"Exhibit D -- Santa Cruz Operation Inc. Reference Source Code Agreement No. SOFT-2538

"I find it curious that SCO bundled both Amendment X and SOFT-2538 together as the two documents seem to be independent of each other. Amendment X clearly modified the original agreements back to Exhibit A. As such it seems to apply to the System V source code and documentation listed in excruciating detail in the original contract (Exhibit A). The February 1998 agreement, SOFT-2538, explicitly applies to 'reference software products' ordered after the signing of the agreement. Without a list of those orders SOFT-2538 seems to be essentially meaningless -- it states the detailed terms of a license for nothing."

Allan has such a way with words. "The detailed terms of a license for nothing." To orient you further, or disorient you, depending on how you look at it, this is how SCO describes it:

"66.  In addition, AT&T and IBM have entered into nearly 400 supplemental agreements over the years, including Supplement No. 170  (Supplement No. 170 is attached hereto and incorporated herein as Exhibit D).  Supplement No. 170 is the document that specifies the royalty amounts and computer CPUs upon which royalty amounts were due to be paid by IBM."

What is so odd is, I see nothing that identifies this document as No. 170. However, Amendment X does have such a reference, and it fits the SCO description in other respects. Further, I see no reason why IBM, or anyone else, would ever sign such an agreement as this one, because it bars whoever signs it from modifying or preparing derivative works based on the "reference software products" and from reverse engineering it. Further, it was to be used solely for IBM's own business purposes and did not include the right to distribute "to any other party" or to export the code anywhere outside of the US. IBM could get the code for its own use, but this document would seem to preclude having customers. It doesn't say all derivative works belong to SCO; it says you can't make any. So it seems obvious this can't be about System V code, because if it were, then from 1998, IBM would have signed a document that said they couldn't do AIX or license it to anyone or distribute it outside of the US, even if they were allowed to write it.

And it gives SCO the right to terminate on 30 days' notice, a time period SCO didn't avail itself of. Why would IBM go from irrevocable and perpetual rights, which they had already paid for, and the right to make derivative works, and to claim the rights to those derivative works as their own so long as no System V code was included, and the right to export to most countries in the world to a contract that took all those rights away? Further, Amendment X was between Novell and IBM and Santa Cruz. This document is between IBM and Santa Cruz only. How then, could it negate or even relate to the 1996 3-way Amendment X? What would be the connection between the two documents, that SCO offers them joined at the hip, so to speak? And it is signed by a woman in NC, at their Research Triangle Park in Raleigh, unlike any other contract or side letter offered in evidence, all of which I believe were signed by someone at IBM headquarters, with the headquarters NY address.

What also stands out is that IBM was offered no indemnification here, so they would have been giving that up too, because they had it under Amendment X. That is correct, folks. The company that is now saying that GPL code is the only code in the world that does not offer indemnification didn't offer it itself in this document. Here's the warranty section:

"12.01  SCO warrants that it is empowered to grant the rights granted herein.

"12.2  Except as set forth in Section 12.01, SCO (and other developers) make no representations or warranties with regard to REFERENCE SOFTWARE PRODUCTS, expressly or impliedly.  By way of example but not of limitation, SCO and other developers make no representations or warranties of merchantability or fitness for any particular purpose, or that the use of any REFERENCE SOFTWARE PRODUCT will not infringe any patent, copyright or trademark."

A 1998 contract. That is not the Middle Ages. Of course, SCO could argue that it wasn't them. The agreement was a contract with oldSCO. Yes. Exactly. They would be right to so argue. This isn't a contract between current SCO and IBM, so unless there is another writing that transferred this and all the rights it specifies, or takes away, to Caldera, now SCO, I really can't understand why they included it in their complaint as an exhibit. I think it must have been added by mistake, pure and simple, on SCO's part. You don't normally append two documents together as one exhibit. Each would be a separately numbered exhibit, so as to avoid confusion. So my vote is that this document was either a mistake on SCO's part or by some stretch a document SCO hoped would be confusing and would make the casual viewer think had taken away the obviously broad rights IBM had already.

But even if this document could amend or negate Amendment X and any earlier agreements, it has a clause on confidentiality, including methods and concepts, clause 3:04, which says that IBM's obligations regarding confidentiality don't apply to any portion of the "reference software product" which was no longer a trade secret in 1998, was independently and legally received by IBM from a third party, was already in their possession, or was "independently developed by you with use of the REFERENCE SOFTWARE PRODUCT or SOFTWARE DERIVATIVE." The restrictions would appear, therefore, to apply only to anything outside those perimeters.

There is also a clause that gives IBM clean room rights, you might call it, or as Allan Kim calls it, the "I own the contents of my brain" clause:

"3.05  - Notwithstanding anything to the contrary, YOU shall have the right to use residual information mentally retained by YOUR employees who in the ordinary course of their work pursuant to this Agreement, retain such information in non-tangible form after having access to REFERENCE SOFTWARE PRODUCT, provided that such employees make no deliberate attempt to preserve such information by reducing it to writing or to otherwise memorialize such information contemporaneously.  However, nothing in this paragraph shall affect SCO's rights under patent or copyright laws."

The amended complaint says there are around 400 such agreements. Where are the other 399, I wonder? And exactly who is the person who signed this? Debra Walton at Research Triangle Park in Raleigh, NC?

And it is clearly a boilerplate document, a kind of order form, between Santa Cruz and "YOU", with blank lines to fill in by the "YOU" party by hand. So it wasn't a negotiated contract so much as a kind of EULA going along with an order of some software "YOU" wanted to license. With a negotiated contract, the secretary or paralegal drawing up the document will type in the names of both parties, and all the parties do with a pen is sign on the dotted line.

Why would this document have anything to do with SystemV code or be related to Amendment X in any way? IBM by this time already had System V code and didn't need to order it again for North Carolina, I wouldn't think.

Honestly I have no idea what this agreement was for, and standing on its own, I don't see how anyone can know what it is talking about. What exactly is the source code referenced? 'Tis a puzzlement. It really does seem to have been attached by mistake.

However, because SCO put it in the case, here it is as text. Again, we have Scott McKellar to thank for the text version. You might think that it's a waste of time to transcribe and analyze what is probably a mistake. However, if nothing else, this exhibit stands as a monument to SCO's legal skill.

*****************

Agreement Number SOFT-2538

THE SANTA CRUZ OPERATION, INC.
REFERENCE SOURCE CODE AGREEMENT

This Agreement is between THE SANTA CRUZ OPERATION, INC. ("SCO"), a California corporation, having an office at 400 Encinal Street, Santa Cruz, California 95061-1900, and YOU as indicated in the signature block of this Agreement, for YOURSELF and on behalf of YOUR SUBSIDIARIES.  Subject to the terms and conditions of this Agreement, SCO will provide YOU the right to acquire REFERENCE SOFTWARE PRODUCTS.  Each such REFERENCE SOFTWARE PRODUCT shall become subject to this Agreement on acceptance by SCO of an ORDER submitted by YOU and accepted by SCO that identifies the SOURCE CODE PRODUCT upon which a REFERENCE SOFTWARE PRODUCT is based.  Each ORDER made part hereof shall identify the number of this Agreement and shall include a Product Schedule for the SOURCE CODE PRODUCT.  Any additional terms and conditions set forth in such Product Schedule incorporated into such ORDER shall also apply with respect to such REFERENCE SOFTWARE PRODUCTS provided that each such Product Schedule containing such additional terms and conditions is signed by YOUR duly authorized representative.  Additional terms and conditions on YOUR initiated ORDERs in conflict with or modifying the terms and conditions of this Agreement shall not apply to such ORDER.

This Agreement and its applicable ORDERS set forth the entire agreement and understanding between the parties as to the subject matter hereof and merges all prior discussions, communications, agreements or understandings between them with respect to such subject matter.  This Agreement shall not be modified except by a writing signed by authorized representatives of both parties.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives.

YOU International Business Machines Corp           (Company Name) New York (State incorporation) 3039 Cornwallis Rd (Address) Research Triangle Park, NC 27709 (Address) {signature: Debra P Walton} (By) DEBRA P. WALTON (Print or Type Name) Contracts Representative (Title) 2-5-98 (Date)

THE SANTA CRUZ OPERATION, INC. By: {illegible signature; Bill something?} (Name) MGR LAW & CORP AFFAIRS (Title) 2-10-98 (Date)

1.   TERM AND TERMINATION

1.01   This Agreement shall become effective on the date of acceptance by SCO.  With respect to a particular REFERENCE SOFTWARE PRODUCT, the duration of LICENSEE's rights shall be as specified in the Product Schedule associated with the applicable Supplement.

1.02   If YOU fail to fulfill one or more of YOUR material obligations under this Agreement, SCO may, upon its election and in addition to any other remedies that it may have, at any time terminate all the rights granted by it hereunder by not less than two (2) month's prior written notice to YOU specifying any such breach, unless within the period of notice all breaches specified therein shall have been remedied; upon such termination, YOU shall immediately discontinue use of and return or destroy all copies of REFERENCE SOFTWARE PRODUCTS covered hereunder.

1.03   Upon thirty (30) days written notice to SCO, YOU may elect to terminate YOUR rights hereunder.  You may elect to acquire more extensive rights under a separate SCO Software Agreement covering the applicable SCO SOURCE CODE PRODUCTS.

1.04   The termination of this Agreement or YOUR rights hereunder shall not relieve YOU of YOUR obligations to pay any fee hereunder.

2.01   Subject to the provisions and during the term of this Agreement, SCO grants to YOU a personal, nontransferable, nonassignable and nonexclusive limited right to use in the United States REFERENCE SOFTWARE PRODUCTS identified in one or more ORDERS hereto, solely for YOUR own business purposes and solely on or in conjunction with DESIGNATED CPUs.  Such right to use does not include any right to:

(a) modify such REFERENCE SOFTWARE PRODUCTS or prepare derivative works based on such REFERENCE SOFTWARE PRODUCTS; or

(b) to distribute, to any other party, REFERENCE SOFTWARE PRODUCTS; or

(c) in the case of object code portions, if any, of REFERENCE SOFTWARE PRODUCTS, to reverse engineer, reverse compile, disassemble or otherwise attempt to derive the source code of such portions.

2.02   No right is granted by this Agreement for the use of REFERENCE SOFTWARE PRODUCTS directly for others, or for any use of REFERENCE SOFTWARE PRODUCTS by others unless such uses are permitted for the associated SCO SOURCE CODE PRODUCTS in the applicable Product Schedules for such SCO SOURCE CODE PRODUCTS.

2.03   No right is granted to YOU to allow anyone other than YOUR employees to use REFERENCE SOFTWARE PRODUCTS unless such uses are permitted by a specific provision in the Product Schedules for the associated SCO SOURCE CODE PRODUCTS.  The term "employees" as used in this Agreement means both direct and contractors.

3.01   SCO shall include the appropriate markings of confidentiality on the REFERENCE SOFTWARE PRODUCT.  As such, YOU shall treat all REFERENCE SOFTWARE PRODUCT or SOFTWARE DERIVATIVE provided to you under this Agreement in accordance with the terms and conditions of this Section.

3.02   YOU agree to use the same degree of care as YOU would with similar products of YOUR own, (but no less than a reasonable degree of care) and to hold all parts of REFERENCE SOFTWARE PRODUCTS or SOFTWARE DERIVATIVES subject to this Agreement in confidence for SCO and not make any disclosure of any or all of such REFERENCE SOFTWARE PRODUCTS (Including methods and concepts utilized therein) to anyone, except to YOUR employees to whom such disclosure is necessary to the use for which rights are granted hereunder and who are under a binding obligation to keep such disclosure in confidence.

3.03   YOU shall appropriately notify each employee to whom any such disclosure is made that such disclosure is made in confidence and shall be kept in confidence by such employee.

3.04   YOUR obligations under this Section shall not apply to a particular portion of the REFERENCE SOFTWARE PRODUCT which: (i) has become generally available to the public through acts or omissions not attributable to YOU; (ii) was already lawfully in YOUR possession unburdened by an obligation of confidentiality owed to SCO, prior to its receipt from SCO; (iii) is received by YOU independently from a third party who was free to lawfully disclose such information to YOU without breach of an obligation of confidentiality to SCO; (iv) is required to be disclosed by YOU by judicial or governmental administrative authority, provided that YOU first notify SCO in a timely fashion to permit SCO to take appropriate protective measures; or (v) is independently developed by you with use of the REFERENCE SOFTWARE PRODUCT or SOFTWARE DERIVATIVE.

3.05   Notwithstanding anything to the contrary, YOU shall have the right to use residual information mentally retained by YOUR employees who in the ordinary course of their work pursuant to this Agreement, retain such information in non-tangible form after having access to REFERENCE SOFTWARE PRODUCT, provided that such employees make no deliberate attempt to preserve such information by reducing it to writing or to otherwise memorialize such information contemporaneously.  However, nothing in this paragraph shall affect SCO's rights under patent or copyright laws.

(a) in the case of a SCO SOFTWARE PRODUCT, directly from SCO; or

(b) in the case of a SOFTWARE DERIVATIVE, from another licensee of SCO for the associated SCO SOURCE CODE PRODUCT who has previously acquired the right, via a SCO Software Agreement, to provide such SOFTWARE DERIVATIVE to certain SCO licensees via SOURCE CODE EXCHANGE.

YOU may make copies of REFERENCE SOFTWARE PRODUCTS solely for the uses granted hereunder.  Each copy shall contain any copyright notices, proprietary notices or notice giving credit to another developer, which appear on or in the REFERENCE SOFTWARE PRODUCT being copied or in the applicable Product Schedule for the associated SCO SOURCE CODE PRODUCT.  All YOUR obligations hereunder with respect to such REFERENCE SOFTWARE PRODUCT shall apply to each copy.

YOU will not, without the prior written consent of the REFERENCE SOFTWARE PRODUCT provider, export, either directly or indirectly, REFERENCE SOFTWARE PRODUCTS covered by this Agreement to any country outside of the United States.  YOU will obtain any and all necessary governmental export licenses for export or for any disclosure of a REFERENCE SOFTWARE PRODUCT to a foreign national.

No right is granted herein to use any trademarks, trade devices, service marks or symbols, or other trade indicia, and abbreviations, contractions or simulations thereof (collectively "trademarks") owned by, or used to identify any product or service of, SCO (or a corporate affiliate thereof) or any third party including any third party who has contributed to any portion of a REFERENCE SOFTWARE PRODUCT.

8.01   The applicable fees specified in Product Schedule(s) included in ORDERS made part hereof shall be paid to SCO within thirty (30) days of receipt of an invoice from SCO.

8.02   YOU shall pay all taxes, including sales and use taxes (and any related interest or penalty), however designated, imposed as a result of this Agreement, except any income tax imposed upon SCO by any governmental entity within the United States (the fifty (50) states and the District of Columbia).  Fees specified here do not include taxes.  If SCO is required to collect a tax to be paid by YOU, YOU shall pay the amount of such tax to SCO on demand.

9.01  Payments to SCO under this Agreement shall be made payable and sent to:

The Santa Cruz Operation, Inc.
P.O. Box 7745
San Francisco, CA 94120-7745

10.01   Notices and other correspondence with SCO relating to this Agreement shall be sent to:

The Santa Cruz Operation, Inc.
P.  O. Box 4
430 Mountain Avenue
Murray Hill, New Jersey 07974-0004
Attention: Law and Corporate Affairs

10.02   Any statement, notice, request or other communication shall be deemed received when personally delivered, sent by facsimile, or three days after being sent via first-class mail postage pre-paid to either party at the addresses specified in this Agreement.

YOU agree to keep records of each copy of REFERENCE SOFTWARE PRODUCTS.  Such records shall list the location, person responsible, and manufacturer, model and serial number of DESIGNATED CPUs such REFERENCE SOFTWARE PRODUCT is installed on.  YOU agree to furnish reports detailing the procedures used to keep such records and the list of DESIGNATED CPUs to SCO upon request.  Such request from SCO shall not be more frequent than annually.  Prompt adjustment shall be made to compensate for any errors or omissions.

12.01  SCO warrants that it is empowered to grant the rights granted herein.

12.2  Except as set forth in Section 12.01, SCO (and other developers) make no representations or warranties with regard to REFERENCE SOFTWARE PRODUCTS, expressly or impliedly.  By way of example but not of limitation, SCO and other developers make no representations or warranties of merchantability or fitness for any particular purpose, or that the use of any REFERENCE SOFTWARE PRODUCT will not infringe any patent, copyright or trademark.  SCO and other developers shall not be held to any claim by YOU or a third party on account of, or arising from, the use of any REFERENCE SOFTWARE PRODUCT.

SCO performs a standard virus check on all media the REFERENCE SOFTWARE PRODUCT is contained on and as such the REFERENCE SOFTWARE PRODUCT is provided to YOU free of any known virus.

SCO's Law and Corporate Affairs Department (meaning the organization responsible for the protection of SCO's patents and other intellectual property, and for the response to suits and claims in connection therewith, has no knowledge of any patents or copyrights which are infringed or may be infringed, or any trade secrets or other proprietary rights of other parties which are or may be misappropriated or violated by using, making, copying, licensing or distributing SCO Products supplied by SCO to OEM hereunder.

13.01   Neither this Agreement nor any rights hereunder, in whole or in part, shall be assignable or otherwise transferable by YOU and any purported assignment or transfer shall be null and void.

13.02   The construction and performance of this Agreement shall be governed by the substantive laws of the State of California.

14.01   CPU means central processing unit.

14.02   COMPUTER PROGRAM means any instruction or instructions, in source-code or object-code format, for controlling the operation of a CPU.

14.03   DESIGNATED CPU means any CPU listed as such for a specific SOURCE CODE PRODUCT in an ORDER under this Agreement.  Such listing includes the maker, model number and serial number.

14.04   SCO SOURCE CODE PRODUCT means a SOURCE CODE PRODUCT made commercially available for license in source code form by SCO through a SCO Software Agreement.

14.05   ORDER means YOUR initiated written request for rights to acquire SOFTWARE DERIVATIVES or REFERENCE SOFTWARE PRODUCT under the terms and conditions of this Agreement.  Such request may be via a purchase order, order form or some other mutually acceptable ordering vehicle under which all required ordering information including the applicable fees as specified in a Product Schedule attached to such ordering vehicle.

14.06   REFERENCE SOFTWARE PRODUCT means a SCO SOURCE CODE PRODUCT or a SOFTWARE DERIVATIVE of such SCO SOURCE CODE PRODUCT.

14.07   SOFTWARE DERIVATIVE means a third-party furnished derivative work of a SCO SOURCE CODE PRODUCT, or portion thereof.

14.08   SOURCE CODE PRODUCT means materials such as COMPUTER PROGRAMS, information used or interpreted by COMPUTER PROGRAMS and documentation relating to the use of COMPUTER PROGRAMS.  Certain SOURCE CODE PRODUCTS identified in an ORDER hereto may contain materials prepared by other developers.

14.09   SOURCE CODE EXCHANGE means the distribution of a SOFTWARE DERIVATIVE from a third-party licensee of SCO to YOU upon verification by SCO, at the request of such third party licensee, of the equivalent SCO SOURCE CODE PRODUCT rights-to-use identified in an ORDER hereto.  Such verification will be requested by such third-party licensee.

14.10   SUBSIDIARY of a company means a corporation or other legal entity (i) the majority of whose shares or other securities entitled to vote for election of directors (or other managing authority) is now or hereafter controlled by such company either directly or indirectly; or (ii) the majority of the equity interest in which is now or hereafter owned and controlled by such company either directly or indirectly; but any such corporation or other legal entity shall be deemed to be a SUBSIDIARY of such company only so long as such control (or such ownership and control, as the case may be).