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                                                                   EXHIBIT 10.10

                                   LINEO, INC.

                            STOCK PURCHASE AGREEMENT

          THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of this __
day of April, 2000, by and between Lineo, Inc., a Delaware corporation (together
with any predecessors or successors thereto, the "Company"), and
_____________________ (together with its successors and assigns, the
"Investor").

                                    RECITALS

         A. The Company has authorized the issuance and sale to the Investor of
_______ shares of Series C Convertible Preferred Stock, $.001 par value per
share (the "Series C Preferred Stock"), having the rights and preferences set
forth in the Certificate of Designation in the form attached as EXHIBIT A hereto
(the "Certificate of Designation"), which the Company shall adopt and file with
the Secretary of State of the State of Delaware on or before the Closing (as
defined below in Section 1.3), for an aggregate purchase price of $__________.

                                    AGREEMENT

          NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:

SECTION 1.  PURCHASE AND SALE OF SHARES.

         1.1 DESCRIPTION OF SECURITIES.

         The Company's authorized capital stock consists of 100,000,000 shares
of Common Stock and 30,000,000 shares of Preferred Stock, par value $.001 per
share. Of such shares of Preferred Stock, 3,000,000 shares are designated as
Series C Preferred Stock. The Company has authorized and has reserved, and
covenants to continue to reserve, free and clear of preemptive and other
preferential rights, a sufficient number of shares of its Common Stock to
satisfy the rights of conversion of the holders of the Series C Preferred Stock.
For purposes of this Agreement, (a) the shares of Series C Preferred Stock to be
acquired by the Investor from the Company hereunder are referred to as the
"Series C Preferred Shares," (b) the shares of Common Stock issuable upon
conversion of the Series C Preferred Shares are referred to as the "Conversion
Shares" and (c) the Series C Preferred Shares and the Conversion Shares are
sometimes referred to collectively as the "Securities."

         1.2 SALE AND PURCHASE.

         Upon the terms and subject to the conditions herein, and in reliance on
the representations and warranties set forth in Section 2, the Investor hereby
agrees to purchase from the Company, and the Company hereby agrees to issue and
sell to the Investor, at the Closing, ______ Series C Preferred Shares for the
purchase price of $6.00 per share for an aggregate of $_________, and the
Company hereby grants the Investor the rights set forth herein. The proceeds of
this sale are intended to be used for the expansion of the Company's business,
working capital and other general corporate purposes.

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         1.3 CLOSING.

         The closing of the purchase and sale of the Series C Preferred Shares
(the "Closing") shall take place at the offices of the Company at 10:00 a.m. on
April __, 2000, or at such other time and place as the parties hereto may agree
(the "Closing Date"). At the Closing, the Company shall deliver to the Investor
a stock certificate, registered in the name of the Investor, representing the
number of shares of Series C Preferred Stock purchased by such Investor
hereunder.

SECTION 2.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

          The Company represents and warrants the following, except as set forth
in the schedule of exceptions attached hereto as EXHIBIT B (the "Disclosure
Schedule"), which exceptions shall be deemed to be representations and
warranties as if made hereunder:

         2.1 ORGANIZATION AND CORPORATE POWER.

         The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and is qualified to do
business as a foreign corporation in each jurisdiction in which the failure to
be so qualified would have a material adverse effect on its assets, liabilities,
condition (financial or other), business, results of operations or prospects (a
"Material Adverse Effect"). The Company has all required corporate power and
authority to carry on its business as presently conducted, to enter into and
perform this Agreement and all other agreements contemplated hereby to which it
is a party and to carry out the transactions contemplated hereby and thereby,
including the issuance (or reservation for issuance), sale, delivery and
conversion of Series C Preferred Shares and the issuance of the Conversion
Shares. The Company is not in violation of any term of the Certificate of
Incorporation and Bylaws of the Company, as amended to date (the "Certificate of
Incorporation" and the "Bylaws," respectively.)

         2.2 AUTHORIZATION AND NON-CONTRAVENTION.

         The execution, delivery and performance by the Company of this
Agreement and all other agreements, documents and instruments to be executed and
delivered by the Company as contemplated hereby (including, without limitation,
the Certificate of Designation) and the issuance and delivery of (i) the Series
C Preferred Shares and (ii) upon the conversion of the Series C Preferred
Shares, the Conversion Shares, have been duly authorized by all necessary
corporate and other action of the Company. This Agreement and each such other
agreement, document and instrument (including, without limitation, the
Certificate of Designation) constitute valid and binding obligations of the
Company, enforceable in accordance with their respective terms. The execution
and delivery by the Company of this Agreement and each other agreement, document
and instrument to be executed and delivered by the Company pursuant hereto or as
contemplated hereby (including, without limitation, the Certificate of
Designation) and the performance by the Company of the transactions contemplated
hereby and thereby, including, without limitation, the issuance and delivery of
(i) the Series C Preferred Shares and (ii) upon the conversion of the Series C
Preferred Shares, the Conversion Shares, do not and will not (whether after the
giving of notice, lapse of time or both): (a) violate, conflict with or result
in a default under any instrument, judgment, order, writ, decree, contract,
statute, rule, regulation or obligation to which the Company is subject to or by
which it or its assets are bound, or any provision of the Certificate of
Incorporation or Bylaws of the Company, and a violation of which would have a
material adverse effect on the business, condition, financial or otherwise, or
operations of the Company, or (b) result in any such

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violation, or be in conflict with or constitute, with or without the passage of
time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event that results
in the creation of any lien, charge or encumbrance upon any assets of the
Company or the suspension, revocation, impairment, forfeiture or nonrenewal of
any material permit, license, authorization or approval applicable to the
Company, its business or operations or any of its assets or properties.

         2.3 CAPITALIZATION.

         As of the Closing and after giving effect to the transactions
contemplated hereby, the authorized capital stock of the Company will consist of
100,000,000 shares of Common Stock, par value $.001 per share, of which
20,148,724 shares are issued and outstanding, and 30,000,000 shares of Preferred
Stock, par value $.001 per share, of which (a) 7,500,000 shares are designated
as Series A Preferred Stock, of which (i) 5,000,000 shares are designated as
Series A Class 1 Preferred Stock, all of which are issued and outstanding, and
(ii) 2,500,000 shares are designated as Series A Class 2 Preferred Stock, all of
which are issued and outstanding, (b) 4,850,000 shares are designated as Series
B Preferred Stock, of which 4,833,331 shares are issued and outstanding, and (c)
3,000,000 shares are designated as Series C Preferred Stock. In addition, the
Company has authorized and reserved for issuance upon conversion of the Series A
Preferred Stock up to 7,500,000 shares of Common Stock (subject to adjustment
for stock splits, stock dividends and the like), has authorized and reserved for
issuance upon conversion of the Series B Preferred Stock up to 4,850,000 shares
of Common Stock (subject to adjustment for stock splits, stock dividends and the
like), has authorized and reserved for issuance upon conversion of the Series C
Preferred Stock up to 3,000,000 shares of Common Stock (subject to adjustment
for stock splits, stock dividends and the like) and has reserved for issuance
upon exercise of options under the Company's stock option plan (the "Plan")
5,000,000 shares of Common Stock (subject to adjustment for stock splits, stock
dividends and the like). Other than as described above, the Company has not
issued or agreed to issue and is not obligated to issue any warrants, options or
other rights to purchase or acquire any shares of its capital stock, or any
securities convertible into or exercisable or exchangeable for such shares or
any warrants, options or other rights to acquire any such convertible
securities. As of the Closing, and after giving effect to the transactions
contemplated hereby, all of the outstanding shares of capital stock of the
Company (including, without limitation, the Series C Preferred Shares) are duly
and validly authorized and issued, fully paid and nonassessable and, except as
set forth herein, not subject to any preemptive rights to purchase or otherwise
acquire shares of capital stock of the Company, are free of restrictions on
transfer, other than restrictions on transfer under this Agreement and the
Investor Rights Agreement and under applicable state and federal securities
laws, and will have been offered, issued, sold and delivered in compliance with
applicable federal and state securities laws. The Conversion Shares will, upon
issuance, be duly and validly authorized and issued, fully paid and
nonassessable, will be free of restrictions on transfer, other than restrictions
on transfer under this Agreement and the Investor Rights Agreement and under
applicable state and federal securities laws, and will not be subject to any
preemptive rights, and will be offered, issued, sold and delivered in compliance
with applicable federal and state securities laws. The relative rights,
preferences and other provisions relating to the Series C Preferred Shares are
as set forth in the Certificate of Designation.

         2.4 SUBSIDIARIES; INVESTMENTS.

         Except as set forth in Section 2.4 of the Disclosure Schedule and other
than 1,250,000 shares of Common Stock of Caldera Systems, Inc., a representative
office located in Taiwan and a wholly owned subsidiary located in the United
Kingdom, the Company does not currently own any capital stock or

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interest or participate in any corporation, joint venture, partnership, trust,
limited liability company or other entity.

         2.5 FINANCIAL STATEMENTS.

         The Company has previously furnished to the Investor copies of its
draft audited financial statements (balance sheet, statement of operations,
statement of cash flows and statement of stockholders equity, including notes
thereto) for the fiscal year at and ended October 31, 1999 (the "Financial
Statements"). Such financial statements were prepared in conformity with
generally accepted United States accounting principles applied on a consistent
basis; are complete, correct and consistent in all material respects with the
books and records of the Company; and fairly and accurately present the
financial position of the Company as of the dates thereof and the results of
operations and cash flows of the Company for the periods shown therein. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted United States
accounting principles.

         2.6 ABSENCE OF UNDISCLOSED LIABILITIES.

         Except as and to the extent reflected or reserved against in the
financial statements referred to in Section 2.5 above, the Company does not have
and is not subject to any material liability or obligation of any nature,
whether accrued, absolute, contingent or otherwise.

         2.7 ABSENCE OF CHANGES.

         Except as set forth in Section 2.7 of the Disclosure Schedule, since
October 31, 1999 there has not been (a) any material adverse change in the
financial condition, results of operations, assets, liabilities, or business of
the Company, (b) any material asset or property of the Company made subject to a
lien of any kind, (c) any waiver of any material right of the Company, or the
cancellation of any material debt or claim held by the Company, (d) any payment
of dividends on, or other distribution with respect to, or any direct or
indirect redemption or acquisition of, any shares of the capital stock of the
Company, or any agreement or commitment therefore, (e) any mortgage, pledge or
hypothecation of any tangible or intangible asset of the Company, except in the
ordinary course of business, (f) any sale or assignment of any tangible asset of
the Company having a book value in excess of $5,000, except in the ordinary
course of business, or of any Intellectual Property Rights (as hereafter
defined) or other intangible assets, (g) any loan by the Company to, or any loan
to the Company from, any officer, director, employee or stockholder of the
Company, or any agreement or commitment therefore (other than travel and other
advances in the ordinary course of business), (h) any damage, destruction or
loss (whether or not covered by insurance) materially and adversely affecting
the assets, property or business of the Company, (i) any repayment of any loan
owed by the Company (including, without limitation, any loan owed to any
stockholder of the Company), (j) any single capital expenditure in excess of
$50,000 or any capital expenditures aggregating more than $250,000, (k) any
material change in the accounting methods or practices followed by the Company,
(l) any satisfaction or discharge of any lien, claim or encumbrance or payment
of any obligation by the Company, except in the ordinary course of business and
that is not material to the business, properties, prospects or financial
condition of the Company, (m) any material change to a material contract or
agreement by which the Company or any of its assets is bound or subject, (n) any
material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder of the Company, (o) to the Company's knowledge,
any other event or condition of any character that might materially and
adversely affect the business, properties, prospects or financial condition of
the Company , (p) any resignation or termination of employment of any officer or
key

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employee of the Company, or (q) any arrangement or commitment by the Company to
do any of the things described in this Section 2.7.

         2.8 TITLE; CONDITION OF PROPERTY.

         (a) Except as set forth in Section 2.8 of the Disclosure Schedule, the
Company has good title to all of its property and assets, real, personal or
mixed, tangible or intangible, free and clear of all liens, security interests,
charges and other encumbrances of any kind.

         (b) Without material exception, all assets used in the Company business
are in good operating condition and repair and suitable for use in the operation
of such business, and none of such assets that (singly or when aggregated with
other assets) is material to the business of the Company is obsolete.

         2.9 CERTAIN CONTRACTS AND ARRANGEMENTS.

         Except as set forth in Section 2.9 of the Disclosure Schedule (with
true and correct copies delivered to the Investor), the Company is not a party
or subject to or bound by:

                    (a) any plan or contract providing for collective bargaining
or the like, or any contract or agreement with any labor union;

                    (b) any contract, lease or agreement creating any obligation
of the Company (contingent or otherwise) to pay to any third party $100,000 or
more with respect to any single such contract or agreement;

                    (c) any contract or agreement for the sale, license, lease
or disposition of products or services in excess of $100,000;

                    (d) any contract containing covenants directly or explicitly
limiting the freedom of the Company to compete in any line of business or with
any person or entity;

                    (e) any license agreement (as licensor or licensee);

                    (f) any contract or agreement for the purchase of any
leasehold improvements, equipment or fixed assets for a price in excess of
$100,000;

                    (g) any indenture, mortgage, promissory note, loan
agreement, guaranty or other agreement or commitment for borrowing in excess of
$100,000 or any pledge or security arrangement;

                    (h) any material joint venture, partnership, or
manufacturing agreement;

                    (i) any endorsement or any other advertising, promotional or
marketing agreement;

                    (j) any employment contracts, or agreements with officers,
directors, employees or stockholders of the Company or persons or organizations
related to or affiliated with any such persons;

                    (k) any pension, profit sharing, retirement (other than the
Company's 401(k) plan), stock option, phantom stock or other equity incentive
plans;

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                    (l) any arrangement relating to any royalty payments to
employees, customers or independent contractors based on the sales volume of the
Company;

                    (m) any acquisition, merger or similar agreement; or

                    (n) any contract with a governmental body under which the
Company may have an obligation for renegotiation.

                    Except as set forth in Section 2.9 of the Disclosure
Schedule, (i) each of the Company's contracts and commitments is in full force
and effect and is valid, binding and enforceable in accordance with its terms as
to the Company and, to the knowledge of the Company, as to each other party
thereto; (ii) there exists no material breach or material default (or event that
with notice or lapse of time would constitute a material breach or material
default) on the part of the Company or, to the knowledge of the Company, on the
part of any other party under any of the Company's contracts or commitments,
except to the extent that any such breach or default would not have a Material
Adverse Effect; (iii) the Company has not received a written notice of
termination or default under any of the Company's contracts or commitments; and
(iv) as of the date of this Agreement, no party to an agreement under which the
Company acquired a substantial portion of its assets has asserted any claim for
indemnification under such agreement.

                    The Company has not engaged in the past three (3) months in
any discussion (i) with any representative of any corporation or corporations
regarding the merger of the Company with or into any such corporation or
corporations, (ii) with any representative of any corporation, partnership,
association or other business entity or any individual regarding the sale,
conveyance or disposition of all or substantially all of the assets of the
Company or a transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the Company would be disposed of, or
(iii) regarding any other form of liquidation, dissolution or winding up of the
Company.

         2.10 INTELLECTUAL PROPERTY RIGHTS; EMPLOYEE RESTRICTIONS.

         Except as set forth in Section 2.10 of the Disclosure Schedule:

                    (a) The Company has the right to use, sell, and license the
Intellectual Property Rights (as defined below) material to the conduct of its
business as presently conducted, including without limitation all rights to the
Company name "Lineo" and to the trademarks and the product name "Embedix" (the
"Company Rights"), free and clear of the rights of all others.

                    (b) The business of the Company as presently conducted, the
products as marketed or sold and the provision of services by the Company do not
violate and will not violate any agreements that the Company has with any third
party or infringe any patent, trademark, service mark, copyright or trade secret
or any other Intellectual Property Rights of any third party.

                    (c) No claim is pending or threatened against the Company
nor has the Company received any notice or claim from any person asserting that
any of the Company's present or contemplated activities infringe or may infringe
any Intellectual Property Rights of such person, and the Company is not aware of
any infringement by any other person of any of the Company Rights.

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                    (d) Each current and former employee of the Company, and
each of the Company's consultants and independent contractors involved in
development of any of the Company Rights, has executed an agreement regarding
confidentiality, proprietary information and assignment of inventions and
copyrights to the Company, and none of such employees, consultants or
independent contractors is in violation of any agreement or in breach of any
agreement or arrangement with former or present employers relating to
proprietary information or assignment of inventions. The Company has taken all
reasonable steps to protect all data, information, ideas, concepts, know-how and
materials that the Company treats as trade secrets, and all other confidential
information and Intellectual Property Rights of the Company, which are not part
of the public domain or knowledge, nor, to the best knowledge of the Company,
have they been used, divulged or appropriated for the benefit of any person
other than the Company or otherwise to the detriment of the Company.

                   (e) No royalties or other amounts are payable by the Company
to persons by reason of the ownership or use of the Intellectual Property Rights
of the Company.

                   (f) No third party has claimed or, to the best of the
Company's knowledge, has reason to claim that any person employed by or
affiliated with the Company has (a) violated or may be violating any of the
terms or conditions of his or her employment, non-competition, non-disclosure,
non-solicitation or inventions agreement with such third party, (b) disclosed or
may be disclosing or utilized or may be utilizing any Intellectual Property
Rights, trade secret or proprietary information or documentation of such third
party, or (c) interfered or may be interfering in the employment relationship
between such third party and any of its present or former employees.

         As used herein, the term "Intellectual Property Rights" shall mean the
intellectual property rights, including, without limitation, all patents, patent
applications, patent rights, trademarks, trademark applications, trade names,
service marks, service mark applications, copyrights, copyright applications,
computer programs and other computer software, inventions, designs, samples,
specifications, schematics, know-how, trade secrets, proprietary processes and
formulae, including production technology and processes, all source and object
code, algorithms, promotional materials, customer lists, supplier and dealer
lists and marketing research, and all documentation and media constituting,
describing or relating to the foregoing, including without limitation, manuals,
memoranda and records.

         2.11 LITIGATION.

         There is no litigation or governmental proceeding or investigation
pending or threatened against the Company or affecting any of its properties or
assets or against any officer, director or key employee of the Company in his or
her capacity as an officer, director or employee of the Company, which
litigation, proceeding or investigation is reasonably likely to have a Material
Adverse Effect, or which may call into question the validity or hinder the
enforceability of this Agreement or any other agreements or transactions
contemplated hereby; nor has there occurred any event nor does there exist any
condition on the basis of which any such litigation, proceeding or investigation
might be properly instituted or commenced. Neither the Company nor any of its
subsidiaries is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company or any of its subsidiaries currently pending or which the Company or any
of its subsidiaries intends to initiate.

         2.12 TAX MATTERS.

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         The Company has filed all federal, state, local and foreign income,
excise and franchise tax returns, real estate and personal property tax returns,
sales and use tax returns and other tax returns required to be filed by it where
the failure to file such returns would have a Material Adverse Effect, and has
paid all taxes owing by it, except taxes which have not yet accrued or otherwise
become due, for which adequate provision has been made in the pertinent
financial statements referred to in Section 2.5 above or which will not have a
Material Adverse Effect. The filed tax returns and reports are true and correct
in all material respects. All taxes and other assessments and levies which the
Company is required to withhold or collect have been withheld and collected and
have been paid over to the proper governmental authorities except where the
failure to withhold or collect and pay over would not have a Material Adverse
Effect With regard to the federal income tax returns of the Company, the Company
has never received notice of any audit or of any proposed deficiencies from the
Internal Revenue Service. There are in effect no waivers of applicable statutes
of limitations with respect to any taxing owed by the Company for any year.
Neither the Internal Revenue Service nor any other taxing authority is now
asserting or, to the knowledge of the Company, threatening to assert against the
Company any deficiency or claim for additional taxes or interest thereon or
penalties in connection therewith.

         2.13 EMPLOYEE BENEFIT PLANS.

         The Company does not maintain or contribute to any employee benefit
plan, stock option, bonus or incentive plan, severance pay policy or agreement,
deferred compensation agreement or any similar plan or agreement (an "Employee
Benefit Plan") other than the Plan and the Employee Benefit Plans identified and
described in Section 2.13 of the Disclosure Schedule. The terms and operation of
each Employee Benefit Plan comply in all material respects with all applicable
laws and regulations relating to such Employee Benefit Plan. There are no
unfunded obligations of the Company under any retirement, pension,
profit-sharing, deferred compensation plan or similar program. The Company is
not required to make any payments or contributions to any Employee Benefit Plan
pursuant to any collective bargaining agreement, and all Employee Benefit Plans
are terminable at the discretion of the Company without material liability to
the Company upon or following such termination. The Company has never maintained
or contributed to any Employee Benefit Plan providing or promising any health or
other welfare benefits (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) to terminated
employees, except for benefits mandated by applicable law, including, but not
limited to, Section 4980B of the Internal Revenue Code of 1986, as amended, and
Part 6 of Subtitle B of Title I of ERISA.

         2.14 LABOR LAWS.

         The Company employs approximately 105 employees and generally enjoys
good employer-employee relationships. The Company is not delinquent in payments
to any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed for it as of the date hereof or
amounts required to be reimbursed to such employees. The Company is in
compliance in all material respects with all applicable laws and regulations
respecting labor, employment, fair employment practices, terms and conditions of
employment, and wages and hours. There are no charges of employment
discrimination or unfair labor practices or strikes, slowdowns, stoppages of
work or any other concerted interference with normal operations existing,
pending or, to the knowledge of the Company, threatened against or involving the
Company.

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         2.15 EMPLOYEES.

         Section 2.15 of the Disclosure Schedule contains a list of all
managers, employees and consultants of the Company who, individually, have
received compensation from the Company for the fiscal year of the Company ended
October 31, 1999, in excess of $100,000. In each case, Section 2.15 of the
Disclosure Schedule includes the current job title, years of service with the
Company and aggregate annual compensation and benefits of each such individual.
To the knowledge of the Company, no key employee of the Company has any plan or
intention to terminate his or her employment with the Company. The Company has
complied in all material respects with the immigration laws of the United States
with respect to the hiring, employment and engagement of all of its employees
and consultants who are not United States citizens, and, to the knowledge of the
Company, the immigration or residency status of each of such employees and
consultants is sufficient to allow such employees and consultants to remain
lawfully employed or engaged by the Company. The employment of each officer and
employee of the Company is teminable at the will of the Company. The Company is
not a party to or bound by any currently effective employment contract.

         2.16 HAZARDOUS WASTE, ETC.

         No hazardous wastes, substances or materials or oil or petroleum
products have been generated, transported, used, disposed, stored or treated by
the Company, and no hazardous wastes, substances or materials or oil or
petroleum products have been released, discharged, disposed, transported, placed
or otherwise caused to enter the soil or water in, under or upon any real
property owned, leased or operated by the Company.

         2.17 BUSINESS; COMPLIANCE WITH LAWS.

         The Company has all necessary franchises, permits, licenses and other
rights and privileges necessary to permit it to own its property and to conduct
its business as it is presently or contemplated to be conducted and is not in
default in any material respect under any of such franchises, permits, licenses
and other similar rights and privileges. The Company is currently and has
heretofore been in compliance in all material respects with all federal, state,
local and foreign laws and regulations.

         2.18 INVESTMENT BANKING; BROKERAGE.

         There are no claims for investment banking fees, brokerage commissions,
finder's fees or similar compensation (exclusive of professional fees to lawyers
and accountants) in connection with the transaction contemplated by this
Agreement payable by the Company or based on any arrangement or agreement made
by or on behalf of the Company or any of the stockholders.

         2.19 INSURANCE.

         The Company has fire, casualty, product liability, workers'
compensation and business interruption and other insurance policies, with
extended coverage, sufficient in amount to allow it to replace any of its
material properties which might be damaged or destroyed or sufficient to cover
liabilities to which the Company may reasonably become subject, and such types
and amounts of other insurance with respect to its business and properties, on
both a per occurrence and an aggregate basis, as are customarily carried by
persons engaged in the same or similar business as the Company. There is no
default or event which could give rise to a default under any such policy.

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         2.20 TRANSACTIONS WITH AFFILIATES.

         There are no loans, leases, contracts or other transactions (directly
or indirectly) between the Company and any officer, director or one percent (1%)
stockholder of the Company or any family member or affiliate of the foregoing
persons, and there have been no such transactions within the past twelve (12)
months except as set forth in Section 2.20 of the Disclosure Schedule. To the
best of the Company's knowledge, none of such persons has any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation that competes with the Company, except that employees, officers or
directors of the Company and members of their families may own stock in publicly
traded companies that may compete with the Company.

         2.21 SUPPLIERS.

         Section 2.21 of the Disclosure Schedule sets forth each supplier of the
Company who supplied more than five percent (5%) of the Company's supplies or
materials for the fiscal year ended October 31, 1999 and each supplier who the
Company believes may supply for more than five percent (5%) of the Company's
supplies or materials for the fiscal year ended October 31, 2000 (each a
"Supplier" and collectively the "Suppliers"). The relationships of the Company
with its Suppliers are good commercial working relationships. No Supplier of the
Company has canceled or otherwise terminated its relationship with the Company,
or has during the last 12 months decreased materially its services, supplies or
materials to the Company. No Supplier has, to the knowledge of the Company, any
plan or intention to terminate, cancel or otherwise materially and adversely
modify its relationship with the Company or to decrease materially or limit its
services, supplies or materials to the Company.

         2.22 CERTAIN EVENTS.

         (a) During the past ten (10) years, neither the Company nor any of the
officers or directors of the Company has had a petition under the Bankruptcy
Reform Act of 1978, as amended, or any state insolvency law, filed by or against
any of them which has not as of the date of this Agreement been dismissed.

         (b) During the past ten (10) years, neither the Company nor the
officers or directors of the Company has been convicted in a criminal proceeding
or is a named subject of a criminal proceeding which is presently pending
(excluding traffic violations and other minor offenses).

         (c) During the past ten (10) years, neither the Company nor the
officers or directors of the Company has been, or is, the subject of any order,
judgment or decree, whether or not subsequently reversed, suspended or vacated,
of any court or any administrative agency, requiring the payment of money
damages in excess of $100,000 or permanently or temporarily enjoining any of
them from, or otherwise limiting any of their abilities to engage in, any type
of business practice.

         2.23 REGISTRATION RIGHTS.

         Except as disclosed in Section 2.23 of the Disclosure Schedule, the
Company has not granted or agreed to grant any registration rights, including
piggyback rights, to any person or entity.

                                       10
<PAGE>

         2.24 DISCLOSURE.

         The representations and warranties made or contained in this Agreement,
the exhibits hereto and the certificates and statements executed or delivered in
connection herewith, and the information concerning the business of the Company
delivered to the Investor in connection with or pursuant to this Agreement, when
taken together, do not and shall not contain any untrue statement of a material
fact and do not and shall not omit to state a material fact required to be
stated therein or necessary in order to make such representations, warranties or
other material not misleading in light of the circumstances in which they were
made or delivered. There have been no events or transactions or information
which has come to the attention of the management of the Company having a direct
impact on the Company or its assets, liabilities, financial condition, business,
results of operations or prospects which, in the reasonable judgment of such
management, could be expected to have a Material Adverse Effect. The Company has
fully provided the Investor with all the information that the Investor has
requested for deciding whether to acquire the Series C Preferred Shares.

         2.25 CORPORATE DOCUMENTS.

         The Certificate of Incorporation and Bylaws of the Company have been
made available to the Investor. The minute books of the Company containing
minutes of all meetings of directors and stockholders and all actions by written
consent without a meeting by the directors and stockholders since the date of
incorporation have been made available to the Investor and reflect accurately in
all material respects all actions by the directors (and any committee of
directors) and stockholders with respect to all transactions referred to in such
minutes. The stock transfer ledgers and other similar records of the Company as
made available to the Investor prior to the execution of this Agreement
accurately reflect all record transfers prior to the execution of this Agreement
in the capital stock of the Company.

         2.26 OFFERING.

         Subject in part to the truth and accuracy of the Investor's
representations and warranties set forth in this Agreement, the offer, sale and
issuance of the Securities as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act and any applicable state
securities laws, and neither the Company nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss of such
exemption.

         2.27 INVESTMENT COMPANY.

         The Company is not and shall not become an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act"). In the event the
Company breaches the foregoing, the Company shall forthwith notify the Investor
and shall take immediate corrective action to remedy such breach.

         2.28 SUPPLEMENTAL REMUNERATION.

         The Company has not and shall not, directly or indirectly, pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise to any investor or other stockholder of the Company
as consideration for or as an inducement to entering into by any investor or
other stockholder of the Company of any waiver or amendment of any of the terms
and provisions of the agreements or the Certificate of Incorporation which
affects any such party's rights as an investor or stockholder, unless such
remuneration is concurrently paid, on the same terms, ratably to

                                       11
<PAGE>

all investors or stockholders whether or not such investors or stockholders
grant such waiver or agree to such amendment.

         2.29 GOVERNMENTAL CONSENTS.

         No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the part of the Company is required in
connection with the consummation of the transactions contemplated by this
Agreement other than as may be required to secure an exemption from
qualification of the offer and sale of the Series C Preferred Shares under the
Securities Act and applicable state securities laws.

SECTION 3.  REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.

         The Investor represents and warrants to the Company the following:

         3.1 INVESTMENT EXPERIENCE AND INTENT.

         The Investor represents to the Company that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the investment contemplated by this Agreement and making
an informed investment decision with respect thereto. The Investor represents
that it is an "accredited investor" as such term is defined in Rule 501 under
the Securities Act. The Investor represents and understands that it is
responsible for its own due diligence investigation and satisfying its own due
diligence requirements and shall not be entitled to rely on the due diligence
investigation of any other person or entity. The Investor represents to the
Company that it is purchasing the Series C Preferred Shares for its own account,
for investment only and not with a view to, or any present intention of,
effecting a distribution of such securities or any part thereof except pursuant
to a registration or an available exemption under applicable law. The Investor
acknowledges that its Series C Preferred Shares have not been registered under
the Securities Act or the securities laws of any state or other jurisdiction and
cannot be disposed of unless they are subsequently registered under the
Securities Act and any applicable state laws or exemption from such registration
is available.

         3.2 AUTHORIZATION AND NON-CONTRAVENTION.

         The Investor represents that it has full right, authority and power to
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by or on behalf of such Investor pursuant to or as
contemplated by this Agreement and to carry out the transactions contemplated
hereby and thereby, and the execution, delivery and performance by such Investor
of this Agreement and each such other agreement, document and instrument have
been duly authorized by all necessary action. The Investor represents and
warrants that this Agreement and each agreement, document and instrument
executed and delivered by such Investor pursuant to or as contemplated by this
Agreement constitute, or when executed and delivered will constitute, valid and
binding obligations of such Investor enforceable in accordance with their
respective terms (except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Investor Rights Agreement may be limited by applicable federal or state
securities laws) and that the execution, delivery and performance by such
Investor of this Agreement and each such other agreement, document and
instrument, and the performance of the transactions contemplated hereby and
thereby do not and will not: (a) violate, conflict with or result in a default
(whether after the giving of notice, lapse of

                                       12
<PAGE>

time or both) under any contract or obligation to which such Investor is a party
or by which it or its assets are bound, or cause the creation of any encumbrance
upon any of the assets of the Investor; (b) violate or result in a violation of,
or constitute a default under, any provision of any law, regulation or rule, or
any order of, or any restriction imposed by, any court or other governmental
agency applicable to the Investor; (c) require from the Investor any notice to,
declaration or filing with, or consent or approval of any governmental authority
or other third party; or (d) accelerate any obligation under, or give rise to a
right of termination of, any agreement, permit, license or authorization to
which the Investor is a party or by which the Investor is bound.

         3.3 COMMISSIONS AND FEES.

         The Investor represents that there are no claims for investment banking
fees, brokerage commissions, finder's fees or similar compensation (exclusive of
professional fees to lawyers and accountants) in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of such Investor.

SECTION 4.  CONDITIONS OF PURCHASE.

         The Investor's obligation to purchase and pay for the Series C
Preferred Shares to be purchased by it shall be subject to compliance by the
Company with its agreements herein contained and to the fulfillment to the
Investor's satisfaction, or the waiver by the Investor, on or before and at the
Closing Date, of the following conditions:

         4.1 SATISFACTION OF CONDITIONS.

         The representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the Closing Date; the Company
shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or
complied with by it on or before the Closing; and, on the Closing Date, a
certificate to such effect executed by the President and Chief Financial Officer
of the Company shall have been delivered to the Investor.

         4.2 AUTHORIZATION.

         The Board of Directors of the Company shall have duly adopted
resolutions in form and substance reasonably satisfactory to the Investor and
shall have taken all action necessary for the purpose of authorizing the Company
to consummate the transactions contemplated hereby in accordance with the terms
hereof and to cause the Certificate of Designation to become effective; and the
Investor shall have received a certificate of the Secretary of the Company
setting forth a copy of the relevant Board of Directors and/or stockholder
resolutions and the Certificate of Incorporation, the Certificate of Designation
and Bylaws of the Company and such other matters as may be reasonably requested
by the Investor.

         4.3 OPINION OF COUNSEL.

         The Investor shall have received from Summit Law Group an opinion dated
as of the Closing Date substantially in the form attached hereto as EXHIBIT C.

                                       13
<PAGE>

         4.4 ALL PROCEEDINGS SATISFACTORY.

         All corporate and other proceedings taken prior to or at the Closing in
connection with the transactions contemplated by this Agreement, and all
documents and evidences incident thereto, shall be reasonably satisfactory in
form and substance to the Investor.

         4.5 NO VIOLATION OR INJUNCTION.

         The consummation of the transactions contemplated by this Agreement
shall not be in violation of any law or regulation and shall not be subject to
any injunction, stay or restraining order.

         4.6 CONSENTS AND WAIVERS.

         The Company shall have obtained all consents or waivers necessary to
execute this Agreement and the other agreements and documents contemplated
herein, to issue and sell the Securities to be sold to the Investor hereunder
and to carry out the transactions contemplated hereby and thereby and shall have
delivered evidence thereof to the Investor. All corporate and other action and
governmental filings necessary to effectuate the terms of this Agreement and
other agreements and instruments executed and delivered by the Company in
connection herewith shall have been made or taken.

         4.7 AMENDMENT NO. 2 TO INVESTOR RIGHTS AGREEMENT.

         The Company, each other Investor and the holders of all of the Series A
and Series B Preferred Stock shall have entered into the Amendment No. 2 to
Investor Rights Agreement.

         4.8 FILING OF CERTIFICATE OF DESIGNATION.

         The Certificate of Designation shall have been filed with the Secretary
of State of the State of Delaware.

SECTION 5.  GENERAL.

         5.1 AMENDMENTS, WAIVERS AND CONSENTS.

         For the purpose of this Agreement and all agreements executed pursuant
hereto, no course of dealing between or among any of the parties hereto and no
delay on the part of any party hereto in exercising any rights hereunder or
thereunder shall operate as a waiver of the rights hereof and thereof. No
covenant or other provision hereof may be waived otherwise than by a written
instrument signed by the party or parties so waiving such covenant or other
provision. No amendment to this Agreement may be made without the written
consent of the Company and the Investor.

                                       14
<PAGE>

         5.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
ASSIGNABILITY OF RIGHTS.

         All covenants, agreements, representations and warranties of the
Company and the Investor made herein, in the Disclosure Schedule and the
Certificate of Designation and in the certificates, lists, exhibits, schedules
or other written information delivered or furnished to the Investor in
connection herewith (a) are material, shall be deemed to have been relied upon
by the party or parties to whom they are made and shall survive the Closing
regardless of any investigation or knowledge on the part of such party or its
representatives and (b) shall bind the parties' successors and assigns
(including without limitation any successor to the Company by way of
acquisition, merger or otherwise), whether so expressed or not, and, except as
otherwise provided in this Agreement, all such covenants, agreements,
representations and warranties shall inure to the benefit of the Investor's
successors and assigns and to their transferees of Securities, whether so
expressed or not, and any such transferee shall be deemed the "Investor" for
purposes hereof.

         5.3 LEGEND ON SECURITIES.

         The Company and the Investor acknowledge and agree that the following
legend shall be typed on each certificate evidencing any of the securities
issued hereunder held at any time by the Investor:

         THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
         OR BLUE SKY LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
         HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT (1) PURSUANT TO A
         REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS
         EFFECTIVE UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM
         REGISTRATION UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES
         AND (3) IN ACCORDANCE WITH APPLICABLE STATE SECURITIES AND BLUE SKY
         LAWS.

         5.4 GOVERNING LAW.

         This Agreement shall be deemed to be a contract made under, and shall
be construed in accordance with, the laws of Delaware, without giving effect to
conflict of laws principles thereof.

         5.5 SECTION HEADINGS AND GENDER.

         The descriptive headings in this Agreement have been inserted for
convenience only and shall not be deemed to limit or otherwise affect the
construction of any provision thereof or hereof. The use in this Agreement of
the masculine pronoun in reference to a party hereto shall be deemed to include
the feminine or neuter, and vice versa, as the context may require.

         5.6 COUNTERPARTS.

         This Agreement may be executed simultaneously in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original; but such counterparts shall together constitute but one and the
same document.

                                       15
<PAGE>

         5.7 NOTICES AND DEMANDS.

         Any notice or demand which is required or provided to be given under
this Agreement or the Certificate of Designation shall be deemed to have been
sufficiently given and received for all purposes when delivered by hand,
telecopy, telex or other method of facsimile, or five days after being sent by
certified or registered mail, postage and charges prepaid, return receipt
requested, or two days after being sent by overnight delivery providing receipt
of delivery, to the following addresses:

if to the Company:

Lineo, Inc.
383 S. 520 W.
Lindon, Utah   84042
Attn: President
Fax: (801) 426-6166

copy to:

Summit Law Group
1505 Westlake Avenue N., Suite 300
Seattle, Washington  98109
Attn: Mark F. Worthington, Esq.
Fax: (206) 281-9882

if to the Investor:

-------------------------------

-------------------------------

-------------------------------

-------------------------------

-------------------------------

-------------------------------

         5.8      REMEDIES; SEVERABILITY.

         It is specifically understood and agreed that any breach of the
provisions of this Agreement by any person subject hereto will result in
irreparable injury to the other parties hereto, that the remedy at law alone
will be an inadequate remedy for such breach, and that, in addition to any other
remedies which they may have, such other parties may enforce their respective
rights by actions for specific performance (to the extent permitted by law). The
Company may refuse to recognize any unauthorized transferee as one of its
stockholders for any purpose, including, without limitation, for purposes of
dividend and voting rights, until the relevant party or parties have complied
with all applicable of this Agreement. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.

                                       16
<PAGE>

         5.9 INTEGRATION.

         This Agreement, including the exhibits, documents and instruments
referred to herein or therein, constitutes the entire agreement, and supersedes
all other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.

         5.10 DELAYS OR OMISSIONS.

         It is agreed that no delay or omission to exercise any right, power or
remedy accruing to any party, upon any breach, default or noncompliance by
another party under this Agreement, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on any Investor's
part of any breach, default or noncompliance under this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing.

         5.11 AGGREGATION OF STOCK.

         All shares of the Series C Preferred Stock or Common Stock issued upon
conversion thereof held or acquired by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.

                            [Signature Page Follows]

                                       17
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

COMPANY:                                          INVESTOR:

LINEO, INC.,
a Delaware corporation                            ------------------------------

By                                                By
  -----------------------------------------         ----------------------------
     Bryan Sparks, President and Chairman           Its
                                                       -------------------------

                                       18<PAGE>

                                                                   EXHIBIT 10.11

                            STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT (this "Agreement") is made as of April 13,
2000 by and among Lineo, Inc., a Delaware corporation ("Buyer"), Yoshinobu
Ushiyama, an individual residing in Japan ("Mr. Ushiyama"), Tatsuya Takeuchi, an
individual residing in Japan ("Mr. Takeuchi", and together with Mr. Ushiyama,
collectively, "Principal Shareholders", and each a "Principal Shareholder") and
such other minority shareholders of United System Engineers, Inc., a Japanese
corporation (the "Company"), listed in the List of Shareholders attached hereto
as Schedule 1 (collectively, "Minority Shareholders", and together with
Principal Shareholders, collectively, "Sellers" and each "Seller"), acting
through Mr. Ushiyama as their representative ("Shareholder Representative").

                                    RECITALS

     A.   Sellers collectively own 160,000 shares of common stock of the
Company, with par value of Yen 500 per share, representing all of the issued and
outstanding capital stock of the Company (the "Company Shares").

     B.   The Company is engaged in the business of development, design,
manufacture and sale of computer systems (the "Business").

     C.   Buyer desires to purchase from Sellers, and Sellers desire to sell to
Buyer, the Company Shares on the terms and conditions hereinafter set forth.

                                    AGREEMENT

     In consideration of the premises and the mutual agreements herein
contained, Sellers and Buyer agree as follows:

     1.   PURCHASE AND SALE OF COMPANY SHARES.

     (a)  TRANSACTION. On and subject to the terms and conditions set forth
          herein, Buyer agrees to purchase from Sellers, and Sellers agree to
          sell to Buyer, at the Closing, 160,000 Company Shares.

     (b)  CONSIDERATION. The total consideration to be paid by Buyer to Sellers
          for all of the Company Shares hereunder shall be Three Hundred Twenty
          Two Thousand Eight Hundred Twenty Nine and 13/100 Dollars
          ($322,829.13). Each Seller shall be entitled to such amount as
          appearing opposite his or her name in Schedule 1 (the
          "Consideration").

     (c)  THE CLOSING. Subject to satisfaction or waiver of the conditions set
          forth in Section 3 hereof, the closing of the transactions
          contemplated by this Agreement (the "Closing") shall take place at the
          offices of Summit Law Group, PLLC on

<PAGE>

          April 30, 2000 or on such other date as Sellers and Buyer may mutually
          agree (the "Closing Date").

     (d)  DELIVERIES AT THE CLOSING. At the Closing, (i) each Seller shall
          deliver to Buyer certificates for the Company Shares representing such
          number of the Company Shares as set forth opposite his or her name in
          Schedule 1, and (ii) Buyer shall deliver to each Seller the
          Consideration appearing opposite his or her name in Schedule 1.

     2.   REPRESENTATIONS AND WARRANTIES.

     (a)  REPRESENTATIONS AND WARRANTIES BY PRINCIPAL SHAREHOLDERS. Principal
          Shareholders hereby jointly and severally represent and warrant to
          Buyer as follows:

          (i) The Company has been duly incorporated and is validly existing and
     in good standing as a joint stock corporation (KABUSHIKI KAISHA) under the
     laws of Japan. It has full corporate power to carry on its business as it
     is now conducted and to own, lease or operate the properties and assets it
     now owns, leases or operates. It is qualified to do business, is in good
     standing and has all required and appropriate licenses in each jurisdiction
     in which its failure to obtain or maintain such qualification, good
     standing or licensing would have a material adverse effect on the condition
     (financial or otherwise), assets, properties, results of operations or
     business of the Company (a "Material Adverse Effect"). The Company does not
     have a subsidiary (defined to mean any entity or organization in which it
     has a direct or indirect equity or ownership interest in excess of 50%).

          (ii) The authorized capital stock of the Company consists solely of
     one class of stock and the total number of the Company Shares authorized to
     be issued by the Company is 160,000 shares, of which 160,000 Company Shares
     are issued and outstanding as of the date hereof.

          (iii) All of the Company Shares have been legally and validly issued
     and are fully paid and nonassessable; and the Company has no outstanding
     obligations, understandings, or commitments regarding the issuance of any
     additional shares of capital stock, or any options, rights, or warrants
     concerning the issuance of any additional shares of capital stock or
     securities convertible into shares of capital stock, of the Company.

          (iv) The List of Shareholders in Schedule 1 lists the names and the
     number of the Company Shares held of record by each Seller as of the date
     hereof.

          (v) There are no permits, approvals or consents of any governmental
     bodies or agencies which are necessary or appropriate to be obtained by
     Sellers in order for the consummation of the transactions contemplated by
     this Agreement to be in compliance with applicable laws, other than
     permits, approvals and consents already obtained.

          (vi) The Company has delivered to Buyer the Company's unaudited
     balance sheet as of December 31, 1999 and unaudited income statement and
     statement of

                                       2
<PAGE>

     disposition of loss (SONSHITSUKIN SHORI KEISANSHO) for the period then
     ended, which have been approved by the shareholders of the Company at the
     general meeting of the shareholders. The financial statements so delivered
     have been prepared in conformity with generally accepted accounting
     principles in Japan ("Japanese GAAP") applied on a consistent basis (except
     for changes, if any, required by Japanese GAAP and disclosed therein). Such
     financial statements present fairly the financial condition and the results
     of operations of the Company as of the date and for the period stated
     therein. Except as and to the extent reflected or reserved against in the
     balance sheet mentioned above, the Company did not have and was not subject
     to any material liability or obligation of any nature, whether accrued,
     absolute, contingent or otherwise, as of December 31, 1999 (the "Balance
     Sheet Date"), required by Japanese GAAP to be stated therein.

          (vii) Since the Balance Sheet Date, there has not been, occurred or
     arisen (i) any declaration or payment of dividends by the Company or any
     distribution of assets of any kind whatsoever by the Company to its
     shareholders with respect to any shares of its capital stock; (ii) any
     transaction, sale or transfer of any of its assets, or cancellation of any
     debts or claims not in the ordinary course of business; (iii) any material
     adverse change in the results of operations, financial condition, assets or
     liabilities of the Company; (iv) any increase in, or commitment to
     increase, the compensation payable or to become payable to any officer,
     director, employee or agent of the Company, or any bonus payment or similar
     arrangement made to or with any such officers, directors, employees or
     agents, except for bonus payment or similar arrangement made consistent
     with the past practice; (v) any incurring of, assumption of, or taking any
     property subject to, any liability, except for liabilities incurred or
     assumed or property taken subsequent to the Balance Sheet Date in the
     ordinary course of business and consistent with past practice; (vi) any
     adoption of a plan or agreement or amendment to any plan or agreement
     providing any new or additional "fringe benefits" (including, but not
     limited to, vacation plans or programs, sick leave plans or programs,
     dental or medical plans or programs, and related or similar benefits); or
     (vii) any material alteration in the manner of keeping the books, accounts
     or record of the Company, or in the accounting practices therein reflected.

          (viii) Except in each case as set forth in the Disclosure Schedule,
     attached hereto as SCHEDULE 2:

               (A)  The Company owns and has good and marketable title to, or is
          licensed or otherwise possesses legally enforceable rights to use, all
          patents, patent applications, disclosures, copyrights (whether
          registered or unregistered), and any applications therefor, software
          or applications (in both source code and object code), websites,
          domain names, technology, trademarks, trade names, service marks,
          trade secrets, know-how or mask work right (the "Intellectual
          Property") material to the conduct of its business as presently
          conducted;

               (B)  The execution, delivery and performance of this Agreement
          and the consummation of the transactions contemplated hereby will not
          breach, violate or conflict in any material respect with any
          instrument or agreement governing any of the Intellectual Property, or
          impair the right of the Company to use, sell,

                                       3
<PAGE>

          license or dispose of the Intellectual Property, or to bring any
          action for the infringement of the Intellectual Property;

               (C)  To the actual knowledge of Principal Shareholders, no third
          party is infringing any of the Intellectual Property;

               (D)  The Company has taken reasonable steps necessary or
          appropriate (including, without limitation, entering into agreements
          concerning nondisclosure and assignment of inventions and copyrights
          with all employees of the Company and setting forth in the employment
          rules (SHUGYOKISOKU) the prohibition against employees' work for
          another employer without the consent of the Company) to safeguard and
          maintain the secrecy and confidentiality of, and establish the
          Company's proprietary rights in, all of the Intellectual Property;

               (E)  All embodiments of those trade secrets which are related to
          the Company's Business are presently and as of the Closing Date will
          be located at the Company's headquarters; and

               (F)  The Company has in all material respects performed, or is
          now performing the obligations of the Company in all material respects
          pursuant to each and every license or agreement concerning the
          Intellectual Property. All such licenses and agreements are in full
          force and effect and are a valid and enforceable obligation against
          the other party or parties thereto in accordance with their terms
          (subject to the enforcement of remedies).

          (ix) Within the times and in the manner prescribed by law, the Company
has filed all applicable tax returns and has paid or caused to be paid all taxes
which have been due pursuant to such tax returns. All tax returns filed by the
Company through the Closing Date, including any amendments to date, have been
prepared in good faith without negligence or willful misrepresentation and are
complete and accurate in all material respects and accurately set forth all
items (to the extent required to be included or reflected in such returns)
relevant to their future tax liabilities, including the tax bases of their
properties and assets.

          (x)  No examination of the tax returns of the Company is currently in
progress nor, to the knowledge of Principal Shareholders, is any such
examination threatened. To the knowledge of Principal Shareholders, no
governmental entity has proposed (tentatively or definitively), asserted or
assessed, or threatened to propose or assert, any deficiency, assessment or
claim for national, local or foreign taxes against the Company.

          (xi) There is no action, suit or proceeding to which the Company is a
party (either as a plaintiff or defendant) pending before any court or
governmental agency, authority or body or arbitrator that would have a Material
Adverse Effect; and to the knowledge of Principal Shareholders, there is no such
action, suit or proceeding threatened against the Company. Neither the Company,
nor, to the knowledge of Principal Shareholders, any officer, director or
employee of any of the foregoing, has been permanently or temporarily enjoined
by any order, judgment or decree of any court

                                       4
<PAGE>

or any governmental agency, authority or body from engaging in or continuing any
conduct or practice in connection with the Business, assets, or properties of
the Company.

          (xii) The conduct of business by the Company on the date hereof does
not violate any laws, statutes, ordinances, rules, regulations, decrees, orders,
permits or other similar items in force on the date hereof, the enforcement of
which would have a Material Adverse Effect, nor has the Company received any
notice of any such violation. The Company holds all permits and licenses that
are required to permit it to conduct its Business as now conducted; all such
permits and licenses are valid and in full force and effect and will remain so
upon consummation of the transactions contemplated by this Agreement; and, to
the knowledge of Principal Shareholders, no suspension, cancellation or
termination of any of such permits or licenses is threatened or imminent.

          (xiii) Mr. Ushiyama is duly authorized to act as Shareholder
Representative on behalf of Minority Shareholders in connection with this
Agreement, including without limitation the execution, delivery and performance
of this Agreement on their behalf.

(b)  REPRESENTATIONS AND WARRANTIES OF SELLER. Each Seller, with respect to
     himself or herself, hereby represents and warrants to Buyer as follows:

     (i)  Seller has good, marketable and indefeasible title to, is the sole
record and beneficial owner of, has full power of disposition over and has full
capacity to sell and transfer to Buyer such number of the Company Shares as set
forth opposite his or her name in Schedule 1, and, at Closing, Buyer will have
good, marketable and indefeasible title to such Company Shares. Such Company
Shares are free and clear of all liens, claims, debts, or other encumbrances;
provided, that a transfer of such Company Shares is subject to the approval of
the Board of Directors as set forth in the Articles of Incorporation of the
Company. To the best knowledge of each Seller, no shareholder of the Company is
entitled to any preemptive or similar rights to subscribe for shares of capital
stock of the Company.

     (ii) Seller has full power and capacity to enter into this Agreement and
all other agreements contemplated hereby to which Seller is or will be a party
(collectively the "Seller Related Agreements") and to consummate the
transactions contemplated hereby and thereby (including sale and delivery of the
Company Shares). This Agreement and the Seller Related Agreements constitute (or
upon execution will constitute) legal, valid and binding obligations of Seller,
enforceable against Seller in accordance with their respective terms and
conditions, except as the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws relating to the enforcement of creditors' rights generally and by general
principles of equity.

     (iii) The execution and delivery of this Agreement and the Seller Related
Agreements, the consummation of the transactions contemplated hereby and thereby
and the fulfillment of the terms hereof and thereof will not result in a breach
of any of the terms or provisions of, or constitute a default under, or conflict
with, any agreement, indenture or other instrument to which either Seller is a
party or by which Seller is bound,

                                       5
<PAGE>

any judgment, decree, order or award of any court, governmental body or
arbitrator by which Seller is bound, or any law, rule or regulation
applicable to Seller.

(c)  REPRESENTATIONS AND WARRANTIES OF BUYER. Except as set forth in the
     Disclosure Schedule attached hereto as SCHEDULE 2, Buyer hereby represents
     and warrants to Sellers as follows:

     (i) Buyer has been duly organized and is validly existing and in good
standing as a corporation under the laws of the State of Delaware and is
qualified to do business as a foreign corporation in each jurisdiction in which
the failure to be so qualified would have a Material Adverse Effect. Buyer has
all requisite corporate power and authority to carry on its business as
presently conducted, enter into this Agreement and all other agreements herein
contemplated to be executed in connection herewith by Buyer (collectively, the
"Buyer Related Agreements") and to consummate the transactions contemplated
hereby and thereby. This Agreement and the Buyer Related Agreements have been
duly authorized by all necessary action, corporate or otherwise, and constitute
(or upon execution will constitute) legal, valid and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective terms and
conditions, except as the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws relating to the enforcement of creditors' rights generally and by general
principles of equity.

     (ii) The execution and delivery of this Agreement and the Buyer Related
Agreements, the consummation of the transactions contemplated hereby and thereby
and the fulfillment of the terms hereof and thereof will not result in a breach
of any of the terms or provisions of, or constitute a default under, or conflict
with, any agreement, indenture or other instrument to which Buyer is a party or
by which it is bound, the charter documents of Buyer, any judgment, decree,
order or award of any court, governmental body or arbitrator by which Buyer is
bound, or any law, rule or regulation applicable to Buyer.

     (iii) Immediately prior to the Closing, the authorized share capital of the
Buyer consists, or will consist of 100,000,000 shares of common stock, of which
20,148,724 are issued and outstanding, and 30,000,000 shares of preferred stock,
of which 7,500,000, 4,850,000 and 3,000,000 shares of preferred stock are
designated Series A Preferred, Series B Preferred and Series C Preferred,
respectively, and of which 7,500,000, 4,833,331 and none, respectively, are
issued and outstanding. 5,000,000 additional shares of common stock of Buyer are
reserved for issuance to employees, officers and directors of Buyer pursuant to
such employee stock option plans as may be approved by the Buyer's board of
directors, of which options for 1,808,381 shares are currently outstanding.

     (iv) Buyer has previously furnished to Sellers copies of its draft audited
financial statements (balance sheet, statement of operations, statement of cash
flows and statement of stockholders equity) for the fiscal year at and ended
October 31, 1999. Such financial statements were prepared in conformity with
generally accepted accounting principles in the United States ("US GAAP")
applied on a consistent basis; are complete,

                                       6
<PAGE>

correct and consistent in all material respects with the books and records of
Buyer; and fairly and accurately present the financial position of Buyer as of
the dates thereof and the results of operations and cash flows of Buyer for the
periods shown therein. Except as and to the extent reflected or reserved against
in the balance sheet so furnished to Sellers, Buyer did not have and was not
subject to any material liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, as of October 31, 1999 (the "Buyer Balance
Sheet Date"), required by US GAAP to be stated therein.

     (v)  Since the Buyer Balance Sheet Date, there has not been (a) any
material adverse change in the financial condition, results of operations,
assets, liabilities, or business of Buyer, (b) any material asset or property of
Buyer made subject to a lien of any kind, (c) any waiver of any material right
of Buyer, or the cancellation of any material debt or claim held by Buyer, (d)
any payment of dividends on, or other distribution with respect to, or any
direct or indirect redemption or acquisition of, any shares of the capital stock
of Buyer, or any agreement or commitment therefore, (e) any mortgage, pledge or
hypothecation of any tangible or intangible asset of Buyer, except in the
ordinary course of business, (f) any sale or assignment of any tangible asset of
Buyer having a book value in excess of $25,000, except in the ordinary course of
business, or of any Buyer Intellectual Property Rights (as hereafter defined) or
other intangible assets, (g) any loan by Buyer to, or any loan to Buyer from,
any officer, director, employee or stockholder of Buyer, or any agreement or
commitment therefore (other than travel and other advances in the ordinary
course of business), (h) any damage, destruction or loss (whether or not covered
by insurance) materially and adversely affecting the assets, property or
business of Buyer, (i) any repayment of any loan owed by Buyer (including,
without limitation, any loan owed to any stockholder of Buyer), (j) any single
capital expenditure in excess of $50,000 or any capital expenditures aggregating
more than $250,000, or (k) any material change in the accounting methods or
practices followed by Buyer.

     (vi) Buyer is not a party or subject to or bound by any acquisition, merger
or similar agreement that may have a Material Adverse Effect.

     (vii) With respect to Buyer Intellectual Property Rights (as defined
below):

          (A)  Buyer has the right to use, sell, and license the Buyer
Intellectual Property Rights (as defined below) material to the conduct of its
business as presently conducted, including without limitation all rights to
Buyer name "Lineo" and to the trademarks and the product name "Embedix" (the
"Buyer Rights"), free and clear of the rights of all others.

          (B)  The business of Buyer as presently conducted, the products as
marketed or sold and the provision of services by Buyer do not violate and will
not violate any agreements that Buyer has with any third party or infringe any
patent, trademark, service mark, copyright or trade secret or any other
Intellectual Property Rights of any third party

          (C)  No claim is pending or threatened against Buyer nor has Buyer

                                       7
<PAGE>

received any notice or claim from any person asserting that any of Buyer's
present or contemplated activities infringe or may infringe any Buyer
Intellectual Property Rights of such person, and Buyer is not aware of any
infringement by any other person of any of Buyer Rights.

          (D)  Each current and former employee of Buyer, and each of Buyer's
consultants and independent contractors involved in development of any of Buyer
Rights, has executed an agreement regarding confidentiality, proprietary
information and assignment of inventions and copyrights to Buyer, and none of
such employees, consultants or independent contractors is in violation of any
agreement or in breach of any agreement or arrangement with former or present
employers relating to proprietary information or assignment of inventions. Buyer
has taken all reasonable steps to protect all data, information, ideas,
concepts, know-how and materials that Buyer treats as trade secrets, and all
other confidential information and Buyer Intellectual Property Rights of Buyer,
which are not part of the public domain or knowledge, nor, to the best knowledge
of Buyer, have they been used, divulged or appropriated for the benefit of any
person other than Buyer or otherwise to the detriment of Buyer.

          (E)  No royalties or other amounts are payable by Buyer to persons by
reason of the ownership or use of the Buyer Intellectual Property Rights of
Buyer.

          (F)  No third party has claimed or, to the best of Buyer's knowledge,
has reason to claim that any person employed by or affiliated with Buyer has (i)
violated or may be violating any of the terms or conditions of his or her
employment, non-competition, non-disclosure, non-solicitation or inventions
agreement with such third party, (ii) disclosed or may be disclosing or utilized
or may be utilizing any Buyer Intellectual Property Rights, trade secret or
proprietary information or documentation of such third party, or (iii)
interfered or may be interfering in the employment relationship between such
third party and any of its present or former employees.

     As used herein, the term "Buyer Intellectual Property Rights" shall mean
the intellectual property rights, including, without limitation, all patents,
patent applications, patent rights, trademarks, trademark applications, trade
names, service marks, service mark applications, copyrights, copyright
applications, computer programs and other computer software, inventions,
designs, samples, specifications, schematics, know-how, trade secrets,
proprietary processes and formulae, including production technology and
processes, all source and object code, algorithms, promotional materials,
customer lists, supplier and dealer lists and marketing research, and all
documentation and media constituting, describing or relating to the foregoing,
including without limitation, manuals, memoranda and records.

     (viii) There is no litigation or governmental proceeding or investigation
pending or threatened against Buyer or affecting any of its properties or assets
or against any officer, director or key employee of Buyer in his or her capacity
as an officer, director or employee of Buyer, which litigation, proceeding or
investigation is reasonably likely to have a Material Adverse Effect, or which
may call into question the validity or hinder the enforceability of this
Agreement or any other agreements or transactions contemplated

                                       8
<PAGE>

hereby; nor has there occurred any event nor does there exist any condition on
the basis of which any such litigation, proceeding or investigation might be
properly instituted or commenced.

     (ix) Buyer has filed all federal, state, local and foreign income, excise
and franchise tax returns, real estate and personal property tax returns, sales
and use tax returns and other tax returns required to be filed by it where the
failure to file such returns would have a Material Adverse Effect, and has paid
all taxes owing by it, except taxes which have not yet accrued or otherwise
become due, for which adequate provision has been made in the pertinent
financial statements referred to above or which will not have a Material Adverse
Effect. All taxes and other assessments and levies which Buyer is required to
withhold or collect have been withheld and collected and have been paid over to
the proper governmental authorities except where the failure to withhold or
collect and pay over would not have a Material Adverse Effect. With regard to
the federal income tax returns of Buyer, Buyer has never received notice of any
audit or of any proposed deficiencies from the Internal Revenue Service. There
are in effect no waivers of applicable statutes of limitations with respect to
any taxing owed by Buyer for any year. Neither the Internal Revenue Service nor
any other taxing authority is now asserting or, to the knowledge of Buyer,
threatening to assert against Buyer any deficiency or claim for additional taxes
or interest thereon or penalties in connection therewith.

     (x)  There are no permits, approvals or consents of any governmental bodies
or agencies which are necessary or appropriate to be obtained by Buyer in order
for the consummation of the transactions contemplated by this Agreement to be in
compliance with applicable laws, other than a securities notice filed with the
Minister of Finance of Japan pursuant to the ministerial ordinances issued under
the Securities and Exchange Law of Japan, and such other permits, approvals and
consents already obtained.

3.   CONDITIONS TO CLOSING.

(a)  CONDITIONS PRECEDENT TO EACH PARTY'S OBLIGATIONS TO CLOSE. The obligations
     of the parties to effect the Closing shall be subject to the following
     conditions unless waived in writing by Buyer and Sellers:

     (i)  No law or order shall have been enacted, entered, issued, promulgated
or enforced by any governmental entity, nor shall any legal action have been
instituted and remain pending or, to the knowledge of Principal Shareholders and
Buyer, have been threatened and remain so at what would otherwise be the Closing
Date, which prohibits or restricts or would (if successful) prohibit or restrict
the transactions contemplated by this Agreement or which would not permit the
Company's Business as presently conducted to continue unimpaired following the
Closing Date. No governmental entity shall have notified any party to this
Agreement that consummation of the transactions contemplated by this Agreement
would constitute a violation of any laws of any jurisdiction and/or that it
intends to commence proceedings to restrain or prohibit such transactions or
force divestiture or rescission, unless such governmental entity shall have
withdrawn such notice and abandoned any such proceedings prior to the time which
otherwise would have been the Closing Date; and

                                       9
<PAGE>

     (ii) To the extent required by applicable law, all governmental permits and
approvals required to be obtained from any governmental entity or agency shall
have been received or obtained on or prior to the Closing Date.

(b)  CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS TO CLOSE. The obligations of
     Buyer to effect the Closing shall be subject to the following conditions
     except to the extent waived in writing by Buyer:

     (i)  The respective representations and warranties of Principal
Shareholders and each Seller herein contained shall be true and correct in all
material respects as of the Closing Date with the same effect as though made as
of such date; Principal Shareholders and Sellers shall have in all material
respects performed all obligations and complied with all covenants and
conditions required under this Agreement to be performed or complied with by
them on or prior to the Closing Date; and Principal Shareholders and Sellers
shall have executed and delivered to Buyer certificates, dated as of the Closing
Date, to that effect in form and substance satisfactory to Buyer;

     (ii) The Board of Directors of the Company shall have approved the transfer
by Sellers of the Company Shares to Buyer, and Buyer shall have been furnished
with satisfactory evidence of all other consents, approvals or notifications of
other persons whose consent, approval or notification is required in order to
permit the transactions contemplated hereunder; and

     (iii) Buyer shall have received an opinion from counsel to the Company in
form and substance mutually agreeable to Buyer and the Company.

(c)  CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS TO CLOSE. The obligations of
     Sellers to effect the Closing shall be subject to the following conditions,
     except to the extent waived in writing by Sellers:

     (i)  The representations and warranties of Buyer herein contained shall be
true and correct in all material respects as of the Closing Date with the same
effect as though made as of such date; Buyer shall have in all material respects
performed all obligations and complied with all covenants and conditions
required under this Agreement to be performed or complied with by it at or prior
to the Closing Date; and Buyer shall have delivered to Sellers a certificate in
form and substance satisfactory to Sellers, dated the Closing Date and signed by
its duly authorized officer, to such effect;

     (ii) Sellers shall have been furnished with satisfactory evidence of all
consents, approvals or notifications of other persons whose consent, approval or
notification is required in order to permit the transactions contemplated
hereunder;

     (iii) Buyer shall have executed employment agreements with Mr. Ushiyama,
Mr. Takeuchi and Mr. Koichi Narasaki on such terms and conditions mutually
agreeable to the parties thereto and shall have granted, effective on the
Closing Date, stock options to those Sellers who shall become employees of Buyer
upon the Closing.

                                       10
<PAGE>

     (iv) Buyer shall have executed an indemnity agreement for the benefits of
Principal Shareholders, Satoru Miura, Masatoshi Suzuki and Yoshito Iguchi
(collectively "Financial Support Providers"), in which Buyer agrees to: (i) use
or caused to be used commercially reasonable best efforts to arrange for the
release of Financial Support Providers from the guarantee they have made on
behalf of the Company ("Guarantees"); (ii) pay or cause to be paid when due any
and all the Company's borrowings in respect of which Guarantees have been
provided with respect to which such release has not been effected; (iii) pay or
cause to be paid when due any and all loans made to the Company by Financial
Support Providers ("Loans"); and (iv) indemnity and hold Financial Support
Providers harmless from and against all liability, damage, deficiency, loss,
cost or expense, including attorneys' fees and costs of investigation
("Losses"), incurred by Financial Support Providers in connection with any
execution of Guarantees by the creditors thereof and/or any breach by the
Company of Loans.

4.   Termination.

(a)  TERMINATION. Anything contained herein to the contrary notwithstanding,
     this Agreement may not be terminated or canceled prior to the Closing Date,
     except:

     (i)  By written consent of Buyer and Sellers; or

     (ii) Upon the failure to satisfy one or more conditions to Close set forth
herein; or

     (iii) By either party by written notice to the other if the Closing has not
occurred by April 30, 2000.

(b)  EFFECT OF TERMINATION. If this Agreement is terminated pursuant to Section
     4(a) above, all rights and obligations of the parties hereunder shall
     terminate without any liability of any party to the other (except for any
     liability of the party then in breach).

5.   INDEMNIFICATION.

(a)  INDEMNIFICATION BY PRINCIPAL SHAREHOLDERS. Principal Shareholders shall
     jointly and severally indemnify and hold harmless Buyer from and against
     all Losses, incurred by Buyer in good faith and which arise from or are
     attributable to any breach of any representation or warranty made by
     Principal Shareholders in Section 2(a) above even though any such
     representation or warranty may have been made by Principal Shareholders in
     good faith and to the best of their knowledge (unless such representation
     or warranty is expressly limited in this Agreement to the knowledge of
     Principal Shareholders).

(b)  INDEMNIFICATION BY SELLER. Each Seller (including Principal Shareholders)
     shall indemnify and hold harmless Buyer from and against all Losses which
     Buyer shall incur in good faith and which arise from or are attributable to
     any breach of any representation or warranty made by such Seller in Section
     2(b) above even though any such representation or warranty may have been
     made by such Seller in

                                       11
<PAGE>

     good faith and to the best of his or her knowledge (unless such
     representation or warranty is expressly limited in this Agreement to the
     knowledge of such Seller), provided, however, that the indemnity obligation
     of each Seller (other than Principal Shareholders) hereunder shall be
     limited to the consideration he or she has received pursuant to this
     Agreement.

(c)  INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold harmless Sellers
     (including Principal Shareholders) from and against all Losses which
     Sellers shall incur in good faith and which arise from or are attributable
     to any breach of any representation or warranty made by Buyer in Section
     2(c) above even though any such representation or warranty may have been
     made by Buyer in good faith and to the best of its knowledge (unless such
     representation or warranty is expressly limited in this Agreement to the
     knowledge of Buyer).

(d)  INDEMNIFICATION PROCEDURES. If any party claiming the right to be
     indemnified hereunder (the "Indemnitee") is threatened with any claim, or
     any claim is presented to or made by the Indemnitee, or any action is
     commenced against the Indemnitee, which may give rise to a right of
     indemnification hereunder, the Indemnitee shall, with reasonable
     promptness, give to the party or parties claiming to be liable hereunder
     (the "Indemnitor") a written notice of the claim and request the Indemnitor
     to defend the Indemnitee, and, without prejudice to the Indemnitee's right
     of indemnification hereunder, shall, prior to taking any action with
     respect to the subject claim, make itself available to meet with the
     Indemnitor and in good faith attempt to resolve and settle the claim
     without further recourse to the Indemnitee's rights and remedies under this
     Section 5. The Indemnitor may elect, within thirty (30) days after receipt
     of such notice, or no later than five (5) days before the return date
     required by any citation, claim or other statute, whichever occurs earlier,
     to contest or defend against such claim at the expense of the Indemnitor
     (with counsel selected by the Indemnitor and reasonably acceptable to the
     Indemnitee), and shall give a written notice to the Indemnitee of the
     commencement of such defense with reasonable promptness after the giving of
     the written notice of the claim by the Indemnitee. The Indemnitee, its
     subsidiaries, successors and assigns shall be entitled to participate with
     the Indemnitor in such event, but shall not be entitled in any way to
     release, waive, settle, modify or pay such claim without the consent of the
     Indemnitor if the Indemnitor has assumed such defense. In the event the
     Indemnitor has assumed said defense and has employed counsel with respect
     thereto, the Indemnitee shall also be entitled to employ separate counsel
     at the Indemnitee's expense. In the event that the Indemnitor does not
     elect to contest or defend the claim as provided above, the Indemnitee, its
     subsidiaries, successors or assigns shall have the exclusive right (but not
     the obligation) to prosecute, defend, compromise, settle or pay the claim
     in its sole discretion and pursue its rights under this Agreement,
     including the remedies set forth in Section 7 hereof.

(e)  INDEMNITEE'S COOPERATION. In the event that a claim or benefit, other than
     an insurance claim against an insurer of the Indemnitee under a policy
     obtained on or after the Closing Date, is created in connection with the
     occurrence of any Losses

                                       12
<PAGE>

     which have not been collected by the Indemnitee at the time payment with
     respect to such Losses is made by the Indemnitor, the Indemnitee shall
     assign such benefit or claim to the Indemnitor as a condition to the
     payment by the Indemnitor and shall cooperate with the Indemnitor in its
     efforts to collect any such benefit or claim. If such claim or benefit is
     not assignable under applicable laws, the Indemnitee shall cooperate in
     good faith with the Indemnitor's efforts to collect such claim or benefit.

6.   SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

     The representations and warranties contained in or made pursuant to this
Agreement shall survive the Closing and expire on the first anniversary of the
Closing except that if a claim or notice is given under Section 5 with respect
to any representation or warranty prior to the applicable expiration date, such
representation or warranty shall continue until such claim is finally resolved.
No claim or action for breach of any representation or warranty shall be
asserted or maintained by any party hereto after the expiration of such
representation or warranty pursuant to the preceding sentence except for claims
made in writing prior to such expiration or actions (whether instituted before
or after such expiration) based on any claim made in writing prior to such
expiration.

7.   NONCOMPETITION COVENANT.

     (a)  NONCOMPETITION. Principal Shareholders and Mr. Koichi Narasaki
          acknowledge and agree that, after the Closing, Buyer shall be
          beneficially entitled, jointly with the Company, to the goodwill and
          going concern value of the Business of the Company and that such
          goodwill and going concern value shall be protected and preserved to
          the maximum extent permitted by law. Principal Shareholders and Mr.
          Koichi Narasaki also acknowledge that their management contributions
          to the Company have been uniquely valuable and involve proprietary
          information that would be competitively unfair to make available to
          any competitor of the Company, and after the Closing, Buyer. For these
          and other reasons and as an inducement to Buyer to enter into this
          Agreement, each Principal Shareholder and Mr. Koichi Narasaki agrees
          that for a period of two (2) years from the Closing Date, he will not,
          directly or indirectly, for his own benefit or as agent for another,
          carry on or participate in the ownership, management or control of, or
          be employed by, or consult for or otherwise render services to, or
          allow his name or reputation to be used in or by any other present or
          future business enterprise that engages in the Business competitive
          with the Company in the geographic areas that the Company currently
          conducts its Business.

     (b)  RESTRICTIONS ON SOLICITING EMPLOYEES. In addition, to protect the
          Company and, after the Closing, Buyer against any efforts by Principal
          Shareholders and Mr. Koichi Narasaki to cause employees of the Company
          to terminate their employment with the Company, each Principal
          Shareholder and Mr. Koichi Narasaki agrees that, until the later of
          (i) the expiry of a period of two (2) years following the Closing Date
          and (ii) the expiry of a period of six (6) months following the date
          that his service to or employment with the Company terminates

                                       13
<PAGE>

          (for whatever reason), he shall not directly or indirectly (i) induce
          any such employee to leave the Company or any of its affiliates or to
          accept any other employment or position with any other business
          enterprise engaging in the Business or (ii) assist such enterprise in
          hiring any such employee.

     (c)  EXCEPTIONS. Nothing contained in this Section 7 shall limit the right
          of a Principal Shareholder and Mr. Koichi Narasaki as an investor to
          hold and make investments in securities of any corporation or limited
          partnership that is registered on a national securities exchange or
          admitted to trading privileges thereon or traded in a generally
          recognized over-the-counter market, provided that Principal
          Shareholder's and Mr. Koichi Narasaki's equity interest therein does
          not exceed 5% of the outstanding shares or interests in such
          corporation or partnership. For avoidance of doubt, nothing contained
          in this Section 7 is intended to prohibit or restrict the activities
          of a Principal Shareholder and Mr. Koichi Narasaki in performing his
          duties as a director, officer or employee of the Company, Buyer or any
          of their affiliates. Further, for avoidance of doubt, it is agreed
          among the parties hereto that no Sellers (other than Principal
          Shareholders and Mr. Koichi Narasaki) shall be subject to the
          restrictions set forth in this Section 7.

     (d)  SPECIAL REMEDIES AND ENFORCEMENT. Each Principal Shareholder and Mr.
          Koichi Narasaki recognizes and agrees that a breach by a Principal
          Shareholder or Mr. Koichi Narasaki of any of the covenants set forth
          in this Section 7 could cause irreparable harm to the Company and,
          after the Closing, Buyer, that the Company's and Buyer's remedies at
          law in the event of such breach would be inadequate, and that,
          accordingly, in the event of such breach a restraining order or
          injunction or both may be issued against a breaching Principal
          Shareholder and Mr. Koichi Narasaki, in addition to any other rights
          and remedies which are available to the Company or Buyer. If this
          Section 7 is more restrictive than permitted by the laws of the
          jurisdiction in which the Company or Buyer seeks enforcement hereof,
          this Section 7 shall be limited to the extent permitted by such laws.

     8.   COVENANTS.

     (a)  GENERAL. The parties hereto agree to execute, acknowledge and deliver,
          at or after the Closing Date, such other and further instruments and
          documents as may be reasonably necessary to implement, consummate and
          effectuate the terms of this Agreement. Sellers agree that at any time
          and from time to time, at the Company's expense, Sellers shall execute
          such documents and take any and all necessary actions as reasonably
          requested by Buyer or the Company to promptly transfer to the Company
          any assets held in the names of Sellers, which are related to or used
          in connection with the Business of the Company.

     (b)  CONFIDENTIALITY. After the Closing, no Seller (including Principal
          Shareholders) shall, at any time, make use of, divulge or otherwise
          disclose, directly or indirectly, any trade secret or other
          proprietary data (including, but not limited to, any customer list,
          record or financial information) of or concerning the Business,

                                       14
<PAGE>

          except in furtherance of his or her duties and responsibilities as a
          director, officer or employee of the Company (or Buyer)

     (c)  CONTINUED EMPLOYMENT. Buyer hereby confirms its agreement and
          acknowledgement to continue the employment of all directors, officers
          and employees of the Company with the Company after the Closing on
          terms consistent with those of other employees of Buyer of comparable
          status.

     9.   ASSIGNMENT. Except with respect to an assignment by Buyer to a
successor of all of the Company Shares, no party hereto may assign this
Agreement or any Buyer Related Agreement or Seller Related Agreement, nor any of
its rights or obligations hereunder may be assignable or transferable, in any
manner to a third party, without the prior written consent of (in case of an
assignment by a Seller) Buyer or (in case of an assignment by Buyer) Sellers.
Subject to the foregoing, this Agreement, the Buyer Related Agreements and
Seller Related Agreements shall be binding upon, inure to the benefit of, and be
enforceable by the heirs, administrators, executors and proper assigns of
Sellers and of Buyer to which they are or will be parties.

     10.  GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware without giving effect
to any choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of Delaware to the rights
and duties of the parties.

     11.  EXPENSES. Sellers and Buyer shall each pay and bear its or his own
costs and expenses incident to the negotiation, preparation and performance of
this Agreement and the transaction contemplated hereby, including but not
limited to the fees, expenses and disbursements of their respective accountants
and legal counsel; provided, that Buyer shall bear the costs and expenses of the
audit of the Company, to the extent that Buyer determines such audit is
necessary or desirable and expenses to be borne or paid by Sellers shall be
charged to the Company.

     12.  PUBLICITY. No party shall issue any press release, publicity statement
or other public notice relating to this Agreement or the transactions
contemplated by this Agreement, without obtaining the prior written consent of
the other party or unless a particular action is required by applicable law;
provided, that the parties acknowledge that Buyer and its affiliates may issue a
press release at or following the Closing to announce the acquisition of the
Company and that the Company may send a notice of the acquisition to its
customers, supplies and such other business contacts of the Company in a manner
customary in Japan.

     13.  ENTIRE AGREEMENT. This Agreement, together with the Exhibits and
Schedules attached hereto, contains the entire agreement of the parties hereto
(including the Minority Shareholders represented by the Shareholder
Representative), and supersedes any prior written or oral agreements between
them concerning the subject matter contained herein. There are no
representations, agreements, arrangements or understanding, oral or written,
between and among the parties hereto, relating to the subject matter contained
in this Agreement, which are not fully expressed herein.

                                       15
<PAGE>

     14.  COUNTERPARTS.

     This Agreement and any amendments hereto may be executed in any number of
counterparts, and each such counterpart shall for all purposes be deemed to be
an original.

     15.  TAX MATTERS.

     Sellers and Buyer acknowledge and agree that each is responsible for
obtaining his, her or its own tax advice with respect to the transactions
contemplated hereby and the tax impact thereof on his, her or its own tax
obligations.

     16.  AGREEMENT TO ARBITRATE.

     (a)  The parties agree that any dispute, controversy or claim concerning or
          relating to this Agreement (a "Dispute"), shall be resolved pursuant
          to this Section 16.

     (b)  The parties shall use all reasonable efforts to resolve the Dispute
          through direct discussions. Within 20 days of written notice that
          there is a Dispute, the parties shall meet in King County, Washington
          or confer by telephone in an effort to reach an amicable settlement
          and to explore alternative means to resolve the dispute expeditiously
          (E.G., mediation).

     (c)  If the Dispute has not been resolved as a result of the procedure in
          paragraph (b) hereof or otherwise within sixty (60) days of the
          initial written notice that there is a Dispute (or such additional
          time to which the parties may agree), the matter shall be resolved by
          final and binding arbitration in King County, Washington under the
          then current Rules promulgated by the CPR Institute for Dispute
          Resolution. The arbitration shall be governed by the United States
          Arbitration Act, 9 USCss.1-16. There shall be three arbitrators, each
          of whom shall be neutral, independent and impartial. Any arbitrator
          may be of any nationality. The award shall be final, binding and
          conclusive upon the parties. Judgment on an arbitral award may be
          entered by any court of competent jurisdiction, or application may be
          made to such a court for judicial acceptance of the award and any
          appropriate order including enforcement.

     (d)  The dispute resolution proceedings contemplated by this provision
          shall be as confidential and private as permitted by law. To that end,
          the parties shall not disclose the existence, content or results of
          any proceedings conducted in accordance with this provision, and
          materials prepared or submitted in connection with such proceedings
          shall not be admissible in any other proceeding, provided, however,
          that this confidentiality provision shall not prevent a petition to
          vacate or enforce an arbitral award, and shall not bar disclosures
          required by law. The parties agree that any decision or award
          resulting from proceedings in accordance with this dispute resolution
          provision shall have no preclusive effect in any other matter
          involving third parties.

                                       16
<PAGE>

     (e)  The arbitral award shall be rendered in writing and shall state the
          reasons for the award.

     The arbitral tribunal shall not be empowered to award any form of punitive
damages or any other remedy not measured by the prevailing party's actual
damages, nor to act as amiable compositeur and shall not make an award solely
out of fairness and equity. The arbitration award may award reasonable
attorneys' fees to the prevailing party.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       17
<PAGE>

     IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
or their duly authorized representatives as of the date first above written.

                                      LINEO, INC., AS BUYER

                                      By:
                                          --------------------------------------
                                            Name:
                                            Title:

                                      YOSHINOBU USHIYAMA,
                                      AS PRINCIPAL SHAREHOLDER AND SELLER

                                      ------------------------------------------

                                      TATSUYA TAKEUCHI,
                                      AS PRINCIPAL SHAREHOLDER AND SELLER

                                      ------------------------------------------

                                      YOSHINOBU USHIYAMA,
                                      AS SHAREHOLDER REPRESENTATIVE ON BEHALF OF
                                      MINORITY SHAREHOLDERS

                                       18
<PAGE>

                         INDEX OF SCHEDULES AND EXHIBIT

     SCHEDULE

     1.       List of Shareholders

     2.       Disclosure Schedule

                                       19
<PAGE>

                                   SCHEDULE 1

                              LIST OF SHAREHOLDERS

                                       20

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