William M. Mower, Esq.
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
Item 4. Description of Securities.
Capital Stock
Pursuant to our articles of incorporation, as
amended to date, our authorized capital stock consists of 405,000,000 shares, comprised of 400,000,000 shares of common stock,
par value $.001 per share, and 5,000,000 shares of preferred stock, par value $.001 per share. As of March 31, 2016, there were
311,181,187 shares of common stock and 51 shares of preferred stock issued and outstanding. Our common stock is quoted on the OTCQB
Marketplace operated by the OTC Markets Group, Inc., under the trading symbol “ECPN.”
The following description summarizes the material
terms of our capital stock. This summary is, however, subject to the provisions of our articles of incorporation and bylaws. For
greater detail about our capital stock, please refer to our articles of incorporation and bylaws.
Common Stock
Voting.
Holders of our common
stock are entitled to one vote for each outstanding share of common stock owned by such stockholder on every matter properly submitted
to the stockholders for their vote. Stockholders are not entitled to vote cumulatively for the election of directors. At any meeting
of the stockholders, a quorum as to any matter shall consist of a majority of the votes entitled to be cast on the matter, except
where a larger quorum is required by law, by our articles of incorporation or by our bylaws.
Dividend Rights.
Holders of
our common stock are entitled to receive ratably dividends and other distributions of cash or any other right or property as may
be declared by our Board of Directors out of our assets or funds legally available for such dividends or distributions. The dividend
rights of holders of common stock are subject to the dividend rights of the holders of any series of preferred stock that may be
issued and outstanding from time to time.
Liquidation Rights.
In the
event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, holders of our common stock would
be entitled to share ratably in our assets that are legally available for distribution to stockholders after payment of liabilities.
If we have any preferred stock outstanding at such time, the holders of such preferred stock may be entitled to distribution and/or
liquidation preferences that require us to pay the applicable distribution to the holders of preferred stock before paying distributions
to the holders of common stock.
Conversion, Redemption and Preemptive Rights.
Holders
of our common stock have no conversion, redemption, preemptive, subscription or similar rights.
The transfer agent and registrar for our common
stock is OTR, Inc., 1001 SW 5th Avenue, Suite 1550, Portland, Oregon 97204-1143.
Preferred Stock
Pursuant to resolutions adopted by our Board
of Directors, on August 1, 2014, we filed a Certificate of Designation with the Nevada Secretary of State creating a series of
preferred stock by and designating 51 shares of previously undesignated preferred stock as Series B Convertible Preferred Stock
(the “Series B Preferred Stock”).
Voting Rights.
Solely with respect to
matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent and relate to Company
capitalization (including, without limitation, increasing and/or decreasing the number of authorized shares of common stock and/or
preferred stock, and implementing forward and/or reverse stock splits) and changes in the Company’s name, the holders of
the outstanding shares of Series B Preferred Stock vote together with the holders of common stock without regard to class, except
as to those matters on which separate class voting is required by applicable law or the Company’s articles of incorporation
or bylaws. The holders of the outstanding shares of Series B Preferred Stock do not otherwise have the right to vote on matters
brought before the Company’s stockholders. In matters on which holders of shares of Series B Preferred Stock are entitled
to vote, each share of the Series B Preferred Stock has voting rights equal to (x) (i) 0.019607 multiplied by the total of (A)
the issued and outstanding shares of common stock eligible to vote at the time of the respective vote, plus (B) the number of votes
which all other series or classes of securities other than this Series B Preferred Stock are entitled to cast together with the
holders of the Company’s common stock at the time of the relevant vote (the amount determined by this clause (i), the “Numerator”),
divided by (ii) 0.49, minus (y) the Numerator.
If the Company affects a stock split which either
increases or decreases the number of shares of common stock outstanding and entitled to vote, the voting rights of the Series B
Preferred Stock are not subject to adjustment unless specifically authorized. So long as any shares of Series B Preferred Stock
are outstanding, the Company may not, without the affirmative vote of the holders of the Series B Preferred Stock, (a) alter or
change adversely the powers, preferences or rights given to the Series B Preferred Stock, (b) alter or amend the certificate of
designation of the Series B Preferred Stock, (c) amend the Company’s articles of incorporation, bylaws or other charter documents
so as to affect adversely the rights of the holders of the Series B Preferred Stock, (d) increase the authorized or designated
number of shares of Series B Preferred Stock, (e) issue any additional shares of Series B Preferred Stock, or (f) enter into any
agreement with respect to the foregoing.
Liquidation
. The Series B Preferred Stock,
with respect to rights on liquidation, dissolution and winding-up of the Company, ranks on parity with each other class or series
of capital stock of the Company the terms of which do not expressly provide that such class or series shall rank senior or junior
to the Series B Preferred Stock. Except for distributions in the event of a liquidation, dissolution or winding-up of the Company
(whether voluntary or involuntary), or a merger or consolidation by the Company with another corporation or other entity (in each
case, other than where the Company is the surviving entity) (a “Liquidation”), holders of Series B Preferred Stock
are not be entitled to receive dividends on the Series B Preferred Stock. In the event of a Liquidation, the holders of Series
B Preferred Stock are be entitled to receive out of the assets of the Company, an amount equal to the $1.00 per share of Series
B Preferred Stock (subject to adjustment), after any distribution or payment with respect to such Liquidation is made to the holders
of any senior securities and prior to any distribution or payment with respect to such Liquidation shall be made to the holders
of any junior securities.
Conversion
. Shares of Series B Preferred
Stock may, at the option of the holder, be converted into one share of common stock (subject to adjustment, the “Conversion
Ratio”). In the event of any Transfer (as defined in the certificate of designation for the Series B Preferred Stock) of
any share of Series B Preferred Stock, such share will automatically convert into common stock based upon the Conversion Ratio
applicable at the time of such Transfer. If, at any time while any shares of Series B Preferred Stock remain outstanding, the Company
effectuates a stock split or reverse stock split of its common stock or issues a dividend on its common stock consisting of shares
of common stock, the Conversion Ratio and any other amounts calculated as contemplated by the certificate of designation for the
Series B Preferred Stock shall be equitably adjusted to reflect such action.
In addition, we have authorized Series A Junior
Participating Preferred Stock, with the rights set forth in Certificate of Designation of Series A Junior Participating Preferred
Stock filed with the Secretary of State of the State of Nevada on August 25, 2011. Series A Junior Participating Preferred Stock
has certain rights in connection with the Preferred Rights Agreement described below under the caption “Anti-Takeover Provisions.”
Anti-Takeover Provisions
Some features of the Nevada Revised Statutes,
which are further described below, may have the effect of deterring third parties from making takeover bids for control of our
company or may be used to hinder or delay a takeover bid.
This would decrease the chance that our stockholders
would realize a premium over market price for their shares of common stock as a result of a takeover bid.
Acquisition of Controlling Interest
The Nevada Revised Statutes contain provisions
governing acquisition of controlling interest of a Nevada corporation. These provisions provide generally that any person or entity
that acquires a certain percentage of the outstanding voting shares of a Nevada corporation may be denied voting rights with respect
to the acquired shares, unless the holders of a majority of the voting power of the corporation, excluding shares as to which any
of such acquiring person or entity, an officer or a director of the corporation, and an employee of the corporation exercises voting
rights, elect to restore such voting rights in whole or in part. These provisions apply whenever a person or entity acquires shares
that, but for the operation of these provisions, would bring voting power of such person or entity in the election of directors
within any of the following three ranges:
|
|
•
|
20% or more but less than 33-1/3%;
|
|
|
|
|
|
|
•
|
33-1/3% or more but less than or equal to 50%; or
|
|
|
|
|
|
|
•
|
more than 50%.
|
The stockholders or board of directors of a
corporation may elect to exempt the stock of the corporation from these provisions through adoption of a provision to that effect
in the articles of incorporation or bylaws of the corporation. Our articles of incorporation and bylaws do not exempt our common
stock from these provisions.
These provisions are applicable only to a Nevada
corporation, which:
|
|
•
|
has 200 or more stockholders of record, at least 100 of whom have addresses in Nevada appearing on the stock ledger of the corporation; and
|
|
|
|
|
|
|
•
|
does business in Nevada directly or through an affiliated corporation.
|
At this time, we do not believe that these provisions
apply to acquisitions of our shares and will not until such time as these requirements have been met. At such time as they may
apply to us, these provisions may discourage companies or persons interested in acquiring a significant interest in or control
of our company, regardless of whether such acquisition may be in the interest of our stockholders.
Combination with Interested Stockholder
The Nevada Revised Statutes contain provisions
governing combination of a Nevada corporation that has 200 or more stockholders of record with an interested stockholder. As of
April 7, 2016, we had approximately 1,423 stockholders of record. Therefore, we believe that these provisions governing combination
of a Nevada corporation apply to us and may have the effect of delaying or making it more difficult to effect a change in control
of our company.
A corporation affected by these provisions may
not engage in a combination within three years after the interested stockholder acquires his, her or its shares unless the combination
or purchase is approved by the board of directors before the interested stockholder acquired such shares. Generally, if approval
is not obtained, then after the expiration of the three-year period, the business combination may be consummated with the approval
of the board of directors before the person became an interested stockholder or a majority of the voting power held by disinterested
stockholders, or if the consideration to be received per share by disinterested stockholders is at least equal to the highest of:
|
|
•
|
the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or within three years immediately before, or in, the transaction in which he, she or it became an interested stockholder, whichever is higher;
|
|
|
|
|
|
|
•
|
the market value per share on the date of announcement of the combination or the date the person became an interested stockholder, whichever is higher; or
|
|
|
|
|
|
|
•
|
if higher for the holders of preferred stock, the highest liquidation value of the preferred stock, if any.
|
Generally, these provisions define an interested
stockholder as a person who is the beneficial owner, directly or indirectly of 10% or more of the voting power of the outstanding
voting shares of a corporation. Generally, these provisions define combination to include any merger or consolidation with an interested
stockholder, or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions
with an interested stockholder of assets of the corporation having:
|
|
•
|
an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation;
|
|
|
|
|
|
|
•
|
an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation; or
|
|
|
|
|
|
|
•
|
representing 10% or more of the earning power or net income of the corporation.
|
Articles of Incorporation and Bylaws
Our articles of incorporation, specifically
the Certificate of Designation of Series A Junior Participating Preferred Stock as it related to the Preferred Rights Agreement
described below, contains provisions that would delay, defer or prevent a change in control of our company and that would operate
only with respect to an extraordinary corporate transaction involving our company, such as merger, reorganization, tender offer,
sale or transfer of substantially all of its assets, or liquidation.
Preferred Rights Agreement
Our Board of Directors has adopted a shareholder
rights plan (commonly referred to as a “poison pill”), as set forth in the Rights Agreement, dated as of August 25,
2011 with OTR, Inc., as rights agent (the “Rights Agreement”). Pursuant to the Rights Agreement, our Board of Directors
declared a dividend distribution of one right (the “Preferred Rights”) for each outstanding share of common stock to
shareholders of record as of the close of business on August 25, 2011 (the “Record Date”). In addition,
one Preferred Right will automatically attach to each share of common stock issued, if any, between the Record Date and the Distribution
Date (defined below). Each Preferred Right entitles the registered holder thereof to purchase from the Company one-ten
thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.001 per share, of the Company (the “Preferred
Stock”) at a cash exercise price of $20.00 (the “Exercise Price”), subject to adjustment, under certain conditions
specified in the Rights Agreement and summarized below.
Initially, the Preferred Rights are not exercisable
and are attached to and trade with all shares of common stock outstanding as of, and issued subsequent to, the Record Date. The
Preferred Rights will separate from the common stock and will become exercisable upon the earlier of (i) the close of business
on the tenth day following the first public announcement that a person or group of affiliated or associated persons (an “Acquiring
Person”) has acquired beneficial ownership of 10% or more of the outstanding shares of common stock, other than as a result
of repurchases of stock by the Company or certain inadvertent actions by a shareholder (the date of said announcement being referred
to as the “Stock Acquisition Date”), or (ii) the close of business on the tenth business day (or such later day as
the Board of Directors may determine) following the commencement of, or first public announcement of the intent any person or group
to conduct, a tender offer or exchange offer that could result upon its consummation in such person or group becoming the beneficial
owner of 10% or more of the outstanding shares of common stock (the earlier of such dates being herein referred to as the “Distribution
Date”).
In the event that a Stock Acquisition Date
occurs, proper provision will be made so that each holder of a Preferred Right (other than an Acquiring Person or its associates
or affiliates, whose Preferred Rights shall become null and void) will thereafter have the right to receive upon exercise that
number of shares common stock of the Company having a market value equal to two times the exercise price of the Preferred Right
(such right being referred to as the “Subscription Right”). In the event that, at any time following the
Stock Acquisition Date, (i) the Company consolidates with, or merges with and into, any other person, and the Company is not the
continuing or surviving corporation, (ii) any person consolidates with the Company, or merges with and into the Company and the
Company is the continuing or surviving corporation of such merger and, in connection with such merger, all or part of the shares
of common stock are changed into or exchanged for stock or other securities of any other person or cash or any other property,
or (iii) 50% or more of the Company’s assets or earning power is sold, mortgaged or otherwise transferred, each holder of
a Preferred Right (other than an Acquiring Person or its associates or affiliates, whose Preferred Rights shall become null
and void) will thereafter have the right to receive, upon exercise, common stock of the acquiring company having a market value
equal to two times the exercise price of the Preferred Right (such right being referred to as the “Merger Right”). The
holder of a Preferred Right will continue to have the Merger Right whether or not such holder has exercised the Subscription Right. Preferred
Rights that are or were beneficially owned by an Acquiring Person may (under certain circumstances specified in the Rights Agreement)
become null and void.