STOCK EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION

STOCK EXCHANGE AGREEMENT

AND PLAN OF REORGANIZATION

STOCK EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement ”) dated September 8, 2009,  by and among Ecolocap Solutions Inc., a Nevada corporation, whose principal office is located at 740 Notre-Dame W., Suite 1525, Montreal, Quebec, Canada (“ESI”); Micro Bubble Technologies Inc., a Nevada corporation (“MBT”); and all of the shareholders of MBT set forth on Exhibit A   (the “MBT SHAREHOLDERS”)

R E C I T A L S

B.           MBT SHAREHOLDERS owns the number of shares of common stock of MBT set forth on Exhibit A .

C.           ESI is a publicly traded company engaged in the business of reducing carbon emissions.  On the Closing Date (as defined herein), ESI will have authorized capital of 100,000,000 shares of common stock, $0.001 par value per share.

D.           Prior to the Closing Date of the Agreement, ESI will have 43,813,739 shares of Common Stock issued and outstanding.

E.            ESI desires to acquire fifty five percent (55%) of the issued and outstanding common stock of MBT, in consideration for which ESI shall issue to MBT’s shareholders 54,000,000 restricted shares of its Common Stock.

 

 

AGREEMENT

NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows.

ARTICLE I

ACQUISITION OF MBT SHARES BY ESI

1.2             Effective Date. If all of the conditions precedent to the obligations of each of the parties hereto as hereinafter set forth shall have been satisfied or shall have been waived, the transactions set forth herein (the "Exchange") shall become effective on the Closing Date as defined herein.

1.3           Consideration.

(a)           In connection with the acquisition of the MBT Shares, ESI shall issue to MBT SHAREHOLDERS up to 54,000,000 restricted shares of ESI (the "ESI Shares").

(b)           If the outstanding shares of ESI Common Stock are changed into a different number or class of shares by reason of any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization, or other similar transaction, then the number of shares of Common Stock referenced in Section 1.3(a), above, shall be appropriately adjusted.

(c)           No fractional shares of ESI Common Stock shall be issued in connection with this Agreement, and no certificates or scrip for any such fractional shares shall be issued.

 

(b)           The Bylaws of MBT and ESI, as in effect on the Closing Date, shall continue in effect without change or amendment.

(c)           Upon the Closing Date, Michael Siegel will be appointed President and CEO of ESI, and Robert Egger Jr. will be appointed COO.  Robert Egger Jr.   will be appointed to the Board of Directors of ESI, in accordance with the notice provisions of Rule 14f-1 of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”) if so required.

 

 

 

 

                1.5           Disclosure Schedules . Simultaneously with the execution of this Agreement: (a) ESI shall deliver a schedule relating to ESI which, along with the reports of ESI filed with the Securities and Exchange Commission, shall be referred to as the " ESI Disclosure Schedule " , and (b) MBT SHAREHOLDERS and MBT shall deliver a schedule relating to MBT SHAREHOLDERS and MBT (the " MBT Disclosure Schedule " and collectively with the ESI Disclosure Schedule , the " Disclosure Schedules ") setting forth the matters required to be set forth in the Disclosure Schedules as described elsewhere in this Agreement. The Disclosure Schedules shall be deemed to be part of this Agreement. ESI’S Disclosure Schedule shall include, but is not limited to, all publicly filed documents of ESI.

1.6             Further Action . From time to time after the Closing, without further consideration, the parties shall execute and deliver such instruments of conveyance and transfer and shall take such other action as any party reasonably may request to more effectively transfer the MBT Shares and ESI Shares.

ARTICLE II

CONDUCT OF BUSINESS PENDING CLOSING; STOCKHOLDER APPROVAL

ESI, MBT SHAREHOLDERS and MBT covenant that between the date hereof and the Closing Date (as hereinafter defined):

2.1             Access by MBT SHAREHOLDERS and MBT. ESI shall afford to MBT SHAREHOLDERS, MBT, and their legal counsel, accountants and other representatives, throughout the period prior to the Closing Date, full access, during normal business hours, to (a) all of the books, contracts and records of ESI, and shall furnish MBT SHAREHOLDERS and MBT, during such period, with all information concerning ESI that MBT SHAREHOLDERS or MBT may reasonably request and (b) the properties of ESI in order to conduct inspections at MBT SHAREHOLDERS and MBT’s expense to determine that ESI is operating in material compliance with all applicable federal, state and local and foreign statutes, rules and regulations, and that ESI's assets are substantially in the condition and of the capacities represented and warranted in this Agreement. Any such investigation or inspection by MBT SHAREHOLDERS or MBT shall not be deemed a waiver of, or otherwise limit, the representations, warranties and covenants contained herein. MBT SHAREHOLDERS and MBT shall grant identical access to ESI and its agents.

2.2             Conduct of Business. During the period from the date hereof to the Closing Date, the business of ESI and MBT shall be operated by the respective entities in the usual and ordinary course of such business and in material compliance with the terms of this Agreement. Without limiting the generality of the foregoing:

(a)           ESI and MBT, respectively, shall each use its reasonable efforts to (i) keep available the services of the present agents of ESI and MBT; (ii) complete or maintain all existing material arrangements; (iii) maintain the integrity of all confidential information of ESI and MBT; and (iv) comply in all material respects with all applicable laws; and (b) Except as contemplated by this Agreement, ESI and MBT shall not (i) sell, lease, assign, transfer or otherwise dispose of any of their material assets or property including cash; (ii) agree to assume, guarantee, endorse or in any way become responsible or liable for, directly or indirectly, any material contingent obligation; make any material capital expenditures; (iii) enter into any transaction concerning a merger or consolidation other than with the other party hereto or liquidate or dissolve itself (or suffer any liquidation or dissolution) or convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of related transactions, all or a substantial part of its property, business, or assets, or stock or securities convertible into stock of any subsidiary, or make any material change in the present method of conducting business; (iv) declare or pay any dividends or make any other distribution (whether in cash or property) on any shares of its capital stock or purchase, redeem, retire or otherwise acquire for value any shares of its capital stock or warrants or options whether now or hereafter outstanding; (v) make or suffer to exist any advances or loans to, or investments in any person, firm, corporation or other business entity not a party to this Agreement; (vi) enter into any new material agreement or be or become liable under any new material agreement, for the lease, hire or use of any real or personal property; (vii) create, incur, assume or suffer to exist, any mortgage, pledge, lien, charge, security interest or encumbrance of any kind upon any of its property or assets, income or profits, whether now owned or hereafter acquired; or (viii) agree to do any of the foregoing.

2.3             Exclusivity to MBT SHAREHOLDERS and MBT. ESI and its officers, directors, representatives and agents, from the date hereof, until the Closing Date (unless this Agreement shall be earlier terminated as hereinafter provided), shall not hold discussions with any person or entity, other than MBT SHAREHOLDERS and MBT or their respective agents concerning the Exchange, nor solicit, negotiate or entertain any inquiries, proposals or offers to purchase the business of ESI, nor the shares of capital stock of ESI from any person other than MBT SHAREHOLDERS and MBT, nor, except in connection with the normal operation of ESI's respective business, or as required by law, or as authorized in writing by MBT SHAREHOLDERS, disclose any confidential information concerning ESI to any person other than MBT SHAREHOLDERS, MBT and MBT SHAREHOLDERS and MBT’s representatives or agents. MBT SHAREHOLDERS and MBT shall from the date hereof, and until the Closing Date, owe the identical obligations of confidentiality and exclusivity to ESI concerning the Exchange as stated in this Section.

2.4             Board and Shareholder Approval. The Board of Directors of ESI has determined that the Exchange is fair to and in the best interests of its stockholders and has approved and adopted this Agreement and the terms of the Exchange. This Agreement constitutes, and all other agreements contemplated hereby will constitute, when executed and delivered by ESI, the valid and binding obligation of ESI, enforceable in accordance with their respective terms.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF ESI

Except as set forth in the ESI Disclosure Schedule (which incorporates all the reports of ESI filed with the United States Securities and Exchange Commission) ESI represents and warrants to MBT SHAREHOLDERS and MBT as follows, with the knowledge and understanding that MBT SHAREHOLDERS and MBT are relying materially upon such representations and warranties.

 

 

3.1             Organization and Standing. ESI is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. ESI has all requisite corporate power to carry on its business as it is now being conducted and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary under applicable law except where the failure to qualify (individually or in the aggregate) will not have any material adverse effect on the business or prospects of ESI. The copies of the Articles of Incorporation and Bylaws of ESI, as amended to date and made available to MBT SHAREHOLDERS and MBT, are true and complete copies of these documents as now in effect.

 

(a)           The number of shares of capital stock which are issued and outstanding are set forth in Recital D. All of such shares of capital stock that are issued and outstanding are duly authorized, validly issued and outstanding, fully paid and nonassessable, and were not issued in violation of the preemptive rights of any person. Other than as set forth in the ESI Disclosure Schedule and Recital D, there are no subscriptions, warrants, rights or calls or other commitments or agreements to which ESI is a party or by which it is bound, pursuant to which ESI is or may be required to issue or deliver securities of any class. Other than as set forth in the ESI Disclosure Schedule and Recital D, there are no outstanding securities convertible or exchangeable, actually or contingently, into common stock or any other securities of ESI.

(b)           To ESI’S knowledge, all outstanding shares of ESI capital stock have been issued and granted in compliance with all applicable securities laws and other applicable legal requirements.

(c)           ESI has good and marketable title to all of the ESI Shares, free and clear of all liens, claims and encumbrances of any third persons.

3.3             Subsidiaries. ESI owns one subsidiary, Ecolocap Canada Ltd

3.4             Authority. ESI’s Board of Directors has determined that the Exchange is fair to and in the best interests of ESI’s stockholders. The execution, delivery and performance by ESI of this Agreement (including the contemplated issuance of up to 54,000,000 ESI Shares in accordance with this Agreement) has been duly authorized by all necessary action on the part of ESI. ESI has the absolute and unrestricted right, power and authority to perform its obligations under this Agreement. This Agreement constitutes, and all other agreements contemplated hereby will constitute, when executed and delivered by ESI in accordance herewith, the valid and binding obligations of ESI, enforceable in accordance with their respective terms.

3.5             Assets . Except as set forth in the ESI Disclosure Schedule , ESI has no material assets. ESI has good and marketable title to all of the assets and properties listed on Schedule 3.5 and as reflected on the balance sheet included in the ESI Financial Statements (as hereinafter defined).

3.6             Contracts and Other Commitments. Except as set forth in the ESI Disclosure Schedule , ESI is not a party to any contracts or agreements.

3.7             Litigation. There is no claim, action, proceeding, or investigation pending or, to its knowledge, threatened against or affecting ESI before or by any court, arbitrator or governmental agency or authority which, in its reasonable judgment, could have a material adverse effect on the operations or prospects of ESI. There are no decrees, injunctions or orders of any court, governmental department, agency or arbitration outstanding against ESI or asserted against ESI that has not been paid.

3.8             Taxes. For purposes of this Agreement, (A) "Tax" (and, with correlative meaning, "Taxes") shall mean any federal, state, local or foreign income, alternative or add- on minimum, business, employment, franchise, occupancy, payroll, property, sales, transfer, use, value added, withholding or other tax, levy, impost, fee, imposition, assessment or similar charge together with any related addition to tax, interest, penalty or fine thereon; and (B) "Returns" shall mean all returns (including, without limitation, information returns and other material information), reports and forms relating to Taxes.

(a)           ESI has duly filed all Returns required to be filed by it other than Returns (individually and in the aggregate) where the failure to file would have no material adverse effect on the business or prospects of ESI. All such Returns were, when filed, and to the knowledge of ESI are, accurate and complete in all material respects and were prepared in conformity with applicable laws and regulations. ESI has paid or will pay in full or has adequately reserved against all Taxes otherwise assessed against it through the Closing Date.

(b)           ESI is not a party to any pending action or proceeding by any governmental authority for the assessment of any Tax, and, to the knowledge of ESI, no claim for assessment or collection of any Tax related to ESI has been asserted against ESI that has not been paid. There are no Tax liens upon the assets of ESI. There is no valid basis, to ESI 's knowledge, for any assessment, deficiency, notice, 30-day letter or similar intention to assess any Tax to be issued to ESI by any governmental authority.

3.9             Compliance with Laws and Regulations. ESI has complied and is presently complying, in all material respects, with all laws, rules, regulations, orders and requirements (federal, state and local and foreign) applicable to it in all jurisdictions where the business of ESI is conducted or to which ESI is subject, including all requisite filings with the SEC. ESI has not made any misrepresentation nor has omitted any material facts in any of its SEC filings to date.

3.10           Hazardous Materials. To the knowledge of ESI, ESI has not violated, or received any written notice from any governmental authority with respect to the violation of any law, rule, regulation or ordinance pertaining to the use, maintenance, storage, transportation or disposal of "Hazardous Materials." As used herein, the term “Hazardous Materials” means any substance now or hereafter designated pursuant to Section 307(a) and 311 (b)(2)(A) of the Federal Clean Water Act, 33 USC §§ 1317(a), 1321(b)(2)(A), Section 112 of the Federal Clean Air Act, 42 USC § 3412, Section 3001 of the Federal Resource Conservation and Recovery Act, 42 USC § 6921, Section 7 of the Federal Toxic Substances Control Act, 15 USC § 2606, or Section 101(14) and Section 102 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC §§ 9601(14), 9602.

 

 

3.11            No Breaches. The making and performance of this Agreement will not (i) conflict with or violate the Articles of Incorporation or the Bylaws of ESI, (ii) violate any laws, ordinances, rules, or regulations, or any order, writ, injunction or decree to which ESI is a party or by which ESI or any of its businesses, or operations may be bound or affected or (iii) result in any breach or termination of, or constitute a default under, or constitute an event which, with notice or lapse of time, or both, would become a default under, or result in the creation of any encumbrance upon any material asset of ESI under, or create any rights of termination, cancellation or acceleration in any person under, any contract.

3.12           Employees . ESI has no employees that are represented by any labor union or collective bargaining unit. Nor does ESI have any employment agreements or compensation plans which are in effect with anyone.

3.13            Financial Statements. Year end audited financial statements and unaudited quarterly stub financial statements are available online at www.sec.gov  (collectively the "Financial Statements"). The Financial Statements present fairly, in all material respects, the financial position on the dates thereof and results of operations of ESI for the periods indicated, prepared in accordance with generally accepted accounting principles ("GAAP"), consistently applied. There are no assets of ESI the value of which is materially overstated in said balance sheets.

3.14            Absence of Certain Changes or Events. Except as set forth in the ESI Disclosure Schedule , since June 30, 2009 (the "Balance Sheet Dates"), there has not been:

(a)           any material adverse change in the financial condition, properties, assets, liabilities or business of ESI;

(b)           any material damage, destruction or loss of any material properties of ESI, whether or not covered by insurance;

(c)           any material adverse change in the manner in which the business of ESI and has been conducted;

(d)           any material adverse change in the treatment and protection of trade secrets or other confidential information of ESI; and

(e)           any occurrence not included in paragraphs (a) through (d) of this Section 3.14 which has resulted, or which ESI has reason to believe, might be expected to result in, a material adverse change in the business or prospects of ESI.

3.15            Government Licenses, Permits, Authorizations. ESI has all governmental licenses, permits, authorizations and approvals necessary for the conduct of its business as currently conducted ("Licenses and Permits"). All such Licenses and Permits are in full force and effect, and no proceedings for the suspension or cancellation of any thereof is pending or, to the knowledge of ESI, threatened.

 

 

3.16           Employee Benefit Plans.

(a)           ESI has no bonus, material deferred compensation, material incentive compensation, stock purchase, stock option, severance pay, termination pay, hospitalization, medical, insurance, supplemental unemployment benefits, profit-sharing, pension or retirement plan.

(b)           ESI has not maintained, sponsored or contributed to, any employee pension benefit plan (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or any similar pension benefit plan under the laws of any foreign jurisdiction.

(c)           Except as set forth in the ESI Disclosure Schedule , neither the execution, delivery or performance of this Agreement, nor the consummation of the Exchange or any of the other transactions contemplated by this Agreement, will result in any bonus, golden parachute, severance or other payment or obligation to any current or former employee or director of any of ESI, or result in any acceleration of the time of payment, provision or vesting of any such benefits.

3.17             Business Locations. Other than as set forth in the ESI Disclosure Schedule , ESI does not own or lease any real or personal property in any state or country.

3.18             Intellectual Property. ESI owns no intellectual property of any kind. ESI is not currently in receipt of any notice of any violation or infringements of, and is not knowingly violating or infringing, or to the best of its knowledge has not violated or infringed the rights of others in any trademark, trade name, service mark, copyright, patent, trade secret, know-how or other intangible asset.

3.19             Governmental Approvals. Except as set forth in the ESI Disclosure Schedule , no authorization, license, permit, franchise, approval, order or consent of, and no registration, declaration or filing by ESI with, any governmental authority, domestic or foreign, federal, state or local, is required in connection with ESI’s execution, delivery and performance of this Agreement. Except as set forth in the ESI Disclosure Schedule , no consents of any other parties are required to be received by or on the part of ESI to enable ESI to enter into and carry out this Agreement.

3.20             Transactions with Affiliates. Except as set forth in the ESI Disclosure Schedule , ESI is not indebted for money borrowed, either directly or indirectly, from any of its officers, directors, or any Affiliate (as defined below), in any amount whatsoever; nor are any of its officers, directors, or Affiliates indebted for money borrowed from ESI; nor are there any transactions of a continuing nature between ESI and any of its officers, directors, or Affiliates not subject to cancellation which will continue beyond the Closing Date, including, without limitation, use of the assets of ESI for personal benefit with or without adequate compensation. For purposes of this Agreement, the term "Affiliate" shall mean any person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified. As used in the foregoing definition, the term (i) "control” shall mean the power through the ownership of voting securities, contract or otherwise to direct the affairs of another person and (ii) "person" shall mean an individual, firm, trust, association, corporation, partnership, government (whether federal, state, local or other political subdivision, or any agency or bureau of any of them) or other entity.

 

 

3.21             No Distributions. ESI has not made nor has any intention of making any distribution or payment to any of its shareholders with respect to any of its shares prior to the Closing Date.

3.22             Liabilities. ESI has no material direct or indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or responsibility, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise ("Liabilities"), whether or not of a kind required by generally accepted accounting principles to be set forth on a financial statement, other than (i) Liabilities fully and adequately reflected or reserved against on the ESI Balance Sheet, (ii) Liabilities incurred since the Balance Sheet Date in the ordinary course of the business of ESI, or (iii) Liabilities otherwise disclosed in this Agreement, including the exhibits hereto and ESI Disclosure Schedule .

3.23             Accounts Receivable. ESI has no accounts receivable.

3.24             Insurance . ESI has no insurance policies in effect.

3.25             No Omissions or Untrue Statements. To the best of each party’s knowledge no representation or warranty made by ESI to MBT SHAREHOLDERS and MBT in this Agreement, the ESI Disclosure Schedule or in any certificate of an ESI officer required to be delivered to MBT SHAREHOLDERS pursuant to the terms of this Agreement, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading as of the date hereof and as of the Closing Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF MBT SHAREHOLDERS AND MBT

Except as set forth in the MBT Disclosure Schedule , MBT SHAREHOLDERS and MBT jointly and severally represent and warrant to ESI as follows as of the date hereof and as of the Closing Date:

4.1             Organization and Standing of MBT. MBT is a corporation duly organized, validly existing and in good standing under the laws of the state of NEVADA and has the corporate power to carry on its business as now conducted and to own its assets and is duly qualified to transact business as a foreign corporation in each state where such qualification is necessary except where the failure to qualify will not have a material adverse effect on the business or prospects of MBT. The copies of the Articles of Incorporation and Bylaws of MBT, as amended to date, and made available to ESI, are true and complete copies of those documents as now in effect.

4.2             Authority. The Board of Directors of MBT has determined that the Exchange is advisable and in the best interests of the MBT SHAREHOLDERS and MBT. MBT has approved and adopted this Agreement and the terms of the Exchange and has adopted a resolution recommending approval and adoption of this Agreement and the Exchange by MBT’s stockholders. This Agreement constitutes, and all other agreements contemplated hereby will constitute, when