ASSET PURCHASE AGREEMENT
dated September 22, 1997
by and between
HEWLETT-PACKARD COMPANY
and
THE FOREFRONT GROUP, INC.
CONFIDENTIALITY TREATMENT has been requested for a portion of this Exhibit.
The copy filed as an exhibit omits information subject to the confidentiality
request, which has been filed separately with the Commission.
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
RECITALS............................................................. 1
ARTICLE I. DEFINITIONS.............................................. 1
ARTICLE II. PURCHASE AND SALE....................................... 4
2.1 Purchase and Sale...................................... 4
2.2 Liabilities and Obligations Not Assumed................ 4
2.3 Consideration.......................................... 4
2.4 Taxes.................................................. 4
ARTICLE III. CLOSING................................................ 5
3.1 Closing................................................ 5
3.2 Delivery by Forefront.................................. 5
3.3 Payment for Transferred Assets......................... 5
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
OF FOREFRONT.................................................... 5
4.1 Organization........................................... 5
4.2 Authority.............................................. 5
4.3 Restrictions........................................... 6
4.4 Ownership and Status of the Verona Assets.............. 6
4.5 Intellectual Property.................................. 6
4.6 Litigation and Claims.................................. 7
4.7 Related Agreements..................................... 8
4.8 Permits................................................ 8
4.9 Taxes.................................................. 8
4.10 Employment Matters..................................... 8
4.11 Bookmaker Transaction.................................. 9
4.12 Brokerage.............................................. 10
4.13 Disclosure............................................. 10
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF HP..................... 10
5.1 Organization........................................... 10
5.2 Authority.............................................. 10
5.3 Brokerage.............................................. 11
ARTICLE VI. VERONA EMPLOYEES........................................ 11
6.1 Offers of Employment................................... 11
6.2 Terms of Employment.................................... 11
6.3 Acceptance of Employment Offers........................ 11
6.4 Bonus Agreements....................................... 11
ARTICLE VII. AGREEMENT WITH ▇▇. ▇▇▇▇▇▇ ............................. 11
ARTICLE VIII. ADDITIONAL AGREEMENTS................................. 12
8.1 Due Diligence.......................................... 12
8.2 Previous Noncompetition Agreements with the
Verona Employees....................................... 12
8.3 Transition Services.................................... 12
8.4 Salt Lake City and Houston Source Code Diskette
of May 11, 1997........................................ 12
8.5 [Confidentiality Treatment Requested].................. 14
8.6 Noncompetition......................................... 14
8.7 Non-Solicitation....................................... 14
8.8 Forefront's Obligations - Employee Benefit Plans....... 14
8.9 Further Assurances..................................... 14
ARTICLE IX. INDEMNIFICATION......................................... 15
9.1 General Indemnification Obligation of Forefront........ 15
9.2 Method of Asserting Claims, Etc........................ 16
9.3 Payment................................................ 17
9.4 Other Rights and Remedies Not Affected................. 17
9.5 Limitation on Indemnification.......................... 18
ARTICLE X. GENERAL PROVISIONS....................................... 18
10.1 Survival of Representations and Warranties............. 18
10.2 Integrated Agreement; Amendments....................... 18
10.3 Waiver................................................. 18
10.4 Notices................................................ 18
10.5 Confidentiality........................................ 19
10.6 Publicity.............................................. 20
10.7 Counterparts........................................... 20
10.8 No Transfer............................................ 20
10.9 Expenses............................................... 20
10.10 Other Remedies......................................... 20
10.11 Absence of Third Party Beneficiary Rights.............. 20
10.12 Mutual Drafting........................................ 20
10.13 Severability........................................... 21
10.14 Governing Law.......................................... 21
ASSET PURCHASE AGREEMENT
EXHIBIT AND SCHEDULES
Exhibit
Exhibit 4.5(b)(vii) Form of Forefront Invention, Confidential Information
and Non-Competition Agreement
Schedules
Schedule 2.1(a) Verona Intellectual Property
Schedule 4 Disclosure Schedule
Schedule 4.5(b) Third Party Licenses
Schedule 4.7(a) Related Agreements
Schedule 4.7(d) Demonstrations
Schedule 4.10(c) Compensation Agreements
Schedule 4.10(f) Transaction Compensation
Schedule 4.11 Bookmaker Agreements
Schedule 6.1 Verona Employees
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into and is effective as of
the 22nd day of September, 1997 (the "Effective Date") by and between THE
FOREFRONT GROUP, INC., a Delaware corporation ("Forefront"), and HEWLETT-PACKARD
COMPANY, a California corporation ("HP"), with respect to the purchase by HP
from Forefront of certain of Forefront's assets related to the Verona Project
(as defined below).
RECITALS
A. Forefront (i) is engaged in research and development activities
relating to technology for enhanced printing of hypertext ▇▇▇▇-up language
(HTML) documents from the Internet (the "Verona Project") and (ii) is the
developer and owner of intellectual property rights and other rights and assets
relating to the Verona Project; and
B. Forefront wishes to sell and grant licenses to, and HP wishes to
purchase and license, certain intellectual property and other rights and assets
related to the Verona Project and make employment offers to certain employees of
Forefront involved in the Verona Project.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, Forefront and HP, intending to be legally bound,
hereby agree as follows:
ARTICLE I
DEFINITIONS
In this Agreement, the following terms have the meanings specified or
referred to in this Article I and shall be equally applicable to both the
singular and plural forms.
"Affiliate" means any entity which controls, is controlled by, or is
under common control with, Forefront or HP, as the case may be. An entity shall
be deemed to be in control of another entity only if, and for so long as, it
owns or controls fifty percent (50%) or more of the shares of the subject entity
entitled to vote in the election of directors (or, in the case of an entity that
is not a corporation, for the election of the corresponding managing authority).
"AISoft Agreement" means the Software Development and License Agreement
dated March 1996 between Forefront and AISoft, Inc., as amended by the First,
Second and Third Amendments thereto.
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"Bookmaker" has the meaning specified in Section 4.11 below.
"Bonus Agreements" has the meaning specified in Section 6.4 below.
"Claim Notice" has the meaning specified in Section 9.2 below.
"Closing" has the meaning specified in Section 3.1 below.
"Closing Date" has the meaning specified in Section 3.1 below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Encumbrance" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, covenant or other restrictions of any kind.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Facilities License" has the meaning specified in Section 8.2(b).
"Forefront" has the meaning specified in the first paragraph of this
Agreement.
"Forefront Benefit Plans" has the meaning specified in Section 4.10(e)
below.
"Forefront Employees" means past or current employees of Forefront,
whether full-time, part-time, consultant, contract or temporary, who have been
involved in any manner with the Verona Project or the Verona Assets.
"Forefront Intellectual Property" means the Verona Intellectual
Property and the Intellectual Property contained in the Source Code CD.
"Governmental Body" means any federal, state, county, local, district,
public authority, public agency, or any other political subdivision, public
corporation, or governmental or regulatory authority whether foreign or
domestic.
"HP" has the meaning specified in the first paragraph of this
Agreement.
"Indemnitee" has the meaning specified in Section 9.1 below.
"Intellectual Property" means the following assets (whether tangible or
intangible):
(A) All documentation;
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(B) Computer programs in source code or object code form;
(C) Works of authorship (whether copyrightable or not);
(D) Inventions (whether patentable or not), know how, technology,
trade secrets, mask works, trade names, designs, design specifications,
processes (including copyrighted manufacturing processes), process
sheets, technical data, specifications, custom tooling, drawings,
supplier lists and customer lists; and
(E) Patents, design patents, utility models, industrial designs,
copyrights, mask work registrations and trademarks, service marks and
trade names (including derivations and combinations of any such ▇▇▇▇ or
name, provided such derivation or combination is confusingly similar to
the original name) and applications therefor and registrations thereof,
foreign counterparts thereof and similar rights and assets in any
country.
"Licensed Technology" has the meaning specified in Section 8.3(b)
below.
"▇▇. ▇▇▇▇▇▇" has the meaning specified in Section 4.11.
"Offer Letters" has the meaning specified in Section 6.1 below.
"Permitted Encumbrance" means the AISoft Agreement.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
Governmental Body.
"Purchase Price" has the meaning specified in Section 2.3 below.
"Source Code CD" has the meaning specified in Section 8.3(a) below.
"Tax" means any federal, state, local or foreign net income,
alternative or add-on minimum, gross income, gross receipts, property, sales,
use, transfer, gains, license, excise, employment, payroll, withholding or
minimum tax, or any other tax custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any Governmental Body.
"Third Party Licenses" has the meaning specified in Section 4.5 below.
"Transferred Assets" has the meaning specified in Section 2.1 below.
"Verona Assets" means the Transferred Assets, the Licensed Technology
and the Third Party Licenses.
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"Verona Employees" has the meaning specified in Section 6.1 below.
"Verona Intellectual Property" means all Intellectual Property owned or
licensed by Forefront relating to the Verona Project.
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and Sale. Subject to the terms and conditions in
this Agreement, Forefront agrees to transfer, convey, assign and deliver to HP,
and HP agrees to purchase from Forefront, free and clear of all Encumbrances
other than the Permitted Encumbrance, the assets owned or licensed by Forefront
and related to, or used or held for use by Forefront in, the Verona Project
wherever located, whether or not carried at any value on the books of Forefront,
as set forth below (collectively, the "Transferred Assets"):
(a) The Verona Intellectual Property, including, without
limitation, all of the items, information and rights listed in Schedule
2.1(a) to this Agreement, other than the Licensed Technology and the
Third Party Licenses; and
(b) Any rights of action Forefront has now, or acquires in the
future, against a third party for the infringement or misappropriation
of a patent, copyright, mask work registration, trademark or trade
secret relating specifically to the Verona Project and comprised within
the Verona Intellectual Property.
Section 2.2 Liabilities and Obligations Not Assumed. Notwithstanding
anything in this Agreement to the contrary, HP is not assuming any liabilities
or obligations of any kind of or from Forefront, whether accrued, absolute,
contingent or otherwise, whether now or hereafter existing, including any
liabilities or obligations under the Permitted Encumbrance or the Third Party
Licenses.
Section 2.3 Consideration. In consideration for the Transferred Assets
and subject to the terms and conditions in this Agreement, the Bonus Agreements
and the Noncompetition Agreement, HP shall pay (a) to Forefront, Two Million
Three Hundred Ninety-Two Thousand Dollars ($2,392,000) (the "Purchase Price").
Section 2.4 Taxes. Forefront shall pay and promptly discharge when due
the entire amount of any and all excise, sales, value-added, use, registration,
stamp, transfer and other like Taxes (the "Transfer Taxes") with respect to
payments made by HP to Forefront under this Agreement, and shall indemnify and
hold HP harmless against any such Transfer Taxes and any interest or penalties
assessed against HP in connection therewith.
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ARTICLE III
CLOSING
Section 3.1 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place simultaneously with the
execution of this Agreement at the offices of HP, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇. The date of the Closing is referred to in this Agreement as
the "Closing Date."
Section 3.2 Delivery by Forefront. At the Closing, Forefront will
deliver to HP, against payment of the Purchase Price, a ▇▇▇▇ of sale, assignment
and such other instruments of transfer and conveyance as HP reasonably requests
in the form agreed to by Forefront and HP to evidence the transfer of the
Transferred Assets.
Section 3.3 Payment for Transferred Assets. At the Closing, HP will pay
to Forefront, against delivery of the Transferred Assets, the Purchase Price by
wire transfer of immediately available funds in accordance with the instructions
of Forefront.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FOREFRONT
Except as disclosed in Schedule 4 to this Agreement (which Schedule 4
shall specifically refer to the Sections of this Agreement to which the
disclosure therein applies and which shall reasonably identify the basis for an
exception to a representation and warranty in the Agreement), Forefront
represents and warrants to HP as set forth below:
Section 4.1 Organization. Forefront is duly incorporated and organized
and is validly existing as a corporation under the laws of the state of
Delaware. Forefront has the corporate power and authority to own the Verona
Assets and to conduct the Verona Project in the manner in which it is now being
conducted, to enter into this Agreement and to sell, transfer, assign and
deliver the Transferred Assets and license the Licensed Technology to HP in
accordance with this Agreement.
Section 4.2 Authority. This Agreement has been duly authorized by all
necessary corporate and other action, executed and delivered on behalf of
Forefront and constitutes the legal, valid and binding obligation of Forefront,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies is subject to the discretion of the court before which any
proceeding therefor may be brought. Forefront is not party to any agreement or
subject to any judgment, award, order, prohibition or decree of any court,
arbitration or Governmental Body which would prevent Forefront from entering
into this Agreement or from selling, transferring and assigning the Transferred
Assets and licensing
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the Licensed Technology to HP pursuant to this Agreement. No consent or
participation of or by any third party or Governmental Body is required as a
condition to the consummation by Forefront of the transactions contemplated by
this Agreement.
Section 4.3 Restrictions. Except for the Permitted Encumbrance,
Forefront is not a party to any charter, bylaw, indenture, agreement, contract,
commitment, lease, plan, license, permit, authorization or other instrument,
document or understanding, oral or written, or subject to any charter or other
corporate restriction or any judgment, order, writ, injunction, decree or award
which adversely affects or restricts or may in the future adversely affect or
restrict, the Transferred Assets or the Licensed Technology or HP's ability to
use or treat the Transferred Assets and Licensed Technology in any manner or
conduct the Verona Project as it sees fit after consummation of the transactions
contemplated hereby.
Section 4.4 Ownership and Status of the Verona Assets.
(a) The Verona Assets represent all of the assets related to
the Verona Project.
(b) Forefront owns each Verona Asset other than the Third
Party Licenses free and clear of all Encumbrances, rights and claims
whatsoever, other than the AISoft Agreement and, upon transfer of the
Transferred Assets and license of the Licensed Technology to HP in
accordance with this Agreement, HP will obtain good title to such
Transferred Assets and a valid license to the Licensed Technology, free
and clear of any adverse rights or claims whatsoever other than the
Permitted Encumbrance.
Section 4.5 Intellectual Property.
(a) Schedule 2.1(a) contains a complete list of the Verona
Intellectual Property.
(b) Except as specifically stated in Schedule 4:
(i) Forefront is the sole owner of all of the Verona
Intellectual Property other than the third party licenses
listed on Schedule 4.5(b) hereto (the "Third Party Licenses")
and has not granted licenses to the Verona Intellectual
Property to any third parties except for the license granted
under the AISoft Agreement. Forefront has the right to
transfer ownership of all the Transferred Assets to HP and to
license the Licensed Technology free and clear of all
Encumbrances other than the Permitted Encumbrance;
(ii) Forefront has conducted the Verona Project
activities completely internally without reference to or
license of any third party Intellectual Property (other than
the Third Party Licenses) or use of consultants and Forefront
is not obligated to make any royalty or other payment to any
third party under any Intellectual Property (other than
pursuant to the Third Party Licenses) in connection with the
Verona
6
Project;
(iii) The Third Party Licenses (A) are valid and
binding on Forefront, (B) are in full force and effect, and
(C) have not been breached by Forefront;
(iv) Forefront, in connection with and relation to
the Verona Project and the Source Code CD, has no knowledge
that it has infringed or misappropriated any Intellectual
Property of any third party. Forefront has not received any
notice, claim or protest alleging any such infringement or
misappropriation. Forefront is not aware that any such notice,
claim or protest is threatened or contemplated by any third
party;
(v) Forefront is not aware of any infringement or
misappropriation by any third party of any Forefront
Intellectual Property;
(vi) Forefront is not aware that any of the Verona
Employees is obligated under any contract, or subject to any
judgment or governmental order, that would restrict or
interfere with such employees' best efforts on behalf of HP.
Forefront is not aware that any of the Forefront Employees or
Verona Employees, as a result of performing services for
Forefront, is in violation of any employment contract with a
third party or is in violation of any contract with a third
party regarding Intellectual Property; and
(vii) Forefront has obtained from each of the
Forefront Employees and Verona Employees a written agreement
in substantially the form of Exhibit 4.5(b)(vii).
Section 4.6 Litigation and Claims.
(a) There is no action, suit, arbitration, proceeding,
grievance or investigation pending or, to the knowledge of Forefront,
threatened before any court, tribunal, panel or Governmental Body in
which Forefront or any of its Affiliates is a party relating to the
Verona Project or to which the Verona Assets or their ownership or use
may be subject, and none of Forefront or any officer, employee, agent
or consultant thereto, is enjoined from any action that may adversely
affect the sale or operation of the Verona Project and the Verona
Assets.
(b) Forefront is not in violation of or in default under any
law, decree, order or regulation applicable to Forefront or the Verona
Assets, including without limitation those relating to environmental
requirements (such as air, water and noise pollution) and to employment
practices (such as discrimination, health and safety). None of
Forefront or any of its officers, directors, employees, agents or
consultants thereto, has been permanently or temporarily enjoined by
any order, judgment or decree of any governmental authority from
engaging in or continuing any conduct or practice in connection with
the Verona Project or the Verona Assets or the transactions
contemplated hereby. There is not in existence on the date hereof any
order, judgment or decree of any governmental authority enjoining or
7
requiring Forefront specifically by name, to take any action of any
kind with respect to the Verona Project or the Verona Assets.
Section 4.7 Related Agreements.
(a) Except for the agreements listed on Schedule 4.7(a) to
this Agreement and the Forefront Benefit Plans, Forefront is not a
party to, bound by or subject to any contract or commitment, whether
oral or written, in connection with or relation to the Verona Project,
the Verona Assets or the Verona Employees.
(b) True, current and complete copies of the agreements listed
on Schedule 4.7(a) have been delivered to HP, and there are no oral or
written commitments or agreements with respect to the renewal,
repudiation or amendment of such agreements.
(c) Except for the AISoft Agreement, there are no existing
agreements, options, commitments or rights with, of or to any Person to
acquire any of the assets, properties or rights of Forefront included
in the Verona Assets or any interest therein.
(d) Schedule 4.7(d) to this Agreement sets forth third parties
other than HP to whom Forefront has demonstrated some part of the
Verona Project. Forefront has entered into nondisclosure agreements
with the parties set forth on Schedule 4.7(d) and except as listed on
Schedule 4.7(d), Forefront has not demonstrated the Verona Project to
any third party. Forefront has not disclosed the Verona Source Code to
any third party.
(e) Each agreement listed on Schedule 4.7(a), (i) is valid and
binding on Forefront, (ii) is in full force and effect, and (iii) has
not been breached by Forefront.
Section 4.8 Permits. There are no licenses, permits or other
governmental authorizations required in the conduct of the Verona Project or the
operation of the Verona Assets.
Section 4.9 Taxes. Forefront has timely filed all tax returns which it
is required to file and has paid in full all Taxes which it is required to pay.
There are (and as of immediately following the Closing there will be) no
Encumbrances on the Verona Assets relating to or attributable to Taxes.
Forefront has no knowledge of any basis for the assertion of any such claims
which, if adversely determined, would result in an Encumbrance on the Verona
Assets or otherwise adversely affect HP or HP's use of the Transferred Assets or
the Licensed Technology. None of the Verona Assets are treated as "tax-exempt
use property" within the meaning of Section 168(h) of the Code.
Section 4.10 Employment Matters.
(a) Other than presenting the Verona Employees with the Offer
Letters from HP, Forefront has not, to its knowledge, made any
statement, representation or promise, orally or in writing, to any of
the Verona Employees concerning the salary or benefits HP may pay
8
or provide to any Verona Employee.
(b) Forefront has provided to HP a list of all Verona
Employees showing, by reference to appropriate grades or categories,
the remuneration payable and other principal benefits which Forefront
or its Affiliates are bound to provide.
(c) Other than the agreements listed on Schedule 4.10(c) to
this Agreement, there is not in existence any written or unwritten
contract of employment, including any agreement which provides for
special remuneration or security of tenure, with any Verona Employee.
(d) Forefront has in relation to each of the Verona Employees
complied with all statutes, regulations, codes of conduct, terms and
conditions of employment, orders and awards relevant to their
conditions of service or to the relations between Forefront and the
Verona Employees.
(e) Forefront has in relation to each of the Verona Employees
complied with the terms and conditions of all employee pension benefit
plans and employee welfare benefit plans as defined in Section 3 of
ERISA, and all profit-sharing, group insurance, bonus, deferred
compensation, executive compensation, consulting, stock option,
severance pay, insurance, employment, simplified employee pension
("SEP"), pension or retirement plan or written agreement relating to
employment or fringe benefits for employees of Forefront (collectively,
the "Forefront Benefit Plans").
(f) Except as described in Schedule 4.10(f) to this Agreement,
no Verona Employee shall accrue or receive additional benefits under
the Forefront Benefit Plans (other than additional accruals under the
formula provided for in such plans as in effect prior to and without
regard to the transactions contemplated hereby) as a direct result of
the transactions contemplated by this Agreement. Verona Employees do
not participate in any multiemployer plans within the meaning of
Section 3(37) of ERISA.
(g) No Verona Employee has asserted any claim against
Forefront since such employee's hiring date by Forefront and, to
Forefront's knowledge, there are no present circumstances which are
likely to give rise to any such claim.
(h) No Verona Employee is a member of or represented by a
trade union.
(i) With respect to the Verona Employees, Forefront is not a
party, either directly or by operation of law, to any collective
agreement, letters of understanding, letters of intent or other written
communication with any trade union.
Section 4.11 Bookmaker Transaction. Forefront has complied with and
performed all of its obligations to the extent required to have been complied
with or performed as of the date of this Agreement to Bookmaker Corporation
("Bookmaker"), the successors and assigns of Bookmaker,
9
the Verona Employees and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇") under the Asset Purchase
Agreement dated as of June 12, 1996 between Forefront, Bookmaker, ▇▇. ▇▇▇▇▇▇ and
certain of the Verona Employees, as amended (the "Bookmaker APA"), and all
related agreements between Forefront and one or more of the above named parties,
as amended (the Bookmaker APA and the related agreements referred to
collectively as the "Bookmaker Agreements"). Forefront has no further
obligations to Bookmaker, its successors and assigns, the Verona Employees or
▇▇. ▇▇▇▇▇▇ under the Bookmaker Agreements other than its continuing obligations
under the agreements specified in Schedule 4.11 and the execution and
performance of this Agreement will not create or give rise to any obligations
under the Bookmaker Agreements or with respect to the Transferred Assets, the
Licensed Technology, the Verona Employees or the Verona Project.
Section 4.12 Brokerage. No broker, finder or other third party has any
right to a commission or other fee as the result of action by or on behalf of
Forefront in connection with this Agreement.
Section 4.13 Disclosure. To its knowledge, Forefront has disclosed to
HP all material adverse facts which directly relate to the Verona Project, the
Verona Assets and the Verona Employees. None of the representations or
warranties of Forefront contained herein, and none of the information contained
in the Schedules hereto is false or misleading or omits to state a fact herein
or therein necessary to make the statements herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HP
HP represents and warrants to Forefront as set forth below:
Section 5.1 Organization. HP is duly incorporated and organized and is
validly existing as a corporation under the laws of the state of California. HP
has the corporate power and authority to enter into this Agreement, the Bonus
Agreements and the Noncompetition Agreement and to purchase from Forefront the
Transferred Assets in accordance with this Agreement.
Section 5.2 Authority. This Agreement, the Bonus Agreements and the
Noncompetition Agreement have been duly authorized by all necessary corporate
and other action, executed and delivered on behalf of HP and constitute the
legal, valid and binding obligations of HP, enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally and except that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought. HP is not a party to any agreement or subject to any judgment,
award, order, prohibition or decree of any court, arbitration or Governmental
Body which would prevent HP from entering into this Agreement, the Bonus
Agreements or the Noncompetition Agreement or from purchasing the Transferred
Assets from Forefront pursuant to this Agreement.
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No consent or participation of or by any third party or Governmental Body is
required as a condition to the consummation by HP of the transactions
contemplated by this Agreement, the Bonus Agreements or the Noncompetition
Agreement.
Section 5.3 Brokerage. No broker, finder or other third party has any
right to a commission or other fee as the result of action by or on behalf of HP
in connection with this Agreement.
ARTICLE VI
VERONA EMPLOYEES
Section 6.1 Offers of Employment. On or before the Closing Date, HP
shall make offers of employment, conditioned upon the Closing, to the Forefront
Employees listed in Schedule 6.1 (the "Verona Employees"), upon the terms and
conditions set forth in the offer letters presented to such employees (the
"Offer Letters")
Section 6.2 Terms of Employment. Upon becoming employees of HP, the
Verona Employees will be treated as new hires under each of HP's employee
benefit plans; provided that any credit under HP's employee benefit plans for
employment service prior to the hire date of such Verona Employee shall be
specified in the Offer Letters.
Section 6.3 Acceptance of Employment Offers. On or before the Closing
Date, each of the Verona Employees shall have accepted employment offers from HP
on the terms and conditions set forth in the Offer Letters.
Section 6.4 Bonus Agreements. On or before the Closing Date, HP and
each of the Verona Employees shall enter into a bonus agreement on mutually
agreeable terms and conditions (the "Bonus Agreements").
ARTICLE VII
AGREEMENT WITH ▇▇. ▇▇▇▇▇▇
On or prior to the Closing Date, HP and ▇▇. ▇▇▇▇▇▇ shall enter into a
noncompetition agreement on mutually agreeable terms and conditions (the
"Noncompetition Agreement").
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ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 Due Diligence. No information or knowledge obtained in any
investigation conducted by HP or provided to HP shall affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of all the parties to consummate the transactions contemplated
hereby.
Section 8.2 Previous Noncompetition Agreements With the Verona
Employees. On or prior to the Closing Date, Forefront will waive operation of
any noncompetition agreements between Forefront and any Verona Employee with
regard to such Verona Employee's employment with HP.
Section 8.3 Transition Services.
(a) Use of Equipment. For a period of up to eight (8) weeks
following the Closing Date, Forefront will make available to HP for
continued use by the Verona Employees the hardware, software and other
equipment at the facility described in Section 8.3(b) below. There
shall be no charge to HP for the use of such equipment.
(b) License to Use Premises. Forefront hereby grants to HP a
license to use the facilities located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ for a period of up to eight (8) weeks following
the Closing Date (the "Facilities License"). In consideration for the
Facilities License, HP shall pay to Forefront One Thousand Eight
Hundred Thirty-Three Dollars and Fifty Cents ($1833.50) per week for
each week during which HP exercises such license. In addition, HP shall
reimburse Forefront for HP's pro rata share of incurred expenses, such
as telephone, Internet service and utilities, for the period during
which HP exercises the Facilities License. HP may terminate the
Facilities License at any time upon one (1) week's notice.
Section 8.4 Salt Lake City and Houston Source Code Diskette of May 11,
1997.
(a) Delivery and Return of Source Code CD. At or prior to the
Closing, Forefront shall deliver to HP the compact disk (CD) titled
"Salt Lake City and Houston Source Code Diskette of May 11, 1997" (the
"Source Code CD") which contains certain programming statements or
instructions of Forefront (the "Forefront Source Code") written and
expressed in language from which statements or instructions are
translated by an appropriate language processor into executable machine
code. On or before the earlier to occur of (i) the first commercial
shipment of a commercial product resulting from the Verona Project
("Verona 1.0") and (ii) June 30, 1998 (provided that HP may extend this
date with the consent of Forefront which consent will not be
unreasonably withheld), HP shall return the Source Code CD to Forefront
and shall certify the destruction of all documents or media containing
any Forefront Source Code and any and all copies or extracts thereof;
provided
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that this Section 8.4(a) shall not require the return or destruction of
any of the Forefront Source Code which HP has a right to continue using
pursuant to the license granted under Section 8.4(b) below.
(b) Grant of Limited License. Subject to the terms and
conditions of this Agreement, Forefront hereby grants to HP (i) the
right to use the Forefront Source Code contained in the Source Code CD
internally in the development of Verona solely for the purposes of
achieving the functionality described in the Verona Executive Summary
dated April 23, 1997 under the heading "Verona 1.0 Broad Functionality
List" or of achieving such other functionality as HP reasonably desires
provided that such functionality falls within the spirit of the
description of Verona contained in the Verona Executive Summary (which
right shall include the right to reproduce and incorporate in the
source code for Verona 1.0 (the "Verona Source Code") such portions of
the Forefront Source Code contained in the Source Code CD as may be
necessary or appropriate to achieve such functionality), (ii) a
non-exclusive, worldwide, fully-paid, royalty-free, license to use,
reproduce, display, translate and distribute the Forefront Source Code
incorporated in the Verona Source Code (the "Licensed Technology) and
(iii) a non-exclusive, worldwide, fully-paid, royalty-free, license to
use, reproduce, display, translate and distribute the Licensed
Technology in any enhancements to, modifications of and other products
derived from Verona 1.0. HP shall have no right or license to use the
Forefront Source Code for any other purposes.
(c) Confidentiality and Non-Use Obligations. Prior to the
return of the Source Code CD, HP agrees (i) to hold the Forefront
Source Code in confidence and to take all reasonable precautions to
protect the Forefront Source Code (including without limitation, the
maintenance of the Forefront Source Code in a secure area with access
restricted to the Verona Employees and such other HP employees as the
Verona Employees determine need to have access to such Forefront Source
Code and all other precautions HP employs with respect to its own
source code), (ii) not to disclose any such Forefront Source Code to
any third person (except to an agent, employee or consultant of HP who
needs to have access to such Forefront Source Code and who is bound by
a confidentiality agreement or to a permitted sublicensee pursuant to a
sublicense agreement, in either case which contains confidentiality
obligations that are no less restrictive than those contained in this
Section 8.4(c)) and (iii) not to make any use whatsoever at any time of
such Forefront Source Code except as expressly authorized in this
Section 8.4. Without granting any right or license, Forefront agrees
that the foregoing shall not apply with respect to information that (i)
is in or (through no improper action or inaction by HP or any of its
affiliates, agents, employees, consultants or sublicenses) enters the
public domain, (ii) was in HP's possession or known by it prior to
receipt from Forefront, (iii) was rightfully disclosed to it by another
person without restriction, or (iv) was independently developed by it
without use of the Forefront Source Code. HP acknowledges and agrees
that due to the unique nature of the Forefront Source Code, Forefront
will suffer irreparable harm for any material breach by HP of its
obligations under this Section 8.4(c) for which there may be no
adequate remedy at law and therefore, that upon any such material
breach by HP, Forefront shall be entitled to appropriate
13
equitable relief in addition to whatever remedies it might have at law
or under this Agreement.
(d) Disclosure of Incorporated Source Code. Concurrently with
the return of the Source Code CD, HP shall provide Forefront with a
written certification containing a list of (i) all of the Forefront
Source Code files reproduced and incorporated (in whole or in part) in
the Verona Source Code and (ii) all of the employees of HP other than
the Verona Employees who had access to the Source Code CD.
Section 8.5 Intentionally omitted per Confidentiality Request
Section 8.6 Noncompetition. In consideration for the payments to be
received hereunder and for other good and valuable consideration, receipt of
which is hereby acknowledged, Forefront will not engage, directly or indirectly,
in any business activity involving developing, marketing, licensing, selling or
servicing products or services for enhanced printing of hypertext ▇▇▇▇-up
language (HTML) or Internet documents (except to the extent such capabilities
are incorporated in current products or services of Forefront, and may be
incorporated in any successors to such products or services to the extent no
Intellectual Property included in the Transferred Assets is incorporated
therein) for a period of two (2) years from the Closing Date.
Section 8.7 Non-Solicitation. For a period of two (2) years from the
Closing, Forefront will not solicit for employment any Verona Employee or hire
any Verona Employee; provided, however, that, Forefront may hire any Verona
Employee (a) who has been involuntarily terminated by HP, or (b) who, at the
time of hiring, has been employed by a third party unaffiliated with Forefront
or HP on a bona fide basis for at least twelve (12) months, or (c) with respect
to whom HP has agreed may be hired by Forefront.
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Section 8.8 Forefront's Obligations - Employee Benefit Plans.
(a) Forefront shall retain responsibility for and satisfy in
full its obligations with respect to all employee benefits which have
accrued and which will accrue to the Verona Employees under the
Forefront Benefit Plans in accordance with the terms of the Forefront
Benefit Plans and applicable federal and local rules, regulations and
legislation having jurisdiction over such plans. The Forefront Benefit
Plans shall pay directly, or otherwise discharge in accordance with the
provisions of such plans, to each Verona Employee that portion of all
benefits which has been accrued and is payable under such provisions on
behalf of each such employee (or is attributable to expenses properly
incurred by such employee) as of the Closing Date and the plans of HP
shall assume no liability therefor. Forefront shall pay all such
amounts when due in accordance with the provisions of the Forefront
Benefit Plans.
(b) No Forefront Benefit Plan and no portion of the assets of
any plan, fund, program or arrangement, written or unwritten,
heretofore sponsored or maintained by Forefront (and no amount,
attributable to any such plan, fund program or arrangement) shall be
transferred to HP and HP shall not be required to continue any such
plan, fund, program or arrangement after the Closing Date.
(c) HP or its plans shall not be liable for any claim for
insurance, reimbursement or other benefits payable with respect to any
Verona Employee by reason of any event which occurs prior to the
Closing Date.
Section 8.9 Further Assurances. From time to time after the Closing
Date, at HP's request and without further consideration between the parties
hereto, Forefront shall execute and deliver such further instruments of transfer
and written assurances and shall take such other action as HP shall reasonably
request for the purpose of fully transferring and licensing to HP and confirming
HP's rights to the Transferred Assets and the Licensed Technology.
ARTICLE IX
INDEMNIFICATION
Section 9.1 General Indemnification Obligation of Forefront. For a
period of two (2) years after the Closing, Forefront will reimburse, indemnify
and hold harmless HP and its successors and permitted assigns (an "Indemnitee")
against and in respect of the following:
(a) any and all damages, losses, deficiencies, liabilities,
costs and expenses incurred or suffered by any Indemnitee that result
from, relate to or arise out of:
(i) any and all liabilities and obligations of
Forefront of any nature
15
whatsoever;
(ii) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings
or investigations against any Indemnitee that relate to
Forefront with respect to the Verona Project, the Verona
Assets or the Verona Employees, which result to any extent
from or arise to any extent out of any action or inaction
prior to the Closing Date of Forefront or any director,
officer, employee, agent, representative or subcontractor of
Forefront;
(iii) any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of
Forefront under this Agreement, or from any misrepresentation
in or omission from any certificate, schedule, statement,
document or instrument furnished to HP pursuant hereto; or
(iv) any claims by creditors of Forefront against HP
arising out of the failure of Forefront to comply with any
applicable bulk sales law or similar law protecting creditors
of Forefront.
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs
and other expenses (including, without limitation, reasonable legal
fees and expenses) incident to any of the foregoing or to the
enforcement of this Section 9.1.
Section 9.2 Method of Asserting Claims, Etc. In the event that any
claim or demand for which Forefront would be liable to an Indemnitee hereunder
is asserted against or sought to be collected from an Indemnitee by a third
party, the Indemnitee shall promptly notify Forefront of such claim or demand,
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 and demand) (the "Claim Notice").
Forefront shall have thirty (30) days from the personal delivery or mailing of
the Claim Notice (the "Notice Period") to notify the Indemnitee, (i) whether or
not they dispute their liability to the Indemnitee hereunder with respect to
such claim or demand, and (ii) notwithstanding any such dispute, whether or not
they desire, at their sole cost and expense, to defend the Indemnitee against
such claim or demand.
(a) In the event that Forefront notifies the Indemnitee within
the Notice Period that it desires to defend the Indemnitee against such
claim or demand then, except as hereinafter provided, Forefront shall
have the right to defend the Indemnitee by appropriate proceedings,
which proceedings shall be promptly settled or prosecuted by Forefront
to a final conclusion in such a manner as to avoid any risk of
Indemnitee becoming subject to liability for any other matter;
provided, however, Forefront shall not, without the prior written
consent of the Indemnitee, consent to the entry of any judgment against
the Indemnitee or enter into any settlement or compromise which does
not include, as an unconditional term thereof, the giving by the
claimant or plaintiff to the Indemnitee of a release, in form and
16
substance satisfactory to the Indemnitee, as the case may be, from all
liability in respect of such claim or litigation. If any Indemnitee
desires to participate in any such defense or settlement, it may do so
at its sole cost and expense. If an Indemnitee determines in good faith
that Indemnitee's interests with respect to any such claim or demand
cannot appropriately be represented by Forefront or the litigation or
resolution of any such claim or demand involves an issue or matter
which could have a materially adverse effect on the business,
operations, assets, properties or prospects of the Verona Project, the
Transferred Assets, the Licensed Technology or the Verona Employees, or
the administration of the tax returns and responsibilities under the
tax laws of any Indemnitee, then the Indemnitee shall have the right,
subject to the consent of Forefront which consent will not be
unreasonably withheld, to control the defense or settlement of any such
claim or demand and its reasonable costs and expenses shall be included
as part of the indemnification obligation of Forefront hereunder;
provided, however, that the Indemnitee shall not settle any such claim
or demand without the prior written consent of Forefront, which consent
shall not be unreasonably withheld. If the Indemnitee should elect to
exercise such right, Forefront shall have the right to participate in,
but not control, the defense or settlement of such claim or demand at
its sole cost and expense.
(b) (i) If Forefront elects not to defend the Indemnitee
against such claim or demand, whether by not giving the
Indemnitee timely notice as provided above or otherwise, then
the amount of any such claim or demand, or if the same be
defended by Forefront or by the Indemnitee (but the Indemnitee
shall not have any obligation to defend any such claim or
demand), then that portion thereof as to which such defense is
unsuccessful, in each case shall be conclusively deemed to be
a liability of Forefront hereunder.
(ii) In the event an Indemnitee should have a claim
against Forefront hereunder that does not involve a claim or
demand being asserted against or sought to be collected from
it by a third party, the Indemnitee shall promptly send a
Claim Notice with respect to such claim to Forefront. If
Forefront does not notify the Indemnitee within the Notice
Period that it disputes such claim, the amount of such claim
shall be conclusively deemed a liability of Forefront
hereunder.
Section 9.3 Payment. Upon the determination of liability under Section
9.2 of this Agreement, Forefront shall pay to the Indemnitee, within thirty (30)
days after such determination, the amount due to the Indemnitee with respect to
any claim for indemnification made hereunder.
Section 9.4 Other Rights and Remedies Not Affected. The indemnification
rights of the Indemnitee under this Article IX are independent of and in
addition to such rights and remedies as the Indemnitee may have at law or in
equity or otherwise for any misrepresentation, breach of warranty or failure to
fulfill any agreement or covenant hereunder on the part of any party hereto,
including without limitation the right to seek specific performance, rescission
or restitution, none of which rights or remedies shall be affected or diminished
hereby.
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Section 9.5 Limitation on Indemnification. In no event shall
Forefront's liability to indemnify Indemnitee hereunder exceed, in the
aggregate, fifty percent (50%) of the amount of the Purchase Price.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Survival of Representations and Warranties. The
representations and warranties of the parties shall survive the consummation of
the transactions contemplated by this Agreement for a period of two (2) years
following the Closing and shall continue to be subject to the indemnification
described in Article IX above.
Section 10.2 Integrated Agreement; Amendments.
(a) The recitals and Schedules to this Agreement constitute an
integral part of this Agreement and are incorporated herein by this
reference. This Agreement and the documents and instruments and other
agreements between the parties delivered pursuant hereto constitute the
entire agreement among the parties with respect to the subject matter
hereof and supersede all prior oral and written agreements and
understandings, and all contemporaneous alleged oral agreements or
understandings, between the parties with respect to the transactions
contemplated by this Agreement, except that the Confidential Disclosure
Agreement dated April 1, 1997 between HP and Forefront shall remain in
full force and effect.
(b) This Agreement may be modified only by a written
instrument duly executed by each party hereto.
Section 10.3 Waiver. No breach of any covenant, agreement, warranty or
representation shall be deemed waived unless expressly waived in writing by the
party which is entitled to assert such breach. No waiver of any right hereunder
shall operate as a waiver of any other right or of the same or a similar right
on another occasion.
Section 10.4 Notices. All notices and other communications between the
parties shall be in writing and shall be deemed to have been duly given (a) on
the same day when delivered personally or by courier to the party to whom
addressed or when sent by facsimile, confirmation received, and (b) three (3)
business days after being mailed by registered or certified mail, return receipt
requested, prepaid and addressed, at the following addresses, or at such other
addresses as the parties may designate by written notice:
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If to Forefront, to:
The Forefront Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
The Forefront Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to HP, to:
Hewlett-Packard Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, General Manager, Information
Appliance Operation
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Hewlett-Packard Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ 20BT
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Director, Corporate Development
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Hewlett-Packard Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ 20BQ
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.5 Confidentiality. Each of Forefront and HP agrees that it
shall not disclose any of the terms, conditions or other facts relating to this
Agreement and the transactions contemplated hereby or thereby without the prior
written consent of the other party except that a party may disclose
19
such information which it believes in good faith to be required by law (in which
case such party will give the other party reasonable opportunity to review the
proposed disclosure and will use best efforts to accommodate such reviewing
party's comments). Forefront agrees that it will cause its directors, officers,
employees, agents or advisors, including, without limitation, attorneys,
accountants and financial advisors (collectively, "Representatives") to observe
these terms and will be responsible for any breach of them by any of its
Representatives.
Section 10.6 Publicity. No press release or other public announcement
related to this Agreement or the transactions contemplated hereby will be issued
by any party hereto without the prior approval of the other party, except that a
party may make such public disclosure which it believes in good faith to be
required by law (in which case such party will give the other party reasonable
opportunity to review the proposed disclosure and will use best efforts to
accommodate such reviewing party's comments).
Section 10.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original Agreement, but
all of which, taken together, shall constitute one Agreement.
Section 10.8 No Transfer. This Agreement and the rights and obligations
set forth herein may not be transferred or assigned by operation of law or
otherwise without the consent of each party hereto. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective legal
representatives, successors and permitted assigns.
Section 10.9 Expenses. Each party to this Agreement will pay all costs
and expenses incident to its negotiation and preparation of this Agreement and
to its performance and compliance with all agreements and conditions contained
herein or therein on its part to be performed and complied with, including,
without limitation, the fees, expenses and disbursements of its counsel,
accountants and financial advisors, if any.
Section 10.10 Other Remedies. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
or equity on such party; and the exercise of any one remedy will not preclude
the exercise of any other.
Section 10.11 Absence of Third Party Beneficiary Rights. No provision
of this Agreement is intended, or will be interpreted, to provide to or create
for any third party beneficiary rights or any other rights of any kind in any
client, customer, affiliate, shareholder, employee or partner of any party
hereto or any other person or entity, and all provisions hereof will be personal
solely between the parties to this Agreement.
Section 10.12 Mutual Drafting. This Agreement is the joint product of
Forefront and HP and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of Forefront and HP and shall not be
construed for or against any party hereto.
20
Section 10.13 Severability. Should any portion or provision of this
Agreement be declared invalid or unenforceable in any jurisdiction, then such
portion or provision shall be deemed to be severable from this Agreement as to
such jurisdiction (but, to the extent permitted by law, not elsewhere) and shall
not affect the remainder hereof.
Section 10.14 Governing Law. This Agreement shall be governed,
construed and enforced in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized representatives on the Effective
Date.
THE FOREFRONT GROUP, INC. HEWLETT-PACKARD COMPANY
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ J. ▇▇▇▇▇ ▇▇▇▇▇
--------------------------- -------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ J. ▇▇▇▇▇ ▇▇▇▇▇
President and CEO Director, Corporate Development
21