Master Services Agreement - Linuxcare Inc. and Hewlett-Packard Co.


                           MASTER SERVICES AGREEMENT

     This Master Services Agreement, including Exhibits A, B, C and D attached
hereto (the "AGREEMENT"), is entered into as of the last date signed by either
party on the signature page below (the "EFFECTIVE DATE") between Linuxcare,
Inc., a Delaware corporation with an office at 650 Townsend Street Suite 3244A,
San Francisco, CA 94103, USA (Phone: 415-354-4878; Fax: 415-701-7457)
("LINUXCARE") and "COMPANY" listed below.
 
Company:   Hewlett-Packard Company           Contact: Kristy Ward
           Software Services Division
Address:   100 Mayfield Ave MS 36LA          Phone: 650-691-5361
           Mountain View CA 94043            Fax: 650-691-5152
           E-Mail: Kristy_Ward@hp.com


                             SERVICES INFORMATION

               Service Level:                Level 3 Support and Level 4 Support
               Service Fee:                  Level 3 Support: * per hour
                                             Level 4 Support: * per hour
               Invoice Period:               monthly
               Term of Contract:             1 year (renewable)
               Technical Support Set Up Fee: *

                               SERVICES PROVIDED

     Subject to payment of all applicable fees, Linuxcare will use reasonable
commercial efforts to perform the services specified in the Statement of Work
("SOW") attached hereto as Exhibit B ("SERVICES") and incorporated herein, in
accordance with the Terms and Conditions attached hereto as Exhibit A, and
incorporated herein. Exhibits C (a Confidential Disclosure Agreement) is also
attached hereto and made a part hereof (collectively, Exhibits A, B and C shall
be called the "EXHIBITS"). Company understands that Linuxcare's performance is
dependent in part on Company's actions. Accordingly, any dates or time periods
relevant to performance of Services by Linuxcare shall be appropriately and
equitably extended to account for any delays resulting from changes to Company
products or otherwise due to Company. Company may request additional hours or
levels of Services ("EXTENDED SERVICES"), which Linuxcare may provide at
Linuxcare's sole discretion, provided that Company pays Linuxcare's then current
fees for such Extended Services and enters into such amendments to this
Agreement as mutually agreed upon by the parties hereto.

          The Exhibits contain, among other things, warranty disclaimers and
          ------------------------------------------------------------------ 
liability limitations. Any different or additional terms of any related purchase
---------------------
order, confirmation, or similar form even if signed by the parties after the
date hereof shall have no force or effect. References in this Agreement or the
Exhibits to a capitalized term appearing on this cover page shall have the
meaning or value of such term on this cover page.

Company: Hewlett - Packard                   Linuxcare, Inc.:

By: /s/ MIKE RIGODANZO                       By: /s/ Thomas W. Philips

Name: MIKE RIGODANZO                         Name: Thomas W. Philips
      --------------                               -----------------

Title: VP & GM Software Services Division    Title: VP Sales
       ----------------------------------           --------

Date: 6 Jan. 2000                            Date: 12/28/99
      -----------                                  --------

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY 
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO 
THE OMITTED PORTIONS.

 
                                   EXHIBIT A
                                   ---------

                             TERMS AND CONDITIONS

1.   Linuxcare Obligations. Upon commercial release any version of the Linux
     ---------------------
     Software (as defined in Section 1 of the SOW attached hereto as Exhibit B),
     Linuxcare will provide (i) Level 3 Support (as defined in Section 1 of the
     SOW) in accordance with Section 2 of the SOW, and (ii) Level 4 Support (as
     defined in Section 1 of the SOW attached hereto as Exhibit B) in accordance
     with Section 3 of the SOW, to the staff of Company with respect to any such
     commercially released Linux Software which is also supported by Company, in
     English only.

2.   Company Obligations. Company will (1) provide Level 1 Support and Level 2
     -------------------   
     Support (as defined in Section 1 of the SOW) to End-Users; and (2) pay the
     Technical Support Set Up Fee, all Services fees, and any other fees
     hereunder in accordance with Section 5 of this Exhibit A.

3.   Training. When mutually agreed upon by both Linuxcare and Company, and
     --------
     subject to payment of all fees, Linuxcare will provide any training
     requested or required by Company in accordance with Linuxcare's current,
     published "Linuxcare Training Programs" documentation. Unless otherwise
     arranged between Company and Linuxcare, all training shall occur at
     Linuxcare's facilities in San Francisco, California on such date(s) and
     time(s) as determined by Linuxcare. The fees for training will be
     Linuxcare's then current published training fees ("CURRENT TRAINING FEES"),
     less a discount equal to ten percent (10%) of such Current Training Fees
     ("Training Fees").

4.   Consulting Services. In the event that Company requires additional levels
     -------------------
     of services outside the scope of Sections 2 and 3 of Exhibit B, or as
     otherwise agreed upon by Linuxcare and Company, Linuxcare will perform such
     consulting services for Company as mutually agreed upon by Linuxcare and
     Company, provided that the fees associated with such consulting services
     payable by Company shall be at the Linuxcare's then current consulting
     services rate ("Consulting Fee"). The consulting services rate as of the
     Effective Date of this Agreement is  * per hour; however, this rate is
     subject to change in accordance with Section 5 of this Exhibit A.

5.   Fees and Payment. Company will pay the Technical Support Set Up Fee within
     ----------------   
     90 days of the Effective Date. Company will pay Linuxcare's fees for
     Services provided under Section 2 and 3 of Exhibit B (the "SERVICE FEES")
     incurred for any Invoice Periods within 90 days after receipt of
     Linuxcare's invoice therefor. Company will also pay Linuxcare all other
     fees, including, but not limited to, Extended Services fees, Training Fees,
     and Consulting Fees, within 90 days after receipt of Linuxcare's invoice
     therefor. All payments shall be made in U.S. Dollars and are non-
     refundable. Service Fees, Training Fees and fees for Extended Service under
     this Agreement are subject to change annually and will be reviewed by
     Linuxcare and Company annually during the term of the Agreement, commencing
     30 days prior to the expiration of the Initial Term in order to discuss
     appropriate fee and/or price levels. If the parties are unable to agree on
     new fees and prices or are unable to meet, Linuxcare shall have the right
     to make a reasonable adjustment in the fee and/or price upon notice to
     Company; provided, however, that Company shall have the right to terminate
              --------  -------  
     this Agreement upon thirty (30) days written notice to Linuxcare if the
     adjusted fees are not acceptable. Consulting Fees may be subject to change
     by Linuxcare at any time upon at least thirty (30) days prior notice to
     Company.

6.   Proprietary Rights. As between the parties, Linuxcare will retain all
     ------------------
     right, title and interest in and to any software, tools, techniques, and
     other materials used in connection with providing the Services contemplated
     hereunder ("LINUXCARE MATERIALS"). As between the parties, Company will
     retain all right, title and interest in and to any software, products,
     documentation and other materials it supplies. Linuxcare hereby assigns to
     Company all right, title and interest, in any work product created as part
     of the Services ("WORK PRODUCT"), but this assignment does not include any
     portion of the Linuxcare Materials or any other work product generally
     applicable to Linuxcare's business, and will not prevent Linuxcare from
     using the expertise, ideas and know-how learned while performing Services
     for other 

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY 
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO 
THE OMITTED PORTIONS.

 
     purposes (including, without limitation, for itself or on behalf of third
     parties).

7.   Confidential Information.
     ------------------------
     7.1  Confidential Information. Confidential information arising under this
          ------------------------
          Agreement shall be governed by the Confidential Disclosure Agreement
          attached hereto as Exhibit C (the "CDA"); provided, however, that any
                                                    --------  -------
          conflict or inconsistency between any provision of the CDA and this
          Agreement shall be governed by this Agreement without regard to
          Exhibit C. The disclosure period covered by the CDA shall commence on
          the Effective Date of this Agreement and end upon the termination or
          expiration of this Agreement. Thereafter, the period during which the
          confidentiality obligations of the parties survive begins, and
          continues for the duration of time specified in the CDA.

 
     7.2  Publicity Linuxcare and Company agree that neither party will, except
          ---------
          as may be required by law, disclose or issue any press release with
          respect to this Agreement or any transactions contemplated by this
          Agreement, without the prior written consent of the other party to
          this Agreement.
     7.3  Non-Solicitation. Linuxcare hereby agrees that it will not actively
          ----------------
          solicit End-Users (as defined in Section 1 of the SOW) which are
          referred to Linuxcare by Company under this Agreement; provided,
                                                                 -------- 
          however, that nothing shall prohibit Linuxcare from providing services
          -------
          to End-Users who are not referred to Linuxcare by Company, and to End-
          Users who are initially referred to Linuxcare by Company and who
          subsequently seek services from Linuxcare independently.

8.   Term and Termination.
     --------------------
     8.1  Term. This Agreement will commence on the Effective Date of this
          ----  
          Agreement and remain in force for a term of one year thereafter (the
          "INITIAL TERM"), unless earlier terminated in accordance with the
          terms of this Agreement. This Agreement will automatically renew at
          the end of such Initial term for successive one year periods (each, a
          "RENEWAL TERM") for a period of four years thereafter.
     8.2  Termination for Breach. In the event that either party commits a
          ----------------------
          material breach of its obligations hereunder, the other party may, at
          its option, terminate this Agreement by written notice of termination,
          which notice shall identify and describe the basis for such
          termination; provided, however, that such termination shall not take
          place if the defaulting party shall have cured the default within
          thirty (30) days from the date of receipt of such notice.
     8.3  Termination at Will. This agreement may be terminated by either party
          ------------------- 
          upon at least thirty (30) days written notice prior to the expiration
          of the Initial Term or any Renewal Term. In addition, Linuxcare may
          terminate this Agreement at any time in its sole discretion in the
          case of non-payment by Company of any undisputed fees, unless Company
          pays such fees in full within ten (10) days after receiving notice of
          non-payment from Linuxcare.
     8.4  Termination for Insolvency. Each party shall have the right to
          --------------------------
          terminate this Agreement on written notice if the other party ceases
          to do business in the ordinary course or is insolvent (i.e., unable to
          pay its debts in the ordinary course as they come due), or is declared
          bankrupt, or is the subject of any liquidation or insolvency
          proceeding which is not dismissed within ninety (90) days, or makes
          any assignment for the benefit of creditors.
     8.5. Termination Upon Change in Control. Either party may terminate this
          ---------------------------------- 
          Agreement at any time upon at least thirty (30) days written notice to
          the other party, in the event such other party is merged into,
          consolidated with, or sells all or substantially all of its assets to
          a third party which the terminating party determines, in its good
          faith commercially reasonable judgment, is a competitor of the
          terminating party.
     8.6  Survival. Sections 6, 7, 8, 9, 10, 11, 12 and 13, of this Exhibit A,
          --------
          as well as those portions of the covering page, Exhibit B, and Exhibit
          C which expressly contain terms that shall survive expiration or
          termination of this Agreement, and all accrued rights to payment,
          shall survive termination or expiration of this Agreement. All accrued
          but unpaid obligations of Company shall become immediately due and
          payable upon termination or expiration of this Agreement.
     8.7  Non-Exclusive Remedy. Termination is not an exclusive remedy and all
          -------------------- 
          other remedies will be available whether or not termination occurs.

9.   Warranty and Disclaimer. Linuxcare hereby warrants to Company that all
     -----------------------
     services provided by Linuxcare under this Master Services Agreement shall
     be performed in a professional and workmanlike manner. THE PARTIES
     ACKNOWLEDGE THAT THIS IS AN AGREEMENT FOR SERVICES AND NOT FOR THE SUPPLY
     OF GOODS. EXCEPT FOR THE FOREGOING, LINUXCARE MAKES NO OTHER WARRANTIES OR
     REPRESENTATIONS AS TO THE SERVICES RENDERED, AND HEREBY DISCLAIMS ALL
     EXPRESS AND IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO, IMPLIED
     WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND
     NONINFRINGEMENT. LINUXCARE FURTHER DISCLAIMS ANY WARRANTY THAT THE SERVICES
     WILL

 
     SUCCEED IN RESOLVING ANY PROBLEM, OR THAT ANY WORK PRODUCT OF THE SERVICES
     WILL BE FREE FROM PROGRAM ERRORS

10   Limitation of Liability  NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR
     ----------------------- 
     OTHERWISE, NEITHER PARTY SHALL BE LIABLE OR OBLIGATED WITH RESPECT TO THE
     SUBJECT MATTER OF THIS AGREEMENT OR UNDER ANY CONTRACT, NEGLIGENCE, STRICT
     LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY (1) FOR ANY AMOUNTS IN EXCESS
     IN THE AGGREGATE OF THE FEES PAID HEREUNDER WITH RESPECT TO THE PERFORMANCE
     OF OBLIGATIONS, (II) FOR ANY COST OF

 
     PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY, SERVICES OR RIGHTS; OR (III)
     FOR INTERRUPTION OF USE OR LOSS OR CORRUPTION OF DATA.

     NEITHER PARTY TO THIS AGREEMENT SHALL BE LIABLE OR OBLIGATED WITH RESPECT
     TO THE SUBJECT MATTER OF THIS AGREEMENT OR UNDER ANY CONTRACT, NEGLIGENCE,
     STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY: (I) FOR ANY MATTER
     BEYOND ITS REASONABLE CONTROL, OR (II) FOR ANY INCIDENTAL, INDIRECT OR
     CONSEQUENTIAL DAMAGES OR LOST PROFITS OF ANY NATURE, WHETHER ARISING UNDER
     STATUTE, TORT (INCLUDING NEGLIGENCE) OR CONTRACT, EVEN IF SUCH PARTY HAS
     BEEN ADVISED BY THE OTHER PARTY OF THE POSSIBILITY OF SUCH DAMAGES.

11.  Export Control. Both parties shall comply with the U.S. Foreign Corrupt
     --------------  
     Practices Act and all applicable export laws, restrictions, and regulations
     of the U.S. and foreign agency or authority.

12.  Indemnification.
     ---------------
     12.1  By Linuxcare. Linuxcare agrees to defend, indemnify an hold Company
           ------------
           harmless from any liability or expense paid to third parties
           (including without limitation reasonable attorneys' fees) incurred by
           Company as a result of any judgment or adjudication against Company
           or final settlement arising from any claim that Linuxcare infringed
           any patent, trademark, copyright, or trade secret of any third party
           with respect to original code and original patches and related
           documentation created by Linuxcare and provided to Company pursuant
           to this Agreement ("INDEMNIFIED MATERIALS"); provided that Company
           provides Linuxcare with (a) prompt written notice of any such
           claim(s), (b) promptly tenders to Linuxcare sole control over the
           defense and settlement of such claim(s) at Linuxcare's expense and
           with Linuxcare's choice of counsel, and (c) full information and
           reasonable assistance to Linuxcare permitting it to defend and/or
           settle such claim(s). Company may not settle any such claim(s)
           without Linuxcare's prior written consent. In the event that any
           Indemnified Materials possessed by Linuxcare are held, or in
           Linuxcare's sole opinion, may be held to constitute an infringement,
           Linuxcare, at its option and expense, may either (x) modify the
           Indemnified Materials so they becomes non-infringing, (y) procure for
           Company a license to use the infringing Indemnified Materials, or (z)
           accept a return of the Indemnified Materials and create new, non-
           infringing, functionally equivalent materials, in lieu of all other
           claims by Company except for the above stated indemnification.
     12.2  Exclusions. Notwithstanding the foregoing, Linuxcare shall have no
           ----------  
           liability if the alleged infringement arises from (a) the
           modification of the Indemnified Materials by any party other than
           Linuxcare, or (b) the use of any hardware or software product with
           the Indemnified Materials or a combination of the Indemnified
           Materials with any software or hardware product not approved by
           Linuxcare, if the infringement would not have occurred using the
           Indemnified Materials either alone or in combination with any
           software or hardware product approved by Linuxcare, or (c) use of the
           Indemnified Materials except as specified by Linuxcare.

13.  General Terms.
     -------------
     13.1  Governing Law: Jurisdiction. This Agreement shall be deemed to have
           ---------------------------  
           been made in, and shall be construed pursuant to the laws of the
           State of California and the United States without regard to conflicts
           of laws provisions thereof. Any disputes between the parties related
           to or arising out of this Agreement shall be litigated in San
           Francisco, California.
     13.2  Attorney's Fees. The prevailing party in any action to enforce this
           ---------------
           Agreement will be entitled to recover its reasonable attorney's fees
           and costs in connection with such action.
     13.3  Assignment. This Agreement is not assignable or transferable by
           ----------
           either party without the prior written consent of the other party,
           and any attempt to do so shall be void; provided, however, that this
                                                   --------  -------         
           Agreement may be assigned by either party, upon written notice to the
           other party, in connection with a merger or a sale of all or
           substantially all of the assets of the party subject to Section 8.5.
           Either party may subcontract the performance of its obligations to
           third parties. However, any contact to Linuxcare under this Agreement
           must come from 

 
           Company's designated contacts per Section 2.1 of Exhibit B.
     13.4  Severability. If any provision of this Agreement, or portion thereof,
           ------------ 
           shall be adjudged by any court of competent jurisdiction to be
           unenforceable or invalid, that provision shall be limited or
           eliminated to the minimum extent necessary so that this Agreement
           shall otherwise remain in full force and effect and enforceable.
     13.5  Relationship of the Parties. The parties agree that they are
           --------------------------- 
           independent contractors and that this Agreement and relations between
           Linuxcare and Company hereby established do not constitute a joint
           venture, agency or

 
           contract of employment between them, or any other similar
           relationship. Neither party has the right or authority to assume or
           create any obligation or responsibility on behalf of the other.
     13.6  Waiver. No failure or delay in exercising any right hereunder will
           ------              
           operate as a waiver thereof, nor will any partial exercise of any
           right or power hereunder preclude further exercise. Any waivers or
           amendments shall be effective only if made in writing and signed by
           an authorized representative of the parties hereto.
     13.7  Notices. Any notice, report, approval or consent required or
           -------
           permitted hereunder shall be in writing and shall be deemed given
           when faxed, personally delivered, delivered by courier, or three days
           after being sent by prepaid certified or registered U.S. mail to the
           address of the party to be notified as set forth herein or such other
           address as such party last provided to the other by written notice.
     13.8  Entire Agreement. The Master Services Agreement, and Exhibits A, B,
           ----------------
           and C to the Master Services Agreement represent the complete and
           exclusive statement of the mutual understanding of the parties and
           supersedes and cancels all previous written and oral agreements and
           communications relating to the subject matter of this Agreement.
     13.9  Force Majeure. Neither party shall be liable to the other for
           -------------
           inability to perform its obligations under the Agreement due to
           causes beyond its reasonable control, including, but not limited to
           acts of God, war, riot, embargo, earthquake, act of government or any
           other force majeure event.

 
                                   EXHIBIT B
                                   ---------

                               STATEMENT OF WORK

1.   Definitions
     -----------
     1.1  A "CRITICAL PROBLEM" shall exist when there is an emergency condition
          that causes critical impact to a user's schedule, or that makes
          performance or continued performance of any feature or function
          impossible or impractical by the End-User. It includes, but is not
          limited to, situations when the product will not function, has a
          severe negative impact on the system, or is causing data corruption.
     1.2  "END-USER" shall mean the end-user of Company's Products who reports
          an Incident to Company.
     1.3  A "FIX" involves resolution of an Incident and involves taking the
          appropriate steps to resolve a request for assistance. This may
          include providing circumvention work-arounds, temporary or permanent
          source code fixes, fix distribution technical information, how-to
          assistance and other similar information.
     1.4  "INCIDENT" shall mean any one single identified End-User issue or
          problem. One contact by the End-User may include multiple Incidents,
          and a single Incident may require more that one contact to resolve.
     1.5  "LEVEL 1 SUPPORT" shall mean identifying and solving any issue that is
          covered in the operating system installation guide, and relates only
          to the existing pre-installed operating system and pre-configured
          hardware.
     1.6  "LEVEL 2 SUPPORT" shall mean identifying and solving software and
          hardware (excluding Microsoft products, RAID systems, WAN Networking
          products, and USB devices) issues that have prescribed solutions,
          existing patches, prior fixes, etc. This also covers basic re-
          configuration of the operating system which is not covered in the
          installation guide, configuration of professional user space
          applications (providing that the existing system configuration allows
          installation), and configuration of new hardware (excluding Microsoft
          products, RAID systems, WAN Networking products, and USB devices)
          utilizing existing functional device drivers. This may require
          multiple e-mail and/or telephone communications between support
          engineers and the users. This level is restricted to a single
          Incident, strictly within the scope of the problem at hand.
     1.7  "LEVEL 3 SUPPORT" shall mean identifying and solving software and
          hardware (excluding Microsoft products) issues that have undocumented
          solutions or fixes; any mid-level and higher system reconfiguration
          not covered at the Level 1 Support or Level 2 Support. This level of
          support may require multiple e-mail communications, telephone
          communications, and remote sessions between support engineers and the
          user to fix or resolve, such as reviewing system logs, long
          configuration files, or gaining root access.
     1.8  "LEVEL 4 SUPPORT" shall mean any issues, above Level 3 Support, which
          involve development, such as original code writing or patch writing,
          to resolve.
     1.9  "LINUX SOFTWARE" shall mean (a) all major distributions (including but
          not limited to Caldera, RedHat, Debian, SuSe, and TurboLinux) of the
          Linux operating system which are open source code and authorized under
          the GNU General Public License (GPL), now existing or hereafter
          developed, including Update Releases, and (b) open source applications
          which run on the Linux operating systems described in (a) and listed
          on the Linuxcare web site (www.linuxcare.com), including but not
          limited to Samba, Apache and Sendmail.
     1.10 A "MEDIUM PROBLEM" shall exist when an important product function has
          an intermittent problem, or a common, non-essential operation is
          failing consistently for the End-User. The problem is not critical in
          regards to performance, and use can be continued without difficulty or
          loss of data by easy circumvention or avoidance by the End-User. The
          inconvenience can be tolerated until the next scheduled release.
     1.11 A "MINOR PROBLEM" shall exist when an error causes the user a slight
          inconvenience but is not critical. The error can be tolerated or can
          easily be avoided or circumvented by the user.
     1.12 "RESPONSE TIME" is defined as that time beginning when Linuxcare
          receives a call about an Incident from Company, and ending when
          that/those individual(s) update(s) the Company on the status of the
          problem and the action plan for resolution.
     1.13 A "SERIOUS PROBLEM" shall exist when a major product function has a
          reproducible problem which significantly affects a user's schedule,
          causes a minor security breach or which makes performance or continued
          performance of any feature or function difficult, and can not be
          circumvented or avoided on a 

 
          temporary basis by the user causing the user significant
          inconvenience.
     1.14 "SYSTEM RESTORATION" shall mean a solution which stabilizes the user
          system by providing an alternative which allows the use of the product
          without negative impacts or data corruption to the system. This
          solution can be an existing patch work around or a set of
          recommendations for optimizing the End-User's

 
          situation. It shall include a documented plan for a permanent
          resolution, which resolution may require Level 4 Support.
     1.15 "UPDATE RELEASE" shall mean a new version release of the Linux
          Software distributed by third parties, including but not limited to
          Caldera, RedHat, Debian, SuSe, or TurboLinux, which are open source
          code and authorized under the GNU General Public License (GPL), now
          existing or hereafter developed, that contains maintenance fixes,
          major functional enhancements and feature additions.

2.   Delivery of Level 3 Support. Company and Linuxcare agree that the Level 3
     ---------------------------
     Support shall be delivered as described in Section 2.1 and Section 2.2
     below.

     2.1. Company Obligations. Company will receive all initial End-User contact
          -------------------
          for technical assistance. Company will determine the End-User's issue,
          diagnose and isolate the problem, search the database of known
          problems for resolution, and determine whether it is an issue that
          requires Level 1 Support, Level 2 Support, Level 3 Support, or Level 4
          Support. If the issue requires Level 1 Support or Level 2 Support, it
          will be resolved within Company. If the issue requires Level 3
          Support, it will be referred to Linuxcare for completion of
          resolution. Company shall designate twelve (12) individuals as
          authorized technical contacts for this Agreement. Company shall give
          prompt notice to Linuxcare of any changes to such authorized contacts.
          If Linuxcare support is required, an authorized contact of Company,
          and only an authorized contact, will contact Linuxcare via telephone,
          communicating in the English language only, and insure that any
          required information about the End-User and the issue is included in
          the transfer call. After receiving the Fix from Linuxcare, Company
          will deliver that Fix to the End-User. Linuxcare Coverage hours,
          Response times, and Fix times will depend on the call severity level
          and will meet the delivery specifications as shown in Table 1. In the
          event that such delivery specifications cannot be met, Linuxcare will
          notify Company, and Linuxcare shall assign a technical account manager
          ("TAM") for that Incident(s) to Company. The TAM will contact the
          Company's authorized contact (or such other contact as designated by
          the authorized contact), communicate the reason for failing to meet
          the delivery specifications, and the TAM and Company's authorized
          contact will create an action plan on how to solve the Incident in the
          most efficient manner.

     2.2. Linuxcare Obligations. Upon receiving the support call from Company,
          ---------------------
          Linuxcare will assign a support engineer that will be responsible for
          managing the diagnosis and resolution of the call, and for
          communicating the status of the problem resolution to Company.
          Coverage hours, Response Times, and Fix times will depend on the call
          severity level and will meet the delivery specifications as shown in
          Table 1. The Linuxcare support engineer will provide all necessary
          information to Company that is required to implement the Fix on the
          End-User's issue. The Linuxcare support engineer will provide Company
          with any assistance required to resolve the End-User's problem and
          close the Incident. After resolution, Linuxcare will provide Company
          information as it relates to the solved/closed Incidents in order to
          assist Company in solving future Incidents.

TABLE 1 - DELIVERY SPECIFICATIONS FOR LEVEL 3 AND LEVEL 4 SUPPORT:
 
 
 
  Call                                                        Permanent            Status
Severity    Coverage          Response        System          Solution            Reporting
 Level      Hours               Time         Restoration        (Fix)1            to Company
--------------------------------------------------------------------------------------------------
                                                                      
Critical    24 hrs/day,       4 hours         24 hours           3 days          daily or as
Problem     365 days/year                                                        mutually agreed
-------------------------------------------------------------------------------------------------- 
Serious     24 hrs/day,       8 hours         48 hours          10 days          daily or as
Problem     365 days/year                                                        mutually agreed
--------------------------------------------------------------------------------------------------
Medium      24 hrs/day,      24 hours       not required        15 days          as needed
Problem     365 days/year
--------------------------------------------------------------------------------------------------
Minor       24 hrs/day,      48 hours       not required       next Update       as needed
Problem     365 days/year                                       Release
--------------------------------------------------------------------------------------------------


 
          1  Linuxcare will use commercially reasonable efforts to provide
             permanent solutions or Fixes within the indicated number of
             calendar days after being informed of the problem by Company.

 
3.   Delivery of Level 4 Support. Level 4 Support shall be delivered in
     --------------------------- 
accordance with the same procedures outlined in Sections 2.1 and 2.2 above and
the delivery specifications as shown in Table 1 above. In the event that such
delivery specifications cannot be met, Linuxcare will notify Company, and
Linuxcare shall assign a TAM for that Incident(s) to Company. The TAM will
contact the Company's authorized contact (or such other contact as designated by
the authorized contact), communicate the reason for failing to meet the delivery
specifications, and the TAM and Company's authorized contact will discuss how to
solve the Incident in the most efficient manner.

4.   Reporting.
     ---------
     4.1. Metrics Report. Linuxcare shall provide a metrics report to Company
          --------------
          which will give a summary description of Incidents in a manner and
          with content that is mutually agreeable to the parties, and any other
          generally available reports reasonably requested by Company.
     4.2. Incident Report. Linuxcare shall make Incident reports available
          ---------------
          online to Company upon receiving a call from Company which requires
          Linuxcare to provide Services. The reports shall be password
          protected, and will allow Company immediate access to updates on the
          reported Incident.

5.   Quarterly Distribution Reports. Linuxcare shall provide Company with
     ------------------------------   
information relating to new Linux Software releases and Update Releases on
a quarterly basis.

 
                                   EXHIBIT C
                                   ---------

                       CONFIDENTIAL DISCLOSURE AGREEMENT

 
                            CONFIDENTIAL DISCLOSURE
                                   AGREEMENT

Effective Date: December 12 1999

In order to protect certain confidential information, Hewlett-Packard Company
and its corporate affiliates ("HP"), and the "Participant" identified below,
agree that:

1.   DISCLOSING PARTY: The party disclosing confidential information
     ---------------- 
("Discloser") is Linuxcare Inc
                 -------------

2.   PRIMARY REPRESENTATIVE: Each party's representative for coordinating
     ----------------------
disclosure or receipt of confidential information is:

HP: _____

PARTICIPANT: John Hayes
             ----------

3.   DESCRIPTION OF CONFIDENTIAL INFORMATION: The confidential information
     ---------------------------------------
disclosed under this Agreement is described as:

HP: _____

PARTICIPANT: Services Protocol
             -----------------

4.   USE OF CONFIDENTIAL INFORMATION: The party receiving confidential
     -------------------------------
information ("Recipient") shall make use of the confidential information only
for the following purpose (e.g., "evaluation and testing for a make/buy decision
on project xyz."):

HP: _____

PARTICIPANT: Support Services and Certification
             ----------------------------------

5.   CONFIDENTIALITY PERIOD: This Agreement and Recipient's duty to hold
     ---------------------- 
confidential information in confidence expire on: 12/12//2000
                                                  -----------

6.   DISCLOSURE PERIOD: This Agreement pertains to confidential information that
     ----------------- 
is disclosed between the Effective Date and 12/ 12/ /2000
                                            -------------

7.   STANDARD OF CARE: Recipient shall protect the disclosed confidential
     ---------------- 
information by using the same degree of care, but no less than a reasonable
degree of care, to prevent the unauthorized use, dissemination, or publication
of the confidential information as Recipient uses to protect its own
confidential information of a like nature.

8.   MARKETING: Recipient's obligations shall only extend to confidential
     ---------
information that is described in paragraph 3, and that: (a) comprises specific
materials individually listed in paragraph 3; or, (b) is marked as confidential
at the time of disclosure; or, (c) is unmarked (e.g. orally disclosed) but
treated as confidential at the time of disclosure, and is designated as
confidential in a written memorandum sent to Recipient's primary representative
within thirty days of disclosure, summarizing the confidential information
sufficiently for identification.

9.   EXCLUSIONS: This Agreement imposes no obligation upon Recipient with
     ----------
respect to information that: (a) was in Recipient's possession before receipt
from Discloser; (b) is or becomes a matter of public knowledge through no fault
of Recipient; (c) is rightfully received by Recipient from a third party without
a duty of confidentiality; (d) is

 
disclosed by Discloser to a third party without a duty of confidentiality on the
third party; (e) is independently developed by Recipient; (f) is disclosed under
operation of law; or (g) is disclosed by Recipient with Discloser's prior
written approval.

10.   WARRANTY: Each Discloser warrants that it has the right to make the
      -------- 
disclosures under this Agreement. NO OTHER WARRANTIES ARE MADE BY EITHER PARTY
UNDER THIS AGREEMENT. ANY INFORMATION EXCHANGED UNDER THIS AGREEMENT IS PROVIDED
"AS IS".

11.   RIGHTS: Neither party acquires any intellectual property rights under this
      ------
Agreement except the limited rights necessary to carry out the purposes set
forth in paragraph 4. This Agreement shall not restrict reassignment of
Recipient's employees.

MISCELLANEOUS
-------------

12.   This Agreement imposes no obligation on either party to purchase, sell,
license, transfer or otherwise dispose of any technology, services or products.

13.   Both parties shall adhere to all applicable laws, regulations and
rules relating to the export of technical data, and shall not export or reexport
any technical data, any products received from Discloser, or the direct product
of such technical data to any proscribed country listed in such applicable laws,
regulations and rules unless properly authorized.

14.   This Agreement does not create any agency or partnership relationship.

15.   All additions or modifications to this Agreement must be made in
writing and must be signed by both parties.

16.   The Parties agree that this Agreement shall be governed by and construed
in accordance with the laws of the State of California, without regard to choice
of law provisions.

17.   Participant acknowledges that HP may transfer the HP business activity
to which this Agreement relates to Agilent Technologies, Inc. ("Agilent") or to
an Agilent affiliate during this Agreement. Participant agrees that as part of
such a transfer of that business activity, HP may, upon prior written notice to
Participant, assign its rights and obligations under this Agreement to Agilent
or to an Agilent affiliate.

                     HEWLETT-PACKARD COMPANY PARTICIPANT

Entity SSD                                  Company: LINUXCARE

Address: 100 Mayfield Ave Mtn View          Address:

By /s/ MIKE RIGODANZO                       By: /s/ ANTHONY V. POLLACE
   (Functional Manager's Signature)             (Authorized Signature)

Name: MIKE RIGODANZO                        Name: ANTHONY V. POLLACE

Title VP & GM                               Title CFO

Copies to Legal Dept.      Participant      HP Functional Manager  
                                            HP Representative
Rev 9/99



 TYPE:  EX-10.2.4
 SEQUENCE:  9
 DESCRIPTION:  MASTER SERVICES AGREEMENT WITH DENSA TECHNO TOKYO



 
                                                                  EXHIBIT 10.2.4

                                                       Agreement Number: DTT'S-1
                                                                         -------

                           MASTER SERVICES AGREEMENT

     This agreement ("Agreement") is made as of June 1, 1999 ("Effective Date"),
between Linuxcare, Inc., a Delaware corporation with an office at 650 Townsend
Street, San Francisco, CA 94103, USA (Phone: 415-354-4878; Fax: 415.701.7457)
("Linuxcare") and the "Customer" listed below.

Customer: Densa Techno Tokyo Co., Ltd         Contact: Kenichi Kataoka
Address: 1-23-14 Ebisu Shibuya-ku             Phone: +81-3-5421-3331
Tokyo, Japan  150-0013                        Fax: +81-3-5421-3330
                                              E-Mail: ken0514@df.mbn.or.jp

                             SERVICES INFORMATION
 
Service Level:                                Silver Plus SLA as defined in
                                              Exhibit B
Service Fee Period:                           July 25, 1999 - July 24, 2000
Service Incident Cap:                         [*]
Service Fee:                                  [*]

                               SERVICES PROVIDED

     Subject to payment of all applicable fees, Linuxcare will use reasonable
commercial efforts to perform the support services specified in the Statement of
Work ("SOW") attached hereto as Exhibit B ("Services") and incorporated herein,
in accordance with the Terms and Conditions attached hereto as Exhibit A , and
incorporated herein (collectively the "Exhibits"). Linuxcare may change the SOW,
the Service Fee, and the services that will be performed for a particular
Service Level, at any time; such changes will take effect at the beginning of
the next Service Fee Period. Customer understands that Linuxcare's performance
is dependent in part on Customer's actions. Accordingly, any dates or time
periods relevant to performance of Services by Linuxcare shall appropriately and
equitably extended to account for any delays resulting from changes to Customer
products or otherwise due to Customer. Customer may request additional hours or
levels of Services ("Extended Services"), which Linuxcare may provide at
Linuxcare's sole discretion, provided that Customer pays Linuxcare's then
current fees for such Extended Services.

     The Exhibits contain, among other things, warranty disclaimers and
     ------------------------------------------------------------------
liability limitations. Any different or additional terms of any related purchase
---------------------
order, confirmation, or similar form even if signed by the parties after the
date hereof shall have no force or effect. References in this Agreement or the
Exhibits to a capitalized term appearing on this cover page shall have the
meaning or value of such term on this cover page.

Customer:                                    Linuxcare:

By: /s/ IKUICHI TAKEYAMN                     By: /s/ FERNAND SARRAT
Name: IKUICHI TAKEYAMN                       Name: FERNAND SARRAT  
Title: PRESIDENT & CEO                       Title: PRESIDENT & CEO

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

 
                                   EXHIBIT A

                             TERMS AND CONDITIONS

1.   Training. Subject to payment of all fees, Linuxcare will provide the
     --------
     training specified in Linuxcare's current, published "Linuxcare Training
     Programs" documentation. Unless otherwise arranged between Customer and
     Linuxcare, all training shall occur at Linuxcare's facilities in San
     Francisco, California. The fees for training will be Linuxcare's current,
     published training fees, less the Training Discount ("Training Fees").

2.   Fees and Payment. Customer shall pay Linuxcare the fees for the selected
     ----------------
     Service Level shown in the Services Information section of this Master
     Services Agreement for each Service Fee Period. ("Service Fees"). Customer
     will pay the Service Fees for the initial Service Fee Period within 30 days
     of the Effective Date. Customer will pay the Service Fees for subsequent
     Service Fee Periods within 30 days after receipt of Linuxcare's invoice.
     Customer will also pay Linuxcare all Training Fees and Extended Services
     fees within 30 days after receipt of Linuxcare's invoice therefor. All
     payments are non-refundable. Any payments over 15 days overdue will bear a
     late payment fee of the lower of 1.5% per month of the outstanding balance
     or the maximum rate allowed by law. Linuxcare shall refund to Customer any
     amounts actually paid to Linuxcare by Customer which exceed amounts due
     hereunder, minus any costs, fees, taxes, duties or other implications, if
     any, arising in connection with such overpayment.

3.   Proprietary Rights. As between the parties, Linuxcare will retain all
     ------------------
     right, title and interest in and to any software, tools, techniques, and
     other materials used in connection with providing the Services ("Linuxcare
     Materials"). As between the parties, Customer will retain all right, title
     and interest in and to any software, products, documentation and other
     materials it supplies. Linuxcare hereby assigns to Customer all right,
     title and interest, in any work product created as part of the Services
     ("Work Product"), but this assignment does not include any portion of the
     Linuxcare Materials, and will not prevent Linuxcare from using the
     expertise, ideas and know-how learned while performing Services for other
     purposes (including, without limitation, for itself or on behalf of third
     parties).

4.   Confidential Information. Each party ("receiving party") agrees that all
     ------------------------
     code, inventions, algorithms, know-how and ideas and all other business,
     technical and financial information it obtains from the other party
     ("disclosing party"), but not including work product that is assigned to
     Customer by Linuxcare pursuant to Section 3, are the confidential property
     of the disclosing party ("Confidential Information" of the disclosing
     party). Except with the consent of the disclosing party, the receiving
     party shall hold in confidence and not use or disclose any Confidential
     Information of the disclosing party for at least seven (7) years after this
     Agreement expires or otherwise terminates. The receiving party's
     nondisclosure obligation shall not apply to information it can document:
     (i) is generally available to the public other than through breach of this
     Agreement; (ii) is rightfully disclosed to the receiving party by a third
     party; or (iii) is independently developed by the receiving party without
     use of any Confidential Information of the disclosing party. Because of the
     unique and proprietary nature of the Confidential Information, it is
     understood and agreed that the disclosing party's remedies at law for a
     breach by the receiving party of its obligations under this Section will be
     inadequate and that the disclosing party shall be entitled to equitable
     relief (including without limitation provisional and permanent injunctive
     relief and specific performance). Nothing stated herein shall limit any
     other remedies provided under this Agreement or available to the disclosing
     party at law. Upon expiration or termination of this Agreement for any
     reason, each party will return all copies of all Confidential Information
     of the other party in its possession or control.

5.   Termination. This Agreement will have an initial term of the earlier of one
     -----------
     year from the Effective Date or the date that Customer uses up its
     Incidences under its Service Level (initial "Service Fee Period") and shall
     automatically renew on each anniversary of the initial Service Fee Period
     for subsequent Service Fee Periods (subject to payment of Linuxcare's then
     current rates for additional Incidences) unless terminated by either party.
     For the purposes of this Agreement, "Incident" shall mean a single
     identified customer issue or problem. Each Incident is only valid 

 
     during the Service Fee Period it was purchased in. One call or e-mail may
     include multiple Incidents, and a single Incident may require more than one
     call or e-mail to resolve. Either party may terminate this Agreement upon
     thirty (30) days written notice to the other party, except if Linuxcare is
     terminating the Agreement such termination will not be effective until the
     end of any fully paid-up Service Fee Period. Linuxcare may terminate this
     Agreement at any time in the case of non-payment by Customer of any fees,
     unless Customer pays such fees in full within ten (10) days after such
     notice. Sections 4, 5, 7, 8, and 9 of this Agreement, and all accrued
     rights to payment, shall survive termination. Termination is not an
     exclusive remedy and all other remedies will be available whether or not
     termination occurs.

6.   Warranty and Disclaimer. Linuxcare hereby warrants to Customer, and only
     -----------------------
     Customer, that all Services shall be performed in a professional and
     workmanlike manner. THE PARTIES ACKNOWLEDGE THAT THIS IS AN AGREEMENT FOR
     SERVICES AND NOT FOR THE SUPPLY OF GOODS. EXCEPT FOR THE FOREGOING,
     LINUXCARE MAKES NO OTHER WARRANTIES OR REPRESENTATIONS AS TO THE SERVICES
     RENDERED. AND HEREBY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES,
     INCLUDING BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY,
     FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT. LINUXCARE FURTHER
     DISCLAIMS ANY WARRANTY THAT THE SERVICES WILL SUCCEED IN RESOLVING ANY
     PROBLEM, OR THAT ANY WORK PRODUCT OF THE SERVICES WILL BE FREE FROM PROGRAM
     ERRORS.

7.   Limitation of Liability. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR
     -----------------------
     OTHERWISE, AND EXCEPT FOR BODILY INJURY, LINUXCARE SHALL NOT BE LIABLE OR
     OBLIGATED WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT OR UNDER ANY
     CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY:
     (I) FOR ANY AMOUNTS IN EXCESS IN THE AGGREGATE OF THE FEES PAID TO IT
     HEREUNDER WITH RESPECT TO THE APPLICABLE SERVICES; (II) FOR ANY COST OF
     PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY, SERVICES OR RIGHTS; OR (III)
     FOR INTERRUPTION OF USE OR LOSS OR CORRUPTION OF DATA.

8.   NEITHER PARTY TO THIS AGREEMENT SHALL BE LIABLE OR OBLIGATED WITH RESPECT
     TO THE SUBJECT MATTER OF THIS AGREEMENT OR UNDER ANY CONTRACT, NEGLIGENCE,
     STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY: (I) FOR ANY MATTER
     BEYOND ITS REASONABLE CONTROL, OR (II) FOR ANY INCIDENTAL, INDIRECT OR
     CONSEQUENTIAL DAMAGES OR LOST PROFITS.

9.   Export Control. Customer shall comply with the U.S. Foreign Corrupt
     -------------- 
     Practices Act and all applicable export laws, restrictions, and regulations
     of the U.S. and foreign agency or authority.

10.  Miscellaneous. This Agreement is not assignable or transferable by Customer
     -------------
     without the prior written consent of Linuxcare; any attempt to do so
     shall be void. Linuxcare may assign this Agreement in whole or in part, or
     subcontract the performance of Services to third parties. Services may be
     used solely by Customer for Customer's internal use for Customer's own
     benefit. The parties agree that they are independent contractors and that
     this Agreement and relations between Linuxcare and Customer hereby
     established do not constitute a, joint venture, agency or contract of
     employment between them, or any other similar relationship. Neither party
     has the right or authority to assume or create any obligation or
     responsibility on behalf of the other. Any notice, report, approval or
     consent required or permitted hereunder shall be in writing. No failure or
     delay in exercising any right hereunder will operate as a waiver thereof,
     nor will any partial exercise of any right or power hereunder preclude
     further exercise. If any provision of this Agreement shall be adjudged by
     any court of competent jurisdiction to be unenforceable or invalid, that
     provision shall be limited or eliminated to the minimum extent necessary so
     that this Agreement shall otherwise remain in full force and effect and
     enforceable. Any waivers or amendments shall be effective only if made in
     writing. This Agreement is the complete and exclusive statement of the
     mutual understanding of the parties and supersedes and cancels all previous
     written and oral agreements and communications relating to the subject
     matter of this Agreement. The prevailing party in any action to enforce
     this Agreement will be entitled to recover its attorney's fees and costs in
     connection with such action.

                                                                     Page 2 of 3

 
11.  Governing Law and Jurisdiction. This Agreement which is in English, shall
     ------------------------------
     be interpreted in accordance with the commonly understood meaning of
     the words and phrases hereof in the United States of America. Any dispute,
     controversy or claim arising out of or relating to this Agreement or to a
     breach thereof, including its interpretation, performance or termination,
     shall be finally resolved by arbitration. The arbitration shall be
     conducted in English and in accordance with the commercial rules of the
     International Chamber of Commerce, which shall administer the arbitration
     and act as appointing authority. The arbitration, including the rendering
     of the award, shall take place in San Francisco, California which shall be
     the exclusive forum for resolving such dispute, controversy or claim. For
     the purposes of this arbitration, the provisions of this Agreement and all
     rights and obligations thereunder shall be governed and construed in
     accordance with the laws of the State of California. United States of
                                              ---------- 
     America, without regard to the conflicts of laws provisions thereof. The
     decision of the arbitrators shall be binding upon the parties hereto, and
     the expense of the arbitration (including without limitation the award of
     attorneys' fees to the prevailing party) shall be paid as the arbitrators
     determine. The decision of the arbitrators shall be executory, and judgment
     thereon may be entered by any court of competent jurisdiction.
     Notwithstanding anything contained in this Paragraph, each party shall have
     the right to institute judicial proceedings against the other party or
     anyone acting by, through or under such other party in order to enforce the
     instituting party's rights hereunder through reformation

                                                                     Page 3 of 3

 
                                   EXHIBIT B

                               STATEMENT OF WORK
CONTROL
 
       Document ID         DTTS SOW 1.0
       Location            /Documents/Linuxcare/DTTS/DTTS SOW 1.0.doc
       Originator          Jay Powell
       Issue Date          6/29/1999
       Status              Approved
       Version             1.0
 
DISTRIBUTION
 
       LINUXCARE           JAY POWELL, JIM FISHER
       DTT'S               KENICHI KATAOKA
 
 
 
       VERSION      MODIFIED BY      DATE         DESCRIPTION
       -------      -----------      ----         -----------
                                         
         0.1         Jay Powell     05/24/99     Draft Proposal
                                            
         0.2         Jay Powell     06/02/99     Content and Formatting changes
                                            
         0.3         Jay Powell     06/10/99     Changes as discussed with DTT'S
                                            
         0.4         Jay Powell     06/19/99     Changes as discussed with DTT'S
                                            
         0.5         Jay Powell     06/21/99     Final Draft for Approval
                                            
         0.6         Jay Powell     06/29/99     Modified Line 1 of section 4 at DTT'S request
                                            
         1.0         Jay Powell     07/07/99     Approved Final Version

                                                                     Page 1 of 8

 



                               TABLE OF CONTENTS
                               -----------------
                                                                         
1     INTRODUCTION                                                           3
                                                                            
2     RELATIONSHIP OBJECTIVES                                                4
                                                                            
   2.1   SHORT TERM OBJECTIVES                                               4
   2.2   LONG TERM OBJECTIVES                                                4
                                                                            
3     SERVICE PROPOSAL                                                       5
                                                                            
   3.1   SLA SERVICES                                                        5
      3.1.1   Hours of Operation:                                            5
      3.1.2   Distribution:                                                  5
      3.1.3   Platforms:                                                     5
      3.1.4   Phone, Web, e-mail support:                                    5
      3.1.5   Acknowledgment of incident:                                    5
      3.1.6   Resolution or report:                                          5
      3.1.7   First point of contact:                                        5
      3.1.8   Assigned Support Engineer:                                     5
      3.1.9   Dedicated Support Engineer:                                    6
      3.1.10  Authorized customer contacts:                                  6
      3.1.11  Telnet access to customer's system:                            6
      3.1.12  View Active Incident Status online:                            6
      3.1.13  Software updates:                                              6
      3.1.14  Access to Script library:                                      6
      3.1.15  Access to online configuration DB:                             6
      3.1.16  Pager notification service:                                    6
      3.1.17  Nextel Instant connect dispatch service:                       6
      3.1.18  Peak season escalation of service:                             6
      3.1.19  On site support:                                               7
   3.2   PROBLEM REPORTING PROCEDURES                                        7
   3.3   SERVICE RESTRICTIONS                                                7
   3.4   SLA SERVICE PERIOD AND RENEWAL                                      7
                                                                            
4     TRAINING                                                               8

                                                                     Page 2 of 8

 
1     INTRODUCTION

This Statement of Work ("SOW") serves to establish the framework of the
relationship between Linuxcare Inc. and Densa Techno Tokyo ("DTT'S") for
providing Linuxcare support services. These support services are to be used by
DTT'S both internally and externally through their support center in Akihabara.
This document is an addendum to the standard Linuxcare Master Service Agreement,
the terms of which are incorporated herein by reference ("Agreement").

This document is intended solely for DTT'S and Linuxcare and is not be
circulated outside of these organizations without written consent from Linuxcare
Inc.

                                                                     Page 3 of 8

 
2     RELATIONSHIP OBJECTIVES

2.1   Short Term Objectives

DTT'S and Linuxcare shall undertake a 12 months trial composed of primarily
backline support for DTT'S Linux support center to be opened in Akihabara Japan
in June of 1999. During this period the companies intend to determine their
ability to cooperate in the Japanese market with the goal of promoting Linux
solutions in Japan. This is to be accomplished with the Linuxcare providing
fundamental backline support to DTT'S thereby allowing DTT'S to provide a
comprehensive support solution to Japanese companies which are beginning to
investigate the strengths of Linux and the unique opportunities which Linux
presents.

2.2   Long Term Objectives

DTT'S desires to become a Linuxcare Certified partner with the ability to offer
solutions across all lines of business currently being offered by Linuxcare. It
is projected that the strength and value of Linuxcare services coupled with the
strength of DTT'S in the Japanese market will produce a situation in which both
companies will enjoy significant gains. This relationship will entail base price
of becoming a Linuxcare Certified Solutions provider and will incorporate a
revenue sharing plan to be worked out upon evaluation of the short term trial
objectives defined above.

Assuming success of the trial in Tokyo DTT'S will expand services to other
companies within the Densa Techno Group throughout Japan. It is envisioned that
these companies will then investigate trial service periods with Linuxcare along
the same lines as defined in section 2.1 for DTT'S.

                                                                     Page 4 of 8

 
3     SERVICE PROPOSAL

Linuxcare will use reasonable commercial efforts to provide an elevated level of
Silver SLA, which for purposes of this document has been deemed "Silver Plus"
Service Level Agreement ("SLA"). These services are to be used by DTT'S to
support Japan Linux users at their newly established Linux support facility in
Akihabara.

3.1   SLA Services

The Silver Plus SLA is unique to DTT'S and is based on a compromise of the
following Linuxcare standard Silver and Gold options. These services will be
used to reach the short term objectives of the business relationship with
Linuxcare and DTT'S as defined above (Ref. 2.1).

3.1.1  Hours of Operation:

9am - 6pm (JST) weekdays excluding national holidays

3.1.2  Distribution:

Distribution support is limited to Turbo Linux and Red Hat 5.2J and 6.0J as it
becomes available. (Note: Distribution interface is Japanese.)

3.1.3  PLATFORMS:

All major (include Alpha, Intel, MIPS, and SPARC)

3.1.4  PHONE, WEB, E-MAIL SUPPORT:

All 3 services will be available. (Note: Phone support will be frontline
Japanese support as rapidly as Linuxcare can staff its Japanese office, in the
meantime it is agreed that DTT'S and Linuxcare will work together to provide a
viable short term solution.)

3.1.5  ACKNOWLEDGMENT OF INCIDENT:

All incidents will be acknowledged within 3 business hours as defined by the
Hours of Operation (Ref. 3.1.1).

3.1.6  RESOLUTION OR REPORT:

Resolution or Report will be issued one business day as defined by the Hours of
Operation (Ref. 3.1.1).

3.1.7  FIRST POINT OF CONTACT:

Initially this is to be a level 1 engineer. As soon as a Linuxcare level 2
engineer is placed full time in Linuxcare's Japanese operations this will be
elevated to level 2 at no additional cost to DTT'S.

3.1.8  ASSIGNED SUPPORT ENGINEER:

This service option is not available for Silver Plus SLA customers.

                                                                     Page 5 of 8

 
3.1.9   Dedicated Support Engineer:

This service option is not available for Silver Plus SLA customers.

3.1.10  AUTHORIZED CUSTOMER CONTACTS:

DTT'S will have 4 Authorized customer contacts. These are the individuals whom
Linuxcare will accept support calls from.

3.1.11  TELNET ACCESS TO CUSTOMER'S SYSTEM:

Telnet access into the Akihabara based servers however not into the DTT'S
customer's site.

3.1.12  VIEW ACTIVE INCIDENT STATUS ONLINE:

Detailed online incident reports will be provided for each DTT'S incident.

3.1.13  SOFTWARE UPDATES:

Software updates will be made available to DTT'S through the Linuxcare web pages
(http://www.linuxcare.com).
--------------------------

3.1.14  ACCESS TO SCRIPT LIBRARY:

Access to the Linuxcare Script Library will be made available to DTT'S through
the Linuxcare web pages (http://www.linuxcare.com). These scripts are not to be
                        -------------------------- 
released to DTT'S customers without written consent from Linuxcare for each
instance.

3.1.15  ACCESS TO ONLINE CONFIGURATION DB:

Access to the Linuxcare online configuration database will be made available to
DTT'S through the Linuxcare web pages (http://www.linuxcare.com). This access is
                                      --------------------------    
solely granted to DTT'S and is not to be released to DTT'S customers.

3.1.16  PAGER NOTIFICATION SERVICE:

This service option is not available for Silver Plus SLA customers.

3.1.17  NEXTEL INSTANT CONNECT DISPATCH SERVICE:

This service option is not available for Silver Plus SLA customers. (Note: This
is a radio dispatch service and is not available in Japan.)

3.1.18  PEAK SEASON ESCALATION OF SERVICE:

This service option is not available for Silver Plus SLA customers.

                                                                     Page 6 of 8

 
3.1.19  ON SITE SUPPORT:

This service option is not available for Silver Plus SLA customers.

3.2   Problem reporting procedures

When DTT'S contacts Linuxcare with a problem report the following information is
required

      1.   Name of DTT'S engineer placing the call. This individual must be one
           of the Authorized customer contacts (Ref. 3.1.10)

      2.   Name of individual and individual's company that logged the initial
           call with DTT'S.

      3.   Description of the problem.

      4.   Description of the steps taken by DTT'S to resolve the problem
           locally.

Linuxcare will track this information; DTT'S shall not purposely mislead
Linuxcare regarding any of these points.

3.3   Service Restrictions

The services provided by Linuxcare are to be used at DTT'S Akihabara support
center and are intended to allow for DTT'S to support external end users. This
contract does not make allowances for Linuxcare services to be used in selling
corporate Linux support in Japan.

DTT'S shall not:

      *    Sell Linux support packages to Japanese corporate customers without
           written consent from Linuxcare for each sale.

      *    Make any additional or conflicting representations or warranties on
           behalf of Linuxcare.

      *    Use the trademark Linuxcare name, logo, or catch phrase "At the
           Center of Linux" without written consent from Linuxcare in each case.

3.4   SLA Service period and Renewal

The Trial SLA shall consist of 12 months of service or 375 Incidents, whichever
comes first, unless otherwise terminated under this Agreement. All SLA contracts
are self renewing however 2 months prior to expiration of existing SLA contracts
(or at 350 Incidents) DTT'S and Linuxcare will take steps to evaluate the
results of the previous year. This process will allow the companies to determine
the required SLA level for the upcoming year or take steps to strengthen the
relationship as defined in section 2.2 (Long Term Objectives) for the upcoming
year.

                                                                     Page 7 of 8

 
4     TRAINING

Included in the price of the Linuxcare solution being provided to DTT'S is 2
weeks of training for 10 engineers, covering Linuxcare University courses 101,
201, & 301. These courses are to be conducted in Japan with DTT'S providing the
following:

      1.   A dedicated training room. This room must be allocated solely for
           training, as having other events occurring at the same time will be a
           distraction to the students and the trainer. The training room should
           be equipped with a white board and pens as well as a projector.

      2.   Enough "Linux capable" computers for each student. Typically we
           provide 1 DELL machine per student however since the course will be
           at DTT'S location we will not be shipping our training machines
           internationally. The hardware is to be used is at DTT'S discretion
           however we must be sure that they are Linux capable. We also request
           that these machines have network cards and ideally an isolated
           network on which training can occur.

      3.   DTT'S must decide which distribution(s) they want to use for
           training. We prefer to offer training across multiple distributions
           to ensure that students come away with a greater appreciation of
           Linux and not just an understanding of a single distribution.
           (Suggested distributions are Turbo Linux and Red Hat 5.2J)

      4.   Copies of the distribution(s) DTT'S will use for training. As these
           distributions are Japanese we would like to request this in advance
           so that our instructor can at least familiarize himself with the
           Japanese front end.

      5.   Interpreter. This cost is to be borne by DTT'S so it is our
           recommendation that DTT'S provide the interpreter. If you are not
           able to do this we need enough notice to hire a local interpreter in
           Japan to provide this service.

The cost of sending training and support staff for this training will be billed
to DTT'S. These costs typically include but are not limited to the following:

      1.   Airfare - Linuxcare policy is business class for flights over 7
           hours.

      2.   Hotel - Linuxcare representatives in Japan stay in the Ebisu Westin
           hotel. This is also close to DTT'S training facilities making this
           hotel an ideal choice.

      3.   Meals.

      4.   Transit - Any travel required by Linuxcare staff to and from training
           and meetings with DTT'S will be incurred by DTT'S.

A minimum advance notice of 3 weeks will be required to allow Linuxcare to
adequately schedule and prepare for these training courses.

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