August 30, 2002

Turbolinux ex-employees not happy with delay in pay

- by Tina Gasperson -
A group of Turbolinux's ex-employees has threatened to pursue claims against the
company because for more than a month they were owed salary. Turbolinux
eventually paid, but apparently the ex-workers are seeking recompense for the
delay.
Turbolinux is based in Asia but has a secondary base of operations in California. The Linux distributor is also part of the newly-formed UnitedLinux coalition, along with SuSE, SCO (formerly known as Caldera) and Conectiva.

Turbolinux CFO Ernie Cicogna confirmed this morning that he and the board of directors received an email from the employees that stated, among
other things, "It appears that the company is avoiding this clear statutory obligation. As loyal employees until the end, it is very
disappointing that the company is not forthcoming in fulfilling its responsibilities and is not willing to respond or open a dialogue with those
impacted by recent events. For many employees this is a significant financial
hardship and we are not asking for anything more than what is due to us under
California Law."

The statutory obligation referred to is that of California's Labor Code, Section 203, which
states:

2. Labor Code section 203: "If an employer willfully fails to pay any
wages of an employee who is discharged or who quits, the wages of such employee
shall continue as a penalty from the due date until paid or until an action is
filed and shall not continue for more than 30 days.

Apparently, the former staff members went unpaid for 37 days after
they were terminated. According to Cicogna, it was because of "the last-minute
withdrawal by one of our key investors." In a reply email to the ex-employees,
he explained, "We did pay your salaries as soon as we had funds available and
were able to process the appropriate paperwork to generate payroll checks."

Cicogna then hints at financial difficulties Turbolinux is
experiencing:

"Unfortunately, we do not have sufficient
funds to pay all our existing creditors. Further, we believe we will be
required by law to treat all our remaining creditors fairly. Accordingly, I
would like to confirm to you that it is the intention of the company to settle
our debts fairly with all our creditors to the extent we have available assets,
including any employee creditors. Again, let me reiterate that we sincerely
regret this unfortunate turn of events. However, please understand that we
cannot be sure of our ability to raise sufficient cash from the sale of our
remaining assets, which makes it impossible for us to assure you that the
company will ever be able to fully reimburse the total amount due to our
creditors."

From his home this morning, Cicogna refused to comment on the possibility of a
bankruptcy filing, saying only, "it's something we would like to avoid."

The full text of the email exchange NewsForge received is as follows:

DATE: August 28, 2002
TO: Centerlex, Inc. (F. K. A. Turbolinux, Inc)
Board of Directors
Ly Pham, CEO
Ernie Cicogna, CFO
Paul Thomas, Chairman
CC: HR Administrator Centerlex, Inc.

FROM: Former California Employees of Turbolinux, Inc.

SUBJECT: California Labor Code Section 203

Dear Ly, Ernie and Board:

We, the former employees of Turbolinux, Inc. in California, are
dismayed by the lack of a response from the company and the Board of
Directors. It appears that the company is avoiding this clear
statutory obligation. As loyal employees until the end, it is very
disappointing that the company is not forthcoming in fulfilling its
responsiblities and is not willing to respond or open a dialogue with
those impacted by recent events. For many employees this is a
significant financial hardship and we are not asking for anything more
than what is due to us under California Law.

We do not want to escalate the situation by filing claims, but the
lack of response leaves us no choice. Please respond as soon as
possible if you feel there is some way we can avoid this.

--------------------------------

To: Employees

I would like to express the deepest apologies from the management team and the
company for the long delay of 37 days, in paying you the owed salary. As you
know, the last minute withdrawal by one of our key investors, lead to this
unfortunate situation. We did pay your salaries as soon as we had funds
available and were able to process the appropriate paper work to generate
payroll checks. We also understand that under the California Labor Code section
203 that each of you, who work in California, may be eligible to assert a claim
against the company due to that delay. Unfortunately, we do not have sufficient
funds to pay all our existing creditors. Further, we believe we will be
required by law to treat all our remaining creditors fairly. Accordingly, I
would like to confirm to you that it is the intention of the company to settle
our debts fairly with all our creditors to the extent we have available assets,
including any employee creditors. Again, let me reiterate that we sincerely
regret this unfortunate turn of events. However, please understand that we
cannot be sure of our ability to raise sufficient cash from the sale of our
remaining assets, which makes it impossible for us to assure you that the
company will ever be able to fully reimburse the total amount due to our
creditors. Please don't hesitate to contact me if you have any further
questions or would like clarification at my home number which is ***********.
Regards and thanks...................Ernie Cicogna

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