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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 Act
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