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EXHIBIT 10.1
Xxxxxxx X. Xxxxxxx
ACTIVE IQ TECHNOLOGIES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made effective the 1st
day of May 2001 by and between Xxxxxxx X. Xxxxxxx, a Minnesota resident
("Employee") and ACTIVE IQ TECHNOLOGIES, INC., a Minnesota corporation (the
"Company").
WHEREAS, Employee desires to provide his services to the Company upon
the terms and conditions hereinafter set forth; and
WHEREAS, the Company desires to employ Employee upon the terms and
conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of these premises and the mutual
promises made herein and the mutual benefits to be derived here from, Employee
and the Company, intending to be legally bound, hereby agree as follows:
1. Employment. The Company hereby employs Employee as CEO, and Employee
hereby accepts employment with the Company upon the terms and conditions
hereinafter set forth.
2. Term. Employment shall be for an initial term of three (3) years
commencing on May 1, 2001 and continuing until the earlier of (i) April 30,
2004; or (ii) the date Employee's employment terminates pursuant to Section 10
hereof. Unless Executive's employment has been terminated pursuant to Section
10, the term of this Agreement shall be automatically renewed and extended for
an additional one year period (in addition to any remaining term) on each
anniversary date hereof unless, at least sixty (60) days prior to such extension
date, the Company provides written notice of its decision to not extend. Thus,
absent notice by the Company, on May 1, 2002, an additional one (1) year shall
be added to the remaining term, thereby extending this Agreement to April 30,
2005. It shall be similarly extended automatically annually absent notice.
3. Duties. Employee shall report to and take direction from the Board
of Directors. Employee shall perform those duties that are usual and customary
for a CEO of a software sales, service and development enterprise. He shall
perform his duties in a manner reasonably expected of a CEO of such a company.
4. Compensation. During the term of his employment, Employee shall
receive the following (collectively, the "Compensation"):
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(a) An initial annual base salary of $125,000, commencing upon the
execution of this agreement and subject to increase by the Board of Directors of
the Company. Payments will be made in equal installments in accordance with the
Company's payment policy (subject to standard withholding amounts for local,
state and federal taxes); and
(b) An annual bonus of up to seventy-five percent (75%) of the
Employee's base salary, dependent upon the achievement of corporate objectives
established by the Company's Board of Directors;
(c) A bonus of $250,000 immediately following the completion of
aggregate investor financing of $12 million (exclusive of pure debt financing
including bank lines and non-convertible debt), and the Company hereby
acknowledges the achievement to date of $9,035,340 toward such threshold; and
(d) The Company also agrees to grant Employee, immediately following
execution of this Agreement, an additional stock option for 250,000 shares of
Company Common Stock (as attached in a separate agreement) with an exercis 1 e
price of $5.00 with 20% vesting immediately and the balance vesting equally over
a four-year period on each successive May 1, 2002, 2003, 2004 and 2005. This
option grant is conditioned upon shareholder approval of an amendment to the
Company's 1999 Stock Option Plan (the "Plan") increasing the number of shares
reserved and available under the Plan; provided, however, that in the event such
shareholder approval is not obtained, then this option will nonetheless be valid
with respect to that number of shares available under the Plan without such
amendment.
5. Expenses. Employee shall be reimbursed for travel and other
out-of-pocket business expenses, provided they have been reasonably incurred in
the performance of Employee's duties for the Company. Employee shall submit to
the Company an itemized account detailing the expenses on a form provided to
Employee by the Company, accompanied by receipts. The Company reserves the right
to reject reimbursement of expense submissions not in compliance with the terms
set forth in this Section or which are not in compliance with Internal Revenue
Service statutes, rules, regulations or other controlling or interpretive
authority
6. Benefits. The Company shall provide Employee with full participation
in the Company's employee benefit plans under the same terms as provided to
other similarly positioned employees of the Company from time to time. Such
benefits are subject to change at any time without notice. Employee is entitled
to four (4) weeks of vacation per year upon the same terms and conditions as
provided to the other employees of the Company. Vacation time will be scheduled
taking into account the Employee's duties and obligations at the Company. Sick
leave, holiday pay and all other leaves of absence also will be in accordance
with the Company's stated personnel policies.
7. Confidential Information. Employee acknowledges and agrees that in
the course of, or incident to, his employment as an employee hereunder, the
Company may provide to Employee, or Employee may otherwise be exposed to or
obtain, confidential information. Without the prior written consent of the Board
of Directors of the Company, except as shall be necessary in the performance of
Employee's assigned duties, Employee shall not disclose or use
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for Employee's direct or indirect benefit or the direct or indirect benefit of
any third party, and Employee shall maintain, both during and after Employee's
employment by the Company, the confidentiality of any Confidential Information
(as hereinafter defined) of the Company. In general, "Confidential Information"
means any and all information of the Company, including, but not limited to, any
information relating to: research; processes; inventions; products; methods;
computer codes or instructions and related documentation; and materials prepared
by Employee in the course of, relating to or arising out of his employment by
the Company, or prepared by any other employee or contractor for the Company or
the Company's customers or clients; cost data; business and financial studies;
business procedures; financial information; financial forecasts and projections;
marketing and business development data, methods, plans and efforts; the
identities of customers or clients, contractors and suppliers and prospective
customers or clients, contractors and suppliers; the terms of contracts and
agreements with customers or clients, contractors and suppliers; the Company's
relationship with actual and prospective customers or clients, contractors and
suppliers and the needs and requirements of, and the Company's course of dealing
with, any such actual or prospective customers or clients, contractors and
suppliers; personnel information; customer and vendor credit information; and
any other materials that have not been made available to the general public.
Failure to xxxx any of the Confidential Information as confidential or
proprietary shall not affect its status as Confidential Information under the
terms of this Agreement. The obligations of this Section shall survive the
termination of this Agreement.
8. Inventions or Discoveries. Employee acknowledges that inventions,
other discoveries, innovations, designs, improvements and software (whether or
not they are in writing or reduced to practice) or works of authorship (whether
or not they can be patented or copyrighted) related to the Company or its
products may be developed, conceived or otherwise made by Employee during the
term of this Agreement (collectively,"Inventions"). Employee agrees that all
Inventions shall be the exclusive property of Company. With respect to all
Inventions, Employee agrees to:
(a) Keep accurate, complete and timely records, which shall be
Company's property and shall be retained on Company's premises; and
(b) Promptly and fully disclose and describe all Inventions to Company;
and
(c) Assign (and Employee does hereby assign) to Company all of
Employee's rights to the Inventions, and to application for letters patent or
copyrights in all countries and to letters patent or copyrights granted upon
these Inventions in all countries; and
(d) To do such other acts as may be necessary or helpful in the opinion
of Company to preserve property rights to these Inventions against forfeiture,
abandonment or loss and to obtain and maintain letters patent or copyrights and
to vest the entire right and title thereto exclusively in Company.
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The obligations of this Section shall continue beyond the termination
of this Agreement with respect to Inventions conceived or otherwise developed
during the term of this Agreement and for the one-year period following the
termination of this Agreement and shall be binding upon assigns, executors,
administrators and other legal representatives. Notwithstanding anything to the
contrary contained herein, the foregoing Section 8 shall not apply to Employee's
rights in any invention that the Employee developed entirely on his own time
without using the Company's equipment, supplies, facilities or trade secret
information except for those inventions that either: (1) relate at the time of
conception or reduction to practice of the invention to the Company's business,
or actual or demonstrable anticipated research or development of the Company; or
(2) result from any work performed by Employee for the Company.
9. Property. During the term of this Agreement and thereafter, Employee
shall not remove from the Company's offices or premises any documents, records,
notebooks, files, correspondence, reports, memoranda, computer tapes, computer
disks or similar materials of or containing confidential information of the type
identified in Section 7 hereof, or other materials or property of any kind,
unless necessary in accordance with Employee's duties and responsibilities of
employment, and in the event that any of such material or property is removed,
all of the foregoing shall be returned to their proper files or places of
safekeeping as promptly as possible after the removal shall have served its
specific purpose; nor shall Employee make, retain, remove or distribute any
copies of any of the foregoing for any reason whatsoever, except as may be
necessary in the discharge of Employee's assigned duties; and upon the
termination of Employee's employment by the Company, Employee shall leave with
or return to the Company all originals and copies of the foregoing, then in
Employee's possession, whether prepared by Employee or by others.
10. Termination of Employment.
(a) Termination for Cause. The Company may terminate employment under
this Agreement only for Cause. For the purposes of this Agreement, "Cause" shall
mean (i) willful misconduct that is injurious to the Company monetarily or
otherwise, including, but not limited to, misappropriation of funds; (ii)
conviction of a crime punishable by imprisonment for a term in excess of one (1)
year or involving moral turpitude; or (iii) failure of Employee to perform the
duties assigned to Employee by the Board of Directors or their assignee,
provided, however, that the Company shall have detailed in writing the specific
duties the Employee has failed to perform and shall have provided Employee with
a ninety (90) day period to cure such failure. Notwithstanding the foregoing,
this Agreement shall terminate in its entirety immediately upon the death of
Employee.
(b) Disability. If Employee has become disabled such that he cannot
perform the essential functions of his job with or without reasonable
accommodation, and the disability continues for a period of more than ninety
(90) days, the Board may, in its discretion, terminate his employment under this
Agreement.
11. Effect of Termination of Employment. Except as expressly set forth
herein, upon the termination of Employee's employment hereunder in accordance
with Section
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10, neither the Employee nor his beneficiary or estate shall have any further
rights or claims against the Company under this Agreement or otherwise.
12. Covenant Not to Compete.
(a) Prohibition on Direct Competition. Regardless of whether or not
this Agreement or the Employee's employment is terminated, for the duration of
Employee's employment and for the twelve (12) month period following the
termination of Employee's employment (hereinafter, the "Restricted Period"),
Employee shall not compete, directly or indirectly, in any geographic area in
which the Company conducted business or in such area in which the Company
conducts business within the six (6) month period following the termination of
this Agreement, with the day-to-day business activities of the Company, which
shall include, but shall not be limited to, the offering of services and/or
products and/or other deliverables similar to products or services or other
deliverables sold, offered, or proposed to be sold in the twelve (12) month
period prior to the Restricted Period. For purposes of this Section 12, the term
"Company" shall include all subsidiaries of the Company.
(b) Prohibition on Indirect Competition. Employee shall be deemed to be
competing (for the purposes of this Section 12), if Employee shall engage,
directly or indirectly, in any business offering products or services similar to
those offered or proposed to be offered by the Company in its day-to-day
business, whether for his own account or that of any other person, firm,
corporation, partnership or other business entity, and whether his participation
shall be as a stockholder, general or limited partner, or investor possessing an
ownership interest exceeding one percent (10%) in any such entity, or as a
principal agent, proprietor, officer, director, employee, sales representative,
consultant, lender or in any other capacity.
(c) Non-Solicitation of Customers. Regardless of whether or not this
Agreement or the Employee's employment is terminated, during the Restricted
Period, neither Employee or his Affiliate shall directly or indirectly, solicit,
divert, take away or induce customers or clients (wherever located) of the
Company to avail themselves of the services or products of others that are
competitive with any of the Company's services or products, it being agreed that
such actions would require Employee to violate the Company's right to its secret
or proprietary information. For purposes of this Agreement, "Affiliate" shall
mean any person or entity controlled by Employee.
(d) Non-Solicitation of Employees and Consultants. Regardless of
whether or not this Agreement or the Employee's employment is terminated, during
the Restricted Period, neither Employee or his Affiliate shall: (i) solicit,
divert, take away or induce any employee or consultant of the Company to leave
the employ of or sever the relationship with the Company; or (ii) employ or hire
any person who was an employee or consultant of the Company at any time during
the past twelve (12) rolling months.
(e) Consideration. Employee agrees that the restrictions set forth in
this Section 12 are given in consideration for Company's selection of Employee
as CEO, Employee's continued employment and his being granted access to
Confidential Information.
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Employee agrees that these restrictions are reasonable under the circumstances,
and Employee understands that the Company would not agree to employment without
Employee's agreement to the restrictions set forth in this Section 12.
Furthermore, in connection with Employees' employment with the Company, the
restrictions set forth in this Section 12 are designed to protect the Company's
proprietary rights and property rights including, but not limited to, customer
lists and trade secrets.
(f) Enforcement Generally. If the scope of the restrictions in this
Section 12 is determined by a court of competent jurisdiction to be too broad to
permit enforcement of such restrictions to their full extent, then such
restrictions shall be construed or rewritten so as to be enforceable to the
maximum extent permitted by law, and Employee hereby consents, to the extent he
may lawfully do so, to the judicial modification of the scope of such
restrictions in any proceeding brought to enforce them.
(g) Enforcement After Termination of Employment. The restrictions of
this Section 12 shall be enforceable provided this Agreement terminates through
expiration or if the Company terminates Employee for Cause pursuant to Section
10 hereof. In the event that Employee's employment is terminated at any time
prior to the expiration of the term of this Agreement without Cause, however,
then the restrictions of this Section 12 shall be unenforceable.
13. Severance and Change in Control.
(a) Termination for Cause. In the event that Employee is terminated for
Cause pursuant to Section 10 hereof, Employee shall not be entitled to
severance.
(b) Termination Without Cause. In the event that Employee is terminated
without Cause at any time (other than expiration of this Agreement by its own
terms), then Employee shall be entitled to a lump sum payment equal to his most
recent base salary.
(c) Change in Control. In the event of any termination of the
Employee's employment by the Company in connection with or within one year after
a Change in Control or in the event of a resignation by Employee following a
Change in Control under Section 13(c)(v) below, Employee shall receive his
then-current base salary for a Twenty-four month period. If the Employee is
still employed by the Company on the first anniversary of a Change in Control,
then the Employee shall be entitled to a bonus equal to the Employee's
then-current base salary in addition to any other bonuses that the Employee may
have earned. This Section 13(c) does not apply to Company's proposed merger with
Meteor Industries, Inc. or any subsidiary thereof.
As used in this Agreement, "Change in Control" shall mean a change in
control which would be required to be reported in response to item 6(e,) on
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company is then
subject to such reporting requirement, including, without limitation, if:
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(i) any person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act, including any affiliate or associate as
defined in Rule 12(b)-2 under the Exchange Act of such person, other
than the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company) becomes a "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company's
then outstanding securities; or
(ii) less than a majority of the Board of Directors is
comprised of the individuals described below; or
(iii) the stockholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into another
corporation or other enterprise in which the holders of outstanding
stock of the Company entitled to vote in elections of directors
immediately before such merger or consolidation hold less than 50% of
the voting power of the survivor of such merger or consolidation or its
parent, or approve a plan of liquidation; or
(iv) at least 80% of the Company's assets are sold and
transferred to another corporation or other enterprise that is not a
subsidiary, direct or indirect, or other affiliate of the Company.
(v) the assignment to Employee of any duties inconsistent in
any respect with the CEO position (including status, offices, titles,
and reporting requirements), authorities, duties, or other
responsibilities or any other action of the Company which results in a
diminishment of Employee's position, authority, compensation, duties,
or responsibilities, other than an insubstantial and inadvertent action
which is remedied by the Company promptly after receipt of notice
thereof given by Employee.
"Board of Directors", for purposes of this Section 13, shall mean
individuals who on the date hereof constituted the Board of the Company, and any
new director who subsequently was elected or nominated for election by a
majority of the individuals who on the date hereof constituted the Board of
Directors and those individuals, if any, who were previously elected or
nominated as provided for in this Section.
14. Intellectual Property.
(a) Employee acknowledges that any and all writings, documents,
inventions, discoveries, computer programs or instructions (whether in source
code, object code, or any other form), algorithms, plans, memoranda, tests,
research, designs, specifications, models, data, diagrams, flow charts, and/or
techniques (whether reduced to written form or otherwise) that Employee makes,
conceives, discovers or develops, either solely or jointly with any other
person, at any time during the term of Employee's employment, whether during
working hours or at the Company's facility or at any other time or location, and
whether upon the
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request or suggestion of the Company or otherwise, that relate to any business
now or hereafter carried on by the Company (collectively, "Intellectual Work
Product") shall be the sole and exclusive property of the Company. Employee
shall promptly disclose to the Company all Intellectual Work Product, and
Employee shall have no claim for additional compensation for the Intellectual
Work Product.
(b) Employee acknowledges that all the Intellectual Work Product that
is copyrightable shall be considered a work made for hire under United States
copyright law. To the extent that any copyrightable Intellectual Work Product
may not be considered a work made for hire under the applicable provisions of
copyright law, or to the extent that, notwithstanding the foregoing provisions,
Employee may retain an interest in any Intellectual Work Product that is not
copyrightable, Employee hereby irrevocably assigns and transfers to the Company
any and all right, title, or interest that Employee may have in the Intellectual
Work Product under copyright, patent, trade secret and trademark law in
perpetuity or for the longest period otherwise permitted by law, without the
necessity of further consideration. The Company shall be entitled to obtain and
hold in its own name all copyrights, patents, trade secrets, and trademarks with
respect thereto.
(c) At the request and sole expense of the Company, either before or
after the termination of Employee's employment, Employee shall assist the
Company in acquiring and maintaining copyright, patent, trade secret, and
trademark protection upon, and confirming the Company's title to, any
Intellectual Work Product. Employee's assistance will include signing all
applications for copyrights and patents and other papers, cooperating in legal
proceedings, and taking any other steps considered desirable by the Company,
provided however that the Employee shall be entitled to reasonable reimbursement
for his time, efforts and expenses following the termination of his employment.
15. Indemnification. During the term of this Agreement, the Company
shall indemnify the Employee against all judgments, penalties, fines, amounts
paid in settlement and reasonable expenses (including, but not limited to,
attorneys' fees) relating to his employment by the Company to the fullest extent
permissible by law.
16. Disclosure. Employee hereby represents that Employee is not subject
to any other agreement that Employee will violate by signing this Agreement.
Employee shall disclose the existence and terms of this Agreement to any
employer that Employee may work for during the Restricted Period after the
termination of Employee's employment at the Company.
17. Conflicting Business. Employee agrees that he will not transact
business with the Company personally, or as agent, owner, partner, or
shareholder of any other entity. Employee further agrees that he will not engage
in any business activity or outside employment that may be in conflict with the
Company's proprietary or business interests.
18. Successors and Assigns. The Company may assign this Agreement to,
and this Agreement shall bind and inure to the benefit of, any parent,
subsidiary, affiliate or successor of the Company. This Agreement shall not be
assignable by Employee.
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19. Entire Agreement; Amendments. This Agreement contains the entire
agreement and understanding of the parties relating to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of every nature between them other than the Merger Agreement. This Agreement may
not be changed or modified, except by an agreement in writing signed by both of
the parties hereto.
20. Waiver. The waiver of the breach of any term or provision of this
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement. Failure of a party to enforce any provision
hereof shall not be deemed a waiver of such party's right to enforce such
provision in the future.
21. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota, without regard to conflicts
of law principles of Minnesota or any other jurisdiction.
22. Invalidity. In case any one or more of the provisions or portions
of the provisions contained in this Agreement shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect the validity of any other provision or
portion of any provision of this Agreement, and any such provision or any such
portion of any provision shall be deemed modified to the extent necessary to
make it enforceable. In the event that a court of competent jurisdiction
determines that one or more of the provisions or portions of the provisions
contained in this Agreement is over broad or over reaching, such provision or
portion thereof shall be deemed modified to the extent necessary to make it
enforceable to the maximum extent allowed by law. If any provision herein is not
enforceable as written, the parties hereto agree that such court shall reform
the provision to provide the maximum restriction enforceable against Employee
and that the provision, as reformed, shall be enforceable.
23. Section Headings. The section headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation
24. Gender; Number. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context requires.
25. Enforcement. Employee acknowledges that it is impossible to measure
fully, in money, the injury that will be caused to the Company in the event of a
breach or threatened breach of this Agreement, and Employee waives the claim or
defense that the Company has an adequate remedy at law. Employee shall not, in
any action or proceeding to enforce the provisions of this Agreement, assert the
claim or defense that such a remedy at law exists. The Company shall be entitled
to injunctive relief to enforce the provisions of this Agreement, without
prejudice to any other remedy the Company may have at law or in equity.
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26. Consent to Suit. Except as otherwise provided by the last sentence
of this Section 26, each of the Company and Employee irrevocably and
unconditionally (a) agrees that any suit, action or other legal proceeding
arising out of or relating to this Agreement brought by either of them or any of
their affiliates or any combination thereof, shall only be instituted in
Minneapolis, Minnesota; (b) consents and submits to the jurisdiction of such
courts in any suit, action or other legal proceeding arising out of or related
to this Agreement; (c) consents to personal jurisdiction in such court and
further agrees that service of process upon Employee may be effected by
certified mail or by any other means permitted by law; (d) waives any objection
which Employee may have to the laying of venue of any such suit, action or
proceeding in any such court; and (e) waives any claim or defense of
inconvenient forum. This Section 26 shall not prevent the Company from seeking
to enforce this Agreement in any other court of competent jurisdiction.
27. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given (i) on the same day if given in person; (ii)
the next business day if sent by overnight courier service to the parties at the
addresses set forth below or to such other addresses as shall be specified by
notice to the other parties hereunder or (iii) the next business day if sent by
telefax, electronic confirmation requested:
If to the Company: with a copy to:
Active lQ Technologies, Inc. Xxxxxxx X. Xxxxx
000 Xxxxxxx Xxxxxxx, Xxxxx 0000 Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP
Xxxxxxxxxx, XX 00000 3300 Xxxxx Fargo Center
Attention: President 00 Xxxxx 0xx Xxxxxx
Telefax No: 000 000 0000 Xxxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telefax No.: (000) 000-0000
To Employee:
Xxxxxxx X. Xxxxxxx
00000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telefax No.: (000) 000-0000
Social Security #: ###-##-####
28. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, and all such counterparts together shall constitute but one
agreement.
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29. Survival of Provisions. Sections 7 through 29 shall survive the
termination of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the day and year first above written.
ACTIVE IQ TECHNOLOGIES, INC.
By: /s/ D. Xxxxxx Xxxx
-------------------------------------
Title: President and COO
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx
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