<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: September 15, 1999
Alysis Technologies, Inc.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 00021539 94-3161772
______________ ________________________ ______________________
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation)
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1900 Powell Street, Suite 600
Emeryville, California 94608
(Address of principal executive offices)
(510) 450-7000
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On September 15, 1999, Alysis Technologies, Inc., a Delaware corporation
(the "Registrant"), acquired all of the shares of capital stock of At Work
Corporation, a New York corporation ("At Work") pursuant to the Stock
Purchase Agreement ("Agreement") dated September 15, 1999 by and among the
Registrant and James Flynn and William D. Clarke, the owners of all of the
issued and outstanding shares of At Work.
At Work is a developer of WorkOut(TM), an advanced system for distributing
computer-generated documents over the Internet and private Intranets. See
attached press release filed herewith as Exhibit 99.1.
The aggregate consideration paid for the shares of At Work (a) $1,445,000
in cash, (b) 480,031 shares of Common Stock of the Registrant, (c)
$1,000,000 in cash, to be paid out as set forth in the employment
agreements of James Flynn and William D. Clarke, and (d) $250,000 deposited
in escrow. The $250,000 in escrow will be maintained for a period of six
months to secure the payment by the Sellers of any amounts that become due
under the indemnification provisions of the Agreement.
This acquisition will be accounted for using the purchase method of
accounting.
The summary of the provisions of the Agreement set forth above is qualified
in its entirety by reference to the Agreement and related employment
agreements filed herewith as Exhibits 2.1, 2.2 and 2.3.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The Registrant will provide the financial statements required by paragraph
(a) of Item 7 of Form 8-K promulgated by the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), if any
such information is required, within 60 days of the date that this initial
report on Form 8-K must be filed with the Commission.
(b) Pro Forma Financial Information
The Registrant will provide the pro forma financial information required by
paragraph (b) of Item 7 of Form 8-K promulgated by the Commission pursuant
to the Exchange Act, if any such pro forma financial information is
required, within 60 days of the date that this initial report on Form 8-K
must be filed with the Commission.
(c) Exhibits
2.1 Stock Purchase Agreement dated September 15, 1999 between the
Registrant and James Flynn and William D. Clarke.
2.2 Employment Agreement dated September 15, 1999 between the
Registrant and James Flynn.
2.3 Employment Agreement dated September 15, 1999 between the
Registrant and William D. Clarke.
99.1 Press release dated September 16, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Name
Dated: September 27, 1999 By: /s/ Leslie J. Alvarez
------------------------------------------
Leslie J. Alvarez
Vice President and Chief Financial Officer
<PAGE>
INDEX OF EXHIBITS
2.1 Stock Purchase Agreement dated September 15, 1999 between the Registrant
and James Flynn and William D. Clarke.
2.2 Employment Agreement dated September 15, 1999 between the Registrant and
James Flynn.
2.3 Employment Agreement dated September 15, 1999 between the Registrant and
William D. Clarke.
99.1 Press release dated September 16, 1999.
<PAGE>
Exhibit 2.1
________________________________________________________________________________
STOCK PURCHASE AGREEMENT
between
JAMES FLYNN
WILLIAM D. CLARKE
as Sellers
and
ALYSIS TECHNOLOGIES, INC.
as Purchaser
dated as of
September 15, 1999
________________________________________________________________________________
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TABLE OF CONTENTS
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ARTICLE I PURCHASE AND SALE OF SECURITIES...................... 1
1.1 Purchase and Sale of Shares......................... 1
1.2 Consideration for the Shares........................ 1
1.3 Escrow.............................................. 1
1.4 Restrictions on Transfer............................ 2
1.5 Legends............................................. 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS........... 3
2.1 Organization and Corporate Documents................ 3
2.2 Due Authority; No Breach............................ 3
2.3 Capitalization...................................... 4
2.4 Equity Investments.................................. 5
2.5 Qualification....................................... 5
2.6 Title to Property; Condition; Sufficiency........... 5
2.7 Contracts........................................... 5
2.8 Insurance........................................... 7
2.9 Intellectual Property............................... 7
2.10 Government Permits; Compliance with Applicable Laws. 9
2.11 Taxes and Tax Returns............................... 9
2.12 Financial Statements; Liabilities................... 10
2.13 Books and Records................................... 10
2.14 Absence of Certain Changes and Events............... 10
2.15 Employment Matters.................................. 12
2.16 Employment, Severance and Termination Agreements,
Etc................................................. 14
2.17 Litigation; Compliance with Law..................... 14
2.18 Year 2000 Compliance................................ 15
2.19 Investment.......................................... 15
2.20 No Brokers.......................................... 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.... 16
3.1 Due Organization, Etc............................... 16
3.2 Due Authority; No Breach............................ 16
3.3 Capitalization...................................... 17
3.4 Investment.......................................... 17
3.5 SEC Filings......................................... 17
3.6 No Brokers.......................................... 18
ARTICLE IV ADDITIONAL AGREEMENTS............................... 18
4.1 Non-Competition..................................... 18
4.2 Employment Matters.................................. 20
ARTICLE V CONDITIONS PRECEDENT TO CLOSING...................... 21
5.1 Conditions Precedent to Obligations of Purchaser.... 21
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TABLE OF CONTENTS
(continued)
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5.2 Conditions Precedent to Obligations of the Sellers.. 21
ARTICLE VI CLOSING............................................. 22
6.1 Closing............................................. 22
6.2 Actions of the Purchaser............................ 23
6.3 Actions by Sellers.................................. 23
ARTICLE VII TERMINATION OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION........................................... 24
7.1 Termination of Representations and Warranties....... 24
7.2 Indemnification by the Sellers...................... 24
7.3 Method of Asserting Claims, Etc..................... 24
7.4 Indemnification Limits.............................. 25
7.5 Exclusive Remedy.................................... 25
ARTICLE VIII MISCELLANEOUS..................................... 26
8.1 Costs and Expenses.................................. 26
8.2 Notices............................................. 26
8.3 Counterparts........................................ 27
8.4 Entire Agreement.................................... 27
8.5 Captions............................................ 27
8.6 Governing Law; Dispute Resolution................... 27
8.7 No Third Party Rights............................... 28
8.8 Amendment and Waiver................................ 28
8.9 Construction and Representation by Counsel.......... 29
8.10 Further Assurances.................................. 29
8.11 Severability........................................ 29
8.12 Dollars............................................. 29
8.13 Binding Effect; No Assignment....................... 29
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EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Opinion of Pennie & Edmonds LLP, counsel to Flynn
and Clarke
Exhibit C Form of General Release in favor of At Work and the
Purchaser
Exhibit D Form of Flynn Employment Agreement
Exhibit E Form of Clarke Employment Agreement
Exhibit F Form of Opinion of Wilson Sonsini Goodrich & Rosati, P.C.,
<PAGE>
TABLE OF CONTENTS
(continued)
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counsel to the Purchaser
Exhibit G Schedules of Exceptions
Schedule 1.2. Allocation of initial purchase price and IA
shares among Sellers
Schedule 2.1. Certificate of Incorporation and Bylaws of
At Work Corp.
Schedule 2.2(b). List of Sellers' contracts that may
conflict with the transaction
Schedule 2.3(c). List of all holders of At Work's issued and
outstanding stock
Schedule 2.5. List of jurisdiction and address where At
Work conducts business
Schedule 2.7. List of all of At Work's material contracts
Schedule 2.7(c). List of At Work's defaults
Schedule 2.7(e). List of At Work's customers who will
terminate business relationship with At
Work following closing
Schedule 2.8. Insurance policies
Schedule 2.9(b). Identification of Patent and Trademark
applications
Schedule 2.9(c). Identification of intellectual property
owned by third parties that At Work
permissibly uses
Schedule 2.9(d). List of actions by At Work that must be
taken to preserve its intellectual property
Schedule 2.9(f). At Work's Form Confidentiality Agreement
Schedule 2.12. At Work's Financial Statements
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TABLE OF CONTENTS
(continued)
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Schedule 2.12(d). List of At Work's debts to Sellers or
Sellers' debt to At Work
Schedule 2.14. List of events since June 30, 1999, that
have had or would have a material adverse
effect on At Work
Schedule 2.15(a). List of At Work's Benefit Plans
Schedule 2.15(b). List of At Work's Non-compliance with its
Benefit Plans
Schedule 2.15(k). List of amounts owed by At Work to its
employees
Schedule 2.16. List of Sellers' Employment Agreements
Schedule 2.17. List of judicial or administrative
proceedings against At Work
</TABLE>
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT (the "Agreement") dated September 15, 1999 by and
---------
among JAMES FLYNN, an individual ("Flynn") and WILLIAM D. CLARKE an individual
-----
("Clarke") (collectively, the "Sellers"), and ALYSIS TECHNOLOGIES, INC., a
------ -------
Delaware corporation (the "Purchaser").
---------
WHEREAS, the Sellers own all of the issued and outstanding shares and any
and all rights to acquire any shares of capital stock (the "Shares") of At Work
------
Corp., a New York corporation ("At Work"); and
-------
WHEREAS, the Purchaser wishes to purchase from Sellers, and the Sellers
wish to sell to the Purchaser, the Shares (the "Acquisition").
-----------
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, agreements and undertakings of the parties hereto, and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, and subject to the conditions hereof, the parties hereto agree as
follows:
ARTICLE I
---------
PURCHASE AND SALE OF SECURITIES
-------------------------------
1.1 Purchase and Sale of Shares. Upon the terms and subject to the
---------------------------
conditions of this Agreement, at the closing of the transactions contemplated by
this Agreement in accordance with Article VI (the "Closing"), the Sellers shall
-------
sell, transfer, assign, convey and deliver to the Purchaser or its designee, and
the Purchaser or such designee shall purchase, all of the Shares, free and clear
of all liens, claims, rights, charges, options, rights of third parties,
encumbrances, security interests or other restrictions or limitations of any
nature whatsoever ("Liens"), as well as all rights attaching thereto.
-----
1.2 Consideration for the Shares. The aggregate consideration to be paid
----------------------------
for the Shares shall be (a) U.S. $1,446,000 (the "Initial Purchase Price"), plus
----------------------
480,031 shares of Common Stock, par value $0.01 per share (the "Common Stock")
------------
of Purchaser (the "Alysis Shares") (calculated by dividing $750,000 by the
-------------
average closing price of Purchaser's Common Stock for the 30 trading days ending
on September 13, 1999, as quoted on Nasdaq), (b) $1,000,000 in cash, to be paid
as set forth in the employment agreements attached hereto as Exhibit D and
---------
Exhibit E (the "Cash Payment") and (c) the remainder, if any, of the amount
- --------- ------------
deposited in the escrow fund established in accordance with the provisions of
Section 1.3 hereof (the "Remainder"). The Remainder, Initial Purchase Price,
---------
Alysis Shares and Cash Payment are collectively referred to as the "Aggregate
---------
Purchase Price". The Initial Purchase Price and the Alysis Shares shall be
- --------------
allocated among the Sellers as set forth in Schedule 1.2.
------------
1.3 Escrow. As of the Closing, the Purchaser shall place in escrow U.S.
------
$250,000 (the "Escrow Amount"), such escrow to be maintained for a period of six
-------------
months to secure the payment
<PAGE>
by the Sellers of any amounts that become due under the indemnification or other
provisions of this Agreement. Such escrow will be established pursuant to an
Escrow Agreement among an escrow agent selected by the Sellers and the Purchaser
(the "Escrow Agent"), in the form of Exhibit A hereto (the "Escrow Agreement"),
------------ --------- ----------------
subject to such changes as may be required by the Escrow Agent.
1.4 Restrictions on Transfer. In consideration of the foregoing, and in
------------------------
order to induce Purchaser to consummate the Acquisition, each of the Sellers
hereby irrevocably agrees that he will not, directly or indirectly, sell, offer,
contract to sell, grant any option to sell, transfer the economic risk of
ownership in, make any short sale, pledge or otherwise dispose of the shares of
Purchaser Common Stock issued pursuant to this Agreement, without the prior
written consent of Purchaser, for a period of two years from the Closing of the
Acquisition (the "Lock-up Period"). This paragraph shall not apply to Common
--------------
Stock purchased in the public market during the Lock-up Period.
Notwithstanding the foregoing, each of the Sellers may transfer any
shares of Common Stock either during his lifetime or on death by will or
intestacy to his immediate family or to a trust (the beneficiaries of which are
exclusively the Seller and/or a member or members of his immediate family);
provided, however, that prior to any such transfer each transferee shall execute
- -------- -------
an agreement, satisfactory to Purchaser and its counsel, pursuant to which each
transferee shall agree to receive and hold such shares of Common Stock subject
to the provisions hereof, and there shall be no further transfer except in
accordance with the provisions hereof. For the purposes of this paragraph,
"immediate family" shall mean spouse, lineal descendant, father, mother, brother
or sister of the transferor.
Each of the Sellers understands that this Agreement is irrevocable and
shall be binding upon his heirs, legal responsibilities, successors and assigns.
Each Seller covenants that, in the absence of an effective registration
statement covering the stock in question, he will sell, transfer or otherwise
dispose of the Alysis Shares only in a manner consistent with his covenants set
forth in this Section 1.4. In connection therewith such Seller acknowledges that
the Purchaser shall make a notation on its stock books regarding the
restrictions on transfer set forth in this Section 1.4 and shall transfer shares
on the books of the Purchaser only to the extent not inconsistent therewith.
Each of the Sellers agrees and consents to the entry of stop transfer
instructions with the Purchaser's transfer agent against the transfer of Common
Stock held by the Seller other than in compliance with this Agreement.
1.5 Legends. The Purchaser shall ensure that the following restrictive
-------
legends are placed on the stock certificates evidencing the Alysis Shares:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY
STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON
<PAGE>
TRANSFER INCLUDING A TWO YEAR LOCKUP AS SET FORTH IN THE
STOCK PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE
ORIGINAL HOLDER OF THESE SHARES.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCK PURCHASE AGREEMENT (THE "AGREEMENT") BETWEEN THE
---------
ISSUER AND THE ORIGINAL HOLDER OF THIS CERTIFICATE THAT
PROHIBITS SALE OR TRANSFER OF SUCH SHARES FOR TWO YEARS
FOLLOWING THE CLOSING OF THE AGREEMENT. THE AGREEMENT IS ON
FILE AT THE OFFICE OF THE ISSUER AND A COPY MAY BE OBTAINED
AT THE PRINCIPAL OFFICE OF THE ISSUER.
The Purchaser need not register a transfer of any Alysis Shares
unless the conditions specified in the foregoing legends are satisfied
to the extent applicable.
ARTICLE II
----------
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
At Work and the Sellers have cooperated with the Purchaser in the conduct
by the Purchaser of its due diligence review of At Work. Notwithstanding the
foregoing, all the representations and warranties set forth in this Article II
and all representations and warranties that are set forth elsewhere in this
Agreement and in any financial statement, exhibit, schedule or document
delivered by or on behalf of the Sellers or At Work or their representatives to
the Purchaser shall survive the Closing (and none shall merge into any
instrument of conveyance) and shall be enforceable against the Sellers,
regardless of any knowledge or belief, investigation or lack of investigation by
the Purchaser.
To induce the Purchaser to enter into this Agreement and to perform the
Purchaser's obligations hereunder, and with full knowledge that the Purchaser
will rely thereon, Flynn and Clarke hereby jointly and severally represent and
warrant the truth and accuracy of the following as of the date hereof and as of
the date of Closing:
2.1 Organization and Corporate Documents. At Work is duly organized,
------------------------------------
validly existing and in good standing under the laws of the jurisdiction of its
incorporation with full power and authority to own, lease and operate its assets
and to carry on its business as now and as heretofore conducted. Complete and
accurate copies of the Certificate of Incorporation and by-laws of At Work and
all amendments thereto are attached as Schedule 2.1. The minutes of, or the
------------
unanimous consents in lieu of, the meetings of the stockholders and board of
directors (and any committee thereof) of At Work are attached as Schedule 2.1 to
------------
the Agreement and are true, complete and accurate records of all such meetings
and consents that have been held or given by them.
2.2 Due Authority; No Breach. Each Seller has all requisite power,
------------------------
capacity and authority to enter into this Agreement and the other agreements
contemplated hereby (the "Ancillary Agreements") and to consummate the
--------------------
transactions contemplated hereby and thereby. This Agreement and the Ancillary
Agreements have been duly executed and delivered by each Seller and
<PAGE>
constitute a legal, valid and binding obligation of each Seller enforceable
against each Seller in accordance with their terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally,
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in an action at law or a suit in equity).
Neither the execution and delivery of this Agreement or any Ancillary Agreement
nor the performance by the Sellers of their obligations hereunder or thereunder
nor the consummation of the transactions provided for hereby or thereby does or
will:
(a) conflict with or violate any provision of the Certificate of
Incorporation, by-laws or any other document or governance of the Sellers or At
Work;
(b) except as set forth on Schedule 2.2(b), violate, conflict with or
---------------
result in the breach or termination of, or otherwise give any other person the
right to accelerate, renegotiate or terminate or receive any payment, or require
any consent, or constitute a default, event of default (or an event which with
notice, lapse of time, or both, would constitute a default or event of default),
under the terms of, any contracts, agreements, commitments, undertakings,
leases, licenses, mortgages, bonds, notes or other instruments ("Contracts"), or
---------
any permits, authorizations, approvals, registrations or licenses granted by or
obtained from any governmental, administrative or regulatory authority
("Permits"), to which any of the Sellers of At Work is a party or by which any
-------
of them or their respective securities, properties or businesses are bound;
(c) result in the creation of any Liens upon any of the Sellers' or
At Work's respective securities, properties or business;
(d) constitute a violation by the Sellers or At Work of any laws,
rules, ordinances or regulations of any governmental, administrative or
regulatory authority ("Laws") or any judgments, orders, decrees, injunctions,
----
rulings or awards of any court, arbitrator or other judicial authority or any
governmental, administrative or regulatory authority ("Judgments"); or
---------
(e) require any consent, approval, waiver, order or authorization of,
or registration, declaration or filing with, any federal, state, local or
foreign governmental or regulatory authorities (each, an "Authority") on the
---------
part of any of the Sellers or At Work.
2.3 Capitalization
--------------
(a) The entire authorized capital stock of At Work consists of 200
shares of common stock, no par value per share, of which 10 shares are issued
and outstanding. All of the Shares are duly authorized, validly issued, fully
paid and nonassessable and were issued in compliance with all federal and state
securities laws. None of the Shares was issued in violation of any preemptive
right or other rights of another person. Each of Sellers has, and upon the
Closing the Purchaser shall acquire, good and marketable title to, and rightful
title to and possession of, each of its Shares, free and clear of any Liens.
(b) There are not authorized or outstanding any subscriptions,
options, conversion rights, warrants or other agreements, securities or
commitments of any nature whatsoever (whether oral or written and whether firm
or conditional) obligating At Work to issue, deliver or sell, or cause to be
issued, delivered or sold, any authorized or outstanding shares of the capital
stock of any class
<PAGE>
or series, or any securities convertible into or exchangeable for shares of
capital stock of any class of series, of At Work or obligating At Work to grant,
extend or enter into any such agreement or commitment.
(c) Schedule 2.3(c) sets forth a complete and accurate list of all
---------------
holders, as of the date of this Agreement, of At Work's issued and outstanding
capital stock. Each Seller is duly registered as the owner of the number of
Shares indicated next to such Seller's name on Schedule 2.3(c).
---------------
(d) There are no assets, properties, rights or businesses used in the
business or operations of At Work that are owned, directly or indirectly, by any
of the Sellers or by any officer, director or employee of At Work, or any
relative or affiliate of any such person.
2.4 Equity Investments. At Work does not own any shares of or equity or
------------------
other investment interest, either of record, beneficially or equitably, in any
association, partnership, joint venture or other legal entity.
2.5 Qualification. At Work is duly qualified and licensed to do business
-------------
as a foreign corporation, and is in good standing, in each jurisdiction where
the character of the properties it owns, operates or holds under lease or the
nature of its activities make such qualification necessary, except where the
failure to be so qualified has not and could not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the business,
prospects, results of operations, properties (including intangible properties),
assets, liabilities or financial condition of At Work (a "Material Adverse
----------------
Effect") (such jurisdictions are referred to herein as the "Foreign
- ------ -------
Jurisdictions"). Schedule 2.5 contains a list of the Foreign Jurisdictions and a
- -------------
list of all addresses at which At Work conducts business or owns or holds
assets.
2.6 Title to Property; Condition; Sufficiency.
-----------------------------------------
(a) At Work owns no real property. The only real property leased,
occupied or used by At Work is located at 111 John Street, 25/th/ Floor, New
York, New York. At Work has (i) with respect to such real property which is
leased by it, a valid and subsisting leasehold estate, free and clear of all
Liens, and (ii) with respect to all other assets owned by it, good and
marketable title, free and clear of all Liens.
(b) The properties and other assets owned or leased by At Work
include all properties and other assets reasonably necessary for the conduct of
the business and activities conducted by At Work immediately prior to Closing.
2.7 Contracts.
---------
(a) Schedule 2.7 sets forth a list of all of the agreements,
------------
contracts and arrangements to which At Work is a party or by which any of its
assets or properties are bound or affected and that are material to the
condition (financial or otherwise), assets, business or future prospects of At
Work including, without limitation, (i) agreements relating to capital
expenditures or the acquisition of tangible or intangible property involving
amounts in excess of $10,000, provided that the aggregate of such expenditures
--------
under agreements not listed on Schedule 2.7 shall not exceed $50,000, (ii) loan
------------
agreements, letters of credit or agreements evidencing indebtedness for borrowed
money of At Work
<PAGE>
or pursuant to which At Work has guaranteed any obligation of or agreed to
indemnify any individual, partnership, corporation (including a business trust),
joint stock company, trust, unincorporated association, joint venture or other
entity (including, without limitation, any governmental entity) (each, a
"Person"), (iii) agency, sales agency, royalty, brokerage, wholesaling,
------
franchise, distributorship or similar agreements or contracts, (iv) personal
property leases, (v) security or pledge agreements or any other agreement
pursuant to which At Work's properties or assets are encumbered, (vi) mortgages
or deeds of trust, (vii) contracts, agreements or purchase orders with any
supplier that involve aggregate annual payments of more than $10,000 or which
are expected to continue for more than one (1) year from the date hereof, (viii)
contracts or agreements (including purchase orders or letter agreements)
relating to software development, (ix) licenses, authorities or permits granted
by At Work to any Person, (x) contracts or agreements that reasonably may be
expected to involve future obligations or benefits in excess of $10,000 in any
one calendar year, (xi) contracts or agreements prohibiting or limiting the
ability of At Work (A) to engage in any line of business, (B) to compete with
any Person or (C) to carry on or expand the nature or geographical scope of its
business, (xii) contracts or agreements involving a sharing of profits, losses,
costs or liabilities of any other Person, (xiii) contracts or agreements
relating to any lease of real property, (xiv) contracts or agreements with any
of the Sellers and (xv) loan agreements or agreements evidencing indebtedness
for borrowed money of any employees of At Work where At Work is the lender or
payee thereunder, including an indication of the principal amount(s) owed
thereunder (such agreements, contracts and arrangements, the "Material
--------
Contracts").
- ---------
(b) Each Material Contract is a legal, valid and binding agreement of
At Work, enforceable against it in accordance with its terms, and will continue
as such following the Closing, and to the knowledge of At Work and the Sellers
is a legal, valid and binding agreement of each other party thereto, enforceable
in accordance with its terms. No party to any Material Contract has given any
notice of termination, nor do the Sellers or At Work have any reason to believe
that such a notice will be given.
(c) Except as set forth on Schedule 2.7(c), no default or event of
---------------
default has occurred and, to the knowledge of the Sellers and At Work, there
exists no condition or event which, after notice or lapse of time or both, would
constitute a default by At Work under such Material Contract, or would give to
any other Person any rights of termination, cancellation or acceleration of any
performance required thereunder or result in the creation of any Lien or any
additional or changed obligation of At Work. At Work has not waived any material
right under or with respect to any of the Material Contracts.
(d) To the knowledge of At Work and the Sellers, none of the other
parties to the Material Contracts is in default thereunder, nor is At Work or
the Sellers aware of any event which, with the passage of time, the giving of
notice or both, would constitute a default under such Material Contract by such
other party.
(e) Except as set forth on Schedule 2.7(e), to the knowledge of the
---------------
Sellers and At Work, there is no reason to believe that any of the customers of
or suppliers to At Work will terminate its business relationship with At Work
following the Closing.
(f) Complete and accurate copies of all Material Contracts with the
Sellers have been made available to the Purchaser.
<PAGE>
2.8 Insurance. Set forth on Schedule 2.8 is a true and complete list and
--------- ------------
brief description (specifying the insurer, the coverage bands, premiums, named
insured, deductibles and expiration date) of all policies, binders or contracts
to which At Work is a party or by which any of its assets are covered (the
"Insurance Policies"). Each of the Insurance Policies is in full force and
------------------
effect, and At Work has not received any notice or other indication from any
insurer of any intent to cancel any such Insurance Policy or has failed to give
any notice or present any claim thereunder in due or timely fashion or as
required by any of such Insurance Policies so as to jeopardize full recovery
under the Insurance Policies. No amount is owing by At Work under any Insurance
Policy. The insurance coverage provided by the Insurance Policies will not in
any material respect be affected by, and will not terminate or lapse by reason
of, the transactions contemplated hereby.
2.9 Intellectual Property.
---------------------
(a) For purposes of this Agreement, "Intellectual Property" means:
---------------------
(i) all inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (ii) all trademarks, service marks, trade dress, logos, trade names,
and corporate names, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated therewith, (iii)
all copyrightable works, all copyrights, and all applications, registrations,
and renewals in connection therewith, (iv) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, drawings, specifications, customer and supplier lists,
pricing and cost information, financial information, and business and marketing
plans and proposals), and (v) all computer software (including data and related
documentation). At Work has not interfered with, infringed upon, misappropriated
or violated any Intellectual Property rights of third parties, and has not
received since its inception any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or violation
(including any claim that At Work must license or refrain from using any
Intellectual Property rights of any third party). To the knowledge of the
Sellers and At Work, no third party has interfered with, infringed upon,
misappropriated, or violated any Intellectual Property rights of At Work. At
Work owns or has the right to all Intellectual Property necessary to the conduct
of its business as it is currently conducted or, to the best of the Sellers'
knowledge, as reasonably contemplated to be conducted, including, without
limitation, the design, development, distribution, use and sale of all services,
products and technologies currently offered, licensed or sold by At Work or
under development by At Work and the performance of all services currently
provided or reasonably contemplated to be provided by At Work.
(b) Schedule 2.9(b) identifies each patent and each trademark,
---------------
tradename service work and copyright registration that has been issued to At
Work and identifies each pending patent application or application for any such
registration that At Work has made. At Work has delivered to Purchaser correct
and complete copies of all such patents, registrations and applications.
Schedule 2.9(b) also identifies (i) each trade name or unregistered trademark or
- ---------------
service mark of At Work and (ii) each unregistered copyright owned by At Work.
With respect to each item of Intellectual Property required to be identified on
Schedule 2.9(b):
- ---------------
<PAGE>
(i) At Work possesses all right, title and interest in and to
the item, free and clear of any Liens, license or other restriction;
(ii) the item is legal and valid and in full force and effect
and is not subject to any outstanding Judgment;
(iii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or threatened in writing that
challenges the legality, validity, enforceability, use or ownership of the item;
and
(iv) other than pursuant to the contracts listed on Schedule
--------
2.9(b), At Work has never agreed to indemnify any person for or against any
- ------
interference, infringement, misappropriation, or other conflict with respect to
the item.
(c) Schedule 2.9(c) identifies each item of Intellectual Property
---------------
material to the operation of At Work's business that any third party owns and
that At Work uses pursuant to license, sublicense, agreement or permission. At
Work has delivered to Purchaser correct and complete copies of all such
licenses, sublicenses, agreements and permissions (as amended to date). With
respect to each item of Intellectual Property required to be identified on
Schedule 2.9(b):
- ---------------
(i) the license, sublicense, agreement or permission covering
the item is legal, valid, binding, enforceable and in full force and effect in
all respects against At Work and, to the knowledge of the Sellers and At Work,
the other parties thereto;
(ii) neither At Work nor, to the knowledge of the Sellers or At
Work, any other party thereto, is in breach or default, and no event has
occurred which, with notice or lapse of time, would constitute a breach or
default or permit termination, modification or acceleration thereunder;
(iii) neither At Work nor, to the knowledge of the Sellers or At
Work, any other party thereto, has repudiated any provision thereof; and
(iv) At Work has not granted any sublicense or similar right
with respect to the license, sublicense, agreement or permission covering the
item.
(d) Schedule 2.9(d) lists all actions that must be taken by At Work
---------------
within sixty (60) days of the Closing Date, including the payment of any
registration, maintenance or renewal fees or the filing of any documents,
applications or certificates for the purposes of maintaining, perfecting or
preserving or renewing any At Work Intellectual Property.
(e) In each case in which At Work has acquired any Intellectual
Property rights from a third party, At Work has obtained a valid and enforceable
assignment sufficient to irrevocably transfer all rights in such Intellectual
Property (including the right to seek past and future damages with respect to
such Intellectual Property) to At Work and, to the maximum extent provided for
by, and in accordance with, applicable laws and regulations, At Work has
recorded each such assignment with the relevant Authority.
<PAGE>
(f) At Work has taken all reasonable steps that are required to
protect At Work's rights in confidential information and trade secrets of At
Work or provided by any third party to At Work. Without limiting the foregoing,
At Work has, and enforces, a policy requiring each employee, consultant and
contractor to execute proprietary information and confidentiality and assignment
agreements substantially in At Work's standard forms (attached hereto as
Schedule 2.9(f), and all current and former employees, consultants and
- ---------------
contractors of At Work have executed such an agreement.
(g) No (i) product, service or publication of At Work, (ii) material
published or distributed by At Work or (iii) conduct or statement of At Work
constitutes obscene material, a defamatory statement or material, false
advertising or otherwise violates any law or regulation.
2.10 Government Permits; Compliance with Applicable Laws. At Work holds
---------------------------------------------------
all Permits from an Authority that are necessary or required for the conduct of
its business as currently conducted. All such Permits are valid and in full
force and effect, and no proceeding is pending, or, to the knowledge of the
Sellers or At Work, threatened, to modify, suspend, revoke or otherwise limit
any of such Permits and no action by any Authority has been taken or, to the
knowledge of the Sellers or At Work are threatened, in connection with the
expiration, revocation, modification or renewal of any of such Permits.
2.11 Taxes and Tax Returns.
---------------------
(a) At Work has filed on a timely basis all returns and reports of
all Taxes (as defined below) required to be filed by it and has timely given and
delivered all Tax notices, accounts and information required to be given by it
in respect of Taxes for which it may be liable. All information provided in such
returns, reports, notices, accounts and information was, when filed or given,
complete and accurate in all material respects. All Taxes required to be paid by
At Work that were due and payable have been paid. Adequate provisions have been
made in At Work's Financial Statements (as defined in Section 2.12) for the
payment of all Taxes for which At Work may be liable for the periods covered
thereby that were not yet due and payable as of the dates thereof, regardless of
whether the liability for such Taxes is disputed.
(b) There are no pending or threatened audits or investigations
relating to any Taxes for which At Work may become (directly or indirectly)
liable. No deficiencies for any Taxes have been proposed, asserted or assessed
against At Work and no state of facts exists or has existed that would
constitute grounds for the assessment of a Tax liability against At Work. There
are no agreements in effect to extend the period of limitations for the
assessment or collection of any Taxes for which At Work may become liable and no
requests for any such agreements are pending.
(c) At Work has withheld from its employees and timely paid to the
appropriate authority proper and accurate amounts for all periods prior to the
date hereof and, as of the Closing, for all periods prior to the Closing Date,
in compliance with all Tax withholding provisions of all applicable Laws.
(d) At Work has furnished or made available to the Purchaser complete
and accurate copies of all returns and reports of all Taxes filed by At Work on
or prior to the date hereof.
<PAGE>
(e) At Work has not elected, nor has otherwise been granted, any
preferential tax treatment or made any sort of commitment to any Tax Authorities
regarding the extension of any applicable statute of limitations with respect to
any Taxes or Tax returns.
(f) "Tax" and "Taxes" shall mean (i) all taxes, assessments, levies,
--- -----
imposts, duties, fees, withholdings, or other similar governmental charges,
including, without limitation, income taxes, franchise taxes, transfer taxes or
fees, sales taxes, excise taxes, ad valorem taxes, withholding taxes, minimum
taxes and social security taxes, and (ii) any interest, penalties or additions
to tax imposed on a Tax described in clause (i) hereof, imposed by any national,
regional, local or foreign government or subdivision or agency of any of the
foregoing.
2.12 Financial Statements; Liabilities.
---------------------------------
(a) The Purchaser has been furnished the profit and loss statements
and balance sheets listed on Schedule 2.12 with respect to At Work (the
-------------
"Financial Statements"). Each of the unaudited Financial Statements, presents
--------------------
fairly the financial condition and results of operations of At Work as of the
respective dates and for the periods specified therein.
(b) Except as disclosed on Schedule 2.12, At Work has no liabilities
-------------
or obligations of any nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due (collectively, "Liabilities"
-----------
and individually, a "Liability") that are not reflected or expressly and
---------
adequately reserved against in the unaudited consolidated balance sheet included
in the Financial Statements as of and for the twelve-month period ending as of
June 30, 1999 (the "1999 Financial Statements") or specifically disclosed or
-------------------------
provided for in the notes thereto, other than Liabilities that (i) were incurred
in the usual and ordinary course of business consistent with past practice
between June 30, 1999 and the Closing Date or (ii) are not, individually or in
the aggregate, in excess of $10,000.
(c) Since the date of the 1999 Financial Statements, At Work has
conducted its business in a prudent manner and has made no change in the lines
of business in which it is engaged and has not undergone or suffered any change
which, individually or in the aggregate, has had or may reasonably be expected
to have a Material Adverse Effect.
(d) Except as set forth on Schedule 2.12(d), At Work is not indebted
----------------
to any Seller or any of their affiliates, nor is any Seller, nor any of its
affiliates, indebted to At Work, in any amount for any purpose.
2.13 Books and Records. The books and records of At Work have been and are
-----------------
being maintained in accordance with applicable legal and accounting requirements
and reflect in all material respects the substance of events and transactions
that should be included therein.
2.14 Absence of Certain Changes and Events. Except as set forth on
-------------------------------------
Schedule 2.14, since June 30, 1999 through the date hereof, At Work has
- -------------
conducted its business only in the ordinary and usual course consistent with
past practice and no event or development has occurred that has had or would be
reasonably expected to have a Material Adverse Effect. Without limiting the
generality of the first sentence of this Section 2.14 (and except as set forth
on Schedule 2.14), since June 30, 1999 through the date hereof, At Work has not:
-------------
<PAGE>
(a) Authorized for issuance, issued, delivered or sold any debt or
equity securities, or altered the terms of any outstanding securities issued by
it;
(b) Declared, paid or set aside for payment any dividend or other
distribution (whether in cash, stock or property or otherwise) in respect of any
shares of capital stock, or redeemed, purchased or otherwise acquired such
shares, any securities convertible into or exchangeable for such shares or any
options, warrants or other rights to purchase or subscribe to any of the
foregoing;
(c) Paid, discharged or satisfied any liability or obligation or
forgiven or otherwise cancelled any debt or claims or waived any rights (whether
accrued, absolute, contingent or otherwise) other than the payment, discharge or
satisfaction in the ordinary and usual course of business and consistent with
past practice, of liabilities or obligations shown or reflected on the 1999
Financial Statements or incurred in the ordinary and usual course of business
since June 30, 1999;
(d) Permitted or allowed any assets (whether real, personal or mixed,
tangible or intangible) to be subjected to any Lien;
(e) Written off as uncollectible any notes or accounts receivable;
(f) Cancelled or waived any claims or rights of value or sold,
transferred, distributed or otherwise disposed of any assets except in the
ordinary and usual course of business and consistent with past practice;
(g) Granted any bonus or other increase in the compensation of any
officer, director, employee or agent, whether now or hereafter payable, or
granted any severance or termination pay in respect of any such person, or
entered into or varied the terms of any employment agreement with any such
person or adopted, amended in any material respect or terminated any Benefit
Plan under ERISA (as defined in Section 2.15), non-ERISA arrangement, bonus,
profit sharing or other employee benefit plan, agreement or arrangement of
general applicability for the benefit of its officers, directors or employees;
(h) Made any capital expenditure or commitment for additions to
property or equipment or other capital expenditures, or leased or agreed to
lease any assets;
(i) Made any material change in any method of accounting or keeping
its books of account or accounting practices, except as required as a result of
changes in the generally accepted accounting practices applicable to At Work;
(j) Incurred any material obligation or liability;
(k) Amended its organizational documents;
(l) Suffered any strike or other employment-related problem;
(m) Suffered any loss of any key employee or customer;
<PAGE>
(n) Made any material changes in policies or practices relating to
selling practices, or other terms of sale or accounting therefor or in policies
of employment;
(o) Increased its aggregate indebtedness for borrowed money by more
than $10,000; or
(p) Taken any action or omitted to take any action that is
reasonably likely to result in the occurrence of, or agreed or committed to do,
any of the foregoing.
2.15 Employment Matters.
------------------
(a) Schedule 2.15(a) sets forth a true and complete list of each
----------------
plan, program, arrangement, agreement or commitment which is an employment,
consulting or deferred compensation agreement, or an executive compensation,
incentive bonus or other bonus, employee pension, profit-sharing, savings,
retirement, stock option, stock purchase, severance pay, life, health,
disability or accident insurance plan, or vacation, or other employee benefit
plan, program, arrangement, agreement or commitment, including, without
limitation, any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") (each such
-----
plan, a "Benefit Plan"), to the extent such Benefit Plan is maintained for the
------------
benefit of current or former directors, officers or employees of At Work (each
such Benefit Plan, a "Schedule 2.15 Plan"). Except as set forth on Schedule
------------------ --------
2.15(a), At Work has no binding commitment to create any additional Benefit
- -------
Plan or to modify or change any existing Schedule 2.15 Plan.
(b) Except as set forth in Schedule 2.15(b), with respect to each
----------------
Schedule 2.15 Plan, (i) all payments due from At Work to date have been made and
all amounts properly accrued to date as liabilities of At Work that have not
been paid have been properly recorded on the books of At Work, (ii) At Work has
complied in all material respects with, and each such Schedule 2.15 Plan
complies in all material respects with all applicable Laws (including, without
limitation and to the extent applicable, ERISA and the Internal Revenue Code of
1986, as amended (the "Code")), (iii) there are no actions,
----
suits or claims pending (other than routine claims for benefits) or, to the
knowledge of the Sellers or At Work, threatened with respect to any such
Schedule 2.15 Plan or against the assets of any such Schedule 2.15 Plan, (iv)
each Schedule 2.15 Plan which is intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the Internal
Revenue Service for "TRA" (as defined in Rev. Proc. 93-39) and to the knowledge
of the Sellers and At Work there are no circumstances likely to result in
revocation of any such favorable determination letter, or have filed for such a
determination letter prior to the expiration of the remedial amendment period
for such Schedule 2.15 Plan if such expiration occurs prior to the Closing Date,
and (v) At Work has not engaged in a transaction with respect to any Schedule
2.15 Plan that is reasonably expected to subject At Work to a material tax or
penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA.
(c) No Schedule 2.15 Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured) with respect to
any current or former employee of At Work beyond their retirement or other
termination of service (other than (i) coverage mandated by applicable Law, (ii)
retirement or death benefits under any employee pension plan, (iii) disability
benefits under any employee welfare plan that have been fully provided for by
insurance or
<PAGE>
otherwise, (iv) deferred compensation benefits accrued as liabilities on the
books of At Work or (v) benefits in the nature of severance pay).
(d) With respect to each Schedule 2.15 Plan that is funded wholly or
partially through an insurance policy, all premiums required to have been paid
to date under the insurance policy have been paid and there is no liability of
At Work under any such insurance policy or ancillary agreement with respect to
such insurance policy in the nature of a retroactive rate adjustment, loss
sharing arrangement or other actual or contingent liability arising wholly or
partially out of events occurring prior to the Closing or by reason of the
Closing.
(e) (i) No Schedule 2.15 Plan is a Benefit Plan subject to Title IV
of ERISA (a "Title IV Plan"), or is subject to Section 302 of ERISA or Section
-------------
412 of the Code; (ii) no Schedule 2.15 Plan nor any other employee benefit plan
maintained or contributed to by any entity (an "ERISA Affiliate") which is
---------------
considered one employer with At Work under Section 4001 of ERISA or Section 414
of the Code (an "ERISA Affiliate Plan") has an "accumulated funding deficiency"
--------------------
(whether or not waived) within the meaning of Section 412 of the Code or Section
302 of ERISA; (iii) no security has been provided or required to be provided to
any Schedule 2.15 Plan or ERISA Affiliate Plan under Section 401(a)(29) of the
Code; (iv) no Title IV Plan will be assumed by the Purchasers pursuant to the
operation of this Agreement; (v) no liability under Title IV of ERISA has been
or is expected to be incurred by any Schedule 2.15 Plan or ERISA Affiliate Plan
which could reasonably be expected to result in liability to the Purchasers
(other than for PBGC premiums); and (vi) no notice of any "reportable event" (as
defined under Section 4043(b) or (c) of ERISA), for which the 30-day notice
period has not been waived, has been required to be filed with respect to any
Schedule 2.15 Plan or will be required to be filed by the Purchasers as a result
of the transactions contemplated by this Agreement.
(f) Neither At Work nor any entity that is considered one employer
with At Work under Section 4001 of ERISA or Section 414 of the Code currently
contributes to or in the past five years has contributed to any "multiemployer
plan," as such term is defined in Section 3(37) of ERISA.
(g) With respect to each Schedule 2.15 Plan, the Sellers have made
available to the Purchaser, if applicable, true and complete copies of: (a) the
most recent versions of all plan documents and all amendments thereto; (b) all
trust instruments and insurance contracts; (c) the last two Forms 5500 filed
with the Internal Revenue Service; (d) the most recent actuarial report and
financial statement; (e) the most recent summary plan description; (f) any and
all forms filed with the PBGC; (g) the most recent determination letter issued
by the Internal Revenue Service; and (h) any Forms 5310A or 5330 filed with the
Internal Revenue Service within the last two years.
(h) At Work has not violated any material provision of any Law or
arbitration award of any court, arbitrator or any government agency regarding
the terms and conditions of employment of employees, former employees or
prospective employees or other labor related matters, including, without
limitation, Laws and awards relating to discrimination, fair labor standards and
occupational health and safety, wrongful discharge or violation of the personal
rights of employees, former employees or prospective employees.
<PAGE>
(i) There is no labor strike, dispute, slowdown or stoppage actually
pending or, to the knowledge of the Sellers or At Work, threatened against or
involving At Work.
(j) At Work is not a party to any collective bargaining agreement
and there are no labor unions or other organizations representing, purporting to
represent, or to the knowledge of the Sellers or At Work, attempting to
represent any employee of At Work.
(k) Except as set forth on Schedule 2.15(k), At Work does not owe
----------------
any past or present employee any sum, including any salary amounts that were
forgiven by such employee, other than for accrued wages, salaries and benefits
for the current payroll period, reimbursable expenses, and accrued holiday pay
(none of which is for a period in excess of two weeks' pay with respect to any
employee), and amounts payable under any Schedule 2.15 Plan.
2.16 Employment, Severance and Termination Agreements, Etc. Schedule 2.16
-----------------------------------------------------
lists all employment, severance, "golden parachute" or termination or
compensation agreements, arrangements or understandings of At Work with any
present director, officer, employee, consultant or group of employees of At
Work, other than agreements (listed on Schedule 2.15) terminable by At Work at
will without expense or liability to At Work. Except as set forth on Schedule
2.16, none of the agreements, arrangements or understandings listed on Schedule
2.16 provides for payments by At Work in connection with any change in control
of At Work, and no payment amount will be become due from At Work to any current
or former employee, consultant, officer or director of At Work as a result of
the transactions contemplated by this Agreement or as a result of the
transactions contemplated by this Agreement in conjunction with any termination
of the employment of any employee of At Work within a defined period of time
following the Closing Date.
2.17 Litigation; Compliance with Law.
-------------------------------
(a) Except as set forth on Schedule 2.17, there is no judicial,
-------------
administrative, arbitral or alternative dispute resolution proceeding, suit or
investigation pending or, to the knowledge of the Sellers or At Work, threatened
against At Work, including, without limitation, with respect to or affecting the
business or financial condition of At Work, or the consummation of the
transactions contemplated hereby and, to the knowledge of the Sellers and At
Work, no reasonable basis exists for any such action, suit, investigation or
proceeding. There is no judicial, administrative, arbitral or alternative
dispute resolution proceeding, suit or investigation pending or, to the
knowledge of the Sellers or At Work, threatened against the Sellers with respect
to or affecting the business or financial condition of At Work, or the
consummation of the transactions contemplated hereby or which could reasonably
be expected to impair any Seller's ability to perform his or its obligations
hereunder, including, without limitation his or its obligations to indemnify the
Purchaser and, to the knowledge of the Sellers and At Work, no reasonable basis
exists for any such action, suit, investigation or proceeding. At Work is not a
party to, or subject to the provisions of, any Judgment.
(b) Except as set forth in Schedule 2.17, the business of At Work is
-------------
being conducted in compliance with all applicable Laws and Judgments of any
court or Authority.
(c) To the knowledge of the Sellers and At Work, there does not
exist, and since the inception of At Work there has not existed, any condition
in respect of any of the properties, assets or business of At Work that (i)
arises from any use, transportation, storage, disposal, release or
<PAGE>
exposure of any pollutants, contaminants or toxic or hazardous substances of any
type and (ii) violates, or could lead to the imposition of any Liability upon At
Work under, any Law, Judgment or Permit relating to human health and safety or
pollution or protection or cleanup of the environment.
2.18 Year 2000 Compliance.
--------------------
(a) At Work Products. Each product sold, distributed, licensed,
----------------
leased or delivered by At Work or used in connection with operations of At
Work's business as presently conducted (the "At Work Products") is designed to
----------------
be used without defect prior to, during, and after the calendar year 2000 A.D.
The At Work Products will operate during each such time period without error
relating to date data, specifically including any error relating to, or the
product of, date data which represents or references different centuries or more
than a century. Without limiting the generality of the foregoing, each of the
Sellers and At Work represent and warrant that the At Work Products (i) will not
abnormally end or provide invalid or incorrect results as a result of date data,
specifically including date data which represents or references different
centuries or more than one century; (ii) have been designed to ensure year 2000
compatibility, including, but not limited to, date data century recognition,
calculations which accommodate same century and multi-century formulas and date
values, and date data interface values that reflect the century; and (iii)
include Year 2000 Capabilities. For purposes of this Section 2.18, "Year 2000
---------
Capabilities" means that (i) the At Work Products will manage, calculate,
- ------------
sequence, compare and manipulate data involving dates, including single century
formulas and multi-century formulas and including leap years, and will not cause
an abnormally ending scenario within the application or generate incorrect
values or invalid results involving such dates; (ii) all date-related user
interface functionalities and data fields associated with the At Work Products
include the indication of century; and (iii) all date-related data interface
functionalities associated with the At Work Products include the indication of
century.
(b) Internal Operating Systems and Licensed Third Party Software.
------------------------------------------------------------
At Work has audited its internal operating systems and licensed third party
software and, to its knowledge, those systems and licensed third party software
include Year 2000 Capabilities.
2.19 Investment.
----------
(a) Restricted Securities. Each of the Sellers hereby represents
---------------------
that the Alysis Shares acquired hereby will be acquired for investment for each
of Sellers' respective accounts and not with a view toward distribution within
the meaning of the Securities Act of 1933, as amended (the "Securities Act").
--------------
Without in any way limiting the representations set forth above, each of the
Sellers understands that the Alysis Shares may not be sold, transferred, or
otherwise disposed of without registration under the Securities Act or an
exemption therefrom, and that in the absence of an effective registration
statement covering the Alysis Shares or an available exemption from registration
under the Securities Act, the Alysis Shares must be held indefinitely. In
particular, each Seller is aware that before the Alysis Shares may be sold under
Rule 144, the following conditions must be fulfilled, except as otherwise
described below: (i) certain public information about the Purchaser must be
available; (ii) the sale must occur at least one year after the later of the
date the Alysis Shares were sold by the Purchaser; (iii) the sale must be made
in a broker's transaction; and (iv) the number of Alysis Shares sold must not
exceed certain volume limitations.
<PAGE>
(b) Accredited. Each of the Sellers is an "accredited investor" as
----------
defined in Rule 501 of Regulation D under the Securities Act.
(c) Access to Information, Management and SEC Filings. Each of the
-------------------------------------------------
Sellers has received and reviewed information about the Purchaser and has had an
opportunity to review and discuss the Purchaser's business, management and
financial affairs with its management. Each of the Sellers understands that such
discussions, as well as any written information issued by the Purchaser, were
intended to describe the aspects of the Purchaser's business and prospects which
the Purchaser believes to be material, but were not necessarily a thorough or
exhaustive description. Each of the Sellers has been provided with and has had
the opportunity to review the Purchaser's documents filed with the Securities
and Exchange Commission pursuant to the Securities and Exchange Act of 1934, as
amended, including without limitation Purchaser's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998 and Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1999 and June 30, 1999.
2.20 No Brokers. No person or entity has acted on behalf of any the
----------
Sellers or At Work in connection with the transactions contemplated by this
Agreement in such manner as to give rise to any valid claim against the
Purchaser or At Work for any broker's or finder's fee or similar compensation in
connection with the transactions contemplated by this Agreement.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
To induce the Sellers to enter into this Agreement and to perform the
Sellers' obligations hereunder, and with full knowledge that the Sellers will
rely thereon, the Purchaser hereby represents and warrants the truth and
accuracy of the following:
3.1 Due Organization, Etc. The Purchaser is a corporation duly organized,
---------------------
validly existing and in good standing under the laws of Delaware and has full
power and authority to own, lease and operate its assets and to carry on its
business as now and as heretofore conducted.
3.2 Due Authority; No Breach. The Purchaser has all requisite power and
------------------------
authority to enter into this Agreement and the Ancillary Agreements and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Ancillary Agreements and the consummation of
the transactions provided for hereby and thereby have been duly authorized by
the Purchaser and no other proceeding on the part of the Purchaser is necessary
to authorize the execution or delivery of this Agreement or the Ancillary
Agreements or the consummation of any of the transactions contemplated hereby or
thereby. This Agreement and the Ancillary Agreements have been duly executed and
delivered by the Purchaser and constitute legal, valid and binding obligations
of the Purchaser enforceable against the Purchaser in accordance with their
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in an action
at law or a suit in equity). Neither the execution and delivery of this
Agreement nor the Ancillary Agreements nor the performance by the Purchaser of
its obligations hereunder or thereunder nor the consummation of the transactions
provided for hereby or thereby does or will:
<PAGE>
(a) conflict with or violate any provision of the Certificate of
Incorporation, by-laws or any other document of governance of the Purchaser;
(b) violate, conflict with or result in the breach or termination of,
or otherwise give any other person the right to accelerate, renegotiate or
terminate or receive any payment, or require any consent, or constitute a
default, event of default (or an event which with notice, lapse of time, or
both, would constitute a default or event of default), under the terms of, any
Contracts or any Permits to which the Purchaser is a party or by which it or its
securities, properties or business are bound;
(c) result in the creation of any Liens upon any of its securities,
properties or business;
(d) constitute a violation by the Purchaser of any Law or Judgment;
or
(e) require any consent, approval, waiver, order or authorization of,
or registration, declaration or filing with, any Authority on the part of the
Purchaser.
3.3 Capitalization.
--------------
(a) The entire authorized capital stock of the Purchaser consists of
40,000,000 shares of authorized Common Stock, $0.01 par value, of which
9,911,541 shares are issued and outstanding as of September 13, 1999, and of
which 5,000,000 are designated Class B Common Stock, of which 2,417,112 are
outstanding, and 5,000,000 shares of Preferred Stock, $0.01 par value, 400 of
which are designated Series B Preferred Stock, all of which are outstanding
(collectively, the "Company Capital Stock"). All outstanding shares of Company
---------------------
Capital Stock are duly authorized, validly issued, fully paid and nonassessable
and none of them was issued in violation of any preemptive right or other rights
of another person. The Purchaser has no other capital stock authorized, issued
or outstanding.
(b) The Alysis Shares to be issued pursuant to Section 1.2 of this
Agreement are duly authorized and reserved for issuance, and upon issuance
thereof will be validly issued, fully paid and nonassessable.
3.4 Investment. The Purchaser hereby confirms that the Shares will be
----------
acquired for investment for the Purchaser's own account and not with a view
toward distribution within the meaning of the Securities Act (this statement is
made without prejudice to the Purchaser's right at all times to resell,
transfer, or otherwise dispose of all or any part of the Shares pursuant to
either registration or an exemption from registration under the Securities Act).
3.5 SEC Filings Purchaser has filed all forms, reports and documents
-----------
required to be filed with the Securities and Exchange Commission (the "SEC")
since December 31, 1998, and has heretofore made available to each of the
Sellers, in the form filed with the SEC, (i) its Annual Report on Form 10-K for
---
the fiscal year ended December 31, 1998, (ii) its Quarterly Reports on Form 10-Q
for the periods ended March 31, 1999 and June 30, 1999, and (iii) the proxy
statement relating to the Purchaser's annual meeting of shareholders held on
June 16, 1999 (collectively, the "Purchaser SEC Reports"). The Purchaser SEC
---------------------
Reports (i) were prepared in accordance with the requirements of the Securities
Exchange Act of 1934, as amended, and (ii) did not at the time they were filed
(or if
<PAGE>
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
3.6 No Brokers. No person or entity has acted on behalf of the Purchaser
----------
in connection with the transactions contemplated by this Agreement in such
manner as to give rise to any valid claim against the Sellers for any broker's
or finder's fee or similar compensation in connection with the transactions
contemplated by this Agreement.
ARTICLE IV
----------
ADDITIONAL AGREEMENTS
---------------------
4.1 Non-Competition
---------------
(a) Each of Flynn and Clarke hereby agrees, and without limiting any
covenant contained in the Flynn Employment Agreement or the Clarke Employment
Agreement, respectively, during the period beginning on the Closing Date and
ending on the second anniversary thereof, not to engage in any aspect of At
Work's Business (as hereinafter defined).
(b) Each of Flynn and Clarke shall be deemed to be engaging in At
Work's Business only if he:
(i) directly or indirectly, whether or not for compensation,
participates in the ownership, management, operation or control of any Competing
Firm (defined below), or as an investor contributes to the capital of any
Competing Firm through loans, purchases of stock or otherwise in amounts
constituting more than 1% of the capital of such firm, or is employed by or
performs consulting services for any Competing Firm;
(ii) directly or indirectly solicits any customer of At Work or
any person who was a prospective customer of At work, with a view to inducing
such customer or prospective customer to enter into an agreement or otherwise do
business with any Competing Firm with respect to At Work's Business;
(iii) directly or indirectly solicits any customer (whether or
not such customer is, or was, a customer of At Work) which is located within the
United States with a view to inducing such customer to enter into an agreement
or otherwise do business with a Competing Firm with respect to At Work's
Business;
(iv) uses in any manner, releases, communicates or divulges to
any third party any Confidential Information (as defined below) of At Work's or
relating to At Work's Business, other than during any period of continued
employment of him by At Work or the Purchaser and then only in the ordinary and
usual course and in furtherance of At Work's Business, provided, however, that
-------- -------
nothing contained in this Section 4.1(b) shall be deemed to release either Flynn
or Clarke from any obligation under any confidentiality or similar agreement in
effect as of the date hereof; or
<PAGE>
(v) offers employment to any employee of At Work or of the
Purchaser or its affiliates, or attempts to induce any such employee to leave
the employ of At Work or of the Purchaser or its affiliates.
(c) For the purpose of this Article IV:
(i) a "Competing Firm" is:
--------------
(1) any Person (where such Person is not subdivided into
business units, divisions, product lines, subsidiaries or affiliates), or
(2) any business unit, division, product line, affiliate or
subsidiary of a Person (where such Person is subdivided into business units,
divisions, product lines, subsidiaries or affiliates),
where such Person or such division, product lines, business unit,
affiliate or subsidiary engages in any At Work Business in the United States, as
the same is conducted as of the date hereof, provided that a Person which
--------
acquires a majority of the voting stock of, or all or substantially all of the
assets of, the Purchaser after the date of the Closing shall not be deemed to be
a Competing Firm for purposes of the Sellers' continued employment with such
Person following such acquisition;
(ii) "At Work's Business" is the research, development, design,
------------------
manufacture, production and distribution of computer software of a type owned by
At Work or licensed by At Work to third parties as of the Closing Date; and
(iii) "Confidential Information" means trade secrets and other
------------------------
confidential or non-public business information, including ideas, formulas,
compositions, inventions, discoveries and improvements, know-how, manufacturing
and production processes and techniques, and research and development
information; drawings, specifications, designs, plans, proposals and technical
data; and financial, marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and information;
provided, however, the term "Confidential Information" does not include
- -------- -------
information that any of the Sellers can show:
(1) is or becomes generally available to the public other
than as a result of a disclosure by any of the Sellers; or
(2) becomes available to the Sellers on a non-confidential
basis from a source other than At Work, its representatives or its agents,
provided that such source is not bound by a confidentiality agreement with At
Work, its representatives or its agents or otherwise prohibited from
transmitting the information to the Sellers by a contractual, legal or fiduciary
obligation. Subject to the prior written approval of the Purchaser, which
approval shall not be unreasonable withheld, Flynn and Clarke may disclose the
Confidential Information, but only to the extent strictly necessary to respond
to compulsory discovery requests or other compulsory legal process, including,
but not limited to, interrogatories, subpoenas, depositions and civil
investigative demands.
-19-
<PAGE>
(d) Enforceability; Specific Performance.
------------------------------------
(i) The Sellers recognize that the laws and public policies
of the various states of the United States may differ as to the validity and
enforceability of covenants similar to those set forth in this Section 4.1. It
is the intention of the parties hereto that the provisions of this Section 4.1
be enforced to the fullest extent permissible under the laws and policies of
each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such laws or policies) of
any provisions hereof shall not render unenforceable, or impair, the remainder
of the provisions hereof. Accordingly, if any provision of this Section 4.1
shall be determined to be invalid or unenforceable, either in whole or in part,
this Section 4.1 shall be deemed amended to delete or modify, as necessary, the
offending provision in order to render this Section 4.1 enforceable, such
amendment to apply only with respect to the operation of this Section 4.1 in the
particular jurisdiction in which such determination is made.
(ii) Because any remedy at law for any breach of the
provisions of this Section 4.1 would be inadequate, the Sellers hereby consent
to the granting by any court of an injunction or other equitable relief, without
the necessity of actual monetary loss being proved, in order that any breach or
threatened breach of such provisions may effectively be restrained. The
agreements and covenants set forth in this Section 4.1 are in addition to any
rights that Purchaser may have in law or at equity.
4.2 Employment Matters
------------------
(a) Key Personnel. During the period from and after the Closing Date
-------------
through December 7, 1999, Sellers will use their best efforts to retain Wei-Wen
Chaio and Wei Lan as employees of At Work.
(b) Salary and Benefits. At Work employees will receive salary and
-------------------
benefits commensurate with the employees' respective experience and salary
levels from the Purchaser consistent with Purchaser's current practice;
provided, however, that the provisions of this Agreement shall not be construed
- -------- -------
to in any way limit the ability of the Purchaser to terminate the employment of
any employee at any time after the Closing.
(c) Options. At or after the Closing, the Purchaser will grant
-------
options to purchase shares of the Purchaser's Common Stock to all At Work
employees, with the exception of Flynn and Clarke, with the number of shares
subject to options, the exercise price and the vesting of such options to be
determined at Purchaser's sole discretion. Such option grants, if any, will be
considered in the same manner as other option grants of the Purchaser.
(d) Employment Agreements. Purchaser will offer employment to Flynn
---------------------
pursuant to the terms of the Flynn Employment Agreement to be entered into by
Flynn concurrent with the Closing and attached hereto as Exhibit D. Purchaser
---------
will offer employment to Clarke pursuant to the terms of the Clarke Employment
Agreement to be entered into by Clarke concurrent with the Closing and attached
hereto as Exhibit E.
---------
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<PAGE>
ARTICLE V
---------
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
5.1 Conditions Precedent to Obligations of Purchaser. The obligations of
------------------------------------------------
Purchaser to purchase the Shares at the Closing are subject to the satisfaction
at or prior to the Closing of each of the following conditions (unless
satisfaction of any such condition is expressly waived in a writing delivered to
the Sellers):
(a) Each of the representations and warranties of the Sellers
contained in this Agreement shall be true and correct in all material respects
as of the Closing Date (except to the extent that any representation or warranty
is made as of a specific date, in which case such representation or warranty
shall be true and correct as of such specified date); and each of the Sellers
shall each have performed and complied with, in all material respects, all
covenants, conditions and agreements required by this Agreement to be performed
or complied with by it prior to or at the Closing;
(b) [intentionally omitted].
(c) No action, suit, claim or administrative proceeding shall be
pending seeking to restrain, enjoin or prohibit or declare illegal, or seeking
substantial damages in connection with, any material part of the transactions
contemplated by this Agreement;
(d) No Law or Judgment shall be in effect having any of the effects
described in paragraph (c) above;
(e) The Purchaser shall have received the written opinion of Pennie &
Edmonds LLP, counsel to Flynn, Clarke and At Work, in form and content as set
forth in Exhibit B;
---------
(f) The Purchaser shall have received a general release in favor of
At Work and the Purchaser, duly executed by each Seller, in form and content as
set forth in Exhibit C;
---------
(g) The parties shall have executed an Employment Agreement in form
and content as set forth in Exhibit D and Exhibit E, respectively;
--------- ---------
(h) Each of Flynn and Clarke shall have executed a letter of
resignation as a director and officer of At Work dated as of the date hereof to
be effective upon the Closing;
(i) The Escrow Agent and each of the Sellers shall have executed and
delivered to the Purchaser the Escrow Agreement; and
(j) All parties hereto shall have completed all required regulatory
filings, registrations and notifications and shall have received all regulatory
licenses, permits, approvals, authorizations, orders and consents required in
order to consummate the transactions contemplated hereby, and all applicable
waiting periods with respect to the foregoing.
5.2 Conditions Precedent to Obligations of the Sellers. The obligations of
--------------------------------------------------
the Sellers to sell the Shares at the Closing are subject to the satisfaction at
or prior to the Closing of each of the
-21-
<PAGE>
following conditions (unless satisfaction of any such condition is expressly
waived in a writing delivered to Purchaser):
(a) Each of the representations and warranties of the Purchaser
contained in this Agreement shall be true and correct as of the Closing Date;
and the Purchaser shall have performed and complied with, in all material
respects, all covenants, conditions and agreements required by this Agreement to
be performed or complied with by it prior to or at the Closing;
(b) [intentionally omitted].
(c) No action, suit, claim or administrative proceeding shall be
pending seeking to restrain, enjoin or prohibit or declare illegal, or seeking
substantial damages in connection with, any material part of the transactions
contemplated by this Agreement;
(d) No Law or Judgment shall be in effect having any of the effects
described in paragraph (c) above;
(e) All parties hereto shall have completed all required regulatory
filings, registrations and notifications and shall have received all regulatory
licenses, permits, approvals, authorizations, orders and consents required in
order to consummate the transactions contemplated hereby, and all applicable
waiting periods with respect to the foregoing, if any; shall have expired or
been terminated;
(f) The Sellers shall have received the written opinion of Wilson
Sonsini Goodrich & Rosati, P.C., in form and content as set forth in Exhibit F;
---------
(g) The parties shall have executed an Employment Agreement in form
and content as set forth in Exhibit D and Exhibit E, respectively;
--------- ---------
(h) The Escrow Agent and the Purchaser shall have executed and
delivered to the Sellers the Escrow Agreement; and
(i) Purchaser shall have reimbursed Sellers for reasonable fees and
out-of pocket expenses not to exceed U.S. $25,000 incurred by Sellers in
connection with the transactions contemplated hereby (the "Expenses").
--------
ARTICLE VI
----------
CLOSING
-------
6.1 Closing. The Closing shall be held at 10:00 A.M. at the offices of
-------
Wilson Sonsini Goodrich & Rosati, P.C., 650 Page Mill Road, Palo Alto,
California 94304 on the third business day following the date on which all
conditions to Closing (other than those that by their terms are to be satisfied
at Closing, but subject to the satisfaction or waiver of all such conditions)
are satisfied or waived or at such other place, at such other time or on such
other date as the parties may mutually agree (the date on which the Closing
occurs is herein referred to as the "Closing Date"), provided
------------ --------
-22-
<PAGE>
that if the Closing has not occurred as of 11:59 p.m., Pacific Time, on
September 30, 1999, then either party may terminate this Agreement upon delivery
of written notice to the other party.
6.2 Actions of the Purchaser. At the Closing, the Purchaser shall take
------------------------
the following actions:
(a) The Purchaser shall pay (or cause its designee to pay) to the
Sellers, by wire transfer of immediately available funds to accounts specified
by the Sellers, the Initial Purchase Price and the Expenses, allocated among the
Sellers as set forth on Schedule 1.2.
------------
(b) The Purchaser shall deliver to the Sellers certificates for all
of the Alysis Shares, allocated among the Sellers as set forth on Schedule 1.2.
------------
(c) The Purchaser shall deliver to the Sellers such other documents
and agreements as required under Section 5.2.
(d) The Purchaser shall deliver to the Escrow Agent, pursuant to the
Escrow Agreement, by wire transfer of immediately available funds, the Escrow
Amount.
(e) The Purchaser shall deliver to the Sellers a certified copy of
resolutions of the Purchaser's Board of Directors authorizing the execution,
delivery and performance of this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby, together with an incumbency
certificate of the Purchaser.
(f) The Purchaser shall deliver to the Sellers such other documents
reasonably required by the Sellers to consummate the transactions contemplated
hereby.
6.3 Actions by Sellers. At the Closing, the Sellers shall take the
------------------
following actions:
(a) The Sellers shall deliver to the Purchaser (or its designee)
certificates for all of the Shares, duly endorsed for transfer or accompanied by
duly executed stock powers or stock transfer forms sufficient to convey to the
Purchaser (or its designee) good and marketable title to the Shares.
(b) The Sellers shall deliver to the Purchaser such other documents
and agreements as required under Section 5.1.
(c) The Sellers shall deliver to the Purchaser such other documents
reasonably required by the Purchasers to consummate the transactions
contemplated herein including, without limitation, all documents and instruments
reasonably requested by the Purchaser to assure itself that it or its designee
receives good and marketable title to the Shares free and clear of all Liens and
that the business conducted by At Work prior to the Closing may continue to be
conducted by At Work after the Closing, without a Material Adverse Effect.
-23-
<PAGE>
ARTICLE VII
-----------
TERMINATION OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
--------------------------------------------------------------
7.1 Termination of Representations and Warranties. Except as otherwise
---------------------------------------------
specifically provided below, all representations and warranties of the parties
shall survive the Closing for a period of six months from and after the Closing
Date. All claims pursuant to the representations and warranties in Section
2.3(a) hereof and relating to fraud or willful misrepresentation by any party
with respect to any matter shall survive the Closing until January 1, 2001.
7.2 Indemnification by the Sellers. Subject to the provisions of Section
------------------------------
7.4 hereof:
(a) General Indemnification. From and after the Closing and subject
-----------------------
to the provisions of this Article VII, each of the Sellers jointly and severally
covenant and agree to indemnify, defend and hold harmless the Purchaser and its
successors and assigns, from and against any and all actions, proceedings,
costs, damages, claims, liabilities (absolute and contingent), fines, penalties
and payments whatsoever (collectively, "Losses"), including reasonable counsel
------
fees, which may be asserted against or suffered by the Purchaser or At Work or
their successors and assigns arising out of, relating to or on account of any
breach of any of the representations, warranties, covenants or agreements on the
part of such Sellers made in this Agreement.
(b) Adjustment to Purchase Price. All amounts paid pursuant to this
----------------------------
Article VII by one party to another party (other than interest payments) shall
be treated by such parties as an adjustment to the Purchase Price paid to or
received by such party, as the case may be (or, in the case of a Seller, the
portion of the Purchase Price allocated to such Seller pursuant to Section 1.2).
7.3 Method of Asserting Claims, Etc. The party or parties making a claim
-------------------------------
under this Article VII is, for purposes of this Agreement, referred to as the
"Indemnified Party" and the party or parties against whom such claims are
-----------------
asserted under this Article is, for the purposes of this Agreement, referred to
as the "Indemnifying Party." All claims by an Indemnified Party under this
------------------
Agreement shall be asserted and resolved only as follows:
(a) In the event that (i) any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party hereunder is asserted
against or sought to be collected from such Indemnified Party by a third party
(such claim or demand, a "Third Party Claim") or (ii) any Indemnified Party
-----------------
hereunder should have a claim or demand against any Indemnifying Party hereunder
which does not involve a claim or demand being asserted against or sought to be
collected from it by a third party (such claim or demand a "Direct Claim"), the
------------
Indemnified Party shall with reasonable promptness notify in writing the
Indemnifying Party of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible to determine (which estimate shall
not be conclusive of the final amount of such claim or demand) (a "Claim
-----
Notice"); provided, however, that any failure to give such notice will not waive
- ------ -------- -------
any rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are actually prejudiced.
(b) In the event of a Third Party Claim, the Indemnifying Party may,
and upon request of the Indemnified Party shall, retain counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party and any
others the Indemnifying Party may designate in
-24-
<PAGE>
connection with such claim or demand and shall pay the fees and disbursements of
such counsel with regard thereto. In the event an Indemnifying Party shall
retain such counsel, an Indemnified Party shall have the right to retain its own
counsel, but the fees and disbursements of the Indemnified Party's counsel shall
be at the expense of such Indemnified Party unless (i) the Indemnifying Party
and such Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) representation of such Indemnified Party by the counsel retained
by the Indemnifying Party would be inappropriate due to actual or potential
differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding. It is understood that the
Indemnifying Party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and disbursements
of more than one firm qualified in such jurisdiction to act as counsel for the
Indemnified Party. No Indemnifying Party shall be liable to an Indemnified Party
for any settlement of any action or claim without the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. The
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party, settle or compromise any claim or consent to the entry of any
judgment that does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party a release from all
liability in respect of such claim.
(c) In the event of a Direct Claim, if the Indemnifying Party
notifies the Indemnified Party within sixty (60) days of receipt of a Claim
Notice that it does not dispute such claim, the amount of such claim shall be
conclusively deemed a liability of the Indemnifying Party hereunder and shall be
paid to the Indemnified Party immediately.
7.4 Indemnification Limits. The Purchaser shall be entitled to
----------------------
indemnification for the total amount of Losses suffered by it except that in no
event shall the Sellers' liability under Section 7.2 exceed in the aggregate
$250,000 (the "Maximum Amount"); provided, however, that the foregoing shall not
in any manner constitute or be deemed to limit the amount of Losses as a result
of a claim by the Purchaser prior to January 1, 2001 arising out of the
representations and warranties made by the Sellers pursuant to (a) Section
2.3(a) hereof arising out of reckless disregard or willful misrepresentation,
which Losses (after exceeding the Maximum Amount) shall be several and not joint
between the Sellers and limited in the aggregate to the Aggregate Purchase
Price, (b) Section 2.9 hereof arising out of fraud or intentional
misrepresentation, which Losses (after exceeding the Maximum Amount) shall be
several and not joint between the Sellers and limited in the aggregate to the
Aggregate Purchase Price. Each Seller's liability hereunder shall be limited to
the portion of the Aggregate Purchase Price received by such Seller as of the
date of the resolution of such claim, provided that any subsequent Cash Payments
payable to such Seller shall be used to offset the remaining due and unpaid
amounts of such claims, if necessary, with the maximum liability for each Seller
not to exceed one-half of the Aggregate Purchase Price. Claims made by the
Purchaser pursuant to a Claim Notice delivered to the Indemnifying Parties prior
to January 1, 2001 shall not terminate as of January 1, 2001, but shall survive
until properly and finally resolved in accordance with the procedures set forth
in Secton 7.3 above.
7.5 Exclusive Remedy. The provisions of this Article VII shall constitute
----------------
the sole and exclusive remedy of the Purchaser for any Losses suffered by it on
account of any breach by the Sellers of any representations, warranties,
covenants or agreements contained herein.
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<PAGE>
ARTICLE VIII
------------
MISCELLANEOUS
-------------
8.1 Costs and Expenses. Subject to the provisions of Section 5.2, each of
------------------
the parties to this Agreement shall bear its own expenses incurred in connection
with the negotiation, preparation, execution and closing of this Agreement and
the transactions provided for hereby.
8.2 Notices. Any notice, request, consent, approval or other document,
-------
instrument or communication that may be required or permitted to be delivered or
served hereunder shall be effective upon delivery and shall be in writing and
may be personally delivered, sent via certified or registered mail, mailed by
courier or sent by facsimile and confirmed by telephone as follows (until notice
of a change thereof is given as provided herein):
If to Purchaser:
Alysis Technologies, Inc.
1900 Powell Street, Suite 600
Emeryville, CA 94608
Attention: General Counsel
Facsimile: (510) 450-7059
Telephone: (510) 450-6827
With copies to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
Attention: Barry E. Taylor, Esq.
Facsimile: (650) 845-5000
Telephone: (650) 493-9300
If to Sellers:
James Flynn
138 Liberty Rd.
Tappan, NY 10983
Telephone: (914) 359-6107
William D. Clarke
420 Jefferson St. #4D
Hoboken, NJ 07030
Telephone: (201) 792-1172
-26-
<PAGE>
With copies to:
Pennie & Edmonds, LLP
3300 Hillview Avenue
Palo Alto, CA 94304
Attention: Paul DeStefano, Esq.
Facsimile: (650) 493-5556
Telephone: (650) 493-4935
8.3 Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall, for all purposes, be deemed an original instrument.
8.4 Entire Agreement. This Agreement (including the Exhibits and Schedules
----------------
hereto, which are incorporated herein and made a part hereof), sets forth the
entire understanding and agreement between the parties as to the matters covered
herein and supersedes and replaces any prior understanding, agreement or
statement of intent, in each case, written or oral, including without limitation
the letters of intention and other correspondence heretofore exchanged between
the parties.
8.5 Captions. All headings contained in this Agreement are for convenience
--------
or reference only and shall not control or affect in any way the meaning,
construction or interpretation of any of the provisions hereof.
8.6 Governing Law; Dispute Resolution.
---------------------------------
(a) This Agreement shall be governed by the laws of the State of
California (regardless of the laws that might be applicable under principles of
conflicts of law) as to all matters, including but not limited to matters of
validity, construction, effect and performance.
(b) Purchaser and each of the Sellers shall attempt in good faith to
resolve among themselves any legal disagreement, dispute, controversy or claim
arising out of or relating to this Agreement, the interpretation hereof, the
relationship contemplated hereby, or the breach, termination or invalidity
hereof. If each of the Sellers and the Purchaser should so agree, a memorandum
setting forth such agreement shall be prepared and signed by each of the parties
thereto and each of the parties thereto shall be entitled to rely on such
memorandum.
(c) If no such agreement between Purchaser and each of the Sellers
can be reached pursuant to Section 8.6(b) hereof within sixty (60) days, any
legal disagreement, dispute, controversy or claim arising out of or relating to
this Agreement, the interpretation hereof, the relationship contemplated hereby,
or the breach, termination or invalidity hereof shall be finally resolved by
arbitration in San Francisco, California conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Arbitration under this Section shall be initiated
by written demand for arbitration specifying the controversy or claim on which
arbitration is sought, as well as the relief requested.
-27-
<PAGE>
(d) Arbitration shall be before one arbitrator, which arbitrator
shall be an attorney or retired judge having knowledge of the disputed subject
matter, mutually agreeable to Sellers and Purchaser. In the event that within
forty-five (45) days after submission of any dispute to arbitration, Sellers and
Purchaser cannot mutually agree on an arbitrator, the American Arbitration
Association shall appoint such arbitrator in accordance with its rules. The
arbitrator shall, before accepting such appointment, agree to render its
decision to the parties in writing together with the underlying reasoning,
including separate statements of findings of facts and conclusions of law, no
later than 60 days after completion of hearings, but in no event later than 180
days from the date of appointment of the arbitrator. The parties to the dispute
agree to use all commercially reasonable efforts to assure that the arbitration
procedure set forth herein, once commenced, shall be completed as expeditiously
as possible. The decision of the arbitrator shall be final and binding upon the
parties thereto and judgment upon the award rendered may be entered in any court
having jurisdiction thereof.
(e) This arbitration agreement is intended to be self-executing. The
expenses of arbitration shall be borne by the party against whom the decision is
rendered, or apportioned in accordance with the decision of the arbitrator in
the event of a compromise decision. All notices from one party to the other
relating to any arbitration hereunder shall be in writing and shall be effective
if given in accordance with the provisions of Section 8.2. Notwithstanding
anything to the contrary herein, the arbitration provisions set forth herein,
and any arbitration conducted thereunder, shall be governed exclusively by the
Federal Arbitration Act, Title 9, United States Code and by the 1958 United
Nations Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, to the exclusion of any state or municipal law of arbitration.
(f) Notwithstanding anything contained in this Section 8.6, each
party shall have the right to institute judicial proceedings against another
party or any Person acting by, through or under such party in order to enforce
the instituting party's rights hereunder through specific performance,
injunction or similar equitable relief. Each party hereby submits to the
jurisdiction of the United States District Court for the Northern District of
California and the Southern District of New York for purposes thereof. Each of
the Sellers and the Purchaser hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to laying of
the venue of any such suit, action or proceeding brought in such Court and any
claim that any such suit, action or proceeding brought in such Court has been
brought in an inconvenient forum. Each of the Sellers and the Purchaser consents
to process being served in any such suit, action or proceeding by mailing a copy
thereof by registered or certified mail, postage prepaid, return receipt
requested, to its address designated in Section 8.2. Each of the Sellers and the
Purchaser agrees that such service (x) shall be deemed in every respect
effective service of process upon it in any such suit, action or proceeding and
(y) shall, to the fullest extent permitted by law, be taken and held to be valid
personal service upon and personal delivery to it.
8.7 No Third Party Rights. Nothing herein express or implied is intended
---------------------
or shall be construed to confer upon or give any Person, other than the parties
hereto, any rights or remedies under or by reason of this Agreement.
8.8 Amendment and Waiver. This Agreement may be amended, modified or
--------------------
superseded, and any of the terms, covenants or conditions hereof may be waived,
at any time by a written instrument executed by the parties hereto or, in the
case of a waiver, by the party waiving
-28-
<PAGE>
compliance. The failure at any time of any party hereto to require performance
by another party of any responsibility or obligation provided for in this
Agreement shall in no way affect the full right to require such performance at
any time thereafter, nor shall the waiver by any party of a breach of any
provision of this Agreement by another party constitute a waiver of the
responsibility or obligation itself.
8.9 Construction and Representation by Counsel. The parties hereto
------------------------------------------
represent that in the negotiation and drafting of this Agreement they have been
represented by and relied upon the advice of counsel of their choice. The
parties affirm that their counsel have had a substantial role in the drafting
and negotiation of this Agreement and, therefore, the rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any Exhibit or
Schedule attached hereto.
8.10 Further Assurances. Each party shall, at the request of the other
------------------
party, at any time and from time to time following the Closing promptly execute
and deliver, or cause to be executed and delivered, to such requesting party all
such further instruments and take all such further action as may be reasonably
necessary or appropriate to more effectively transfer, assign, convey, grant and
confirm to the Purchaser, or to perfect or record the Purchaser's title to or
interest in, or to enable the Purchaser to possess and use, the Shares or
otherwise to confirm or carry out the provisions of and transactions
contemplated by this Agreement. Following the Closing, each of Sellers shall use
all reasonable efforts to assist Purchaser in completing the audit of any
financial statements of At Work required to be prepared by Purchaser in order to
comply with its ongoing reporting obligations under the Exchange Act.
8.11 Severability. If any one or more of the provisions contained in this
------------
Agreement or any document executed in connection herewith shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions contained herein or
therein shall not in any way be affected or impaired; provided that the economic
--------
and legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. In the case of any such invalidity,
illegality or unenforceability, the parties hereto agree to use all commercially
reasonable efforts to achieve the purpose of such provision by a new legally
valid and enforceable stipulation.
8.12 Dollars. All references in this Agreement to "Dollars" and "$" shall
-------
mean the lawful money of the United States.
8.13 Binding Effect; No Assignment. This Agreement shall be binding upon
-----------------------------
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. This Agreement is not assignable without the prior
written consent of each of the parties hereto or by operation of law.
* * *
-29-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of the
parties hereto as of the date first above written.
SELLERS:
_________________________________
JAMES FLYNN
_________________________________
WILLIAM D. CLARKE
PURCHASER:
ALYSIS TECHNOLOGIES, INC.
By:______________________________
Printed: Kevin D. Moran
President and Chief Executive Officer
<PAGE>
EXHIBIT 2.2
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Agreement") is entered into as of September
15, 1999 (the "Effective Date"), by and between Alysis Technologies, Inc., a
Delaware corporation (the "Company"), and James Flynn (the "Employee").
WHEREAS, the Company desires to employ the Employee as of the Effective
Date and the Employee desires to accept employment with the Company on the terms
and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing recital and the
respective covenants and agreements of the parties contained in this document,
the Company and the Employee agree as follows:
1 Employment and Duties. During the Employment Period (as defined in
---------------------
Section 2 below), the Employee will be hired as Vice President of Business
Development. The duties and responsibilities of the Employee shall include the
responsibilities set forth in Exhibit A and such other duties and
---------
responsibilities as the President and CEO of the Company may from time to time
reasonably assign to the Employee, in all cases to be consistent with the
Employee's position as Vice President of Business Development. The Employee
shall at all times perform faithfully the Employee duties assigned to him to the
best of his ability and in the best interests of the company.
2 Employment Period.
-----------------
(a) Initial Employment Period. The employment period shall
-------------------------
begin upon the Effective Date and shall continue thereafter until October 2,
2000 (the "Initial Employment Period"), unless sooner terminated pursuant to the
provisions of this Agreement.
(b) At-Will Employment. At the conclusion of the Initial
------------------
Employment Period, the Employee will become an "at-will" employee of the
Company. This "at-will" employment shall be for no definite or determinable
period and will be subject to the then-current Company policies and procedures.
Upon conclusion of the Initial Employment Period, the provisions contained in
Sections 2(c-e) and 10 shall no longer apply.
(c) Death. The Employee's employment shall terminate in the
-----
event of his death. The Company shall have no obligation to pay or provide any
compensation or benefits under this Agreement on account of the Employee's
death, except as provided in Section 4(b) of this Agreement. The Employee's
rights under the benefit plans of the Company in the event of the Employee's
death shall be determined under the provisions of those plans.
(d) Termination for Cause or Without Cause. The Company may
--------------------------------------
terminate the Employee's employment for cause, with or without advance notice.
For all purposes under this Agreement, "Cause" shall mean (i) willful failure by
the Employee to substantially perform his duties hereunder, other than a failure
resulting from the Employee's complete or partial incapacity due to physical or
mental illness or impairment, (ii) a willful act by the Employee which
constitutes gross misconduct and which is injurious to the Company, (iii) a
willful breach by the Employee of a material provision of this Agreement, or
(iv) a material and willful violation of a federal or state law or regulation
applicable to the business of the Company. No act, or failure to act, by the
Employee shall be considered "willful" unless committed without good faith or
without a reasonable belief that the act or omission was in the Company's best
interest. No compensation or benefits will be paid or provided to the Employee
under this Agreement on account of a termination for Cause, or for periods
following the date when such a termination of employment is effective. The
Employee's rights under the benefit plans of the
<PAGE>
Company shall be determined under the provisions of those plans. Termination for
any reason other than for "Cause" as defined herein - including Constructive
Termination as defined below- shall be deemed to constitute termination without
cause. If the Company terminates the Employee without Cause, the Employee will
be eligible for all benefits under Sections 4 (b) and 10 (a) (i).
Constructive Termination shall be deemed to have occurred upon
Employee's resignation because of (i) the reduction of Employee's pay by five
(5) percent or more (other than as a general reduction affecting all officers of
the Company), (ii) adverse change in the Employee's fringe benefits (unless
agreed to by all officers of the Company), (iii) material reduction in the level
of the Employee's job responsibilities, or (iv) involuntary relocation outside
the Northeast Region or relocation in the Northeast Region more than once in the
Initial Employment Period.
(e) Disability. The Company may terminate the Employee's employment
----------
for Disability by giving the Employee 30 days' advance notice in writing. For
all purposes under this Agreement, "Disability" shall mean that the Employee, at
the time notice is given, has been unable to substantially perform his duties
under this Agreement for a period of not less than six (6) consecutive months as
the result of his incapacity due to physical or mental illness. In the event
that the Employee resumes the performance of substantially all of his duties
hereunder before the termination of his employment under this subsection (d)
becomes effective, the notice of termination shall automatically be deemed to
have been revoked. No compensation or benefits will be paid or provided to the
Employee under this Agreement on account of termination for Disability, or for
periods following the date when such a termination of employment is effective,
except as provided in Section 4(b) of the Agreement. The Employee's rights under
the benefit plans of the Company shall be determined under the provisions of
those plans.
3 Place of Employment. The Employee's services shall be performed at the
-------------------
Company's offices in New York City, New York. However, the Company reserves the
right to relocate these offices to another location within the Northeastern
Region, at the most, one time during the Initial Employment Period.. The
parties acknowledge that the Employee may be required to travel in connection
with the performance of his duties hereunder.
4 Compensation.
------------
(a) For all services to be rendered by the Employee pursuant to
this Agreement, the Company agrees to pay the Employee during the Employment
Period a base salary (the "Base Salary") at an annual rate of $180,000. The Base
Salary shall be paid in periodic installments in accordance with the Company's
regular payroll practices. In addition, the Employee will be eligible for a 33%
bonus. Mr. Flynn will also receive a 1% commission override on license and
services revenue for all Cyberstatement sales for which he is directly involved.
This override will be paid on a monthly basis.
(b) Employee will receive $125,000 on January 4, 2000, $125,000
on April 3, 2000, $125,000 on July 3, 2000, and $125,000 on October 2, 2000.
Each payment is contingent upon Employee being an employee in good standing of
the Buyer at each of the four dates listed. Employee shall be an employee in
good standing of the Buyer unless, prior to any of the above dates listed, he
voluntarily terminates his employment with the Buyer or his employment is
terminated by the Buyer for "Cause" as defined in Section 2(d) of this
Agreement. In the event of the Employee's death or Disability prior to the
conclusion of the Employment Period, Employee or his estate, shall receive the
remaining unpaid balance of these monies from the Company.
<PAGE>
5 Stock Option.
------------
(a) Initial Option. On the Effective Date, the Company shall
--------------
grant the Employee an option to purchase 50,000 shares of the Company's common
stock (the "Option Shares") at an exercise price equal to the closing price on
date of hire. The Initial Option shall vest as described in Section 5(b) below
and shall be subject to such other terms and conditions as are described in
Section 5(c) below.
(b) Vesting. The options will vest over a four-(4) year period
-------
as follows: the first twenty-five percent (25%) of the options shall vest and
become exercisable after one (1) year of employment with the Company. The
remaining options will vest an additional twenty-five percent (25%) each year on
a monthly basis.
(c) Option Provisions. The Stock Option Grant shall be granted
-----------------
under the Alysis Technologies, Inc. 1996 Stock Option Plan (the "Stock Plan")
and, shall be subject to the terms and conditions of the Stock Plan and form of
option agreement and said Stock Option Grant is subject to Board Approval.
6 Expenses. The Employee shall be entitled to prompt reimbursement by
--------
the Company for all reasonable ordinary and necessary travel, entertainment, and
other expenses incurred by the Employee during the Employment Period (in
accordance with the policies and procedures established by the Company for its
employees) in the performance of his duties and responsibilities under this
Agreement; provided, that the Employee shall properly account for such expenses
in accordance with Company policies and procedures.
7 Other Benefits. During the Employment Period, the Employee shall be
--------------
entitled to participate in employee benefit plans or programs of the Company.
8 Vacations and Holidays. The Employee shall be entitled to three (3)
----------------------
weeks paid vacation and Company holidays in accordance with the Company's
policies.
9 Other Activities. The Employee shall devote substantially all of his
----------------
working time and efforts during the Company's normal business hours to the to
the diligent and faithful performance of the duties and responsibilities duly
assigned to him pursuant to this Agreement, except for vacations, holidays and
sickness.
10 Termination Benefits- Initial Employment Period. In the event the
-----------------------------------------------
Employee's employment terminates prior to the end of the Initial Employment
Period, then the Employee shall be entitled to receive severance and other
benefits as follows:
(a) Severance.
---------
(i) Involuntary Termination. If the Company
-----------------------
terminates the Employee's employment other than for Disability or Cause, then,
in lieu of any severance benefits to which the Employee may otherwise be
entitled under any Company severance plan or program, the Employee shall be
entitled to payment of his Base Salary until the end of the Initial Employment
Period or, if earlier, until a breach by the Employee of his obligations under
paragraphs 17 or 18 hereof; provided, however, that such payments shall be
reduced to the extent of any other compensation that the Employee receives or
earns in the event he obtains another position with a subsequent Company. The
provisions set forth herein at Section 10(a)(i) shall not infringe upon the
rights and representations as detailed in Section 4(b) of the Agreement.
(b) Other Termination. In the event the Employee's employment
-----------------
terminates for any reason other than as described in Section 10(a)(i) above,
including by reason of the Employee's death, Disability, then the Employee shall
be entitled to receive severance and any other benefits only as may then be
established under the Company's existing severance and benefit plans and
policies at the time of such termination, except as provided in Section 4(b) of
this Agreement. If the Employee voluntarily terminates his own employment, he
will not be eligible for the continued payment of his base salary, and all stock
options grants will cease vesting as of the
<PAGE>
termination date. The provisions set forth herein at Section 10(b) shall not
infringe upon the rights and representations as detailed in Section 4(b) of this
Agreement.
11 Non-Competition by Employee during Employment. During Employee's
---------------------------------------------
period of employment, Employee shall not, directly or indirectly, engage or
participate in any business that is in competition with the business of Company.
This prohibition shall not include ownership by Employee of less than one
percent (1%) of the outstanding stock in a publicly traded corporation.
12 Duty to Devote Full Time and Avoid Conflict of Interest. During his
-------------------------------------------------------
or her employment, Employee shall devote full-time efforts to his or her duties
as an Employee of the Company. Employee will not, directly or indirectly, engage
or participate in any activities during the period of employment in conflict
with the best interests of Company. Further, the Employee represents and
warrants that his employment by the Company as described herein shall not
conflict with and will not be constrained by any prior employment or contractual
agreement or relationship.
13 Inventions Belong to Company. Employee shall promptly disclose and
----------------------------
assign to Company all of Employee's right, title and interest in and to any and
all ideas, inventions, discoveries or creations which are or may become legally
protectable or recognized improvements, including but not limited to computer
programs, algorithms, methods, manufacturing techniques, writings and other
works of authorship, illustrations and pictures which Employee solely or jointly
has or may in the future have conceived, made or reduced to practice or
developed, in whole or part, during work time, unless the idea, invention,
creation or discovery (a) does not use Company's equipment, supplies, facilities
or trade secret information; (b) was developed entirely on Employee's own time
without the use of Company's equipment, supplies or facilities; (c) does not
relate to the business of Company or to Company's actual or demonstrably
anticipated research or development; and (d) does not result from work Employee
performs for Company. Employee will assign to Company inventions or creations
created or discovered by Employee, or jointly by Employee and a co-employee or
co-employees, on Employee's or their time if the same relate to the business of
Company or to its actual or demonstrably anticipated research or development or
which results from any work performed by Employee for Company. The foregoing
Agreement is binding upon Employee's heirs, representatives and assignees.
Pursuant to the above, Employee will execute and deliver to Company or its
attorneys without additional compensation, but without expense to Employee, any
and all instruments including United States and foreign patent applications,
instruments to secure priority rights under the International Convention for the
Protection of Industrial Property, applications for securing or registering any
property rights assigned herein, and will perform any and all lawful acts which
in the judgment of Company or its attorneys may be necessary or desirable to
secure or maintain for the benefit of Company, patents or other proprietary
rights in the Unites States and all foreign counties with respect to the
property rights to be assigned herein.
It is understood that the election of whether or not to file a patent
application on any disclosure submitted by Employee and the manner of
preparation and prosecution of any and all United States or foreign patent
applications shall be wholly within the discretion of Company, and at its
expense. If Employee petitions in writing to Company for a release of any rights
hereunder granted, Company will promptly consider and act on such petition, but
is not obligated to release any of its rights.
14 Trade Secrets and Proprietary Information of Company. Employee will
----------------------------------------------------
have access to, will acquire and become acquainted with various trade secrets,
confidential and proprietary information, relating to Company's business,
including but not limited to: client, employee, supplier, and distributor lists,
contacts, addresses, information about employees and employee relations,
training manuals and procedures, recruitment method and procedures, employment
contracts, employee handbooks, information about clients and suppliers, price
lists, costs and expenses, documents, budgets, proposals, financial information,
inventions, patterns, processes, computer programs,
<PAGE>
manufacturing, recruitment and distribution techniques, specifications, tapes
and compilations of information, all of which are owned by Company, other
parties with which Company does business ("Third Parties") or clients of Company
and which are used in the operation of Company's, Third Parties' and/or a
client's business. Employee shall hold in strictest confidence and shall not
(other than as specifically allowed in writing by Company) disclose or use any
trade secret or confidential information of Company, directly or indirectly, or
use them in any way, either during the term of Employee's employment, or at any
time thereafter, except as required by Company in the course of Employee's
employment. Employee understands that the term "trade secret" or "confidential
information" means all information concerning Company, Third Parties and/or
clients of Company, or any parent, subsidiary or affiliate of Company, Third
Parties, and/or a client (including, but not limited to, information regarding
the peculiarities, preferences and manner of doing business) that is not
generally known to the public. All items referred to in this section and similar
items relating to the business of Company, Third Parties and/or a client,
whether prepared by Employee or otherwise, shall remain the exclusive property
of Company, Third Parties and/or client and shall not be removed from Company's,
Third Parties' and/or client's premises without prior written consent of
Company. Employee also agrees that the remedy at law for breach of this section
is inadequate and that Company, in addition to any other remedy, can seek
appropriate injunctive relief from an appropriate court or arbitrator, at its
election.
15 Confidential Information of Clients. All ideas, concepts,
-----------------------------------
information, and written material disclosed to Employee by Company, or acquired
from a client of Company, and all financial, accounting, statistical, personnel,
and business data and plans of clients, are and shall remain the sole and
exclusive property and proprietary information of the Company, or said client,
and are disclosed in confidence by Company or permitted to be acquired from
clients in reliance on Employee's agreement to maintain them in confidence and
not to use or disclose them to any other person except in furtherance of
Company's business.
The prohibitions of this section shall not apply to any information which
is later publicly disclosed, or is obtained by Employee in a legal manner from
another source not connected with or related to Company.
16 Return of Information. On or before termination of employment,
---------------------
Employee will return to Company all originals and copies of all of any part of:
(a) Lists and sources of clients and suppliers;
(b) Lists of employees
(c) Proposals to clients or drafts of proposals
(d) Reports, job notes, specifications, and drawings pertaining
to clients; or
(e) Any and all other things, equipment, and written materials
obtained by Employee during the course of employment from Company or from
any client of Company.
17 Post-Employment Nonsolicitation of Clients. It is understood that
------------------------------------------
Employee will learn trade secrets, confidential and proprietary information as
referred to in sections 14 and 15 above. Use of such trade secrets, confidential
and proprietary information will provide Employee with an unfair advantage over
Company, as compared to a normally competitive situation. Employee agrees that
if he solicits business from Company's clients and prospective clients, Employee
will of necessity use such trade secrets, proprietary and confidential
information, and such solicitation would be unfair. In recognition of this,
Employee agrees that upon termination of employment, he will not engage in the
conduct described below:
(a) Employee shall not solicit any clients of Company (i.e., clients
where at least a project has been conducted in the last two (2) years), or
attempt to take away any business of Company that is either under way or about
to begin at the termination of employment.
<PAGE>
(b) For a period of one (1) year following termination of employment,
Employee shall not interfere or compete in any way with any proposal or other
efforts of Company, already in progress (that is, a proposal sent to or being
then currently developed for a specific existing or prospective client or
clients, or contemplated to be submitted to a specific existing or prospective
client or clients by Company within one (1) year) at the termination of
employment.
(c) For a period of one (1) year following termination of employment,
Employee shall not make use of any of his personal relationships or business
contacts developed during the course of employment with Company and utilized for
business purposes within the two (2) years prior to termination, for the benefit
of himself or another, in a competitive manner with respect to the business of
Company.
Notwithstanding the foregoing, the Employee and Company agree that there is no
restriction on Employee's right, upon termination, to send general announcements
of any new employment or to contact in the same manner all potential customers
of his new employment without selecting or devoting special attention (as in a,
b, or c above or otherwise) to Company's clients or prospective clients.
18 No Solicitation of Employees. Employee will not, either during the
----------------------------
term of Employee's employment or for one year thereafter, attempt to solicit or
influence any of Company's employees to: (a) become employees of, or render
services to, any other company or business; (b) engage in any activity, business
or undertaking not sponsored by Company; or (c) engage in any activity contrary
to or conflicting with the interests of Company, while the Employee is employed
by Company. Employee agrees that the remedy at law for breach of this section
is inadequate and that Company, in addition to any other remedy, can seek
appropriate injunctive relief from an appropriate court or arbitrator, at its
election.
19 Injunctive Relief. The services of Employee, as well as the trade
-----------------
secrets and the proprietary and confidential information of Company are of a
special, unique, unusual and extraordinary nature, which give them a unique
value, the loss of which cannot reasonably or adequately be compensated for in
damages in an action at law. The breach by Employee of any provision of this
Agreement would cause the Company irreparable injury and damage, the measure of
which could not be adequately measured at law. Company shall be entitled, as a
matter of right, to injunctive and other equitable relief to prevent the
violation of any provision of this Agreement by Employee. Employee hereby
consents to the granting of such injunctive or other equitable relief. The
exercise by Company of any of its rights hereunder shall not constitute a waiver
by Company of any other rights which it may have to damages or otherwise.
20 Right to Advice of Counsel. The Employee acknowledges that he has
--------------------------
consulted with counsel and is fully aware of his rights and obligations under
this Agreement.
21 Successors. The Company will require any successor (whether direct or
----------
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption agreement
prior to the effectiveness of any such succession shall entitle the Employee to
the benefits described in Sections 11(a)(i), 11(b) and 11(c) of this Agreement,
subject to the terms and conditions therein.
22 Arbitration. Any dispute or controversy arising under or in connection
-----------
with this Agreement shall be settled exclusively by arbitration in San Jose,
California, in accordance with the rules of the American Arbitration Association
then in effect by an arbitrator selected by both parties within 10 days after
either party has notified the other in writing that it desires a dispute between
them to be settled by arbitration. In the event the parties cannot agree on such
arbitrator within such 10-day period, each party shall select an arbitrator and
inform the
<PAGE>
other party in writing of such arbitrator's name and address within 5 days after
the end of such 10-day period and the two arbitrators so selected shall select a
third arbitrator within 15 days thereafter; provided, however, that in the event
of a failure by either party to select an arbitrator and notify the other party
of such selection within the time period provided above, the arbitrator selected
by the other party shall be the sole arbitrator of the dispute. Each party shall
pay its own expenses associated with such arbitration, including the expense of
any arbitrator selected by such party and the Company will pay the expenses of
the jointly selected arbitrator. The decision of the arbitrator or a majority of
the panel of arbitrators shall be binding upon the parties and judgment in
accordance with that decision may be entered in any court having jurisdiction
thereover. Punitive damages shall not be awarded.
23 Assignment. This Agreement and all rights under this Agreement shall
----------
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective personal or legal representatives, executors,
administrators, heirs, distributees, devisees, legatees, successors and assigns.
This Agreement is personal in nature, and neither of the parties to this
Agreement shall, without the written consent of the other, assign or transfer
this Agreement or any right or obligation under this Agreement to any other
person or entity; except that the Company may assign this Agreement to any of
its affiliates or wholly-owned subsidiaries, provided, that such assignment will
--------
not relieve the Company of its obligations hereunder. If the Employee should
die while any amounts are still payable to the Employee hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Employee's devisee, legatee, or other designee
or, if there be no such designee, to the Employee's estate.
24 Notices. For purposes of this Agreement, notices and other
-------
communications provided for in this Agreement shall be in writing and shall be
delivered personally or sent by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Employee: James Flynn
138 Liberty Rd.
Tappan, NY 10983
If to the Company: Geraldine McGrath, VP and General Counsel
Alysis Technologies, Inc.
1900 Powell Street - Suite 600
Emeryville, CA 94608
or to such other address or the attention of such other person as the recipient
party has previously furnished to the other party in writing in accordance with
this Section. Such notices or other communications shall be effective upon
delivery or, if earlier, three days after they have been mailed as provided
above.
25 Integration. This Agreement and the Exhibit hereto represent the
-----------
entire agreement and understanding between the parties as to the subject matter
hereof and supersede all prior or contemporaneous agreements whether written or
oral. No waiver, alteration, or modification of any of the provisions of this
Agreement shall be binding unless in writing and signed by duly authorized
representatives of the parties hereto.
26 Waiver. Failure or delay on the part of either party hereto to enforce
------
any right, power, or privilege hereunder shall not be deemed to constitute a
waiver thereof. Additionally, a waiver by either party or a breach of any
promise hereof by the other party shall not operate as or be construed to
constitute a waiver of any subsequent waiver by such other party.
<PAGE>
27 Severability. Whenever possible, each provision of this Agreement will
------------
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
28 Headings. The headings of the Sections contained in this Agreement
--------
are for reference purposes only and shall not in any way affect the meaning or
interpretation of any provision of this Agreement.
29 Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the internal substantive laws, and not the choice of law rules,
of the State of California.
30 Counterparts. This Agreement may be executed in one or more
------------
counterparts, none of which need contain the signature of more than one party
hereto, and each of which shall be deemed to be an original, and all of which
together shall constitute a single agreement.
31 Termination of Prior Agreements. The parties agree and acknowledge
-------------------------------
that effective as of the closing of the Stock Purchase Agreement between the
parties of even date herewith, all employment agreements between the Employee
and At Work Corporation, a New York corporation, shall be terminated and
superseded in their entirety by this Agreement and no amounts shall be due and
payable by At Work under such terminated agreements for services performed prior
to September 15, 1999.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.
ALYSIS TECHNOLOGIES, INC.
By _______________________________
Kevin D. Moran
President
EMPLOYEE:
__________________________________
James Flynn
<PAGE>
Exhibit A
Vice President of Business Development
Job Responsibilities
--------------------
- Liaison between Sales, Marketing and Alysis alliance partners for
Cyberstatement.
- Understand competition and provide organization with competitive
intelligence acquired in the marketplace.
- Oversee product direction and coordinate efforts between our
technical associates and our Sales and Marketing teams.
- Coordinate with Marketing to help develop collateral and
necessary Marketing materials.
- Speak at conferences.
- Provide training to Sales people.
<PAGE>
EXHIBIT 2.3
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Agreement") is entered into as of September
15, 1999 (the "Effective Date"), by and between Alysis Technologies, Inc., a
Delaware corporation (the "Company"), and William Clarke (the "Employee").
WHEREAS, the Company desires to employ the Employee as of the Effective
Date and the Employee desires to accept employment with the Company on the terms
and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing recital and the
respective covenants and agreements of the parties contained in this document,
the Company and the Employee agree as follows:
1. Employment and Duties. During the Employment Period (as defined in
---------------------
Section 2 below), the Employee will be hired as Chief Architect. The duties and
responsibilities of the Employee shall include the duties set forth in Exhibit A
and such other duties and responsibilities as the Vice President of e-Commerce
may from time to time reasonably assign to the Employee, in all cases to be
consistent with the Employee's position as Chief Architect. The Employee shall
at all times perform faithfully the Employee duties assigned to him to the best
of his ability and in the best interests of the Company.
2. Employment Period.
-----------------
(a) Initial Employment Period. The employment period shall begin
-------------------------
upon the Effective Date and shall continue thereafter until October 2, 2000 (the
"Initial Employment Period"), unless sooner terminated pursuant to the
provisions of this Agreement.
(b) At-Will Employment. At the conclusion of the Initial
------------------
Employment Period, the Employee will become an "at-will" employee of the
Company. This "at-will" employment shall be for no definite or determinable
period and will be subject to the then-current Company policies and procedures.
Upon conclusion of the Initial Employment Period, the provisions contained in
Sections 2(c-e) and 10 shall no longer apply.
(c) Death. The Employee's employment shall terminate in the event
-----
of his death. The Company shall have no obligation to pay or provide any
compensation or benefits under this Agreement on account of the Employee's
death, except as provided in Section 4(b) of this Agreement. The Employee's
rights under the benefit plans of the Company in the event of the Employee's
death shall be determined under the provisions of those plans.
(d) Termination for Cause or Without Cause. The Company may
--------------------------------------
terminate the Employee's employment for cause, with or without advance notice.
For all purposes under this Agreement, "Cause" shall mean (i) willful failure by
the Employee to substantially perform his duties hereunder, other than a failure
resulting from the Employee's complete or partial incapacity due to physical or
mental illness or impairment, (ii) a willful act by the Employee which
constitutes gross misconduct and which is injurious to the Company, (iii) a
willful breach by the Employee of a material provision of this Agreement, or
(iv) a material and willful violation of a federal or state law or regulation
applicable to the business of the Company. No act, or failure to act, by the
Employee shall be considered "willful" unless committed without good faith or
without a reasonable belief that the act or omission was in the Company's best
interest. No compensation or benefits will be paid or provided to the Employee
under this Agreement on account of a termination for Cause, or for periods
following the date when such a termination of employment is effective. The
Employee's rights under the benefit plans of the Company shall be determined
under the provisions of those plans. Termination for any reason other than for
"Cause" as defined herein - including Constructive Termination as defined below
- - shall be deemed to constitute
<PAGE>
termination without cause. If the Company terminates the Employee without Cause,
the Employee will be eligible for all benefits under Sections 4 (b) and 10 (a)
(i).
Constructive Termination shall be deemed to have occurred upon
Employee's resignation because of (i) the reduction of Employee's pay by five
(5) percent or more (other than as a general reduction affecting all officers of
the Company), (ii) adverse change in the Employee's fringe benefits (unless
agreed to by all officers of the Company), (iii) material reduction in the level
of the Employee's job responsibilities, or (iv) involuntary relocation outside
the Northeast Region or relocation in the Northeast Region more than once in the
Initial Employment Period.
(e) Disability. The Company may terminate the Employee's
----------
employment for Disability by giving the Employee 30 days' advance notice in
writing. For all purposes under this Agreement, "Disability" shall mean that the
Employee, at the time notice is given, has been unable to substantially perform
his duties under this Agreement for a period of not less than six (6)
consecutive months as the result of his incapacity due to physical or mental
illness. In the event that the Employee resumes the performance of substantially
all of his duties hereunder before the termination of his employment under this
subsection (d) becomes effective, the notice of termination shall automatically
be deemed to have been revoked. No compensation or benefits will be paid or
provided to the Employee under this Agreement on account of termination for
Disability, or for periods following the date when such a termination of
employment is effective, except as provided in Section 4(b) of the Agreement.
The Employee's rights under the benefit plans of the Company shall be determined
under the provisions of those plans.
3. Place of Employment. The Employee's services shall be performed at the
-------------------
Company's offices in New York City, New York. However, the Company reserves the
right to relocate these offices to another location within the Northeastern
Region, at the most, one time during the Initial Employment Period. The parties
acknowledge that the Employee may be required to travel in connection with the
performance of his duties hereunder.
4. Compensation.
------------
(a) For all services to be rendered by the Employee pursuant to
this Agreement, the Company agrees to pay the Employee during the Employment
Period a base salary (the "Base Salary") at an annual rate of $175,000 a year.
The Base Salary shall be paid in periodic installments in accordance with the
Company's regular payroll practices. In addition, the Employee will be eligible
for a bonus of up to thirty percent (30%) of the base salary, based on
performance measures to be determined after beginning employment with the
Company. For the year of 1999, this bonus shall be pro-rated for the months of
October through December 1999. The Company also agrees to pay a $25,000 signing
bonus within two (2) weeks of hire.
(b) Employee will receive $125,000 on January 4, 2000, $125,000
on April 3, 2000, $125,000 on July 3, 2000, and $125,000 on October 2, 2000.
Each payment is contingent upon Employee being an employee in good standing of
the Buyer at each of the four dates listed. Employee shall be an employee in
good standing of the Buyer unless, prior to any of the above dates listed, he
voluntarily terminates his employment with the Buyer or his employment is
terminated by the Buyer for "Cause" as defined in Section 2(d) of this
Agreement. In the event of the Employee's death or Disability prior to the
conclusion of the Employment Period, Employee or his estate, shall receive the
remaining unpaid balance of these monies from the Company.
5. Stock Option.
------------
(a) Initial Option. On the Effective Date, the Company shall
--------------
grant the Employee an option to purchase 50,000 shares of the Company's common
stock (the "Option Shares") at an exercise price equal to the closing price on
the date of hire. The Initial Option shall vest as described in Section 5(b)
below and shall be subject to such other terms and conditions as are described
in Section 5(c) below.
-2-
<PAGE>
(b) Vesting. The options will vest over a four-(4) year period
-------
as follows: the first twenty-five percent (25%) of the options shall vest and
become exercisable after one (1) year of employment with the Company. The
remaining options will vest an additional twenty-five percent (25%) each year on
a monthly basis.
(c) Option Provisions. The Stock Option Grant shall be granted
-----------------
under the Alysis Technologies, Inc. 1996 Stock Option Plan (the "Stock Plan")
and, shall be subject to the terms and conditions of the Stock Plan and form of
option agreement and said Stock Option Grant is subject to Board Approval.
6. Expenses. The Employee shall be entitled to prompt reimbursement by
--------
the Company for all reasonable ordinary and necessary travel, entertainment, and
other expenses incurred by the Employee during the Employment Period (in
accordance with the policies and procedures established by the Company for its
employees) in the performance of his duties and responsibilities under this
Agreement; provided, that the Employee shall properly account for such expenses
in accordance with Company policies and procedures.
7. Other Benefits. During the Employment Period, the Employee shall be
--------------
entitled to participate in employee benefit plans or programs of the Company.
8. Vacations and Holidays. The Employee shall be entitled to three (3)
----------------------
weeks paid vacation and Company holidays in accordance with the Company's
policies.
9. Other Activities. The Employee shall devote substantially all of his
----------------
working time and efforts during the Company's normal business hours to the to
the diligent and faithful performance of the duties and responsibilities duly
assigned to him pursuant to this Agreement, except for vacations, holidays and
sickness.
10. Termination Benefits- Initial Employment Period. In the event the
-----------------------------------------------
Employee's employment terminates prior to the end of the Initial Employment
Period, then the Employee shall be entitled to receive severance and other
benefits as follows:
(a) Severance.
---------
(i) Involuntary Termination. If the Company
-----------------------
terminates the Employee's employment other than for Disability or Cause, then,
in lieu of any severance benefits to which the Employee may otherwise be
entitled under any Company severance plan or program, the Employee shall be
entitled to payment of his Base Salary until the end of the Initial Employment
Period or, if earlier, until a breach by the Employee of his obligations under
paragraphs 17 or 18 hereof; provided, however, that such payments shall be
reduced to the extent of any other compensation that the Employee receives or
earns in the event he obtains another position with a subsequent Company. The
provisions set forth herein at Section 10(a)(i) shall not infringe upon the
rights and representations as detailed in Section 4(b) of the Agreement.
(b) Other Termination. In the event the Employee's employment
-----------------
terminates for any reason other than as described in Section 10(a)(i) above,
including by reason of the Employee's death, Disability, then the Employee shall
be entitled to receive severance and any other benefits only as may then be
established under the Company's existing severance and benefit plans and
policies at the time of such termination, except as provided in Section 4(b) of
this Agreement. If the Employee voluntarily terminates his own employment, he
will not be eligible for the continued payment of his base salary, and all stock
options grants will cease vesting as of the termination date. The provisions set
forth herein at Section 10(b) shall not infringe upon the rights and
representations as detailed in Section 4(b) of this Agreement.
11. Non-Competition by Employee during Employment. During Employee's
---------------------------------------------
period of employment, Employee shall not, directly or indirectly, engage or
participate in any business that is in competition with the business of Company.
This prohibition shall not include ownership by Employee of less than one
percent (1%) of the outstanding stock in a publicly traded corporation.
-3-
<PAGE>
12. Duty to Devote Full Time and Avoid Conflict of Interest. During his
-------------------------------------------------------
or her employment, Employee shall devote full-time efforts to his or her duties
as an Employee of the Company. Employee will not, directly or indirectly,
engage or participate in any activities during the period of employment in
conflict with the best interests of Company. Further, the Employee represents
and warrants that his employment by the Company as described herein shall not
conflict with and will not be constrained by any prior employment or contractual
agreement or relationship.
13. Inventions Belong to Company. Employee shall promptly disclose and
----------------------------
assign to Company all of Employee's right, title and interest in and to any and
all ideas, inventions, discoveries or creations which are or may become legally
protectable or recognized improvements, including but not limited to computer
programs, algorithms, methods, manufacturing techniques, writings and other
works of authorship, illustrations and pictures which Employee solely or jointly
has or may in the future have conceived, made or reduced to practice or
developed, in whole or part, during work time, unless the idea, invention,
creation or discovery (a) does not use Company's equipment, supplies, facilities
or trade secret information; (b) was developed entirely on Employee's own time
without the use of Company's equipment, supplies or facilities; (c) does not
relate to the business of Company or to Company's actual or demonstrably
anticipated research or development; and (d) does not result from work Employee
performs for Company. Employee will assign to Company inventions or creations
created or discovered by Employee, or jointly by Employee and a co-employee or
co-employees, on Employee's or their time if the same relate to the business of
Company or to its actual or demonstrably anticipated research or development or
which results from any work performed by Employee for Company. The foregoing
Agreement is binding upon Employee's heirs, representatives and assignees.
Pursuant to the above, Employee will execute and deliver to Company or its
attorneys without additional compensation, but without expense to Employee, any
and all instruments including United States and foreign patent applications,
instruments to secure priority rights under the International Convention for the
Protection of Industrial Property, applications for securing or registering any
property rights assigned herein, and will perform any and all lawful acts which
in the judgment of Company or its attorneys may be necessary or desirable to
secure or maintain for the benefit of Company, patents or other proprietary
rights in the United States and all foreign counties with respect to the
property rights to be assigned herein.
It is understood that the election of whether or not to file a patent
application on any disclosure submitted by Employee and the manner of
preparation and prosecution of any and all United States or foreign patent
applications shall be wholly within the discretion of Company, and at its
expense. If Employee petitions in writing to Company for a release of any
rights hereunder granted, Company will promptly consider and act on such
petition, but is not obligated to release any of its rights.
14. Trade Secrets and Proprietary Information of Company. Employee will
----------------------------------------------------
have access to, will acquire and become acquainted with various trade secrets,
confidential and proprietary information, relating to Company's business,
including but not limited to: client, employee, supplier, and distributor lists,
contacts, addresses, information about employees and employee relations,
training manuals and procedures, recruitment method and procedures, employment
contracts, employee handbooks, information about clients and suppliers, price
lists, costs and expenses, documents, budgets, proposals, financial information,
inventions, patterns, processes, computer programs, manufacturing, recruitment
and distribution techniques, specifications, tapes and compilations of
information, all of which are owned by Company, other parties with which Company
does business ("Third Parties") or clients of Company and which are used in the
operation of Company's, Third Parties' and/or a client's business. Employee
shall hold in strictest confidence and shall not (other than as specifically
allowed in writing by Company) disclose or use any trade secret or confidential
information of Company, directly or indirectly, or use them in any way, either
during the term of Employee's employment, or at any time thereafter, except as
required by Company in the course of Employee's employment. Employee
understands that the term "trade secret" or "confidential information" means all
information concerning Company, Third Parties and/or clients of Company, or any
parent, subsidiary or affiliate
-4-
<PAGE>
of Company, Third Parties, and/or a client (including, but not limited to,
information regarding the peculiarities, preferences and manner of doing
business) that is not generally known to the public. All items referred to in
this section and similar items relating to the business of Company, Third
Parties and/or a client, whether prepared by Employee or otherwise, shall remain
the exclusive property of Company, Third Parties and/or client and shall not be
removed from Company's, Third Parties' and/or client's premises without prior
written consent of Company. Employee also agrees that the remedy at law for
breach of this section is inadequate and that Company, in addition to any other
remedy, can seek appropriate injunctive relief from an appropriate court or
arbitrator, at its election.
15. Confidential Information of Clients. All ideas, concepts,
-----------------------------------
information, and written material disclosed to Employee by Company, or acquired
from a client of Company, and all financial, accounting, statistical, personnel,
and business data and plans of clients, are and shall remain the sole and
exclusive property and proprietary information of the Company, or said client,
and are disclosed in confidence by Company or permitted to be acquired from
clients in reliance on Employee's agreement to maintain them in confidence and
not to use or disclose them to any other person except in furtherance of
Company's business.
The prohibitions of this section shall not apply to any information which
is later publicly disclosed, or is obtained by Employee in a legal manner from
another source not connected with or related to Company.
16. Return of Information. On or before termination of employment,
---------------------
Employee will return to Company all originals and copies of all of any part of:
(a) Lists and sources of clients and suppliers;
(b) Lists of employees
(c) Proposals to clients or drafts of proposals
(d) Reports, job notes, specifications, and drawings pertaining
to clients; or
(e) Any and all other things, equipment, and written materials
obtained by Employee during the course of employment from Company or from
any client of Company.
17. Post-Employment Nonsolicitation of Clients. It is understood that
------------------------------------------
Employee will learn trade secrets, confidential and proprietary information as
referred to in sections 14 and 15 above. Use of such trade secrets,
confidential and proprietary information will provide Employee with an unfair
advantage over Company, as compared to a normally competitive situation.
Employee agrees that if he solicits business from Company's clients and
prospective clients, Employee will of necessity use such trade secrets,
proprietary and confidential information, and such solicitation would be unfair.
In recognition of this, Employee agrees that upon termination of employment, he
will not engage in the conduct described below:
(a) Employee shall not solicit any clients of Company (i.e., clients
where at least a project has been conducted in the last two (2) years), or
attempt to take away any business of Company that is either under way or about
to begin at the termination of employment.
(b) For a period of one (1) year following termination of employment,
Employee shall not interfere or compete in any way with any proposal or other
efforts of Company, already in progress (that is, a proposal sent to or being
then currently developed for a specific existing or prospective client or
clients, or contemplated to be submitted to a specific existing or prospective
client or clients by Company within one (1) year) at the termination of
employment.
(c) For a period of one (1) year following termination of employment,
Employee shall not make use of any of his personal relationships or business
contacts developed during the course of employment with Company and utilized for
business purposes within the two (2) years prior to termination, for the benefit
of himself or another, in a competitive manner with respect to the business of
Company.
-5-
<PAGE>
Notwithstanding the foregoing, the Employee and Company agree that there is no
restriction on Employee's right, upon termination, to send general announcements
of any new employment or to contact in the same manner all potential customers
of his new employment without selecting or devoting special attention (as in a,
b, or c above or otherwise) to Company's clients or prospective clients.
18. No Solicitation of Employees. Employee will not, either during the
----------------------------
term of Employee's employment or for one year thereafter, attempt to solicit or
influence any of Company's employees to: (a) become employees of, or render
services to, any other company or business; (b) engage in any activity, business
or undertaking not sponsored by Company; or (c) engage in any activity contrary
to or conflicting with the interests of Company, while the Employee is employed
by Company. Employee agrees that the remedy at law for breach of this section
is inadequate and that Company, in addition to any other remedy, can seek
appropriate injunctive relief from an appropriate court or arbitrator, at its
election.
19. Injunctive Relief. The services of Employee, as well as the trade
-----------------
secrets and the proprietary and confidential information of Company are of a
special, unique, unusual and extraordinary nature, which give them a unique
value, the loss of which cannot reasonably or adequately be compensated for in
damages in an action at law. The breach by Employee of any provision of this
Agreement would cause the Company irreparable injury and damage, the measure of
which could not be adequately measured at law. Company shall be entitled, as a
matter of right, to injunctive and other equitable relief to prevent the
violation of any provision of this Agreement by Employee. Employee hereby
consents to the granting of such injunctive or other equitable relief. The
exercise by Company of any of its rights hereunder shall not constitute a waiver
by Company of any other rights which it may have to damages or otherwise.
20. Right to Advice of Counsel. The Employee acknowledges that he has
--------------------------
consulted with counsel and is fully aware of his rights and obligations under
this Agreement.
21. Successors. The Company will require any successor (whether direct or
----------
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption agreement
prior to the effectiveness of any such succession shall entitle the Employee to
the benefits described in Sections 11(a)(i), 11(b) and 11(c) of this Agreement,
subject to the terms and conditions therein.
22. Arbitration. Any dispute or controversy arising under or in
-----------
connection with this Agreement shall be settled exclusively by arbitration in
San Jose, California, in accordance with the rules of the American Arbitration
Association then in effect by an arbitrator selected by both parties within 10
days after either party has notified the other in writing that it desires a
dispute between them to be settled by arbitration. In the event the parties
cannot agree on such arbitrator within such 10-day period, each party shall
select an arbitrator and inform the other party in writing of such arbitrator's
name and address within 5 days after the end of such 10-day period and the two
arbitrators so selected shall select a third arbitrator within 15 days
thereafter; provided, however, that in the event of a failure by either party to
select an arbitrator and notify the other party of such selection within the
time period provided above, the arbitrator selected by the other party shall be
the sole arbitrator of the dispute. Each party shall pay its own expenses
associated with such arbitration, including the expense of any arbitrator
selected by such party and the Company will pay the expenses of the jointly
selected arbitrator. The decision of the arbitrator or a majority of the panel
of arbitrators shall be binding upon the parties and judgment in accordance with
that decision may be entered in any court having jurisdiction thereover.
Punitive damages shall not be awarded.
23. Assignment. This Agreement and all rights under this Agreement shall
----------
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective personal or legal representatives,
-6-
<PAGE>
executors, administrators, heirs, distributees, devisees, legatees, successors
and assigns. This Agreement is personal in nature, and neither of the parties to
this Agreement shall, without the written consent of the other, assign or
transfer this Agreement or any right or obligation under this Agreement to any
other person or entity; except that the Company may assign this Agreement to any
of its affiliates or wholly-owned subsidiaries, provided, that such assignment
--------
will not relieve the Company of its obligations hereunder. If the Employee
should die while any amounts are still payable to the Employee hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Employee's devisee, legatee, or other
designee or, if there be no such designee, to the Employee's estate.
24. Notices. For purposes of this Agreement, notices and other
-------
communications provided for in this Agreement shall be in writing and shall be
delivered personally or sent by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Employee: William Clarke
420 Jefferson St. #4D
Hoboken, NJ 07030
If to the Company: Geraldine McGrath, VP and General Counsel
Alysis Technologies, Inc.
1900 Powell Street - Suite 600
Emeryville, CA 94608
or to such other address or the attention of such other person as the recipient
party has previously furnished to the other party in writing in accordance with
this Section. Such notices or other communications shall be effective upon
delivery or, if earlier, three days after they have been mailed as provided
above.
25. Integration. This Agreement and the Exhibit hereto represent the
-----------
entire agreement and understanding between the parties as to the subject matter
hereof and supersede all prior or contemporaneous agreements whether written or
oral. No waiver, alteration, or modification of any of the provisions of this
Agreement shall be binding unless in writing and signed by duly authorized
representatives of the parties hereto.
26. Waiver. Failure or delay on the part of either party hereto to
------
enforce any right, power, or privilege hereunder shall not be deemed to
constitute a waiver thereof. Additionally, a waiver by either party or a breach
of any promise hereof by the other party shall not operate as or be construed to
constitute a waiver of any subsequent waiver by such other party.
27. Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
28. Headings. The headings of the Sections contained in this Agreement
--------
are for reference purposes only and shall not in any way affect the meaning or
interpretation of any provision of this Agreement.
29. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the internal substantive laws, and not the choice of law rules,
of the State of California.
-7-
<PAGE>
30. Counterparts. This Agreement may be executed in one or more
------------
counterparts, none of which need contain the signature of more than one party
hereto, and each of which shall be deemed to be an original, and all of which
together shall constitute a single agreement.
31. Termination of Prior Agreements. The parties agree and acknowledge
-------------------------------
that effective as of the closing of the Stock Purchase Agreement between the
parties of even date herewith, all employment agreements between the Employee
and At Work Corporation, a New York corporation, shall be terminated and
superseded in their entirety by this Agreement and no amounts shall be due and
payable by At Work under such terminated agreements for services performed prior
to September 15, 1999.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.
ALYSIS TECHNOLOGIES, INC.
By___________________________________
Kevin D. Moran
President
EMPLOYEE:
_____________________________________
William Clarke
-8-
<PAGE>
Exhibit A
Chief Architect
The role of Chief Architect in a product development group includes the
following activities:
- Responsible for the creation of any formal requirements analysis
specifications.
- Establishes the functional design.
- Produces the software architecture.
- Codes core functions of the architecture.
- Responsible for maintaining the architectural and conceptual integrity
of the software during detail design and coding, and during future
enhancements and modifications. (Architectural and conceptual
integrity is appearance that the software was created by a single
mind, even though it was built by many.)
- Defines the design and coding standards used on the project.
- Responsible for making final decisions on technical issues.
- Manages the preparation and performance of the system testing
function.
- Determines the appropriate development environment tools for coding,
testing and configuration management.
<PAGE>
Exhibit 99.1
Carter Israel Contact: IA Corporation Contact:
SABRINA HUGHES CHARLES CARRICO
(408) 998-5433 (510) 450-6804
IA CORPORATION ACQUIRES @WORK TECHNOLOGIES
Acquisition Positions IA to Deliver a Full Range of Products and Services for
E-Presentment and Customer Service on the Internet
EMERYVILLE, Calif., September 16, 1999 -- IA Corporation (Nasdaq: IACPC), a
provider of information commerce software for the Internet, announced today the
acquisition of @Work Technologies, a New York-based provider of advanced
document distribution and electronic commerce applications which utilize Java
and other Internet-based technologies. As a result, IA has positioned itself to
further capitalize on the burgeoning e-presentment marketplace.
@Work Technologies is the developer of WorkOut(TM), an advanced system for
distributing computer-generated documents over the Internet and private
Intranets. The WorkOut(TM) system, one of the few of its class that is active in
large institutions, enables its clients to take full advantage of Internet
technologies in order to enhance customer relationships, improve productivity,
reduce cost, and achieve a competitive edge in today's fast-moving
e-enterprises.
@Work Technologies is recognized as one of the early innovators in the Internet
billing and statement distribution market. @Work's clients are some of the
world's most respected institutions, including Pitney Bowes Inc. and HPA (Hermes
Precisa Pty Ltd) - Australia's largest producer of bills and statements.
The acquisition of @Work Technologies brings IA Corporation an array of benefits
including:
. strong technology and talent in the e-presentment space
. open scalable architecture
. emerging standard tools, including CORBA and XML
. a competitive edge in e-statement and e-bills
. double-byte architecture for international expansion.
"This acquisition brings to IA a rare combination of business and technical
expertise which has created some of the most successful packages in both the
document management and financial industries," IA Corporation President and CEO
Kevin Moran said. "E-presentment combined with IA's repository management and
integrated with legacy and web platforms leads to valuable information portals
and a synergy in meeting the huge demand for high-end information commerce
solutions."
<PAGE>
As a result of the acquisition, IA Corporation adds to its management team
@Work's CEO Jim Flynn, who will become Vice President of Business Development,
and Chief Technologist Bill Clarke, who will be joining as Chief Architect.
Flynn and Clarke are recognized experts on the Java program language and other
Internet technologies and are credited for authoring one of the earliest and
most comprehensive books on Java entitled Visual J++ Java Programming (New
Riders, 1996). In addition, both Flynn and Clark have a long and successful
record of accomplishment in developing industry leading document management
software.
"@Work's WorkOut Server has a unique value proposition," says Jeetu Patel, vice
president of research at Doculabs, a research and advisory firm focusing on e-
business solutions. "IA's customer base and resources will truly allow @Work to
take its innovation to the next level of mass adoption. The acquisition also has
great potential in providing IA with a more complete offering to its customers
and to open the doors for new markets."
"The acquisition of @Work Technologies positions IA as a significant entry into
the e-commerce and Web portal market," said Mason Grigsby, a partner with IMERGE
Consulting. "The high performance, scalable, metadata index lets IA deliver
bills, statements, computer transaction reports, document images and text
through the Internet."
IA Corporation acquired @Work Technologies for approximately $3.6 million in
cash, stock and compensation. This union extends IA Corporation's presence in
the expanding e-presentment and document commerce markets.
IA Corporation
IA Corporation, headquartered in Emeryville, Calif., develops and delivers
software products that allow leading edge financial services organizations to
integrate the power of the Internet with their network document repositories to
provide increased customer service, one-to-one marketing and business
intelligence. Its client base includes 20% of the largest banks in the United
States, the largest mutual fund organizations, leading global brokerage firms
and many of the world's largest information technology outsourcing companies.
@Work Technologies
@Work Technologies, headquartered in New York City, is focused on enabling its
clients to take full advantage of Internet technologies in order to improve
productivity, reduce cost, and make better decisions.
This press release contains forward looking statements, including but not
limited to statements regarding the e-presentment and document commerce market
size and opportunities, anticipated customer usage, the features and benefits of
the WorkOut system, the benefits of the @Work Technologies acquisition, and the
competitive advantages of @Work Technologies' and products. Actual results may
vary from anticipated results and such differences may be material, based on a
number of factors, including the actual size and available opportunities of the
e-presentment and document commerce market, customer acceptance of and market
demand for the Company's products, the ability to of the Company's products and
@Work acquisition to achieve anticipated benefits, the ability of the Company to
integrate the operations of the two companies and retain key @Work employees as
well as other risk factors as described in for IA's Form 10-K for the year ended
December 31, 1998, and the Company's 10-Q for the quarter ended March 30, 1999
and Company's 10-Q for the quarter ended June 30, 1999.
