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To read comments to this article, go here
Project Monterey Agreement
Sunday, March 07 2004 @ 11:32 AM EST

We've been wanting to see this contract from day one, the Monterey Agreement between IBM and the Santa Cruz Operation from October of 1998, and now we can add it to our collection. The most riveting clause is this one:

*************************
15.2 Change of Control

Notwithstanding Section 15.1, IBM shall have the right to terminate this
Agreement immediately upon the occurrence of a Change of Control of SCO
which IBM in its sole discretion determines will substantially and
adversely impact the overall purpose of the cooperation set forth by
this Agreement and applicable Project Supplements or will create a
significant risk or material and adverse exposure of IBM's confidential
and/or technical proprietary information (which is subject to, and to
the extent of, confidentiality restrictions) ("Information"). For
purposes of this Agreement, control shall be deemed to be constituted by
rights, contracts or any other means which, either separately or jointly
and having regard to the consideration of fact or law involved, confer
the possibility of exercising decisive influence (other than by an
entity currently exercising such influence or any entity controlled by
or controlling such entity) on SCO by:

1. owning more than half the equity, capital or business assets, or

2. having the power to appoint more than half of the members of the
supervisory board, board of directors or bodies legally
representing SCO, or

3. having the right to directly manage SCO's business activities.

Subject to a plan deemed adequate by IBM to protect its Information, the
parties will agree to a wind-down period for activities under this
Agreement in case of termination for Change of Control. Such wind-down
period will take into consideration the party's outstanding commitments
relating to this Agreement and will not be less than 6 months. Any New
Entity (defined below) identified in Attachment B shall not be entitled
to any benefit of licenses granted by IBM under this Agreement in
relation to the IA-64 Product and shall not be entitled to receive any
Information, (including during any wind-down period). "New Entity" means
the entity assuming control as described in subparagraphs 1 through 3
above and all of such entity's then current subsidiaries and affiliates.
IBM's right to the Project Work upon a Change of Control shall be in
accordance with Section 15.4.

***************************

You can find it at
http://www.sec.gov/Archives/edgar/data/851560/0000891618-99-000561.txt attached to the Santa Cruz' 10 Q for December 31, 1998.


**************************************************************************


EXHIBIT 10.1



NOTE: INFORMATION IN THIS DOCUMENT MARKED WITH AN "[*]" HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.


JOINT DEVELOPMENT AGREEMENT
AGREEMENT NUMBER 4998CR0349

This agreement, dated as of October 23, 1998 ("Effective Date"), and its
attachments, which are incorporated by reference, ("Agreement") is entered into
by and between The Santa Cruz Operation, Incorporated, a California corporation
("SCO") having an office for the transaction of business at 400 Encinal Street,
Santa Cruz, California 95060, and International Business Machines Corporation, a
New York corporation ("IBM") having an office for the transaction of business at
11400 Burnet Road, Austin Texas 78758.

Whereas, IBM and SCO believe that each company has complementary skills,
experience and technology to extend and evolve existing UNIX operating systems
designed to operate on the 32-bit and 64-bit Intel architecture platforms;

Whereas, pursuant to this Agreement, IBM and SCO desire to undertake specific
development projects to design and further develop an IA-32 Product and IA-64
Product as further defined below. Through these projects the parties expect to
enable innovative new open systems computer technologies and products more
rapidly and efficiently than either party could achieve independently;

Whereas, each party expects to market products based on this development work
and to work toward the goal of creating and participating in a high volume UNIX
marketplace, bringing significant benefits to each party, its customers and the
computer industry;

Now, therefore, in consideration of the mutual provisions contained herein, SCO
and IBM (the "Parties") agree to the following terms and conditions.

1.0 DEFINITIONS:

1.1 "Code" shall mean computer or controller programming code. Unless
specifically agreed otherwise, Code shall include Object Code and Source Code.
Code shall include any Maintenance Modifications that one party may be obligated
to deliver to the other party for use with Code.

"Object Code" shall mean Code, substantially or entirely in binary form,
which is intended to be directly executable by a computer after suitable
processing and linking but without the intervening steps of compilation
or assembly.

"Source Code" shall mean Code, other than Object Code, and Documentation
related to such Source Code, comments and procedural code, such as job
control language, which may be printed out or displayed in human
readable form.

1.2 "Deliverables" shall mean the Licensed Materials, Project Work, and
Documentation under any Project Supplement. Deliverables shall be IBM
Deliverables or SCO Deliverables or both, as the content requires.

1.3 "Derivative Work" shall mean a work which is based upon one or more
pre-existing works, such as a revision, enhancement, modification, translation,
abridgment, condensation, expansion, compilation, or any other form in which
such preexisting works may be recast, transformed, adapted, or included, and
which, if prepared without authorization of the owner of the copyright in such
preexisting work, would constitute a copyright infringement.

1.4 Design Environment" shall mean the following items, information or data
(including without limitation applicable Licensed SCO Materials or Licensed IBM
Materials) used by the parties to design, develop, integrate, test or maintain
and modify any Deliverable:

(a) methodologies, standards, specifications, process formats and
ground rules used for design, integration, test and maintenance;

(b) "Design Tools" which comprise Code and Documentation of software
tools, including without limitation, software tools for
designing, coding, editing, assembling, translating, compiling,
building, linking, performance measuring, monitoring, tuning and
testing Deliverables.

1.5 "Design Environment Specification" shall mean the portion of the Project
Work that may, as applicable, specify the content, architecture, functionality
performance, size and structure, format, programming language, application
binary interfaces, programming interfaces, user interfaces, other compatibility
specifications, standards compliance, prerequisites, usability, quality,
reliability, third party source (if applicable) and other characteristics of the
Design Environment.

1.6 "Distributor" shall mean any third party (including, without limitation,
agents, ISPs, OEMs, resellers, dealers, sales representatives or distributors)
that is authorized by a party to this Agreement, their Subsidiaries or
Distributors to license or distribute products of the respective party or third
party products, with or without either party's logo. Distributors shall be
chosen by either party and their Distributors, at their sole discretion.

1.7 "Documentation" shall mean all written or machine-readable materials related
to Code including, but not limited, to user manuals, instructions, descriptions
and any other written or electronically stored materials, and any applicable
Enhancements and Maintenance Modifications thereto.

1.8 "Enhancements" shall mean changes, additions or improvements, other than
Maintenance Modifications, to Code and/or to Documentation that improve
functions, add new functions, or improve performance by changes to system design
or coding.

1.9 "IA-32 Product" shall mean the UNIX operating system that is designed to run
on Intel architecture and compatibles and which consists of SCO's UnixWare 7
with the addition of Licensed IBM Materials and any additional Project Work
developed under this Agreement.

1.10 "IA-64 Product" shall mean the UNIX operating system that is designed to
run on Intel architecture and compatibles and which consists of IBM's AIX
operating system with the addition of Licensed SCO Materials and any additional
Project Work developed under this Agreement.

1.11 "Invention" shall mean any idea, concept, know-how, technique, discovery or
improvement conceived or first actually reduced to practice solely or jointly by
one or more employees of either party or jointly by one or more employees of the
parties, in the course of performance of this Agreement.

1.12 "Licensed Independent Materials" shall mean any Code and Documentation of
either party which is created by such party outside of the development
activities of a Project Supplement, and any Enhancements and Maintenance
Modifications thereto included in the Deliverables under a Project Supplement.
Licensed Independent Materials may also include development tools owned by
either party and provided pursuant to a Project Supplement.

1.13 "Licensed Materials" shall mean Licensed IBM Materials and Licensed SCO
Materials which are included in the Deliverables under a Project Supplement but
which are not Project Work.

"Licensed IBM Materials" shall mean any part or all of, IBM Licensed
Independent Materials, IBM Third Party Materials, and IBM Related
Written Materials.

"Licensed SCO Materials" shall mean any part of or all of, SCO Licensed
Independent Materials, SCO Third Party Licensed Materials, and SCO
Related Written Materials.

1.14 "Maintenance Modification" shall mean any modification or revision to Code
or to Documentation, other than an Enhancement, that corrects an error or
deficiency or provides any other incidental corrections .

1.15 "Product Roadmap" shall mean the schedule, sequence and description for
developing new versions and new releases to the IA-32 Product and the IA-64
Product. A new version of the IA-32 Product and IA-64 Product shall occur when
sufficient upgrades and enhancements to the functionality and performance of the
IA-32 Product and IA-64 Product are added to such products such that the
numerical designation is changed in accordance with the agreed-to Product
Roadmap. Such numerical designation shall occur before a decimal point. A new
release of the IA-32 Product and the IA-64 Product shall occur when interim
Maintenance Modifications, product fixes and minor functional enhancements are
added to the product such that the parties agree that a new numerical
designation after a decimal point shall be added to the version numerical
designation for the Product Roadmap.

1.16 "Project Supplement" shall mean the Project Supplement(s) executed by the
parties and attached to the Agreement.

1.17 "Project Work" shall mean the Code, Documentation, and other items created
by IBM or SCO or both, pursuant to a Project Supplement, and any Enhancements
and Maintenance Modifications thereto. Project Work does not include any
Licensed Materials.

"IBM Project Work" shall mean the Code, Documentation, and other items
created by IBM pursuant to a Project Supplement and any Enhancements and
Maintenance Modifications thereto.

"SCO Project Work" shall mean the Code, Documentation, and other items
created by SCO pursuant to a Project Supplement and any Enhancements and
Maintenance Modifications thereto.

1.18 "Project Work Specification" shall mean the Software Specifications and
Design Environment Specifications.

1.19 "Related Written Materials" shall mean all written materials furnished
hereunder by either party and any applicable Enhancements and Maintenance
Modifications thereto, other than Documentation, including materials useful for
demonstration and training, determining performance, productivity and economic
justification or otherwise useful in designing (including design documentation),
developing, testing, maintaining and marketing the Code and Documentation.

1.20 "Software Specifications" shall mean that portion of the Deliverables which
specifies the content, architecture, functionality, performance, size and
structure, format, programming language, programming interfaces, user
interfaces, other compatibility specifications, standards compliance,
prerequisites, usability, quality, reliability, third party source (if
applicable) and other characteristics of the Code contained in the Deliverables.

1.21 "Subsidiary" is an entity during the time that more than 50% of its voting
stock is owned or controlled, directly or indirectly, by another entity. If
there is no voting stock, a Subsidiary is an entity during the time that more
than 50% of its decision-making power is controlled, directly or indirectly, by
another entity.

1.22 "Third Party Licensed Materials" shall mean either IBM Third Party Licensed
Materials or SCO Third Party Licensed Materials.

"IBM Third Party Licensed Materials" shall mean any Code or
Documentation licensed to IBM from a third party which IBM makes a part
of the Licensed Materials, and any applicable Enhancements and
Maintenance Modifications thereto.

"SCO Third Party Licensed Materials" shall mean any Code or
Documentation licensed to SCO from a third party which SCO makes a part
of the Licensed Materials, and any applicable Enhancements and
Maintenance Modifications thereto.

2.0 OWNERSHIP AND LICENSES:

(a) Joint Ownership

All IBM and SCO jointly created Project Work shall be jointly owned by
SCO and IBM, including ownership of associated copyrights or
confidential information. Each party shall be free in all respects to
exercise or dispose of any or all of its ownership rights in the jointly
created Project Work without accounting to the other party.

(b) Sole Ownership

1. IBM (or its third party suppliers) retains sole ownership of IBM
Project Work and IBM Licensed Materials.

2. SCO (or its third party suppliers) retains sole ownership of SCO
Project Work and Licensed SCO Materials.

3. Nothing in this Agreement shall be deemed to transfer ownership
of any portion of the Licensed Materials or each party's Project
Work from one party (or its third party suppliers) to the other
party. Subject to the terms, conditions, and licenses of the
Agreement, the owning party shall be free in all respects to
exercise or dispose of any or all of its ownership rights in
such portions of the Licensed Materials or Project Work, without
accounting to the other party.

(c) License to SCO of Licensed IBM Materials and IBM Project Work

1. The license grants contained in this section shall apply to all
IBM Third Party Licensed Materials unless different terms for a
specific item of IBM Third Party Licensed Materials are
specified in a Project Supplement. Any such different license
terms must, at a minimum, provide a worldwide, nonexclusive
right and license consistent with the terms of the license
grants contained in this section for the purpose of inclusion
with, use and distribution of the IA-32 Product and the IA-64
Product. Any separate license grant for any item of the IBM
Third Party Licensed Materials contained in a Project Supplement
which is more limited than the license grants contained in this
section must be applicable only to items which are separable
from other code in the Deliverable.

2. Subject to Section (c) (1) above regarding third party or other
restrictions, IBM hereby grants to SCO a worldwide,
non-exclusive, royalty free (subject to the royalty provisions
set forth below), perpetual and irrevocable (subject to Section
14.0, "Termination") right and license under IBM's and
applicable third parties' copyrights, to the extent IBM has the
right to grant such rights, and any trade secrets or
confidential information in the Licensed IBM Materials and IBM
Project Work which are included in the Deliverables to (i)
prepare or have prepared Derivative Works, (ii) use, execute,
reproduce, display and perform the Licensed IBM Materials and
IBM Project Work and Derivative Works thereof, (iii) sublicense
and distribute the Licensed IBM Materials and IBM Project Work
and Derivative Works thereof either directly or through
Distributors, in the form of Source Code, Object Code,
Documentation, and/or in any other form whatsoever, and (iv)
grant licenses, sublicenses, and authorizations to others
(including without limitation SCO Subsidiaries, Distributors and
any other third parties), on a non-exclusive basis that is equal
to the scope of the licenses granted hereunder, limited only as
specifically described in Section (e) below The rights and
licenses granted in this Section (c)(2), with respect to the
IA-64 Product, shall be limited to use and distribution solely
in connection with SCO products designed to operate on the Intel
Architecture or with a single Special Purpose Processor.
Designed to operate on the Intel Architecture shall mean
designed to run on an the Intel X86, Pentium, Pentium Pro,
Merced or their successors or compatible microprocessors without
recompiling. Special Purpose Processor means a processor that is
(i) for a single pre-defined embedded special purposes
application, and (ii) does not allow the end user to run the
system as a General Purpose Computer System, either directly or
indirectly. General Purpose Computer System means a commercially
available system which is intended to be reprogrammable by the
end user and is either (i) intended for primary use as a general
purpose business computer, a personal computer, or a
scientific/technical workstation; or (ii) part of a network
configuration whose primary purpose is for executing general
application programs supporting general business, personal or
scientific/technical activities.

(d) License to IBM of Licensed SCO Materials and SCO Project Work

1. The license grants contained in this section shall apply to all
SCO Third Party Licensed Materials unless different terms for a
specific item of SCO Third Party Licensed Materials are
specified in a Project Supplement. Any such different license
terms must, at a minimum, provide a worldwide, nonexclusive
right and license consistent with the terms of the license
grants contained in this section for the purpose of inclusion
with, use and distribution of the IA-32 Product and the IA-64
Product. Any separate license grant for any item of the SCO
Third Party Licensed Materials contained in a Project Supplement
which is more limited than the license grants contained in this
section must be applicable only to items which are separable
from other code in the Deliverable.

2. Subject to Section (d) (1) above regarding third party or other
restrictions, SCO hereby grants to IBM a worldwide,
non-exclusive, royalty free (subject to the royalty provisions
set forth below), perpetual and irrevocable (subject to Section
14.0, "Termination") right and license under SCO's and
applicable third parties' copyrights, to the extent SCO has the
right to grant such rights, and any trade secrets or
confidential information in the Licensed SCO Materials and SCO
Project Work which are included in Deliverables to (i) prepare
or have prepared Derivative Works, (ii) use, execute, reproduce,
display and perform the Licensed SCO Materials and SCO Project
Work and Derivative Works thereof, (iii) sublicense and
distribute the Licensed SCO Materials and SCO Project Work and
Derivative Works thereof either directly or through
Distributors, in the form of Source Code, Object Code,
Documentation, and/or in any other form whatsoever, and (iv)
grant licenses, sublicenses, and authorizations to others
(including without limitation IBM Subsidiaries, Distributors and
any other third parties), on a non-exclusive basis that is equal
to the scope of the licenses granted hereunder, limited only as
specifically described in Section (e) below.

(e) Source Code Sublicensing

With respect to either party's Licensed Materials and Project Work
contained in the IA-64 Product (as described in applicable Project
Supplements), both parties rights to sublicense Source Code to third
parties under the sections (c)(2) and (d)(2) above, shall be limited in
the following manner:

When IBM sublicenses the IA-64 Product containing Licensed SCO Materials
and/or SCO Project Work in Source Code form or when SCO sublicenses the
IA-64 Product containing Licensed IBM Materials and/or IBM Project Work
in Source Code form, the parties shall not grant the third party the
right to further grant source sublicenses to the other party's Licensed
Materials or Project Work. Further, when licensing such Source Code,
both parties shall only grant the right to create Derivative Works
required for the following purposes:

1. Maintenance and support;

2. Translation and localization;

3. Porting, optimization and extensions;

4. Any other Derivative Works agreed to by SCO and IBM.

3.0 TRADEMARKS/BRANDING

The parties agree that they will designate a name or common set of
trademarks to describe the family of UNIX operating system products
developed and/or licensed under this Agreement. The parties will have a
plan for such trademarks agreed to within a target date of 365 days from
the Effective Date of this Agreement, but in any event such plan shall
be agreed to and implemented before announcement of the IA-64 Product.
In the event the parties are unable to agree on such trademarks, neither
party shall be deemed in breach of this Agreement. Each party hereby
grants to the other party a license to the necessary trademark(s)
identified in such agreed to plan. The terms of such trademark license
shall be fully described as part of the plan referenced herein.

4.0 PRODUCT ROADMAP

A Product Roadmap for the IA-32 Product and the IA-64 Product will be
agreed to no later than the time period associated with execution of
Project Supplements A and B and will be attached hereto as Exhibit A.
Any modifications to the Product Roadmap shall be handled in accordance
with the Project Management process described in Section 8 below. The
parties agree to commit the necessary resources to execute the agreed-to
Product Roadmap.

5.0 PROJECT SUPPLEMENTS AND DEVELOPMENT OF PROJECT WORK:

5.1 Purpose and Effect of Project Supplements

The purpose of each Project Supplement is to set forth the parties
required contributions to execute on the agreed-to Product Roadmap,
including delivery and licensing of Licensed Materials, application of
development resources, and delivery of the Project Work, and any
variation from the application of the terms and conditions of this
Agreement to such Licensed Materials or the Project Work. Project
Supplements will be created which cover all development and integration
of all contributions to the IA-32 Product and the IA-64 Product during
the term of this Agreement. Unless mutually agreed otherwise in the
Project Supplement, SCO agrees to reimburse IBM for development
resources and technical support provided by IBM under the IA-32 Project
Supplement according to the terms of such Project Supplement. The terms
of such reimbursement will include the development rate of [*] per
person year and other terms as may be mutually agreed to in the Project
Supplement. Additional Project Supplements may be created or amended to
cover any other mutually agreed to development activities.

5.2 Content of Project Supplements

The initial Project Supplement A will address development of the IA-32
Product.. The initial Project Supplement B will address development of
the IA-64 Product. The initial Project Supplements A and B are planned
to be executed no later than 60 days after execution of this Agreement.
The parties agree to create a template which will serve as a checklist
for determining the content of subsequent Project Supplements. Each
Project Supplement shall generally contain a statement of purpose and
description of the following for that project:

a. the Deliverables, including the method and form of delivery and
minimum delivery requirements;

b. the Design Environment to be used for development of each
Deliverable, including any development tools which are not
Licensed Materials;

c. assignment of development responsibilities between the parties
for each item, including any development of test plans and
completion criteria.

d. planned schedule for completion and delivery of Deliverables,
including any applicable milestones and checkpoints;

e. estimated development resources to be applied by each party to
prepare the Deliverables assigned under the Project Supplement
and to provide level 3 support and Maintenance Modifications;

f. identification of any Licensed Materials, dependencies or third
party encumbrances or prerequisite licenses;

g. additional information or terms and conditions as may be
mutually agreed;

h. number, location and areas of development for development
location(s);

i. provision for written and oral progress reports; and

j. acceptance standards for Deliverables and/or reports, including
(i) documentation, specifications and standards, (ii) quality
standards, (iii) performance specifications and (iv) usability
and architecture requirements


6.0 DELIVERY OF LICENSED MATERIALS

6.1 Deliveries of Licensed Independent Materials

As soon as reasonably possible after execution of any Project Supplement
(unless otherwise stated in the Project Supplement), the licensor shall
deliver to the licensee one copy of any Licensed Independent Materials
specified in such Project Supplement, in the form as they then exist.

6.2 Access to and Delivery of Licensed Materials and Project Work

Subject to any third party restrictions identified and accepted in a
Project Supplement, each party is entitled to full free and continuous
access to all Licensed Materials and Project Work, both at the time of
completion and while under development pursuant to a Project Supplement.
IBM and SCO will provide electronic means for providing such access and
for exchanging the Deliverables. In addition, upon request, the party
responsible for developing a Deliverable that is under development shall
promptly deliver a tangible copy to the requesting party. Each party may
make such requests as frequently as necessary to reasonably achieve its
own development or product goals as set forth in a Project Supplement.

6.3 Offer and Delivery of Enhancements

During the term of the Agreement, each party shall, on an ongoing basis,
provide to the other party Enhancements to Deliverables and the Design
Environment as they are completed.

7.0 ACCEPTANCE OF DELIVERABLES

7.1 Payment of royalties or invoices will not be deemed acceptance of
Deliverables, but rather such Deliverables will be subject to
inspection, test and rejection. Each party's Deliverables may be tested
by the receiving party in accordance with the process generally outlined
in each Project Supplement, which may set forth the completion criteria,
testing method, test period and test cases which apply to Deliverables
under that Project Supplement (the "Acceptance Process"). Further
details of the Acceptance Process for a particular Project Supplement
may be established by the parties after execution of the Project
Supplement on a schedule set forth in the Project Supplement.

7.2 The receiving party shall provide to the contributing party written
notification of its acceptance or rejection of the contributing party's
Deliverables. In the case of rejection or partial or conditional
acceptance, such notification shall state the reasons for the receiving
party's determination. In the event the contributing party does not cure
the deficiencies stated in the notification, the receiving party may, at
its reasonable sole option, cure the deficiencies in any such
unacceptable Deliverables of the contributing party and make reasonable
adjustments to the receiving party's royalty obligations under Section
12.0 Royalties based on a calculation of their non recurring engineering
charges applied to cure such deficiencies.

8.0 PROJECT MANAGEMENT

Overview: The purpose of this Project Management process is to describe
the levels of project management, the authority of management at each
level to make certain decisions under the applicable Project Supplement
as well as across Project Supplements and the process by which those
decisions will be made. As further described below, certain decisions
will be made by the Technical Managers of each company named in each
Project Supplement, subject to further escalation to the Project
Managers. If the Project Managers are unable to agree on such matters,
the matter may be further escalated to the Executive Level of
management. If such Executive Level of management is unable to come to a
resolution, the process described in 8.2(d) below shall apply.

8.1 Management Levels

Project Management for each Project Supplement will include three
levels:

(a) Executive Level

(b) Project Level

(c) Technical Level

The individuals assigned to the Technical Level of project management
from SCO and IBM will be identified in the Project Supplement.

8.2 Executive Level Management

a. The Executive Level management is the ultimate management level
from which the overall projects are managed and directed. They
broadly define the project goals, functional requirements,
resources assigned to the projects, with specific scope where
required. The Executive Level of management shall be as follows:

For IBM: [*] For SCO: [*]

b. The Executive Level management sets the Product Roadmap,
strategic direction, monitors results, and agrees to high-level
project changes via an Executive Change Control Process, and
makes the ultimate decisions to resolve project direction and
contract interpretations. Executives will communicate with one
another as required and will meet periodically to review status
of the project. The timing of these executive meetings is
expected to be quarterly and executives may be represented by an
authorized substitute. At a minimum, executive review meetings
will address:

1. Project Supplement status;

2. Schedule status and outlooks;

3. Action items from previous meetings; and

4. Project issues and disputes, if any.

c. The Executives, or their authorized representatives must be
present at an executive review meeting in order for program
level decisions to be made. All decisions require mutual
agreement of the Executives. The Executives are the decision
makers on project level concerns. The following are areas
reserved for decisions either through an executive review
meeting or by these same Executives, or their authorized
representatives, operating as part of the Executive Change
Control Process, (described below):

(i) changes to the Product Roadmap, after it has been placed
under change control;

(ii) changes to project schedule dates which exceed an amount
specified by the Executive Level management;

(iii) changes to required resources which exceed a percent
specified by the Executive Level management of original
estimate;

(iv) changes to the assignment of work responsibilities
between the parties;

(v) confirmation that milestones and other schedule events
and project checkpoints have been achieved;

(vi) changes to the Change Control Processes described in
Section 8.7 through 8.10 hereof; and

(vii) setting product requirement objectives

(d) If, pursuant to the procedures set forth herein, the Executives
are unable to reach the necessary agreement concerning a matter
within their responsibility hereunder to decide, the following
results shall occur and shall be binding upon the parties;

(A) if the Executives are unable to agree to proposed
changes in a Project Supplement, neither party is
required to apply its development personnel under the
affected Project Supplement. However, all other
obligations under this Agreement remain unchanged.

(B) if the Executives are unable to agree to proposed
changes in the Product Roadmap, neither party is
required to apply any or all of its development
personnel under any or all of the Project Supplements.
However, all other obligations under this Agreement
remain unchanged.

(C) if a party withdraws their development resources under
subparts (A) and (B) above, the other party may make a
reasonable royalty adjustment via a royalty credit
against royalties payable under Section 12.0, Royalties,
based on a reasonable assessment of the value of the
development personnel withdrawn from the Project
Supplement(s).

(e) All reviews at the executive level will be completed only after
concurrence of the executives, or their authorized
representatives, is obtained.

8.3 Project Level Management

(a) For Project Supplements, the Project Level management shall
consist of one Project Manager appointed by each company as
follows:

For IBM: [*] For SCO: [*]

(b) The Project Managers will engage in the following activities:

(i) overall Project Level leadership and project management
for the applicable Project Supplement;

(ii) reviewing and tracking project accomplishments against
the formal plan and schedule;

(iii) acting as primary senior management interface between
IBM and SCO for the projects;

(iv) overall coordination with the Technical Manager of their
company's participation in the projects, management
guidance for their company's personnel, and ensuring
that their company's project efforts and Deliverables
conform to the detailed Project Work Specification and
other formal plans and schedules;

(v) reviewing changes to the assignment of work
responsibilities between the parties; and

(vi) changes to the Change Control Processes described in
Section 8.7 through 8.10 hereof.

8.4 Technical Level Management

(a) The Technical Level management shall consist of a SCO-appointed
Technical Manager and an IBM-appointed Technical Manager named
in the Project Supplement;

(b) The Project Managers, will provide guidance to the Technical
Managers of both companies to ensure execution of the Project
Supplement. This will clearly define the lines of technical
management guidance, consistent with either IBM's or SCO's
overall responsibility to ensure the successes of each project.
The IBM and SCO Technical Managers will cooperate on a
peer-level basis in order to define, implement, verify, review
and track their cooperatively made joint schedules. The IBM and
SCO Technical Managers will cooperate to ensure that the
appropriate people in each company are each aware of, and can
influence, any and all of the developments and proposed changes.
All development activity at this level must be understood and
agreed upon by the appropriate Technical Managers identified in
the Project Supplement. In instances of unresolved disagreement,
either the IBM or the SCO-appointed Technical Managers can
escalate to the Project Level of Management for a review and
decision.

8.5 Responsibilities of Each Level of Management

(a) Executive Level management responsibilities include:

(i) overall executive review and resolution of issues as
documented in Section 8.2 (c); and
(ii) provide guidance to Project Level management.

(b) Project Level management responsibilities include:

(i) manage the overall implementation of a Project
Supplement;

(ii) ensure overall consistency of all Project Work
Specifications, schedules and plans;

(iii) act as an escalation point for Technical Managers

(iv) ensure completion of all Deliverables identified in the
Project Supplement

(v) assessing proposed changes and make recommendations to
the executive level where appropriate;

(vii) meeting committed project key dates;

(viii) meeting project/product cost objectives;

(ix) participation in Executive Level reviews and decision
meetings;

(x) managing work sharing between the parties;

(xi) managing inter-company issues and initiation and
escalation to the Executive Level when necessary;

(d) If a decision exceeds Project Level responsibilities, (slippage
of key scheduled events, requirements for extra resources,
etc.), notification will be made to the Executive Level.

(e) Within the responsibilities of the Project Level, consensus will
be reached for decisions and corrective actions, where possible.
If no consensus can be reached, either Project Manager may take
the initiative to escalate the dispute to the Executive level.

(f) Technical Level responsibilities include:

(i) initiation of detailed project design concepts and
technical reviews;

(ii) work assignments of their respective personnel;

(iii) performance of the design implementations;

(iv) technical management of their respective development
activities;

(v) coordination of relevant programming group activities;

(vi) preparation of design status reports;


(vii) participate in design and program reviews;

(viii) identification to the Project level any projected or
actual deviations from the Project Work Specifications,
acceptance criteria, costs, resources, schedules and
definitions, and agreement terms and conditions;

(ix) document design results;

(x) produce data to verify compliance to specifications and
targets;

(xi) report development status to the Project Managers;

(xii) lead technical meetings

(xiii) proposing their company's formal detailed requests for
Project Work Specifications and updates and reviewing
the other company's proposals;

(xiv) proposing their company's desired design decisions and
reviewing the other company's proposal;

(xv) proposing changes to the Project Work Specifications
(after it has been placed under change control).

(xvi) verification of compliance to:

(A) Project Work Specifications

(B) performance targets

(C) standards; and

(xvii) establishing and managing a mutually agreed formal and
informal communications process to include design
reviews, status meetings, reports and necessary
documentation.


(g) If decisions exceed Technical Level responsibilities, Technical
Managers will involve Project Level Management for resolution;
and

(h) Within the responsibilities of the Technical Level, cooperation
with various SCO, IBM, and joint work groups will be
coordinated. Disagreements will be brought to the Project Level
for resolution.

8.7 Change Control

(a) All changes required relative to the Product Roadmap, and
Deliverables per the Project Supplements may be made only in
compliance with the with the formal Change Control procedure by
the appropriate Change Control Processes (CCP), which are
intended to enable the appropriate level of SCO and IBM
management to mutually agree on each change. All documents
related to the Agreement, are put under Change Control (base
lines).

(b) There are three levels of Change Control and at each level there
is a Change Control Process. The three CCPs are:

(i) The Executive CCP;

(ii) The Project CCP; and

(iii) The Technical CCP.

(c) The CCP's have the following functions:

(i) provide a forum for review of proposed changes to the
Product Roadmap and Deliverables defined in Project
Supplements as described below;

(ii) enable the appropriate representatives of each company
to review, accept, reject or redo proposed changes
within their authority;

(iii) attempt to resolve disputes.

Disputes at any level can be escalated to any of the three CCPs.

8.8 Executive CCP

The Executive CCP is carried out by the Executive Level management. The
Executive CCP is responsible for changes with deep impact on the
business, plans, features, resource allocations and any item or action
which exceeds the responsibilities of the Project CCP. The Executive CCP
controls changes or resolves disputes for:

(a) the Product Roadmap;

(b) required resources and financial considerations;

(c) work assignments between SCO and IBM;

(d) schedule events and checkpoints; and

(e) changes to the CCP.

Changes agreed to pursuant to this Executive CCP shall be memorialized
by an amendment to this Agreement or the Project Supplement in
accordance with the requirements of the Agreement.

8.9 Project CCP

The Project CCP is carried out by the Project Manager. The Project CCP
is responsible for changes, within ranges specified by the Executive
Level management, with impact on plans, functions and assignment of
resources and for any action or item which exceeds the responsibilities
of the Technical CCP. The Project CCP controls changes or resolves
disputes for:

(a) resources within a specified percentage of the program total;

(b) tracking program schedule events and checkpoints; and

(c) Project Supplements.


8.10 Technical CCP

The Technical CCP is comprised of the SCO and IBM Technical Managers.
The Technical CCP is responsible for changes in software developments
which do not impact overall product content, overall plans, or overall
program schedules. The Technical CCP controls changes or resolves
disputes for:

(a) detailed design approaches;

(b) detailed Code and Documentation related to the Deliverables;

(c) details of the Design Environment; and

(d) design level Project Work Specifications.

8.11 General Aspects of the Technical Management Process

(a) Any decisions subject to the Executive CCP of Section 8.8, which
pursuant to 8.8, requires an amendment to this Agreement, will
be binding on the parties only when set forth in a definitive
writing signed by authorized representatives of both parties.
Any amendment to the terms of this Agreement must be by
definitive writing specifying that it amends this Agreement
signed by authorized representatives of both parties.

(b) Changes to the Project Work Specifications, or Code and
Documentation for the Deliverables, other than those that are
subject to the Executive CCP of Section 8.8 and therefore
require amendment of this Agreement, require formal advance
written approval through the appropriate level of CCP. However,
the express provisions of the Agreement take precedence over any
such CCP approval.

(c) In no event will any procedure set forth in this Section 8 be
deemed to grant to one party the authority to act as an agent
for the other party, to make any binding commitments or
representations on behalf of the other party, to change any of
the Product Roadmap or Project Supplements on behalf of the
other party, or to change any of the provisions of the Agreement
on behalf of the other party.

(d) Each party may replace its management representative(s) at the
Executive Level, Project Level and Technical Level by written
notice to the other party.

(e) SCO and IBM managers will be responsible in all cases to
individually manage, pay, appraise and develop the careers of
their respective company's personnel assigned to the projects,
and procedures, compensation guidelines and the like for their
respective companies with respect to their employees assigned to
projects. The managers of one company shall not in any way
manage or supervise employees of the other company participating
in the project with respect to employment status, personnel
practices, policies, salary administration, performance planning
and review, or career development planning. Rather, they shall
provide the appropriate team operational guidance, technical
guidance and work environment to successfully execute the
approved projects.

9.0 DISTRIBUTION OF UNIXWARE 7 AND IA-32 PRODUCT

The following provisions will apply to IBM's distribution, in the form
of Object Code, of the IA-32 Product as well as UnixWare 7 and any
subsequent releases of UnixWare 7 ("hereinafter SCO Products").
Notwithstanding the foregoing, for the period of time from the Effective
Date of the Agreement through June 30, 1999, the Agreement Number 094690
between IBM and SCO executed by the parties on February 23, 1995, shall
apply to IBM's distribution of the UnixWare 7 products. IBM will have no
right to distribute the SCO Products in the form of Source Code,
provided, however, that IBM may, in any manner it sees fit and without
royalty to SCO, distribute any Licensed IBM Materials contained in the
SCO Products as well as any jointly created and jointly owned Project
Work which is contained in the IA-32 Product in accordance with the
licenses granted herein.

9.1 SCO Responsibilities

SCO will provide to IBM a golden master at no charge for the SCO
Products beginning with the Effective Date of this Agreement, as well as
for Enhancements and Maintenance Modifications as they are made
generally available by SCO via SCO's Standard Support Library.

SCO will provide, free of charge, reasonable sales training in the form
of "train the trainer" to IBM in the continental United States. Such
training will be offered upon each new major release of SCO Product.
Each Party will be responsible for any travel and living expenses of its
own employees and representatives for such training.

For the term of this Agreement and continuing for two (2) years
thereafter, SCO will offer IBM technical support (e.g. Engineering
Services, TEAM Services, and the like) upon such terms and conditions
and at such prices as are offered to SCO's OEM customers in general [*].

9.2 IBM's Responsibilities

IBM agrees to remarket SCO Product(s) solely in conjunction with IBM
computer systems which SCO acknowledges as "value add". However, IBM is
authorized to provide the SCO Products to end users on a stand alone
basis provided the total volume of the stand alone product does not
exceed five percent (5%) of the total volume of a particular
transaction.

All copies of the SCO Product Object Code and/or Documentation
reproduced by IBM shall include the copyright notice of SCO and/or its
suppliers, and all other proprietary markings as provided by SCO.
Prior to delivery to an End User, IBM shall assign a unique serial
number activation key ("SNAK"), as provided by SCO, with each SCO
Product. IBM may provide the same SNAK to an end user when a defective
storage containing the SCO Product is replaced or to be replaced.

IBM will endeavor to provide SCO with sales out reports on a quarterly
basis. Such reports shall include postal zip code or country code, if
applicable.

9.3 Use of SCO Product Names and Trademarks

SCO hereby grants to IBM, IBM Subsidiaries, its and their successors,
assigns, agents, and Distributors, a nonexclusive, irrevocable, royalty
free right and license to use, in connection with the marketing of the
SCO Products and/or Documentation, including any portions thereof only
in accordance with SCO's trademark guidelines, as contained in the
Attachment C entitled "SCO Trademark Guidelines".

9.4 License Fees

IBM will pay SCO license fees for the SCO Products in accordance with
prices and discounts offered by SCO to its OEM customers in general [*].

With respect to the SCO Products in the form of packaged product, SCO
will invoice IBM upon shipment, and IBM will pay such invoice within
thirty (30) days of receipt.

With respect to the SCO Products with are reproduced by IBM from the
golden master, IBM will make payment of license fees in the same fashion
as IBM will make payment for IA-64 Product which is reproduced, as set
forth in this Agreement.

Notwithstanding the foregoing, any time after the first anniversary of
this Agreement, IBM may request a review of the prices and discounts
offered by SCO hereunder. In reviewing any such request SCO will
consider the overall relationship between the parties, the marketing
efforts made by IBM with respect to the SCO Products, and the volume of
SCO Products distributed by IBM.

10.0 THIRD PARTY LICENSES/ROYALTIES

10.1 The provision of Licensed Materials from one party to the other may be
subject to third party encumbrances other than prerequisite licenses.
For example, the licensor's right to license such work to the licensee
may be subject to license limitations or payment obligations imposed on
the providing party by a third party, or the obligation to obtain a
prerequisite license from a third party. Any such requirements will be
specified in the applicable Project Supplement in the case of Licensed
Materials, or written notice from the licensor before delivery of the
affected materials in the case of Enhancements. To the extent such items
are specified in a Project Supplement and accepted by the licensee, the
licensee will comply with any applicable encumbrances, such as licensing
restrictions, or payment or reimbursement of any royalties or other fees
due to the third party. The parties intend that no fee shall be due the
licensor from the licensee except such amount as is required to be paid
to the third party. To the extent that one party has its own license to
Third Party materials that is less restrictive in terms of licensing
terms or license fees, that party may use the Third Party materials for
the development of Deliverables to the extent that such party's use of
the materials does not put the other party in default of any agreement
that the other party may have for the same third party materials.

10.2 Minimizing Encumbrances

To the extent reasonable, the parties intend to minimize or avoid the
use in Licensed Materials of Code, Documentation, or other materials
that are subject to such third party encumbrances. If the licensor
proposes to provide third-party Code or Documentation as part of its
Licensed Materials, and the licensor is unable to provide it under terms
at least as favorable to the licensee (in the licensee's judgment) as
the licenses and other provisions of this Agreement without additional
royalties or fees, then both parties must agree to such use.

10.3 Prerequisite Licenses

a. Pursuant to 10.1 and 10.2 above, the delivery and licensing of
Third Party Licensed Material from one party to the other
pursuant to this Agreement may be subject to the requirement
that the receiving party obtain certain prerequisite license(s)
directly from third-party licensors rather than from the other
party proposing inclusion of such materials through the Project
Supplement.

b. Where it is agreed to use such materials, prior to receipt from
the providing party under this Agreement of any applicable
portion of any third party Licensed Materials or Derivative
Works thereof, the licensee must have obtained the listed
prerequisite license(s) as required. Upon request from the
providing party, the other party will provide written assurance
of the existence of such license, and authorizes the other party
to verify the existence of such license directly with the
third-party licensor.

c. Notwithstanding anything herein to the contrary, the party
receiving Licensed Materials subject to a prerequisite license
shall be entitled to use such Licensed Materials only to the
extent of, and subject to all limitations in such prerequisite
license. The provisions of this Section 10.0 shall only apply to
third party Licensed Materials provided pursuant to this
Agreement and shall in no way change the rights and obligations
with respect to any materials licensed to IBM/SCO under any
other IBM/SCO agreement.

11.0 INVENTION RIGHTS

11.1 Ownership and License.

Each Invention, other than a Joint Invention, shall be the property of
the party whose employees make the Invention (hereinafter "Owning
Party"), subject to a license which the Owning Party hereby grants to
the other party under each such Invention and any patent protection
obtained therefor. The Owning Party shall promptly make a complete
written disclosure to the other party of each such Invention submitted
as an invention disclosure to the Owning Party's intellectual property
law department, specifically pointing out the feature or concepts which
it believes to be new or different.

11.2 Protection.

The Owning Party shall notify the other party promptly as to each
country in which it elects to seek protection by obtaining patent
rights, at its expense, and shall promptly provide the other party with
a copy of each application so filed. Upon written request, the Owning
Party will advise the other party of the status of any such application.
If the Owning Party elects not to seek such protection on an Invention
(other than a Joint Invention) in any country or to seek such protection
only in certain countries, it shall notify the other party, and the
other party shall have the right to seek such protection, at its sole
expense, on such Inventions in any country. If neither party elects to
seek any such patent protection, the Owning Party shall have the right
to publish such Invention after obtaining the prior approval of the
other party. The non-Owning Party may publish with permission of the
Owning Party. Title to all applications filed on such Invention and all
patents issuing thereon shall vest in the Owning Party subject to a
license under said patents hereby granted to the other party.

11.3 Joint Inventions.

Joint Inventions shall be jointly owned; title to all patents issued
thereon shall be jointly owned; all expenses incurred in obtaining and
maintaining such patents, except as provided hereinafter, shall be
equally shared; and each party grants to the other party the
unrestricted right to license third parties thereunder without
accounting or further permission from the granting party. In the event
that one party elects not to seek or maintain patent protection for any
Joint Invention in any particular country or not to share equally in the
expenses thereof with the other party, the other party shall have the
right to seek or maintain such protection at its sole expense in such
country and shall have full control over the prosecution and maintenance
thereof even though title to any patent issuing therefrom shall be joint
owned.

11.4 Assistance.

Each party shall give the other party all reasonable assistance in
obtaining patent protection and in preparing and prosecuting any patent
application filed by the other party, and shall cause to be executed
assignments and all other instruments and documents as the other party
may consider necessary or appropriate to carry out the intent of this
Section.


11.5 Scope of Licenses.

All licenses granted to IBM and SCO under this Section 11.0 shall be
worldwide, irrevocable (subject to Section 15.0, "Termination"),
nonexclusive, non-transferable; shall include the right to make, have
made, use, have used, lease, sell or otherwise transfer any apparatus,
and to practice and have practiced any method. All such licenses shall
include the right of the grantee to grant revocable or irrevocable
sublicenses at grantee's discretion to its Subsidiaries and the right of
such sublicensed Subsidiaries to correspondingly sublicense other
Subsidiaries, of the same or lesser scope as granted here, without other
permission or accounting. Except to the extent that royalties may be due
under the Agreement, the licenses stated in this Section 11.0 shall be
fully paid up.

11.6 No Implied Licenses.

Nothing contained in the Agreement shall be deemed to grant either
directly or by implication, estoppel, or otherwise, any license under
any patents or patent applications arising out of any other inventions
of either party.

12.0 ROYALTIES

12.1 Royalty Calculations

Each party shall pay royalties for the IA-64 Product as follows:

When either party licenses significant portions of the IA-64 Product, the
parties will pay a percentage of revenue recorded for license fees by the
parties for authorized copies of the IA-64 Product (or signficant portions
thereof), licensed to an end user by the parties, their Subsidiaries and its or
their Distributors as follows:

For SCO's distribution of the IA-64 Product, for the period of time during which
(i) SCO's total sales volume for the IA-64 Product represents less than [*] of
their total volume of UNIX for Intel architecture platforms and (ii) SCO's
cumulative royalties paid to IBM under this Agreement amount to less than [*]
(collectively, referred to as the "Initial Period"), SCO shall pay the following
percentage of revenue recorded for license fees by SCO:

Annual SCO IA-64 Volumes Royalty Percentage
- ------------------------ ------------------
[*] [*]

"Plan" shall mean the "SCO IA-64 Plan Volumes" [*] for the following years:

[*]

"SCO IA-64 Plan Volumes" shall not include any volumes associated with Special
Purpose Processors.

For the period of time during which (i) SCO's total sales volume for the IA-64
Product represents [*] or greater of their total volume of UNIX for Intel
architecture platform operating systems and (ii) SCO's cumulative royalties paid
to IBM under this Agreement equals [*] or more (collectively referred to as the
"Subsequent Period"), SCO shall pay the following percentage of revenue recorded
for license fees by SCO:

Annual SCO IA-64 Volumes Royalty Percentage
- ------------------------ ------------------
[*] [*]

SCO agrees to provide IBM with plan volumes for years after [*] if the Agreement
is renewed in accordance with Section 14.0, below. IBM will review such plan
volumes and determine their acceptability for the above purposes. If the
Agreement is not renewed, SCO shall pay [*] of net revenue if at the time of
expiration of the agreement, SCO is in the Initial Period. If at the time of
expiration of the Agreement, SCO is in the Subsequent Period, SCO shall pay [*]
of net revenue.

For IBM's distribution of the IA-64 Product, for the period of time during which
IBM's cumulative royalties paid to SCO under this Agreement amount to less than
[*] will be referred to as the "Initial Period". The period once IBM's
cumulative royalties paid to SCO under this Agreement equals [*] or more will be
referred to as the "Subsequent Period". For IBM's distribution of the IA-64
Product, IBM shall pay the following percentage of revenue recorded for license
fees by IBM for licensing of the IA-64 Product:

During the Initial Period During the Subsequent Period
- ------------------------- ----------------------------
[*] [*]

At the point in time in which either party meets the criteria described in their
respective "Subsequent Periods" above, both parties shall be entitled to
percentages associated with their respective Subsequent Periods.

For IBM's distribution of the IA-64 Product, when IBM includes the IA-64 Product
combined with other products or services, IBM will report and pay SCO the above
percent of the revenue recorded for license fees by IBM and IBM Subsidiaries for
the IA-64 Product licensed to an End User by IBM, IBM Subsidiaries or its or
their Distributors, which license fee will be based on the proportionate value
of the IA-64 Product to the IBM product, as reasonably determined by IBM taking
into account, among other things, investment recoveries, return on investment,
competitive considerations, etc.

For SCO's distribution of the IA-64 Product, when SCO includes the IA-64 Product
combined with other products or services, SCO will report and pay IBM the above
percent of the revenue recorded for license fees by SCO and SCO Subsidiaries for
the IA-64 Product licensed to an End User by SCO, SCO Subsidiaries or its or
their Distributors, which license fee will be based on the proportionate value
of the IA-64 Product to the SCO product, as reasonably determined by SCO taking
into account, among other things, investment recoveries, return on investment,
competitive considerations, etc.

Minimum Royalties

During the Initial Period:

Annually, three (3) months following the end of each calendar year, IBM will
calculate (based on its records of worldwide activity) the cumulative annual
amount of all license fees that would have been paid to SCO under this Agreement
during such calendar year if the minimum license fee of [*] of the IBM lowest
list price for a comparable license in effect during such annual period had been
used to calculate quarterly license fees instead of the applicable percent of
revenue rate.

Annually, three (3) months following the end of each calendar year, SCO will
calculate (based on its records of worldwide activity) the cumulative annual
amount of all license fees that would have been paid to IBM under this Agreement
during such calendar year if the minimum license fee of [*] of the SCO lowest
list price for a comparable license in effect during such annual period had been
used to calculate quarterly license fees instead of the applicable percent of
revenue rate.

During the Subsequent Period:

Annually, three (3) months following the end of each calendar year, IBM will
calculate (based on its records of worldwide activity) the cumulative annual
amount of all license fees that would have been paid to SCO under this Agreement
during such calendar year if the minimum license fee of [*] of the IBM lowest
list price for a comparable license in effect during such annual period had been
used to calculate quarterly license fees instead of the applicable percent of
revenue rate.

Annually, three (3) months following the end of each calendar year, SCO will
calculate (based on its records of worldwide activity) the cumulative annual
amount of all license fees that would have been paid to IBM under this Agreement
during such calendar year if the minimum license fee of [*] of the SCO lowest
list price for a comparable license in effect during such annual period had been
used to calculate quarterly license fees instead of the applicable percent of
revenue rate.

If the annual cumulative royalties paid or payable to the other party within
such annual period is less than the calculated royalties due based on the above
calculation, the party will pay the other party the difference in the next
scheduled royalty payment.

Special Purpose Processor - Minimum Royalties:

Annually, three (3) months following the end of each calendar year, IBM will
calculate (based on its records of worldwide activity) the cumulative annual
amount of all license fees that would have been paid to SCO under this Agreement
during such calendar year if the minimum license fee [*] for the Initial Period
and [*] for the Subsequent Period for Special Purpose Processor was in effect
during such annual period had been used to calculate quarterly license fees
instead of the applicable percent of revenue rate.

Annually, three (3) months following the end of each calendar year, SCO will
calculate (based on its records of worldwide activity) the cumulative annual
amount of all license fees that would have been paid to IBM under this Agreement
during such calendar year if the minimum license fee of [*] for the Initial
Period and [*] for the Subsequent Period for Special Purpose Processor was in
effect during such annual period had been used to calculate quarterly license
fees instead of the applicable percent of revenue rate.

If the annual cumulative royalties paid or payable to the other party within
such annual period is less than the calculated royalties due based on the above
calculation, the party will pay the other party the difference in the next
scheduled royalty payment.

[*]

Additional Royalties

Unless mutually agreed to in writing, the parties shall pay the additional
percentage royalties as defined in the table below for distribution of the IA-64
Product into the other party's Specific Channels. The parties will document the
Specific Channels no later than six (6) months prior to the first customer ship
of the IA-64 Product by either party.


The additional royalties shall be as follows:

[*]

"First Customer Ship" shall mean shipment under a volume supply agreement.

Minimum Royalties for Specific Channels:

During the Initial Period:

Annually, three (3) months following the end of each calendar year, IBM will
calculate (based on its records of worldwide activity) the cumulative annual
amount of all license fees that would have been paid to SCO under this Agreement
during such calendar year if the minimum percent in the table below of the IBM
lowest list price for a comparable license in effect during such annual period
had been used to calculate quarterly license fees for the Specific Channel
instead of the applicable percent of revenue rate above.

[*]

Annually, three (3) months following the end of each calendar year, SCO will
calculate (based on its records of worldwide activity) the cumulative annual
amount of all license fees that would have been paid to IBM under this Agreement
during such calendar year if the minimum percent
in the table below of the SCO lowest list price for a comparable license in
effect during such annual period had been used to calculate quarterly license
fees for the Specific Channel instead of the applicable percent of revenue rate.

[*]

During the Subsequent Period:

Annually, three (3) months following the end of each calendar year, IBM will
calculate (based on its records of worldwide activity) the cumulative annual
amount of all license fees that would have been paid to SCO under this Agreement
during such calendar year if the minimum percent in the table below of the IBM
lowest list price for a comparable license in effect during such annual period
had been used to calculate quarterly license fees for the Specific Channel
instead of the applicable percent of revenue rate.

[*]

Annually, three (3) months following the end of each calendar year, SCO will
calculate (based on its records of worldwide activity) the cumulative annual
amount of all license fees that would have been paid to IBM under this Agreement
during such calendar year if the minimum percent in the table below of the SCO
lowest list price for a comparable license in effect during such annual period
had been used to calculate quarterly license fees for the Specific Channel
instead of the applicable percent of revenue rate.

[*]

If the annual cumulative royalties paid or payable to the other party within
such annual period is less than the calculated royalties due based on the above
calculation, the party will pay the other party the difference in the next
scheduled royalty payment.

Notwithstanding the foregoing, neither party shall be required to pay the above
additional royalties when the IA-64 Product is packaged as a solution with a
computer system manufactured by or for the party with or without the party's
logo.

The parties obligations to pay any additional royalties described above shall
end on the earlier of the expiration of the initial term of the Agreement or
upon termination of the Agreement except for those Specific Channels where
either party was under the obligation to pay additional royalties at the time of
such expiration or termination of the Agreement.

12.2 Payment Obligations

Royalties are paid against revenue recorded by the parties in a royalty
payment quarter. In the U.S., a royalty payment quarter ends on the last
business day of the calendar quarter.

Outside of the U.S., a royalty payment quarter is defined according to
each party's current administrative practices. Payment will be made by
the last day of the second calendar month following the royalty payment
quarter. Each party will provide a statement
summarizing the royalty calculation with each payment. All payments will
be made in U.S. Dollars. Payments based on foreign revenue will be
converted to U.S. Dollars on a monthly basis at the rate of exchange
published by Reuters Financial Service on approximately the same day
each month.

Each party will be solely responsible for any taxes incurred by the
party, directly or indirectly, associated with its performance of this
Agreement.

12.3 Exceptions to Royalty Payment Obligations

Neither party shall pay the other a royalty for the Licensed Materials
or Derivative Works used for:

(a) internal use;

(b) development, maintenance and support activities;

(c) marketing demonstrations, customer testing or trial periods
(including early support, prerelease, encrypted or locked
sampler distributions not resulting in a license for full
productive use, or other similar programs);

(d) backup or archival purposes;

(e) Documentation provided with, contained in, or derived from the
Licensed Materials;

(f) Maintenance Modifications or Enhancements (unless otherwise
provided in a Project Supplement);

(g) licensing for no fee (except for reimbursement of distribution
costs) to third parties for non-commercial educational,
charitable or research purposes.

(h) returns, or copies destroyed by customers in lieu of returning
for which the customer is credited.

When a party uses the Licensed Materials for the above purposes, that
party will make their own copies of the Licensed Materials. If a party
orders a significant quantity of the other party's Licensed Materials,
the ordering party shall reimburse the other party for reasonable costs
of media.

[*]

12.5 Records

Each party will maintain relevant records to support payments made to
the other company. The records will be retained and made available for
two (2) years from the date of the related payment. If a party requests,
the other party will make these records available to an independent
certified public accountant chosen and compensated (other than on a
contingency basis) by the requesting party. The parties will put such
requests in writing, will provide the audited party 90 days prior
notice, and will make such requests no more than once per year. The
audit will be conducted during normal
business hours at the audited party's office in such a manner not to
interfere will the audited party's normal business activities. The
auditor will sign a confidentiality agreement and will only disclose to
the requesting party any amounts overpaid or underpaid for the period
examined.

The cost of such audit will be borne by the requesting party unless such
audit reflects an underpayment of more than 15% in the royalty payments
reported due by the audited party over the period of time being audited,
but in no event less than 1 year. In the event that the underpayment is
greater than 15% the audited party will reimburse the requesting party
for the cost of the audit.

13.0 FREEDOM TO MARKET

Subject to the terms and conditions of this Agreement, both parties
shall have full freedom and flexibility in the design and implementation
of its marketing programs for any Deliverables, including, without
limitation, the decision of whether to market or discontinue marketing
any particular Deliverable, the selection of marketing channels, the
timing and sequence of announcements and roll-out programs, the
determination of
pricing strategy, the specification of license terms, and the offering
of such Deliverables in connection with or as part of other software
products an systems and with any computer hardware equipment. Nothing in
this Agreement shall be construed as an obligation, guarantee or
commitment by either party that any Deliverable shall be announced or
marketed, or that any marketing effort will be productive of any level
of sales. The parties may agree to pursue specific marketing activities
as outlined in a Marketing Supplement executed by authorized
representatives of each party and attached to this Agreement.
Notwithstanding the foregoing, IBM agrees to include the IA-32 Product
in the IBM marketing programs outlined in Attachment A for a minimum
period of one year from the Effective Date of the Agreement. IBM will
identify an IBM contact responsible for the marketing programs outlined
in Attachment A. The scope and contributed resources and expenditures
for such IBM marketing programs shall be at IBM's sole discretion.

14.0 TERM

[*]

15.0 TERMINATION

Except as expressly provided in this Section 15.0, neither party will
have the right to terminate this Agreement or any Project Supplements
executed hereunder. This Agreement may only be terminated in accordance
with the following:

15.1 Termination for Cause

In the event either party materially breaches or defaults on the terms
and conditions of this Agreement, the non-breaching party shall attempt
to resolve the problem through the Project Management process. If the
parties are unable to reach a resolution through the Project Management
process, the non-breaching party may at its option, exercise one of the
following remedies:

(i) Termination of this Agreement if the breach or default is of
this Agreement or of a Project Supplement hereunder that is
material to it, upon ninety (90) calendar days' written notices,
unless the breaching party cures the breach within such ninety
(90) day notice period provided however, that if the breach is
such that it cannot reasonably be cured within ninety (90) days,
then the breaching party must commence cure within ninety (90)
days and proceed to cure with due diligence to avoid termination
for breach.

(ii) Termination of one or more Project Supplements, if the breach or
default is of such Project Supplement, upon ninety (90) calendar
days' written notice, unless the breaching party cures the
breach within such ninety (90) day notice period provided
however, that if the breach is such that it cannot reasonably be
cured within ninety (90) days, then the breaching party must
commence cure within such ninety (90) days and proceed to cure
with due diligence to avoid termination for breach. Upon receipt
of notice of such termination, the breaching party shall inform
the non-
breaching party of the extent to which performance has been
completed through such date and shall deliver to the
non-breaching party whatever work product then exists in a
manner prescribed by the non-breaching party. The breaching
party shall be paid or credited only for those royalties or
other payments properly due to the breaching party from the
non-breaching party pursuant to this Agreement subject, however,
to a setoff, credit and/or payment to the non-breaching party,
of damages or losses incurred by the non-breaching party.

15.2 Change of Control

Notwithstanding Section 15.1, IBM shall have the right to terminate this
Agreement immediately upon the occurrence of a Change of Control of SCO
which IBM in its sole discretion determines will substantially and
adversely impact the overall purpose of the cooperation set forth by
this Agreement and applicable Project Supplements or will create a
significant risk or material and adverse exposure of IBM's confidential
and/or technical proprietary information (which is subject to, and to
the extent of, confidentiality restrictions) ("Information"). For
purposes of this Agreement, control shall be deemed to be constituted by
rights, contracts or any other means which, either separately or jointly
and having regard to the consideration of fact or law involved, confer
the possibility of exercising decisive influence (other than by an
entity currently exercising such influence or any entity controlled by
or controlling such entity) on SCO by:

1. owning more than half the equity, capital or business assets, or

2. having the power to appoint more than half of the members of the
supervisory board, board of directors or bodies legally
representing SCO, or

3. having the right to directly manage SCO's business activities.

Subject to a plan deemed adequate by IBM to protect its Information, the
parties will agree to a wind-down period for activities under this
Agreement in case of termination for Change of Control. Such wind-down
period will take into consideration the party's outstanding commitments
relating to this Agreement and will not be less than 6 months. Any New
Entity (defined below) identified in Attachment B shall not be entitled
to any benefit of licenses granted by IBM under this Agreement in
relation to the IA-64 Product and shall not be entitled to receive any
Information, (including during any wind-down period). "New Entity" means
the entity assuming control as described in subparagraphs 1 through 3
above and all of such entity's then current subsidiaries and affiliates.
IBM's right to the Project Work upon a Change of Control shall be in
accordance with Section 15.4.

15.3 Bankruptcy or Insolvency

Notwithstanding Section 15.1 above, either party shall have the right to
terminate this Agreement immediately if the other party becomes
insolvent, files or has filed against it a petition under bankruptcy
law, proposes any dissolution, liquidation, composition, financial
reorganization or recapitalization with creditors, makes an assignment
or trust mortgage for the benefit of creditors, or if a receiver
trustee, custodian or similar agent is appointed or takes possession of
any property or business. IBM's right to the Project
Work upon the occurrence of one of the events described in this Section
15.3 as it relates to SCO, shall be in accordance with Section 15.4.
SCO's right to the Project Work upon the occurrence of one of the events
described in this Section 15.3 as it relates to IBM, shall be in
accordance with Section 15.4.

15.4 Effect on Rights

(a) Termination or expiration of this Agreement or of a Project
Supplement by either party shall not act as a waiver of any
breach of this Agreement or of the effected Project Supplement
and shall not act as a release of either party from any
liability for breach of such party's obligations under this
Agreement.

(b) Notwithstanding any provision in this Agreement to the contrary,
licenses and sublicenses to end users granted by either party
prior to the effective date of termination are irrevocable and
shall survive the termination or expiration of this Agreement.

(c) In the event of termination or expiration of this Agreement or a
Project Supplement in accordance with Section 15.1 above, all
licenses granted to the breaching party prior to termination
shall remain in effect, subject to all terms and conditions
applicable hereunder, including applicable payment provisions.

(d) In the event of termination of this Agreement in accordance with
Section 15.3 and/or Section 15.2 where such New Entity is a
company identified in Attachment B, SCO shall promptly: (i)
return to IBM or destroy all copies of the Project Work and the
IBM Licensed Materials, in tangible or electronic form,
including any IBM Third party Licensed Materials, in SCO's
possession or control provided by IBM in connection with the
IA-64 Product and (ii) provide IBM with a written statement
certifying that SCO has complied with the foregoing obligations.
All licenses granted to SCO prior to termination in connection
with the IA-64 Product shall also terminate.

(e) In the event of termination of this Agreement in accordance with
Section 15.2 where such New Entity is a company identified in
Attachment B, and where IBM is still marketing and offering for
licensing the IA-64 Product, IBM agrees to offer to such New
Entity an object code license and distribution agreement based
on IBM's reasonable standard terms for such distribution.

16.0 NOTICE AND RIGHT TO PARTICIPATE ON CHANGE OF CONTROL

16.1 Notice

During the term of the Agreement, if SCO receives an offer to merge
with, sell shares representing 50% or more of the voting power of SCO,
or sell all or substantially all of SCO's assets to any company such
that the SCO Board of Directors either authorizes management to accept
the offer or pursue further discussions with the offeror, prior to
acceptance of any such offer or initiation of such discussions, SCO
shall promptly upon such Board of Director's authorization, deliver a
notice (an "Acquisition Notice") to IBM, which Acquisition Notice shall
be kept confidential by IBM. The Acquisition Notice shall set forth the
proposed material terms of the merger, sale or acquisition,
including the structure and price terms of the merger, sale or
acquisition, the name and address of the party proposed to acquire or
merge with SCO and the date on or about which sale or merger is proposed
to be made.

16.2 Right to Participate

Upon IBM's receipt of the Acquisition Notice, IBM shall be given a
reasonable period of time not to exceed fifteen (15) days and
opportunity to determine whether IBM wishes to submit its own proposal
("Acquisition Proposal"). In the event IBM submits to SCO an Acquisition
Proposal, SCO agrees to give such Acquisition Proposal due consideration
by the SCO Board of Directors. SCO further agrees to engage with IBM to
discuss the terms of the Acquisition Proposal in good faith and IBM
agrees to promptly make itself available for such discussions. If the
Acquisition Proposal is not accepted by the SCO Board of Directors, SCO
will promptly notify IBM before accepting the terms of any Acquisition
Notice (including any later forms such Acquisition Notice may take).

17.0 CONFIDENTIAL INFORMATION

Except as expressly set forth in the Section entitled "Public
Disclosure", neither Party has an obligation of confidentiality under
this Agreement. Should the Parties desire to exchange confidential
information, it shall be handled under an appropriate Supplement to the
Agreement for the Exchange of Confidential Information ("AECI")
#4997AU6595.

18.0 PUBLIC DISCLOSURE

Each Party agrees to take reasonable measures not to disclose the terms
of this Agreement without the express written consent of other Party,
except as may be required by law or government rule or regulation, or to
establish its rights under this Agreement; provided, however that if one
Party is seeking to disclose such information for reasons not requiring
the other Party's written consent, then the disclosing Party shall limit
disclosure to the extent required, shall allow the other Party to review
the information to be disclosed prior to such disclosure, and shall
apply, where available, for confidentiality, protective orders, and the
like. For purposes of SCO's compliance with Securities and Exchange
Commission ("SEC") rules or regulations, the foregoing obligations shall
be satisfied by SCO providing IBM with timely notice of the content of
the applicable disclosure documents, provided that such disclosure does
not contain IBM Confidential Information, provided, however, that SCO
shall consult with IBM on which information shall be redacted from any
applicable disclosure documents. Such review under this Section shall
not be construed to make reviewing Party responsible for the contents of
the disclosure and disclosing Party shall remain solely responsible for
such content.

19.0 REPRESENTATIONS AND WARRANTIES

19.1 Each party represents and warrants that it is under no obligation or
restriction, nor will it assume any such obligation or restriction,
which would in any way interfere or be inconsistent with or present a
conflict of interest concerning its performance under this Agreement.

19.2 Each party represents and warrants that, to the best of its knowledge,
the Deliverables do not contain any harmful code. Each party shall
enforce procedures to prevent negligent incorporation of such harmful
code into Deliverables and shall promptly notify the other party of any
knowledge or suspicion of any such incorporation of harmful code into
Deliverables.

19.3 Both parties represent and warrant the originality of any work prepared
hereunder, and that no portion of the materials prepared for or supplied
to the other party under this Agreement, including the use or
distribution of the materials, violates any copyright, patent,
trademark, trade secret or similar intellectual property rights of any
third party.

19.4 Both parties represent and warrant that they have or will obtain, prior
to the commencement of work under this Agreement, appropriate agreements
with their employees who will be involved or others whose services they
may require in the performance under this Agreement, sufficient to
enable them to comply with all the terms of this Agreement.

19.5 Each party represents and warrants that it shall comply with all
obligations, duties and responsibilities set forth in this Agreement.

19.6 Except as provided herein, neither party makes any warranties nor
assumes any liability in connection with this Agreement including but
limited to the accomplishment, completion or correctness of any result
of work effort under this Agreement. EXCEPT AS PROVIDED HEREIN ALL
INFORMATION, MATERIALS OR SERVICES FURNISHED BY IBM AND/OR SCO PURSUANT
TO THIS AGREEMENT ARE ON AN "AS-IS" BASIS WITHOUT WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

20.0 LIMITATION OF LIABILITY

20.1 In no event shall either party be liable to the other for lost profits,
lost savings, or other consequential, incidental or punitive damages
resulting from breach of this Agreement even if advised in advance of
the possibility of such losses or damages. The foregoing limitation
shall not apply to any liabilities under Section 21.0,
"Indemnification".

The entire liability of each party under this Agreement for actual
damages for any cause whatsoever, regardless of the form of action,
whether in contract or tort including negligence, shall be limited to
Five Million Dollars ($ 5,000,000). This limitation of liability will
not apply to claims for royalties due under this Agreement, personal
injury, copyright and/or patent infringement or damage to real or
tangible personal property caused solely by the other party's
negligence, or for any liabilities under Section 21.0,
"Indemnification".

Except as may otherwise be provided in this Section, neither party shall
be liable for any delays, losses or other damages which may result from
the furnishing of any equipment, programs, publications, information or
services to the other party under this Agreement.

21.0 INDEMNIFICATION

21.1 Each party agrees to protect, defend, hold harmless and indemnify the
other party, their Subsidiaries and their Distributors from and against
any and all claims, actions, liabilities, losses, costs and expenses
arising out of any actual or alleged: (a) infringement of any patent,
trademark, trade name, copyright or mask work right or violation of any
trade secret or other proprietary rights by the contributing party's
Deliverables and related materials furnished to the other party
hereunder; and/or (b) acts, failure to act, or negligence by the
contributing party. The contributing party shall pay all damages,
expenses, costs, including but not limited to reasonable attorney's fees
resulting from all such claims or proceedings against the other party,
their Subsidiaries and their Distributors and their successors and
assigns, provided that such payment shall be contingent on: (i) notice
by the other party to the contributing party in writing of such claim to
enable the contributing party to defend or mitigate the same; (ii)
cooperation by the other party with the contributing party in the
defense thereof, of which the contributing party shall have control at
the contributing party's expense; and (iii) the other party's obtaining
the contributing party's prior written approval of any settlement by the
other party of such matters (which approval shall not be unreasonably
withheld). If, pursuant to any such claim, the other party's rights to
the contributing party's Deliverables is restricted, the contributing
party shall, at its sole option (i) procure for the other party the
right to continue to use, sell and license the infringing Deliverables;
or (ii) modify the infringing Deliverables, provided the functionality
thereof is not substantially affected, so as to make it non-infringing;
or (iii) replace the infringing Deliverables with non-infringing ones
that comply with this Agreement; or (iv) require the other party, upon
written notice, to return the infringing Deliverables for a full refund
of all amounts paid by the other party under this Agreement.

21.2 Notwithstanding 21.1 above, the contributing party shall not have an
obligation regarding any claim based on the following:

(a) recipient's modification of contributor's Deliverables, or
recipient's use of a Deliverable in other than its operating environment
as defined in the applicable Project Work Specification; or

(b) the combination, operation or use of a Deliverable by recipient with
any product, data or apparatus that the contributing party did not
provide.

22.0 GENERAL

22.1 Force Majeure

Neither party shall be held responsible for any delay or failure in
performance under this Agreement arising out of causes beyond its
control, or without its fault or negligence for as long as the cause
exists and continues to prevent such performance. Such causes may
include, but are not limited to: fires, strikes, freight embargoes,
civil commotions, epidemics, quarantine restrictions, acts of God, acts
of public enemy, acts of governmental or regulatory agencies, or
national disasters.

22.2 Notices/Coordinators

All contractual communications between the parties under this Agreement,
including legal notices, shall be carried out through or under the
supervision of the following
contract coordinators listed below. Any legal notice shall be
sufficiently made or given on the date of mailing if sent to such party
by facsimile transmission ("FAX") or by certified mail, postage prepaid,
courier or express mail and addressed to the address set forth below.

For IBM: International Business Machines Corporation
Craig Schneider, M/S 4106
11400 Burnet Road
Austin, Texas 78758
Phone: 512-823-8694 FAX: 512-823-8712

For SCO: The Santa Cruz Operation, Inc.
Kimberlee Madsen
Law and Corporate Affairs
400 Encinal Street
Santa Cruz, California 95060
Phone: 831-427-7822 FAX: 831-427-5474

Each party may change the aforesaid coordinators and/or addresses at any
time by written notice to the other party's contract coordinator.

22.3 Choice of Law/Venue

This Agreement shall be governed by, and the legal relations between the
parties hereto shall be determined in accordance with, the substantive
laws of the State of New York, without regard to the conflict of laws
principles of such State, as if this Agreement was executed in and fully
performed within the State of New York. Each party hereby waives any
right to a trail by jury in any dispute arising under or in connection
with this Agreement, and agrees that any dispute hereunder shall be
tried by a judge without a jury. Any legal or other action related to a
breach of this Agreement must be commenced no later than two (2) years
from the date of the breach in a court sited in the State of New York.

22.4 Headings

Headings used in this Agreement are for convenience of reference only
and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.

22.5 Independent Contractors

Each party is acting solely as an independent company. This Agreement
shall not be construed to establish any form of partnership, agency,
franchise or joint venture of any kind between SCO and IBM, nor to
constitute either party as a agent, employee, legal representative, or
any other form of representative of the other. This Agreement shall not
be construed to provide for any sharing of profits or losses between the
parties.

Each party agrees that it has entered into, or will enter into,
agreements with its employees, contractors, licensees or other
applicable third parties, as necessary for it to comply with all of its
obligations under this Agreement.
Each party acknowledges that it has not relied on any promises,
inducements, representations or other statements made by the other party
regarding the commercial viability, profitability or success in the
marketplace of any products or services, and that each party's decision
to enter into this Agreement is made independently from the other party.

22.6 Freedom of Action

Nothing in this Agreement shall be construed as: (1) prohibiting or
restricting either party or their Subsidiaries from independently
developing, having developed independently, acquiring, licensing,
distributing or marketing products, services and other materials which
are competitive in any form with the Deliverables, (2) except that
deliverables are subject to Section 13.0, Freedom to Market,
guaranteeing that either party or their Subsidiaries shall announce,
market, or otherwise offer for sale or lease, any product or service or
the success of its marketing efforts, if any, or (3) affecting either
party's pricing of products or services. Each party is free to enter
into similar agreements with other parties.

22.7 Compliance with Laws/Regulations

Each party will comply, at its own expense, with all statutes,
regulations, rules, ordinances, and orders of any governmental body,
department or agency which apply to or result from that party's
obligations under this Agreement.

22.8 Workplace Safety

Both parties shall endeavor to provide a safe environment free from
violence and threats of violence for all employees and contractors of
the other party while such employees and contractors are on IBM or SCO
premises. Each party has taken or will take appropriate preventative
steps to ensure that anyone directly or indirectly employed by the other
party who enters IBM or SCO premises does not have a background of
violent behavior in the workplace and that such person is not employed
by their subcontractors to perform work on the other party's premises.

22.9 Presence on Other Party's Premises

(a) When the employees of SCO are present on the premises of IBM
pursuant to the requirements of a Project Supplement under this
Agreement, and when employees of IBM are present on the premises
of SCO pursuant to the requirements of a Project Supplement
under this Agreement, each host company shall, at no expense to
the other, provide such employees of the other an office,
telephone and secretarial support, as well as mutually agreed
upon access to data processing equipment and telecommunication
attachment therefor, to the extent any and all of the foregoing
shall be required by the respective employees of SCO and IBM to
carry out the obligations of a Project Supplement.

(b) When present on the site of the other company, IBM and SCO
employees assigned to the other company's site shall comply with
all rules applicable to contractor personnel resident at or
visiting such other company's site. Each company having
employees of the other assigned to its premises hereunder shall
provide the other
company a set of documents setting forth all such rules
applicable to contractor personnel resident at or visiting its
premises.

22.10 Solicitation

To the extent permitted by law, during the term of this Agreement, each
party agrees not to knowingly solicit for employment purposes the
employees of the other party during the time such employees are
performing work under this Agreement. Neither party shall make any
payment or gift of any value to any employee of the other party assigned
to a Project Supplement under this Agreement, without the employing
party's prior written approval, nor shall either party make any
representations that might cause an employee to believe that an
employment relationship exists between such employee and the other
party.

22.11 Amendment/Waiver

No amendment, modification or waiver of any provision of this Agreement
shall be effective unless it is set forth in a writing which refers to
the provisions so affected and is signed by an authorized representative
of each Party. No failure or delay by either party in exercising any
right, power or remedy will operate as a waiver of any such right, power
or remedy.

22.12 Assignment

Neither party may assign, or otherwise transfer, its rights or delegate
any of its duties or obligations under this Agreement without the prior
written consent of the other party. Notwithstanding the foregoing,
either party may assign or otherwise transfer this Agreement, or
delegate its duties and obligations under this Agreement, in whole or in
part, to a Subsidiary . Further, IBM may assign or otherwise transfer
this Agreement, or delegate its duties and obligations under this
Agreement in connection with the sale or transfer of substantially all
of the assets of a business unit of IBM, without the consent of SCO
provided the assignee agrees in writing to assume all of the obligations
of the transferring party under this Agreement, but IBM will promptly
notify SCO of any such assignment or transfer. Notwithstanding the
foregoing, IBM agrees that it will not assign or otherwise transfer this
Agreement or delegate its duties and obligations under this Agreement to
the entities listed in Attachment B.

22.13 Order of Precedence

In the event of an inconsistency, the order of precedence shall be:

(a) this Agreement;

(b) any Attachment(s) to this Agreement;

(c) any Project Supplements to this Agreement;

(d) any price, quantity, and delivery schedules contained in
Purchase Order(s) issued hereunder (delete if no P.O.'s
issued).

Any terms contained in any invoices, acknowledgments, shipping
instructions or other forms issued under or in connection with this
Agreement that are inconsistent with, different from or additional to
the terms of this Agreement shall be void and of no effect.

22.14 Severability

If any provision of this Agreement is held to be illegal, invalid or
unenforceable, the legality, validity and enforceability of the
remaining provisions shall not be affected or impaired.

22.15 Survival

Any provisions of this Agreement that by their nature extend beyond
termination or expiration will survive in accordance with their terms.
These include 2.0 (only as set forth in 15.4), 9.0, 10.0, 11.0, 12.0,
15.4, 17.0, 18.0, 19.0, 20.0, 21.0. These terms shall apply to either
party's successors and assigns.

22.16 Former Employees

Each party shall make reasonable efforts to inform the other if and when
it plans to assign a person to work with employees of the other party,
who shall have been a former employee of the other party within 24
months, to work that is the subject of this Agreement. Each party
reserves the right to approve or disapprove such an assignment.

22.17 Responsibility for Employees

IBM and SCO each shall be responsible for the selection, screening and
proper documentation of its employees who will be assigned to work
pursuant to this Agreement and Project Supplements hereunder. Each party
shall bear all travel, living, moving salary, benefits and similar
expenses involved in providing its employees to meet the requirements of
this Agreement, unless otherwise agreed in writing.


22.18 Export of Technical Data

Neither party shall, nor shall either party authorize or permit its
employees, agents or subcontractors to, export or re-export any Project
Work, any Licensed Materials of the other party, or any process, product
or service that is produced under this Agreement to any country, or
representative of such country, specified as a prohibited destination in
applicable United States federal, state and local laws, regulations and
ordinances, including the Export Regulations of the U.S. Department of
Commerce, the U.S. Department of Treasury and/or the U.S. State
Department, without first obtaining applicable governmental approval.

22.19 Entire Agreement

The provisions of this Agreement, including any attachments, appendices,
exhibits, and the agreements expressly incorporated herein by reference,
constitute the entire agreement between the Parties and supersedes all
prior intentions, proposals, understandings, communications and
agreements, oral or written, relating to the subject matter of this
Agreement. This Agreement will not be binding upon the parties until it
has been signed by each party's authorized representative.

22.20 Counterparts

This Agreement may be signed by each party's respective duly authorized
representative in one or more counterparts, each of which shall be
deemed to be an original and all of which when taken together shall
constitute one single agreement between the parties hereto.

22.21 Agreement Reproductions

Any signed copy of this Agreement made by reliable means (e.g. photocopy
or facsimile) is considered an original.

In witness whereof, the parties hereto have caused this Agreement to be executed
by their respective authorized representatives

INTERNATIONAL BUSINESS THE SANTA CRUZ OPERATION,
MACHINES CORPORATION INCORPORATED

By: /s/John E. Kelly III By: /s/ Douglas L. Michels
-------------------------------- --------------------------------
John E. Kelly III Douglas L. Michels
Vice President President and Chief Executive
Officer

Date: October 26, 1998 Date: October 26, 1998

Attachment A

I. IBM intends to engage in at least the following marketing activities to
market, promote and sell the Unixware and the IA-32 Product on IBM systems in
1999 with a minimum cumulative funding of Five Million Dollars in the first
year:

* Unix on Intel Awareness Campaign

* Increased WW Business Show Presence

* Enable Support Centers for UnixWare and IA-32 Product

* ISV Recruitment (exclusive of payments from Intel/IBM ISV fund)

* Training of Sales Reps (including direct and channels) and
Geography personnel

* Channel Strategy Programs (including development of Channel
Solutions Offerings)

* Netfinity Development and Programs

* Expand SCO engagement with major IBM Segment Stategy (e.g.,
e-business)

* Jointly Developed Business Propositions (e.g., Network Computing
in Retail)

* General Marketing/Communication material development


II. Separate from the activities under I. above, IBM will make certain IBM
middleware available for the UnixWare 7 and IA-32 Product platform based on
IBM's own determination of commercial considerations. At a minimum, however, IBM
plans to make the following middleware available for the IA-32 or UnixWare 7
Product:


- MQ-series

- DB2

- eNetwork Directory

- Net.Data

- IBM Websphere

- Commserver

- Tivoli Management Software

- Network Station Manager

ATTACHMENT B

[*]


ATTACHMENT C
TRADEMARK

AND

LOGO

USAGE

GUIDELINES


TRADEMARKS AND SERVICE MARKS ARE THE VALUABLE INTELLECTUAL PROPERTY OF THE SANTA
CRUZ OPERATION, INC. PLEASE TREAT THEM PROPERLY, IN ACCORDANCE WITH THESE
GUIDELINES. CONTACT THE LAW AND CORPORATE AFFAIRS DEPARTMENT TO OBTAIN THE MOST
CURRENT LIST OF SCO, IXI AND VISIONWARE TRADEMARKS OR IF
YOU HAVE ANY USAGE QUESTIONS.


-----------------------------------------------
TRADEMARK AND LOGO USAGE GUIDELINES


TABLE OF CONTENTS:

Definition
The Santa Cruz Operations, Inc.
Trademark Symbols
Trademarks are Adjectives
Plural, Posessive, Hyphens & Slashes
Don't Shorthand
Ownership Footnote
Corporate Name
Use of the UNIX and SCO UnixWare Trademarks
Use of the SCO OpenServer Trademark

Use of the Tarantella Trademark
Use of SCO Trademarks and Logos by Third Parties
Third Party Obligations

List of SCO Trademarks
List of IXI Trademarks
List of Visionware Trademarks
IP review by Legal Department

___________________________________________________

INTRODUCTION


DEFINITION OF MARKS

A trademark identifies the source or sponsor of a product and a service mark
identifies services of one company from another company ("marks"). Marks may
consist of a variety of words and symbols. For example, a design of a tree (aka
logo), a number, a slogan (aka tag line), a sound and a smell can be trademarks.
Marks promoted by good advertising and consistent product or service quality
create a strong and distinct impression for a business in a particular industry.

THE SANTA CRUZ OPERATION, INC.

The Santa Cruz Operation, Inc. (SCO) owns a number of registered, unregistered
trademarks, and service marks (including various corporate, product, and program
logos). SCO trademarks are valuable company assets because they identify our
products or services to current and potential customers. Our product, service
and program names, when used properly, are protected by established trademark
law. If trademarks are used incorrectly, or not at all, they can, over a period
of time, fall into general public use and lose their protective value. This
could damage the reputation of SCO by giving others the opportunity to adopt or
misuse the names that should be uniquely associated with SCO products and
services. THEREFORE, PLEASE TREAT SCO'S TRADEMARKS PROPERLY, IN ACCORDANCE WITH
THESE GUIDELINES.

A list of SCO's, and its subsidiaries (IXI and Visionware) trademarks appear at
the end of these Guidelines on page 6. Please refer to this list and the usage
guidelines when preparing your web pages, videos, contests, posters,
commercials, brochures, presentations, external correspondence, publications,
marketing materials, packaging materials, manuals, ads, foils, slides, etc.
(anything that could possibly be seen externally-see page 10 for more details ).
Please understand that this list changes frequently and all such prepared
materials additionally require the Legal Department's review.

- -------------------------------
PROPER TRADEMARK USAGE
- -------------------------------

TRADEMARK SYMBOLS:

As discussed above, SCO's marks are used to identify SCO products or services.
Some of the marks have been registered in the U.S.A. as well as other countries,
and others are pending registration. Registered trademarks and registered
service marks are denoted by the "(R)" symbol. Marks for which protection is
claimed but not registered are denoted by the "(TM)" symbol. When a claimed mark
refers to a service, the mark is denoted by the "(SM)" symbol. These marks
should be used consistently, and in such a way that they
are easy to distinguish. The (R), (TM), and (SM) symbols should run as
superscript immediately after the trademark or service mark. If superscript is
not available, use parentheses: (circle-R) or (TM) or (SM). SCO trademarks and
service marks need only be denoted the first time they appear in a particular
text or copy.

After the initial notation of a trademark symbol, the symbol need not appear
with the product name again except for the following exception. If a trademark
is used and noted with its proper trademark symbol, and then the trademark is
again used by combining it with another trademark, the trademark should be cited
again, unless the mark is part of the complete trademark. EXAMPLE: Even if you
used SCO(R) earlier in the text, now you must use SCO(R) UNIX(R) so that it does
not seem like the complete mark is SCO UNIX vs. two separate trademarks.
However, since "SCO OpenServer" is the complete name of the trademark and is not
two separate trademarks, "SCO" does not get noted again with the (R) symbol.

TRADEMARKS ARE ADJECTIVES:

Per Trademark Law, a trademark is an adjective modifying a generic noun for the
product or service. EXAMPLE: "SCO(R) UnixWare(R) system" where "system" is the
generic noun. However, because it is sometimes cumbersome to continually use a
trademark as an adjective in certain marketing materials, we have developed the
following as an alternative method. At the first occurrence of the trademark,
use it as an adjective followed by a noun, and then qualify the trademark by
putting it in parentheses and quotes so later uses of the mark may be used
without a noun:

EXAMPLE: SCO OpenServer systems ("SCO OpenServer") is today's leading operating
system. SCO OpenServer runs critical day-to-day business operations.

This alternative method is NOT to be used with the UNIX trademark.

PLURAL, POSSESSIVE, HYPHENS & SLASHES

In addition, a trademark should not be used in the plural form or as a
possessive. Instead, the modifying noun should be used in the plural form or as
a possessive. See the following examples:

INCORRECT USAGE: SCO UnixWare's

CORRECT USAGE: SCO UnixWare System's

Additionally, the trademark should not be used in a combination form using a
hyphen or a slash with the modifying noun or another trademark. See the
following examples:

INCORRECT: SCO UnixWare-compatible

SCO OpenServer/SCO UnixWare

CORRECT USAGE: SCO UnixWare System compatible

SCO OpenServer and SCO UnixWare Systems

DON'T SHORTHAND

Trademarks should not be used in shorthand compatibility phrases such as "SCO
compatible", etc. It is improper usage because it treats the trademark as a
generic standard, rather than the trademark owner's
specific product brand, and unfairly leverages off the owner's substantial and
valuable goodwill. See the following examples:

CORRECT USAGE: XXXXXX runs applications compatible with SCO
UnixWare System.

OR

XXXXXX is compatible with SCO UnixWare System.

OWNERSHIP FOOTNOTE

Whenever you use an SCO mark and certain third party marks, they should also be
included in a footnote. For advertisements, packaging, etc. the footnote should
be placed at the end of the piece. For brochures, manuals and other printed
materials, the footnote should be placed either on the last page or on a
copyright page (when used). You need only list those trademarks which are
actually used in materials. The following is the order in which to list
trademark footnotes.

1. SCO's trademarks

2. SCO's subsidiaries' trademarks (i.e. IXI Limited and Visionware Limited)

3. The UNIX footnote

4. Footnotes we are obligated by contract to list for third parties (see
specific list on page 4 under title Third Party Obligations)

5. A generic footnote to cover other third party marks.

Here is a typical OWNERSHIP FOOTNOTE sample:

SCO, the SCO logos, The Santa Cruz Operation, SCO Open Server, SCO OpenServer,
UnixWare, SCO WebTop, The Internet Way of Computing, and IWoC are trademarks or
registered trademarks of The Santa Cruz Operation, Inc. in the U.S.A. and other
countries. Wintif is a registered trademark of IXI Limited, a subsidiary of The
Santa Cruz Operation, Inc. XVision, SuperVision, TermVison and SQL-Retriever are
trademarks or registered trademarks of Visionware Limited, a subsidiary of The
Santa Cruz Operation, Inc. UNIX is a registered trademark of The Open Group in
the United States and other countries. Cheyenne and ARCserve are registered
trademarks of Cheyenne Software, Inc. All other brand or product names are or
may be trademarks of, and are used to identify products or services of, their
respective owners.

- -------------------------------------------------
CORPORATE NAME
- -------------------------------------------------

The formal legal name of the parent corporation is THE SANTA CRUZ OPERATION,
INC. "SCO" is acceptable in most instances, although the formal name must be
used in most legal-type documents (e.g. government filings, lawsuits, legal
contracts). In addition, it is important to understand the difference between a
trade name and a trademark. A trade name is the name under which a company does
business. The Santa Cruz Operation or SCO are trade names when they refer to the
company, and are trademarks when they are the brand name or part of a brand name
of a product. Therefore, "SCO" and "The Santa Cruz Operation" are both
trademarks and trade names. When they are used to describe the company, they are
a trade name and do not require the (R) symbol. However, if they are used to
describe a product, they are a trademark and, at first occurrence should contain
a (R) symbol, and should be used as an adjective followed by a generic noun.

For example:

TRADE NAME USAGE: SCO is the world leading supplier....

TRADEMARK USAGE: SCO(R) operating systems are installed
worldwide.
- -------------------------------------------------------
USE OF THE UNIX(R) AND SCO(R) UNIXWARE(R) TRADEMARKS
- -------------------------------------------------------

The marks "UnixWare" and "SCO" are two separate registered trademarks owned by
SCO. An ownership footnote stating that "SCO and UnixWare are registered
trademarks of The Santa Cruz Operation, Inc." must appear in an appropriate area
of the piece, such as at the end or on the copyright page. However, the
underlying mark "UNIX" is owned by The Open Group. When initial reference is
made to the UNIX mark, it should be footnoted as follows:

UNIX is a registered trademark of The Open Group in the United States and other
countries.

- ----------------------------------------------------------
USE OF THE SCO OPENSERVER TRADEMARK
- ----------------------------------------------------------

"SCO OpenServer" and "SCO Open Server" are two different trademarks. NEVER use
these trademarks without "SCO". "SCO OpenServer" describes Release 5 and "SCO
Open Server" describes Release 3.0. Do NOT use "SCO OpenServer 5"; the word
"Release" must be used in front of "5". In addition, an ownership footnote
stating that "SCO OpenServer is a trademark of The Santa Cruz Operation, Inc."
or "SCO Open Server is a trademark of The Santa Cruz Operation, Inc." must
appear in an appropriate area of the piece, such as at the end or on the
copyright page (see OWNERSHIP FOOTNOTE sample above).

- -----------------------------------------------------------
USE OF THE TARANTELLA TRADEMARK
- -----------------------------------------------------------

Tarantella is a new trademark. It is currently a trademark (TM), however, SCO is
in the process of registering the mark. Therefore, it is important to use the
mark as an adjective, followed by a generic noun (e.g. software, product,
technology, server, etc. "software" and product are currently the preferred
nouns of the Tarantella product group).
- ------------------------------------------------------------
USE OF SCO TRADEMARKS AND LOGOS BY THIRD PARTIES
- ------------------------------------------------------------

SCO's trademarks may not be preceded or appended directly with the name of a
third party company, product or service name. Licensees may, however, reference
their company, product, or service by adding a
preposition such as "from" or "for". EXAMPLE: SCO OpenServer System from
Siemens, or SCO UnixWare System for Compaq Computer Systems.

Certain third parties are licensed to use certain SCO logos under special
licensing agreements and must adhere to those rules contained in the licensing
agreement. Third parties may not use SCO's trademarks in any manner that is
potentially misleading to the public and which may confuse the public as to who
owns the product.

In addition, these guidelines are not to be distributed externally. If you wish
to send a list of our trademarks outside the Company, send the External.

- -----------------------------------------------------------
THIRD PARTY OBLIGATIONS
- -----------------------------------------------------------

Trademark footnotes we are obligated by contract to include for third parties
are as follows:

ADOBE: The following notice is to be included whenever the mark "Adobe" is used:

Adobe is a trademark of Adobe Systems Incorporated and is registered in the U.S.
Patent and Trademark Office.

ARCSERVE: The following notice is to be included whenever the mark "ARCserve" is
used:

ARCserve is a registered trademark of Cheyenne Software, Inc.

CHEYENNE: The following notice is to be included whenever the mark "Cheyenne" is
used:

Cheyenne is a registered trademark of Cheyenne Software, Inc.

JAVA, JAVA WORKSHOP, JAVA STUDIO, SUN, SUN MICROSYSTEMS: The following notice is
to be included whenever these marks are used, being sure to include the
appropriate marks:

Sun, Sun Microsystems, Java, Java Workshop, and Java Studio are trademarks or
registered trademarks of Sun Microsystems, Inc. in the United States and other
countries, and are used under license. MPX: The following notice is to be
included on all appropriate packaging and marketing/sales literature:

MPX was developed by Corollary, Inc.

NETSCAPE, NETSCAPE NAVIGATOR, NETSCAPE COMMUNICATIONS SERVER, NETSCAPE COMMERCE
SERVER, NETSCAPE PROXY SERVER, NETSCAPE FASTTRACK SERVER, NETSCAPE ENTERPRISE
SERVER, NETSCAPE SUITESPOT, NETSCAPE CATALOG SERVER, NETSCAPE NEWS SERVER,
NETSCAPE MAIL SERVER, AND NETSCAPE NAVIGATOR GOLD: The following notice is to be
included whenever any of these marks are used (list only marks used however):

Netscape, Netscape Navigator, Netscape Communications Server, Netscape Commerce
Server, Netscape Proxy Server, Netscape FastTrack Server, Netscape Enterprise
Server, Netscape SuiteSpot, Netscape
Catalog Server, Netscape News Server, Netscape Mail Server, and Netscape
Navigator Gold are trademarks or registered trademarks of Netscape
Communications Corporation.

In addition, when making reference to NAVIGATOR PRODUCTS or THEIR FUNCTIONALITY
the following notice must be added in any advertising, marketing, technical or
other materials:

"Netscape Navigator Included"

NFS: The following notice is to be included in all published documentation
based, comprising, or including the documentation provided as part of the NFS
product:

NFS was developed by Computer Associates, Inc. (formerly Lachman Associates,
Inc. and Legent Corporation) based on LACHMAN SYSTEM V NFS. LACHMAN is a
trademark of Computer Associates, Inc. NFS is a registered trademark of Sun
Microsystems, Inc.

NONSTOP: The following notice is to be included whenever the mark "NonStop" is
used:

NonStop is a registered trademark of Compaq Computer Corporation.

ORACLE: The following notice is to be included whenever the mark "Oracle" is
used:

Oracle is a registered trademark of Oracle Corporation, Redwood City,
California.

REALNETWORKS: The following notice is to be included whenever any of these marks
are used (list only marks used however):

Real bubble logo, RealNetworks, RealSystem, RealAudio, RealVideo, RealPlayer,
Basic Server Plus, RealEncoder, and RealPublisher are trademarks or registered
trademarks of RealNetworks, Inc.

RELIANT: The following notice is to be included whenever the mark "Reliant" is
used:

Reliant is a registered trademark of Siemens Pyramid Information Systems, Inc.
(formerly Pyramid Technology Corporation).

TCP/IP: The following notice is to be included in all published documentation
based, comprising, or including the documentation provided as part of the TCP/IP
product:

TCP/IP was developed by Computer Associates, Inc. (formerly Lachman Associates,
Inc. and Legent Corporation) based on LACHMAN SYSTEM V STREAMS TCP, a joint
development of Lachman Associates and Convergent Technologies.

VP/IX: The following notice is to be included on all promotional materials,
packaging and other written materials that contain the term "VP/ix":

VP/ix is a product developed and licensed by Phoenix Technologies, Ltd./Lachman
Technology, Inc./Interactive Systems Corporation.

XREMOTE: The following notice is to be included whenever the mark "XRemote" is
used:

XRemote is a registered trademark of Network Computing Devices, Inc.


LIST OF SCO TRADEMARKS
- -----------------------------------------------------------------------
*REGISTERED TRADEMARKS

DiSCOver(R)

Multiscreen(R)

ODT(R)

Open Desktop(R)

SCO(R)

SCO Logo(with tree design)(R)

The Santa Cruz Operation(R)

UnixWare(R)

VP/ix(R)

*TRADEMARKS

Business/21(TM)

dbXtra(TM)

Internet Way of Computing(TM)

IWoC(TM)

Optimized for Internet Computing Logo(TM)

Panner(TM)

SCO ACE(TM)

SCO CIFS Bridge(TM)

SCO CUSA(TM)

SCO Doctor(TM)

SCO Doctor for Networks(TM)

SCO Doctor Lite (TM)

SCO Global Access(TM)

SCO MPX(TM)

SCO MultiView(TM)

SCO Nihongo Open Server(TM)

SCO OK(TM)

SCO OK logo(TM)

SCO Open Server(TM)

SCO OpenServer(TM)

SCO Portfolio(TM)

SCO POS System(TM)

SCO Premier Motif(TM)

SCO TermLite(TM)

SCO ToolWare (TM)

SCOtopia(TM)

SCO Vision2K(TM)

SCO Vision97(TM)

SCO VisionFS(TM)

SCO Visual Tcl(TM)

Skunkware(TM)

Tarantella(TM)

The Tarantella logo(TM)

The Business Choice(TM)

Zones(TM)

*SERVICE MARKS APC(SM)

SoftCare(SM)

SoftTech

LIST OF IXI TRADEMARKS
------------------------------------------------------------------------


*REGISTERED TRADEMARKS

Wintif(R)

*TRADEMARKS:

IXI(TM)

IXI logo(TM)

X.desktop(TM)

Deskworks(TM)

IXI Panorama(TM)

Deskterm(TM)

IXI Desktop(TM)

*SERVICE MARKS:

X.tra(SM)


LIST OF VISIONWARE TRADEMARKS
------------------------------------------------------------------------



*REGISTERED TRADEMARKS:

Devkit.Vision(R)

Esprit(R)

Kodon(R)

Super.Vision(R)

Term.Vision(R)

Visionware(R)

Visionware Direction(R)

Visionware logo(R)

Visionware SQL-Retriever(R)

Visionware Super.Vision(R)

XVision(R)


*TRADEMARKS:

Codon(TM)

PC-Connect(TM)

SQL-Retriever(TM)

SuperVision(TM)

TermVision(TM)

Vision Builder (TM)

XV Logo(TM)

X-Visionware(TM)



THESE PRINTED GUIDELINES ARE UPDATED INFREQUENTLY. CONTACT THE LAW AND CORPORATE
AFFAIRS DEPARTMENT TO OBTAIN THE MOST CURRENT LIST OF SCO, IXI AND VISIONWARE
TRADEMARKS.



MEMORANDUM

DATE: April 9, 1997
TO: SCO Employees
FROM: SCO Legal Department/Intellectual Property Workgroup
RE: When Should the Legal Department Perform an Intellectual Property Review?


Information is provided to the public in many forms, including, but not limited
to the following materials:

surveys/questionnaires

cover letters

web pages/domain names

contest materials

press releases

newsletters

videos

presentations

guidelines

white papers

manuals

technical papers

media labels

packaging materials

artwork

banners

posters

datasheets

cds

annual report

inserts

postcards

commercials: tv, radio, etc. publications

collateral

brochures

slides/foils

handbooks

educational materials

demos

charts

mailings

price lists

These materials are protected under copyright, trademark, contractual and other
similar rules and laws as discussed below.

Copyright Law:



Regardless of how you are providing valuable, proprietary information to the
public, it is important to protect such information under copyright law.
Copyright law protects the original works of its author(s) against the
unauthorized copying, selling, distributing, licensing, and displaying by a
third party. Use of a copyright notice ((C) 1997 The Santa Cruz Operation, Inc.)
is often important because it provides notification to the public that copyright
protection is claimed, and the notice entitles the copyright owner to recover
certain damages. In addition, the term "All Rights Reserved" is required to
avoid any possible problems under the Buenos Aires Convention. Therefore, SCO
believes it is in its best interest to use copyright notices to provide
copyright protection in its works. Please refer to the SCO Copyright Guidelines
published by the Legal Department.


Advertising Compliance

Information provided to the public in any media must be true and accurate
(especially use of numbers), and neither exaggerated nor misleading. You must be
able to back up statements with some kind of proof. Therefore it is not
advisable to use words such as "best", "fastest", "most reliable", "only", etc.
unless one can prove such a claim. The rules regarding comparative advertising
are complicated and must be complied with as well. Furthermore, written
permission must be obtained when using names or quotes of third parties,
regardless of where previously printed or the source. A copy of such written
permission must be provided to SCO Legal.

Trademarks/Logos

Materials will most likely contain trademarks and logos of SCO and/or a third
party. SCO and its subsidiaries own a number of trademarks (including various
corporate, product, and program logos). SCO trademarks are valuable company
assets because they identify our products to current and potential customers.
Our product, service and program names, when used properly, are protected by
established trademark law. If trademarks are used incorrectly, or not at all,
they can, over a period of time, fall into general public use and lose their
protective value. This could damage the reputation of SCO by giving
others the opportunity to adopt or misuse the names that should be uniquely
associated with SCO products and services. Furthermore, to help protect SCO from
potential lawsuits, etc., use of a third party's logos and trademarks must be
used properly. Please refer to the SCO Trademark Guidelines published by the
Legal Department.

Contractual Obligations

SCO has many contracts with other companies and individuals. Such contracts
contain numerous types of intellectual property obligations which SCO is
required to meet. Compliance with such obligations is extremely important so as
to eliminate possible breaches by SCO, loss of contract rights, and lawsuits
filed against SCO. For example, some of our contracts prohibit the use of a
customer's name without its prior written permission.




Privacy and Data Protection

If you obtain information about others (e.g. information provided by filling in
a form or by response email) it is important to comply with pertinent laws
relating to use of that information. Sometimes you need to obtain consent of the
individual/company to re-use the information. In addition, photos are often
considered private and intellectual property, and written permission must be
obtained prior to their publication. The Legal Department can provide sample
permission letters. Privacy and data protection notices vary; they can cover
items ranging all the way from those purporting to obtain complete freedom of
use to those involving a promise of confidentiality.

Legislation/Court Rulings

Our state and federal laws change frequently, and it is important to keep
current with such laws so as to ensure all materials meet the current
intellectual property laws. In addition, court cases relating to intellectual
property matters can affect the structure of the materials as well.

Disclaimers

Disclaimers for certain types of materials are important to use. These provide
flexibility as well as protection. The Legal Department can draft the
appropriate disclaimer.



*


FISCAL-YEAR-END - SEP-30-1998
PERIOD-START - OCT-01-1998
PERIOD-END - DEC-31-1998
CASH - 15,628
SECURITIES - 28,543
RECEIVABLES - 44,162
ALLOWANCES - (10,468)
INVENTORY - 1,390
CURRENT-ASSETS - 87,846
PP&E - 58,516
DEPRECIATION - (45,931)
TOTAL-ASSETS - 125,727
CURRENT-LIABILITIES - 56,333
BONDS - 0
PREFERRED-MANDATORY - 0
PREFERRED - 0
COMMON - 108,457
OTHER-SE - (48,989)
TOTAL-LIABILITY-AND-EQUITY - 125,727
SALES - 48,633
TOTAL-REVENUES - 52,706
CGS - 7,511
TOTAL-COSTS - 11,868
OTHER-EXPENSES - 37,520
LOSS-PROVISION - 0
INTEREST-EXPENSE - 566
INCOME-PRETAX - 3,884
INCOME-TAX - 780
INCOME-CONTINUING - 3,104
DISCONTINUED - 0
EXTRAORDINARY - 0
CHANGES - 0
NET-INCOME - 3,104
EPS-PRIMARY - 0.09
EPS-DILUTED - 0.09

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