Statement of Work - IBM Global Services and Linuxcare Inc.


                               STATEMENT OF WORK
                   BETWEEN IBM GLOBAL SERVICES AND LINUXCARE

1.0  OVERVIEW
-------------

This Statement of Work ("SOW") describes the agreement between IBM Global
Services and Linuxcare, where Linuxcare will provide Level 3 support and fix
distribution to IBM for Linux and Linux related products. This SOW is not a WA.
This SOW is an attachment to the IBM Customer Agreement (ICA) signed on 10/18/99
by Linuxcare and 10/21/99 by IBM.

2.0  KEY DEFINITIONS
--------------------

     PROBLEM RESOLUTION involves taking the appropriate steps to resolve a
     request for assistance. This may include providing Error Corrections.

     ERROR CORRECTIONS shall mean circumventions, work-arounds, temporary or
     permanent source code fixes, fix distribution technical information, how-to
     assistance and other similar information.

     SEVERITY involves the impact the problem has on business operations.

     LEVEL 1 SUPPORT shall mean the services in response to a customer's initial
     notification of a suspected problem. These services include call-logging
     and validation, determination of whether a solution is contained in product
     information and a review of symptoms/solutions database for known
     resolutions.

     LEVEL 2 SUPPORT shall mean the services to a customer to attempt to
     reproduce and correct the suspected problem.

     LEVEL 3 SUPPORT shall mean services provided by Linuxcare engineers to
     resolve Problems.

     PROBLEMS shall mean requests for Problem Resolution that are determined to
     be, or are highly probable to be, the result of a design or manufacturing
     defect or the result of a complex interaction between the product and
     another product that cannot be resolved by IBM, and which requires product
     design engineering knowledge or expertise to isolate and effect a Problem
     Resolution.

     LINUX: Any distribution of the Linux operating system or other products
     supported by Linuxcare.

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3.0  PROJECT SCOPE
------------------

IBM plans to independently market and perform product support services for IBM
customers using Linux. Under this SOW, in consideration for the payments
described in Section 5.4, Linuxcare will provide IBM with certain technical
assistance which will facilitate IBM's ability to provide such support services.
IBM will be responsible for providing Level 1 and Level 2 support to the IBM
customers in an attempt to resolve customer problems. Linuxcare will provide IBM
access to certain Linuxcare technical databases, information and materials as
described in Section 4.1 for IBM's use in providing such Level 1 and Level 2
support. Linuxcare also will be responsible for providing Level 3 support to IBM
to isolate and resolve source code defects, resolve complex technical issues and
provide fixes in furtherance of IBM's support services to IBM customers.

4.0  LINUXCARE RESPONSIBILITIES
-------------------------------

4.1  PRODUCT
------------

Provide to IBM for IBM's internal use only:

*    Access to existing Linuxcare technical informational databases and
     technical informational archives.
*    A complete listing of all components included in supported Linux and the
     scope of support for each of the components.

4.2  TECHNICAL ASSISTANCE
-------------------------

Linuxcare technical assistance responsibilities include:

*    Accept and provide Problem Resolution to all IBM requests. This includes
     requests for technical assistance as well as code defect assistance, source
     code corrections and fix distribution.
*    Work directly with IBM customers, when requested by IBM, to expedite
     Problem Resolution.
*    Maintain Problem record documentation in an agreed to database that is
     accessible to both companies.
*    Update Problem records with a current status.

     *    Sev 1 - Update every 4 hours
     *    Sev 2 - Update daily
     *    Sev 3 - Update weekly
     *    Sev 4 - Update/Close with comment and provide in next release.

*    Upon final Problem closure, provide a complete description of the Problem
     Resolution.
*    Test all fixes to ensure defect is resolved and no system regression has
     occurred.
*    Problems shall be considered closed when the Error Correction or corrective
     action resolves the outstanding issue or is mutually agreed to be a code
     restriction or "working as designed" issue, and when IBM, on behalf of the
     customer, conveys acceptance to Linuxcare.

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*    For the term of this SOW, Linuxcare shall make available to IBM customers
     Error Corrections for Linux as the Error Corrections are available, but in
     no event later than the general availability of such Error Corrections, and
     the following minimum service in accordance with the terms and conditions
     defined in this SOW:

     (1)  Isolate all Problems in Linux and promptly provide Error Corrections
          to IBM in accordance with the following "time is of the essence"
          parameters:
          (a)  for Problems that result in an emergency condition that cause
               critical impact to an IBM schedule or that make performance or
               continued performance of any feature or function impossible or
               impracticable by the end user ("Severity Level 1 Error"),
               Linuxcare shall provide a response within 4 hours and use best
               efforts to provide Error Corrections within 3 calendar days of
               the earlier of Linuxcare discovering the Problem or being
               informed of the Problem by IBM, IBM subsidiaries or end users who
               have entered into a support agreement with Linuxcare.
          (b)  for Problems that significantly affect an IBM schedule, cause a
               minor security breach or which make the performance or continued
               performance of any feature or function difficult that cannot be
               circumvented or avoided on a temporary basis by the end user
               ("Severity Level 2 Error"), Linuxcare shall provide a response
               within 8 hours and use commercially reasonable efforts to provide
               Error Corrections within 10 calendar days of the earlier of
               Linuxcare discovering the Problem or being informed of the
               Problem by IBM, IBM subsidiaries or end users who have entered
               into a support agreement with Linuxcare.
          (c)  for Problems that are not critical in that performance can be
               continued without difficulty or loss of data by easy
               circumvention or avoidance by the end user ("Severity Level 3
               Error"), Linuxcare shall provide a response within 24 hours and
               use commercially reasonable efforts to provide Error Corrections
               within 15 days of the earlier of Linuxcare discovering the
               Problem being informed of the Problem by IBM, IBM subsidiaries or
               end users who have entered into a support agreement with
               Linuxcare.
          (d)  for Problems that are minor which can be easily avoided or
               circumvented by the end user ("Severity Level 4 Error"),
               Linuxcare shall provide a response within 48 hours and use
               commercially reasonable efforts to provide Error Corrections in
               the next commercial release of the Deliverable.

 
SUMMARY CHART
-------------

Severity     Response to Initial   Time to Resolution *
             Contact                            
                                                
1            4 hours               24 Hours      
2            8 Hours               10 Days       
3            24 Hours              15 Days       
4            48 Hours              30 Days        


* From time of Linuxcare being informed of the Problem

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4.3  MANAGEMENT
---------------

Linuxcare management responsibilities include:

*    Identify a management contact(s) to oversee the support and service
     responsibilities defined in this SOW.
*    Work with IBM management to resolve issues related to the execution of this
     SOW.
*    Participate in status meetings with IBM management on a mutually agreeable
     basis.
*    Notify IBM management of pending changes or decisions that potentially may
     cause a negative impact to IBM's ability to deliver Linuxcare product
     support.

5.0  IBM RESPONSIBILITIES
-------------------------

5.1  PROBLEM MANAGEMENT TOOL
---------------------------- 

IBM will provide a WEB based tool that will be used for:

*    Requesting assistance from Linuxcare
*    Providing initial Problem information and severity
*    Maintaining appropriate Problem documentation by both IBM and Linuxcare on
     such items as status, updates, priority, Problem descriptions, customer
     environment and all other pertinent information that is necessary to
     resolve customer problems

5.2   TECHNICAL ASSISTANCE
--------------------------

IBM will provide the following Level 1 and Level 2 technical assistance to IBM
customers:

*    Provide initial customer contact and entitlement
*    Create initial Problem record and ensure all appropriate information is
     recorded
*    Establish proper priority/severity of Problem based on its impact to the
     customer
*    Search databases for known problems
*    Assist customer with the installation of corrective service/fixes obtained
     by customer
*    Attempt to determine if the error is due to improper installation of the
     Linuxcare product
*    Attempt to determine if the suspected error is due to prerequisite or
     operationally related equipment or software
*    Attempt to recreate the Problem
*    Communicate solution or recommended action to the customer
*    If no resolution and the Problem appears to be a newly discovered Code or
     documentation error, request assistance from Linuxcare for further analysis
     and documentation

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5.3  MANAGEMENT
--------------- 

IBM management responsibilities include:

*    Identify a management contact(s) to oversee the support and service
     responsibilities defined in this SOW.
*    Work with Linuxcare management to resolve issues related to the execution
     of this SOW.
*    Participate in status meetings with Linuxcare management on a mutually
     agreeable basis.
*    Notify Linuxcare management of pending changes or decisions that
     potentially may cause a negative impact to Linuxcare's ability to deliver
     Linuxcare product support.

5.4  COMPENSATION FOR SERVICES PROVIDED
--------------------------------------- 

Pricing for Linuxcare Support services will be based on an hourly charge of
$180.00. This hourly rate will be calculated in 15 minute increments and billed
monthly on net 30 terms. IBM agrees to commit to a minimum monthly usage of 27
hours. Unused hours may be carried forward to the following month until used.

5.5  YEAR 2000 SERVICES
----------------------- 

This SOW does not address the capability of Linuxcare's systems to handle date
data within and between the twentieth and twenty-first centuries. Linuxcare
acknowledges that it is Linuxcare's responsibility to assess its current systems
and take appropriate action to migrate to Year 2000 ready systems.

6.0  SUPPORT AVAILABILITY
------------------------- 
Both companies shall be available to meet the responsibilities of this SOW on
all hours seven (7) days a week.

Both companies shall be available via defined call out processes to meet the
responsibilities of this SOW on all hours, seven (7) days a week.

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7.0  OWNERSHIP AND LICENSES
--------------------------- 

LINUXCARE AND IBM: ANY MATERIALS PROVIDED BY IBM OR LINUXCARE ARE PROVIDED ON AN
-----------------
"AS IS" BASIS WITHOUT WARRANTY OF ANY KIND INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

8.0  STATEMENT OF WORK PERFORMANCE PERIOD AND CHANGES
-----------------------------------------------------

This SOW will be valid from September 23, 1999 through September 23, 2000.

All change requests shall be submitted through e-mail to the Project Manager.

10.0 CONTACT INFORMATION
------------------------

IBM MANAGEMENT CONTACTS:  LINUXCARE MANAGEMENT CONTACTS:

Larry Bucklew                                     Fernand Sarrat
Business Executive, Remote Workstation Services   CEO
11400 Brunet Rd.                                  650 Townsend
Austin, TX 78758                                  San Francisco, CA 94103
(512) 823-5600                                    (415) 354-4878
 
Ross Mikosh                                       Renee Harwood
Linux Service and Support Consultant              Director, Technical Support
11400 Brunet Rd.                                  650 Townsend
Austin, TX 78758                                  San Francisco, CA 94103
(512) 823-5600                                    (415) 354-4878

11.0 SUPPORTED PRODUCTS
-----------------------

A list of supported products will be maintained by Linuxcare at URL:
www.linuxcare.com/ibmdistsupport

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12.0 TERMINATION
---------------- 

After a period of twelve months from the date of execution of this SOW, either
party shall have the right to terminate this SOW with or without cause upon
sixty (60) days notice to the other party.

ACCEPTED AND AGREED TO:                  ACCEPTED AND AGREED TO:

     /s/ Thomas W. Phillips                   /s/ Larry W. Bucklew 
By-----------------------------10/22/99  By-----------------------------10/22/99
Authorized Signature           Date      Authorized Signature           Date

Thomas W. Phillips                       Larry W. Bucklew 
Printed Name                             Printed Name

VP WORLD WIDE SALES                      BUSINESS EXEC - IGS
Title & Organization                     Title & Organization

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