in the names of your spouse, minor
children or other relatives who live in the same household may be attributed
to
you.
Please
note: If
you
have any reason to believe that any interest in securities of the Company which
you may have, however remote, is a beneficial interest, please describe such
interest. For purposes of responding to this questionnaire, it is preferable
to
err on the side of inclusion rather than exclusion. Where the SEC's
interpretation of beneficial
ownership would
require disclosure of your interest or possible interest in certain securities
of the Company, and you believe that you do not actually possess the attributes
of beneficial ownership, an appropriate response is to disclose the interest
and
at the same time disclaim beneficial ownership of the securities.
1. As
of the
closing of the
Purchase Agreement, I owned outright (including shares registered in my name
individually or jointly with others, shares held in the name of a bank, broker,
nominee, depository or in “street name” for my account), the following number of
shares of the Company’s capital stock:
2. As
of the
closing of the Purchase Agreement, I owned the following number of securities
that are exercisable or exchangeable for, or convertible into the Company’s
common stock:
3. In
addition to the number of shares I own outright as indicated by my answer to
Item B(l), as of the closing of the Purchase Agreement,
I had or
shared voting power or investment power, directly or indirectly, through a
contract, arrangement, understanding, relationship or otherwise, over the
following number of shares of the Company's capital stock:
4. Please
identify the natural person or persons who have voting and/or investment control
over the Company's securities that you own, and state whether such person(s)
disclaims beneficial ownership of the securities. For example, if you are a
general partnership, please identify the general partners in the partnership.
B-2
C. NASD
Questions
1.
Are
you
(i) a “member”1 of
the
National Association of Securities Dealers, Inc. (the “NASD”),
(ii)
an “affiliate”2
of a member of the NASD, (iii) a “person associated with a
member” or an “associated person of a member” of the NASD or (iv) an immediate
family member3 of
the
foregoing persons? If yes,
please
identify the member and describe such relationship (whether direct or indirect),
and please respond to Item 2 below; if no,
please
proceed directly to Item 3 below.
Description:
2. If
you
answered “yes” to Question Number 1, please furnish any information as to
whether any such member intends to participate in any capacity in the proposed
public resale of the Securities, including the details of such
participation:
1 NASD
defines a “member” as any broker or dealer admitted to membership in the NASD,
or any officer or partner or branch manager of such a member, or any person
occupying a similar status or performing a similar function for such a
member.
2 The
term
“affiliate” means a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is in common control
with, the
person specified. Persons who have acted or are acting on behalf of or
for the
benefit of a person include, but are not necessarily limited to, directors,
officers, employees, agents, consultants and sales representatives. The
following should apply for purposes of the foregoing:
(i) a
person
should be presumed to control a Member if the person beneficially owns 10
percent or more the outstanding voting securities of a Member which is a
corporation, or beneficially owns a partnership interest in 10 percent or
more
of the distributable profits or losses of a Member which is a
partnership;
(ii)
a
Member should be presumed to control a person if the Member and Persons
Associated With a Member beneficially own 10 percent or more of the outstanding
voting securities of a person which is a corporation, or beneficially own
a
partnership interest in 10 percent or more of the distributable profits or
losses of a person which is a partnership; (iii) a person should be presumed
to
be under common control with a Member if:
(1) the
same
person controls both the Member and another person by beneficially owning
10
percent or more of the outstanding voting securities of a Member or person
which
is a corporation, or by beneficially owning a partnership interest in 10
percent
or more of the distributable profits or losses of a Member or person which
is a
partnership; or
(2)
a
person having the power to direct or cause the direction of the management
or
policies of the Member or such person also has the power to direct or cause
the
direction of the management or policies of the other entity in
question.
3
Immediate family includes parents, mother-in-law, father-in-law, husband
or
wife, brother or sister, brother-in-law or sister-in-law, son-in-law or
daughter-in-law, and children, or any other person who is supported, directly
or
indirectly, to a material extent, by a person associated with a member
of the
NASD or any other broker dealer.
B-3
3. Are
you
or have you been an “underwriter or related person”4
The term
“underwriter or related person” includes underwriters, underwriters' counsel,
financial consultants and advisors, finders, members of the selling or
distribution group, and any and all other persons associated with or related
to
any of such persons, including members of the immediate family of such
persons.
or a
person associated with an underwriter or related person, including, without
limitation, with respect to the proposed public resale of the Securities?
If
yes, please identify the underwriter or related person and describe such
relationship (whether direct or indirect).
Description:
4. If
known,
please describe in detail any underwriting compensation received or underwriting
arrangements or dealings entered into during the previous twelve months,
or
proposed to be consummated in the next twelve months, between (i) any
underwriter or related person, member of the NASD, affiliate of a member
of the
NASD, person associated with a member or associated person of a member of
the
NASD or any immediate family member thereof, on the one hand, and (ii) the
Company, or any director, officer or shareholder thereof, on the other hand,
which provides for the receipt of any item of value and/or the transfer of
any
warrants, options or other securities from the Company to any such person
(other
than the information relating to the arrangements with any investment firm
or
underwriting organization which may participate in the proposed public resale
of
the Securities).
Description:
5. Have
you
purchased the securities in the ordinary course of business?
D. Regulation
M
You
hereby acknowledge and agree that you have been advised by the Company that
the
anti-manipulation rules of Regulation M under the Exchange Act may apply
to
sales of shares in the market and to the activities of you and the other
selling
stockholders and your and their affiliates. In addition, you acknowledge
that
have agreed to make copies of the prospectus (as it may be supplemented or
amended from time to time) available to you and the other selling stockholders
for the purpose of satisfying the prospectus delivery requirements of the
Securities Act.
B-4
E. Signatures
The
undersigned has prepared and carefully read this questionnaire. The undersigned
understands that:
4
The term
“underwriter or related person” includes underwriters, underwriters' counsel,
financial consultants and advisors, finders, members of the selling or
distribution group, and any and all other persons associated with or related
to
any of such persons, including members of the immediate family of such
persons.
1. Xxxxxxxx
Xxxxxx, 000 Xxxxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, is the attorney for the Company.
2. The
above
attorney will rely upon the answers and representations made above when
preparing or reviewing documents, including, with limitation, the Registration
Statement.
3. One
who
causes documents to be misleading may be held liable civilly to investors
and
other persons who are damaged as a result of such
misrepresentation.
In
view
of the situation described above, the undersigned represents that the
undersigned:
1. has
considered carefully each of the above questions;
2. has
answered each question fully and truthfully; and
3. has
knowledge of no facts other than as set forth above which might be construed
to
qualify any of the above answers to this questionnaire.
The
undersigned hereby agrees to indemnify and hold harmless the Company, its
directors, officers, counsels and affiliates from and against any and all
loss,
liability, charge, claim, damage, and expense whatsoever as and when incurred,
arising out of, based upon, or in connection with any incorrect or incomplete
information contained in this questionnaire.
THE
UNDERSIGNED WILL NOTIFY THE COMPANY PROMPTLY OF ANY SUBSTANTIAL CHANGES IN
THE
FOREGOING INFORMATION THAT MAY OCCUR.
| Date:____________________ | |||
| For Individuals: | For Entities: | ||
|
Print
Name Above
|
Print
Name Above |
||
|
By:
|
|||
| Sign Name Above |
Name:
Title:
|
||
| State of residence | State of Residence |
B-5
PLEASE
RETURN THE COMPLETED QUESTIONNAIRE BY FACSIMILE AND OVERNIGHT MAIL
TO:
Xxxxxx
X.
Xxxxxxx, Esq.
Xxxxxxxx
Xxxxxx
19th
Floor,
000 Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone:
000-000-0000
Facsimile:
000-000-0000
xxxxxxxx@xxxxxxxx.xxx
B-6
Schedule
A
|
Name
of Shell Holder
|
Number
of Shell Shares
|
|
|
Xxxxxxx
Xxxxxx
|
150,000
|
|
|
La
Pergola Investments
|
87,166
|
|
|
Fountainhead
Capital Partners Limited
|
813,299
|
|
|
Gaha
Ventures, LLC
|
57,167
|
|
|
G4,
LLC
|
54,000
|
B-7
