EXHIBIT 99.1
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT is made effective this twentieth (20th) day of October, 2005.
BETWEEN:
Financial Telecom Limited (USA) Inc.
And
Xx. Xxxxxxxxx Xxxxxxxxxx
WHEREAS:
Financial Telecom Limited (USA) Inc. (hereinafter referred to as "Xxxxxx") is a
company duly incorporated under the laws of Nevada, and has its executive
offices located in Shanghai, PR China, and has its shares traded on the OTCBB
under the trading symbol of FLTL.OB, and is subject to the reporting
requirements of the Securities Exchange Commission;
Xx. Xxxxxxxxxx is a citizen of Panama, and is resident in Panama;
Xx. Xxxxxxxxxx owns all the issued and outstanding shares of MK Aviation, S.A.;
MK Aviation, S.A. (hereinafter referred to as "MKAviation") is a company duly
incorporated under the laws of Panama, and has its executive offices located in
the city of Panama;
The parties to this agreement wish to effect a purchase by Xxxxxx of 75% of the
issued and outstanding shares of MKAviation, the consideration for which will be
Xxxxxx'x common shares issued to Xx. Xxxxxxxxxx;
THEREFORE THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS
a. Net Assets means the aggregate of total Identified Assets less total
Identified Liabilities.
b. Identified Assets means all assets other than Goodwill and amounts
receivable from Parties Related to MKAviation.
c. Identified Liabilities means all liabilities other than amounts
payable to Parties Related to MKAviation.
d. Goodwill has the meaning assigned by FASB statement 142
e. Parties Related has the meaning assigned by FASB statement 57
f. FASB means the Financial Accounting Standards Board of the USA
g. Closing and Closing Date mean the date this Share Exchange Agreement
is executed.
2. SHARES EXCHANGED
a. Number of Xxxxxx Common Shares to be exchanged:
(i) Xxxxxx will issue 372,430,363 common shares to Xx. Xxxxxxxxxx, or
his nominees, upon the close of purchase of MKAviation shares by
Xxxxxx.
b. Number of MKAviation Common Shares to be exchanged:
(i) Xx. Xxxxxxxxxx will transfer seventy-five percent (75%) of all
the outstanding shares of MKAviation to Xxxxxx, being
seventy-five (75) shares of MKAviation. 3. ACTIONS TO BE TAKEN BY
XXXXXX PRIOR TO CLOSING
a. Information to be provided to Xx. Xxxxxxxxxx
(i) Copies of all bank statements for the month of September 2005.
(ii) A schedule of Accounts Receivable up to September 30, 2005.
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(iii) A schedule of Accounts Payable up to September 30, 2005.
(iv) A copy of Xxxxxx'x Federal Tax return for the year 2004.
(v) A schedule and full disclosure of any and all suits filed against
the company.
(vi) A copy of Xxxxxx'x 10QSB for June 30, 2005, duly filed with the
SEC.
(vii) Financial Statements for Xxxxxx, as at September 30, 2005,
prepared by management in accordance with accounting principles
accepted generally in the USA.
(viii) A copy of its Shareholder Register as at September 30, 2005,
comprising of a list or lists prepared by Xxxxxx'x stock transfer
agent, Signature Stock Transfer.
(ix) A list prepared by Xxxxxx for all share options granted by Xxxxxx
to its independent Agents.
b. No Dilution of Shares
(i) Xxxxxx will not issue any of its common shares to any third party
after the date of September 30, 2005, up to and including the
Closing Date.
c. Resolutions
(i) Xxxxxx will procure all necessary Board and Shareholder
resolutions to effect the exchange of shares contemplated herein.
d. Name Change
(i) Xxxxxx will take all actions necessary to reserve a change in
name to "MKA Capital Inc", or some other close substitution as
may be available under Nevada law.
4. ACTIONS TO BE TAKEN BY XX. XXXXXXXXXX PRIOR TO CLOSING
a. Information to be provided to Xxxxxx
(i) Financial Statements for MKAviation, for the fiscal years of 2003
and 2004, prepared in accordance with accounting principles
accepted generally in the USA, and audited by Ernst and Young.
(ii) Financial Statements for MKAviation, as at September 30, 2005,
prepared by management in accordance with accounting principles
accepted generally in the USA.
(iii) Copies of all bank statements for the month of September 2005.
(iv) A schedule of Accounts Receivable up to September 30, 2005.
(v) A schedule of Accounts Payable up to September 30, 2005.
(vi) A schedule of all Tangible Assets up to September 30, 2005.
(vii) A schedule of all Long Term Debts up to September 30, 2005.
(viii) A schedule and full disclosure of any and all suits filed
against the company up to September 30, 2005.
(ix) A schedule and full disclosure of any and all Contingent
Liabilities up to September 30, 2005.
b. Determine the Net Assets of MKAviation
(i) The Net Assets shown in the financial statements of MKA as at
September 30, 2005, will be no less than $10 million.
c. Seek additional legal opinions about any matter pertaining to this
Agreement, as he may so choose.
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5. ACTIONS TO BE TAKEN BY XXXXXX UPON CLOSING
a. Adjustments made on account of Net Assets of MKAviation
(i) Should the Net Assets of MKAviation exceed $10mm, the excess will
be recorded in the books of Xxxxxx as a Payable to Xx.
Xxxxxxxxxx, or his nominee, and paid out within six months
following the Closing Date.
b. Resignations and Changes to the Board
(i) Three (3) existing board members of Xxxxxx will resign
immediately prior to Closing.
(ii) The remaining Directors of Xxxxxx will appoint interim Directors
based on the persons nominated by Xx Xxxxxxxxxx.
c. Deliver evidence of Board Resolutions
(i) A Board Resolution approving this Agreement and its execution. d.
Deliver evidence of shares issued to Xx. Xxxxxxxxxx.
(i) A Board Resolution for the number of shares determined above of
unregistered Xxxxxx common shares, fully paid and non-assessable,
free and clear of all liens and encumbrances of any kind.
(ii) Instructions to the company's share transfer agent, for the
number of unregistered shares determined above.
e. Execute and deliver such other instruments, certificates,
authorizations, releases, resolutions and documents as may be
necessary to effect the transactions described in or otherwise
required by this Agreement.
6. ACTIONS TO BE TAKEN BY XX. XXXXXXXXXX UPON CLOSING
a. Nominate three (3) members to the Board
(i) Xx. Xxxxxxxxxx will name his nominees to the Board to fill the
interim vacancies.
b. Deliver evidence of shares transferred to Xxxxxx
(i) Xx. Xxxxxxxxxx will transfer to Xxxxxx 75% of his rights, title
and interest in and to all of the capital stock of MKAviation
owned by him.
(ii) Xx. Xxxxxxxxxx will deliver to Xxxxxx his stock certificates
representing 75% of the MKAviation capital stock owned by him,
with such certificates to be duly endorsed in blank or
accompanied by an irrevocable stock power and assignment separate
from certificate and endorsed in blank.
c. Deliver evidence of Board Resolutions
(i) A Board Resolution approving this Agreement and its execution.
d. Execute and deliver such other instruments, certificates,
authorizations, releases, resolutions and documents as may be
necessary to effect the transactions described in or otherwise
required by this Agreement.
7. CLOSING DATE
a. Closing of the transactions contemplated by this Agreement will take
place at the offices of Xxxxxx'x legal counsel on or before December
31, 2005.
8. CONTINUATION OF BUSINESS
a. Other than as contemplated by this Agreement, each party covenants and
agrees that, from and after the date hereof and until Closing, neither
party will:
(i) Conduct its business, or introduce any material change in its
business practices or the accounting methods in respect of its
business, except in a manner consistent with prior practices;
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(ii) Except in the ordinary course of business, pay, discharge or
liquidate any outstanding indebtedness or incur any obligation
not relating to the conduct of its business;
(iii) Fail to maintain its books and records in accordance with sound
business practices, on a basis consistent with prior practice;
(iv) For a period of thirty (30) days from the date hereof, directly
or indirectly:
1. solicit or initiate any offer or proposal for, or any
written indication on interest in, a merger, acquisition or
other business combination involving either party or the
acquisition of any equity interest in either party, other
than the transactions contemplated by this Agreement, or
engage in negotiations with, or disclose any non-public
information relating to it or afford access to its
properties, books and records to any person or entity in
connection with any such offer or proposal;
2. make any announcement or submit any filing(s) to the SEC
without having received the approval of the other party
hereto any government or regulatory authorities, stock
exchanges or other third parties, if required to be made by
any parties hereto, without delivering to other party a
draft of such announcement and shall give such other party
reasonable opportunity to comment thereon.
9. WARRANTIES
x. Xxxxxx represents, warrants, covenants and agrees as follows, all of
which are true and correct in all material respects as of the date
hereof and will be true and correct in all material respects as of the
Closing Date with the same force and effect as if then made:
(i) Xxxxxx is a corporation duly organized and existing under Nevada
law and is in good standing in the State of Nevada.
(ii) Xxxxxx has all requisite power and authority to conduct its
business as it is now being conducted and to own or use the
properties and assets it purports to own or use.
(iii) Xxxxxx is registered to do business in all jurisdictions where
the failure to obtain such registration could reasonably be
expected to result in a material adverse effect on the financial
position, results of operations or business of Xxxxxx.
(iv) Xxxxxx is in compliance with all federal and state, and local
regulations applicable to the business conducted by Xxxxxx.
(v) The execution and delivery by Xxxxxx of this Agreement and each
other agreement or instrument contemplated by this Agreement, the
performance by Xxxxxx of its covenants and obligations under this
Agreement,and the consummation by Xxxxxx of the transactions
contemplated by this Agreement, have been authorized by all
necessary corporate action. Assuming due execution and delivery,
this Agreement constitutes the valid and legally binding
obligation of Xxxxxx and is enforceable in accordance with its
terms.
(vi) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated by this Agreement:
1. violates any provisions of any of Xxxxxx'x organizational
documents;
2. violates any statute, ordinance, law, writ, injunction,
ruling, regulation, order, judgment or decree of any court
or governmental agency or board ("Laws") by which Xxxxxx or
any of its assets or properties is bound, which violation
could reasonably be expected to have a material, adverse
effect on the financial position, results of operations or
business of Xxxxxx; or
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3. conflicts with, violates, or will result in any breach of
(or give rise to any right of termination, cancellation,
modification, amendment, rescission, refusal to perform or
acceleration of) any of the terms of, or constitute a
default under, or result in the creation of any lien
pursuant to the terms of, any note, bond, lease, mortgage,
deed of trust, franchise, guaranty, certificate of
occupancy, indenture, license, permit, contract or agreement
("Contracts") or other instrument or obligation to which
Xxxxxx is a party or by which Xxxxxx'x assets are encumbered
and which, individually or in the aggregate, could
reasonably be expected to have a material adverse effect on
the financial position, results of operations or business of
Xxxxxx.
(vii) All of Xxxxxx'x financial statements, including, but not limited
to, Xxxxxx'x consolidated balance sheet (including the notes
thereto), and the related consolidated statement of income,
changes in stockholders' equity and cash flow for the one year
fiscal periods ended December 31, 2003 and 2004, fairly present,
in all material respects, the financial condition and the results
of operations, changes in stockholders' equity and cash flow of
Xxxxxx as of the respective dates thereof and for the accounting
periods referenced therein, all in accordance with generally
accepted accounting principles and practices applied on a
consistent basis.
(viii) This Agreement and the information furnished by Xxxxxx whether
set forth in this Agreement or in any filing made by Xxxxxx under
the Exchange Act, contains no untrue statement of a material fact
and does not omit to state a material fact necessary to make the
statements made not misleading.
b. Xx. Xxxxxxxxxx represents, warrants, covenants and agrees as follows,
all of which are true and correct in all material respects as of the
date hereof and will be true and correct in all material respects as
of the Closing Date with the same force and effect as if then made:
(i) MKAviation is a corporation duly organized and existing under
Panama law and is in good standing in Panama.
(ii) MKAviation, has all requisite power and authority to conduct its
business as it is now being conducted and to own or use the
properties and assets it purports to own and use.
(iii) MKAviation is registered to do business in all jurisdictions
where the failure to obtain such registration could reasonably be
expected to result in a material adverse effect on the financial
position, results of operations or business of MKAviation.
(iv) MKAviation is in compliance with all federal and state, and local
regulations applicable to the business conducted by MKAviation.
(v) The execution and delivery by Xx. Xxxxxxxxxx of this Agreement
and each other agreement or instrument contemplated by this
Agreement, the performance by Xx. Xxxxxxxxxx of his covenants and
obligations under this Agreement, and the consummation by Xx.
Xxxxxxxxxx of the transactions contemplated by this Agreement,
have been authorized by all necessary legal action. Assuming due
execution and delivery, the Agreement constitutes the valid and
legally binding obligation of Xx. Xxxxxxxxxx, and is enforceable
in accordance with its terms;
(vi) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated by this Agreement:
1. violates any provision of any of MKAviation's organizational
documents;
2. violates any statute, ordinance, law, writ, injunction,
ruling, regulation, order, judgment or decree of any court
or governmental agency or board ("Laws") by which
MKAviation, or any of its assets or properties is bound,
which violation could reasonably be expected to have a
material adverse effect on the financial position, results
of operations or business of MKAviation ; or,
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3. conflicts with, violates or will result in any breach of (or
give rise to any right of termination, cancellation,
modification, amendment, rescission, refusal to perform or
acceleration of ) any of the terms of, or constitute a
default under, or result in the creation of any lien
pursuant to the terms of, any note, bond, lease, mortgage,
deed of trust, franchise, guaranty, certificate of
occupancy, indenture, license, permit, contract or agreement
("Contracts") or other instrument or obligation to which
MKAviation is a party or by which MKAviation, 's assets are
encumbered and which, individually or in the aggregate,
could reasonably be expected to have a material adverse
effect on the financial position, results of operations or
business of MKAviation ;
(vii) All of MKAviation's financial statements, present fairly, in all
material respects, the financial condition of MKAviation, as of
the date thereof, in accordance with generally accepted
accounting principles and practices
(viii) This Agreement and the information furnished by Xx. Xxxxxxxxxx,
whether set forth in this Agreement or in any document, contains
no untrue statement of a material fact and does not omit to state
a material fact necessary to make the statements made not
misleading.
10. JURISDICTION
a. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Nevada.
11. ARBITRATION
a. Except in the event an equitable remedy or injunction is sought
pursuant to this Agreement, any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled
exclusively by arbitration before three arbitrators in accordance with
the rules of the American Arbitration Association then current, and
judgment upon the award rendered may be entered in the highest court
of the forum, country or state, having jurisdiction.
12. BINDING EFFECT AND NO ASSIGNMENT
a. This Agreement shall be binding upon and shall inure to the benefit of
the parties to this Agreement and their respective successors and
assigns.
b. This Agreement and the Exhibits attached hereto together constitute
the entire agreement of the parties with respect to the subject matter
of this Agreement and the Exhibits attached hereto and supersede all
prior agreements and understandings relating hereto and thereto.
c. Notwithstanding anything to the contrary, no party may transfer or
assign any of its rights or obligations under this Agreement without
the prior written consent of all other parties, which they may
withhold in their sole discretion.
13. NOTICES
a. Any notice, communication, request, reply, or advice (hereinafter
severally and collectively called "notice") in this Agreement provided
or permitted to be given, made, or accepted by either party to the
other must be in writing and shall be given or be served by telex,
telecopy, facsimile, registered, certified or other form of mail
requiring a return receipt, addressed to the party to be notified,
postage prepaid, or by reputable overnight delivery service, or by
delivering the same in person to such party and obtaining a receipt
for such delivery.
b. Notice deposited in the mail in the manner hereinabove described shall
be deemed received on the earlier of the fifth day after day after
deposit in the mail or upon receipt, whichever is earlier.
c. Notice sent by reputable overnight courier shall be deemed received on
the next day after sending.
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d. Notices given by hand delivery shall be deemed received when
delivered.
e. Notices sent by facsimile transmission with electronic confirmation
shall be deemed received on the date sent or the first business day
thereafter, if sent after normal business hours or on a non-business
day, provided that the sender requests and the receiver sends a return
confirmation by facsimile transmission or by mail.
f. For purposes of notice, the address and facsimile numbers of the
parties shall, until notice of any change is provided, be as follows:
(i) For Xxxxxx: 0000 Xxxxxxx Securities Tower, 000 Xxxxxxxxx Xx,
Xxxxxxxx, XX Xxxxx 000000
Fax: x00-00-00000000
(ii) For MKAviation: Xxxxxxxx Xxxxxxxxx, Xxxx 00
Xxxxx 00 y Xxxxx Xxxxxx
Panama
Fax: x000-0000000
14. FURTHER ASSURANCES
a. Each of the parties to this Agreement shall use such party's
commercially reasonable efforts to take such actions as may be
necessary or reasonably requested by the other parties to this
Agreement to carry out and consummate the transactions contemplated by
this Agreement
15. EXPENSES
a. Each of the parties to this Agreement shall bear such party's own
expenses and attorneys' fees in connection with the negotiation and
preparation of this Agreement and the transactions contemplated by
this Agreement, unless:
b. In the event this Agreement is not closed by decision or action taken
by Xx Xxxxxxxxxx, all expenses and attorneys' fees in connection with
the negotiation and preparation of this Agreement and the transactions
contemplated by this Agreement, will be borne entirely by MkAviation.
16. COUNTERPARTS
a. This Agreement may be executed in any number of counterparts, each of
which will be deemed an original but all of which shall constitute one
and the same instrument.
17. AMENDMENTS, WAIVERS
a. Any changes, amendments, waivers or additions to this Agreement, must
be made in writing by the parties to this Agreement in order to be
effective. The failure of any party hereto to enforce at any time any
provision of this Agreement shall not be construed as a waiver of such
provision nor in any way to affect the validity of this Agreement or
any part hereof or the right of any party thereafter to enforce each
and every such provision strictly in accordance with its terms. No
waiver of any breach of this Agreement shall be held to constitute a
waiver of any other or subsequent breach.
18. INVALIDITY
a. Should any provision of this Agreement be held by a court or
arbitration panel of competent jurisdiction to be enforceable only if
modified, such holding shall not affect the validity of the remainder
of this Agreement, the balance of which shall continue to be binding
upon the parties to this Agreement with any such modification to
become a part hereof and treated as though originally set forth in
this Agreement.
19. INTERPRETATION
a. No provision of this Agreement shall be construed against a party
because such party of its attorney may have been the draftsman
thereof.
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b. Each of the undersigned joins in this Agreement for the purpose of
confirming his agreement to be bound by the terms of and the
representations, warranties, indemnities, obligations, agreements or
covenants contained in this Agreement and applicable to each party.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on
the effective date first written above.
/s/ Xx. X. Xxxxxxxxxx
-------------------------------- ------------------------------
Signed by Xx. X. Xxxxxxxxxx Witness
for and on behalf of himself, and
for and on behalf of MK Aviation, S.A.
/s/ Mr. Xxxxx Xxxx
-------------------------------- ------------------------------
Signed by Mr. Xxxxx Xxxx Witness
Authorised signatory
for and on behalf of
Financial Telecom Limited (USA) Inc.
