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                                                                  EXHIBIT 10.2.7

                         CONSULTING SERVICES AGREEMENT

     Effective August 30, 1999, ("Effective Date") Linuxcare, Inc., a Delaware
corporation with offices at 6034 Fulton Street, San Francisco, CA 94121
("Linuxcare") and Macmillan USA, Inc., a Maryland corporation (the "Company" or
"Macmillan") with offices at 201 West 103 Street, Indianapolis, IN 42690, agree
as follows (the "Agreement"):

     1.  Services. Linuxcare shall use reasonable commercial efforts to
         --------
undertake and complete the technical support services specified in Schedule A
("Services") in accordance with and substantially on the schedule specified
therein. However, the Company understands that Linuxcare's performance is
dependent in part on the Company's cooperation with Linuxcare and Company's
provision of materials and data necessary for Linuxcare to complete the
Services. Accordingly, dates or time periods relevant to performance by
Linuxcare hereunder shall be appropriately and equitably extended to account for
any delays due to the Company. From time to time Company may propose additional
services that it wants Linuxcare to perform by providing an amended Schedule A.
Linuxcare will review such amended Schedule A reasonably and in good faith and
discuss with Company the proposed addition; each addition will become effective
upon signature by both parties hereto. Linuxcare may either perform the Services
itself, or through subcontractors, but the use of such subcontractors shall only
be permitted with the written consent of the Company. Linuxcare shall be solely
responsible for the selection and supervision of all subcontractors.

     2.  Payment and Forecast.
         --------------------

         a.  Company shall make payments to Linuxcare for Services in accordance
with Schedule A. Each payment will be made in U.S. dollars in and from the
United States and will be made no later than forty five (45) days from the
receipt of Linuxcare's invoice for such amounts. Such amounts shall be billable
to Company each month for time spent in the immediately preceding month and
shall be submitted with a detailed report describing such Services rendered.
Company shall be responsible for any such taxes that accrue with the exception
of taxes on Linuxcare's net income. No payment to Linuxcare will be made with
government funds.

         b.  Linuxcare acknowledges and agrees that, except as provided in this
Section 2, it shall not be entitled to, and the Company shall not be obligated
to pay, any monies or other compensation for the Services provided and rights
granted under this Agreement.

         c.  Company shall provide a forecast to Linuxcare of the estimated
number of hours of Services per month needed hereunder in accordance with
Schedule A prior to the commencement of each calendar quarter.

     3.  Ownership. As between the parties, Company will retain or own all
         ---------
right, title and interest (including all patent rights, copyrights, trade secret
rights, mask work rights and

[*] = 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.

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other rights throughout the world (collectively, "Intellectual Property
Rights")) in its Proprietary Information (as defined below) and in the results
that may be produced as part of the Services rendered hereunder ("Results"),
provided that Company shall have no ownership of or license to any Developer
Stock except as may be set forth in a license agreement executed between the
parties. "Developer Stock" means Linuxcare's Proprietary Information,
preexisting software, engines, development tools and routines, as well as
derivatives and modifications thereof; provided that if any such derivative or
modification is made in the course of performance under this Agreement, then it
will qualify as Developer Stock only if it (a) has substantially the same
functionality as other Developer Stock and (b) has general applicability apart
from the Services. The parties hereby make any assignments necessary to achieve
the foregoing ownership provisions and will reasonably assist each other in
perfecting such ownership.

     4.   Representations and Warranties.
          ------------------------------

          a.  Linuxcare represents and warrants that: (i) the Services shall be
performed and Results created in accordance with, and shall not violate,
applicable laws, rules or regulations, and standards prevailing in the industry;
(ii) Linuxcare has full power and authority to enter into and perform its
obligations under this Agreement; this Agreement is a legal, valid, and binding
obligation of Linuxcare, enforceable against it in accordance with its terms
(except as may be limited by bankruptcy, insolvency, moratorium, or similar laws
affecting creditors' rights generally and equitable remedies); and (iii)
entering into this Agreement will not violate the Charter or By-laws of
Linuxcare or any material contract to which it is a party:

          b.  The Company represents and warrants that: (i) it has full power
and authority to enter into and perform its obligations under this Agreement;
(ii) this Agreement is a legal, valid, and binding obligation of the Company,
enforceable against it in accordance with its terms (except as may be limited by
bankruptcy, insolvency, moratorium, or similar laws affecting creditors' rights
generally and equitable remedies); and (iii) entering into this Agreement will
not violate the Charter or By-laws of the Company or any material contract to
which it is a party.

          c.  Indemnity by Linuxcare. Linuxcare will defend or settle, at its
sole expense, any action brought against Company, to the extent based on a third
party claim that the Services or Results provided by Linuxcare infringe any
third party U.S. patent, trademark, copyright or other proprietary right.
Linuxcare will indemnify, hold harmless and pay any settlement and other costs
and damages incurred by Company as a result of such claim; provided that
Linuxcare is (i) promptly informed in writing of such claim and action; (ii)
given exclusive authority and control to defend, settle or otherwise remove or
avoid such claim and action; and (iii) provided with all reasonable assistance
that it requests in connection with such claim and action. Linuxcare shall not
be responsible for costs or expenses incurred without its prior written
authorization. The remedy set forth in this Section 4c shall not apply to the
extent that such infringement claim arises from (i) use of the Results in a
manner for which it was not intended, (ii) use of the Results with any
equipment, hardware or software where the Results would not have infringed such
rights; (iii) modifications by or at the direction or request of Company or its
end users; (iv) willful infringement by Company or its end users; (v) the
negligence or misconduct of Company or its end users; or (vi) breach of this
Agreement or a Linux license by a

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party other than Linuxcare. Linuxcare shall have no obligation or responsibility
under this Section 4c for damages, costs, expenses and other losses to the
extent that Company knew of the possibility of, and failed to take reasonable
actions to, prevent or mitigate such losses, costs, expenses and damages. In the
event that Linuxcare reasonably believes that any aspect of the Services or
Results may infringe any intellectual property rights, Linuxcare may, at its
option, (i) procure for Company the right to continue obtain such Services; (ii)
modify the Service or Results to avoid such infringement; or (iii) immediately
terminate this Agreement. SECTION 4c STATES THE ENTIRE LIABILITY AND OBLIGATION
OF LINUXCARE AND THE EXCLUSIVE REMEDY OF COMPANY WITH RESPECT TO INFRINGEMENT OF
ANY INTELLECTUAL PROPERTY RIGHTS.

     5.   Confidentiality. Each party agrees that all code, inventions,
          ---------------
algorithms, know-how and ideas and all other business, technical and financial
information it obtains from the other are the confidential property of the
disclosing party ("Proprietary Information" of the disclosing party). All
software, engines, tools and techniques used by Linuxcare to perform the
Services shall be Proprietary Information of Linuxcare. The parties hereto agree
and acknowledge that all Results shall be Proprietary Information of Company.
Except as expressly and unambiguously allowed herein, the receiving party, with
respect to the disclosing party's Proprietary Information, will: (i) hold such
Proprietary Information in strict confidence; (ii) not disclose such Proprietary
Information to any third party (except subcontractors) without the disclosing
party's consent; (iii) use diligent efforts to protect such Proprietary
Information, such efforts to be no less than the efforts used by disclosing
party to protect its own similar confidential and proprietary materials; and,
(iv) similarly bind its employees and subcontractors in writing. The receiving
party shall not be obligated under this Section 5 with respect to information
the receiving party can document:

          (1)  is or has become readily publicly available without restriction
through no fault of the receiving party or its employees or agents; or

          (2)  is received without restriction from a third party lawfully in
possession of such information and lawfully empowered to disclose such
information; or

          (3)  was rightfully in the possession of the receiving party without
restriction prior to its disclosure by the other party; or

          (4)  was independently developed by employees or consultants of the
receiving party without access to such Proprietary Information; or

          (5)  must be disclosed in order to comply with any relevant law,
regulation, or judicial order.

     The parties hereby acknowledge that any breach of this Section 5 will cause
irreparable harm to the disclosing party, and that damages will not be an
adequate remedy for such a breach. Accordingly, the parties hereby agree that
the injured party will be free to seek equitable relief for such a breach,
including preliminary injunction if appropriate, without need to post a bond.

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     6.   Limited Liability.
          -----------------

          a.   NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE,
LINUXCARE SHALL NOT BE LIABLE OR OBLIGATED UNDER ANY SECTION 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 OR (II) FOR ANY COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY,
SERVICES OR RIGHTS OR (III) FOR LOSS OR CORRUPTION OF DATA OR INTERRUPTED USE.

          b.   NEITHER PARTY SHALL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER
OF THIS AGREEMENT UNDER ANY CONTRACT. NEGLIGENCE, STRICT LIABILITY OR OTHER
THEORY FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES. NOTHING IN THIS SECTION 6B
SHALL AFFECT THE PARTIES' RIGHTS AND OBLIGATIONS UNDER SECTION 4C.

     7.  Warranty and Disclaimer. Linuxcare represents and warrants to Company
         -----------------------
that the Services performed under this Agreement will be performed in a
professional and workman-like manner. EXCEPT AS STATED IN THIS AGREEMENT,
LINUXCARE MAKES NO WARRANTIES TO ANY PERSON OR ENTITY WITH RESPECT TO ANY
DEVELOPER STOCK, ANY DELIVERABLE OR ANY SERVICES OR LICENSES AND DISCLAIMS ALL
WARRANTIES, EXPRESS AND IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE. COMPANY'S
AND END USER'S SOLE AND EXCLUSIVE REMEDY, AND LINUXCARE'S SOLE AND EXCLUSIVE
LIABILITY, FOR ANY BREACH OF THE FOREGOING WARRANTY IS LINUXCARE'S COMMERCIALLY
REASONABLE EFFORTS TO RE-PERFORM THE SERVICES AT NO ADDITIONAL COST TO COMPANY.

     8.   Term and Termination.
          --------------------

          a.  The term of this Agreement shall be for one (1) year from the date
hereof or until terminated in accordance with the express terms of this
Agreement.

          b.  Either party may terminate this Agreement upon 30 days notice to
the other party of a breach of this Agreement unless such breach is cured within
that period. Termination under this Section 7(a) shall be Company's sole remedy
for any delay or failure by Linuxcare to perform Services under this Agreement.

          c.  Company may terminate this Agreement at any time upon sixty (60)
days notice to Linuxcare, provided that Company pays all accrued amounts due for
Services rendered up to the effective date of such termination.

          d.  Sections 3 through 7 of this Agreement, any accrued rights to
payment, and any remedies for breach of this Agreement shall survive termination
or expiration of this Agreement.

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     9.   Publicity and Press Releases. Except to the extent necessary under
          ----------------------------
applicable laws or for ordinary marketing purposes, the parties agree that no
press releases or other publicity relating to the substance of the matters
contained herein will be made without joint approval.

     10.  Assignment. Neither party shall have any right or ability to assign,
          ----------
transfer, or sublicense any obligations or benefit under this Agreement without
the written consent of the other except that a party may assign and transfer
this Agreement and its rights and obligations hereunder to any third party who
succeeds to substantially all its business or assets.

     11.  Notice. All notices under this Agreement shall be in writing, and
          ------
shall be deemed given when personally delivered or three days after being sent
by prepaid certified or registered U.S. mail to the address of the party to be
noticed as set forth herein or such other address as such party last provided to
the other by written notice.

     12.  Independent Contractor. Linuxcare agrees to perform the Services
          ----------------------
hereunder solely as an Independent Contractor. The parties to this Agreement
recognize that this Agreement does not create any actual or apparent agency,
partnership, franchise, or relationship of employer and employee between the
parties. Neither party is authorized to enter into or commit the other party to
any agreements. Further, neither party shall be entitled to participate in any
of the other party's benefits, including without limitation any health or
retirement plans. The Company shall not be liable for Worker's Compensation,
unemployment insurance, employers' liability, employer's FICA, social security,
or withholding tax, for or on behalf of Linuxcare or any other person consulted
or employed by Linuxcare in performing Services under this Agreement.

     13.  Miscellaneous.
          -------------

          a.  The failure of either party to enforce its rights under this
Agreement at any time for any period shall not be construed as a waiver of such
rights.

          b.  No changes or modifications or waivers are to be made to this
Agreement unless evidenced in writing and signed for and on behalf of both
parties.

          c.  In the event that any provision of this Agreement shall be
determined to be illegal or unenforceable, that provision will be limited or
eliminated to the minimum extent necessary so that this Agreement shall
otherwise remain in full force and effect and enforceable.

          d.  This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the conflicts of laws
provisions thereof. Headings herein are for convenience of reference only and
shall in no way affect interpretation of the Agreement.

          e.  Except as otherwise expressly stated in this Agreement, the rights
and remedies of a party set forth herein with respect to failure of the other to
comply with the terms of this Agreement (including, without limitation, rights
of full termination of this Agreement) are not exclusive, the exercise thereof
shall not constitute an election of remedies and the aggrieved

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party shall in all events be entitled to seek whatever additional remedies may
be available in law or in equity.

          f.   No liability or loss of rights hereunder shall result to either
party from delay or failure in performance (other than payment) caused by force
majeure, that is, circumstances beyond the reasonable control of the party
affected thereby, including, without limitation, acts of God, fire, flood, war,
government action, compliance with laws or regulations (including, without
limitation, those related to infringement), strikes, lockouts or other serious
labor disputes, or shortage of or inability to obtain material or equipment.

          g.   EACH PARTY RECOGNIZES AND AGREES THAT THE WARRANTY DISCLAIMERS
AND LIABILITY AND REMEDY LIMITATIONS IN THIS AGREEMENT ARE MATERIAL BARGAINED
FOR BASES OF THIS AGREEMENT AND THAT THEY HAVE BEEN TAKEN INTO ACCOUNT AND
REFLECTED IN DETERMINING THE CONSIDERATION TO BE GIVEN BY EACH PARTY UNDER THIS
AGREEMENT.

                                         LINUXCARE

                                         /s/ Signature Illegible

                                         By  _______________

                                         Address: 6034 Fulton St.
                                         San Francisco, CA 94121

                                         MACMILLAN USA, INC.

                                         /s/ Signature Illegible

                                         By  _______________

                                         Address: 201 W 103RD ST
                                         INDIANAPOLIS IN 46290
                                         ---------------------

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                                  SCHEDULE A

                                   SERVICES
                                   --------

1.   SERVICES: During the term of this Agreement, Linuxcare shall provide
technical support services to support end users of Macmillan Mandrake-branded
and Quake-branded products.

     Hours. Linuxcare support personnel will be available to provide support to
     -----
     end users 24 hours a day/ 7 days a week.

     Language. Support will be provided only in English.
     --------

     Method. Linuxcare shall provide standard support to end users via world
     ------
wide web, e-mail and facsimile. In addition, Linuxcare shall make telephonic
support available at the cost of * for the first minute a call for telephone
support and * for each additional minute of such telephone call.

     Resolution. Linuxcare will send an end user a resolution for an incident or
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a report detailing the status of resolution efforts within 24 hours of Linuxcare
being notified of the incident by end users.

     Company Personnel. Linuxcare will provide technical support to the
     -----------------
following two Company personnel: (1) Steve Schafer and (2) Jim Lefevere. Such
personnel may be changed by Company upon written notice to Linuxcare so long as
only two persons shall have such access. Linuxcare shall have no obligation to
provide support to additional Company personnel.

     End User Assistance. Linuxcare's Services under this Agreement are
     -------------------
conditional upon end user and Company providing reasonable assistance to
Linuxcare, including without limitation: (i) end users providing Linuxcare with
accurate information regarding an incident; and (ii) end users taking all steps
necessary to carry out procedures for the rectification of errors or
malfunctions.

     Escalation. Where a reported incident meets the following guidelines, such
     ----------
incident shall be escalated to the status of "Linuxcare Professional Services"
and the parties may mutually agree in a separate writing upon the terms and
conditions under which Linuxcare will provide such services, including without
limitation, additional fees to be charged by Linuxcare.

     Eligibility of Software. Linuxcare Services shall not include services
     -----------------------
requested as a result of, or with respect to, the following, and any such
services if provided by Linuxcare shall be provided (if at all) as part of a
separate Linuxcare Professional Services contract:

          (i) accident; unusual physical, electrical or electromagnetic stress;
neglect; misuse; failure of electric power, air conditioning or humidity
control; failure of rotation media;

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

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operation of the Software with other media not meeting or not maintained in
accordance with the manufacturer's specifications; or causes other than ordinary
use;

          (ii)   improper installation by End User or use of the software that
deviates from any operating procedures established by Company; or

          (iii)  modification, alteration or addition or attempted modification,
alteration or addition of the software undertaken by persons other than Company
or Company's authorized representatives.

     Hardware Support:
     ----------------

     For Linux Operating System products, Linuxcare shall provide support in the
following areas: (i) installation of Linux distribution and (ii) installation
and support of drivers located on Linux distribution CD's.

     For Quake and Quake II products, Linuxcare shall provide the following
support: (i) installation of Quake on hardware which meets the minimum
specifications for systems as set forth in the applicable documentation, and
(ii) configuration of support for hardware devices support by Quake CD's.

     For Oracle Products, Linuxcare shall provide the following support: (i)
installation of Oracle on hardware which meets the minimum specifications for
systems as set forth in the applicable documentation, and (ii) configuration of
support for hardware devices support by Oracle.

2    FEES AND FORECAST. The fees for Services (exclusive of telephone support
     -----------------
which is calculated separately in accordance with Section 1 above) will be
calculated based upon the following service level matrix:


     LEVEL     HOURS OF SERVICE           FEES
               DURING A CALENDAR MONTH


      1        0-125 hours                     * per/hr
      2        126-150 hours                   * per/hr
      3        151-175 hours                   * per/hr
      4        176-200 hours                   * per/hr
      5        201-225 hours                   * per/hr
      6        226-250 hours                   * per/hr
      7        251-300 hours                   * per/hr
      8        301-350 hours                   * per/hr
      9        351-400 hours                   * per/hr
     10        Over 401 hours                  * per/hr

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

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     Fee Calculation. Fees will be charged based upon the cumulative actual
     ---------------
number of hours of Service provided by Linuxcare each month. For example, if
Company utilized 306 hours of Service during a calendar month, Company would be
obligated to pay Linuxcare U.S.   (306 hours charged at   per hour) or if
Company utilized 224 hours of Service during a calendar month, Company would be
obligated to pay Linuxcare U.S. $   (224 hours charged at    per hour).

     Forecasts. No more than seven days prior to each calendar quarter, Company
     ---------
shall provide notice to Linuxcare of the estimated hours of Service for each
month during the next calendar quarter ("Forecast"). This Forecast will be non-
binding on the level of hourly support required hereunder, but will constitute
Company's good faith estimate of its use of Linuxcare Services.

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