EXHIBIT 10.4
 
REGISTRATION RIGHTS AGREEMENT
 
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
 
10510 Hillsboro Road
 
Santa Ana, CA 92705
 
Telephone: 904-507-4937
 
Facsimile: 904-507-9151
 
Attn.: Mr. Peter Wang
 
 
With a copy to:
Graubard Miller
 
405 Lexington Avenue, 19th Floor
 
New York, New York 10174
 
Facsimile: 212-818-8881
Attn.: Andrew D. Hudders, 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.

       
EQUICAP, INC.
 
   
   
  By:    

--------------------------------------------------------------------------------

Name: Peter Wang 
 
Title: Chairman and President

 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES OF INVESTORS TO FOLLOW]
 
19

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.

       
INVESTORS:
 
   
   
  By:      

--------------------------------------------------------------------------------

Name:
Title:
       
ADDRESS FOR NOTICE

 
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK SIGNATURE
PAGE FOR OTHER INVESTOR FOLLOWS]
 

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.

       
VFINANCE:
 
   
   
  By:      

--------------------------------------------------------------------------------

Name:
Title:
       
ADDRESS FOR NOTICE

 
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK SIGNATURE
PAGE 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:        
SHELL HOLDERS:
 
   
   
  By:      

--------------------------------------------------------------------------------

Name:
Title:
       
ADDRESS FOR NOTICE

 
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK SIGNATURE
PAGE 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)?
 
o Yes o No 
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?
 
o Yes o No 
 
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.  
 
o Yes o No 
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).
 
o Yes o No 
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?
 
o Yes o No 
 
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. Graubard Miller, 405 Lexington Avenue, 19th Floor, New York, New York 10174,
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:
 
Andrew D. Hudders, Esq.
Graubard Miller
19th Floor, 405 Lexington Avenue
New York, New York 10174
Telephone: 212-818-8614
Facsimile: 212-818-8881
ahudders@graubard.com
 
B-6

--------------------------------------------------------------------------------

 
Schedule A
 
Name of Shell Holder
 
Number of Shell Shares
Stephen Siedow
 
150,000
     
La Pergola Investments
 
87,166
     
Fountainhead Capital Partners Limited
 
813,299
     
Gaha Ventures, LLC
 
57,167
     
G4, LLC
 
54,000

 
B-7

--------------------------------------------------------------------------------