JOINT VENTURE AND JOINT CONTRIBUTION AGREEMENTJoint Venture JV Agreement |
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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






