<PAGE>   1
                                                                    EXHIBIT 10.1



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


                          JOINT DEVELOPMENT AGREEMENT
                          AGREEMENT NUMBER 4998CR0349

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

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

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

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

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

1.0 DEFINITIONS:

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

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

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

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


                              SCO/IBM CONFIDENTIAL
                                  Page 1 of 53
<PAGE>   2


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

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

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

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

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

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

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

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

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

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


                              SCO/IBM CONFIDENTIAL
                                  Page 2 of 53
<PAGE>   3

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

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

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

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

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

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

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

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

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

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

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



                              SCO/IBM CONFIDENTIAL
                                  Page 3 of 53
<PAGE>   4
1.18 "Project Work Specification" shall mean the Software Specifications and
Design Environment Specifications.

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

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

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

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

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

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

2.0     OWNERSHIP AND LICENSES:

(a)     Joint Ownership

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

(b)     Sole Ownership

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

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


                              SCO/IBM CONFIDENTIAL
                                  Page 4 of 53
<PAGE>   5

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

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

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

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



                              SCO/IBM CONFIDENTIAL
                                  Page 5 of 53
<PAGE>   6
(d)     License to IBM of Licensed SCO Materials and SCO Project Work

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

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

(e)     Source Code Sublicensing

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

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

                1. Maintenance and support;

                2. Translation and localization;

                3. Porting, optimization and extensions; 

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


                              SCO/IBM CONFIDENTIAL
                                  Page 6 of 53
<PAGE>   7
3.0     TRADEMARKS/BRANDING

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

4.0     PRODUCT ROADMAP

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

5.0     PROJECT SUPPLEMENTS AND DEVELOPMENT OF PROJECT WORK:

5.1     Purpose and Effect of Project Supplements

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

5.2     Content of Project Supplements

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



                              SCO/IBM CONFIDENTIAL
                                  Page 7 of 53
<PAGE>   8

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

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

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

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

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

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

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

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

        i.      provision for written and oral progress reports; and

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



                              SCO/IBM CONFIDENTIAL
                                  Page 8 of 53
<PAGE>   9

6.0     DELIVERY OF LICENSED MATERIALS

6.1     Deliveries of Licensed Independent Materials

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

6.2     Access to and Delivery of Licensed Materials and Project Work

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

6.3     Offer and Delivery of Enhancements

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

7.0     ACCEPTANCE OF DELIVERABLES

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

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

8.0     PROJECT MANAGEMENT



                              SCO/IBM CONFIDENTIAL
                                  Page 9 of 53
<PAGE>   10

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

8.1     Management Levels

        Project Management for each Project Supplement will include three
        levels:

        (a)     Executive Level

        (b)     Project Level

        (c)     Technical Level

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

8.2     Executive Level Management

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

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

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

                        1.      Project Supplement status;

                        2.      Schedule status and outlooks;

                        3.      Action items from previous meetings; and

                        4.      Project issues and disputes, if any.

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



                              SCO/IBM CONFIDENTIAL
                                 Page 10 of 53
<PAGE>   11

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

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

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

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

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

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

                (vii)   setting product requirement objectives

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

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

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

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

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

8.3     Project Level Management

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

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



                              SCO/IBM CONFIDENTIAL
                                 Page 11 of 53
<PAGE>   12

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

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

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

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

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

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

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

8.4     Technical Level Management

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

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

8.5     Responsibilities of Each Level of Management

        (a)     Executive Level management responsibilities include:

                (i)     overall executive review and resolution of issues as
                        documented in Section 8.2 (c); and



                              SCO/IBM CONFIDENTIAL
                                 Page 12 of 53
<PAGE>   13

                (ii)    provide guidance to Project Level management.

        (b)     Project Level management responsibilities include:

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

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

                (iii)   act as an escalation point for Technical Managers

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

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

                (vii)   meeting committed project key dates;

                (viii)  meeting project/product cost objectives;

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

                (x)     managing work sharing between the parties;

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

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

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

        (f)     Technical Level responsibilities include:

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

                (ii)    work assignments of their respective personnel;

                (iii)   performance of the design implementations;

                (iv)    technical management of their respective development
                        activities;

                (v)     coordination of relevant programming group activities;

                (vi)    preparation of design status reports;



                              SCO/IBM CONFIDENTIAL
                                 Page 13 of 53
<PAGE>   14

                (vii)   participate in design and program reviews;

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

                (ix)    document design results;

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

                (xi)    report development status to the Project Managers;

                (xii)   lead technical meetings

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

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

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

                (xvi)   verification of compliance to:

                        (A) Project Work Specifications

                        (B) performance targets

                        (C) standards; and

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


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

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

8.7     Change Control

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



                              SCO/IBM CONFIDENTIAL
                                 Page 14 of 53
<PAGE>   15

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

                (i)     The Executive CCP;

                (ii)    The Project CCP; and

                (iii)   The Technical CCP.

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

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

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

                (iii)   attempt to resolve disputes.

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

8.8     Executive CCP

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

        (a)     the Product Roadmap;

        (b)     required resources and financial considerations;

        (c)     work assignments between SCO and IBM;

        (d)     schedule events and checkpoints; and

        (e)     changes to the CCP.

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

8.9     Project CCP

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



                              SCO/IBM CONFIDENTIAL
                                 Page 15 of 53
<PAGE>   16

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

        (b)     tracking program schedule events and checkpoints; and

        (c)     Project Supplements.


8.10    Technical CCP

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

        (a)     detailed design approaches;

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

        (c)     details of the Design Environment; and

        (d)     design level Project Work Specifications.

8.11    General Aspects of the Technical Management Process

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

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

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

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

        (e)     SCO and IBM managers will be responsible in all cases to
                individually manage, pay, appraise and develop the careers of
                their respective company's personnel assigned to the projects,
                and procedures, compensation guidelines and the like for their
                respective companies with respect to their employees assigned to



                              SCO/IBM CONFIDENTIAL
                                 Page 16 of 53
<PAGE>   17

                projects. The managers of one company shall not in any way
                manage or supervise employees of the other company participating
                in the project with respect to employment status, personnel
                practices, policies, salary administration, performance planning
                and review, or career development planning. Rather, they shall
                provide the appropriate team operational guidance, technical
                guidance and work environment to successfully execute the
                approved projects.

9.0     DISTRIBUTION OF UNIXWARE 7 AND IA-32 PRODUCT

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

9.1     SCO Responsibilities

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

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

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

9.2     IBM's Responsibilities

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

        All copies of the SCO Product Object Code and/or Documentation
        reproduced by IBM shall include the copyright notice of SCO and/or its
        suppliers, and all other proprietary markings as provided by SCO.



                              SCO/IBM CONFIDENTIAL
                                 Page 17 of 53
<PAGE>   18

        Prior to delivery to an End User, IBM shall assign a unique serial
        number activation key ("SNAK"), as provided by SCO, with each SCO
        Product. IBM may provide the same SNAK to an end user when a defective
        storage containing the SCO Product is replaced or to be replaced.

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

9.3     Use of SCO Product Names and Trademarks

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

9.4     License Fees

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

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

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

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

10.0    THIRD PARTY LICENSES/ROYALTIES



                              SCO/IBM CONFIDENTIAL
                                 Page 18 of 53
<PAGE>   19

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

10.2    Minimizing Encumbrances

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

10.3    Prerequisite Licenses

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

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

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



                              SCO/IBM CONFIDENTIAL
                                 Page 19 of 53
<PAGE>   20

11.0    INVENTION RIGHTS

11.1    Ownership and License.

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

11.2    Protection.

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

11.3    Joint Inventions.

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

11.4    Assistance.

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



                              SCO/IBM CONFIDENTIAL
                                 Page 20 of 53
<PAGE>   21

11.5    Scope of Licenses.

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

11.6    No Implied Licenses.

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

12.0    ROYALTIES

12.1    Royalty Calculations

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

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

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

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

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

[*]



                              SCO/IBM CONFIDENTIAL
                                 Page 21 of 53
<PAGE>   22

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

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

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

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

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

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

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

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



                              SCO/IBM CONFIDENTIAL
                                 Page 22 of 53
<PAGE>   23

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

Minimum Royalties

During the Initial Period:

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

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

During the Subsequent Period:

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

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

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

Special Purpose Processor - Minimum Royalties:



                              SCO/IBM CONFIDENTIAL
                                 Page 23 of 53
<PAGE>   24

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

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

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

[*]

Additional Royalties

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


The additional royalties shall be as follows:

[*]

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

Minimum Royalties for Specific Channels:

During the Initial Period:

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

[*]

Annually, three (3) months following the end of each calendar year, SCO will
calculate (based on its records of worldwide activity) the cumulative annual
amount of all license fees that would have been paid to IBM under this Agreement
during such calendar year if the minimum percent



                              SCO/IBM CONFIDENTIAL
                                 Page 24 of 53
<PAGE>   25

in the table below of the SCO lowest list price for a comparable license in
effect during such annual period had been used to calculate quarterly license
fees for the Specific Channel instead of the applicable percent of revenue rate.

[*] 

During the Subsequent Period:

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

[*]

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

[*]

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

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

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

12.2    Payment Obligations

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

        Outside of the U.S., a royalty payment quarter is defined according to
        each party's current administrative practices. Payment will be made by
        the last day of the second calendar month following the royalty payment
        quarter. Each party will provide a statement 



                              SCO/IBM CONFIDENTIAL
                                 Page 25 of 53
<PAGE>   26

        summarizing the royalty calculation with each payment. All payments will
        be made in U.S. Dollars. Payments based on foreign revenue will be
        converted to U.S. Dollars on a monthly basis at the rate of exchange
        published by Reuters Financial Service on approximately the same day
        each month.

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

12.3    Exceptions to Royalty Payment Obligations

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

        (a)     internal use;

        (b)     development, maintenance and support activities;

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

        (d)     backup or archival purposes;

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

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

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

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

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

[*]

12.5    Records

        Each party will maintain relevant records to support payments made to
        the other company. The records will be retained and made available for
        two (2) years from the date of the related payment. If a party requests,
        the other party will make these records available to an independent
        certified public accountant chosen and compensated (other than on a
        contingency basis) by the requesting party. The parties will put such
        requests in writing, will provide the audited party 90 days prior
        notice, and will make such requests no more than once per year. The
        audit will be conducted during normal 



                              SCO/IBM CONFIDENTIAL
                                 Page 26 of 53
<PAGE>   27
        business hours at the audited party's office in such a manner not to
        interfere will the audited party's normal business activities. The
        auditor will sign a confidentiality agreement and will only disclose to
        the requesting party any amounts overpaid or underpaid for the period
        examined.

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

13.0    FREEDOM TO MARKET

        Subject to the terms and conditions of this Agreement, both parties
        shall have full freedom and flexibility in the design and implementation
        of its marketing programs for any Deliverables, including, without
        limitation, the decision of whether to market or discontinue marketing
        any particular Deliverable, the selection of marketing channels, the
        timing and sequence of announcements and roll-out programs, the
        determination of



                              SCO/IBM CONFIDENTIAL
                                 Page 27 of 53
<PAGE>   28

        pricing strategy, the specification of license terms, and the offering
        of such Deliverables in connection with or as part of other software
        products an systems and with any computer hardware equipment. Nothing in
        this Agreement shall be construed as an obligation, guarantee or
        commitment by either party that any Deliverable shall be announced or
        marketed, or that any marketing effort will be productive of any level
        of sales. The parties may agree to pursue specific marketing activities
        as outlined in a Marketing Supplement executed by authorized
        representatives of each party and attached to this Agreement.
        Notwithstanding the foregoing, IBM agrees to include the IA-32 Product
        in the IBM marketing programs outlined in Attachment A for a minimum
        period of one year from the Effective Date of the Agreement. IBM will
        identify an IBM contact responsible for the marketing programs outlined
        in Attachment A. The scope and contributed resources and expenditures
        for such IBM marketing programs shall be at IBM's sole discretion.

14.0    TERM

[*]

15.0    TERMINATION

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

15.1    Termination for Cause

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

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

        (ii)    Termination of one or more Project Supplements, if the breach or
                default is of such Project Supplement, upon ninety (90) calendar
                days' written notice, unless the breaching party cures the
                breach within such ninety (90) day notice period provided
                however, that if the breach is such that it cannot reasonably be
                cured within ninety (90) days, then the breaching party must
                commence cure within such ninety (90) days and proceed to cure
                with due diligence to avoid termination for breach. Upon receipt
                of notice of such termination, the breaching party shall inform
                the non-



                              SCO/IBM CONFIDENTIAL
                                 Page 28 of 53
<PAGE>   29
                breaching party of the extent to which performance has been
                completed through such date and shall deliver to the
                non-breaching party whatever work product then exists in a
                manner prescribed by the non-breaching party. The breaching
                party shall be paid or credited only for those royalties or
                other payments properly due to the breaching party from the
                non-breaching party pursuant to this Agreement subject, however,
                to a setoff, credit and/or payment to the non-breaching party,
                of damages or losses incurred by the non-breaching party.

15.2    Change of Control

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

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

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

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

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

15.3    Bankruptcy or Insolvency

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



                              SCO/IBM CONFIDENTIAL
                                 Page 29 of 53
<PAGE>   30
        Work upon the occurrence of one of the events described in this Section
        15.3 as it relates to SCO, shall be in accordance with Section 15.4.
        SCO's right to the Project Work upon the occurrence of one of the events
        described in this Section 15.3 as it relates to IBM, shall be in
        accordance with Section 15.4.

15.4    Effect on Rights

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

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

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

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

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

16.0    NOTICE AND RIGHT TO PARTICIPATE ON CHANGE OF CONTROL

16.1    Notice

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



                              SCO/IBM CONFIDENTIAL
                                 Page 30 of 53
<PAGE>   31
        including the structure and price terms of the merger, sale or
        acquisition, the name and address of the party proposed to acquire or
        merge with SCO and the date on or about which sale or merger is proposed
        to be made.

16.2    Right to Participate

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

17.0    CONFIDENTIAL INFORMATION

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

18.0    PUBLIC DISCLOSURE

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

19.0    REPRESENTATIONS AND WARRANTIES

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



                              SCO/IBM CONFIDENTIAL
                                 Page 31 of 53
<PAGE>   32

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

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

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

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

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

20.0    LIMITATION OF LIABILITY

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

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

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

21.0    INDEMNIFICATION



                              SCO/IBM CONFIDENTIAL
                                 Page 32 of 53
<PAGE>   33

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

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

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

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

22.0    GENERAL

22.1    Force Majeure

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

22.2    Notices/Coordinators

        All contractual communications between the parties under this Agreement,
        including legal notices, shall be carried out through or under the
        supervision of the following 



                              SCO/IBM CONFIDENTIAL
                                 Page 33 of 53
<PAGE>   34
        contract coordinators listed below. Any legal notice shall be
        sufficiently made or given on the date of mailing if sent to such party
        by facsimile transmission ("FAX") or by certified mail, postage prepaid,
        courier or express mail and addressed to the address set forth below.

              For IBM:          International Business Machines Corporation
                                Craig Schneider,  M/S 4106
                                11400 Burnet Road
                                Austin, Texas 78758
                                Phone:  512-823-8694  FAX:  512-823-8712
              
              For SCO:          The Santa Cruz Operation, Inc.
                                Kimberlee Madsen
                                Law and Corporate Affairs
                                400 Encinal Street
                                Santa Cruz, California  95060
                                Phone: 831-427-7822  FAX: 831-427-5474

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

22.3    Choice of Law/Venue

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

22.4    Headings

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

22.5    Independent Contractors

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

        Each party agrees that it has entered into, or will enter into,
        agreements with its employees, contractors, licensees or other
        applicable third parties, as necessary for it to comply with all of its
        obligations under this Agreement.



                              SCO/IBM CONFIDENTIAL
                                 Page 34 of 53
<PAGE>   35
        Each party acknowledges that it has not relied on any promises,
        inducements, representations or other statements made by the other party
        regarding the commercial viability, profitability or success in the
        marketplace of any products or services, and that each party's decision
        to enter into this Agreement is made independently from the other party.

22.6    Freedom of Action

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

22.7    Compliance with Laws/Regulations

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

22.8    Workplace Safety

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

22.9    Presence on Other Party's Premises

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

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



                              SCO/IBM CONFIDENTIAL
                                 Page 35 of 53
<PAGE>   36

                company a set of documents setting forth all such rules
                applicable to contractor personnel resident at or visiting its
                premises.

22.10   Solicitation

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

22.11   Amendment/Waiver

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

22.12   Assignment

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

22.13   Order of Precedence

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

                (a)     this Agreement;

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

                (c)     any Project Supplements to this Agreement;

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

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



                              SCO/IBM CONFIDENTIAL
                                 Page 36 of 53
<PAGE>   37

22.14   Severability

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

22.15   Survival

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

22.16   Former Employees

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

22.17   Responsibility for Employees

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


22.18   Export of Technical Data

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

22.19   Entire Agreement

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



                              SCO/IBM CONFIDENTIAL
                                 Page 37 of 53
<PAGE>   38

22.20   Counterparts

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

22.21   Agreement Reproductions

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

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

INTERNATIONAL BUSINESS                      THE SANTA CRUZ OPERATION,
MACHINES CORPORATION                        INCORPORATED

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

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



                              SCO/IBM CONFIDENTIAL
                                 Page 38 of 53
<PAGE>   39
                                  Attachment A

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

        *       Unix on Intel Awareness Campaign

        *       Increased WW Business Show Presence

        *       Enable Support Centers for UnixWare and IA-32 Product

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

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

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

        *       Netfinity Development and Programs

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

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

        *       General Marketing/Communication material development


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


        -       MQ-series

        -       DB2

        -       eNetwork Directory

        -       Net.Data

        -       IBM Websphere

        -       Commserver

        -       Tivoli Management Software

        -       Network Station Manager



                              SCO/IBM CONFIDENTIAL
                                 Page 39 of 53
<PAGE>   40
                                  ATTACHMENT B

[*]



                              SCO/IBM CONFIDENTIAL
                                 Page 40 of 53
<PAGE>   41
                                  ATTACHMENT C
                                   TRADEMARK

                                      AND

                                      LOGO

                                     USAGE

                                   GUIDELINES


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



================================================================================
                      TRADEMARK AND LOGO USAGE GUIDELINES


TABLE OF CONTENTS:

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

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

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



                              SCO/IBM CONFIDENTIAL
                                 Page 41 of 53
<PAGE>   42

 -----------------------------------------------------------------------------
                                  INTRODUCTION
 ------------------------------------------------------------------------------

DEFINITION OF MARKS

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

THE SANTA CRUZ OPERATION, INC.

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

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

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

TRADEMARK SYMBOLS:

As discussed above, SCO's marks are used to identify SCO products or services.
Some of the marks have been registered in the U.S.A. as well as other countries,
and others are pending registration. Registered trademarks and registered
service marks are denoted by the "(R)" symbol. Marks for which protection is
claimed but not registered are denoted by the "(TM)" symbol. When a claimed mark
refers to a service, the mark is denoted by the "(SM)" symbol. These marks
should be used consistently, and in such a way that they 



                              SCO/IBM CONFIDENTIAL
                                 Page 42 of 53
<PAGE>   43

are easy to distinguish. The (R), (TM), and (SM) symbols should run as
superscript immediately after the trademark or service mark. If superscript is
not available, use parentheses: (circle-R) or (TM) or (SM). SCO trademarks and
service marks need only be denoted the first time they appear in a particular
text or copy.

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

TRADEMARKS ARE ADJECTIVES:

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

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

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

PLURAL, POSSESSIVE, HYPHENS & SLASHES 

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

INCORRECT USAGE: SCO UnixWare's

CORRECT USAGE: SCO UnixWare System's

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

INCORRECT: SCO UnixWare-compatible

SCO OpenServer/SCO UnixWare

CORRECT USAGE: SCO UnixWare System compatible

SCO OpenServer and SCO UnixWare Systems

DON'T SHORTHAND

Trademarks should not be used in shorthand compatibility phrases such as "SCO
compatible", etc. It is improper usage because it treats the trademark as a
generic standard, rather than the trademark owner's 



                              SCO/IBM CONFIDENTIAL
                                 Page 43 of 53
<PAGE>   44

specific product brand, and unfairly leverages off the owner's substantial and
valuable goodwill. See the following examples:

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

OR

XXXXXX is compatible with SCO UnixWare System.

OWNERSHIP FOOTNOTE

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

1. SCO's trademarks

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

3. The UNIX footnote 

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

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

Here is a typical OWNERSHIP FOOTNOTE sample:

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

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

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



                              SCO/IBM CONFIDENTIAL
                                 Page 44 of 53
<PAGE>   45

For example:

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

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

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

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

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

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

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

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

SCO's trademarks may not be preceded or appended directly with the name of a
third party company, product or service name. Licensees may, however, reference
their company, product, or service by adding a 



                              SCO/IBM CONFIDENTIAL
                                 Page 45 of 53
<PAGE>   46

preposition such as "from" or "for". EXAMPLE: SCO OpenServer System from
Siemens, or SCO UnixWare System for Compaq Computer Systems.

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

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

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

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

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

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

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

ARCserve is a registered trademark of Cheyenne Software, Inc.

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

Cheyenne is a registered trademark of Cheyenne Software, Inc.

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

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

MPX was developed by Corollary, Inc.

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

Netscape, Netscape Navigator, Netscape Communications Server, Netscape Commerce
Server, Netscape Proxy Server, Netscape FastTrack Server, Netscape Enterprise
Server, Netscape SuiteSpot, Netscape 



                              SCO/IBM CONFIDENTIAL
                                 Page 46 of 53
<PAGE>   47

Catalog Server, Netscape News Server, Netscape Mail Server, and Netscape
Navigator Gold are trademarks or registered trademarks of Netscape
Communications Corporation.

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

"Netscape Navigator Included"

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

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

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

NonStop is a registered trademark of Compaq Computer Corporation.

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

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

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

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

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

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

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

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

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

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



                              SCO/IBM CONFIDENTIAL
                                 Page 47 of 53
<PAGE>   48

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

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


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

DiSCOver(R)

Multiscreen(R)

ODT(R)

Open Desktop(R)

SCO(R)

SCO Logo(with tree design)(R)

The Santa Cruz Operation(R)

UnixWare(R)

VP/ix(R)

*TRADEMARKS

Business/21(TM)

dbXtra(TM)

Internet Way of Computing(TM)

IWoC(TM)

Optimized for Internet Computing Logo(TM)

Panner(TM)

SCO ACE(TM)

SCO CIFS Bridge(TM)

SCO CUSA(TM)

SCO Doctor(TM)

SCO Doctor for Networks(TM) 

SCO Doctor Lite (TM) 

SCO Global Access(TM) 

SCO MPX(TM) 

SCO MultiView(TM) 

SCO Nihongo Open Server(TM) 

SCO OK(TM) 




                              SCO/IBM CONFIDENTIAL
                                 Page 48 of 53
<PAGE>   49

SCO OK logo(TM)

SCO Open Server(TM) 

SCO OpenServer(TM) 

SCO Portfolio(TM) 

SCO POS System(TM) 

SCO Premier Motif(TM) 

SCO TermLite(TM) 

SCO ToolWare (TM) 

SCOtopia(TM) 

SCO Vision2K(TM) 

SCO Vision97(TM) 

SCO VisionFS(TM) 

SCO Visual Tcl(TM) 

Skunkware(TM)

Tarantella(TM) 

The Tarantella logo(TM) 

The Business Choice(TM) 

Zones(TM)

*SERVICE MARKS APC(SM)

SoftCare(SM)

SoftTech

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


*REGISTERED TRADEMARKS

Wintif(R)

*TRADEMARKS:

IXI(TM)

IXI logo(TM)

X.desktop(TM)

Deskworks(TM)

IXI Panorama(TM)



                              SCO/IBM CONFIDENTIAL
                                 Page 49 of 53
<PAGE>   50


Deskterm(TM)

IXI Desktop(TM)

*SERVICE MARKS:

X.tra(SM)


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



*REGISTERED TRADEMARKS:

Devkit.Vision(R)

Esprit(R)

Kodon(R)

Super.Vision(R)

Term.Vision(R)

Visionware(R)

Visionware Direction(R)

Visionware logo(R)

Visionware SQL-Retriever(R)

Visionware Super.Vision(R)

XVision(R)


*TRADEMARKS:

Codon(TM)

PC-Connect(TM)

SQL-Retriever(TM)

SuperVision(TM)

TermVision(TM)

Vision Builder (TM)

XV Logo(TM)

X-Visionware(TM)




                              SCO/IBM CONFIDENTIAL
                                 Page 50 of 53
<PAGE>   51



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



MEMORANDUM
================================================================================

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


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

surveys/questionnaires 

cover letters 

web pages/domain names 

contest materials

press releases 

newsletters 

videos 

presentations 

guidelines 

white papers 

manuals

technical papers 

media labels 

packaging materials 

artwork 

banners 

posters

datasheets 

cds 

annual report 

inserts 

postcards

commercials: tv, radio, etc. publications




                              SCO/IBM CONFIDENTIAL
                                 Page 51 of 53
<PAGE>   52

collateral

brochures

slides/foils

handbooks

educational materials

demos

charts

mailings

price lists

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

Copyright Law:



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


Advertising Compliance

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

Trademarks/Logos

Materials will most likely contain trademarks and logos of SCO and/or a third
party. SCO and its subsidiaries own a number of trademarks (including various
corporate, product, and program logos). SCO trademarks are valuable company
assets because they identify our products to current and potential customers.
Our product, service and program names, when used properly, are protected by
established trademark law. If trademarks are used incorrectly, or not at all,
they can, over a period of time, fall into general public use and lose their
protective value. This could damage the reputation of SCO by giving 



                              SCO/IBM CONFIDENTIAL
                                 Page 52 of 53
<PAGE>   53

others the opportunity to adopt or misuse the names that should be uniquely
associated with SCO products and services. Furthermore, to help protect SCO from
potential lawsuits, etc., use of a third party's logos and trademarks must be
used properly. Please refer to the SCO Trademark Guidelines published by the
Legal Department.

Contractual Obligations

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




Privacy and Data Protection

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

Legislation/Court Rulings

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

Disclaimers

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



*



                              SCO/IBM CONFIDENTIAL
                                 Page 53 of 53