-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JH4xJY+C2ZOXxw/6rITBIYkxNquXutqS6f+zBjWyts7vosshFMonztXxNas2cqcn hl1Z1IfcdI+EZGxB61xBSA== 0000950134-03-009767.txt : 20030701 0000950134-03-009767.hdr.sgml : 20030701 20030701163633 ACCESSION NUMBER: 0000950134-03-009767 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030626 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030701 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACTIVE IQ TECHNOLOGIES INC CENTRAL INDEX KEY: 0000912875 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO & HOME SUPPLY STORES [5531] IRS NUMBER: 412004369 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12401 FILM NUMBER: 03768400 BUSINESS ADDRESS: STREET 1: 800 NICOLLET MALL STREET 2: SUITE 2690 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: (612)664-0570 MAIL ADDRESS: STREET 1: 601 CARLSON PARKWAY STREET 2: SUITE 1500 CITY: MINNETONKA STATE: MN ZIP: 55305 FORMER COMPANY: FORMER CONFORMED NAME: METEOR INDUSTRIES INC DATE OF NAME CHANGE: 19960313 8-K 1 c78051e8vk.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): June 26, 2003 ACTIVE IQ TECHNOLOGIES, INC. (Exact Name of Registrant as Specified in Charter) Minnesota 1-12401 41-2004369 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 800 Nicollet Mall, Suite 2690 Minneapolis, Minnesota 55402 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (612) 664-0570 (Former Name or Former Address, if Changed Since Last Report) ITEM 5. OTHER EVENTS. On June 26, 2003, the Registrant entered into a Joint Venture and Joint Contribution Agreement with Hawk Precious Minerals Inc., a corporation organized under the laws of the Canadian Province of Ontario, and its wholly owned subsidiary Hawk Precious Minerals USA, Inc., a Minnesota corporation, with respect to the formation and operation of a joint venture entity, Active Hawk Minerals, LLC, a Minnesota limited liability company. Under the terms of the transaction, five members of the Registrant's board of directors resigned and were replaced by four new directors, three of whom were designated by Hawk Precious Minerals Inc. In addition, the Registrant's Chief Executive Officer resigned and was replaced by H. Vance White, a designee of Hawk Precious Minerals Inc. In connection with the joint venture, the Registrant issued 3,750,000 shares of its common stock, $0.01 par value, to Hawk Precious Minerals USA, Inc., which issuance represents beneficial ownership of 21.9% of the Registrant's common stock. The Registrant currently holds a 50% equity interest in the joint venture, Active Hawk Minerals, LLC, and has an option to purchase the equity interest of Hawk Precious Minerals USA, Inc. on or prior to October 6, 2003. In connection with the formation and organization of the joint venture, the Registrant also entered into a Member Control Agreement with Hawk Precious Minerals USA, Inc. The Registrant is attaching the Joint Venture and Joint Contribution Agreement and the Member Control Agreement as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K, and such exhibits are incorporated herein by reference. In addition, the Registrant is attaching as Exhibit 99.1 a Press Release dated June 30, 2003, with respect to the joint venture transaction which is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits EXHIBIT DESCRIPTION OF DOCUMENT ------- ----------------------- 10.1 Joint Venture and Joint Contribution Agreement, dated June 26, 2003, by and among Active IQ Technologies, Inc., Hawk Precious Minerals Inc., and Hawk Precious Minerals USA, Inc. 10.2 Member Control Agreement of Active Hawk Minerals, LLC dated June 26, 2003 99.1 Press Release dated June 30, 2003 2 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ACTIVE IQ TECHNOLOGIES, INC. Date: July 1, 2003 By: /s/ Mark D. Dacko -------------------------- Mark D. Dacko Chief Financial Officer 3 EXHIBIT INDEX EXHIBIT DESCRIPTION OF DOCUMENT ------- ----------------------- 10.1 Joint Venture and Joint Contribution Agreement, dated June 26, 2003, by and among Active IQ Technologies, Inc., Hawk Precious Minerals Inc., and Hawk Precious Minerals USA, Inc. 10.2 Member Control Agreement of Active Hawk Minerals, LLC dated June 26, 2003 99.1 Press Release dated June 30, 2003 EX-10.1 3 c78051exv10w1.txt JOINT VENTURE AND JOINT CONTRIBUTION AGREEMENT 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 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 2 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 3 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. 4 (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 5 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. 6 (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. 7 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 provisions restricting a Member's ability to buy, sell or otherwise transfer their Company Units. (b) Investment Representations with regard to Private Placement. Hawk Sub hereby represents and warrants to the Company and to Active IQ, respectively, with respect to the Hawk Sub Contribution and the concomitant investments by Hawk Sub in Company Units and the Shares (such Units and Shares are collectively referred to herein as the "SECURITIES"), as follows: (i) Hawk Sub is acquiring the Securities for its own account, for investment purposes only and not with a view towards or in connection with the public sale or distribution thereof in violation of the Securities Act of 1933, as amended (the "SECURITIES ACT"); (ii) Hawk Sub understands that the Securities are being offered and sold by the Company and Active IQ in reliance on an exemption from the registration requirements of the Securities Act and equivalent state securities and "blue sky" laws, and that both the Company and Active IQ are relying upon the accuracy of, and Hawk Sub's compliance with, Hawk Sub's representations, warranties and covenants set forth in this Agreement to determine the availability of such exemption and the eligibility of Hawk Sub to purchase the Securities; (iii) Hawk Sub understands that the Securities have not been approved or disapproved by the United States Securities and Exchange Commission (the "COMMISSION") or any state securities commission; (iv) Hawk Sub understands that there will be no market for the Units, that there are significant restrictions on the transferability of the Securities, and that, for these and other reasons, Hawk Sub may be unable to liquidate an investment in the Securities for an indefinite period of time; and (c) Restrictions on Resale; Rule 144. Hawk Sub understands and acknowledges that, upon issuance pursuant to Section 1.5, the Securities will not be registered under the Securities Act or any state securities laws by reason of the availability of an exemption from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Rules 505 or 506 promulgated under the Securities Act and applicable state securities laws, and that the reliance of Active IQ upon these exemptions is predicated in part upon this representation by Hawk Sub. Hawk Sub further understands and acknowledges that the Securities may not be transferred or resold without (i) registration under the Securities Act and any applicable state securities laws or (ii) an exemption from the requirements of the Securities Act and applicable state securities laws. Hawk Sub understands and acknowledges that (i) an exemption from such registration is not presently available pursuant to Securities Act Rule 144 promulgated by the Commission, (ii) Active IQ makes no commitment to become or remain eligible for Rule 144, and (iii) Hawk Sub may not sell any Securities acquired hereunder pursuant to Rule 144 prior to the expiration of a one-year period (or such shorter period as the Commission may hereafter adopt) after the acquisition of such Securities. 8 (d) Restrictive Legend. Hawk Sub acknowledges and agrees that, upon issuance of the Shares pursuant to this Agreement, certificates representing the Shares shall have endorsed thereon legends in substantially the following form (and a stop-transfer order may be placed against transfer of the Shares until such legend has been removed): THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND WITHOUT A VIEW TO THEIR DISTRIBUTION AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUING CORPORATION, AN EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER APPLICABLE SECURITIES LAWS. 3.3 Representations and Warranties of Active IQ. Active IQ hereby represents and warrants to Hawk Sub: (a) Member Control Agreement. Active IQ understands and acknowledges that by performing the Active IQ Contribution and executing and delivering the Member Control Agreement, Active IQ will become bound by the terms of the Member Control Agreement, including those provisions restricting a Member's ability to buy, sell or otherwise transfer their Company Units. (b) Organization; Good Standing, Etc. Active IQ 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. (c) Charter Documents. Copies of Active IQ's Charter Documents have been delivered to legal counsel for Hawk 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. (d) Due Authorization. This Agreement and the Ancillary Documents have been duly authorized by all necessary corporate action on behalf of Active IQ, have been duly executed and delivered by authorized officers of Active IQ, are valid and binding agreements on the part of Active IQ and are enforceable against Active IQ in accordance with their respective terms. (e) Capitalization. As of June 26, 2004, the Company's authorized capital stock consists of 150,000,000 shares of capital stock; of which 13,307,181 shares of Common Stock are issued and outstanding. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and nonassessable. As of the date of this Agreement, the Company has outstanding stock options to purchase 2,805,545 shares of Common Stock, and outstanding warrants to purchase 9,269,301 shares of Common Stock. 9 (f) Valid Issuance. The Shares to be issued to Hawk Sub in the Private Placement, when issued and paid for pursuant to the terms of this Agreement (i.e., upon the performance by Hawk Sub of the Hawk Sub Contribution), will be duly authorized and validly issued and outstanding, fully paid, nonassessable and free and clear of all pledges, liens, encumbrances and restrictions other than those restrictions relating to the Securities Act. (g) Litigation; Governmental Proceedings. Except as set forth on Schedule 3.3(g) hereof, there are no Proceedings pending or threatened against Active IQ or any of their respective properties or business, or any officer or director of Active IQ in their capacity as such, and neither Active IQ nor any of its officers or directors are aware of any facts that are reasonably expected to result in or form the basis for any such Proceeding. Active IQ is not in default with respect to any judgment, order or decree of any court or any Governmental Body. (h) No Conflict. Neither the execution and the delivery of this Agreement or the Ancillary Documents, nor the consummation or performance of any of 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 Active IQ or any resolution adopted by the shareholders of Active IQ; (ii) contravene, conflict with or result in a violation of or default under, or give any Governmental Body or other Person 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 Active IQ 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 held by Active IQ or that otherwise relates to the business of Active IQ; 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 Active IQ is a party or by which Active IQ is bound. Except as set forth on Schedule 3.3(h) hereof, Active IQ will not be required to give any notice to or obtain any consent from any Person in order for Active IQ to consummate the Contemplated Transactions. (i) Compliance with Applicable Laws and Other Instruments. The properties, business and operations of Active IQ have been and are being conducted in all material respects in accordance with all applicable laws, rules and regulations of all Governmental Bodies. 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 Active IQ is a party or by which it or any of its properties, assets or rights is bound or affected. Active IQ is not in violation of its Charter Documents, nor is it in violation of, or in default under, any lien, indenture, mortgage, lease, agreement, instrument, commitment or arrangement in any material respect. Active IQ is not subject to any restriction that would prohibit it from entering into or performing its obligations under this Agreement or the Ancillary Agreements. (j) No Brokers or Finders. Except for Boston Financial Partners and Wayne W. Mills (the fees for which, if any, will be paid by Hawk) no Person has or will have, as a result of any contractual undertaking by Active IQ, any right, interest or valid claim against Active IQ for any commission, fee or other compensation as a finder or broker, or in any similar capacity, in connection with the Contemplated Transactions. 10 (k) Absence of Restrictive Agreements. There are no agreements or other obligations by which Active IQ is bound, which restrict the ability of Active IQ to enter into this Agreement, to form, organize or operate the Company, or to perform any of the Contemplated Transactions. (l) Board of Directors; Management. As of the Closing, Active IQ's board of directors shall consist of no more than two persons. Three additional directors shall be appointed to serve on the board of directors of Active IQ pursuant to the written action described in Section 2.2(f). ARTICLE 4 CONDITIONS TO CLOSING The obligation of each party to this Agreement to close the Contemplated Transactions is subject to the fulfillment or waiver, on or prior to the Closing Date, of the conditions set forth in this Article 4, as follows: 4.1 Representations and Warranties. Each party's obligation to close the Contemplated Transactions is subject to the truth and accuracy, in all respects, of the representations and warranties of each other party, made to and for the benefit such party, under this Agreement as of the Closing Date with the same effect as though made on and as of such date. 4.2 Ancillary Documents. Each party's obligation to close the Contemplated Transactions is subject to the execution and delivery, at the Closing, of all Ancillary Documents by all parties thereto. 4.3 Supporting Documents. Legal counsel for each of the parties to this Agreement shall have received the following: (a) a copy of resolutions of the other parties' board of governors or directors, as the case may be, authorizing and approving the execution, delivery and performance of this Agreement and any Ancillary Documents to which it is a party; all such resolutions shall be certified by a corporate or company officer of the delivering party; and (b) copies of Charter Documents, certified by the governmental agencies responsible for the filing and certification of such Charter Documents. 4.4 Consents and Approvals. No party shall be obligated to close the Contemplated Transactions unless, on or prior to the Closing Date, the parties shall have received all consents and approvals necessary to consummate the Contemplated Transactions. 4.5 Certificate of Officers. Each party's obligation to close the Contemplated Transactions is subject to the delivery, by each other party who made a representation and warranty to and for the benefit of such party, of a certificate, dated as of the Closing Date, executed by the delivering party's Chief Executive Officer or similar officer, certifying to the delivering party's satisfaction of the conditions specified in Sections 4.1 through 4.4. 4.6 Composition of Board of Directors. Each party's obligation to close the Contemplated Transactions is subject to the mutual agreement of Hawk and Active IQ with respect to the third new director to be appointed by mutual agreement of such parties pursuant to the written action of the board of directors of Active IQ to be delivered at Closing, as contemplated by Section 2.2(f). 11 ARTICLE 5 COVENANTS 5.1 No Publicity. The parties agree that, except as required by applicable law, they will not make any press releases or other announcements prior to or at the time of Closing with respect to the Contemplated Transactions without the prior approval of the other Party, which approval will not be unreasonably withheld or delayed. 5.2 Claims of Shareholders or Equity Interest Holders. The parties agree that any Proceeding brought by a shareholder or equity interest holder of any of the parties against another party to this Agreement as a result of the Contemplated Transactions shall be defended by the party whose shareholder or equity interest holder brings the Proceeding. 5.3 Stop Transfer Instructions; Legends. Active IQ agrees that no instruction, other than the instructions referred to in this Section 5.3 and customary stop-transfer instructions prior to the registration and sale of the Shares pursuant to an effective Securities Act registration statement, shall be given to its transfer agent for the Shares. The Shares shall otherwise be freely transferable on the Company's books and records as and to the extent provided in this Agreement and applicable law. Nothing contained in this Section 5.3 shall affect in any way Hawk Sub's (or any subsequent transferee's) obligations and agreement to comply with all applicable securities laws upon resale of any Shares. If at any time Hawk Sub provides Active IQ with an opinion of counsel reasonably satisfactory to Active IQ that registration of the resale by Hawk Sub of any Shares is not required under the Securities Act and that the removal of restrictive legends is permitted under applicable law, then Active IQ shall permit the transfer of such Shares and promptly instruct its transfer agent to issue one or more certificates for Common Stock without any restrictive legends endorsed thereon. 5.4 Oxide Zone Rights. Hawk agrees to use reasonable efforts to promptly determine the precise nature and extent of its mining claim with respect to the Oxide Zone Rights, specifically including whether the mining claim is patented or unpatented. ARTICLE 6 REGISTRATION RIGHTS 6.1 Piggyback Registration. (a) Active IQ covenants to and agrees with Hawk Sub that, if at any time following the commencement of the Registration Period, as defined in paragraph (c) below, (i) Active IQ proposes to file a registration statement under the Securities Act (expressly excluding amendments to currently filed but not yet effective registration statements, if any and any inappropriate forms for piggyback registration such as Forms S-4, S-8 or their successor forms) with respect to any class of security in connection with either a primary registration on behalf of Active IQ itself or a secondary registration on behalf of holders of securities, and (ii) the registration statement may be used for registration of the Shares, then Active IQ will give written notice to Hawk Sub at least 30 days prior to the filing of such registration statement and will include in such registration statement the Shares to the extent that Hawk Sub provides a written request for inclusion therein within 20 days after receipt of the Active IQ's written notice. (b) Active IQ will use its best efforts, through its officers, directors, auditors and counsel, to cause to become effective such registration statement as promptly as practicable. At such time after the filing of the registration statement when the Commission indicates, either orally or in writing, that it is willing to entertain requests for acceleration of effectiveness of such registration statement, 12 Active IQ shall promptly request that the effectiveness of such registration statement be accelerated; provided, however, that Active IQ shall not have an obligation to register Shares if such Shares are already then covered by an existing registration statement. (c) For purposes of this Article 6, the term "REGISTRATION PERIOD" shall mean the period of time following the Closing after which (i) Active IQ has raised an aggregate of at least $2.0 million in gross proceeds from one or more public offerings of equity securities, including for this purpose so-called "PIPE" transactions, and (ii) the closing sales price of Active IQ Common Stock is at least One Dollar and No/100 ($1.00) per share of Common Stock for a minimum of 20 consecutive trading days. 6.2 Subsequently Issued Shares. The piggyback registration rights of Hawk Sub set forth in Section 6.1 above shall include any shares of Active IQ Common Stock issued to Hawk Sub in connection with the purchase and sale of all of Hawk Sub's remaining membership interest in the Company pursuant to Section 8.7 of the Member Control Agreement, and all such shares of Common Stock shall be considered "Shares" for all purposes of this Article 6. 6.3 Certain Limitations. (a) Notwithstanding anything else to the contrary contained in this Article 6, if a greater number of shares of Common Stock are offered for participation in a proposed offering than, in the reasonable opinion of the managing underwriter of such proposed offering, if any, can be accommodated without adversely affecting the proposed offering, then the amount of Shares (including shares of Common Stock registrable under Section 6.2 above) shall be proportionately reduced together with the securities of other selling shareholders participating in the registration to the extent deemed satisfactory by the managing underwriter. (b) Active IQ's obligation to include any Shares in a registration statement is contingent upon the cooperation of Hawk Sub in the preparation and filing of any such registration statement, such cooperation to include the furnishing of information concerning Hawk Sub for inclusion in such registration statement. 6.4 Fees and Expenses. Active IQ shall bear all expenses and fees incurred in connection with the preparation, filing and amendments, if any, of any registration statement under which Hawk Sub exercises its rights to piggyback registration under this Article 6; provided, however, that Hawk Sub shall pay all fees, disbursements and expenses of any counsel or expert it retains and all underwriting discounts and commissions, filing fees and any transfer or other taxes relating to the Shares included in a registration statement of Active IQ. 6.5 Length of Effectiveness. Active IQ shall prepare and file with the Commission such amendments (including post-effective amendments) to any registration statement under which Shares are being registered, and supplements thereto, as may be necessary to keep such registration statement continuously effective and in compliance with the provisions of the Securities Act applicable thereto so as to permit the prospectus forming part of the registration statement to be current and useable by Hawk Sub for resales of the Shares for a two-year period after the date on which such registration statement is first declared effective by the Commission, or, if shorter, two years after the date of issuance of the Shares or when all the Shares covered by the registration statement have been sold pursuant thereto in accordance with the plan of distribution provided in the prospectus, transferred pursuant to Rule 144 under the Securities Act, or otherwise transferred in a manner that results in the delivery of new securities not subject to transfer restrictions under the Securities Act. 13 ARTICLE 7 INDEMNIFICATION 7.1 Indemnification. Each party shall indemnify and hold harmless (each an "INDEMNIFYING PARTY") the others (the party or parties to be indemnified in any particular case is collectively referred to hereinafter as an "INDEMNIFIED PARTY") from, against and in respect of any and all Damages, as defined below, losses, deficiencies, liabilities, costs and expenses resulting from, relating to or arising out of any (a) misrepresentation, (b) breach of a representation or warranty or (c) non-fulfillment of any agreement or covenant hereunder on the part of such Indemnifying Party. Moreover, each Indemnifying Party will indemnify and hold harmless an Indemnified Party hereto from, against and in respect of any and all actions, suits, proceedings, demands, assessments, judgments, costs (including reasonable attorneys' fees) and legal and other expenses incident to any of the foregoing or to the enforcement of this Section. As used in this Article 7, the term "DAMAGES" means all actual damages suffered or incurred by an Indemnified Party, including without limitation all compensatory damages, but excluding any consequential or punitive damages. 7.2 Survival. All of the indemnity obligations herein shall survive the Closing for a period of three years from the Closing Date. 7.3 Claims for Indemnification. All claims for indemnification under this Agreement shall be asserted and resolved as follows: (a) Third Party Claims. In the event that any claim or demand for which one party would be liable to the other hereunder is asserted against or sought to be collected by a third party (a "THIRD PARTY CLAIM"), the Indemnified Party shall promptly notify the Indemnifying Party in writing of such Third Party Claim, specifying the nature of such claim or demand and the amount or the estimated amount thereof to the extent then feasible (which estimate shall not be conclusive of the final amount of such claim or demand) (the "CLAIM NOTICE"); provided, however, that failure of an Indemnified Party to give notice as provided in this Section 7.3(a) shall relieve the Indemnifying Party of its obligations hereunder to the extent that the Indemnifying Party actually has been prejudiced by such failure to give notice. Thereafter, the Indemnified Party shall deliver to the Indemnifying Party, as promptly as practicable and, in any event, within ten days after such Indemnified Party's receipt thereof, copies of all notices and other documents relating to the Third Party Claim. In addition: (i) The Indemnifying Party will have 30 days from its receipt of the Claim Notice (the "NOTICE PERIOD") to assume or cause the assumption of the defense thereof with counsel selected by the Indemnifying Party (provided such counsel is not reasonably objected to by the Indemnified Party). (ii) Should the Indemnifying Party elect to assume or cause the assumption of the defense of a Third Party Claim, the Indemnifying Party will not be liable to the Indemnified Party for any legal expenses subsequently incurred by the Indemnified Party in connection with the defense thereof unless the Indemnifying Party has agreed in writing to pay such fees and expenses. (iii) If the Indemnifying Party assumes the defense of a Third Party Claim, then, as long as the Indemnifying Party is reasonably contesting such claim in good faith, the 14 Indemnified Party shall not admit any liability with respect to, or settle, compromise or discharge any Third Party Claim without the Indemnifying Party's prior written consent, and the Indemnified Party will agree to any settlement, compromise or discharge of the Third Party Claim the Indemnifying Party may recommend which releases the Indemnified Party in connection with such Third Party Claim. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay or settle any such claim, provided that in such event it shall waive any right to indemnity therefor by the Indemnifying Party. If the Indemnifying Party assumes the defense of a Third Party Claim, then the Indemnifying Party shall not, without the Indemnified Party's prior written consent, settle or compromise any Third Party Claim or consent to the entry of any judgment which does not include as an unconditional term thereof the delivery by the claimant or plaintiff to the Indemnified Party of a written release from all liability in respect of such Third Party Claim. (iv) The amount that an Indemnifying Party shall be obligated to reimburse an Indemnified Party in connection with any Third Party Claim shall be reduced by the amount of the insurance benefits, if any, obtained by the Indemnified Party (or for its benefit) by reason of the matter giving rise to such Claim. (v) The amount that any Indemnifying Party shall be obligated to reimburse an Indemnified Party in connection with any Third Party Claim shall be reduced by an amount equal to any income tax benefits obtained by such party (or for its benefit) as a result of the event giving rise to the Indemnifying Party's obligation to make the reimbursement, after taking into account (1) any insurance benefits described in the preceding paragraph and (2) the income tax treatment of the Indemnified Party's receipt of such insurance benefits and reimbursement. (b) Other Claims. In the event that a party should have a claim against another party hereunder which does not involve a Third Party Claim, the Indemnified Party shall promptly notify the Indemnifying Party in writing of the claim, specifying the nature of such claim or demand and the amount or the estimated amount thereof to the extent then feasible (which estimate shall not be conclusive of the final amount of such claim or demand); provided, however, that failure of an Indemnified Party to give notice as provided in this Section 7.3(b) shall relieve the Indemnifying Party of its obligations hereunder to the extent that the Indemnifying Party actually has been prejudiced by such failure to give notice. If the Indemnifying Party does not notify the Indemnified Party within 30 days after receipt of notice thereof that the Indemnifying Party disputes such claims, the amount of such claim shall be conclusively deemed a liability of the Indemnified Party hereunder. ARTICLE 8 GENERAL PROVISIONS 8.1 Notices. All notices required to be given by this Agreement shall be made in writing either: (a) by personal or commercial courier delivery to the party requiring notice and securing a written receipt, or (b) by mailing the notice to the last known address of the party requiring notice, by registered mail, return-receipt requested. Notice shall be treated as given when personally received or, if sent as provided above, the effective date of the notice shall be the date of the written receipt received upon delivery in clause (a) above or (except in the event of a mail strike) the date the notice is sent pursuant to clause (b) above. 15 Such notices will be given to a party at the address set forth below: If to Active IQ: Active IQ Technologies, Inc. 800 Nicollet Mall, Suite 2690 Minneapolis, Minnesota 55402 Attention: Chief Executive Officer If to Hawk: Hawk Precious Minerals Inc. 404 - 347 Bay Street Toronto, Ontario M5H 2R7 Attention: President If to Hawk Sub: Hawk Precious Minerals USA, Inc. 404 - 347 Bay Street Toronto, Ontario M5H 2R7 Attention: Chief Executive Officer Any party to this Agreement may, at any time by giving five days prior written notice to the other parties, designate any other address in substitution of the foregoing address. All notices, offers, demands, certificates or other communications required or permitted under this Agreement shall be in writing, signed by the Person giving the same. 8.2 Consent and Waiver. No consent under and no waiver of any provision of this Agreement on any one occasion shall constitute a consent under or waiver of any other provision on said occasion or on any other occasion, nor shall it constitute a consent under or waiver of the consented-to or waived provision on any other occasion. No consent or waiver shall be enforceable unless it is in writing and signed by the party against whom such consent or waiver is sought to be enforced. 8.3 Entire Agreement. Except for the Articles of Organization of the Company, the Company bylaws, the Member Control Agreement with respect to the Company, and any other Ancillary Documents, this Agreement constitutes the entire agreement among the parties with respect to the Company and the joint venture contemplated hereby. It supersedes any prior agreement or understanding among them, and it may not be modified or amended in any manner other than as set forth herein. 8.4 Oral Changes, Waivers, Etc. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, but only pursuant to a written statement signed by the party against which enforcement of the change, waiver, discharge or termination is sought. 8.5 Governing Law; Jurisdiction and Venue. This Agreement and the rights of the parties hereunder shall be governed by, interpreted and enforced in accordance with the laws of the State of Minnesota without regard to the principles of conflicts-of-law. Each of the parties hereto consents to the exclusive jurisdiction of the federal courts whose districts encompass any part of the City of Minneapolis or the state courts of the State of Minnesota sitting in the City of Minneapolis in connection with any dispute arising in connection with the Contemplated Transactions. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may effectively do so, any defense of an inconvenient forum or improper venue to the maintenance of such action or proceeding in any such court and any right of jurisdiction on account of its place of residence or domicile. Each party hereto irrevocably and unconditionally consents to the service of any and all process in any such action or proceeding in such courts by the mailing of copies of such process by certified or registered airmail at its address specified in Section 8.1. Each party hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 16 8.6 Binding Effect. Except as herein otherwise specifically provided, this Agreement shall be binding upon and inure to the benefit of the parties and their legal representatives, heirs, administrators, executors, successors and permitted assigns. 8.7 Number and Gender. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural and pronouns stated in either the masculine, the feminine, or the neuter gender shall include the masculine, feminine and neuter. 8.8 Interpretation. All references herein to Articles, Sections and paragraphs refer to Articles, Sections and paragraphs of this Agreement, unless the context of such reference indicates otherwise. All Article, Section and paragraph headings are for reference purposes only and shall not affect the interpretation of this Agreement. 8.9 Severability. If any provision of this Agreement or the application of such provision to any Person or circumstances, shall be held invalid, the remainder of the Agreement, or the application of such provision to Persons or circumstances other than those to which it is held invalid, shall not be affected thereby. 8.10 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement binding on all parties. Facsimile and electronically transmitted signatures shall be valid and binding to the same extent as original signatures. Each party shall become bound by this Agreement immediately upon signing and delivering any counterpart, independently of the signature of any other party. Nevertheless, in making proof of this Agreement, it will be necessary to produce only one copy signed by the party to be charged. 8.11 Further Assurances. Each party hereby agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and the Contemplated Transactions. 8.12 No Third Party Beneficiary. This Agreement is made solely and specifically among and for the benefit of the parties hereto and their respective successors and assigns, and no other Person will have any rights, interest or claims hereunder or be entitled to any benefits under or on account of this Agreement as a third-party beneficiary or otherwise; provided, however, that all representations and warranties of the parties contained in Article 3 shall also inure to the benefit of the Company upon the Closing. 8.13 Incorporation by Reference. Each of the exhibits, schedules and other appendices attached to this Agreement and referred to herein is hereby incorporated into this Agreement by reference, unless this Agreement expressly otherwise provides. 8.14 Discretion. Whenever a Person may take action under this Agreement is his, her or its "sole discretion," "sole and absolute discretion" or "discretion," or under a grant of similar authority or latitude, such Person shall be entitled to consider any factors and interests as it desires, including its own interests. 8.15 Arbitration. If any controversy or claim arising out of this Agreement cannot be settled by the parties hereto and, if applicable, the Company (the "disputants"), the controversy or claim shall be resolved pursuant 17 to informal arbitration by an arbitrator selected under and conducted pursuant to the Commercial Rules of the American Arbitration Association (as then in effect for expedited proceedings) and located in Minneapolis, Minnesota; and the arbitration shall be conducted in that same location under such rules. Notwithstanding the foregoing, no disputant shall be required to seek arbitration regarding any cause of action that would entitle such disputant to injunctive relief. Each of the disputants shall be entitled to present evidence and argument to the arbitrator. The arbitrator shall have the right only to interpret and apply the provisions of this Agreement (including other applicable agreements) and may not change any of such provisions. The arbitrator shall permit reasonable pre-hearing discovery of facts, to the extent necessary to establish a claim or a defense to a claim, subject to supervision by the arbitrator. The determination of the arbitrator shall be conclusive and binding upon the parties and a court judgment upon the same may be entered in any court having competent jurisdiction thereof. The arbitrator shall give written notice to the disputants stating the arbitrator's determination, and shall furnish to each disputant a signed copy of such determination. The expenses of arbitration shall be borne equally by the opposing disputants or as the arbitrator shall otherwise equitably determine. 8.16 Litigation Expense. If any disputant (as defined in Section 8.15, and including all disputants opposing one or more other disputants as one party) is made or shall become a party to any litigation (including arbitration) commenced by or against another disputant involving the enforcement of any of the rights or remedies of such disputant, or arising on account of a default of the other disputant in its performance of any of the other disputant's obligations hereunder, then the prevailing disputant in such litigation shall receive from the other disputant all costs incurred by the prevailing disputant in such litigation, plus reasonable attorneys' fees to be fixed by the court or arbitrator (as applicable), with interest thereon from the date of judgment or arbitrator's decision at the rate of ten percent (10%) or, if less, the maximum rate permitted by law. 18 IN WITNESS WHEREOF, the undersigned have set their hands to this Joint Venture and Joint Contribution Agreement to be effective as of the date first set forth above. ACTIVE IQ TECHNOLOGIES, INC. /s/ Kenneth W. Brimmer ------------------------------------------------ KENNETH W. BRIMMER, Chief Executive Officer HAWK PRECIOUS MINERALS INC. /s/ H. Vance White ------------------------------------------------ H. VANCE WHITE, President HAWK PRECIOUS MINERALS USA, INC. /s/ H. Vance White ------------------------------------------------ H. VANCE WHITE, Chief Executive Officer Pursuant to Item 601(b)(2) of Regulation S-K, certain Schedules and Exhibits have been omitted from this Agreement. The Registrant will furnish a copy of any omitted Schedule or Exhibit to the Commission upon request. EX-10.2 4 c78051exv10w2.txt MEMBER CONTROL AGREEMENT EXHIBIT 10.2 MEMBER CONTROL AGREEMENT OF ACTIVE HAWK MINERALS, LLC EFFECTIVE AS OF JUNE 26, 2003 THE LIMITED LIABILITY COMPANY INTERESTS AND UNITS CREATED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR UNDER ANY STATE SECURITIES LAWS. CONSEQUENTLY, THE LIMITED LIABILITY COMPANY INTERESTS AND UNITS MAY NOT BE SOLD OR TRANSFERRED UNLESS SUBSEQUENTLY REGISTERED AND QUALIFIED UNDER SUCH LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION AND QUALIFICATION IS THEN AVAILABLE. OTHER RESTRICTIONS ON TRANSFER APPLY, AS HEREINAFTER SET FORTH. TABLE OF CONTENTS ARTICLE 1 FORMATION OF LIMITED LIABILITY COMPANY..................................................................1 1.1 Formation and Term..............................................................................1 1.2 Name............................................................................................1 1.3 Place of Business and Agent for Process.........................................................2 1.4 Purpose.........................................................................................2 ARTICLE 2 MEMBERS AND NEW MEMBERS.................................................................................2 2.1 Members.........................................................................................2 2.2 Terms of Membership Interests...................................................................2 2.3 Additional Members..............................................................................2 ARTICLE 3 MEMBERS' CAPITAL........................................................................................3 3.1 Definitions Relating to Capital.................................................................3 3.2 Original Capital Contributions and Interests of Members.........................................4 3.3 Active IQ Installments of Original Capital Contribution.........................................4 3.4 Additional Capital Contributions................................................................4 3.5 Other Capital Matters...........................................................................5 3.6 Default by Member...............................................................................5 3.7 Default in Original Capital Contribution of Active IQ...........................................6 3.8 Transferee Succeeds to Transferor's Capital Account.............................................6 3.9 Loans to Company................................................................................6 ARTICLE 4 ALLOCATIONS AND DISTRIBUTIONS...........................................................................6 4.1 Definitions of Profits and Losses...............................................................6 4.2 Allocation of Profits...........................................................................7 4.3 Allocation of Losses............................................................................7 4.4 Proration of Allocations........................................................................7 4.5 Distributions of Net Cash From Operations.......................................................7 4.6 Other Cash Distributions........................................................................8 ARTICLE 5 MANAGEMENT AND OPERATION OF BUSINESS....................................................................8 5.1 Management and Control of the Company...........................................................8 5.2 Appointment of Directors........................................................................8 5.3 Removal, Resignation and Replacement of Directors...............................................8 5.4 Authority of Board..............................................................................8 5.5 Restrictions on Board Authority.................................................................8 5.6 Obligations of the Board........................................................................9 5.7 Reimbursement of Expenses.......................................................................9 5.8 Conflicts of Interest...........................................................................9 5.9 Independent Activities..........................................................................9 5.10 Indemnification.................................................................................9 5.11 Liability Under Other Agreements...............................................................10 ARTICLE 6 BOOKS OF ACCOUNT AND RECORDS...........................................................................10 6.1 Books of Account...............................................................................10 6.2 Accounting Practices...........................................................................10 6.3 Bank Accounts..................................................................................10 6.4 Report to Members..............................................................................10 6.5 Partnership Tax Status and Information.........................................................10 ARTICLE 7 TRANSFER RESTRICTIONS..................................................................................11 7.1 General Restriction............................................................................11 7.2 Permitted Transfers............................................................................11 7.3 Conditions to Permitted Transfers..............................................................11
i 7.4 Acquit Company.................................................................................12 7.5 Prohibition of Involuntary Transfers...........................................................12 7.6 Effect of Attempts to Make Prohibited Transfers................................................12 7.7 Limited Rights of Unadmitted Transferees.......................................................13 ARTICLE 8 RIGHTS, OPTIONS AND VALUATION..........................................................................13 8.1 Certain Definitions............................................................................13 8.2 Events Creating Option To Buy..................................................................13 8.3 Notice To Company and Members..................................................................14 8.4 Company's Option to Purchase...................................................................15 8.5 Members' Option to Purchase....................................................................15 8.6 Failure of Company and Members to Exercise Option..............................................15 8.7 Active IQ Buyout Option........................................................................16 8.8 Purchase Price.................................................................................16 8.9 Closing Date and Terms of Purchase.............................................................17 ARTICLE 9 AMENDMENT OF AGREEMENT.................................................................................18 ARTICLE 10 DISSOLUTION...........................................................................................18 10.1 Liquidating Events.............................................................................18 10.2 Agreement to Avoid Dissolution.................................................................18 10.3 Distributions on Liquidation...................................................................18 ARTICLE 11 GENERAL PROVISIONS....................................................................................19 11.1 Notices........................................................................................19 11.2 Consent and Waiver.............................................................................19 11.3 Entire Agreement...............................................................................19 11.4 Governing Law; Jurisdiction....................................................................20 11.5 Binding Effect.................................................................................20 11.6 Number and Gender..............................................................................20 11.7 Interpretation.................................................................................20 11.8 Severability...................................................................................20 11.9 Counterparts...................................................................................20 11.10 Right to Specific Performance..................................................................20 11.11 Further Assurances.............................................................................20 11.12 No Third-Party Beneficiary.....................................................................21 11.13 Incorporation by Reference.....................................................................21 11.14 Discretion.....................................................................................21 11.15 Arbitration....................................................................................21 11.16 Litigation Expense.............................................................................21
ii MEMBER CONTROL AGREEMENT OF ACTIVE HAWK MINERALS, LLC THIS MEMBER CONTROL AGREEMENT is made effective as of June 26, 2003 (the "Effective Date"), by and between Active IQ Technologies, Inc., a Minnesota corporation ("AIQ"), and Hawk Precious Minerals USA, Inc., a Minnesota corporation ("Hawk Sub") (collectively with any future undersigned parties to this Agreement, the "Members") with respect to Active Hawk Minerals, LLC, a Minnesota limited liability company (the "Company"). INTRODUCTION A. The Company has been organized pursuant to Minnesota Statutes, Chapter 322B (the "LLC Act"), by the filing of the Company's Articles of Organization (the "Articles"), and the making of capital contributions as set forth in Exhibit A attached to this Agreement and hereby made a part of this Agreement. B. The Members constitute all of the original members of the Company and wish to combine their respective business operations into a joint venture to be conducted in the form of the Company; and to that end the Members have executed and delivered a Joint Venture and Joint Contribution Agreement dated June 26, 2003 (the "Joint Venture and Joint Contribution Agreement") describing the respective capital contributions of the Members to the Company, a copy of which Joint Contribution Agreement is attached to this Agreement as Exhibit B. C. Section 322B.37 of the LLC Act authorizes a member control agreement for a limited liability company. D. Each Member desires to enter into such an agreement with respect to the Company, in the form of this Agreement which hereby incorporates by reference the Appendix of General Definitions and Income Tax Appendix attached hereto. AGREEMENT NOW, THEREFORE, in consideration of the foregoing facts which are hereby made a part of this Agreement, the mutual promises of the Members and the mutual benefits to be gained by the performance of this Agreement, the Members, intending to be legally bound, hereby agree as follows: ARTICLE 1 FORMATION OF LIMITED LIABILITY COMPANY 1.1 Formation and Term. On June 24, 2003 (the "Formation Date"), the Company was formed as a limited liability company under the provisions of the LLC Act. The Members hereby adopt and approve the Company's Articles as filed in the office of the Minnesota Secretary of State on the Formation Date. Except as otherwise provided in this Agreement, the Articles and the Company's bylaws (the "Bylaws"), the rights and liabilities of the Members shall be as provided in the LLC Act. The Company shall exist perpetually unless dissolved upon a Liquidating Event as provided in Section 10.1. 1.2 Name. The Company's business shall be conducted under the name of "Active Hawk Minerals, LLC" or such other name as the Board may designate. 1.3 Place of Business and Agent for Process. The Board may from time to time change the location of the Company's principal office. In addition, the Board may in its discretion establish additional places of business of the Company. The name and address of the agent for service of process is as set forth in the Articles. 1.4 Purpose. The Company has been formed for the purpose of obtaining and holding certain rights with respect to certain lands located in the Republic of South Africa pursuant to those certain Heads of Agreement by and among Hawk Sub, Kwagga Gold (Proprietary) Limited, and AfriOre International (Barbados) Limited ("AfriOre"), dated June 4, 2003 (the "Kwagga Agreement"); including the right to fund and participate in all operations conducted on 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"). As of the Effective Date, the Company shall be the sole owner (other than Kwagga and AfriOre) of all rights in, to and under the Kwagga Agreement. ARTICLE 2 MEMBERS AND NEW MEMBERS 2.1 Members. The names and addresses of the Members shall be set forth Exhibit A hereby made a part of this Agreement, as amended from to time pursuant hereto. For all purposes of this Agreement, the terms "Member" or "Members" means the Persons initially signing this Agreement as members of the Company under the LLC Act, in their capacity as members, and each other Person who shall hereafter be admitted to the Company as a Member pursuant to the terms of this Agreement. 2.2 Terms of Membership Interests. Membership Interests in the Company are denominated "Units." The Company's Units shall have the rights provided by this Agreement, subject to any limitations in the Articles or the LLC Act. Each Member's Original Capital Contribution (as defined in Section 3.1(d)) and number and type of Units held shall be set forth in Exhibit A, as amended from time to time pursuant hereto. A Member's right to vote is a Governance Right. Each Member shall be entitled to one (1) vote on all Company matters for each Unit owned. Unless a higher threshold is specified in any provision of this Agreement or in the LLC Act, all actions to be taken or approved by the Members (either pursuant to this Agreement or otherwise) shall be taken or approved upon the unanimous vote of the Members holding issued and outstanding Units entitled to vote. As of the Effective Date, all Units have voting rights. Except as specifically set forth in this Agreement, all Units shall have equal Financial Rights and Governance Rights. Upon approval of the Members, the Board may establish one or more additional types, classes or series of Units having either Governance Rights or Financial Rights (or both) that are different, limited or preferred, as compared with the original Units authorized as of the Effective Date. If any such new type, class or series of Units is issued, this Agreement shall be amended to state the rights of such Units without further approval of the Members, or the Company's Officers may certify an addendum to this Agreement setting forth the relative rights, preferences and privileges of any new type, class or series of Unit. 2.3 Additional Members. Additional Members may be admitted to the Company by issuing additional Units of a type, class or series authorized by this Agreement only upon such terms and conditions as may be established and approved by the Board and the Members. Upon any such consent and issuance of additional Units, Exhibit A shall be appropriately amended. Nothing in this Section 2.3 shall be construed to limit the meaning and effect of Article 7 and Article 8 with respect to the Transfer of Units by Members and the addition of Members pursuant to such Transfers. 2 Each additional Member admitted to the Company shall execute this Agreement and, if making a Capital Contribution, shall execute and perform a Contribution Agreement delivered to and accepted on behalf of the Company by the Board. Any Person admitted to the Company as a Member or who otherwise has an interest in any Units shall be subject to and bound by all the provisions of this Agreement as if originally a party to this Agreement, including specifically the requirements of Article 3 relating to Capital Contributions. ARTICLE 3 MEMBERS' CAPITAL 3.1 Definitions Relating to Capital. (a) "Additional Capital Contributions" means, with respect to each Member, the Capital Contributions made by such Member pursuant to Section 3.4, reduced by the amount of any liabilities of such Member either assumed by the Company in connection with such Capital Contribution or which are secured by any property contributed by such Member as a part of such Capital Contribution. (b) "Capital Account" means, with respect to any Member, the Capital Account maintained for such Member in accordance with the following provisions: (i) To each Member's Capital Account there shall be credited such Member's Capital Contributions, such Member's distributive share of Profits and any items in the nature of income or gain which are specially allocated pursuant to Section 4 or Section 5 of the Income Tax Appendix, and the amount of any Company liabilities assumed by such Member or which are secured by any Company Property distributed to such Member. (ii) To each Member's Capital Account there shall be debited the amount of cash and the Gross Asset Value of any Company Property distributed to such Member pursuant to any provision of this Agreement, such Member's distributive share of Losses and any items in the nature of deductions or expenses that are specially allocated pursuant to Section 4 or Section 5 of the Income Tax Appendix, and the amount of any liabilities of such Member that are assumed by the Company or secured by any property contributed by such Member to the Company. (iii) In the event all or any portion of an Interest is Transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the Transferred Interest. (iv) In determining the amount of any liability for purposes of Sections 3.1(a), 3.1(b)(i), 3.1(b)(ii), and 3.1(d), there shall be taken into account Code ss. 752(c) and any other applicable provisions of the Code and Regulations. (c) "Capital Contribution" means, with respect to any Member, the amount of money and the initial Gross Asset Value of any Property (other than money) contributed to the Company with respect to the Interest held by such Member, and includes an Original Capital Contribution under Section 3.1(d) and any Additional Capital Contribution under Section 3.1(a). The principal amount of a promissory note that is not readily traded on an established securities market and is contributed to the Company by the maker of the note (or a Member related to the maker of the note within the meaning of Regulations ss. 3 1.704-1(b)(2)(ii)(c)) shall not be included in the Capital Account of any Member until the Company makes a taxable disposition of the note or until (and to the extent) principal payments are made on the note, all in accordance with Regulationsss. 1.704-1(b)(2)(iv)(d)(2). (d) "Original Capital Contribution" means, with respect to each Member, the Capital Contribution made by such Member pursuant to Section 4.2, reduced by the amount of any liabilities of such Member that are (i) assumed by the Company in connection with such Capital Contribution or (ii) secured by any property contributed by such Member to the Company as a part of such Capital Contribution. 3.2 Original Capital Contributions and Interests of Members. The capital of the Company shall be contributed by the Members and accepted by the Board at the respective values set forth on Exhibit A attached hereto. Upon executing this Agreement, each Member shall contribute to the capital of the Company the amount specified following his, her or its name on Exhibit A hereto as his, her or its Original Capital Contribution, and shall be credited with the number and type of Units set forth therein. Exhibit A shall be amended from time to time upon the occurrence of any event changing the information set forth therein. Any such amendment shall not be considered an "amendment" to this Agreement subject to the provisions of Article 9. The Members acknowledge and understand that, in accordance with the Joint Venture and Joint Contribution Agreement, the Original Capital Contribution of Active IQ shall be paid in three separate installments of cash in the following amounts on or prior to the following dates, in order that the Company meet its obligations to fund exploratory and, if necessary, mining operations under the Kwagga Agreement: Date Amount - ---- ------ Effective Date $500,000 September 27, 2003 $1,000,000 November 11, 2003 $600,000 3.3 Active IQ Installments of Original Capital Contribution. The installment of Active IQ's Original Capital Contribution due and payable on September 27, 2003 (the "First Funding Date") shall hereinafter be referred to as the "First Funding" and the installment of Active IQ's Original Capital Contribution due and payable on November 11, 2003 (the "Second Funding Date") shall hereinafter be referred to as the "Second Funding." All of Active IQ's installments of its Original Capital Contribution, including the installment made on the Effective Date, shall be made by wire transfer of immediately available funds to either the Company or to Kwagga, on the Company's behalf, in order for the Company to meet its funding obligations under the Kwagga Agreement, as the Members shall mutually determine a reasonable amount of time in advance of the Effective Date, the First Funding Date and the Second Funding Date. 3.4 Additional Capital Contributions. Each Member may contribute from time to time as an Additional Capital Contribution such additional money or other property as agreed upon by all the Members; provided, however, that any Additional Capital Contribution of property other than money made pursuant to this Section 3.4 shall be subject to the terms and provisions of a Contribution Agreement to be executed by the contributing Member and the Company prior to delivery of such property. The Company shall not demand that Members make Additional Capital Contributions. 4 If Additional Capital Contributions are not made equally by all Members, the Board shall equitably adjust the Capital Accounts, and Units if necessary, of each Member to account for any non-pro-rata Additional Capital Contributions on terms that shall be set forth in a Contribution Agreement signed as provided in the preceding paragraph. Upon any such adjustment, Exhibit A shall be appropriately amended. Additional Units may be issued only as permitted by Sections 2.2 and 2.3. If additional Units are issued, Exhibit A shall be appropriately amended. 3.5 Other Capital Matters. (a) Except as otherwise provided in this Agreement, no Member shall demand or receive a return of the Member's Capital Contributions or withdraw them from the Company without the approval of the Members. Under circumstances allowing or requiring a return of any Capital Contributions, no Member shall have the right to receive Company Property other than cash except as may be specifically provided herein. (b) No Member shall receive any interest, salary or draw with respect to the Member's Capital Contributions or the Member's Capital Account. (c) Except as otherwise provided by any other agreements among the Members or mandatory provisions of applicable state law, a Member shall be liable only to make the Member's Capital Contributions and shall not be required to lend any funds to the Company or, after the Member's Original Capital Contribution has been made, to make any Additional Capital Contributions to the Company. (d) A Member with a deficit balance in his, her or its Capital Account after the distribution of liquidation proceeds under Article 10 shall not be required to contribute the amount of such deficit to the Company. 3.6 Default by Member. Except with respect to an Original Capital Contribution by a Member or any installment thereof (which case is governed by Section 3.7 below), in the event that a Member fails to make any payment, or any installment thereof, when due, of any Capital Contribution or other obligation hereunder or under a Contribution Agreement, the Board may enforce such obligation in such manner as may be permitted by law. Without limiting the generality of the foregoing, the Board may, in its discretion: (a) bring an action at law or in equity to enforce such obligation; (b) assess interest on the unpaid amount at the highest rate of interest then being charged to the Company by any lender or allowed by state law; and/or (c) if the unpaid obligation is a required Capital Contribution, require the defaulting Member to unconditionally and irrevocably assign to the remaining Members that portion of the defaulting Member's Units which bears the same ratio to all of such defaulting Member's Units of the class of Units to which such Capital Contribution relates as the remaining amount of such defaulting Member's unpaid contributions, whether due or not yet due, bears to the total amount of contributions, both paid and unpaid, required to be made by such defaulting Member; provided, however, that such default shall not theretofore have been cured. If the Board requires assignment of all or a portion of a defaulting Member's Units pursuant to clause (c) above, then each remaining Member of the class of Units such Capital Contribution relates to shall have the right to acquire the defaulting Member's Units, determined as aforesaid, in the proportion that the number of each remaining Member's Units of the class of 5 Units such Capital Contribution relates to bears to the aggregate number of Units of the class of Units such Capital Contribution relates to of the remaining Members who desire to participate in such purchase, by paying the Company a cash amount equal to such proportion of the unpaid Capital Contributions. 3.7 Default in Original Capital Contribution of Active IQ. The parties acknowledge that Active IQ is making its Original Capital Contribution in cash installments occurring on the Effective Date, the Second Funding Date and the Third Funding Date in order that the Company may fund the operations of the Project pursuant to the timelines set forth in the Kwagga Agreement. Accordingly, if Active IQ defaults in any planned installment of the Original Capital Contribution described in Section 3.3, then (as the Company's sole and exclusive remedy), upon the expiration of the seventh (7th) day following Active IQ's receipt of a written notice from Kwagga or Hawk indicating that the due date for any "Advance" (as such term is defined in the Kwagga Agreement) not yet made has passed and that Active IQ has seven (7) days to make such Advance, Active IQ shall, if it has not theretofore provided the funds described in the Second Funding or Third Funding to the Company or to Kwagga (as the Members may mutually determine a reasonable amount of time prior to the Second Funding Date and/or Third Funding Date, as applicable), immediately forfeit all of its Units to Hawk and such Units shall be deemed automatically assigned to Hawk for an aggregate purchase price of One Dollar and No/100 ($1.00). 3.8 Transferee Succeeds to Transferor's Capital Account. If any Member Transfers all or a part of his, her or its Financial Rights in the Company, whether or not such Transfer is permitted under Article 8, any transferee from the Member shall succeed to the Capital Account (including any remaining Capital Contributions) of the transferor Member to the extent of the Interest Transferred, in accordance with Regulations ss. 1.704-1(b)(2)(iv)(1). 3.9 Loans to Company. If authorized by the Board, a Member may lend money to the Company from time to time, in excess of the Member's Capital Contributions; provided, however, that no such loan may be treated as a Capital Contribution for any purpose or entitle such Member to any increase in the Member's Units or share of the Profits, Losses, deductions, credits or Distributions of the Company. The Company shall be obligated to such Member for the amount of any such loan, with interest thereon at such rate as may have been agreed upon by such Member and the Board. ARTICLE 4 ALLOCATIONS AND DISTRIBUTIONS 4.1 Definitions of Profits and Losses. "Profits" and "Losses," respectively, shall mean, for each Fiscal Year, an amount equal to the Company's taxable income or loss (as the case may be) for such Fiscal Year, determined in accordance with Code ss. 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code ss. 703(a)(1) shall be included in taxable income or loss) with the following adjustments: (a) any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this Section 0 shall be added to such taxable income or loss; (b) any nondeductible expenditures of the Company described in Code ss. 705(a)(2)(B) or treated as Code ss. 705(a)(2)(B) expenditures pursuant to Regulations ss. 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this Section 4.1, shall be subtracted from such taxable income or loss; 6 (c) in the event the Gross Asset Value of any Company asset is adjusted pursuant to Section 3(b) or Section 3(c) of the Income Tax Appendix, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses; (d) gain or loss resulting from any disposition of Company Property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the Company Property disposed of, notwithstanding that the adjusted tax basis of such Company Property differs from its Gross Asset Value; (e) in lieu of the depreciation, amortization and other cost-recovery deductions taken into account when computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year, computed in accordance with Section 2 of the Income Tax Appendix; (f) to the extent an adjustment to the adjusted tax basis of any Company Property pursuant to Code ss. 734(b) or Code ss. 743(b) is required pursuant to Regulations ss. 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a Distribution other than in liquidation of a Member's Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Profits or Losses; and (g) notwithstanding any other provisions of this Section 4.1, any items that are specially allocated pursuant to Section 4 or Section 5 of the Income Tax Appendix shall not be taken into account in computing Profits or Losses. The amounts of the items of Company income, gain, loss or deduction available to be specially allocated pursuant to Sections 4 and 5 of the Income Tax Appendix shall be determined by applying rules analogous to those set forth in Sections 4.1(a) through 4.1(f) above. 4.2 Allocation of Profits. After giving effect to the special allocations set forth in Sections 4 and 5 of the Income Tax Appendix, Company Profits for each Fiscal Year for book purposes, whether taxable or nontaxable, shall be allocated to the Members and their Capital Accounts shall be appropriately increased ratably in proportion to their respective Units. 4.3 Allocation of Losses. After giving effect to the special allocations set forth in Sections 4 and 5 of the Income Tax Appendix, Company Losses, deductions and credits for each Fiscal Year for book purposes, whether taxable or nontaxable, shall be allocated to the Members and their Capital Accounts shall be appropriately decreased ratably in proportion to their respective Units. 4.4 Proration of Allocations. All Profits, Losses, deductions and credits for a Fiscal Year allocable with respect to any Member whose Interest may have been Transferred, forfeited, reduced or changed during such year shall be allocated based upon the varying Interests of the Members throughout the year. The precise manner in which such allocation shall be made shall be determined by the Board and shall be a manner of allocation permitted to be used for federal income tax purposes under the Code. 4.5 Distributions of Net Cash From Operations. Except for a cash reserve determined by the Board in its sole discretion, Distributions of Net Cash from Operations for each Fiscal Year shall be made from time to time, but 7 no less frequently than annually, first to the Members in an amount equal to the Estimated Member Tax Liability for each such Member; and thereafter, to the Members in proportion to their respective Units. 4.6 Other Cash Distributions. Distribution of any net proceeds upon the sale, exchange or other disposition of all or substantially all Company Property shall be made in accordance with Section 10.3. ARTICLE 5 MANAGEMENT AND OPERATION OF BUSINESS 5.1 Management and Control of the Company. The Members shall appoint the Board and Directors, and individual Directors shall be removed or replaced, pursuant to this Article 5. Except as otherwise provided in this Agreement, the Board shall have the sole and exclusive control of the conduct, operations and management of the Company's business. The Board shall manage the Company's affairs in a prudent and businesslike fashion and shall use its best efforts to carry out the purposes and the business of the Company. The Board shall carry out its duties through Officers. The Officers shall be elected and removed by the Board, and their duties shall be established by the Board, all as provided in the Bylaws. The Board and the Officers shall devote such of their time as the Board deems necessary to the management of the business of the Company. The Board shall initially consist of two (2) Directors, and the number of Directors may be increased or decreased pursuant to a unanimous resolution or written action of the Members. 5.2 Appointment of Directors. The initial Members (i.e., Hawk Sub and Active IQ) shall each be entitled to appoint members of the Board as follows: Hawk Sub shall be entitled to appoint one (1) Director to serve on the Board, and Active IQ shall be entitled to appoint one (1) Director to serve on the Board. The right of the initial Members to appoint Directors to serve on the Board is a Governance Right and is transferable only to the extent permitted under Article 7. 5.3 Removal, Resignation and Replacement of Directors. The initial Members shall each have the power to remove and replace the Directors they appoint pursuant to Section 5.2. Furthermore, any Director may resign at any time by giving written notice to the Board and the Member who appointed such resigning Director. Vacancies on the Board shall be filled by appointment made by the Member whose Director resigned, was removed, or whose directorship otherwise terminated. The right of the initial Members to remove and replace Directors from the Board is a Governance Right and is transferable only to the extent permitted under Article 7. 5.4 Authority of Board. The Board shall have all necessary powers to carry out the Company's purposes and business, as set forth in Section 1.4, including without limitation the power to delegate appropriate authority to the Company's Officers; provided, however, that the Officers shall at all times remain subject to the Board's supervision. 5.5 Restrictions on Board Authority. In addition to other acts expressly prohibited or restricted by this Agreement or by law, the Board shall have no authority to act on behalf of the Company and is expressly prohibited from the following: (a) doing any act in contravention of this Agreement; (b) doing any act that would make it impossible to carry on the ordinary business of the Company, other than as permitted in this Agreement; (c) seizing Company Property or assigning the rights of the Company and specific Company Property for other than a Company purpose; (d) admitting any Person as a Member except as provided in this Agreement; (e) performing any act (other than an act required by this Agreement or an act taken in good faith or in reliance upon counsel's opinion) that would, at the time such act occurred, subject any Member to liability as a general partner or otherwise in any jurisdiction; (f) selling, exchanging or otherwise disposing any of the Company's assets (other than cash); 8 (g) allowing a merger or reorganization of the Company with any other entity; or (h) taking any action that, in the prudent exercise of business discretion, could reasonably be expected to have a material adverse effect on the Company or the assets or operations thereof. All actions described in this Section 5.5 shall require the unanimous approval of the Members. 5.6 Obligations of the Board. In addition to the obligations expressly provided by law or this Agreement, the Board, to the extent of Company assets, shall: (a) cause to be filed and published all certificates, statements and other instruments required by law for the Company's formation, qualification and operation and for the conduct of its business in all appropriate jurisdictions; (b) cause the Company to prepare or have prepared all financial and tax statements and reports required under Article 6; and (c) cause the Company to keep the Required Records at its principal office. 5.7 Reimbursement of Expenses. The Directors, Officers and their respective Affiliates shall be reimbursed for all expenses incurred on behalf of the Company. 5.8 Conflicts of Interest. The Members, Officers, Directors and their respective Affiliates may deal with, perform other services for and sell goods or services to the Company without limitation; provided, however, that any compensation for such services or goods shall be limited to amounts and rates customary in the industry. The fact that a Member, Director, Officer or any of their respective Affiliates is employed by, or is directly or indirectly interested in or connected with any Person from whom or which the Company may buy services, merchandise or other property shall not prohibit the Directors or Officers from employing such Person or from otherwise dealing with such Person. 5.9 Independent Activities. Except for business opportunities (i) arising solely by virtue of a Member's, Director's, Officer's respective role(s) with the Company and (ii) within the purposes of the Company as set forth in Section 1.4, any Member, Director, Officer or their respective Affiliates may, during the term of this Agreement, engage in, possess and acquire interests for their own accounts in other business ventures of every nature and description, independently or with others; and neither the Company nor any Member, by virtue of this Agreement shall have any right in and to such independent venture or any income or profit derived therefrom, nor shall any such independent venture be considered a Company opportunity under this Agreement. Furthermore, the Members hereby agree to execute and deliver reasonably requested waivers, consents or ratifications to any of the foregoing Persons upon the undertaking of any activity not constituting a Company opportunity as described above. 5.10 Indemnification. The Company shall indemnify the Members, Directors and Officers against any loss, claim or liability incurred by any of them in connection with the business of the Company; provided, however, that the Person to be indemnified acted in good faith and was not grossly negligent or guilty of willful misconduct. Any amount paid to indemnify a Person, however, shall be paid out of Company assets only, and Members shall not be liable for such amount to be paid to indemnify a Person except to the extent of any amount of the Capital Contribution of a Member that is due and owing to the Company and remains unpaid. Neither the Company nor any Member shall have any claim against the Directors or Officers based upon or arising out of any act or omission of the Directors or Officers; provided, however, that such Officer or Director acted in good faith and was not grossly negligent or guilty of willful misconduct. 9 Notwithstanding anything to the contrary in this Section 5.10, nothing herein shall be deemed to conflict with the provisions of Article 7 of the Joint Venture and Joint Contribution Agreement. In any case where Article 7 of the Joint Venture and Joint Contribution Agreement conflicts with any provisions set forth herein or in any other agreement related to the conduct of the Company's business or operations, specifically including the Bylaws, the provisions of Article 7 of the Joint Venture and Joint Contribution Agreement shall control. 5.11 Liability Under Other Agreements. Except to the extent specifically provided herein, the obligations of the Members, Officers, and Directors or their Affiliates, pursuant to any agreement or contract entered into in their personal capacity with the Company (whether or not such agreements are referred to herein) shall be separate and distinct from their obligations hereunder and any default or failure of performance with respect to such separate agreements or contracts, unless otherwise specified in this Agreement, shall have the consequences provided for in such separate agreements or contracts or by applicable law and shall not constitute a breach hereunder. ARTICLE 6 BOOKS OF ACCOUNT AND RECORDS 6.1 Books of Account. The Board shall cause to be kept complete and accurate accounts of all Company transactions in proper books of account and shall enter or cause to be entered therein a full and accurate account of each and every Company transaction in accordance with accounting principles as set forth in Section 6.2. The Company's books and records shall be closed and balanced as of the end of each Fiscal Year. The books of account and other records of the Company shall at all times be kept at the Company's place of business. Each of Member and Director shall have access to and may inspect and copy any of such books and records at all reasonable times. 6.2 Accounting Practices. The Company's books of account shall be kept on the cash or accrual basis as determined by the Board, according to United States generally accepted accounting principles consistently applied. Such principles shall be applied by the Board upon the advice of the Company's accountants. The Board shall have the authority to designate and retain a firm of independent certified public accountants to assist in the maintenance and preparation of such books, records and reports as the Board deems desirable. 6.3 Bank Accounts. The Company shall maintain bank accounts in such bank or banks as the Board may determine. All withdrawals from such bank accounts shall be made by check or other instrument, signed by such Person or Persons as the Board may designate. 6.4 Report to Members. Not later than ninety (90) days after the end of each Fiscal Year of the Company, the Chief Executive Officer shall caused to be delivered to each Member a report of the Company's business and operations during such Fiscal Year, which report shall constitute the accounting of the Board for such Fiscal Year. The report shall contain financial statements, including statements of assets and liabilities, of income and expenses, of Members' equity and changes in financial position, of cash flow and of the amount and nature of any compensation paid to the Members, Directors, Officers or their Affiliates during the period, including a description of the services performed in relation thereto, and shall otherwise be in such form and have such content as the Board deems proper. Such report shall state income from every source, including net gains from disposition or sale of Company assets. 6.5 Partnership Tax Status and Information. The Members acknowledge that the Company will be treated as a "partnership" for income tax purposes. Not later than ninety (90) days after the end of each Fiscal Year of the Company, the Officer acting as Treasurer shall cause to be delivered to each Person who was a Member at any time during such Fiscal Year, a Form K-1 and such other 10 information, if any, with respect to the Company as may be necessary for the preparation of such Person's federal, state and local income tax (or informational) returns, including a statement showing such Person's share of income, gain or loss and credits for such Fiscal Year, as determined for federal, state and local income tax purposes. In addition, the Chief Executive Officer shall from time to time cause to be delivered to each Member adequate information relating to the Company's operations to enable each Member to complete and file all federal, state and local estimated tax returns for which the Member may be liable. ARTICLE 7 TRANSFER RESTRICTIONS 7.1 General Restriction. Except to the limited extent permitted under this Article 7, no part of a Member's Interest and no Units may be Transferred, whether voluntarily or involuntarily (by operation of law or otherwise), and whether with or without consideration; nor may a Member enter into a binding agreement with respect to any of the foregoing. The Required Records and other appropriate records of the Company shall be noted to prevent the Transfer of Units except in accordance with this Article 7 and Article 8. 7.2 Permitted Transfers. The following Transfers are permitted (each a "Permitted Transfer"); provided, however, that any such Transfer and the parties thereto comply with all of the applicable conditions pertaining to Permitted Transfers under this Article 7 and under Article 8: (a) Any Member may Transfer his, her or its Units upon the exercise of any right of first refusal described in Sections 8.4 or 8.5; (b) Any Member may Transfer its Units with the unanimous written consent of the Members, which consent may be withheld or conditioned in the sole discretion of such Members; (c) Hawk may Transfer its Units pursuant to the exercise of the Active IQ Buyout Option described in Section 8.7; or (d) All of Active IQ's Units may be forfeited and Transferred to Hawk upon default in the making of the Original Capital Contribution or any installment thereof, pursuant to the provisions of Sections 3.7. 7.3 Conditions to Permitted Transfers. Any Permitted Transfer of Units pursuant to Section 7.2(a) shall be effective only if each of the following conditions is satisfied: (a) Governance Rights. If the Transfer will include any Governance Rights, the transferring Member shall Transfer all such Governance Rights coupled with a simultaneous Transfer to the same transferee of all of the Member's Financial Rights relating to such Units. (b) Investment Representations. In the case of any Transfer for value, then either the transferor or the proposed transferee shall provide the following documentation to the Board: (i) an opinion of counsel (whose fees and expenses shall be borne by such Member or transferee), satisfactory in form and substance to the Board, to the effect that either (A) the Transfer constitutes an exempt transaction and does not require registration under applicable securities laws, or (B) the Units to be Transferred are duly and properly registered under all applicable securities laws; (ii) evidence satisfactory to the Board of the transferee's agreement to comply with and be bound by the terms of this Agreement and to execute any and all documents that the Board may deem necessary or appropriate in connection with his, her or its becoming a Member; (iii) evidence satisfactory to the Board that the 11 Transfer will not impair the ability of the Company to be taxed as a partnership for federal income tax purposes under the Code or to take advantage of accelerated depreciation under the Code; (iv) representations in form and substance satisfactory to the Board that the transferee is acquiring the Units for his, her or its own account for investment and not with a view to the distribution thereof; and (v) a written agreement signed by the transferee that the Units being acquired will in no event be resold unless properly registered under all applicable securities laws or exempt therefrom. (c) Other Documents and Expenses. As a condition to admission as a Member, any transferee of all or part of the Units of any Member, or the legatee or distributee of all or any part of the Units of any Member, shall execute and acknowledge such instruments, in form and substance satisfactory to the Board, as the Board shall deem necessary or advisable to effect such admission and to confirm the agreement of the person being admitted to be bound by all the terms and provisions of this Agreement. Such transferee, legatee or distributee shall also pay all reasonable expenses in connection with such admission as a Member, including but not limited to legal fees and costs of the preparation of any amendment to this Member Control Agreement, if necessary or desirable in connection therewith. (d) Effective Date of Transfer. All Transfers of Units occurring during any month shall be deemed effected on the first day of the month next following the month in which the Transfer occurs. 7.4 Acquit Company. In the absence of written notice to the Company of any Transfer of Units, any payment by the Company to the transferring Member or his or its executors, administrators or representatives shall acquit the Company of liability, to the extent of such payment, to any other Person who may have an interest in such payment by reason of a Transfer by the Member or by reason of such Member's death or otherwise. 7.5 Prohibition of Involuntary Transfers. Except as otherwise required by the LLC Act, a Member's Governance Rights shall not be subject to Involuntary Transfer (as that term is defined in Article 8), and any attempted Involuntary Transfer shall be void and of no effect except for a Transfer to a deceased Member's personal representative or trustee to whom such Interest is Transferred by operation of law or a testamentary instrument at the death of the transferor. If such a Transfer is attempted, whether or not permitted by applicable law, the affected portion of the Member's Interest shall thereupon be an "Affected Interest" under this Agreement and be subject to the options and rights of first refusal set forth in Article 8. If all or any portion of a Member's Financial Rights are the subject of a Foreclosure of a Pledge or Involuntary Transfer (as those terms are defined in Article 8), or if the Member becomes Insolvent (as that term is defined in Article 8), the affected portion of the Member's Financial Rights, together with the associated Governance Rights, if any, shall thereupon be an "Affected Interest" under this Agreement and be subject to the options and rights of first refusal set forth in Article 8. 7.6 Effect of Attempts to Make Prohibited Transfers. Any purported Transfer (of all or any portion of an Interest) that is not permitted under this Article 7 shall be null and void and of no force or effect; provided, however, that, if the Company is required by applicable law to recognize a Transfer that is not so permitted (or if the Members in their sole discretion elect to recognize a Transfer that is not so permitted), then the Transferred Interest shall be strictly limited to the transferor's Financial Rights as provided by this Agreement with respect to the Transferred Interest, which may be applied (without limiting any other legal or equitable rights of the Company) to satisfy any debts, obligations or liabilities for damages that the transferor or transferee of such Interest may have to the Company. 12 In the case of a Transfer or attempted Transfer of an Interest that is not permitted hereunder, the parties engaging or attempting to engage in such Transfer shall be liable to indemnify and hold harmless the Company and the other Members from all cost, liability and damage that any of such indemnified Persons may incur (including without limitation tax liabilities, lawyers' fees and expenses) as a result of such Transfer or attempted Transfer and efforts to enforce the indemnity required hereby. 7.7 Limited Rights of Unadmitted Transferees. A Person who holds merely Financial Rights or acquires any part of an Interest other than pursuant to a Permitted Transfer: (a) shall be subject to the restrictions of Section 7.1; (b) shall be entitled only to allocations and Distributions with respect to such Interest in accordance with this Agreement; (c) shall have no right to any information or accounting of the affairs of the Company; (d) shall not be entitled to inspect the books or records of the Company; (e) shall not be entitled to exercise any Governance Rights; and (f) shall not have any of the other rights of a Member under the LLC Act or this Agreement. ARTICLE 8 RIGHTS, OPTIONS AND VALUATION 8.1 Certain Definitions. For all purposes of this Agreement, the following terms shall have the meanings set forth below: (a) "Affected Interest" shall mean any of the following: (i) a Person's entire Membership Interest in the event of a Transfer (or attempted Transfers) of all or any portion of a Member's Governance Rights or Financial Rights in violation of this Agreement; or (ii) a Person's entire Membership Interest in the event such Interest becomes subject to the right or obligation of the Company or a Member to purchase such Interest under this Article 8 for any other reason. (b) "Transferring Holder" shall mean any of the following Persons, as applicable: (i) a Member who holds an Affected Interest or whose Affected Interest is being terminated or is the subject of any other event that caused such Interest to become an Affected Interest; (ii) any non-Member transferee holding an Affected Interest as a result of a Transfer or attempted Transfer that made it an Affected Interest; or (iii) any legal representative of either. 8.2 Events Creating Option To Buy. Except for the Permitted Transfers allowed under Section 7.2, if any of the following events occurs or is attempted, the Company and the Members shall have the options and the rights to buy the Affected Interest of a Transferring Holder, and that Transferring Holder shall be obligated to sell the Affected Interest, pursuant to the terms and conditions of this Article 8: (a) Voluntary Transfer. A "Voluntary Transfer" shall occur if (i) any Membership Interest or Units are sold, exchanged, pledged, encumbered, given, gifted or otherwise voluntarily Transferred, with or without full consideration, or (ii) an agreement is entered into to do any of the foregoing. (b) Foreclosure of a Pledge. A "Foreclosure of a Pledge" shall occur if (i) any Person attempts to gain absolute rights to a Membership Interest or Units as a result of a default under a security interest, whether pursuant to the Uniform Commercial Code or otherwise, regardless of whether the security interest is termed as a pledge, collateral, a conditional assignment, an outright assignment, or in any equivalent manner (and regardless of whether the security interest is perfected), and regardless of whether the foreclosure is termed a repossession, cancellation, enforcement, foreclosure or similar term, or (ii) an agreement is entered into to do any of the foregoing in clause (i). 13 (c) Involuntary Transfer. An "Involuntary Transfer" shall occur if a Person attempts to gain absolute rights to any part of a Membership Interest or Units by (i) sale pursuant to a levy of execution, (ii) garnishment, (iii) attachment, (iv) property division or settlement in a marriage dissolution proceeding, (v) the dissolution of a Member that is a corporation, partnership, limited liability company, trust or other business entity, or (vi) other legal process, including without limitation Bankruptcy or receivership proceedings intended to Transfer a Membership Interest or Units. The term "Involuntary Transfer" specifically includes any Transfer by operation of law, including any Transfer pursuant to any testamentary instrument or the laws of descent and distribution. (d) Insolvency. A Transferring Holder shall be considered "Insolvent" upon filing a petition for Voluntary Bankruptcy or being the subject of a petition for Involuntary Bankruptcy (which involuntary petition is not dismissed within forty-five (45) days of filing), or if a receiver, whether permanent or temporary, of a Transferring Holder's property or any part thereof, shall be appointed by a court of competent authority, or if a Transferring Holder shall make a general assignment for the benefit of creditors, or if any material judgment against a Transferring Holder remains unsatisfied or unbonded of record for thirty (30) days or longer. (e) Dissolution. For any Member who is not an individual, if such Member should dissolve, voluntarily or involuntarily. 8.3 Notice To Company and Members. Each Transferring Holder shall give written notice to the Company within thirty (30) days of the occurrence of any event described in Section 8.2. Such notice shall be sent, return-receipt requested, to an Officer of the Company other than the Transferring Holder at the Company's principal administrative office. Upon the Company's receipt, the Company's Secretary shall send the notice to each Member at the most recent address reflected on the Company's Required Records or such other residential address as the party giving notice has reason to know is more current. If the Transferring Holder fails or refuses to give such notice, the Company or any Member may do so as soon as it has the information required to be given in such notice. Each such notice shall contain the following information: (a) Notice of Voluntary Transfer. Any notice of Voluntary Transfer shall identify the transferee to whom the Transferring Holder desires to sell, exchange, pledge or give a Membership Interest or Units, a description of the Membership Interest and Unit and the consideration, if any, for the Transfer. The notice shall also identify all pertinent terms of the Transfer. A copy of all agreements and documents pertinent to the Transfer shall be attached to the notice. (b) Notice of Foreclosure of a Pledge. The notice of Foreclosure of a Pledge of a Membership Interest or Units shall identify to whom the Member pledged the Membership Interest and Unit, a description of the Membership Interest and Units, the reason for the foreclosure, and shall identify all material terms of the pledge agreement and the foreclosure. A copy of all agreements and documents relating to the pledge shall be attached to the notice. (c) Notice of Involuntary Transfer. Any notice of Involuntary Transfer shall identify: the order, decree or directive, if any, requiring the involuntary Transfer of an a Membership Interest or Units, a description of the Membership Interest and Units, the reason 14 for the Involuntary Transfer, and the pertinent terms of the Involuntary Transfer. A copy of the relevant order, decree or directive, if any, shall be attached to the notice. (d) Notice of Insolvency. Any notice of insolvency shall identify the manner in which the Transferring Holder is deemed Insolvent (as defined in paragraph (d) of Section 8.2) and shall identify any trustee or fiduciary appointed with regard to the Transferring Holder. A copy of any petition for Bankruptcy, petition for Involuntary Bankruptcy, order appointing a receiver, whether permanent or temporary, order creating an assignment for the benefit of the Transferring Holder's creditors, and/or any judgment against the Transferring Holder that has remained unsatisfied or unbonded for a period of thirty (30) days or longer shall be attached to the notice. (e) Notice of Dissolution. A notice of dissolution shall specify the date in which such event took place or is proposed to take place. 8.4 Company's Option to Purchase. For the period commencing upon the occurrence of an event giving rise to an option to buy, as specified in Section 8.2, and continuing thereafter until thirty (30) days after the Company's receipt of notice of the event giving rise to the option, which notice is in substantial compliance with the provisions of Section 8.3, the Company shall have the option to purchase all, but not less than all, of the Affected Interest of a Transferring Holder, which option and right to purchase are at the price and according to the terms and conditions provided in this Article 8. The Company may exercise its right and option to purchase by giving notice to the Transferring Holder and a copy to the other Members of its intention to exercise its right and option before the expiration of said thirty (30) day period. In no event shall the Transferring Holder vote, either as a Director or as a Member, on the question of whether the Company will elect to exercise its option. Notwithstanding any other provisions of this Agreement, the Company shall not elect to purchase any Units if the payment of the purchase price would render the Company unable to pay its debts in the ordinary course of business. 8.5 Members' Option to Purchase. If the Company does not exercise its option to purchase as provided for in Section 8.4, then the Members (other than the Transferring Holder, if a Member) shall have, for a period of thirty (30) days thereafter, the option and right to collectively purchase all, but not less than all, of the Affected Interest, which option and right to purchase are at the price and according to the terms and conditions provided in this Article 8. Each Member (other than the Transferring Holder) shall have the option and right to purchase that fraction of the Affected Interest which the respective Units owned by each bears to the total number of Units owned by all such other Members (excluding any Units held by the Transferring Holder). Members shall exercise their right and option to purchase under this Section 8.5 by giving notice to the Transferring Holder, the other Members and the Company of their intention to exercise their right and option within the applicable thirty (30) day period. In the event that more than one Member elects to purchase his, her or its proportionate part of the Affected Interest, the electing Members shall be required to purchase that fraction of the Affected Interest not purchased by the non-electing Members, which the respective Units owned by each electing Member bears to the total number of Units of all such Members electing to exercise their option. 8.6 Failure of Company and Members to Exercise Option. (a) In the case of a "Voluntary Transfer" (as defined in Section 8.2) that is not a Permitted Transfer, if neither the Company nor the Members exercise their options pursuant to Sections 8.4 or 8.5, respectively, in the time periods provided therein, then the 15 Transferring Holder shall not be allowed to Transfer his, her or its Units, and such Units shall remain subject to the restrictions on Transfer set forth in Article 7 and this Article 8. (b) In the case of all Transfers described in Section 8.2 (other than a "Voluntary Transfer" as defined in Section 8.2) which are not Permitted Transfers, if neither the Company nor the Members exercise their options pursuant to Sections 8.4 or 8.5, respectively, in the time periods provided therein, then: (a) the Transferring Holder shall be free to retain or dispose of the Financial Rights included in the Affected Interest; but (b) any attempted or purported Transfer of any Governance Rights in violation of this Agreement shall be disregarded as provided in the LLC Act and Sections 7.5 and 7.6, and the transferee will be an unadmitted transferee as provided in Section 7.7, unless the Members consent to such Transfer and admit the transferee as a new Member pursuant to Section 2.3, in which case such transferee must execute this Agreement. 8.7 Active IQ Buyout Option. Active IQ shall have the right at any time on or prior to October 6, 2003, to purchase all, but not less than all, of the Units held by Hawk by delivering written notice to Hawk of such intention on or prior to October 6, 2003 (the "Active IQ Buyout Option"). Upon exercise of the Active IQ Buyout Option, all of Hawk's Financial Rights and Governance Rights shall expire and Hawk shall promptly deliver an assignment instrument assigning the Units to Active IQ. The purchase price for the purchase and sale of Hawk's Units pursuant to the Active IQ Buyout Option shall be the issuance of 2,500,000 shares (as appropriately adjusted for any stock splits, combinations, or similar events with regard to the equity securities of Active IQ) of original-issue common stock, $0.01 par value, of Active IQ. Active IQ shall have fourteen (14) days to deliver a certificate representing such shares of common stock to Hawk, or to have such certificate delivered by Active IQ's transfer agent. Upon the purchase and sale of all of Hawk's Units pursuant to this Section 8.7, all provisions regarding Hawk contained in this Agreement shall be disregarded. 8.8 Purchase Price. Except for cases covered by Section 8.7, In the event of a purchase and sale of an Affected Interest pursuant to the provisions of this Agreement (including but not limited to a Voluntary Transfer), it is agreed that, for the purpose of determining the purchase price, the value of the Affected Interest shall be determined as follows: (a) Agreement. The parties to any purchase and sale hereunder shall attempt to agree upon the Affected Interest's fair market value (according to the principles set forth in Section 8.8(c) below) within 15 days of the date of notice of exercise of the applicable purchase option (b) Appraisal. If the parties are unable to agree upon a valuation within the 15-day period, the Affected Interest's value shall be determined by appraisal as follows. The parties shall attempt to agree upon a qualified independent business appraiser with at least five years of experience appraising entities whose business and purpose are similar to the Company. If they are unable to do so within 15 days, then the purchasing party shall, within 15 days, name one such appraiser, and the selling party shall, within the same time period, name another such appraiser. The two appraisers so selected shall, within ten (10) days, agree upon the appointment of a third and independent so qualified appraiser who shall make a final determination of the Affected Interest's fair market value. The costs of any appraisals hereunder shall be borne equally between the selling party on the one hand, and purchasing party or parties on the other. (c) Valuation Standard. For purposes of this Agreement, the fair market value of an Affected Interest shall be the cash price that would be payable to a reasonable seller by an unrelated reasonable 16 buyer for said Interest, with due consideration given to the terms and conditions of this Agreement and all other facts and circumstances. 8.9 Closing Date and Terms of Purchase. (a) Closing Date. In the event of a sale or Transfer of an Affected Interest, the following provisions of this Section 8.9 shall apply and the sale and purchase shall close on a reasonable date, at a reasonable place and at a reasonable time to be selected by the purchasing party, which shall be no later than ninety (90) days after a final determination of value pursuant to Section 8.8: (b) Offset of Purchase Price. The Company (or any purchasing Members) may offset the purchase price of an Affected Interest by the amounts of any debts or damages described in this Agreement, and such offset may be used first to reduce amounts due at closing under paragraph (c) below, and then the first payments due on any promissory note delivered under paragraph (c) below. (c) Payments. Subject to paragraph (b) above, on the date of closing the purchasing party (i.e., the Company or one or more Members, in which case they shall be collectively referred to as the "purchasing party") shall pay to the Transferring Holder at least ten (10%) of the purchase price in cash at closing. The purchasing party shall execute a promissory note for the remaining balance of the purchase price (i.e., 90% or less). Any such promissory note shall be substantially in the form attached hereto as Exhibit E and shall require the purchasing party to make five (5) equal annual installments of the remaining amount of purchase price. All promissory notes executed and delivered pursuant hereto shall bear interest at a rate equal to the prime lending rate as published in the Wall Street Journal on the date of closing. In the event of a purchase by more than one purchasing party, the purchasing parties shall execute separate notes for their proportionate shares of the unpaid purchase price, which notes shall be pursuant to the terms of and in the form of the note attached hereto as Exhibit E. (d) Transfer and Pledge of Affected Interest. Upon delivery of the cash payment at closing and delivery of the installment note or notes specified in the preceding paragraph, the Affected Interest shall be assigned to the purchasing party or parties with all necessary instruments required to complete the Transfer of the Affected Interest on the Company's Required Records. Once the Affected Interest has been Transferred, the Affected Interest shall be pledged by the purchasing party or parties to the Transferring Holder, to be held as collateral security for the payment of said notes pursuant to the provisions of the Pledge Agreement (attached hereto as Exhibit F), which each purchasing party shall execute on the date of closing. The purchasing party or parties shall have the right, while said pledge is effective, to vote any pledged Governance Rights and to receive Distributions (other than liquidating Distributions under Section 10.3). (e) Guaranty Contribution Agreement. If a Member's Interest is purchased under this Article 8 and the former Member is required to pay a Company debt because of his guaranty of the debt, each remaining Member who also guaranteed the debt shall contribute toward that payment his respective share of such payment. The share of such payment due from each such remaining Member shall be that fraction of the payment which the number of Units held by each such remaining Member bears to the total number of Units owned by all such remaining Members. 17 ARTICLE 9 AMENDMENT OF AGREEMENT At any time, the Members holding ten percent (10%) or more of the aggregate Units entitled to vote may propose an amendment to this Agreement, and in such event the Chief Executive Officer shall call a special meeting of all Members for the purpose of considering such proposed amendment. At least thirty (30) days prior to such meeting, the Board shall deliver to each Member written notice of the meeting and a statement of the purposes of the amendment and such other matters as the Board deems material to consideration of the amendment. The amendment so proposed shall be adopted if unanimously approved by Members holding Units entitled to vote; alternatively, this Agreement may be amended by a written action signed by Members holding all of the Units entitled to vote. ARTICLE 10 DISSOLUTION 10.1 Liquidating Events. (a) The Company shall be dissolved upon the occurrence of any of the following events (a "Liquidating Event"): (i) by the unanimous written agreement of the Members; or (ii) upon the vote of a majority of the Members entitled to vote in favor of a proposal to dissolve the Company, at a meeting held pursuant to Section 322B.806 of the LLC Act. (b) As soon as possible following the occurrence of any Liquidating Event that causes the dissolution of the Company, the appropriate Company representative shall give all of the Members a written notice of such Liquidating Event and execute a notice of dissolution in such form as shall be prescribed by the Minnesota Secretary of State, setting forth the information required under Subdivision 1 of Section 322B.81 of the LLC Act, and shall file that notice with the Secretary of State's office. (c) If the Company is dissolved, the Company shall cease to carry on its business upon filing a notice of dissolution with the Minnesota Secretary of State, except insofar as may be necessary for the winding up of the Company's business and any Distributions under Section 10.3, but its separate existence shall continue until a certificate of termination has been issued by such Secretary of State or until a decree dissolving the Company has been entered by a court of competent jurisdiction. 10.2 Agreement to Avoid Dissolution. Each Member specifically acknowledges and agrees that the Company shall not be dissolved upon the withdrawal or resignation of any Member or other termination of any Member's Interest in the Company. The events set forth in Section 322B.80, Subdivision 1, clause (5), of the LLC Act, or a similar provision of subsequent law, shall not be an event of dissolution for the Company and the Members hereby agree that the business of the Company shall be continued upon the occurrence of any such event without any additional action or any additional required consent of any Member or Director. 10.3 Distributions on Liquidation. Upon liquidation of the Company, its business shall be wound up, the Board shall take full account of the Company's assets and liabilities, and all assets, whether tangible or intangible, shall be distributed to the Members or liquidated as promptly as is consistent with obtaining the fair value thereof, as determined by the Board. If any assets are not sold, gain or loss shall be allocated to the Members in accordance with Article 4 as if such assets had been sold at their fair market value at the time of the liquidation. If any assets are distributed to a Member, rather than sold, the Distribution shall be treated as a distribution equal to the fair market 18 value of the assets at the time of the liquidation. The assets of the Company shall be applied and distributed in the following order of priority: (a) to the payment of all debts and liabilities of the Company, including all fees due the Members, Directors, Officers and their Affiliates, and including any loans that may have been made by the Members of the Company, in the order of priority as provided by law; (b) to the establishment of any reserves deemed necessary by the Board or other Person winding up the Company's affairs for any contingent liabilities or obligations of the Company; (c) to the Members, ratably in proportion to the credit balances (taking into account the Distributions previously made under this Section 10.3) in their respective Capital Accounts, in an amount equal to the aggregate credit balances in the Capital Accounts after and including all allocations to the Members under Article 4, including the allocation of any Profit or Loss from the sale, exchange or other disposition (including a deemed sale pursuant to this Section 10.3) of the Company's assets; and (d) finally, to the Members ratably in accordance with their Units. The Company may offset any amount due a Member under this Section 10.3 by the amounts of (i) any debts owed the Company by the Member, and (ii) any damages suffered by the Company as a result of that Member's breach, if any, of this Agreement. ARTICLE 11 GENERAL PROVISIONS 11.1 Notices. All notices required to be given by this Agreement shall be made in writing either: (a) by personal or commercial courier delivery to the party requiring notice and securing a written receipt, or (b) by mailing the notice in the U.S. mails to the last known address of the party requiring notice, by registered mail, return receipt requested. Notice shall be treated as given when personally received or, if sent as provided above, the effective date of the notice shall be the date of the written receipt received upon delivery in clause (a) above or (except in the event of a mail strike) the date the notice is sent pursuant to clause (b) above. Such notices will be given to a Member at the address specified in Exhibit A. Any Member or the Company may, at any time by giving five (5) days' prior written notice to the other Members and the Company, designate any other address in substitution of the foregoing address to which such notice will be given. All notices, offers, demands, certificates or other communications required or permitted under this Agreement shall be in writing, signed by the Person giving the same. 11.2 Consent and Waiver. No consent under and no waiver of any provision of this Agreement on any one occasion shall constitute a consent under or waiver of any other provision on said occasion or on any other occasion, nor shall it constitute a consent under or waiver of the consented-to or waived provision on any other occasion. No consent or waiver shall be enforceable unless it is in writing and signed by the party against whom such consent or waiver is sought to be enforced. 11.3 Entire Agreement. Except for the Articles, the Bylaws, the Joint Venture and Joint Contribution Agreement, and the Ancillary Documents (as such term is defined in the Joint Venture and Joint Contribution Agreement), this Agreement constitutes the entire agreement among the parties with respect to the Company. It supersedes any prior agreement or understanding among them, and it may not be modified or amended in any manner other than as set forth herein. 19 11.4 Governing Law; Jurisdiction. This Agreement and the rights of the parties hereunder shall be governed by, interpreted and enforced in accordance with the laws of the State of Minnesota without regard to the principles of conflicts-of-law. Each of the parties hereto consents to the exclusive jurisdiction of the federal courts whose districts encompass any part of the City of Minneapolis or the state courts of the State of Minnesota sitting in the City of Minneapolis in connection with any dispute arising in connection with the Contemplated Transactions. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may effectively do so, any defense of an inconvenient forum or improper venue to the maintenance of such action or proceeding in any such court and any right of jurisdiction on account of its place of residence or domicile. Each party hereto irrevocably and unconditionally consents to the service of any and all process in any such action or proceeding in such courts by the mailing of copies of such process by certified or registered airmail at its address specified in Section 11.1. Each party hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 11.5 Binding Effect. Except as herein otherwise specifically provided, this Agreement shall be binding upon and inure to the benefit of the Members and their legal representatives, heirs, administrators, executors, successors and permitted assigns. 11.6 Number and Gender. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural and pronouns stated in either the masculine, the feminine, or the neuter gender shall include the masculine, feminine and neuter. 11.7 Interpretation. All references herein to Articles, Sections and paragraphs refer to Articles, Sections and paragraphs of this Agreement. All Article, Section and paragraph headings are for reference purposes only and shall not affect the interpretation of this Agreement. 11.8 Severability. If any provision of this Agreement or the application of such provision to any Person or circumstances, shall be held invalid, the remainder of the Agreement, or the application of such provision to Persons or circumstances other than those to which it is held invalid, shall not be affected thereby. 11.9 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement binding on all Members. Facsimile and electronically transmitted signatures shall be valid and binding to the same extent as original signatures. Each Member shall become bound by this Agreement immediately upon signing and delivering any counterpart, independently of the signature of any other Member. However, in making proof of this Agreement, it will be necessary to produce only one copy signed by the party to be charged. 11.10 Right to Specific Performance. In view of the fact that the Membership Interests subject to this Agreement are of a closely held limited liability company, and in view of the purposes of this Agreement, it is agreed that the remedy at law for failure of any party to perform would be inadequate and that the injured party or parties, at his, her or their option, shall have the right to compel the specific performance of this Agreement in a court of competent jurisdiction, to the extent permitted by the LLC Act and other applicable law, and not expressly prohibited by this Agreement. 11.11 Further Assurances. Each Member agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and the transactions contemplated hereby. 20 11.12 No Third-Party Beneficiary. This Agreement is made solely and specifically among and for the benefit of the parties hereto and their respective successors and assigns, and no other Person will have any rights, interest or claims hereunder or be entitled to any benefits under or on account of this Agreement as a third-party beneficiary or otherwise. 11.13 Incorporation by Reference. Each of the exhibits, schedules and other appendices attached to this Agreement and referred to herein is hereby incorporated into this Agreement by reference, unless this Agreement expressly otherwise provides. 11.14 Discretion. Whenever a Person may take action under this Agreement is his, her or its "sole discretion," "sole and absolute discretion" or "discretion," or under a grant of similar authority or latitude, such Person shall be entitled to consider any factors and interests as it desires, including its own interests. 11.15 Arbitration. The parties will, to the greatest extent possible, endeavor to resolve any disputes relating to the Agreement through amicable negotiations with escalation to the top executives of each party. Failing an amicable settlement, any controversy, claim or dispute arising under or relating to this Agreement, including the existence, validity, interpretation, performance, termination or breach of this Agreement, will finally be settled by binding arbitration before a single arbitrator (the "Arbitration Tribunal") which will be jointly appointed by the parties. The Arbitration Tribunal shall self-administer the arbitration proceedings utilizing the Commercial Rules of the American Arbitration Association ("AAA"); provided, however, the AAA shall not be involved in administration of the arbitration. The arbitrator must be a retired judge of a state or federal court of the United States or a licensed lawyer with at least ten (10) years of corporate or commercial law experience from a law firm with at least 10 attorneys and at least an AV rating by Martindale Hubbell. If the parties cannot agree on an arbitrator, either party may request the AAA to appoint an arbitrator which appointment will be final. The arbitration will be held in Minneapolis, Minnesota. Each party will have discovery rights as provided by the Federal Rules of Civil Procedure within the limits imposed by the arbitrator; provided, however, that all such discovery will be commenced and concluded within sixty (60) days of the selection of the arbitrator. It is the intent of the parties that any arbitration will be concluded as quickly as reasonably practicable. Once commenced, the hearing on the disputed matters will be held four days a week until concluded, with each hearing date to begin at 9:00 a.m. and to conclude at 5:00 p.m. The arbitrator will use all reasonable efforts to issue the final written report containing award or awards within a period of five (5) business days after closure of the proceedings. Failure of the arbitrator to meet the time limits of this Section will not be a basis for challenging the award. The Arbitration Tribunal will not have the authority to award punitive damages to either party. Each party will bear its own expenses, but the parties will share equally the expenses of the Arbitration Tribunal. The Arbitration Tribunal shall award attorneys' fees and other related costs payable by the losing party to the successful party as it deems equitable. This Agreement will be enforceable, and any arbitration award will be final and non-appealable, and judgment thereon may be entered in any court of competent jurisdiction. Notwithstanding the foregoing, claims for injunctive relief may be brought in a state or federal court in Minneapolis, Minnesota. 11.16 Litigation Expense. If any disputant (as defined in Section 11.15, and including all disputants opposing one or more other disputants as one party) is made or shall become a party to any litigation (including arbitration) commenced by or against another disputant involving the enforcement of any of the rights or remedies of such disputant, or arising on account of a default of the other disputant in its performance of any of the other disputant's obligations hereunder, then the prevailing disputant in such litigation shall receive from the other disputant all costs incurred by the prevailing disputant in such litigation, plus reasonable attorneys' fees to be fixed by the court or 21 arbitrator (as applicable), with interest thereon from the date of judgment or arbitrator's decision at the rate of ten percent (10%) or, if less, the maximum rate permitted by law. Signature Page Follows 22 IN WITNESS WHEREOF, the undersigned Members have duly executed this Member Control Agreement to be effective as of the Effective Date. MEMBERS: Active IQ Technologies, Inc. a Minnesota corporation /s/ Kenneth W. Brimmer ------------------------------------------ KENNETH W. BRIMMER, Chief Executive Officer Hawk Precious Minerals USA, Inc. a Minnesota corporation /s/ H. Vance White ------------------------------------------- H. VANCE WHITE, President Signature Page - Member Control Agreement APPENDIX OF GENERAL DEFINITIONS Wherever used in this Agreement, unless another meaning is explicitly indicated by the context, the following terms shall have the meanings set forth below: "Active IQ" means Active IQ Technologies, Inc., a Minnesota corporation and initial Member of this Company. "Active IQ Buyout Option" shall have the meaning set forth in Section 8.7. "Affected Interest" shall have the meaning set forth in Section 8.1(a). "Affiliate" means, with respect to a specific Person, any of the following other Persons: (a) any Person directly or indirectly controlling, controlled by, or under common control with such Person; (b) any Person owning or controlling ten percent (10%) or more of the outstanding voting interest of such Person; (c) any officer, director, or general partner of such Person; or (d) any Person who is an officer, director, general partner, trustee, or holder of ten percent (10%) or more of the voting interest of any Person described in clauses (a) through (c) of this sentence. For purposes of this definition, the terms "control," "is controlled by," or "is under common control with" shall mean the direct or indirect possession of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "AfriOre" shall mean AfriOre International (Barbados) Limited, as set forth in Section 1.4. "Agreement" or "Member Control Agreement" means this Member Control Agreement (including all of its Exhibits and Schedules, if any), as the same may be amended from time to time. "Appraiser" shall have the meaning set forth in Section 8.8(b). "Articles" shall mean the Articles of Organization filed on behalf of the Company with the Minnesota Secretary of State on the Formation Date and attached hereto as Exhibit C, as they may be amended from time to time by the Members pursuant to this Agreement, the LLC Act and the Bylaws. "Bankruptcy" means, with respect to any Person, a "Voluntary Bankruptcy" or an "Involuntary Bankruptcy." (a) "Voluntary Bankruptcy" means, with respect to any Person, the inability of such Person generally to pay his, her or its debts as such debts become due or an admission in writing by such Person of his, her or its inability to pay such debts generally or a general assignment by such Person for the benefit of creditors; the filing of any petition or answer by such Person seeking to adjudicate it a bankrupt or insolvent or seeking for such Person any liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of such Person or the debts of such Person under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking, consenting to or acquiescing in the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for such Person or for any substantial part of such Person's property; or corporate action taken by such Person to authorize any of the actions set forth above. (b) "Involuntary Bankruptcy" means, with respect to any Person and without the consent or acquiescence of such Person, the entry of an order for relief or approval of a petition for relief or reorganization or any other petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or other similar relief under any present or future bankruptcy, insolvency or similar statute, law or regulation; or the filing of any such petition against such Person which petition shall not be dismissed within ninety (90) days; or, without the consent or acquiescence of such Person, the entry of any order appointing a trustee, custodian, receiver or liquidator of such Person or of all or any substantial part of the property of such Person, which order shall not be dismissed within sixty (60) days. "Board" means the Company's Board of Directors, appointed by the Members pursuant to Sections 5.1 and 5.2 and the Bylaws. "Bylaws" means the Company's Bylaws as adopted under the LLC Act, and hereafter amended from time to time by the Board or the unanimous vote of the Members entitled to vote. The initial Bylaws are attached hereto as Exhibit D. "Additional Capital Contributions" means, with respect to each Member, the Capital Contributions made by such Member pursuant to Section 3.4, reduced by the amount of any liabilities of such Member either assumed by the Company in connection with such Capital Contribution or which are secured by any property contributed by such Member as a part of such Capital Contribution. "Capital Account" shall have the meaning set forth in Section 3.1. "Capital Contribution" shall have the meaning set forth in Section 3.1(c). "Hawk Sub" means Hawk Precious Minerals USA, Inc., a Minnesota corporation and initial Member of this Company. "Code" means the Internal Revenue Code of 1986, as amended from time to time (and any corresponding provisions of succeeding law). "Company" means Active Hawk Minerals, LLC, the Minnesota limited liability company formed on the Formation Date. "Company Property" means all real and personal property acquired and held from time to time by the Company, and any improvements thereto, and shall include both tangible and intangible property. "Contribution Agreement" means an agreement in writing, executed by the Company and one or more Person(s) desiring to become a Member after the Effective Date, setting forth the terms of such Person's admission as a Member, including but not limited to the agreed upon value of the Capital Contribution that shall be made by such Person to the Company and the number and type of Company Units to be issued to such Person in exchange. "Depreciation" shall have the meaning set forth in Section 2 of the Income Tax Appendix. "Director" shall mean any individual natural person appointed under Section 5.2 to serve on the Board. The term "director" as used in this Agreement and in the Bylaws has replaced the term "governor" as used in the LLC Act, and shall have the same meaning and legal significance as the term "governor" under the LLC Act. "Distribution" means any distribution to the Members of cash or other Company assets made from time to time pursuant to the provisions of this Agreement. "Effective Date" is defined in the introductory paragraph of this Agreement. "Estimated Member Tax Liability" for a Member means the highest actual combined marginal federal and state tax rate percentage of any of the Members multiplied by the Company's taxable income and gains, as reported on the Company's federal income tax informational return for the Fiscal Year, allocated to such Member pursuant to this Agreement, excluding any guaranteed payments to any Members in consideration for services rendered to the Company. It shall be the obligation of each Member to submit satisfactory evidence of such Member's marginal tax rates pursuant to a policy determined by the Board from time to time. "Financial Rights" means a Member's rights to: (a) a Capital Account; (b) a share of the Company Profits, Losses and Distributions as set forth in this Agreement; (c) Distributions on liquidation pursuant to Article 10; and (d) a Member's limited right, if any, to Transfer such rights according to the provisions of Article 8. "First Funding" and "First Funding Date" shall have the meanings ascribed to them, respectively, in Section 3.3. "Fiscal Year" means (a) the period commencing on the Formation Date and ending on December 31 of the year of this Agreement, (b) any subsequent calendar year, or (c) any portion of either of the periods described in clauses (a) and (b) for which the Company is required to close its books and allocate Profits, Losses and other Company items pursuant to Article 4. "Force Majeure" shall mean an event which (i) is not within the reasonable control of the party claiming Force Majeure (the "claiming party"), (ii) was not caused by the acts, omissions, negligence, fault or delays of the claiming party or any Person over whom the claiming party has control, and (iii) by the prompt exercise of due diligence, the claiming party is unable to overcome or avoid or cause to be avoided. Force Majeure shall include but is not limited to: acts of God; acts of the public enemy, war, hostilities, invasion, insurrection, riot, civil disturbance, terrorism or internet hacking; explosion or fire; strikes or lockouts; malicious acts, vandalism or sabotage. "Foreclosure of a Pledge" shall have the meaning set forth in Section 8.2(b). "Formation Date" shall have the meaning set forth in Section 1.1. "Governance Rights" means all of a Member's rights as a Member, other than the such Member's Financial Rights. "Gross Asset Value" shall have the meaning set forth in Section 3 of the Income Tax Appendix. "Income Tax Appendix" means the Income Tax Appendix attached hereto and hereby made a part of this Agreement, which Income Tax Appendix includes certain definitions and other provisions intended primarily for income tax purposes. "Insolvent" shall have the meanings set forth in Section 8.2(d). "Interest" shall have the same meaning as Membership Interest (defined below). "Involuntary Transfer" shall have the meaning set forth in Section 8.2(c). "Joint Venture and Joint Contribution Agreement" shall have the meaning set forth in the Introduction to this Agreement. A copy of the Joint Venture and Joint Contribution Agreement is attached hereto as Exhibit B. "LLC Act" means the Minnesota Limited Liability Company Act, as set forth in Minnesota Statutes, Chapter 322B, as amended from time to time (or any corresponding provisions of succeeding law). "Liquidating Event" shall have the meaning set forth in Section 10.1. "Loss" and "Losses" shall have the meanings set forth in Section 4.1. "Member" or "Members" shall have the meaning set forth in Section 2.1. "Membership Interest" or "Interest" means the entire interest of a Member in the Company and the appurtenant rights, powers and privileges, including both the Financial Rights and Governance Rights, if any, of such Member with respect to the Company. The quantity of a Member's Membership Interest is determined by the number of Units held by the Member relative to the number of Units held by all other Members. The quality of a Member's Membership Interest is determined by the type, class and series of Units held by the Member and the relative rights and preferences appurtenant to that type, class and series of Units. "Net Cash From Operations" means the gross cash proceeds from Company operations, less the portion thereof used to pay or establish reserves for all Company expenses, debt payments, capital improvements, replacements and contingencies, all as determined by the Board. "Net Cash From Operations" shall not be reduced by depreciation, amortization, cost-recovery deductions or similar allowances, but shall be increased by any reduction of reserves previously established pursuant to the preceding sentence. "Officer" means the Chief Executive Officer, the Chief Financial Officer/Treasurer, and Secretary elected by the Board and each other individual who shall hereafter be elected, appointed or otherwise designated as an officer by the Board pursuant to Section 5.1 and the Bylaws, and any other person elected as deemed to be an officer pursuant to the LLC Act. The term "officer" as used in this Agreement and in the Bylaws has replaced the term "manager" as used in the LLC Act, and shall have the same meaning and legal significance as the term "manager" under the LLC Act. "Permitted Transfer" shall have the meaning set forth in Section 7.2. "Person" means any individual, partnership, limited liability company, corporation, trust or other entity. "Profits" shall have the meaning set forth in Section 4.1. "Regulations" means the Income Tax Regulations, including Temporary Regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "Required Records" are the financial records and other records required to be kept at the Company's principal executive office under Section 322B.373 of the LLC Act. "Second Funding" and "Second Funding Date" shall have the meanings ascribed to them, respectively, in Section 3.3. "Transfer" means, as a noun, any voluntary or involuntary transfer (by operation of law, Bankruptcy, court order or otherwise), sale, exchange, assignment, pledge or other encumbrance, foreclosure of a security interest upon, or other disposition of an item; or, as a verb, to voluntarily or involuntarily cause a Transfer of an item. "Transferred" means, as a past participle or participial adjective, that an item has been the subject of a Transfer. "Transferring Holder" shall have the meaning set forth in Section 8.1(b). "Unit" means a quantitative measurement of an entire Membership Interest or portion thereof. Except as may be otherwise specifically provided herein with respect to different types, classes and series of Units, each Unit of the Company shall have equal rights and preferences. The number of Units to which a Member is entitled shall not be affected by either (a) any issuance of new Units to new or existing Members or (b) any change in the Capital Account of the Member (other than the effect of an Additional Capital Contribution made by the Member in exchange for new Units). The number and type of Units allocated to each of the Members is set forth in Exhibit A, as amended from time to time. A Member's relative voting power as a Member shall be based on the number of Units to which the Member is entitled. "Voluntary Transfer" shall have the meaning set forth in Section 8.2(a). Pursuant to Item 601(b)(2) of Regulation S-K, certain Schedules and Exhibits have been omitted from this Agreement. The Registrant will furnish a copy of any omitted Schedule or Exhibit to the Commission upon request. The following Exhibits have been omitted: Exhibit A Exhibit C Exhibit D Exhibit E Exhibit F Income Tax Appendix Exhibit B is filed as Exhibit 10.1 to this Form 8-K. EX-99.1 5 c78051exv99w1.txt PRESS RELEASE EXHIBIT 99.1 ACTIVE IQ AND HAWK PRECIOUS MINERALS ANNOUNCE CREATION OF JOINT VENTURE TO PARTICIPATE WITH AFRIORE AND KWAGGA GOLD TO TEST FOR POSSIBLE WITWATERSRAND-TYPE GOLD MINERALIZATION SEARCHING FOR A MAJOR NEW GOLDFIELD Minneapolis, MN and Toronto, Ontario, Canada (June 30, 2003) --Active IQ Technologies, Inc. ("AIQT")(OTC Bulletin Board: AIQT) and Hawk Precious Minerals Inc. ("HAWK")(CUB: HAWK) today announced that AIQT and Hawk have completed a transaction whereby AIQT and a wholly-owned subsidiary of Hawk became equal owners in a joint venture called Active Hawk Minerals, LLC, a Minnesota limited liability company ("Active Hawk"). Active Hawk was created to pursue an opportunity to secure an interest in mineral rights to the FSC Project area in South Africa pursuant to the recently announced Heads of Agreement ("Heads of Agreement") amongst Hawk, AfriOre International (Barbados) Ltd. ("AfriOre") and Kwagga Gold (Proprietary) Ltd. of South Africa ("Kwagga") on which AfriOre will be the operator. Pursuant to a Joint Venture and Joint Contribution Agreement (the "Agreement"), AIQT and Hawk have both made certain contributions to Active Hawk in exchange for their equal ownership in Active Hawk. AIQT has made its initial US$500,000 contribution as specified under the Agreement. This was the first of three contributions that will total US$2,100,000. The balance of the remaining two contributions is as follows: on September 27, 2003, US$1,000,000 is due, and on November 11, 2003, US$600,000 is due. Hawk has contributed its interest in the Heads of Agreement, as well as its interest in the "Oxide Zones" on its Holdsworth Property near Wawa, Ontario, Canada. As additional compensation for Hawk's contributions, Hawk's wholly-owned subsidiary was issued 3,750,000 unregistered common shares of AIQT. AIQT can acquire HAWK's 50% interest in Active Hawk by issuing HAWK an additional 2,500,000 of unregistered common shares of AIQT on or before October 6, 2003. As a result of the transaction, H. Vance White has become the Chief Executive Officer of AIQT replacing Mr. Brimmer and the AIQT Board of Directors is now comprised of Messrs. Jack A. Johnson, Mark D. Dacko, H. Vance White, Walter E. Brooks, and Michael Pickens. For more information, please contact: Hawk Precious Minerals Inc. Active IQ Technologies, Inc. H. Vance White, President Mark D. Dacko, CFO Walter E. Brooks, Vice-President Telephone: 416-214-2250 Telephone: 612-664-0570 Fax: 416-214-5599 FAX: 612-338-7332 -----END PRIVACY-ENHANCED MESSAGE-----