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JOINT VENTURE AND JOINT CONTRIBUTION AGREEMENT

Joint Venture JV Agreement

JOINT VENTURE AND JOINT CONTRIBUTION AGREEMENT You are currently viewing:
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Active IQ Technologies, Inc | Hawk Precious Minerals Inc | Hawk Precious Minerals USA, Inc

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Title: JOINT VENTURE AND JOINT CONTRIBUTION AGREEMENT
Governing Law: Minnesota     Date: 7/1/2003
Industry: GLDSLV     Law Firm: Maslon Edelman     Sector: BASICM

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EXHIBIT 10.1

JOINT VENTURE AND

JOINT CONTRIBUTION AGREEMENT

 

THIS JOINT VENTURE AND JOINT CONTRIBUTION AGREEMENT (the "AGREEMENT")

is made and entered into effective as of June 26, 2003, by and among Active IQ

Technologies, Inc., a Minnesota corporation ("ACTIVE IQ"), Hawk Precious

Minerals Inc., a corporation organized under the laws of the Canadian Province

of Ontario ("HAWK"), and Hawk Precious Minerals USA, Inc., a Minnesota

corporation and wholly owned subsidiary of Hawk ("HAWK SUB"), in connection with

the formation and organization of a joint-venture limited liability company to

be organized under the laws of the State of Minnesota (the "COMPANY").

 

INTRODUCTION

A. Hawk is a party to those certain Heads of Agreement by and among

Hawk and Kwagga Gold (Proprietary) Limited, a corporation existing under the

laws of the Republic of South Africa (such entity is hereinafter referred to as

"KWAGGA"), and AfriOre International (Barbados) Limited, dated June 4, 2003 (the

"KWAGGA AGREEMENT").

B. Pursuant to the Kwagga Agreement, Hawk has obtained certain rights

with respect to certain lands located in the Republic of South Africa, including

the right to fund and participate in all operations conducted on, and at least a

35% interest in the profits derived from, such lands for the purpose of

exploring for and exploiting base and/or precious metals discovered therein, if

any (such purpose shall be hereinafter referred to as the "PROJECT").

C. Hawk wishes to assign its rights in, to and under the Kwagga

Agreement, and thereby acquire a partner in its participation in the Project, in

exchange for agreements to assume Hawk's obligations to contribute capital to

the enterprise by and between Hawk and Kwagga, and for an issuance of certain

securities of Active IQ, as described herein, pursuant to an exemption from the

registration requirements under the Securities Act of 1933, as amended.

D. For the above purposes, Hawk and Active IQ have entered into a

Letter of Intent dated June 4, 2003 (the "LETTER OF INTENT") outlining the terms

and conditions for the formation and operation of a joint-venture limited

liability company to be organized under the laws of the State of Minnesota, the

members of which shall be Active IQ and Hawk Sub (Active IQ and Hawk Sub are

collectively referred to hereinafter as the "MEMBERS"); in exchange for the

contributions and transactions described herein, each Member will receive a 50%

membership interest in the Company in the form of membership units (the "UNITS")

pursuant to the terms of this Agreement.

E. The parties wish to enter into an Agreement with respect to the

formation of and contribution of capital and property to the Company, in the

form of this Agreement, in order to effect the transactions contemplated by the

Letter of Intent.

 

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing facts and premises

which are hereby made a part of this Agreement, the mutual promises of the

Members contained herein, the mutual benefits to be gained by the performance of

this Agreement, and for other good and valuable consideration the receipt and

 

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sufficiency of which are hereby acknowledged, the Members, intending to be

legally bound, hereby agree as follows:

ARTICLE 1

CONTRIBUTIONS AND MEMBERSHIP INTERESTS

1.1 Contribution by Active IQ.

(a) Subject to the terms and conditions of this Agreement,

Active IQ shall make a contribution to the Company in an amount equal

to Two Million One Hundred Thousand Dollars and No/100 ($2,100,000.00)

(the "ACTIVE IQ CONTRIBUTION") in the following manner:

(i) Five Hundred Thousand Dollars and No/100

($500,000.00) at the Closing (as defined in Section 2.1);

(ii) One Million Dollars and No/100 ($1,000,000.00)

on or prior to the First Funding Date (as defined in Section

3.3 of the Member Control Agreement, as defined below); and

(iii) Six Hundred Thousand Dollars and No/100

($600,000.00) on or prior to the Second Funding Date (as

defined in Section 3.3 of the Member Control Agreement, as

defined below).

(b) The above-described installments of the Active IQ

Contribution shall be payable on the respective dates for contribution,

in U.S. dollars, by wire transfer of immediately available funds to an

account mutually agreed upon by the Members prior to Closing.

(c) On the Closing Date (as defined in Section 2.1) and in

exchange for the Active IQ Contribution, Active IQ shall receive

2,100,000 million Units of the Company in the manner provided in

Section 2.2(c) of this Agreement, and described in Section 3.2 of the

member control agreement by and among the Members and Company, dated

June 26, 2003 (the "MEMBER CONTROL AGREEMENT"), a copy of which Member

Control Agreement is attached hereto as Exhibit A to this Agreement and

hereby incorporated by reference as a part of this Agreement.

1.2 Contribution by Hawk Sub.

(a) Subject to the terms and conditions of this Agreement,

Hawk Sub shall make a contribution to the Company of all of its rights,

title and interest in, to and under the Kwagga Agreement, as the same

shall have been assigned on or prior to the Closing Date by Hawk to

Hawk Sub pursuant to Section 1.3 below.

(b) Subject to the terms and conditions of this Agreement,

Hawk Sub shall make a contribution to the Company of all of its rights,

title and interest in, to and under the Oxide Zone Rights (as such term

is defined in Section 3.1(k) below) (the contributions by Hawk Sub of

the Kwagga Agreement, described above in paragraph (a), and Oxide Zone

Rights described in this paragraph (b), are collectively referred to

hereinafter as the "HAWK SUB CONTRIBUTION;" and are referred to

collectively with the Active IQ Contribution as THE "CONTRIBUTIONS"),

as the same shall have been assigned on or prior to the Closing Date by

Hawk to Hawk Sub pursuant to Section 1.3 below. The parties acknowledge

and understand that Hawk Sub's contribution of the Oxide Zone Rights

will, initially upon the Effective Date, consist of rights to obtain a

mining lease as, if and when Hawk (i) obtains such a mining lease with

 

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respect to the property located near Hawk Junction, Ontario or (ii)

determines that it is otherwise legally entitled to assign an ownership

interest in the Oxide Zone Rights.

(c) On the Closing Date and in exchange for the Hawk Sub

Contribution, Hawk Sub shall receive 2,100,000 million Units of the

Company in the manner provided in Section 2.2(c) of this Agreement, and

described in Section 3.2 of the Member Control Agreement.

(d) In addition to the issuance of Company Units described

above, Hawk Sub shall receive, as additional consideration and

incentive for the Hawk Sub Contribution hereunder, the issuance of

common stock of Active IQ, $0.01 par value per share (the "COMMON

STOCK"), described in Section 1.5 below.

1.3 Hawk Agreement to Assign. Subject to the terms and conditions of

this Agreement, Hawk hereby agrees to assign the Kwagga Agreement and the Oxide

Zone Rights (as and to the extent contemplated in Section 1.2) to Hawk Sub on or

prior to the Closing, and to cause Hawk Sub to make the Hawk Sub Contribution

described in Section 1.2 above. The assignments of the Kwagga Agreement and the

Oxide Zone Rights shall be effected by the execution and delivery of assignments

in the form attached hereto as Exhibit B.

1.4 Third Party Consents. Notwithstanding anything in this Agreement to

the contrary, this Agreement shall not constitute an assignment of or an

agreement to assign any asset, claim or right or any benefit arising under or

resulting from any such asset, claim or right if an attempted assignment thereof

or an agreement to assign such asset, claim or right, without the consent of a

third party, would (a) constitute a breach or other contravention of the rights

of such third party, (b) be ineffective with respect to any party to an

agreement concerning such asset, claim or right, or (c) in any way adversely

affect the rights of the Company under such asset, claim or right. To the extent

any asset, claim or right may not be assigned to the Company by reason of the

absence of any such consent, the Company shall not be required to assume any

duties, obligations or liabilities arising under such asset, claim or right.

1.5 Private Placement of Active IQ Common Stock. On the Closing Date

and subject to the terms and conditions of this Agreement, Active IQ shall issue

Three Million Seven Hundred Fifty Thousand (3,750,000) original-issue shares of

Common Stock (the "SHARES") to Hawk Sub as additional consideration to enter

into this Agreement and make the Hawk Sub Contribution as described in Section

1.2(d) (the issuance of the Shares is referred to hereinafter as the "PRIVATE

PLACEMENT"). Active IQ shall deliver the Shares to Hawk Sub on a

delivery-against-payment basis on the Closing Date, and shall cause a

certificate representing the Shares to be executed and delivered to Hawk Sub, at

the address set forth in Section 8.1 below, no later than 14 calendar days after

the Closing Date.

All parties understand and acknowledge that the Private Placement, and

Active IQ's obligation to issue Shares to Hawk Sub, are expressly conditioned on

the representations and warranties of Hawk Sub set forth in Section 3.2.

ARTICLE 2

CLOSING

2.1 Closing.

(a) The closing of the Contributions described herein shall

take place at the offices of Maslon Edelman Borman & Brand, LLP, 3300

Wells Fargo Center, 90 South Seventh Street, Minneapolis, Minnesota

55402, at 10:00 a.m., Minneapolis time, on June 26, 2003, or as soon as

practicable thereafter but in no event to occur after June 27, 2003

(the "CLOSING"), or at such other place or different time or day as may

 

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be mutually acceptable to the parties to this Agreement; provided,

however, that all conditions to the Closing, as provided in this

Agreement, have been met to the reasonable satisfaction of, or waived

by, the particular party whose rights have been compromised by the

failure to meet any such condition. The date and time on which the

Closing occurs shall be referred to herein as the "CLOSING DATE."

(b) On the Closing Date, the Parties shall execute and deliver

(as appropriate) this Agreement and all of the Ancillary Documents, as

defined in Section 2.2 below, contemplated by this Agreement and shall

perform the Contributions. After all of the appropriate documents have

been executed and the required Contributions have been performed, the

Company shall register the above-referenced number of Units in the

respective names of Active IQ and Hawk Sub in the Company's required

records under the Minnesota limited liability company act (the "LLC

ACT").

2.2 Ancillary Documents. At the Closing, the parties will enter into

the following agreements, execute and deliver the following instruments, and/or

cause the following instruments to be executed and delivered (collectively, the

"ANCILLARY DOCUMENTS"):

(a) Assignments of Kwagga Agreement. Hawk shall deliver, or

shall have delivered prior to the Closing Date, an assignment of the

Kwagga Agreement pursuant to which all of Hawk's right, title and

interest in, to and under the Kwagga Agreement are assigned to Hawk

Sub, in form and substance agreeable to Active IQ in its sole

discretion; and Hawk Sub shall deliver an assignment of the Kwagga

Agreement pursuant to which all of Hawk Sub's right, title and interest

in, to and under the Kwagga Agreement are assigned to the Company, in

form and substance agreeable to Active IQ in its sole discretion.

(b) Assignments of Oxide Zone Rights. Hawk shall deliver, or

shall have delivered prior to the Closing Date, an assignment of (or

agreement to assign) the Oxide Zone Rights pursuant to which all of

Hawk's right, title and interest in, to and under such Oxide Zone

Rights are assigned to Hawk Sub, in form and substance agreeable to

Active IQ in its sole discretion; and Hawk Sub shall deliver to the

Company an assignment of all of Hawk Sub's rights with respect to the

Oxide Zone Rights, in form and substance agreeable to Active IQ in its

sole discretion.

(c) Written Action by the Board of Directors of the Company.

Those individual persons selected by the respective Members to serve as

directors of the Company shall execute a written action of the

Company's board of directors, in a form mutually agreed upon by the

parties, completing the process of organizing the Company under the LLC

Act, including but not limited to the valuation and acceptance of the

Contributions by each of the Members to the Company, the adoption of

Company bylaws, and the issuance of Units to Active IQ and Hawk Sub in

exchange for the Contributions.

(d) Member Control Agreement. The Members shall execute and

deliver a Member Control Agreement with respect to the Company, in a

form mutually agreed upon by the parties, governing the relationship

among the Members and the Company and, inter alia, the restrictions on

the transfer of Company Units.

(e) Resignations. Active IQ shall cause to be delivered the

written resignations of a sufficient number of directors serving on the

board of directors of Active IQ, such resignations to be effective

immediately prior to the Closing, in furtherance of the representation

and warranty of Active IQ contained in Section 3.3(l) herein.

 

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(f) Active IQ Management. The board of directors of Active IQ

shall execute a written action pursuant to which the board of directors

shall: (i) appoint two additional directors to serve on Active IQ's

board of directors, both of whom shall be chosen by Hawk; (ii) appoint

a third additional director, who shall be agreed upon by Hawk and

Active IQ prior to Closing, to serve on Active IQ's board of directors;

and (iii) appoint three new corporate officers to the positions of

Chief Executive Officer, Chief Financial Officer and Secretary, all as

mutually agreed upon by Hawk, Hawk Sub and Active IQ.

2.3 Wire Transfer of Active IQ Contribution. On the Closing Date, the

first installment of the Active IQ Contribution, described in Section 1.1(a)(i),

shall be payable by wire transfer of immediately available funds to an account

mutually agreed upon by the Members prior to Closing.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

To induce the parties to enter into this Agreement and to make the

Contributions and engage in the other transactions described herein, the parties

hereby represent and warrant to each other party to this Agreement as follows:

3.1 Representations and Warranties of Hawk and Hawk Sub. Hawk and Hawk

Sub hereby jointly and severally represent and warrant to Active IQ:

(a) Organization; Good Standing, Etc. Hawk is a corporation

duly organized, validly existing and in good standing under the laws of

the Canadian Province of Ontario, and has the requisite power and

authority to carry on its business as it is now being conducted and as

it is proposed to be conducted. Hawk Sub is a corporation duly

organized, validly existing and in good standing under the laws of the

State of Minnesota, and has the requisite power and authority to carry

on its business as it is now being conducted and as it is proposed to

be conducted.

(b) Charter Documents. Copies of the articles of

incorporation, certificate of incorporation and bylaws, including all

amendments thereto (collectively, the "CHARTER DOCUMENTS"), of Hawk

have been delivered to legal counsel for Active IQ prior to the

execution of this Agreement, and are true and complete copies of the

duly and legally adopted Charter Documents in effect as of the date of

this Agreement. Copies of the corresponding Charter Documents (i.e.,

articles of organization, certificate of organization and bylaws),

including all amendments thereto have to have been delivered to legal

counsel for Active IQ prior to the execution of this Agreement, and are

true and complete copies of the duly and legally adopted Charter

Documents in effect as of the date of this Agreement.

(c) Due Authorization. This Agreement and the Ancillary

Documents have been duly authorized by all necessary corporate action

on behalf of Hawk, have been duly executed and delivered by authorized

officers of Hawk, are valid and binding agreements on the part of Hawk

and are enforceable against Hawk in accordance with their respective

terms. Similarly, this Agreement and the Ancillary Documents have been

duly authorized by all necessary company action on behalf of Hawk Sub,

have been duly executed and delivered by authorized officers of Hawk

Sub, are valid and binding agreements on the part of Hawk Sub and are

enforceable against Hawk Sub in accordance with their respective terms.

(d) No Conflict. Neither the execution and the delivery of

this Agreement or the Ancillary Documents, nor the consummation or

performance of any of the transactions contemplated by this Agreement

or any of the Ancillary Documents (such transactions collectively

 

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referred to hereinafter as the "CONTEMPLATED TRANSACTIONS") will

directly or indirectly (with or without notice or lapse of time): (i)

contravene, conflict with or result in a violation of or default under

any provision of the Charter Documents of Hawk or Hawk Sub or any

resolution adopted by the shareholders of Hawk or Hawk Sub; (ii)

contravene, conflict with or result in a violation of or default under,

or give any Governmental Body (as defined below) or other Person (as

defined below) the right to challenge any of the Contemplated

Transactions or to exercise any remedy or obtain any relief under, any

legal requirement or any order to which Hawk or Hawk Sub is subject;

(iii) contravene, conflict with or result in a violation of or default

under any of the terms or requirements of, or give any Governmental

Body the right to revoke, withdraw, suspend, cancel, terminate or

modify any Governmental Authorization (as defined below) held by Hawk

or Hawk Sub or that otherwise relates to the business of Hawk or Hawk

Sub; or (iv) contravene, conflict with or result in a violation or

breach of or default under any provision of, or give any Person the

right to declare a default or exercise any remedy under, or to

accelerate the maturity or performance of, or to cancel, terminate or

modify any contract or other arrangement to which Hawk or Hawk Sub is a

party or by which Hawk or Hawk Sub is bound. Except as set forth on

Schedule 3.1(d) hereof, neither Hawk nor Hawk Sub will be required to

give any notice to or obtain any consent from any Person in order for

Hawk or Hawk Sub to consummate the Contemplated Transactions.

Furthermore, neither the assignment of the Kwagga Agreement by Hawk or

Hawk Sub, or Hawk Sub Contribution will cause a violation of any laws

regarding fraudulent transfer or conveyance, or similar laws to which

Hawk or Hawk Sub are subject.

For the purposes of this Agreement, the term "GOVERNMENTAL

AUTHORIZATION" means any approval, certificate, consent, franchise,

license, permit, registration, variance, waiver or other authorization

issued, granted, given or otherwise made available by or under the

authority of any Governmental Body or pursuant to any legal

requirement. The term "GOVERNMENTAL BODY" means any (i) nation, state,

city, town, village, district or other jurisdiction of any nature; (ii)

federal, state, provincial, local, municipal, foreign or other

government; or (iii) governmental or quasi-governmental agency, branch,

department, official or entity and any court or other tribunal; (iv)

multi-national organization or body; or (v) body entitled to exercise

any administrative, executive, judicial, legislative, police,

regulatory or taxing authority or power of any nature. Finally, the

term "PERSON" means any individual, partnership, corporation, limited

liability company, association, joint-stock company, trust, joint

venture, unincorporated organization or association or a governmental

entity (or any department, agency or political subdivision thereof).

(e) Rights, Title and Interest; Encumbrances. After the Hawk

Sub Contribution, the Company will own all of the rights, title and

interest originally vested in and held by Hawk and Hawk Sub with

respect to the Kwagga Agreement, and neither (i) the Kwagga Agreement,

or (ii) any of the rights of Hawk or Hawk Sub in, to and under the

Kwagga Agreement, subject to any pledge, lease, lien, charge, security

interest, encumbrance or restriction of any kind.

(f) Litigation; Governmental Proceedings. Except as set forth

on Schedule 3.1(f) hereof, there are no legal actions, suits,

arbitrations or other legal, administrative or governmental proceedings

or investigations (any of the foregoing are a "PROCEEDING") pending or

threatened against Hawk, Hawk Sub or any of their respective properties

or business, or any officer or director of Hawk or Hawk Sub in their

capacity as such, and neither Hawk, Hawk Sub nor any officer or

director of such parties are aware of any facts that are reasonably

expected to result in or form the basis for any such Proceeding.

Neither Hawk nor Hawk Sub are in default with respect to any judgment,

order or decree of any court or any Governmental Body.

 

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(g) Compliance with Applicable Laws and Other Instruments. The

properties, business and operations of Hawk and Hawk Sub have been and

are being conducted in all material respects in accordance with all

applicable laws, rules and regulations of all Governmental Bodies to

which such parties are subject. Neither the execution nor delivery of,

nor the performance of or compliance with, this Agreement or Ancillary

Documents, nor the consummation of the Contemplated Transactions will,

with or without the giving of notice or passage of time (or both),

result in any breach of, or constitute a default under any agreement or

other instrument to which the Hawk or Hawk Sub are a party or by which

they or any of their respective properties, assets or rights is bound

or affected. Neither Hawk nor Hawk Sub is in violation of its Charter

Documents, nor are the Parties in violation of, or in default under,

any lien, indenture, mortgage, lease, agreement, instrument, commitment

or arrangement in any material respect. Hawk and Hawk Sub are not

subject to any restriction that would prohibit them from entering into

or performing their obligations under this Agreement or the Ancillary

Agreements.

(h) Licenses. Immediately prior to and immediately following

the Closing, Hawk and Hawk Sub do and will possess, from the

appropriate Governmental Bodies, all licenses, permits, authorizations,

approvals, franchises and rights that (i) are necessary for them to

engage in the business they currently conduct, and (ii) if not

possessed by them or the Company, would not have a material adverse

effect on the Company. Neither Hawk nor Hawk Sub have any reasonable

basis to conclude that they, or, after the Hawk Sub Contribution, the

Company, will not be able to obtain any license, permit, authorization,

approval, franchise and right that may be required for the Company to

assert any rights under the Kwagga Agreement and the Project.

(i) Absence of Restrictive Agreements. Other than Kwagga, no

Person, other than Hawk or Hawk Sub has any claim of any kind

whatsoever in respect of the Kwagga Agreement. Furthermore, there are

no agreements or other obligations by which Hawk or Hawk Sub is bound,

which restrict the ability of Hawk or Hawk Sub to enter into this

Agreement, to form, organize or operate the Company, or to perform any

of the Contemplated Transactions.

(j) No Brokers or Finders. Except for Boston Financial

Partners, no Person has or will have, as a result of any contractual

undertaking by Hawk or Hawk Sub, any right, interest or valid claim

against Hawk or Hawk Sub for any commission, fee or other compensation

as a finder or broker, or in any similar capacity, in connection with

the Contemplated Transactions, specifically including the Kwagga

Agreement.

(k) Oxide Zone Rights. Hawk and Hawk Sub are, pursuant to

Sections 1.2 and 1.3, assigning their entire rights, title and interest

in, under and to, and otherwise associated and in connection with, any

mining claims insofar as they relate, and are limited to, that portion

of the mineral resource located on the "Holdsworth Property" (as such

term is described in the Report on the Holdsworth Gold Prospect Wawa

Area, Ontario, for Hawk Junction Capital Corp., dated October 2002, and

authored by Seymour M. Sears, P. Geo., hereinafter referred to as the

"REPORT," a copy of which all parties to this Agreement acknowledge to

have received prior to Closing) and comprising the "Black Sand Zone"

overlying the "Algoma Iron Formation" (as both terms are described in

the Report). The foregoing rights are herein referred to as the "OXIDE

ZONE RIGHTS." Furthermore, Hawk represents and warrants that the Oxide

Zone Rights comprise a portion of, at the very least, a mining claim

giving it the right to explore for valuable mineral deposits and apply

for an exclusive mining lease with respect to the property located near

Hawk Junction, Ontario.

 

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3.2 Representations and Warranties of Hawk Sub. Hawk Sub hereby

represents and warrants to and covenants and agrees with Active IQ as follows:

(a) Member Control Agreement. Hawk Sub understands and

acknowledges that by performing the Hawk Sub Contribution and executing

and delivering the Member Control Agreement, Hawk Sub will become bound

by the terms of the Member Control Agreement, including those

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