Sco Group Inc – ‘S-4/A’ on 3/23/01

On:  Friday, 3/23/01, at 9:37pm ET   ·   As of:  3/26/01   ·   Accession #:  1035704-1-238   ·   File #:  333-45936

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Pre-Effective Amendment to Registration of Securities Issued in a Business-Combination Transaction   —   Form S-4
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-4/A       Amendment No. 5 to Form S-4                          475   2.39M 
 2: EX-23.1     Consent of Arthur Andersen LLP (Caldera)               1      6K 
 3: EX-23.1.2   Consent of Arthur Andersen LLP                         1      6K 
 4: EX-23.2     Consent of Pricewaterhousecoopers LLP                  1      6K 
 5: EX-23.2.2   Consent of Pricewaterhousecoopers                      1      6K 
 6: EX-99.1     Caldera Proxy Card                                     2     12K 
 7: EX-99.2     Santa Cruz Operations Inc. Proxy Card                  2     15K 

S-4/A   —   Amendment No. 5 to Form S-4
Document Table of Contents

S-4/A
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 26, 2001. 

                                                      REGISTRATION NO. 333-45936
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 5 

TO

FORM S-4
REGISTRATION STATEMENT
UNDER 
THE SECURITIES ACT OF 1933
------------------------

CALDERA INTERNATIONAL, INC. 
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                                                [Download Table]
                                                                                    
           DELAWARE                         7372                    87-0662823      
   (STATE OR JURISDICTION OF    (PRIMARY STANDARD INDUSTRIAL     (I.R.S. EMPLOYER   
INCORPORATION OR ORGANIZATION)      CLASSIFICATION CODE)      IDENTIFICATION NUMBER)

240 WEST CENTER STREET
OREM, UT 84057
(801) 765-4999
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF 
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) 
------------------------

RANSOM H. LOVE
CHIEF EXECUTIVE OFFICER 
CALDERA INTERNATIONAL, INC. 
240 WEST CENTER STREET
OREM, UT 84057
(801) 765-4999
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE) 
------------------------

COPIES TO:

                                                                [Download Table]
                                                                      
      JOHN E. HAYES, III, ESQ.            MICHAEL J. DANAHER, ESQ.    
       LEXI S. METHVIN, ESQ.          WILSON SONSINI GOODRICH & ROSATI
  BROBECK, PHLEGER & HARRISON LLP         PROFESSIONAL CORPORATION    
370 INTERLOCKEN BOULEVARD, SUITE 500         650 PAGE MILL ROAD       
        BROOMFIELD, CO 80021                PALO ALTO, CA 94304       
           (303) 410-2000                      (650) 493-9300         

   APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable following the effective time of the consummation of the combination.
------------------------

If the securities being registered on this Form are to be offered in    
connection with the formation of a holding company and there is compliance with 
General Instruction G, check the following box.  [ ]                            

If this Form is filed to register additional securities for an offering 
pursuant to Rule 462(b) under the Securities Act, check the following box and   
list the Securities Act registration statement number of the earlier effective  
registration statement for the same offering.  [ ]                              

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act   
registration statement number of the earlier effective registration statement   
for the same offering.  [ ]                                                     
------------------------

  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION       
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF  
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME     
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING        
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.                                   

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

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[CALDERA LOGO]

Dear Caldera Systems Stockholders:                                              

  I am writing to you today about our proposed combination with the server
and professional services groups of The Santa Cruz Operation, Inc. The          
combination will create a combined company to offer comprehensive business      
solutions based on both the Linux and UNIX platforms.                           

In the combination, each share of Caldera Systems common stock will be
exchanged for one share of common stock of a new entity, Caldera International, 
Inc. SCO will receive 16 million shares of Caldera International common stock   
(representing approximately 25.3% of Caldera International on a fully diluted   
basis), $23 million in cash (of which $7 million was advanced to SCO on January 
26, 2001) and a non-interest bearing promissory note in the amount of $8 million
that will be paid in quarterly installments of $2 million beginning the fifth   
quarter after the combination is completed. In addition, if the OpenServer line 
of business of the server and professional services groups generates revenues in
excess of specified thresholds during the three-year period following the       
completion of the combination, SCO will have earn-out rights entitling it to    
receive 45% of these excess revenues. Based on a price per share of $1.50, the  
closing price of a share of Caldera Systems common stock on March 22, 2001, the 
last full trading day for which closing prices were available at the time of    
printing this joint proxy statement/prospectus, and not including any future    
payments SCO may be entitled to receive from its earn-out rights, the estimated 
value of the consideration to be paid for the server and professional services  
groups would be approximately $55 million. SCO employees who join Caldera       
International will receive options to purchase approximately 1.8 million shares 
of common stock of Caldera International (representing approximately 2.8% of    
Caldera International on a fully diluted basis). In the combination, Caldera    
Systems will become a subsidiary of Caldera International. Please refer to page 
68 for further discussion of the types and amounts of consideration to be paid  
to SCO in the combination. The combination is described more fully in the       
accompanying joint proxy statement/prospectus.                                  

   You will be asked to vote on a proposal to combine our company with SCO's
server and professional services groups and to issue approximately 16 million   
shares in connection with the combination, at the annual meeting of Caldera     
Systems stockholders to be held on April 27, 2001 at 10:00 a.m. Mountain time,  
at Caldera Campus, Building 1, 240 West Center Street, Orem, Utah. The holders  
of a majority of the outstanding shares of Caldera Systems common stock present 
in person or by proxy and entitled to vote at the annual meeting must approve   
these transactions. Only stockholders who hold shares of Caldera Systems at the 
close of business on March 5, 2001 will be entitled to vote at the annual       
meeting.                                                                        

     At the meeting, you will also be asked to vote on some additional proposals
which are described on the attached Notice of Annual Meeting of Stockholders.   

  We are very excited about the opportunities we envision for the combined
company. AFTER CAREFUL CONSIDERATION, OUR BOARD OF DIRECTORS HAS UNANIMOUSLY    
APPROVED THE COMBINATION AND CONCLUDED THAT IT IS IN THE BEST INTERESTS OF      
CALDERA SYSTEMS AND YOU, OUR STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT YOU  
VOTE "FOR" THE PROPOSED COMBINATION AND EACH OF THE ADDITIONAL PROPOSALS.       

   This joint proxy statement/prospectus provides detailed information about
Caldera Systems and SCO's server and professional services groups. Please give  
all of this information your careful attention. IN PARTICULAR, YOU SHOULD       
CAREFULLY CONSIDER THE DISCUSSION IN THE SECTION ENTITLED "RISK FACTORS"        
BEGINNING ON PAGE 17 OF THIS JOINT PROXY STATEMENT/PROSPECTUS.                  

   Holders of over 67% of the outstanding common stock of Caldera Systems as
of February 1, 2001 have entered into voting agreements with The Santa Cruz     
Operation, Inc. whereby they have agreed to vote all of their Caldera Systems   
common stock "For" the combination and have appointed representatives of The    
Santa Cruz Operation, Inc. as proxies to vote their Caldera Systems common stock
at the meeting.                                                                 

 We invite you to attend the meeting. Whether or not you plan to attend,
please complete, sign and date the enclosed proxy and return it to us in the    
enclosed envelope. If you attend the meeting, you may vote in person if you     
wish, even if you have previously returned your proxy. It is important that your
shares be represented and voted at the meeting.                                 

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You will not be required to exchange your Caldera Systems stock       
certificates for Caldera International certificates. PLEASE DO NOT SEND YOUR    
CERTIFICATES.                                                                   

        Sincerely,

                /s/ RANSOM H. LOVE
                                       -----------------------------------------
            Ransom H. Love
                                   President and Chief Executive Officer

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THIS JOINT PROXY STATEMENT/PROSPECTUS RELATES TO THE ISSUANCE OF UP TO
APPROXIMATELY 63.3 MILLION SHARES OF CALDERA INTERNATIONAL, INC. COMMON STOCK IN
CONNECTION WITH THE COMBINATION DESCRIBED INSIDE THIS DOCUMENT. WE ANTICIPATE   
THAT THIS STOCK WILL BE TRADED ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL   
"CALD".                                                                         

 NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION OR THE CALDERA       
INTERNATIONAL, INC. COMMON STOCK TO BE ISSUED IN THE COMBINATION, OR DETERMINED 
IF THIS JOINT PROXY STATEMENT/PROSPECTUS IS ACCURATE OR COMPLETE. ANY           
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.                           

THIS JOINT PROXY STATEMENT/PROSPECTUS IS DATED MARCH 26, 2001, AND WAS
FIRST MAILED TO CALDERA SYSTEMS STOCKHOLDERS ON OR ABOUT MARCH 27, 2001.        

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[CALDERA LOGO]

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To our Stockholders:                                                            

  We will hold the annual meeting of Caldera Systems, Inc. stockholders at
Caldera Campus, Building 1, 240 West Center Street, Orem, Utah on April 27, 2001
at 10:00 a.m., Mountain time, to consider and vote on the following proposals:  

          1. To combine Caldera with the server and professional services groups
   of The Santa Cruz Operation, Inc. In connection with the combination, SCO
    will receive 16 million shares of Caldera International, Inc. common stock
(representing approximately 25.3% of Caldera International on a fully 
  diluted basis), $23 million in cash (of which $7 million was advanced to
    SCO on January 26, 2001) and a non-interest bearing promissory note in the
amount of $8 million that will be paid in quarterly installments of $2
    million beginning the fifth quarter after the combination is completed. In
     addition, if the OpenServer line of business of the server and professional
     services groups generates revenues in excess of specified thresholds during
     the three-year period following the completion of the combination, SCO will
    have earn-out rights entitling it to receive 45% of these excess revenues.
SCO employees who join Caldera International will receive options to  
purchase approximately 1.8 million shares of common stock of Caldera  
    International (representing approximately 2.8% of Caldera International on
a fully diluted basis). In the combination, Caldera will become a     
 subsidiary of Caldera International, which we call New Caldera, and SCO
  will contribute to New Caldera the assets of its server and professional
services groups.                                                      

       2. To elect six (6) directors to serve for one-year terms ending in
the year 2002 or until successors are duly elected and qualified.     

     3. To amend our 1999 Omnibus Stock Incentive Plan to increase the
    number of shares reserved for issuance from 4,105,238 to 10,905,238 and to
provide for an automated director option grant program.               

     4. To amend our 2000 Employee Stock Purchase Plan to increase the
number of shares reserved for issuance from 500,000 to 2,000,000.     

5. To amend our Certificate of Incorporation to increase the
     authorized number of shares of common stock from 75,000,000 to 175,000,000.

    6. To ratify the appointment of Arthur Andersen LLP as Caldera's
independent auditors for the fiscal year ending October 31, 2001.     

      7. To transact such other business as may properly come before the
annual meeting or any adjournment or postponement thereof.            

  For more information about the combination, the reorganization agreement
and related matters, please review the accompanying joint proxy                 
statement/prospectus.                                                           

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   Only stockholders of record at the close of business on March 5, 2001 are
entitled to notice of and to vote at the annual meeting. Our stock transfer     
books will remain open between the record date and the date of the meeting. A   
list of stockholders entitled to vote at the annual meeting will be available   
for inspection at Caldera's executive offices.                                  

                                         By Order of the Board of Directors of
                         Caldera Systems, Inc.

                      /s/ RANSOM H. LOVE
                                          --------------------------------------
                  Ransom H. Love
                                         President and Chief Executive Officer

Orem, Utah                                                                      

March 26, 2001                                                                  

  TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE POSTAGE  
PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. YOU CAN  
REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED.                               

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SCO LOGO

425 ENCINAL STREET

SANTA CRUZ, CALIFORNIA 95060

Dear Shareholder of The Santa Cruz Operation:                                   

    We invite you to attend a special meeting of the shareholders of The Santa
Cruz Operation, Inc. ("SCO") to be held at 425 Encinal Street, Santa Cruz,      
California at 10:00 a.m. local time, on May 4, 2001. At the special meeting, we 
will ask you to consider a proposal to approve and adopt the agreement and plan 
of reorganization that we entered into with Caldera Systems, Inc. and Caldera   
International, Inc. on August 1, 2000 and amended on September 13, 2000,        
December 12, 2000 and February 9, 2001, and a proposal to change our corporate  
name to "Tarantella, Inc."                                                      

    Under the agreement and plan of reorganization, Caldera Systems, Inc. will
acquire the assets of our server and our professional services groups. A new    
company, Caldera International, Inc., will be formed, combining the assets of   
Caldera Systems with the assets acquired from SCO. After the combination is     
completed, we will continue to operate our Tarantella business, and accordingly,
have decided to change our corporate name. Under the proposed transaction, SCO  
will receive 16 million shares of Caldera International (representing           
approximately 25.3% of Caldera International on a fully diluted basis), $23     
million in cash (of which $7 million was received on January 26, 2001) and a    
non-interest bearing promissory note in the amount of $8 million that will be   
received in quarterly installments of $2 million beginning the fifth quarter    
after the combination is completed. In addition, if the OpenServer line of      
business of the server and professional services groups generates revenues in   
excess of specified thresholds during the three-year period following the       
completion of the combination SCO will have earn-out rights entitling it to     
receive 45% of these excess revenues. Based on a price per share of $1.50, the  
closing price of a share of Caldera Systems common stock on March 22, 2001, the 
last full trading day for which closing prices were available at the time of    
printing this joint proxy statement/prospectus, and not including any future    
payments SCO may be entitled to receive from its earn-out rights, the estimated 
value of the consideration to be paid for the server and professional services  
groups would be approximately $55 million. SCO employees who join Caldera       
International will receive options to purchase approximately 1.8 million shares 
of common stock of Caldera International (representing approximately 2.8% of    
Caldera International on a fully diluted basis). Please refer to page 68 for    
further discussion of the types and amounts of consideration to be received by  
SCO in the combination.                                                         

  We are very excited about the opportunities we envision for the combined
company and for our ongoing operations. However, we cannot complete the         
combination unless all of the conditions to the closing are satisfied, including
the approval and adoption of the reorganization agreement by holders of a       
majority of SCO voting stock.                                                   

Douglas Michels, our President and Chief Executive Officer and largest
shareholder with beneficial ownership of approximately 10% of the outstanding   
SCO common stock as of February 1, 2001, has entered into a voting agreement    
with Caldera Systems to vote all of his SCO common stock in favor of approving  
and adopting the reorganization agreement and to appoint representatives of     
Caldera Systems as proxies to vote his SCO common stock at the meeting.         

    Your vote is very important. Whether or not you plan to attend the special
meeting, you should complete, sign, date and promptly return the enclosed proxy 
card in the enclosed envelope or complete the your proxy via telephone or the   
internet to ensure that your shares will be represented at the meeting. If you  
attend the meeting, you may vote in person if you wish, even though you have    
previously returned your proxy.                                                 

AFTER CAREFUL CONSIDERATION, OUR BOARD OF DIRECTORS HAS UNANIMOUSLY   
APPROVED THE COMBINATION AND CONCLUDED THAT IT IS IN THE BEST INTERESTS OF SCO  
AND YOU, OUR SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE   
PROPOSED COMBINATION AND THAT YOU VOTE "FOR" THE PROPOSED NAME CHANGE.          

   This joint proxy statement/prospectus provides detailed information about
Caldera Systems and the server and professional services groups. Please give all
of this information your careful attention. IN PARTICULAR, YOU SHOULD CAREFULLY 
CONSIDER THE DISCUSSION IN THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON PAGE
17 OF THIS JOINT PROXY STATEMENT/PROSPECTUS.                                    

                         /s/ STEVEN M. SABBATH
                                          --------------------------------------
                     Steven M. Sabbath
             Secretary

This joint proxy statement/prospectus is dated March 26, 2001, and was first    
mailed to shareholders of The Santa Cruz Operation on or about March 27, 2001.  

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SCO LOGO

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS 

TO BE HELD MAY 4, 2001

To our Shareholders:                                                            

  NOTICE IS HEREBY GIVEN that a special meeting of the shareholders of The
Santa Cruz Operation, Inc., will be held on May 4, 2001 at 10:00 a.m., local    
time at 425 Encinal Street, Santa Cruz, California for the following purposes:  

     1. To approve and adopt the agreement and plan of reorganization,
   dated August 1, 2000 and amended on September 13, 2000, December 12, 2000
    and February 9, 2001, by and among The Santa Cruz Operation, Inc., Caldera
Systems, Inc., and Caldera International, Inc.                        

         2. To approve an amendment to our articles of incorporation to change
our corporate name to "Tarantella, Inc."                              

      3. To transact such other business as may properly come before the
special meeting or any adjournment or postponement thereof.           

These items of business are more fully described in the joint proxy   
statement/prospectus accompanying this notice. Shareholders of record at the    
close of business on March 8, 2001, are entitled to notice of and to vote at the
special meeting and any adjournment or postponement thereof. All shareholders   
are cordially invited to attend the special meeting in person.                  

     If the reorganization agreement is approved by SCO shareholders, holders of
SCO common stock who elect to dissent from the approval and who follow the      
procedural requirements of the California Corporations Code may, under certain  
circumstances, be entitled to receive cash for their SCO common stock at their  
fair market value.                                                              

    YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO MARK,   
SIGN, DATE AND RETURN THE ENCLOSED PROXY AS SOON AS POSSIBLE IN THE             
POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE OR TO CAST YOUR VOTE VIA     
TELEPHONE OR THE INTERNET. You may revoke your proxy in the manner described in 
the attached document at any time before it has been voted at the special       
meeting. Any shareholder attending the meeting may vote in person even if he or 
she has returned a proxy.                                                       

                  Sincerely,

                             /s/ STEVEN M. SABBATH
                                            ------------------------------------
                         Steven M. Sabbath
                 Secretary

Santa Cruz, California                                                          

March 26, 2001                                                                  

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TABLE OF CONTENTS 

                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
FREQUENTLY ASKED QUESTIONS..................................   iii
SUMMARY.....................................................     1
MARKET PRICE INFORMATION....................................    15
RISK FACTORS................................................    17
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS...........    32
SCO IS INCORPORATING ITS SEC FILINGS IN THIS DOCUMENT BY          
  REFERENCE.................................................    32
WHERE YOU CAN FIND MORE INFORMATION.........................    33
THE CALDERA ANNUAL MEETING..................................    34
THE SCO MEETING.............................................    38
THE COMBINATION.............................................    41
INTERESTS OF PERSONS IN THE COMBINATION.....................    66
THE REORGANIZATION AGREEMENT................................    67
AGREEMENTS RELATED TO THE COMBINATION.......................    76
THE EMPLOYEE STOCK OPTION ALTERNATIVES......................    80
SELECTED FINANCIAL DATA OF CALDERA..........................    84
CALDERA MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL         
  CONDITION AND RESULTS OF OPERATIONS.......................    86
SELECTED FINANCIAL DATA OF THE SANTA CRUZ OPERATION, INC....   103
SELECTED FINANCIAL DATA OF THE SERVER AND PROFESSIONAL            
  SERVICES GROUPS...........................................   104
SERVER AND PROFESSIONAL SERVICES GROUPS MANAGEMENT'S              
  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS      
  OF OPERATIONS.............................................   105
BUSINESS OF CALDERA.........................................   115
BUSINESS OF SERVER AND PROFESSIONAL SERVICES GROUPS.........   129
BUSINESS OF NEW CALDERA.....................................   134
MANAGEMENT OF CALDERA AND NEW CALDERA.......................   134
CERTAIN TRANSACTIONS OF CALDERA AND NEW CALDERA.............   147
PRINCIPAL STOCKHOLDERS OF NEW CALDERA.......................   151
PRINCIPAL STOCKHOLDERS OF CALDERA...........................   153
PRINCIPAL SHAREHOLDERS OF SCO...............................   155
DESCRIPTION OF CALDERA AND NEW CALDERA CAPITAL STOCK........   157
COMPARISON OF RIGHTS OF HOLDERS OF SCO COMMON STOCK AND NEW       
  CALDERA COMMON STOCK......................................   160
PROPOSALS TO BE VOTED UPON BY CALDERA STOCKHOLDERS AT THE         
  CALDERA ANNUAL MEETING....................................   166
PROPOSAL ONE: APPROVAL AND ADOPTION OF THE AGREEMENT AND          
  PLAN OF REORGANIZATION....................................   167
PROPOSAL TWO: ELECTION OF DIRECTORS.........................   168
PROPOSAL THREE: APPROVAL OF AMENDMENTS TO THE STOCK               
  INCENTIVE PLAN............................................   170
OPTION TRANSACTIONS.........................................   182
PROPOSAL FOUR: APPROVAL OF AMENDMENTS TO THE EMPLOYEE STOCK       
  PURCHASE PLAN.............................................   185
PURCHASE PLAN TRANSACTIONS..................................   189
PROPOSAL FIVE: AMENDMENTS TO CALDERA'S CERTIFICATE OF             
  INCORPORATION.............................................   191
PROPOSAL SIX: RATIFICATION OF INDEPENDENT PUBLIC                  
  ACCOUNTANTS...............................................   192
PROPOSALS TO BE VOTED UPON BY SCO SHAREHOLDERS AT THE SCO         
  SPECIAL MEETING...........................................   196
PROPOSAL ONE: APPROVAL AND ADOPTION OF THE AGREEMENT AND          
  PLAN OF REORGANIZATION....................................   196

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                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
PROPOSAL TWO: APPROVAL OF AN AMENDMENT TO THE SCO ARTICLES        
  OF INCORPORATION TO CHANGE SCO'S CORPORATE NAME TO              
  "TARANTELLA, INC."........................................   196
LEGAL MATTERS...............................................   198
EXPERTS.....................................................   198
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL                  
  INFORMATION...............................................   P-1
INDEX TO FINANCIAL STATEMENTS...............................   F-1
INDEX TO APPENDICES.........................................  IA-1

  ii

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FREQUENTLY ASKED QUESTIONS

This document contains a great deal of important information. Your    
individual circumstances will determine which aspects of that information apply 
to you, and the decisions you will make in connection with this document. For   
these reasons, this series of frequently asked questions will not answer all of 
the questions you may have. Rather they are designed to give you a clearer      
understanding of the choices you will make.                                     

INTRODUCTORY QUESTIONS                                                          

Q:  WHAT IS THE COMBINATION BEING PROPOSED?                                     

A:  The transaction being proposed is as follows:                               

- a new company, Caldera International, Inc., or New Caldera, has been
formed to facilitate the proposed combination.                    

  - Caldera Systems, Inc., or Caldera, will merge to become a wholly-owned
subsidiary of New Caldera.                                        

     - The Santa Cruz Operation, Inc., or SCO, will contribute the assets of its
server and professional services groups to New Caldera.           

Q:  WHAT IS "NEW CALDERA"?                                                      

A:  New Caldera is what we call the combined company after the combination in   
this joint proxy statement/prospectus. The entity will be named Caldera 
International, Inc., and it will become the parent company of Caldera   
Systems. New Caldera will also directly own the server and professional 
services groups contributed by SCO.                                     

QUESTIONS FOR CALDERA STOCKHOLDERS                                              

Q:  WHAT WILL I RECEIVE IN THE COMBINATION?                                     

A:  If we complete the combination, each share of Caldera common stock you own  
   will automatically be converted into one share of New Caldera common stock.
   Your current Caldera stock certificate will then no longer represent shares
 of Caldera, and will instead represent shares of New Caldera. The Caldera
 stockholders and stock option holders will own approximately 71.9% of New
Caldera on a fully diluted basis.                                       

Q:  WHAT WILL I GIVE UP IN THE COMBINATION?                                     

A:  You will give up your stock ownership in Caldera. However, you will not give
up your stock certificate or make any payment because your old stock    
   certificate will represent your interest in New Caldera. PLEASE DO NOT SEND
YOUR CALDERA STOCK CERTIFICATES.                                        

Q:  WHAT TAXES WILL I OWE AS A RESULT OF THE COMBINATION?                       

A:  None. The combination will be tax-free to Caldera and its stockholders for  
U.S. federal income tax purposes. See page 61.                          

Q:  ARE THERE RISKS I SHOULD CONSIDER IN DECIDING WHETHER TO VOTE FOR THE       
COMBINATION?                                                            

A:  Yes. In evaluating the combination, you should keep in mind that if the     
    combination occurs, you will be subject to the risks related to the business
    of New Caldera. You should, therefore, consider the factors discussed in the
section entitled "Risk Factors" beginning on page 17.                   

Q:  DOES THE BOARD OF DIRECTORS OF CALDERA RECOMMEND APPROVAL OF THE            
REORGANIZATION AGREEMENT AND THE PROPOSED COMBINATION?                  

A:  Yes. After careful consideration, the board of directors of Caldera         
  unanimously recommends that its stockholders vote in favor of the approval
  and adoption of the reorganization agreement and the proposed combination.

Q:  WHAT RIGHTS DO I HAVE TO DISSENT FROM THE COMBINATION?                      

A:  None. If the reorganization agreement is approved, you will not, under      
Delaware General Corporation Law, have the right to dissent from the    
approval.                                                               

QUESTIONS FOR SCO SHAREHOLDERS                                                  

Q:  WHAT WILL SCO RECEIVE IN THE COMBINATION?                                   

A:  In exchange for the assets of SCO's server and professional services groups,
    SCO will receive 16 million shares of New Caldera common stock (representing
approximately                                                           

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25.3% of New Caldera on a fully diluted basis), $23 million in cash (of 
which $7 million was received on January 26, 2001) and a non-interest   
 bearing promissory note in the amount of $8 million that will be received
 in quarterly installments of $2 million beginning the fifth quarter after
the combination is completed. In addition, if the OpenServer line of    
  business of the server and professional services groups generates revenues
in excess of specified thresholds during the three-year period following
  the completion of the combination, SCO will have earn-out rights entitling
it to receive 45% of these excess revenues.                             

Q:  WILL THE CURRENT SHAREHOLDERS OF SCO BE ISSUED SHARES OF NEW CALDERA WHEN   
THE COMBINATION CLOSES?                                                 

A:  No. The New Caldera shares received by SCO in the combination will become an
   asset of SCO. There is no current intention to distribute New Caldera stock
directly to SCO shareholders because of the adverse tax impact of       
 distributing the shares and because the shares will serve as security for
 the $18 million line of credit to SCO from The Canopy Group, the majority
stockholder of Caldera. There are also distribution limitations that are
part of the reorganization agreement with Caldera.                      

Q:  WHAT IS THE EFFECT ON SCO IF THE COMBINATION TAKES PLACE?                   

A:  SCO will continue to operate its Tarantella division and hold the assets of 
    that division and the assets of its investment holdings, including shares of
New Caldera common stock received in the combination. SCO's headquarters
 will remain in Santa Cruz, California and there will be approximately 230
employees worldwide.                                                    

Q:  DOES THE BOARD OF DIRECTORS OF SCO RECOMMEND VOTING IN FAVOR OF THE PROPOSED
COMBINATION?                                                            

A:  Yes. After careful consideration, the board of directors of SCO unanimously 
   recommends that its shareholders vote in favor of the approval and adoption
of the reorganization agreement and the proposed combination.           

Q:  ARE THERE RISKS I SHOULD CONSIDER IN DECIDING WHETHER TO VOTE FOR THE       
COMBINATION?                                                            

A:  Yes. In evaluating the combination, you should keep in mind that if the     
    combination occurs, you will be subject to the risks related to the business
of Caldera as well as risks that relate to SCO's business. You should,  
therefore, consider the factors discussed in the section entitled "Risk 
Factors" beginning on page 17.                                          

QUESTIONS FOR SCO OPTION HOLDERS WHO BECOME NEW CALDERA EMPLOYEES               

Q:  WHAT WILL BECOME OF THE OPTIONS I CURRENTLY HOLD FOR SCO COMMON STOCK?      

A:  Assuming you are offered and accept employment with New Caldera, you will be
    entitled to select between two alternatives with respect to the treatment of
  each of your SCO option grants. Under the first alternative, you may elect
   to have some or all of your option grants assumed by New Caldera. Under the
second alternative, you may elect to have some or all your existing SCO 
option grants cancelled and replaced with new options to purchase New   
Caldera common stock.                                                   

Q:  WHAT WILL HAPPEN TO MY SCO STOCK OPTIONS IF I CHOOSE THE "ASSUMPTION"       
ALTERNATIVE?                                                            

A:  Each SCO stock option grant assumed by New Caldera will continue to have its
   original terms (including vesting schedule and termination provisions), and
    be subject to its original conditions that were applicable immediately prior
to the effective time, except that:                                     

 - each SCO stock option will become exercisable for shares of New Caldera
common stock,                                                       

- the number of shares of New Caldera common stock issuable upon the    
     exercise of any given SCO option will be one half of the number of shares
of SCO common stock subject to the option immediately prior to the  
effective time, rounded down to the nearest whole number,           

- the per share exercise price of any given option will be two times the
exercise price                                                      

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    of the option immediately prior to the effective time, rounded up to the
nearest whole cent, and                                             

    - the option for shares of New Caldera may not qualify as an incentive stock
option even though the SCO option may have.                         

For an illustration of how this alternative works, please see page 80.  

Q:  WHAT WILL HAPPEN TO MY SCO STOCK OPTIONS IF I CHOOSE THE "REPLACEMENT"      
ALTERNATIVE?                                                            

A:  Under the "replacement" alternative:                                        

- each SCO stock option will be exchanged for an option exercisable for 
shares of New Caldera common stock,                                 

- the number of shares of New Caldera common stock issuable upon the    
exercise of the replacement option will be one half of the number of
      shares of SCO common stock under the cancelled option immediately prior to
the effective time, rounded down to the nearest whole number,       

    - the per share exercise price of an option will be the fair market value of
      New Caldera common stock immediately after the closing of the combination,

 - the vesting schedule of the New Caldera options will be the same as the
vesting schedule of the exchanged SCO stock option, and             

  - the replacement option grants will qualify as incentive stock options to
the maximum extent permissible under the federal tax laws.          

For an illustration of how this alternative works, please see page 81.  

Q:  WHAT WILL BE THE TAX CONSEQUENCES OF THESE OPTION ALTERNATIVES?             

A:  There will be no immediate tax consequences from either alternative.        
However, under the assumption alternative, if you had an incentive stock
option while at SCO, you may have a non-qualified option after the      
assumption.                                                             

Q:  WHAT WILL HAPPEN IF I DO NOT ELECT TO HAVE MY SCO OPTIONS ASSUMED OR        
REPLACED?                                                               

A:  If you do not elect to participate in the employee stock option assumption  
and replacement, the unvested portion of your SCO stock options will be 
   canceled as of the date the combination is completed. You will have only 90
   days after the completion of the combination to exercise the vested portion
of your SCO stock options.                                              

Q:  WHAT DO I NEED TO DO NOW?                                                   

A:  Your options will not be assumed or replaced automatically when you become  
an employee of New Caldera. If you wish to have your SCO stock options  
assumed by New Caldera or cancelled and replaced with New Caldera stock 
   options, please follow the instructions beginning on page 82. IF YOU DO NOT
FOLLOW THESE DIRECTIONS, YOUR OPTIONS WILL EXPIRE.                      

OTHER QUESTIONS FOR ALL STOCKHOLDERS/SHAREHOLDERS                               

Q:  WHAT DO I NEED TO DO NOW?                                                   

A:  We urge you to read this joint proxy statement/prospectus, including its    
  appendices, carefully, and to consider how the merger will affect you as a
shareholder. You may also want to review the documents referenced under 
"Where You Can Find More Information" on page 33.                       

Q:  WHEN DO YOU EXPECT THE COMBINATION TO BE COMPLETED?                         

A:  We are working toward completing the combination as quickly as possible. We 
    hope to complete the combination during the second calendar quarter of 2001.

Q:  WHAT DO I NEED TO DO NOW TO VOTE?                                           

A:  Just indicate on your proxy card how you want to vote, and sign and mail it 
    in the enclosed return envelope as soon as possible, so that your shares may
 be represented at your meeting. If you sign and send in your proxy and do
  not indicate how you want to vote, your proxy will be counted as a vote in
   favor of the combination. You may instead choose to attend your meeting and
vote your shares in person.                                             

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Q:  MAY I CHANGE MY VOTE AFTER I HAVE MAILED IN MY SIGNED PROXY CARD?           

A:  You may change your vote at any time before the vote takes place at the     
   Caldera annual meeting or SCO special meeting, respectively. To change your
vote, you may either submit a later dated proxy card or send a written  
 notice stating that you would like to revoke your proxy. In addition, you
    may attend the annual or special meeting and vote in person. However, if you
elect to vote in person at the Caldera annual meeting or SCO special    
  meeting, respectively, and your shares are held by a broker, bank or other
    nominee, you must bring to the annual meeting or the special meeting a legal
  proxy from the broker, banker or other nominee authorizing you to vote the
shares.                                                                 

Q:  IF MY SHARES OF STOCK ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?                                                  

A:  Your broker will vote your shares only if you provide instructions on how to
vote. Without instructions, your shares will not be voted. You should   
   instruct your broker to vote your shares, following the directions provided
by your broker. See pages 34 and 38.                                    

Q:  SHOULD I SEND IN MY STOCK CERTIFICATES NOW?                                 

A:  No. Neither Caldera stockholders nor SCO shareholders will exchange their   
stock certificates.                                                     

Q:  WHERE CAN I FIND MORE INFORMATION ABOUT CALDERA AND SCO?                    

A:  Both Caldera and SCO file reports, proxy and information statements and     
   other information with the Securities and Exchange Commission. You may read
  and copy this information at the SEC's public reference facilities. Please
   call the SEC at 1-800-SEC-0330 for information about these facilities. This
information is also available at the Internet site the SEC maintains at 
   www.sec.gov. See "Where You Can Find More Information" beginning on page 33
of this document.                                                       

Q:  WHOM AT CALDERA OR SCO SHOULD I CONTACT IF I HAVE ANY QUESTIONS ABOUT THE   
COMBINATION?                                                            

A:  You should contact either Kathy Allred of Caldera by telephone at           
  801-765-4999 or by e-mail at kallred@caldera.com, or Lynn Schroeder of SCO
by telephone at 831-427-7399 or by e-mail at lynnsc@sco.com, with any   
questions about the combination.                                        

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SUMMARY 

     For your convenience, we have summarized here information that is contained
elsewhere in this document. It highlights selected information and does not     
contain all of the information that is important to you. To understand the      
transactions more fully and for a more complete description of the legal terms  
of these transactions, you should carefully read this document and the documents
to which we have referred. See "Where You Can Find More Information" and "SCO is
Incorporating its SEC Filings in this Document by Reference" on pages 33 and 32.
We have included page references parenthetically to direct you to a more        
complete description of the topics in this summary.                             

THE COMPANIES                                                                   

                                                                [Download Table]
                                                                   
CALDERA SYSTEMS, INC. AND                                          
CALDERA INTERNATIONAL, INC.                                        

240 West Center Street                                             
Orem, Utah 84057                                                   
(801) 765-4999                                                     

Caldera develops and markets business solutions based on the Linux    
operating system, or Linux-based solutions, including eDesktop and eServer      
products, technical training, certification and support. Caldera's OpenLearning 
Providers offer distribution-neutral Linux training and certification based on  
Linux Professional Institute (LPI) certification standards. Caldera Systems     
supports the open source community and is an advocate of Linux Standard Base    
(LSB) and LPI.                                                                  

    New Caldera was formed to facilitate the proposed combination. New Caldera
has not engaged in any business and will not engage in business until the       
combination has been completed. New Caldera currently has no assets or          
liabilities and no outstanding capital stock.                                   

THE SANTA CRUZ OPERATION, INC.                                                  

425 Encinal Street                                                              
Santa Cruz, California 95061                                                    
(831) 425-7222                                                                  

  SCO provides server-based software for networked business computing. SCO
also provides server operating systems based on UNIX technology, or UNIX server 
operating systems, and network computing software that enables clients of all   
kinds -- including, personal computers, graphical terminals, network computers, 
and other devices -- to have webtop access to business-critical applications    
running on servers of all kinds.                                                

THE COMBINATION                                                                 

   Caldera, New Caldera and SCO have entered into a reorganization agreement
that provides for the following transactions:                                   

 - New Caldera will purchase the server and professional services groups
      from SCO for a purchase price of 16 million shares of New Caldera common
       stock (representing approximately 25.3% of New Caldera on a fully diluted
     basis), $23 million in cash (of which $7 million was advanced to SCO on
 January 26, 2001) and a non-interest bearing promissory note in the
    amount of $8 million that will be paid in quarterly installments of $2
     million beginning the fifth quarter after the combination is completed.
In addition, if the OpenServer line of business of the server and 
    professional services groups generates revenues in excess of specified
     thresholds during the three-year period following the completion of the
       combination, SCO will have earn-out rights entitling it to receive 45% of
    these excess revenues. SCO employees who join New Caldera will receive
 options to purchase approximately 1.8 million shares of New Caldera
(representing approximately 2.8% of New Caldera on a fully diluted
basis). There will be no adjustment to the purchase price for     

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    changes in the market price of Caldera's common stock. The New Caldera
      shares issued to SCO will be held as an asset of SCO. SCO has no current
     intention to distribute New Caldera stock directly to SCO shareholders.
  The server and professional services groups operate as a provider of
       server software and related support for networked business computing, and
   are a leading provider of UNIX server operating systems through their
     UnixWare and OpenServer product lines. For a further description of the
       business, products and technology of the server and professional services
       groups, see "Business of Server and Professional Services Groups" on page
129.                                                              

    - Caldera will merge with a subsidiary of New Caldera and as a result will
      become a wholly-owned subsidiary of New Caldera. Stockholders of Caldera
    will become stockholders of New Caldera following the merger, and each
  share of Caldera common stock will be exchanged for one share of New
Caldera common stock.                                             

We urge you to read carefully the reorganization agreement. The       
reorganization agreement is attached as Appendix A to this joint proxy          
statement/prospectus.                                                           

  In conjunction with the signing of the reorganization agreement, Caldera
and The Canopy Group, Inc., the majority stockholder of Caldera, agreed to loan 
to SCO $7 million and up to $18 million, respectively. These loan agreements    
were finalized and entered into in January 2001 and the loan amounts were funded
on January 26, 2001. If the combination is completed, Caldera's advance to SCO  
will be forgiven and will be treated by New Caldera and SCO as part of the cash 
portion of the consideration to SCO for the server and professional services    
groups. Caldera has also reimbursed SCO for $1.5 million of transition costs    
relating to the retention of various employees of SCO who will become employees 
of New Caldera.                                                                 

VOTE REQUIRED                                                                   

Approval of the combination and reorganization agreement requires the 
affirmative vote of holders of a majority of the outstanding shares of Caldera  
common stock and the affirmative vote of holders of a majority of the           
outstanding shares of SCO common stock.                                         

CALDERA RECOMMENDATION TO STOCKHOLDERS                                          

The Caldera board of directors voted unanimously to approve the       
reorganization agreement and the combination. The Caldera board of directors    
believes that the combination is advisable and in the best interest of Caldera's
stockholders and recommends that you vote FOR the proposal to approve the       
reorganization agreement and the combination.                                   

SCO RECOMMENDATION TO SHAREHOLDERS                                              

The SCO board of directors voted unanimously to approve and adopt the 
reorganization agreement and the combination. The SCO board of directors        
believes that the combination is advisable and in the best interest of the SCO  
shareholders and recommends that you vote FOR the proposal to approve and adopt 
the reorganization agreement and the combination.                               

NO SOLICITATION BY SCO (SEE PAGE 72)                                            

 Subject to the applicable fiduciary duties to its shareholders, the SCO
board of directors have agreed that neither it, SCO nor any of SCO's            
subsidiaries will do any of the following:                                      

- solicit, initiate or encourage the submission of any alternative    
proposal;                                                         

- engage in discussions or negotiations concerning, or provide any    
non-public information to a third party regarding an alternative  
proposal;                                                         

- take any other action intended, designed or reasonably likely to    
     facilitate any inquiries or the making of any proposal that constitutes
  or would reasonably be expected to lead to any alternative proposal;

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- enter into any letter of intent, agreement in principle or similar  
agreement with respect to any alternative transactions; or        

- make or authorize any statement, recommendation or solicitation in  
support of any alternative transactions.                          

  SCO has also agreed to cause each of its officers, directors, employees,
financial advisors, representatives and agents not to take any of these actions.

TERMINATION OF THE REORGANIZATION AGREEMENT (SEE PAGE 75)                       

Caldera and SCO can mutually agree to terminate the reorganization    
agreement without completing the transaction, and either Caldera or SCO can     
terminate the reorganization agreement if:                                      

- the other party materially breaches any representation, warranty,   
     covenant or agreement in the reorganization agreement and fails to cure
the breach within 30 days of receiving notice of the breach;      

 - the transactions contemplated by the reorganization agreement are not
completed on or before May 31, 2001;                              

- Caldera stockholders or SCO shareholders do not approve the         
reorganization agreement and the transactions contemplated by the 
reorganization agreement;                                         

   - if a final and non-appealable permanent injunction or other court order
restrains or prohibits the transactions contemplated by the       
reorganization agreement; or                                      

- the board of the other party modifies or withdraws its approval or  
recommendation of the combination.                                

In addition, Caldera may terminate the reorganization agreement if the
board of SCO recommends any SCO alternative proposal.                           

TERMINATION FEES AND EXPENSE                                                    

    SCO must pay Caldera a termination fee equal to approximately $4.0 million
if the reorganization agreement is terminated and the SCO board has changed its 
recommendation.                                                                 

SCO will also pay a termination fee if:                               

- SCO shareholders do not approve the combination after an alternative
proposal has been disclosed and not withdrawn; or                 

- SCO has violated its non-solicitation obligations; and              

    - within 6 months an agreement is entered into for an alternative proposal
or within 12 months an alternative proposal is consummated.       

     Caldera must pay SCO the termination fee if the reorganization agreement is
terminated because the Caldera board has changed its recommendation.            

OPINIONS OF FINANCIAL ADVISORS (SEE PAGES 47 AND 53)                            

    In deciding to approve the combination, our boards of directors considered
the opinions of each of our financial advisors.                                 

Caldera received an opinion from its financial advisor, Broadview     
International, LLC, that as of February 5, 2001, the consideration to be paid   
for the server and professional services groups was fair to Caldera from a      
financial point of view. Caldera has agreed to pay Broadview fees totaling      
approximately $1.4 million. Caldera has paid $300,000 in August 2000 and an     
additional $300,000 in February 2001. The remainder of the fee is contingent    
upon consummation of the combination. Broadview and Caldera believe that these  
fees are customary in transactions of this nature.                              
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   SCO received an opinion from its financial advisor, Chase H&Q, that as of
February 8, 2001 the consideration to be received by SCO from New Caldera was   
fair to SCO from a financial point of view. SCO has agreed to pay Chase H&Q fees
totaling approximately $2.1 million. SCO has paid a $25,000 agreement fee and a 
$750,000 retainer. The remainder of the fee is contingent upon consummation of  
the combination. SCO and Chase H&Q believe that these fees are customary in     
transactions of this nature.                                                    

 WE ENCOURAGE YOU TO READ THESE OPINIONS CAREFULLY. THEY ARE ATTACHED AS
APPENDICES B AND C.                                                             

INTERESTS OF PERSONS IN THE COMBINATION (SEE PAGE 66)                           

  Certain persons and entities have interests in the combination which may
differ from yours because of their status as a director, nominee for director or
executive officer of Caldera, SCO or New Caldera. For instance:                 

   - Certain officers of SCO, including David McCrabb, will become executive
officers of New Caldera;                                          

- SCO will provide change-of-control benefits to its current executive
officers;                                                         

     - SCO will have the right to nominate 2 directors of the New Caldera board;

   - Two individuals to be determined by SCO and approved by Caldera will be
directors of New Caldera;                                         

- SCO has granted additional "stay-put" options to certain executive  
      officers to encourage those individuals to remain with SCO following the
combination; and                                                  

- Each person who becomes an executive officer or key employee of New 
      Caldera will sign an employment agreement with New Caldera that provides
 for terms of employment and severance benefits, among other things.

 As of February 1, 2001, directors and executive officers of Caldera and
their affiliates as a group beneficially owned approximately 75.1% of the       
outstanding shares of Caldera common stock. As of February 1, 2001, directors   
and executive officers of SCO and their affiliates as a group beneficially owned
approximately 16.33% of the outstanding shares of SCO common stock. The approval
and adoption of the combination requires the affirmative vote of a majority of  
the holders of the outstanding common stock of each of Caldera and SCO.         

DISSENTERS' OR APPRAISAL RIGHTS (SEE PAGES 36 AND 39)                           

 The Caldera stockholders do not have dissenters' or appraisal rights in
connection with the combination.                                                

If holders of 5% or more of the outstanding shares of SCO common stock
entitled to vote at the SCO special meeting vote against the reorganization     
agreement and comply with certain other procedures specified in Chapter 13 of   
the California Corporations Code, SCO shareholders of record who take such      
actions will be entitled to exercise dissenters' rights. In accordance with the 
provisions of the California Corporations Code, dissenting SCO shareholders will
have the right to be paid in cash the fair market value of their shares of SCO  
common stock, determined as of the day before the first announcement of the     
combination, and excluding any appreciation or depreciation as a result of the  
combination. A copy of Chapter 13 of the California Corporations Code is        
attached to this document as Appendix O.                                        

ACCOUNTING TREATMENT OF THE COMBINATION (SEE PAGE 62)                           

    Caldera expects the combination will be accounted for as a purchase, which
means that New Caldera will incur substantial non-cash charges to earnings of   
approximately $5.3 million per quarter over the next three years and            
approximately $3.5 million per quarter for the subsequent two years related to  
the amortization of goodwill and other intangible assets.                       

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SCO expects to recognize a gain on the combination equivalent to      
approximately 71.3% of the difference between the total consideration received  
and the carrying amount of the server and professional services groups net      
assets being sold plus the total cash consideration and discounted value of the 
promissory note to be issued to SCO. This gain is estimated to be approximately 
$60.7 million before tax. After the combination closes, SCO will report         
approximately 28.7% of the operations of New Caldera under the equity method of 
accounting, after certain adjustments, in its financial statements.             

OWNERSHIP OF NEW CALDERA FOLLOWING THE COMBINATION                              

     The following table illustrates the approximate percentage ownership of New
Caldera if the combination is completed. The percentages reflect the estimated  
ownership of all common stock, assuming the exercise of all stock options of New
Caldera, and are calculated based on Caldera and SCO shares outstanding as of   
February 1, 2001.                                                               

                                                                [Download Table]

                                          APPROXIMATE NUMBER                
                                              OF SHARES        PERCENTAGE OF
                                            OF NEW CALDERA      NEW CALDERA 
                                         --------------------  -------------
                                                                            
Caldera stockholders and option holders   45.5 million shares      71.9%    
SCO                                       16.0 million shares      25.3%    
SCO employees joining New Caldera          1.8 million shares       2.8%    

DIRECTORS AND EXECUTIVE OFFICERS OF NEW CALDERA FOLLOWING THE COMBINATION (SEE  
PAGE 134)                                                                       

    If we complete the combination, the board of directors of New Caldera will
initially consist of all of the current board members of Caldera, excluding John
R. Egan who has announced that he will not seek re-election as a director of    
Caldera, as well as two individuals to be determined by SCO and approved by     
Caldera.                                                                        

  The executive officers of New Caldera will consist of all of the current
executive officers of Caldera, as well as David McCrabb.                        

LISTING OF NEW CALDERA COMMON STOCK (SEE PAGE 61)                               

We expect that the shares of New Caldera common stock to be issued in 
connection with the combination will be approved for listing on the Nasdaq      
National Market, subject to official notice of issuance. The trading symbol for 
the New Caldera common stock will be "CALD," the symbol currently used for      
Caldera.                                                                        

CONDITIONS TO COMPLETION OF THE COMBINATION (SEE PAGE 70)                       

   The respective obligations of the parties to complete the combination are
subject to approval of the reorganization agreement and combination by Caldera's
stockholders and SCO's shareholders, as well as the prior satisfaction or waiver
(if permitted by applicable law) of conditions specified in the reorganization  
agreement. The following conditions, among others, must be satisfied or waived  
before the combination can be completed:                                        

    - the combination shall have been approved and adopted by both the Caldera
stockholders and the SCO shareholders;                            

  - the board of directors of New Caldera shall have appointed Mr. Michels
      and an individual to be determined by SCO and approved by Caldera to the
board of directors of New Caldera;                                

   - the relevant parties shall have entered into the stockholder agreement,
      the escrow agreement, the security agreement, and the voting agreements;

   - the New Caldera common stock to be issued in the combination shall have
   been approved for quotation on the Nasdaq National Market, subject to
notice of issuance;                                               

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  - the representations and warranties of the other party contained in the
       reorganization agreement shall be accurate except for representations and
   warranties that address matters as of a particular date and where the
breaches have not resulted in a material adverse effect;          

   - the parties shall have materially complied with the covenants contained
in the reorganization agreement; and                              

   - each of Caldera and SCO shall have received an opinion of their counsel
as to the tax consequences of the combination.                    

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE COMBINATION (SEE  
PAGE 61)                                                                        

    The combination has been structured as a tax-free transaction described in
Section 351 of the Internal Revenue Code and, as to Caldera, a "reorganization" 
under Section 368 of the Internal Revenue Code for United States federal income 
tax purposes. If the combination qualifies as a tax-free transaction and, as to 
Caldera, as a "reorganization" under Section 368 of the Internal Revenue Code,  
neither Caldera's stockholders generally nor SCO will recognize gain or loss for
United States federal income tax purposes in the combination, except with       
respect to cash and other non-stock consideration received by SCO in the        
combination. It is a condition to the completion of the combination that each of
Caldera and SCO receive an opinion of their counsel as to the tax consequences  
of the combination.                                                             

MARKET PRICES OF THE COMMON STOCK OF CALDERA AND SCO                            

                                                                [Download Table]

                                                              CALDERA     SCO 
                                                              -------    -----
                                                                              
August 1, 2000 closing price -- the last trading day before                   
  the announcement of the proposed combination..............  $6.937     $3.25
March 22, 2001 closing price -- the last practical trading                    
  day before the printing of this document..................  $ 1.50     $1.25

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SUMMARY OF THE EMPLOYEE STOCK OPTION ASSUMPTION 
AND REPLACEMENT OFFER 

Employees of the server and professional services groups who become   
employees of New Caldera have the opportunity to either (i) have their SCO stock
options cancelled and replaced with options to purchase shares of New Caldera   
common stock at an exercise price equal to the fair market value of New Caldera 
common stock immediately after the closing or (ii) have their SCO options       
assumed by New Caldera for shares of New Caldera common stock at an exercise    
price equal to twice the exercise price of the SCO stock options. Regardless of 
the alternative chosen, the number of shares of New Caldera common stock        
issuable upon the exercise of any given SCO option will be one half of the      
number of shares of SCO common stock subject to the option immediately prior to 
the effective time. Please see "The Employee Stock Option Alternatives" on page 
80.                                                                             

SCO's stock option plan will continue to govern the option grants of  
employees of SCO who do not become employees of New Caldera and remain with SCO.
If you become an employee of New Caldera and do not choose to have your SCO     
options assumed or replaced, your options will terminate 90 days after the      
closing of the combination pursuant to SCO's stock option plan.                 

OUR REASONS FOR THE EMPLOYEE STOCK OPTION ASSUMPTION AND REPLACEMENT OFFER      

Caldera and SCO negotiated the employee stock option assumption and   
replacement offer to provide the server and professional services groups'       
employees similar equity incentives to those possessed by other New Caldera     
option holders and to allow them to participate in the success of New Caldera.  

Caldera and SCO agreed to halve the number of shares underlying each  
outstanding SCO option based on the fact that at the time the reorganization    
agreement was signed Caldera's common stock was trading at approximately twice  
the per share price of SCO's common stock.                                      

The replacement alternative is designed to incent the server and      
professional services groups employees holding options for SCO common stock at  
an exercise price equal to more than half of the New Caldera trading price at   
closing. Based on the current trading price of Caldera common stock and the     
exercise prices of outstanding SCO options, New Caldera believes the replacement
alternative will be the desirable alternative for most of the former SCO        
employees. However, New Caldera is nevertheless offering the assumption         
alternative in recognition of the fact that some SCO employees have outstanding 
options with low exercise prices, which may make the assumption option          
desirable.                                                                      

The assumption alternative is designed to incent the server and       
professional services groups' employees holding options for SCO common stock at 
an exercise price equal to less than half of the New Caldera trading price at   
the closing. Under the assumption alternative, the exercise price per share of  
the New Caldera options will be twice that of the SCO options because, as noted 
above, Caldera's common stock was trading at a price per share twice that of    
SCO's common stock at the time the reorganization agreement was signed. A former
SCO employee who chooses the assumption alternative will incur the same         
aggregate exercise price (number of shares times exercise price per share) in   
exercising options to purchase New Caldera common stock as he or she would have 
incurred in exercising SCO options; in this way, the assumption alternative     
preserves the benefit of the employee's low exercise price, relative to the     
replacement alternative.                                                        

   Since the time of signing the reorganization agreement, the trading price
of Caldera common stock has fluctuated widely. Consequently, former SCO         
shareholders choosing between the replacement alternative and the assumption    
alternative should obtain updated market price information before choosing an   
alternative.                                                                    

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ASSUMPTION OFFER                                                                

To illustrate the effect of choosing the assumption alternative for a 
specific option grant, assume our combination closes on April 1, 2001 and, at   
that point, an employee had a SCO option to purchase 100 shares which was       
granted on April 1, 1999 when SCO's common stock was at $5.4375 per share, and  
which was vested as to 50 shares on April 1, 2001. The employee would receive   
the following:                                                                  

 - an option to purchase 50 shares of New Caldera common stock, which is
vested as to 25 shares, and                                       

- the exercise price of the option would be $10.875.                  

REPLACEMENT OFFER                                                               

    To illustrate the effect of choosing the replacement option for a specific
option grant, assume again our combination closes on April 1, 2001 and at that  
point an employee had a SCO option to purchase 100 shares which was granted on  
April 1, 1999 when SCO's common stock was at $5.4375 per share, and which was   
vested as to 50 shares on April 1, 2001. The employee would receive the         
following:                                                                      

 - an option to purchase 50 shares of New Caldera common stock, which is
vested as to 25 shares, and                                       

   - the exercise price would be the fair market value of New Caldera common
stock on April 1, 2001.                                           

PROCEDURES TO ELECT ASSUMPTION OR REPLACEMENT (SEE PAGE 82)                     

     Employees of the server and professional services groups who hold SCO stock
options should send the enclosed notice of election, by mail postmarked on or   
before April 23, 2001, to:                                                      

The Santa Cruz Operation, Inc.                                
425 Encinal Street                                            
Santa Cruz, California 95061                                  
Attn: Steve Sabbath                                           

IF YOU ARE OFFERED AND ACCEPT EMPLOYMENT WITH NEW CALDERA AND DO NOT  
COMPLETE APPENDIX N, THE NOTICE OF ELECTION TO ASSUME OR REPLACE OPTIONS, THE   
UNVESTED PORTION OF YOUR SCO STOCK OPTIONS WILL BE CANCELED AS OF THE DATE THE  
COMBINATION IS COMPLETED. YOU WILL HAVE ONLY 90 DAYS AFTER THE COMBINATION IS   
COMPLETED TO EXERCISE THE VESTED PORTION OF YOUR SCO OPTIONS.                   

THE TAX STATUS OF SCO OPTIONS WILL DEPEND ON THE ALTERNATIVE CHOSEN BY AN       
EMPLOYEE (SEE PAGE 62)                                                          

    There will be no immediate tax consequences from either alternative. Under
the replacement alternative, the new option granted to an employee will be an   
incentive stock option to the maximum extent permissible under the federal tax  
laws. Under the assumption alternative, if an employee had an incentive stock   
option while at SCO, an employee may have a non-qualified option after the      
assumption.                                                                     

VESTING SCHEDULE OF OPTIONS (SEE PAGE 69)                                       

Under either the assumption or replacement alternative, your vesting  
schedule will not be changed.                                                   

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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA 

     The following tables present summary historical financial data for Caldera,
SCO and the server and professional services groups and summary pro forma       
combined financial data for Caldera and SCO. The summary pro forma combined     
financial data of New Caldera includes the combined results of operations and   
financial data of Caldera and the server and professional services groups and   
the summary pro forma financial data of SCO excludes the server and professional
services groups. The historical financial data has been derived from financial  
statements and related notes of Caldera, SCO and the server and professional    
services groups. Caldera and the server and professional services groups'       
financial statements are included elsewhere in this joint proxy                 
statement/prospectus and SCO's financial statements are incorporated by         
reference in this joint proxy statement/prospectus.                             

     You should read the following summary financial data together with "Caldera
Management's Discussion and Analysis of Financial Condition and Results of      
Operations," "Server and Professional Services Groups Management's Discussion   
and Analysis of Financial Condition and Results of Operations" and the financial
statements and related notes included elsewhere in this joint proxy             
statement/prospectus.                                                           

SUMMARY HISTORICAL FINANCIAL DATA OF CALDERA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        [Enlarge/Download Table]

                                                                                              THREE MONTHS ENDED  
                                                      YEAR ENDED OCTOBER 31,                      JANUARY 31,     
                                       ----------------------------------------------------   ------------------- 
                                          1996        1997      1998      1999       2000       2000       2001   
                                       -----------   -------   -------   -------   --------   --------   -------- 
                                       (UNAUDITED)                                                (UNAUDITED)     
                                                                                                                  
STATEMENT OF OPERATIONS DATA:                                                                                     
Revenue..............................    $ 1,108     $ 1,117   $ 1,057   $ 3,050   $  4,274   $    553   $  1,054 
Gross margin (deficit)...............        228         (25)   (1,341)      124        253          3       (123)
Loss from operations.................     (2,649)     (7,578)   (6,853)   (9,103)   (31,999)    (5,614)   (10,196)
Net loss.............................     (2,757)     (8,148)   (7,963)   (9,367)   (26,923)    (5,513)    (9,843)
Net loss attributable to common                                                                                   
  stockholders.......................     (2,757)     (8,148)   (7,963)   (9,367)   (39,176)   (15,513)    (9,843)
Basic and diluted net loss                                                                                        
  attributable to common stockholders                                                                             
  per share..........................    $ (0.17)    $ (0.51)  $ (0.50)  $ (0.51)  $  (1.19)  $  (0.63)  $  (0.25)
Basic and diluted weighted average                                                                                
  common shares outstanding..........     16,000      16,000    16,000    18,458     32,922     24,780     39,588 

                                                        [Enlarge/Download Table]

                                                                  OCTOBER 31,                                   
                                            -------------------------------------------------------  JANUARY 31,
                                               1996          1997        1998      1999      2000       2001    
                                            -----------   -----------   -------   ------   --------  -----------
                                            (UNAUDITED)   (UNAUDITED)                                (UNAUDITED)
                                                                                                                
BALANCE SHEET DATA:                                                                                             
Cash and cash equivalents..................   $  207        $  398      $    76   $  122   $ 36,560    $28,359  
Working capital (deficit)..................     (122)        1,313          290      678     88,680     82,051  
Total assets...............................    1,639         3,915       16,353    3,714    107,518     96,640  
Long-term liabilities, net of current                                                                           
  portion..................................       --            --           --        6         --         --  
Predecessor's equity in carved-out                                                                              
  operations...............................      576         2,319           --       --         --         --  
Total stockholders' equity.................       --            --          708    1,516    102,215     91,077  

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SUMMARY HISTORICAL FINANCIAL DATA OF SCO
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        [Enlarge/Download Table]

                                                                                            THREE MONTHS ENDED    
                                                YEAR ENDED SEPTEMBER 30,                       DECEMBER 31,       
                                  ----------------------------------------------------   -------------------------
                                    1996       1997       1998       1999       2000        1999          2000    
                                  --------   --------   --------   --------   --------   -----------   -----------
                                                                                         (UNAUDITED)   (UNAUDITED)
                                                                                                                  
STATEMENT OF OPERATIONS DATA:                                                                                     
Net revenues..................... $207,890   $193,660   $171,900   $223,624   $148,923     $53,653       $26,455  
Gross margin.....................  153,488    138,345    124,804    173,846    107,127      41,821        19,374  
Operating income (loss)..........  (23,581)   (16,594)   (13,593)    16,373    (51,233)      2,108        (7,656) 
Net income (loss)................  (22,414)   (15,170)   (14,665)    16,858    (56,953)      2,875        (7,897) 
Net income (loss) per                                                                                             
  share -- basic................. $  (0.62)  $  (0.41)  $  (0.41)  $   0.49   $  (1.59)    $  0.08       $ (0.20) 
Net income (loss) per share --                                                                                    
  diluted........................ $  (0.62)  $  (0.41)  $  (0.41)  $   0.46   $  (1.59)    $  0.07       $ (0.20) 
Shares used in per share                                                                                          
  calculation -- basic...........   36,179     36,628     35,817     34,232     35,720      34,713        39,443  
Shares used in per share                                                                                          
  calculation -- diluted.........   36,179     36,628     35,817     36,402     35,720      41,258        39,443  

                                                        [Enlarge/Download Table]

                                                                SEPTEMBER 30,                                 
                                             ---------------------------------------------------  DECEMBER 31,
                                               1996       1997       1998       1999      2000        2000    
                                             --------   --------   --------   --------   -------  ------------
                                                                                                  (UNAUDITED) 
                                                                                                              
BALANCE SHEET DATA:                                                                                           
Cash and cash equivalents and short-term                                                                      
  investments............................... $ 54,831   $ 51,711   $ 51,076   $ 62,844   $26,446    $13,109   
Working capital.............................   61,935     46,164     32,221     44,813    16,654      8,961   
Total assets................................  166,807    146,665    131,189    139,284    82,202     63,206   
Long-term liabilities, net of current                                                                         
  portion...................................    9,332      9,545     12,027     11,094     5,462      5,488   
Shareholders' equity........................  101,581     81,462     60,135     70,338    31,202     20,101   

SUMMARY HISTORICAL FINANCIAL DATA OF THE SERVER AND PROFESSIONAL SERVICES GROUPS
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                                               THREE MONTHS ENDED    
                                                YEAR ENDED SEPTEMBER 30,                          DECEMBER 31,       
                               ----------------------------------------------------------   -------------------------
                                  1996          1997         1998       1999       2000        1999          2000    
                               -----------   -----------   --------   --------   --------   -----------   -----------
                               (UNAUDITED)   (UNAUDITED)                                    (UNAUDITED)   (UNAUDITED)
                                                                                                                     
STATEMENT OF OPERATIONS DATA:                                                                                        
Net revenues.................   $190,989      $181,915     $162,720   $214,083   $139,632     $50,780       $23,887  
Gross margin.................    139,809       128,815      118,239    165,558     98,221      38,976        16,845  
Net income (loss)............    (20,640)       (8,508)     (12,576)    19,867    (41,075)      2,072        (1,795) 

                                                        [Enlarge/Download Table]

                                                               SEPTEMBER 30,                                       
                                       -------------------------------------------------------------   DECEMBER 31,
                                          1996          1997          1998         1999       2000         2000    
                                       -----------   -----------   -----------   --------   --------   ------------
                                       (UNAUDITED)   (UNAUDITED)   (UNAUDITED)                         (UNAUDITED) 
                                                                                                                   
BALANCE SHEET DATA:                                                                                                
Cash and cash equivalents.............  $     --       $    --      $  3,517     $  2,223   $    511     $    69   
Working capital deficit...............    (7,295)       (6,775)      (14,651)     (14,261)   (13,292)     (7,933)  
Total assets..........................   102,995        84,553        73,355       70,117     40,051      36,052   
Long-term liabilities, net of current                                                                              
  portion.............................     6,540         5,787         7,703        7,031      2,020       2,036   
Divisional surplus (deficit) and                                                                                   
  accumulated other comprehensive                                                                                  
  loss................................    42,743        24,298         9,161        8,932     (2,201)      1,206   

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UNAUDITED SUMMARY PRO FORMA COMBINED FINANCIAL DATA OF NEW CALDERA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

    The following table presents summary pro forma combined financial data for
Caldera and the server and professional services groups and should be read in   
conjunction with the introduction to pro forma condensed combined financial     
information, pro forma condensed combined financial statements and related notes
included elsewhere in this joint proxy statement/prospectus. This information   
has been derived from each company's respective financial statements and notes, 
which are included elsewhere in this joint proxy statement/prospectus. The      
summary pro forma combined financial data below presents New Caldera's statement
of operations data on a pro forma basis to reflect the proposed combination of  
Caldera and the server and professional service groups as though the transaction
had occurred on November 1, 1999 and presents balance sheet data on a pro forma 
basis as though the transaction occurred on January 31, 2001. You should not    
rely on the summary pro forma combined financial data as an indication of the   
results of operations or financial position that would have been achieved if the
combination had taken place earlier or as an indication of the results of       
operations or financial position of New Caldera after completion of the         
combination.                                                                    

                                                        [Enlarge/Download Table]

                                                                YEAR      THREE MONTHS
                                                                ENDED        ENDED    
                                                             OCTOBER 31,  JANUARY 31, 
                                                                2000          2001    
                                                             -----------  ------------
                                                                                      
PRO FORMA COMBINED STATEMENT OF OPERATIONS DATA:                                      
Revenue.....................................................  $ 143,525     $ 24,941  
Gross margin................................................     98,474       16,512  
Amortization of intangibles.................................     21,008        5,252  
Loss from operations........................................    (84,683)     (17,486) 
Net loss....................................................    (88,835)     (17,943) 
Net loss attributable to common stockholders................   (101,088)     (17,943) 
Basic and diluted net loss attributable to common                                     
  stockholders per share....................................  $   (2.07)    $  (0.32) 
Basic and diluted weighted average common shares                                      
  outstanding...............................................     48,922       55,588  

                                                                [Download Table]

                                                              JANUARY 31,
                                                                 2001    
                                                              -----------
                                                                         
PRO FORMA COMBINED BALANCE SHEET DATA:                                   
Cash and cash equivalents...................................   $  9,328  
Working capital.............................................     52,943  
Goodwill and other intangibles..............................     95,340  
Total assets................................................    178,255  
Long-term liabilities, net of current portion...............     14,466  
Total stockholders' equity..................................    149,444  

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UNAUDITED SUMMARY PRO FORMA FINANCIAL DATA OF SCO 
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

     The following table presents unaudited summary pro forma combined financial
data for SCO after completion of the reorganization and should be read in       
conjunction with the introduction to pro forma condensed financial information, 
pro forma condensed consolidated financial statements of SCO and related notes  
included elsewhere in this joint proxy statement/prospectus. This information   
has been derived from SCO and the server and professional services groups'      
respective financial statements and notes, which are included elsewhere in this 
joint proxy statement/prospectus or incorporated by reference herein. The       
unaudited summary pro forma financial data below presents SCO's statement of    
operations data on a pro forma basis to reflect the proposed sale of the server 
and professional service groups as though the transaction had occurred on       
October 1, 1999 and presents balance sheet data on a pro forma basis as though  
the transaction occurred on December 31, 2000. You should not rely on the       
summary pro forma financial data as an indication of the results of operations  
or financial position that would have been achieved if the reorganization had   
taken place earlier or as an indication of the results of operations or         
financial position of SCO after completion of the reorganization.               

                                                        [Enlarge/Download Table]

                                                                            THREE MONTHS
                                                              YEAR ENDED       ENDED    
                                                             SEPTEMBER 30,  DECEMBER 31,
                                                                 2000           2000    
                                                             -------------  ------------
                                                                                        
PRO FORMA STATEMENT OF OPERATIONS DATA:                                                 
Net revenues................................................   $  9,291       $ 2,568   
Gross margin................................................      8,906         2,529   
Operating loss..............................................    (18,659)       (6,516)  
Net loss....................................................    (44,629)       (5,964)  
Basic and diluted net loss per share........................   $  (1.25)      $ (0.15)  
Shares used in basic and diluted net loss per share                                     
  calculation...............................................     35,720        39,433   

                                                                [Download Table]

                                                              DECEMBER 31, 2000
                                                              -----------------
                                                                               
PRO FORMA BALANCE SHEET DATA:                                                  
Cash and cash equivalents...................................      $ 44,177     
Working capital.............................................        14,891     
Equity investment in New Caldera............................        23,293     
Total assets................................................       110,807     
Long-term liabilities, net of current portion...............         3,452     
Total stockholders' equity..................................        47,205     

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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA FOR CALDERA 

   The information below reflects the historical net loss and book value per
share of Caldera stock in comparison with the pro forma combined net loss and   
book value per share of New Caldera after giving effect to the proposed         
combination of Caldera and the server and professional services groups as though
such combination had occurred at November 1, 1999 using the purchase method of  
accounting for business combinations. The pro forma combined book value per     
share is computed by dividing pro forma combined stockholders' equity by the pro
forma combined number of shares outstanding as of January 31, 2001.             

You should read the tables below in conjunction with the respective   
financial statements and related notes of Caldera and the server and            
professional services groups and the pro forma condensed combined financial     
statements and related notes included elsewhere in this joint proxy             
statement/prospectus.                                                           

CALDERA 

                                                        [Enlarge/Download Table]

                                                                YEAR ENDED     THREE MONTHS ENDED
                                                             OCTOBER 31, 2000   JANUARY 31, 2001 
                                                             ----------------  ------------------
                                                                                                 
HISTORICAL PER SHARE DATA:                                                                       
  Basic and diluted net loss per common share...............      $(1.19)            $(0.25)     
  Book value per share at period end........................      $ 2.59             $ 2.30      

PRO FORMA COMBINED

                                                        [Enlarge/Download Table]

                                                                YEAR ENDED     THREE MONTHS ENDED
                                                             OCTOBER 31, 2000   JANUARY 31, 2001 
                                                             ----------------  ------------------
                                                                                                 
PRO FORMA COMBINED PER SHARE DATA:                                                               
  Basic and diluted net loss per common share...............      $(2.07)            $(0.32)     
  Book value per share at period end........................                         $ 2.69      

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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA FOR SCO 

   The information below reflects the historical net loss and book value per
share of SCO stock in comparison with the pro forma net loss and book value per 
share of SCO after giving effect to the proposed combination of Caldera and the 
server and professional services groups as though such combination had occurred 
at October 1, 1999 using the purchase method of accounting for business         
combinations. The pro forma book value per share is computed by dividing pro    
forma stockholders' equity by the pro forma number of shares outstanding as of  
December 31, 2000.                                                              

You should read the tables below in conjunction with the respective   
financial statements and related notes of SCO and the server and professional   
services groups and the pro forma condensed financial statements and related    
notes included elsewhere in this joint proxy statement/prospectus.              

SCO 

                                                        [Enlarge/Download Table]

                                                               YEAR ENDED      THREE MONTHS ENDED
                                                           SEPTEMBER 30, 2000  DECEMBER 31, 2000 
                                                           ------------------  ------------------
                                                                                                 
HISTORICAL PER SHARE DATA:                                                                       
  Basic and diluted net loss per share....................       $(1.59)             $(0.20)     
  Book value per share at period end......................       $ 0.79              $ 0.51      

PRO FORMA 

                                                        [Enlarge/Download Table]

                                                               YEAR ENDED      THREE MONTHS ENDED
                                                           SEPTEMBER 30, 2000  DECEMBER 31, 2000 
                                                           ------------------  ------------------
                                                                                                 
PRO FORMA PER SHARE DATA:                                                                        
  Basic and diluted net loss per share....................       $(1.25)             $(0.15)     
  Book value per share at period end......................                           $ 1.20      

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MARKET PRICE INFORMATION

CALDERA MARKET PRICE INFORMATION                                                

 Caldera common stock has traded on the Nasdaq National Market under the
symbol "CALD" since March 21, 2000.                                             

The table below sets forth the range of high and low closing prices of
Caldera common stock as reported on the Nasdaq National Market since March 21,  
2000, the date of Caldera's initial public offering.                            

                                                                [Download Table]

                                                                  CALDERA     
                                                                COMMON STOCK  
                                                              ----------------
                                                               HIGH      LOW  
                                                              ------    ------
                                                                              
FISCAL 2000                                                                   
Quarter ended April 30, 2000 (from March 21, 2000)..........  $29.44    $ 9.56
Quarter ended July 31, 2000.................................   16.25      7.05
Quarter ended October 31, 2000..............................    8.50      3.25

FISCAL 2001                                                                   
Quarter ended January 31, 2001..............................    4.88      1.84
Quarter ending April 30, 2001 (through March 6, 2001).......    3.56      1.97

As of March 5, 2001, Caldera had 324 stockholders of record.          

SCO MARKET PRICE INFORMATION                                                    

SCO common stock has traded on the Nasdaq National Market under symbol
"SCOC" since May 1993.                                                          

    The table below sets forth the range of high and low closing prices of SCO
common stock as reported on the Nasdaq National Market for the periods          
indicated.                                                                      

                                                                [Download Table]

                                                                     SCO       
                                                                COMMON STOCK   
                                                              -----------------
                                                               HIGH       LOW  
                                                              ------     ------
                                                                               

FISCAL 1999                                                                    
Quarter ended December 31, 1998.............................  $ 5.59     $ 3.25
Quarter ended March 31, 1999................................    5.88       4.00
Quarter ended June 30, 1999.................................    7.06       5.38
Quarter ended September 30, 1999............................   14.13       6.44

FISCAL 2000                                                                    
Quarter ended December 31, 1999.............................   34.65      11.25
Quarter ended March 31, 2000................................   31.25       9.39
Quarter ended June 30, 2000.................................    8.95       4.39
Quarter ended September 30, 2000............................    6.13       2.78

FISCAL 2001                                                                    
Quarter ended December 31, 2000.............................    4.25       1.06
Quarter ending March 31, 2001 (through March 6, 2001).......    2.84       1.31

As of March 8, 2001, SCO had 365 shareholders of record.              

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RECENT CLOSING PRICES                                                           

The following table sets forth the closing prices per share of Caldera
common stock and SCO common stock as reported on the Nasdaq National Market on  
August 1, 2000, the last full trading day prior to the public announcement that 
Caldera and SCO had entered into the reorganization agreement, and on March 22, 
2001, the last full trading day for which closing prices were available at the  
time of the printing of this joint proxy statement/prospectus.                  

                                                        [Enlarge/Download Table]

                                                               CALDERA         SCO     
DATE                                                         COMMON STOCK  COMMON STOCK
----                                                         ------------  ------------
                                                                                       
August 1, 2000..............................................    $6.937        $3.25    
March 22, 2001..............................................    $ 1.50        $1.25    

DIVIDENDS                                                                       

    Caldera has never declared or paid cash dividends on Caldera common stock.
Caldera currently intends to retain earnings, if any, to support its growth     
strategy and does not anticipate paying cash dividends in the foreseeable       
future. Payment of future dividends, if any, will be at the discretion of the   
Caldera board of directors after taking into account various factors, including 
Caldera's financial condition, operating results, current and anticipated cash  
needs and plans for expansion.                                                  

    SCO has never paid cash dividends on its capital stock and does not intend
to pay any cash dividends on its common stock in the foreseeable future. SCO    
currently intends to retain earnings, if any, to support its operations. Payment
of future dividends, if any, will be at the discretion of SCO's board of        
directors.                                                                      

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RISK FACTORS

     In evaluating the proposals to be voted on at your meeting please carefully
consider the information presented throughout this document, and in particular  
the following risk factors. Some of these risk factors relate directly to the   
combination described in this document, while others relate to the businesses of
New Caldera, Caldera and the server and professional services groups.           

RISKS RELATING TO THE COMBINATION                                               

New Caldera might fail to successfully integrate the businesses of Caldera and  
the server and professional services groups                                     

  Product line integration will be difficult. If New Caldera completes the
combination of the server and professional services groups with Caldera's Linux 
business, which is not assured, New Caldera will need to integrate two          
independent businesses. One key issue will be the integration of Caldera's Linux
product offerings and SCO's UnixWare. This product line integration will involve
consolidation of products with duplicative functionality, coordination of       
research and development activities, and convergence of the technologies        
supporting the various products.                                                

   Other business integration issues could arise. Other problems inherent in
integrating the businesses of Caldera and the server and professional services  
groups include:                                                                 

  - maintaining brand recognition for key products of the server business,
      such as UnixWare and OpenServer, while migrating customer identification
of the brands to New Caldera;                                     

- resolving channel conflicts that may arise between third party      
      distributor and electronic solution provider channels of Caldera and the
channels of the server business;                                  

- coordinating, integrating and streamlining geographically dispersed 
operations; and                                                   

- coping with customers' uncertainty about continued support for      
duplicative New Caldera products.                                 

Management and employee integration issues could arise. Potential     
management and employee integration problems include:                           

   - resolving differences between the corporate cultures of Caldera and the
server and professional services groups;                          

- employee turnover; and                                              

- integrating the management teams of both companies successfully.    

   The integration will be expensive. In addition, management's focus on the
combination is likely to interrupt the current business activities of Caldera   
and the server and professional services groups. Any of these risks could harm  
New Caldera's revenue and results of operations.                                

    Operational issues could arise. Potential operational integration problems
include conflict between each of Caldera's and SCO's:                           

- management information systems;                                     

- telephone systems; and                                              

- customer data.                                                      

Certain individuals have interests that are different from or in addition to    
yours, which could influence them to support the combination                    

   Members of the boards of directors and management of Caldera and SCO, and
certain officers of SCO, will receive benefits from the combination in addition 
to those which you will receive. Because of                                     

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these benefits, these persons may be influenced to vote in favor of or to       
recommend the combination. These interests include:                             

   - the current executive officers and directors of Caldera, excluding John
R. Egan who has announced he will not be seeking re-election as a 
      director of Caldera, will become executive officers and directors of New
Caldera;                                                          

     - David McCrabb is an executive officer of SCO and will become an executive
officer of New Caldera;                                           

- each of the SCO executive officers and employees of the server and  
    professional services groups who will become executive officers of New
      Caldera, and other key employees of the server and professional services
       groups, will sign employment agreements with New Caldera that provide for
terms of employment and severance benefits, among other things;   

- SCO will provide change-of-control benefits to its current executive
officers;                                                         

- SCO has granted additional "stay-put" options to certain executive  
      officers to encourage those individuals to remain with SCO following the
combination; and                                                  

    - SCO will have the right to nominate two members of the New Caldera board
    of directors, who will initially be two individuals to be named by SCO
and approved by Caldera.                                          

New Caldera will incur significant accounting charges in connection with the    
combination that will impact its operating results immediately and in the future

The significant costs of integration associated with the combination  
increases the risk that New Caldera will not realize the anticipated benefits.  
Because New Caldera will account for the combination as a purchase, it expects  
to incur a non-cash charge of approximately $1.6 million at the date of the     
combination, related to the write-off of in-process research and development.   
New Caldera also will record goodwill and other intangible assets of            
approximately $90.8 million. This amount will be amortized over periods ranging 
from three to five years, and will result in charges to operations of           
approximately $5.3 million per quarter for the first three years and            
approximately $3.5 million per quarter for the subsequent two years. Please see 
"Unaudited Pro Forma Condensed Combined Financial Information" on page P-1.     

Because the Nasdaq National Market is likely to experience extreme price and    
volume fluctuations, particularly with respect to the stock of internet         
companies such as New Caldera, the price of New Caldera's stock may decline even
if New Caldera's business is doing well                                         

The market price of New Caldera's common stock could fluctuate        
significantly as a result of:                                                   

- New Caldera's susceptibility to quarterly variations in operating   
 results, which may cause it to fail to meet analysts' or investors'
expectations;                                                     

    - earnings and other announcements by, and changes in analyst and investor
evaluations of, internet firms and New Caldera;                   

- announcements or implementation by New Caldera or its competitors of
technological innovations or new products or services; and        

- trading volume of New Caldera common stock.                         

 The securities of many companies have experienced significant price and
volume fluctuations in recent years, often unrelated to the companies' operating
performance. Specifically, market prices for securities of technology companies 
have sometimes reached elevated levels. These levels may not be sustainable and 
may not bear any relationship to the operating performances of these companies. 
For example, on March 21, 2000, Caldera's stock closed at a high of $29.44 per  
share, but has since declined significantly. As of March 6, 2001, it closed at  
$2.03 per share. Similarly, the stock price of SCO closed at $34.63 per share on
December 27, 1999. However, as of March 6, 2001, it closed at $1.34 per share.  

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Because the number of shares to be received in the combination by SCO is fixed, 
the market value of the consideration could fluctuate as a result of changes in 
the market price of Caldera's common stock                                      

     There will be no adjustment to the merger consideration received by SCO for
changes in the market price of Caldera's common stock, and neither SCO nor      
Caldera will be permitted to terminate the reorganization agreement solely      
because of changes in the market price of Caldera common stock. Accordingly, the
market value of the consideration to be paid to SCO for the assets of its server
and professional services groups will fluctuate depending upon the market value 
of the Caldera common stock at the time of completion of the combination. At    
$3.3125, the closing price per share of Caldera common stock on February 9,     
2001, the day the third amendment to the reorganization agreement was signed,   
the aggregate consideration to be paid to SCO, not including any future payments
SCO may be entitled to receive from its earn-out rights, would be valued at     
approximately $84 million. Based on $1.50, the closing price per share of       
Caldera common stock on March 22, 2001, the last full trading day for which     
closing prices were available at the time of printing of this joint proxy       
statement/prospectus, the aggregate consideration would be valued at            
approximately $55 million. Such fluctuations may continue until the closing of  
the combination. To the extent that SCO continues to hold shares of New Caldera 
common stock following the combination, its market value will continue to       
fluctuate with the stock price of New Caldera's common stock.                   

RISKS RELATING TO NEW CALDERA AFTER THE COMBINATION                             

New Caldera may not be profitable or achieve positive cash flow; if New Caldera 
does not achieve and sustain profitability and positive cash flow, New Caldera's
financial condition would be adversely affected and its stock price could suffer

Caldera has not been profitable. The server and professional services 
groups have not been profitable and their revenue has been declining. If New    
Caldera's revenue declines or grows at a slower rate than anticipated or if New 
Caldera is unable to efficiently reduce operating expenses, New Caldera may not 
achieve or sustain profitability or generate positive cash flow. In this case,  
the value of an investment in New Caldera could be reduced and New Caldera could
be required to seek additional funding sooner than currently anticipated.       

  Based on a pro forma analysis, the combination will result in a material
increase in the losses incurred by, and in a material decrease in the working   
capital available to, New Caldera as compared with Caldera. For the fiscal year 
ended October 31, 2000 and the three months ended January 31, 2001, Caldera     
incurred net losses attributable to common stockholders of approximately $39.2  
million and $9.8 million, respectively. As of January 31, 2001, Caldera had     
incurred total net losses of $66.3 million since its inception in 1994. For the 
fiscal year ended September 30, 2000 and the three months ended December 31,    
2000, the server and professional services groups incurred net losses of        
approximately $41.1 million and $1.8 million, respectively. On a pro forma      
basis, the combined operations of Caldera and the server and professional       
services groups would have incurred net losses attributable to common           
stockholders of approximately $101.1 million for the fiscal year ended October  
31, 2000 and $17.9 million for the three months ended January 31, 2001.         

    In connection with the acquisition of the server and professional services
groups, New Caldera anticipates additional working capital requirements to fund 
the acquired operations. On a pro forma basis, the combined operations of       
Caldera and the server and professional services groups would have working      
capital of approximately $52.9 million as of January 31, 2001, a decrease of    
$29.2 million from Caldera's working capital on a historical basis of $82.1     
million as of such date. During the year ended September 30, 2000 and the three 
months ended December 31, 2000, the server and professional services groups used
approximately $24.9 million and $4.9 million, respectively, in cash for         
operating activities. Although New Caldera hopes to reduce employee headcount   
and generate other cost reductions and efficiencies from the acquisition to     
minimize the negative impact on working capital, it may not be successful in    
attaining such cost reductions and efficiencies. Additionally, New Caldera will 
not acquire certain working capital accounts such as cash, accounts payable or  
the majority of accounts receivable. As a result, New Caldera                   

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will be required to provide all working capital for the initial 30 to 60 days of
operations from its cash reserves.                                              

    Caldera believes that its current cash and cash equivalents and short-term
investments will be sufficient to meet capital expenditures and working capital 
requirements for at least the next twelve months. However, after the            
combination, New Caldera may need to raise additional funds to carry out its    
business plan. Additional funding may not be available in amounts or on terms   
acceptable to New Caldera. If sufficient funds are not available or are not     
available on acceptable terms, New Caldera may be unable to carry out its       
business plan and achieve profitability and positive cash flow.                 

Because New Caldera's product and service offerings, which will include both    
Unix and Linux products and services, may not be accepted, New Caldera may not  
be successful                                                                   

  New Caldera will face risks and uncertainties relating to its ability to
successfully implement its strategy. New Caldera's business model is based on an
expectation that it can create and develop demand for product and service       
offerings, which will include both UNIX and Linux products and services. There  
is no current market for business solutions combining both Linux and UNIX-based 
products and services. At present Microsoft and other non-Linux operating       
systems are favored by the business community.                                  

In order for New Caldera's product offering to be accepted New Caldera
must:                                                                           

- broaden awareness of the New Caldera brand;                         

- maintain its current, and develop new, strategic relationships with 
technology partners and solution providers;                       

    - continue to develop and upgrade product offerings tailored for business;
and                                                               

- respond effectively to competitive pressures.                       

  If New Caldera is unable to execute its strategy, New Caldera may not be
successful.                                                                     

  In addition, New Caldera's business model will be subject to many of the
same risks currently facing Caldera's business model, which relies on a         
combination of open source software and proprietary technology. While the UNIX  
products of the server group to be acquired by New Caldera do not contain open  
source software components, the Linux products will continue to do so. For      
further discussion of risks associated with Caldera's business model, see       
"-- Risks of Caldera" beginning on page 23.                                     

New Caldera will have a workforce approximately four times the size of the      
Caldera workforce. The management of New Caldera will face many difficulties in 
managing a larger company                                                       

   In deciding whether to approve and adopt the reorganization agreement and
the combination, you should bear in mind that the larger combined company will  
create new challenges for Caldera's existing management. If New Caldera fails to
meet these challenges, the value of an investment in New Caldera may decline.   
After the combination, New Caldera will have a workforce approximately four     
times the size of the Caldera workforce prior to the combination. Key personnel 
have little experience managing this type of growth. This growth is likely to   
strain New Caldera's management control systems and resources, including        
decision support, accounting and management information systems. New Caldera    
will need to continue to improve its financial and management controls and its  
reporting systems and procedures to manage its employees and to obtain          
additional facilities. If New Caldera does not succeed in these efforts, it     
could reduce New Caldera's revenue and the value of an investment.              

If New Caldera is unable to retain key personnel in an intensely competitive    
environment, its operations could be adversely affected                         

As a result of the combination, New Caldera will need to retain the   
personnel of both Caldera and the server and professional services groups.      
Competition for qualified professionals in the software industry is intense, and
New Caldera may be unable to retain sufficient professionals to operate the     
combined                                                                        

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business. Departures of existing personnel could be disruptive to its business  
and can result in the departure of other employees.                             

 The loss or departure of any of New Caldera's officers or key employees
could harm New Caldera's ability to implement its business plan and could lower 
its revenue. New Caldera's future success depends to a significant extent on the
continued service and coordination of its management team, particularly Ransom  
H. Love, New Caldera's Chief Executive Officer. New Caldera does not maintain   
key person insurance for any member of its management team.                     

  Even though New Caldera intends to enter into employment agreements with
key management personnel, these agreements cannot prevent the departure of those
employees.                                                                      

New Caldera will operate in a highly competitive market and faces significant   
competition from a variety of current and potential sources, including Red Hat  
and Sun Microsystems; Many of New Caldera's current and potential competitors   
will have greater financial and technical resources; Thus, New Caldera may fail 
to compete effectively in its market                                            

  In considering whether to approve this combination, Caldera stockholders
and SCO shareholders should bear in mind that New Caldera will have new         
competitors. New Caldera's principal competitors include:                       

- Microsoft;                                                          

- Cygnus Solutions;                                                   

- VA Linux;                                                           

- Wind River Systems;                                                 

- Sun Microsystems;                                                   

- Corel;                                                              

- MacMillan;                                                          

- Red Hat;                                                            

- SuSE;                                                               

- AT&T;                                                               

- Compaq;                                                             

- Hewlett-Packard;                                                    

- IBM;                                                                

- Novell; and                                                         

- Unisys.                                                             

    Many of New Caldera's competitors have substantially greater financial and
technical resources, more extensive marketing and distribution capabilities;    
larger development staffs and more widely recognized brands and products.       

  Also, due to the open source nature of Linux, anyone can freely download
Linux and many Linux applications and modify and re-distribute them with few    
restrictions. For example, solution providers upon whom New Caldera depends for 
the distribution of its products could instead create their own Linux solutions 
to provide to their customers. Also, established companies and other            
institutions could easily produce competing versions of Linux.                  

New Caldera's foreign-based operations and sales create special problems,       
including the imposition of governmental controls and fluctuations in currency  
exchanges, that could hurt its results                                          

 Caldera's revenue from foreign sources as a percentage of total revenue
materially increased from 7% in fiscal 1999 to 30% in fiscal 2000, with the     
greatest increase occurring from sales in the Asia Pacific                      
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region. A key component of Caldera's growth strategy has been to expand         
Caldera's presence in foreign markets. However, it is costly to establish       
international facilities and operations, promote Caldera's brand                
internationally, and develop localized products and support. Revenue from       
international activities may not offset the expense of establishing and         
maintaining these foreign operations. In addition, Caldera may not be successful
in marketing and distributing its products because Caldera has little experience
in these markets.                                                               

    As a result of the purchase of the server and professional services groups
from SCO, New Caldera will have significantly more foreign operations than      
Caldera currently has, including development facilities, sales personnel and    
customer support operations, in Europe, Latin America and Southeast Asia. These 
foreign operations are subject to certain inherent risks, including:            

    - potential loss of developed technology through piracy, misappropriation,
or more lenient laws regarding intellectual property protection;  

- imposition of governmental controls, including trade restrictions;  

- fluctuations in currency exchange rates and economic instability;   

- longer payment cycles for sales in foreign countries;               

- difficulties in staffing and managing the foreign operations;       

   - seasonal reductions in business activity in the summer months in Europe
and other countries; and                                          

  - political unrest, particularly in areas in which New Caldera will have
facilities.                                                       

In addition, operating expenses will be denominated in local currency,
creating risk of foreign currency translation gains and losses that could harm  
New Caldera's financial results. If New Caldera generates profits or losses in  
foreign countries, its effective income tax rate could also be increased.       

   In Latin America and Southeast Asia in particular, several countries have
suffered and may be especially susceptible to recessions and economic           
instability which may lead to increased governmental ownership or regulation of 
the economy, higher interest rates, increased barriers to entry such as higher  
tariffs and taxes, and reduced demand for goods manufactured in the United      
States.                                                                         

New Caldera's business plan contemplates additional acquisitions, which may     
divert management's attention and present difficulties with respect to          
integrating operations and employees of these acquisitions                      

     New Caldera expects to pursue other acquisitions in the future. New Caldera
cannot predict whether it will be successful in pursuing any acquisition        
opportunities or what the consequences of any acquisitions would be.            
Acquisitions involve a number of special risks and challenges, including:       

- management's attention may be diverted, particularly in the case of 
multiple concurrent acquisitions;                                 

     - New Caldera must integrate the target's operations and employees with its
existing business;                                                

- New Caldera may have difficulty incorporating technology into its   
existing product lines;                                           

- key employees may leave; and                                        

 - New Caldera may have difficulty presenting a unified corporate image.

New Caldera does not have experience in integrating the operations of 
acquired companies.                                                             

  In addition, if consideration for future acquisitions includes equity in
New Caldera such acquisitions will have a dilutive effect on existing New       
Caldera stockholders.                                                           

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Caldera and SCO could each be harmed if the combination is not completed        

     Caldera and SCO have each expended substantial management time and incurred
costs in negotiating the combination. These costs will not be recouped if the   
combination is not completed. If the combination is not completed, Caldera and  
SCO will continue to operate as independent entities, despite customers' and    
employees' expectations. Each of our reputations and relationships with         
customers could be damaged if Caldera and SCO fail to complete the combination. 
If Caldera or SCO does not complete the combination, in certain circumstances,  
SCO or Caldera may be required to pay a significant breakup fee to the other    
party.                                                                          

     In addition, on January 26, 2001, Caldera advanced to SCO $7 million in the
form of a promissory note that matures either on the closing of the combination 
or on the date of termination of the reorganization agreement. If the           
combination is not completed, SCO would have an outstanding debt obligation to  
Caldera that might be difficult to repay, and Caldera would hold an investment  
that may be difficult to collect.                                               

New Caldera will be dependent upon certain strategic relationships with its     
technology partners and the loss of any of these relationships could adversely  
affect its business prospects                                                   

New Caldera will depend on alliances with technology partners such as 
Citrix Systems, Fujitsu, IBM, Intel, Novell, Compaq and Sun Microsystems. These 
relationships encompass product integration, two-way technology transfers, joint
marketing to electronic service providers and revenue-generating initiatives in 
areas such as product bundles, training and education and third-level technical 
support, relating to modification of the operating system code, for its         
partners. New Caldera expects that these relationships will create opportunities
for its products and services in business markets in which it otherwise might   
not have access. If New Caldera is unable to maintain these relationships, it   
will not be able to develop and deploy its products in certain segments of the  
business community and its product development and sales will not grow.         

In addition, existing strategic relationships of Caldera and SCO with 
technology partners do not, and any future strategic relationships may not,     
afford New Caldera any exclusive marketing development or distribution rights.  
As a result, the companies with which New Caldera will have strategic alliances 
are free to pursue alternative technologies and to develop alternative products 
and services in addition to or in lieu of New Caldera's products and services,  
either on their own or in collaboration with others, including competitors of   
New Caldera. Moreover, New Caldera cannot guarantee that the companies with     
which Caldera and SCO have strategic relationships will market New Caldera's    
products effectively or continue to devote the resources necessary to provide it
with effective sales, marketing and technical support, or that these partners   
will not choose to open source products into which Caldera and SCO have invested
significant time and resources, thereby reducing the value of New Caldera's     
rights in these products.                                                       

Raymond J. Noorda will be able to exert significant control over New Caldera,   
and his interests may differ from those of other stockholders                   

    After the combination, Raymond J. Noorda will have beneficial ownership of
approximately 50.0% of New Caldera's outstanding common stock. As a result, Mr. 
Noorda could exercise significant control and determine the outcome of actions  
that require stockholder approval. For example, Mr. Noorda could delay or       
prevent a transaction in which stockholders might receive a premium over the    
prevailing market price for their shares and control changes in management.     

RISKS OF CALDERA                                                                

Caldera is a new company with a limited operating history, which may make it    
difficult for you to assess the risks related to its business                   

Although Caldera began operations in 1994, during the past 24 months  
Caldera has substantially revised its business plan to focus on Linux for       
eBusiness, or business conducted over the internet, made                        

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additions to its product line and hired a significant number of new employees,  
including key members of its management team. In January 2000, Caldera released 
its server product, eServer. Its historical sales have been primarily from its  
OpenLinux products, including OpenLinux 2.3 (renamed eDesktop because of its    
focus on the desktop environment), which were historically developed for        
first-time Linux users who predominantly have experience using Windows desktop  
environments. As a company in a new and rapidly evolving industry, Caldera faces
risks and uncertainties relating to its ability to successfully implement its   
strategy. You must consider the risks, expenses and uncertainties facing a      
company like Caldera, operating with an unproven business model, faces in a new 
and rapidly evolving market such as the market for Linux software. These risks  
also include Caldera's ability to:                                              

- broaden awareness of the Caldera Systems brand;                     

- maintain its current, and develop new, strategic relationships with 
technology partners and solutions providers;                      

- attract, integrate and retain qualified management personnel;       

  - attract, integrate and retain qualified personnel for the expansion of
   its sales, professional services, engineering, marketing and customer
support organizations;                                            

    - continue to develop and upgrade product offerings tailored for business;

- respond effectively to competitive pressures; and                   

    - generate revenue from the sale of software products, services, education
programs and training.                                            

 If Caldera cannot address these risks and uncertainties or is unable to
execute its strategy, Caldera may not be successful.                            

You should not rely on Caldera's quarterly operating results as an indication of
its future results because they are subject to significant fluctuations;        
Fluctuations in Caldera's operating results or the failure of its operating     
results to meet the expectations of public market analysts and investors may    
negatively impact Caldera's stock price                                         

   Caldera's quarterly operating results have varied in the past and Caldera
expects them to fluctuate significantly in the future due to a variety of       
factors that could affect revenue or expenses in any particular quarter.        
Historically, Caldera has experienced substantial fluctuations in its software  
and related products revenue from period to period relating to the introduction 
of new products and new versions of its existing products. For example, revenue 
from software and related products for the three-month period ended April 30,   
1999 was approximately $482,000 and increased to approximately $1.0 million     
during the three-month period ended July 31, 1999. Software and related products
revenue decreased to approximately $775,000 during the three-month period ended 
October 31, 1999, further decreased to approximately $395,000 during the        
three-month period ended January 31, 2000 and then increased to approximately   
$1.1 million for the three-month period ended April 30, 2000. Software and      
related products revenue then decreased to approximately $631,000 during the    
three-month period ended July 31, 2000, increased to approximately $845,000 for 
the three-month period ended October 31, 2000 and most recently has decreased to
approximately $452,000 during the three-month period ended January 31, 2001. In 
addition, Caldera anticipates that product revenue for the three-month period   
that will end April 30, 2001 may be significantly lower than product revenue    
compared to the prior three-month period. These quarterly revenue fluctuations  
were primarily due to the fluctuation of sales of Caldera's OpenLinux products, 
and these fluctuations in revenue can be expected to continue as a result of    
fluctuating sales of all of Caldera's products, including its new product       
offerings.                                                                      

     Upon announcement of an expected release date for a new product or upgrade,
Caldera often experiences a significant decrease in sales of its existing       
products. Additionally, Caldera often experiences the strongest sales for a new 
product during the first 30 days after its introduction as Caldera fills advance
orders from its distribution channel. Fluctuations in quarterly operating       
results could cause Caldera's stock price to decline.                           

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   Services revenue has increased consistently from fiscal 1999 through July
31, 2000 as Caldera has increased its education and training-related offerings, 
as well as support and consulting services. Services revenue during the quarter 
ended October 31, 2000 decreased from the prior quarter as Caldera did not have 
a Linux training program tour during the October 31, 2000 quarter, but did hold 
the Linux training program tour during the first quarter of fiscal 2001. Caldera
expects that quarterly services revenue for the duration of fiscal 2001 will be 
lower than services revenue generated in the first quarter of fiscal 2001. The  
trend of increased services revenue experienced in fiscal 2000 and in the first 
quarter of 2001 is not expected to continue throughout fiscal 2001 as Caldera   
believes that future Linux training program tours will not be offered. Caldera  
has also increased personnel to promote its services offerings. You should not  
rely on quarter-to-quarter comparisons of Caldera's results of operations as an 
indication of future performance. Factors that may affect our quarterly results 
include:                                                                        

- the interest level of electronic solutions providers in recommending
Caldera's Linux business solutions to end users;                  

 - the introduction, development, timing, competitive pricing and market
acceptance of Caldera's products and services and those of its    
competitors;                                                      

  - changes in general economic conditions, such as recessions, that could
affect capital expenditures and recruiting efforts in the software
industry in general and in the Linux environment in particular;   

- the magnitude and timing of marketing initiatives;                  

 - changing business attitudes toward Linux as a viable operating system
alternative to other competing systems;                           

     - the maintenance and development of Caldera's strategic relationships with
technology partners and solution providers;                       

- the attraction, retention and training of key personnel; and        

- Caldera's ability to manage anticipated growth and expansion.       

    As a result of the factors listed above and elsewhere, it is possible that
in some future periods Caldera's results of operations may be below the         
expectations of public market analysts and investors. This could cause Caldera's
stock price to decline. In addition, Caldera plans to increase its operating    
expenses to expand its sales and marketing, administration, consulting and      
training, maintenance and technical support and research and development groups.
If revenue falls below expectations in any quarter and Caldera is unable to     
quickly reduce its spending in response, Caldera's operating results would be   
lower than expected and Caldera's stock price may fall.                         

Caldera's business model, which relies on a combination of open source software 
and proprietary technology, is unproven                                         

   Caldera's business model incorporates as integral elements of its product
offerings both commercial products and open source software. Caldera knows of no
company that has built a profitable business based in whole or in part on open  
source software. By incorporating open source components in its product         
offerings, Caldera faces many of the same risks that other open source companies
experience, including the inability to offer warranties and indemnities on      
products and services. In addition, by developing products based on proprietary 
technology that is not freely downloadable Caldera may run counter to the       
perception of Linux as an open source model and alienate the Linux community.   
Negative reaction, if widely shared by its customers, developers or the open    
source community, could harm Caldera's reputation, diminish its brand and       
decrease its revenue. Caldera's business will fail if it is unable to           
successfully implement its business model.                                      

     Caldera's business model also depends upon incorporating contributions from
the open source community into products that it open sources. The viability of  
Caldera's product offerings depends in large measure upon the efforts of the    
open source community in enhancing products and making them compatible for use  
across multiple software and hardware platforms. There are no guarantees that   
these products will be embraced by the open source community such that          
programmers will contribute sufficient                                          

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resources for their development. If the open source community does not embrace  
products that Caldera views as integral to providing eBusiness solutions,       
Caldera will be required to devote significant resources to develop these       
products on its own.                                                            

The sales cycle for Caldera's products is long and Caldera may incur substantial
non-recoverable expenses; Caldera devotes significant resources to sales that   
may not occur when anticipated or at all                                        

  The length of time between initial contact with a potential customer and
sale of a product, or Caldera's sales cycle, outside the retail channel is      
typically complex and lengthy, lasting from three to nine months. These direct  
sales also represent Caldera's largest orders. Therefore, Caldera's revenue for 
a period is likely to be affected by the timing of larger orders, which makes   
the related revenue difficult to predict. Caldera's revenue for a quarter could 
be reduced if large orders forecasted for a certain quarter are delayed or are  
not realized. The cycle factors that could delay or defer an order include:     

- time needed for technical evaluations of our software by customers; 

- customer budget restrictions;                                       

- customer internal review and testing procedures; and                

 - engineering work needed to integrate our software with the customer's
systems.                                                          

Because Caldera's products have relatively short life cycles, Caldera must      
develop and introduce new products to sustain its level of sales                

   Caldera's software products have a limited life cycle and it is difficult
to estimate when they will become obsolete. If Caldera does not develop and     
introduce new products before its existing products have completed their life   
cycles, Caldera would not be able to sustain its level of sales. In addition, to
succeed, many customers must adopt Caldera's new products early in the product's
life cycle. Therefore, if Caldera does not attract sufficient customers early in
a product's life, it may not realize the amount of revenue that Caldera         
anticipated for the product. Caldera cannot be sure that it will continue to be 
successful in marketing its key products.                                       

Caldera relies on independent developers in the open source community, such as  
Linus Torvalds, in order to release upgrades of its Linux-based products        

    Many of the components of Caldera's software products, including the Linux
kernel, the core of the Linux operating system, are developed by independent    
developers in the open source community and are available for inclusion in      
Caldera's products without cost. Linus Torvalds, the original developer of the  
Linux kernel, and a small group of independent engineers have in the past       
developed and upgraded the Linux kernel. Neither Mr. Torvalds nor any           
significant contributor to the Linux kernel is an employee of Caldera, and none 
of these individuals is required to further update the Linux kernel. If these   
independent developers and others in the open source community do not further   
develop the Linux kernel and other open source software included in Caldera's   
products on a timely basis, or at all, Caldera's ability to enhance its product 
offerings will suffer. As a consequence, Caldera will be forced to rely to a    
greater extent on its own development efforts or license commercial software    
products as replacements, which would increase its expenses and delay           
enhancements to its products. For example, in the past, Caldera has sometimes   
been unable to upgrade all open source components of a product in connection    
with a proposed release because enhancements had not yet been made by these     
independent developers. Any failure on the part of the kernel developers to     
further develop and enhance the kernel could also stifle the development of     
additional Linux applications.                                                  

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Caldera's reliance on independent third parties who develop most of the software
included in its Linux products could result in delays or unreliable products and
damage to Caldera's reputation                                                  

Caldera's products consist of many different software components and  
applications, most of which are developed by independent third parties over whom
Caldera has limited or no control. While Caldera uses rigid engineering         
standards in testing the products or applications that Caldera integrates in its
products, Caldera cannot guarantee that it has selected or will select in the   
future the most reliable components available in the market or that it will     
successfully integrate the many components of its products. In addition, if any 
of these third-party products are not reliable or available, Caldera may have to
develop them internally, which would significantly increase its development     
expenses and delay the time to market. Caldera's customers could be dissatisfied
if any of these products fail to work as designed or if adequate support is not 
provided, which could damage its reputation and lead to potential litigation.   

If the market for Linux business solutions does not grow as Caldera anticipates,
Caldera may not be able to continue its business plan and grow its business     

   Caldera's strategy for marketing Linux solutions to businesses depends in
part upon its belief that many businesses will follow a trend away from the use 
of networked computers linked by centralized servers and move toward the use of 
distributed applications through thin appliance servers, or specialized servers,
internet access devices and application service providers. Caldera is also      
relying on electronic solution providers making these technologies available on 
Linux and on Linux then becoming a desirable operating system under these       
circumstances. Caldera also plans to market its Linux products for use on these 
specialized servers and internet access devices, which Caldera believes will    
become widely used for eBusiness. However, if businesses, which at present favor
Microsoft and other non-Linux operating systems, do not adopt these trends in   
the near future, or if Linux is not viewed as a desirable operating system in   
connection with these trends, a significant market for our products may not     
develop. Factors that may keep businesses from adopting these trends include:   

- costs of installing and implementing new hardware devices;          

- costs of porting legacy systems into new platforms;                 

- security concerns regarding manipulation of data through application
service providers;                                                

- limited adoption of Linux among businesses generally;               

- previous significant investments in competing systems;              

- lack of adequate Linux-trained professionals and support services;  

- lack of standards among Linux products and applications; and        

    - lack of acceptance of the internet as a medium for distributing business
applications.                                                     

  Even if these trends toward distributed applications are adopted, if the
development of Linux products and Linux applications is not sufficient to meet  
the needs of eBusiness, a significant market for Linux business solutions such  
as Caldera's may not materialize.                                               

Caldera could be prevented from selling or developing its products if the GNU   
general public license and similar licenses under which its products are        
developed and licensed are not enforceable                                      

  The Linux kernel and certain other components of Caldera's products have
been developed and licensed under the GNU General Public License and similar    
licenses. These licenses state that any program licensed under them may be      
liberally copied, used, modified and distributed freely, so long as all         
modifications are also freely made available and licensed under the same        
conditions. Caldera knows of no instance in which a party has challenged the    
validity of these licenses or in which these licenses have been interpreted in a
legal proceeding. To date, all compliance with these licenses has been          
voluntary. It is possible that a court would hold one or more of these licenses 
to be unenforceable in the event that                                           

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someone were to file a claim asserting proprietary rights in a program developed
and distributed under them. Any ruling by a court that these licenses are not   
enforceable, or that Linux operating systems, or significant portions of them,  
may not be liberally copied, modified or distributed freely, would have the     
effect of preventing Caldera from selling or developing its products, unless    
Caldera is able to negotiate a license to use the software or replace the       
affected portions. These licenses could be expensive, which could impair        
Caldera's ability to price its products competitively.                          

Caldera is vulnerable to claims that its products infringe third-party          
intellectual property rights, particularly because its products are comprised of
many distinct software components developed by thousands of independent parties 

Caldera may be exposed to future litigation based on claims that its  
products infringe the intellectual property rights of others. This risk is      
exacerbated by the fact that most of the code in its products is developed by   
independent parties over whom Caldera exercises no supervision or control and   
who, themselves, might not have the same financial resources as Caldera to pay  
damages to a successful litigant. Claims of infringement could require Caldera  
to re-engineer its products or seek to obtain licenses from third parties in    
order to continue offering its products. In addition, an adverse legal decision 
affecting Caldera's intellectual property, or the use of significant resources  
to defend against this type of claim, could place a significant strain on       
Caldera's financial resources and harm its reputation.                          

Failure to protect Caldera's intellectual property rights adequately would      
result in significant harm to its business                                      

   While much of the code for Caldera's products is open source, its success
depends significantly on Caldera's ability to protect its trademarks, trade     
secrets and certain proprietary technology contained in its products. Caldera   
relies on a combination of copyright and trademark laws, and on trade secrets   
and confidentiality provisions and other contractual provisions to protect its  
proprietary rights. These measures afford only limited protection. Some         
trademarks that have been registered in the United States have been licensed to 
Caldera, and Caldera has other trademark applications pending in the United     
States. Effective trademark protection may not be available in every country in 
which Caldera intends to offer its products and services. Caldera's means of    
protecting its proprietary rights in the United States or abroad may not be     
adequate and competitors may independently develop similar technologies.        
Caldera's future success will depend in part on its ability to protect its      
proprietary rights. Despite Caldera's efforts to protect its proprietary rights 
and technologies, unauthorized parties may attempt to copy aspects of Caldera's 
products or to obtain and use trade secrets or other information that Caldera   
regards as proprietary. Legal proceedings to enforce Caldera's intellectual     
property rights could be burdensome and expensive and could involve a high      
degree of uncertainty. These legal proceedings may also divert management's     
attention from growing Caldera's business. In addition, the laws of some foreign
countries do not protect its proprietary rights as fully as do the laws of the  
United States. If Caldera does not enforce and protect Caldera's intellectual   
property, its business may suffer substantial harm.                             

Caldera may face potential liability for material published or made available on
its web site and other sites linked to it                                       

    Caldera may be sued for defamation, civil rights infringement, negligence,
copyright or trademark infringement, personal injury, product liability or other
legal claims relating to information that is published or made available on its 
web site and the other sites linked to it. These types of claims have been      
brought, sometimes successfully, against providers of online services in the    
past. Caldera could also be sued for the content that is accessible from its web
site and through links to other internet sites or through content and materials 
that may be posted by members in chat rooms or on bulletin boards. Caldera's    
insurance does not specifically provide for coverage of these types of claims   
and therefore may not adequately protect it against these types of claims. In   
addition, Caldera could incur significant costs in investigating and defending  
such claims, even if Caldera ultimately is not liable. If any of these events   
occur, its revenues and the value of your investment could be materially        
adversely affected.                                                             

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Caldera must achieve rapid market penetration of its products in order to       
compete successfully                                                            

 Because the Linux and eBusiness markets are new and emerging, companies
that are early in providing products and solutions for these markets will have  
an advantage in building awareness and consumer loyalty. Therefore, in order for
Caldera to successfully market its products on a wide scale, Caldera must       
rapidly achieve market penetration. For example, if Caldera is unable to        
demonstrate the viability of its products through rapid growth:                 

   - software developers will be less likely to develop applications for its
products;                                                         

- Caldera will be unable to achieve economies of scale;               

    - Caldera will be less able to negotiate favorable terms with distributors
and other partners; and                                           

- customers will be less likely to devote resources to purchasing and 
     implementing its products if they are not seen as an industry standard.

     Caldera may lack the economic and managerial resources necessary to promote
this growth. Also, the fact that Caldera relies almost entirely on the success  
of a few principal products affects its ability to penetrate diversified        
markets. In addition, while Caldera believes its process of self-hosting results
in superior products, it requires time and resources that may delay new product 
releases and upgrades. These delays could affect its ability to take advantage  
of market opportunities on a timely basis.                                      

To achieve the type of broad recognition necessary to succeed, Caldera will need
to expend significant financial and management resources; There is no guarantee 
that these expenditures will enable Caldera to receive the recognition necessary
to its success                                                                  

     Caldera believes that broad recognition and a favorable audience perception
of the Caldera brand will be essential to its success. If Caldera's brand does  
not achieve broad recognition as the leading provider of Linux solutions for    
eBusiness, our success will be limited. Caldera intends to build brand          
recognition through advertising its products and services. During the fiscal    
year ended October 31, 1999, Caldera spent approximately $1.2 million for       
advertising. During the fiscal year ended October 31, 2000, Caldera spent       
approximately $1.5 million for advertising, and during the quarter ended January
31, 2001 Caldera spent approximately $907,000 for advertising. Caldera expects  
to increase its advertising expenses in future periods as Caldera builds the    
Caldera brand and awareness of Caldera's products and services. In addition,    
Caldera provides education and training to build brand recognition, which may   
not be successful if Caldera is unable to generate wide-acceptance of these     
services. Caldera may lack the resources necessary to accomplish these          
initiatives. Even if the resources are available, Caldera cannot be certain that
its brand enhancement strategy will deliver the brand recognition and favorable 
audience perception that Caldera seeks. If Caldera's strategy is unsuccessful,  
these expenses may never be recovered and Caldera may be unable to increase     
future revenues. Even if Caldera achieves greater recognition of its brand,     
competitors with greater resources or a more recognizable brand could reduce its
market share of the emerging Linux market, as well as the broader market for the
provision of eBusiness solutions.                                               

Caldera's strategy to provide solutions for eBusiness depends upon its ability  
to successfully introduce products tailored for eBusiness and there is no       
assurance that these products will gain commercial acceptance                   

     To date, practically all of its sales revenue has come from retail sales of
OpenLinux, which is designed to assist the first-time Linux user who may be     
familiar with a Windows, desktop environment. However, Caldera's business model 
is targeted toward using Linux solutions to facilitate eBusiness. In order for  
our strategy of providing Linux solutions for eBusiness to be successful,       
Caldera must provide products that meet the needs of solution providers and     
their eBusiness customers. In January 2000, Caldera released its server product,
OpenLinux eServer. In January 2000, Caldera released Volution, its second       
eBusiness product. These new products, which are Caldera's primary eBusiness    
products, may not be adopted by solution providers and their customers for any  
number of reasons, including lack of customer awareness of Caldera and its      
products, malfunction of the products and failure to meet needs of eBusiness. If
Caldera's eBusiness products are not successful, Caldera will fail to execute   
its strategy and its sales may not grow.                                        

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Because software programs frequently contain errors or defects, Caldera could   
lose significant revenue if its software programs do not perform as expected    

 Software programs frequently contain errors or defects, especially when
first introduced or when new versions are released. Caldera could, in the       
future, lose revenue as a result of errors or defects in its software products. 
Caldera cannot assure you that errors will not be found in new products or      
releases. Although Caldera has both product liability and errors and omissions  
insurance, Caldera might incur losses in excess of the dollar limits or beyond  
the scope of coverage of its policies. While Caldera tests its products prior to
release, the fact that most of the components of its software offerings are     
developed by independent parties over whom Caldera exercises no supervision or  
control makes it particularly difficult to identify and remedy any errors or    
defects that could exist. Any errors could result in loss of revenue, or delay  
in market introduction or acceptance, diversion of development resources, damage
to its reputation or increased service costs.                                   

Caldera's current and potential customers may find it difficult to hire and     
train qualified employees to handle installation and implementation of its      
products, which could negatively affect sales of its products to new customers  
and lead to dissatisfaction among current customers                             

    There are limited numbers of individuals that are trained and qualified to
manage Linux systems, including OpenLinux and our other products. End users and 
Caldera's distribution partners may lack the resources to hire or train such    
qualified personnel to install and implement Caldera's products, which could    
lead to dissatisfaction with Caldera's products among end users and deter       
potential end users from purchasing Caldera's product.                          

The growth of Caldera's business will be diminished if the internet is not      
accepted as a medium for commerce and business networking applications          

   An important part of Caldera's business strategy is to develop and market
its products for the support of secure business networks hosted on the internet.
In addition, Caldera plans to sell its products and provide a significant amount
of technical support and education via its web site. If the internet is not     
accepted as a medium for commerce and business networking applications, demand  
for its products and services will be diminished. For example, many companies   
whose business model was to conduct commerce over the internet went out of      
business in 2000 and the first quarter of 2001, in many cases due to a failure  
to generate anticipated revenues and an inability to raise additional capital to
fund operations. A number of factors may inhibit internet usage, including:     

- inadequate network infrastructure;                                  

- lack of knowledge and training on internet use and benefits;        

- consumer concerns for internet privacy and security;                

- lack of availability of cost-effective, high-speed service;         

- interruptions in internet commerce caused by unauthorized users;    

- changes in government regulation relating to the internet; and      

- internet taxation.                                                  

    If internet usage grows, the infrastructure may not be able to support the
demands placed on it by that growth and its performance and reliability may     
decline. Web sites have experienced interruptions as a result of delays or      
outages throughout the internet infrastructure. If these interruptions continue,
internet usage may decline.                                                     

Future sales of Caldera's common stock may negatively affect its stock price    

 The market price of Caldera's common stock could decline as a result of
sales of a large number of shares of Caldera common stock in the market in the  
future, or the perception that such sales could occur. Caldera has a large      
number of shares of common stock outstanding and available for resale beginning 
at various points in time in the future. These sales also might make it more    
difficult for Caldera to sell equity securities in the future at a time and at a
price that it deems appropriate. The shares of Caldera common                   

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stock currently outstanding will become eligible for sale without registration  
pursuant to Rule 144 under the Securities Act, subject to certain conditions of 
Rule 144, including the shares issued to SCO in the combination. Certain holders
of our common stock also have certain demand and piggyback registration rights  
enabling them to register their shares under the Securities Act for sale.       

RISKS RELATING TO SCO AFTER THE COMBINATION                                     

Following the combination, the shares of New Caldera stock will become a        
significant asset of SCO's, the value of which may not be reflected, in whole or
in part, in SCO's trading price                                                 

Because SCO has no current intention of distributing the shares of New
Caldera common stock that it receives as a result of the combination directly to
its shareholders, SCO shareholders who do not otherwise own shares of New       
Caldera may not directly benefit from the combination. Additionally, the resale 
of SCO's shares of New Caldera common stock will be subject to certain          
restrictions including minimum trading volume requirements for New Caldera      
common stock. Therefore, the market value of SCO common stock following the     
combination, may not, in whole or in part reflect the value of New Caldera      
common stock held by SCO. Conversely, by virtue of SCO's ownership of New       
Caldera common stock following the combination, the value of SCO common stock   
may decline as much as a potential decline in the trading price of New Caldera  
or disproportionately so. Therefore, a shareholder of SCO should study the risks
that pertain specifically to Caldera and New Caldera in addition to the risks   
that SCO faces.                                                                 

The proposed sale by SCO of the server and professional services groups, which  
traditionally comprise a large percentage of SCO's revenues, may result in      
significant harm to SCO's business                                              

  Historically, revenues generated by the server business and professional
services have been a significant portion of SCO's total revenues. The sale of   
the server and professional services groups, while also significantly reducing  
headcount and operating expenses, will lead to a dramatic decline in SCO's      
revenues. For the year ended September 30, 2000, revenues generated by these two
divisions were 93.8% of SCO's total revenues. For fiscal years 1999 and 1998,   
revenues generated by these 2 divisions were 95.7% and 94.7% of total revenues, 
respectively.                                                                   

     Subsequent to the asset sale, Tarantella, Inc., as SCO will then be called,
will derive revenue from sales of its Tarantella products, including the CID    
products. Tarantella, Inc. may never generate combined revenues equal to those  
revenues previously generated by the assets sold to Caldera.                    

  Pursuant to the terms of the reorganization agreement, if the OpenServer
line of business of the server and professional services groups generates       
revenues in excess of specified thresholds during the three-year period         
following the completion of the combination, SCO will have earn-out rights      
entitling it to receive 45% of these excess revenues. Since SCO will no longer  
control the operations and future business direction of its OpenServer line of  
business, it is not possible to determine if the specified thresholds can or    
will be met. Consequently, SCO may never receive any portion of the earn-out    
rights.                                                                         

Certain of SCO's revenue sources have declined dramatically during fiscal year  
2000 and will likely continue to decline                                        

    SCO experienced declines in its CID products during fiscal 2000. In fiscal
1999, CID revenues were $7.8 million; for the first 9 months of 2000, CID       
revenues were only $3.9 million. CID (client integration devices) products are  
legacy products, which were the precursor to the new Tarantella technology. The 
CID product line has not been emphasized by SCO and revenues have, therefore,   
been declining as anticipated. However, it is possible that CID product sales   
will decline more quickly than expected and that the Company will, therefore,   
realize lower revenue, which yields relatively high profit margins, than        
anticipated. Furthermore, while the Tarantella product line may offset some of  
the decline, there can be no assurance that the increase in Tarantella revenues 
will compensate for such declines.                                              

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 

Some of the statements under "Summary," "Risk Factors," "Caldera      
Management's Discussion and Analysis of Financial Condition and Results of      
Operations," "Server and Professional Services Groups Management's Discussion   
and Analysis of Financial Condition and Results of Operations," "Business of    
Caldera," "Business of New Caldera" and elsewhere in this joint proxy           
statement/prospectus constitute forward-looking statements. In some cases, you  
can identify forward-looking statements by terms such as "may," "might,"        
"could," "will," "should," "expect," "plan," "intend," "project," "forecast,"   
"anticipate," "believe," "estimate," "predict," "foreseeable," "potential,"     
"continue" or the negative of these terms or other comparable terminology. The  
forward-looking statements contained in this prospectus involve known and       
unknown risks, uncertainties, and other factors that may cause our or our       
industry's actual results, level of activity, performance or achievements to be 
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these statements. These factors include,   
among others, those listed under "Risk Factors" and elsewhere in this           
prospectus.                                                                     

    Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of        
activity, performance or achievements. You should not place undue reliance on   
these forward-looking statements.                                               

SCO IS INCORPORATING ITS SEC FILINGS
IN THIS DOCUMENT BY REFERENCE 

The SEC allows SCO to "incorporate by reference" information into this
joint proxy statement/prospectus, which means that SCO can disclose important   
information to you by referring you to another document filed separately with   
the SEC. The information incorporated by reference is deemed to be part of this 
joint proxy statement/prospectus, except for any information superseded by      
information in this joint proxy statement/prospectus. This joint proxy          
statement/prospectus incorporates by reference the documents set forth below    
that SCO has previously filed with the SEC. These documents contain important   
information about SCO and its finances that you should read.                    

                                                        [Enlarge/Download Table]

SCO SEC FILINGS                                                        PERIOD               
---------------                                                        ------               
                                                                                            
Quarterly Report on Form 10-Q.......................... Three months ended December 31, 2000
Annual Report on Form 10-K/A........................... Fiscal year ended September 30, 2000
Registration Statement on Form 8-A/A................... Filed on March 3, 1999              
Registration Statement on Form 8-A..................... Filed on April 1, 1993              

  SCO is also incorporating by reference additional documents that SCO may
file with the SEC between the date of this joint proxy statement/prospectus and 
the date of the special meeting of SCO shareholders.                            

    Documents incorporated by reference are available from SCO without charge,
excluding all exhibits unless SCO has specifically incorporated by reference an 
exhibit in this joint proxy statement/prospectus. Shareholders may obtain       
documents incorporated by reference in this joint proxy statement/prospectus    
from SCO by requesting them in writing or by telephone at the following address:

THE SANTA CRUZ OPERATION, INC.
ATTENTION: LYNN SCHROEDER 
425 ENCINAL STREET
SANTA CRUZ, CALIFORNIA 95061
TELEPHONE: (831) 425-7222 

    If you would like to request documents from SCO, please do so by April 27,
2001, to receive them before the SCO special meeting.                           

You should rely only on the information contained or incorporated by  
reference in this joint proxy statement/prospectus to vote on the reorganization
agreement and the combination Caldera and SCO have not authorized anyone to     
provide you with information that is different from what is contained in this   
joint proxy statement/prospectus. This joint proxy statement/prospectus is dated
March 26, 2001. You should not assume that the information contained in this    
joint proxy statement/prospectus is accurate as of any date other than March 26,
2001, and the mailing of the joint proxy statement/prospectus to Caldera        
stockholders and SCO shareholders should not create any implication to the      
contrary.                                                                       

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WHERE YOU CAN FIND MORE INFORMATION 

Caldera and SCO each file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission.   
You may read and copy any reports, statements or other information Caldera or   
SCO file at the SEC's public reference rooms at Room 1024, 450 Fifth Street,    
N.W., Washington, D.C. 20549, as well as at the SEC's regional offices at 500   
West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade      
Center, Suite 1300, New York, New York 10048. Copies of these materials may also
be obtained from the SEC at prescribed rates by writing to the Public Reference 
Section of the SEC, 450 Fifth Street, N.W., Washington D.C. 20549. Our filings  
are also available to the public from commercial document retrieval services and
at the web site maintained by the SEC at http://www.sec.gov.                    

    New Caldera has filed a registration statement on Form S-4 with respect to
the common stock to be issued to holders of Caldera common stock. This document 
constitutes the prospectus of New Caldera that is filed as part of the          
registration statement. Other parts of the registration statement are omitted   
from this document in accordance with the rules and regulations of the SEC.     
Copies of the registration statement, including exhibits, may be inspected,     
without charge, at the offices of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549, and copies may be obtained from the SEC at prescribed rates.        

    You should rely only on the information contained in this document to vote
on the proposals. We have not authorized anyone to provide you with information 
that is different from what is contained in this document.                      

     Caldera has supplied all information contained in this document relating to
Caldera and New Caldera. SCO has supplied all information relating to the server
and professional services groups.                                               

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THE CALDERA ANNUAL MEETING

   This joint proxy statement/prospectus is furnished in connection with the
solicitation of proxies from holders of Caldera Systems, Inc. common stock by   
the Caldera Systems, Inc. board of directors for use at the annual meeting of   
Caldera Systems, Inc. stockholders.                                             

WHEN AND WHERE THE MEETING WILL BE HELD                                         

 We will hold an annual meeting of Caldera Systems, Inc. stockholders at
Caldera's offices at 240 West Center Street, Orem, Utah on April 27, 2001 at    
10:00 a.m., Mountain time, to consider and vote on the proposals set forth      
below.                                                                          

WHAT WILL BE VOTED UPON                                                         

At the Caldera meeting, you will be asked to approve the following    
proposals:                                                                      

  - To combine Caldera with the server and professional services groups of
    The Santa Cruz Operation, Inc. In connection with the combination, SCO
  will receive 16 million shares of Caldera International, Inc. common
   stock (representing approximately 25.3% of Caldera International on a
fully diluted basis), $23 million in cash (of which $7 million was
advanced to SCO on January 26, 2001) and a non-interest bearing   
promissory note in the amount of $8 million that will be paid in  
    quarterly installments of $2 million beginning the fifth quarter after
the combination is completed. SCO employees who join Caldera      
      International will receive options to purchase approximately 1.8 million
shares of common stock of Caldera International (representing     
       approximately 2.8% of Caldera International on a fully diluted basis). In
the combination, Caldera will become a subsidiary of a new parent 
company, which we call New Caldera, and SCO will contribute to New
Caldera the assets of its server and professional services groups.

     - To elect six (6) directors to serve for one-year terms ending in the year
2002 or until successors are duly elected and qualified.          

    - To amend our 1999 Omnibus Stock Incentive Plan to increase the number of
      shares reserved for issuance from 4,105,238 to 10,905,238 and to provide
for an automated director option grant program.                   

    - To amend our 2000 Employee Stock Purchase Plan to increase the number of
shares reserved for issuance from 500,000 to 2,000,000.           

- To amend our Certificate of Incorporation to increase the authorized
number of shares of common stock from 75,000,000 to 175,000,000.  

     - To ratify the appointment of Arthur Andersen LLP as Caldera's independent
auditors for the fiscal year ending October 31, 2001.             

  - To transact such other business as may properly come before the annual
meeting or any adjournment or postponement thereof.               

OTHER MATTERS 

    Caldera knows of no other matters that will be presented for consideration
at the annual meeting. If any other matters properly come before the annual     
meeting, it is the intention of the persons named in the enclosed form of Proxy 
to vote the shares they represent as the board of directors may recommend.      
Discretionary authority with respect to such other matters is granted by the    
execution of the enclosed Proxy.                                                

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ONLY STOCKHOLDERS ON MARCH 5, 2001 WILL BE ENTITLED TO VOTE                     

You will be entitled to vote at the Caldera meeting only if you are a 
holder of record of shares of Caldera common stock at the close of business on  
March 5, 2001, the Caldera record date. On that date, there were 39,693,805     
shares of Caldera common stock outstanding and entitled to vote. These shares   
were held of record by approximately 324 stockholders. No shares of Caldera's   
preferred stock were outstanding.                                               

    Each Caldera stockholder is entitled to one vote for each share of Caldera
common stock held on the Caldera record date for each matter to be acted upon in
the Caldera meeting. Stockholders may not cumulate votes in the election of     
directors.                                                                      

VOTES REQUIRED TO APPROVE THE PROPOSALS                                         

    The approval and adoption of each of the proposals described above, except
as to the election of directors which requires a plurality of the votes cast,   
will require the affirmative vote of a majority of the Caldera stockholders as  
follows:                                                                        

                                                                [Download Table]

                                              REQUIRES THE AFFIRMATIVE      
PROPOSAL                                     VOTE OF A MAJORITY OF THE:     
--------                                ------------------------------------
                                                                            
The combination                         Outstanding common stock            
The amendments to the Caldera Stock     Outstanding common stock in person  
Incentive Plan and Employee Stock       or represented in proxy at the      
Purchase Plan                           meeting entitled to vote            
The amendment to the Caldera            Outstanding common stock            
certificate of incorporation                                                
Appointment of auditors                 Outstanding common stock in person  
                                        or represented in proxy at the      
                                        meeting entitled to vote            

SHARES HELD BY DIRECTORS, EXECUTIVE OFFICERS AND THEIR AFFILIATES               

    On February 1, 2001, directors and executive officers of Caldera and their
affiliates as a group held 29.8 million shares of Caldera common stock, or      
approximately 75.1% of the outstanding shares of Caldera common stock. The      
Canopy Group, Inc. and MTI Technology Corporation, affiliates of Caldera, have  
executed voting agreements with SCO, under which they have agreed to vote all of
their shares in favor of the combination.                                       

VOTES NEEDED FOR A QUORUM                                                       

 The required quorum for the transaction of business at the meeting is a
majority of the shares of Caldera common stock outstanding on the Caldera record
date.                                                                           

EFFECT OF ABSTENTIONS AND BROKER NON-VOTES                                      

     Abstentions and broker non-votes will be included in determining the number
of shares present and voting at the meeting. Abstentions will have the same     
effect as votes against all of the proposals.                                   

For the proposals relating to the combination and the amendment to the
Caldera certificate of incorporation, broker non-votes will have the same effect
as votes cast against the proposals.                                            

  For each of the proposals relating to the Caldera equity incentive plans
and appointment of auditors, broker non-votes will have no effect.              

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CALDERA WILL PAY THE EXPENSES OF PROXY SOLICITATION                             

Caldera will bear the entire cost of solicitation, including the      
preparation, assembly, printing and mailing of this joint proxy                 
statement/prospectus, the Proxy and any additional solicitation materials       
furnished to its stockholders. Copies of solicitation materials will be         
furnished to brokerage houses, fiduciaries and custodians holding shares in     
their names that are beneficially owned by others so that they may forward this 
solicitation material to such beneficial owners. In addition, Caldera may       
reimburse such persons for their costs in forwarding the solicitation materials 
to such beneficial owners. The original solicitation of proxies by mail may be  
supplemented by a solicitation by telephone, telegram or other means by         
directors, officers or employees of Caldera. No additional compensation will be 
paid to these individuals for any such services. Except as described above,     
Caldera does not presently intend to solicit proxies other than by mail.        

Following the original mailing of the proxies and other soliciting    
materials, Caldera will request brokers, custodians, nominees and other record  
holders of Caldera common stock to forward copies of the proxy and other        
soliciting materials to persons for whom they hold shares of Caldera common     
stock and to request authority for the exercise of proxies. In these cases,     
Caldera, upon the request of the record holders, will reimburse the holders for 
their reasonable expenses.                                                      

HOW PROXIES WILL BE VOTED                                                       

    All properly executed proxies received by Caldera prior to the vote at the
meeting that are not revoked will be voted at the meeting according to the      
instructions indicated on the proxies. If no direction is indicated, they will  
be voted to approve the election of the directors proposed by the Board, unless 
the authority to vote for the election of such directors is withheld, and to    
approve each of the other proposals.                                            

HOW YOU CAN REVOKE YOUR PROXY                                                   

A Caldera stockholder who has given a proxy may revoke it at any time 
before it is exercised at the meeting, by:                                      

     - delivering to the Secretary of Caldera by any means, including facsimile,
a written notice, bearing a date later than the date of the proxy,
stating that the proxy is revoked;                                

     - signing and so delivering a proxy relating to the same shares and bearing
a later date prior to the vote at the meeting; or                 

  - attending the meeting and voting in person, although attendance at the
meeting will not, by itself, revoke a proxy.                      

  Please note, that if your shares are held of record by a broker, bank or
other nominee and you wish to vote at the meeting, you must bring to the Caldera
meeting a letter from the broker, bank or other nominee confirming your         
ownership of the shares.                                                        

YOU DO NOT HAVE DISSENTERS' OR APPRAISAL RIGHTS                                 

     You are not entitled to dissenters' rights or appraisal rights with respect
to any proposals to be considered at the Caldera meeting.                       

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YOU MUST ACT BY A SPECIFIED DATE TO PRESENT A STOCKHOLDER PROPOSAL AT THE NEXT  
CALDERA ANNUAL MEETING                                                          

    Stockholders are entitled to present proposals for action at a forthcoming
annual meeting if they comply with the requirements of the proxy rules          
established by the Securities and Exchange Commission. In order for submitted   
proposals by New Caldera stockholders to be considered for inclusion in the     
proxy statement for the next annual meeting of New Caldera stockholders if the  
combination is approved, the proposals must be received a reasonable time prior 
to the printing and mailing by New Caldera of its proxy materials for such      
meeting. If the combination is not approved, November 26, 2001 will be the      
deadline for the submission of proposals for the next Caldera annual meeting.   

     If a stockholder intends to submit a proposal at the next annual meeting of
New Caldera stockholders which is not eligible for inclusion in the proxy       
statement relating to that meeting, the stockholder must give notice to New     
Caldera in accordance with the requirements set forth in the Securities Exchange
Act no later than a reasonable time prior to the mailing by New Caldera of its  
proxy materials for such meeting. If the combination is not approved, February  
8, 2002 will be the deadline for giving notice to Caldera of the intent to      
submit a proposal at the next Caldera annual meeting. If a stockholder fails to 
comply with this notice provision, the proxy holders will be allowed to use     
their discretionary voting authority when and if the proposal is raised at that 
meeting, or the annual meeting of New Caldera stockholders if the combination is
approved.                                                                       

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THE SCO MEETING 

WHEN AND WHERE THE MEETING WILL BE HELD                                         

  A special meeting of the shareholders of SCO will be held at 10:00 a.m.,
local time, on May 4, 2001, at 425 Encinal Street, Santa Cruz, California.      

WHAT WILL BE VOTED UPON                                                         

   At the SCO meeting, you will be asked to approve the following proposals:

- To approve and adopt the agreement and plan of reorganization, dated
     August 1, 2000 and amended on September 13, 2000, December 12, 2000 and
    February 9, 2001, by and among The Santa Cruz Operation, Inc., Caldera
Systems, Inc., and Caldera International, Inc.                    

    - To approve an amendment to SCO's articles of incorporation to change our
corporate name to "Tarantella, Inc."                              

   - To transact such other business as may properly come before the special
meeting or any adjournment or postponement thereof.               

RECORD DATE AND OUTSTANDING SHARES                                              

   SCO's board of directors has fixed the close of business on March 8, 2001
as the record date for the special meeting. You will be entitled to vote at the 
SCO special meeting only if you are a holder of record of shares of SCO common  
stock at the close of business on the SCO record date. On that date, there were 
39,875,042 shares of SCO common stock outstanding and entitled to vote. These   
shares were held of record by approximately 365 shareholders. SCO has been      
informed that there are in excess of 20,000 beneficial owners.                  

VOTING RIGHTS AND VOTES REQUIRED TO APPROVE THE PROPOSALS                       

   Each SCO shareholder is entitled to one vote for each share of SCO common
stock held on the SCO record date for each matter to be acted upon in the SCO   
meeting.                                                                        

The approval and adoption of each proposal by the SCO shareholders    
described above will require the affirmative vote of a majority of the          
outstanding common stock.                                                       

SHARES HELD BY DIRECTORS, EXECUTIVE OFFICERS AND THEIR AFFILIATES               

   As of February 1, 2001, directors and executive officers of SCO and their
affiliates as a group beneficially owned approximately 16.33% of the outstanding
shares of SCO common stock. Doug Michels, Chief Executive Officer and President 
of SCO, has executed a voting agreement with Caldera, under which he has agreed 
to vote all of his shares in favor of approving and adopting the reorganization 
agreement.                                                                      

QUORUM, ABSTENTIONS AND BROKER NON-VOTES                                        

 The required quorum for the transaction of business at the meeting is a
majority of the shares of SCO common stock issued and outstanding on the SCO    
record date.                                                                    

  Abstentions will be included in determining the number of shares present
and voting at the meeting and will have the same effect as votes against all of 
the proposals.                                                                  

    While there is no definitive statutory or case law authority in California
as to the proper treatment of abstentions in the counting of votes with respect 
to a proposal, SCO believes that abstentions should be counted for purposes of  
determining both (i) the presence or absence of a quorum for the transaction of 
business and (ii) the total number of votes cast with respect to the proposal.  
In the absence of controlling                                                   

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precedent to the contrary, we intend to treat abstentions in this manner.       
Accordingly, abstentions will have the same effect as a vote against the        
proposal. Broker non-votes, shares held by brokers that are present but not     
voted because the brokers were prohibited from exercising discretionary         
authority ("broker non-votes"), will be counted for purposes of determining the 
presence or absence of a quorum for the transaction of business, but will not be
counted for purposes of determining the number of votes cast with respect to the
proposal.                                                                       

SOLICITATION OF PROXIES                                                         

     SCO will pay the expenses of soliciting proxies to be voted at the meeting.
Following the original mailing of the proxies and other soliciting materials,   
SCO and its agents also may solicit proxies by mail, telephone, telegraph,      
e-mail or in person. SCO has retained a proxy solicitation firm, Morrow &       
Company, Inc., to aid it in the solicitation process. SCO will pay that firm a  
fee equal to approximately $8,500. Following the original mailing of the proxies
and other soliciting materials, SCO will request brokers, custodians, nominees  
and other record holders of SCO common stock to forward copies of the proxy and 
other soliciting materials to persons for whom they hold shares of SCO common   
stock and to request authority for the exercise of proxies. In these cases, SCO,
upon the request of the record holders, will reimburse the holders for their    
reasonable expenses. Proxies may also be solicited by certain of SCO's          
directors, officers and regular employees, without additional compensation,     
personally, by telephone or by e-mail.                                          

HOW PROXIES WILL BE VOTED                                                       

All properly executed proxies received by SCO prior to the vote at the
meeting that are not revoked will be voted at the meeting according to the      
instructions indicated on the proxies. If no direction is indicated, they will  
be voted to approve each of the proposals.                                      

HOW YOU CAN REVOKE YOUR PROXY                                                   

     A SCO shareholder who has given a proxy may revoke it at any time before it
is exercised at the meeting, by:                                                

   - delivering to the Secretary of SCO by any means, including facsimile, a
      written notice, bearing a date later than the date of the proxy, stating
that the proxy is revoked;                                        

     - signing and so delivering a proxy relating to the same shares and bearing
a later date prior to the vote at the meeting; or                 

  - attending the meeting and voting in person, although attendance at the
meeting will not, by itself, revoke a proxy.                      

  Please note, that if your shares are held of record by a broker, bank or
other nominee and you wish to vote at the meeting, you must bring to the SCO    
meeting a letter from the broker, bank or other nominee confirming your         
ownership of the shares.                                                        

DISSENTERS' RIGHTS                                                              

If the reorganization agreement is approved by SCO shareholders, SCO  
shareholders who elect to dissent from the approval and who follow the          
procedural requirements of Chapter 13 of the California Corporations Code may,  
under certain circumstances, be entitled to receive cash for their SCO common   
stock at their fair market value. A copy of Chapter 13 of the California        
Corporations Code is attached to this document as Appendix O.                   

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DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSAL                                    

SCO shareholders are entitled to present proposals for action at a    
forthcoming meeting if they comply with the requirements of the proxy rules     
established by the Securities and Exchange Commission. In order for submitted   
proposals by shareholders to be considered for inclusion in the proxy statement 
for the next annual meeting of shareholders, the proposals must be received in a
reasonable time before SCO begins to print and mail its proxy materials.        
Proposals of SCO shareholders that are intended to be presented for             
consideration at SCO's 2001 annual meeting of shareholders must have been       
received by SCO no later than September 23, 2000 in order that they may be      
considered for inclusion in the proxy statement and form of proxy relating to   
that meeting.                                                                   

     If a shareholder intends to submit a proposal at the 2001 annual meeting of
shareholders that is not eligible for inclusion in the proxy statement and      
proxy, the shareholder must have given notice to SCO in accordance with the     
requirements set forth in the Securities Exchange Act no later than December 7, 
2000. If a shareholder fails to comply with this notice provision, the proxy    
holders will be allowed to use their discretionary voting authority when and if 
the proposal is raised at that meeting.                                         

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THE COMBINATION 

   This section of the joint proxy statement/prospectus describes aspects of
the proposed combination that we consider important. While we believe that the  
subscription covers the material terms of the combination and related           
transactions, this summary may not contain all the information that is important
to Caldera stockholders and SCO shareholders. Stockholders and shareholders     
should read the reorganization agreement and the other documents we refer to    
carefully for a more complete understanding of the combination.                 

BACKGROUND OF THE COMBINATION                                                   

    The Linux and Unix industries are highly competitive. Since each company's
inception, Caldera and SCO have continually evaluated strategic relationships of
various forms with various third parties in their efforts to enhance their      
market position and grow their businesses in an increasingly competitive        
environment. Over time, representatives of Caldera and SCO became familiar with 
each others' products through informal contacts at industry trade shows and     
through interaction with various industry participants.                         

On March 23 and 24, 2000, Ransom Love, President and Chief Executive  
Officer of Caldera, met with Doug Michels, President and Chief Executive Officer
of SCO, to discuss a possible transaction between the two companies.            

    On April 21, 2000, Messrs. Love and Michels met again regarding pursuing a
relationship between Caldera and SCO.                                           

   On May 10, 2000, officers of Caldera met with Broadview International LLC
to discuss risks and opportunities concerning a potential transaction with SCO. 

   On May 15, 2000, SCO entered into a financial advisory services agreement
with Chase H&Q.                                                                 

On May 18, 2000, Caldera and SCO entered into a mutual non-disclosure 
agreement allowing for the exchange of non-public information.                  

   On May 23, 2000, officers of Caldera and representatives of Broadview met
with officers of SCO and representatives of Chase H&Q to discuss potential      
structure and synergies of a transaction.                                       

On June 5, 2000, representatives of Caldera and Broadview met with    
representatives of SCO and Chase H&Q to discuss how the business plans of the   
two companies might integrate and to develop cost and revenue models for the    
possible new entity.                                                            

     On June 6, 2000, Caldera retained Broadview International LLC to act as its
financial advisor in connection with a possible transaction between Caldera and 
SCO and signed an engagement letter.                                            

   On June 7, 2000, Caldera and Broadview proposed an acquisition to SCO and
Chase H&Q of SCO's open server business in return for a percentage ownership in 
the combined company, with a portion of future operating income from the open   
server business to go to SCO. Over the course of the following week, officers of
SCO and Caldera exchanged proposals for a potential transaction. On June 13,    
2000, the parties reached a tentative agreement in principle as to the structure
of the transaction.                                                             

     On June 14, 2000, the board of directors of SCO met to discuss the proposed
combination with Caldera. The SCO board authorized its officers to conduct due  
diligence, and to continue discussions and negotiations regarding the potential 
combination.                                                                    

  On June 16 and 19, 2000, the board of directors of Caldera met in person
and telephonically to discuss the proposed combination with SCO. The board of   
Caldera authorized officers of Caldera to conduct due diligence, continue       
discussions concerning the terms of the combination and negotiate the terms of  
the reorganization agreement.                                                   

     On June 23, 2000, representatives of Broadview and Chase H&Q met to discuss
possible no-shop language for both companies during the negotiation process.    

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On June 25, 2000, Caldera and SCO entered into a letter agreement     
concerning restrictions on public announcements by either party and restrictions
on negotiations by SCO with third parties regarding transactions relating to    
SCO's server division through July 26, 2000.                                    

 On June 28, 2000, counsel to Caldera distributed the first draft of the
reorganization agreement. Representatives of Caldera and SCO met to discuss the 
Asian and Latin American components of SCO's current business strategy.         

On June 29, 2000, officers of Caldera reviewed with officers of SCO   
business and financial information in connection with SCO's due diligence.      

    During July 2000, additional meetings and telephone conferences took place
between the marketing, communications and human resources teams from Caldera and
SCO for the purpose of due diligence and planning logistics of public and       
internal announcements in the event the parties reached agreement on the        
material terms of the proposed combination. The companies also discussed        
providing information regarding the combination of employees and customers if   
they reached an agreement regarding the contribution of SCO's server business to
the combined company.                                                           

On July 14, 2000, after conducting due diligence, Caldera proposed to 
re-structure certain terms of the proposed transaction. SCO rejected this       
proposal and sent a letter to Caldera purporting to unilaterally terminate the  
restrictions on negotiations by SCO contained in the June 26, 2000 letter       
agreement.                                                                      

   On July 19, 2000 and again on July 21, 2000, the SCO board met to discuss
the direction of the company and the proposed combination in light of recent    
events involving Caldera and SCO, and instructed management to report back with 
any further developments.                                                       

On July 23, 2000, officers of the two companies discussed renewing    
negotiations concerning the proposed combination.                               

   On July 25, 2000, Mr. Love met with Mr. Michels in Santa Cruz, California
and discussed the terms of and implementation of the combination. During this   
discussion, Mr. Michels suggested that Caldera and The Canopy Group, one of     
Caldera's major stockholders, loan up to an aggregate of $25 million to SCO for 
purposes of helping SCO pay restructuring and operating costs that would arise  
between signing of the reorganization agreement and the closing of the          
combination.                                                                    

On July 26, 2000, SCO management briefed the SCO board on the latest  
discussions with Caldera. The SCO board authorized the officers to continue     
negotiating the terms of the reorganization agreement and any ancillary         
agreements related to the combination.                                          

   From July 25, 2000 through July 28, 2000, officers of and counsel for the
two companies met in Palo Alto, California and Santa Cruz, California to        
negotiate and finalize the terms of the reorganization agreement, the voting    
agreements and related forms of agreements to be entered into at the closing of 
the combination. During these discussions, the companies also discussed the     
purchase by the combined company of the professional services division of SCO.  
Officers of the two companies settled on including the assets of the            
professional services division with the other assets of SCO to be sold to the   
combined entity pursuant to the reorganization agreement, in return for         
increasing the purchase price by $7 million in cash. However, as a condition to 
SCO entering into the reorganization agreement on these terms, SCO would require
that a loan of $7 million would be provided to SCO by Caldera at the time of    
signing the reorganization agreement. This loan would be unsecured, but if not  
paid before the maturity date, it would convert into shares of common stock of  
SCO at up to a 20% discount from the fair market value of SCO's shares at that  
time.                                                                           

    On July 31, 2000, the board of directors of each of Caldera and SCO met to
consider the proposed combination and the related transactions. The boards      
reviewed, among other things, the background of the proposed combination,       
strategic alternatives, financial and valuation analyses of the transaction, and
the terms of the combination. During the meetings, the boards of Caldera and SCO
each received an oral financial fairness opinion from their respective financial
advisors, which was subsequently confirmed in writing. After extensive          
discussion and consideration, the board of directors of SCO approved the terms  
of                                                                              
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the combination and authorized its officers to complete the terms of the        
reorganization agreement and the ancillary agreements. The board of directors of
Caldera, however, expressed concern in lending $7 million unsecured to SCO, and 
instructed the officers to negotiate with SCO concerning receiving adequate     
security for the loan amount.                                                   

     On August 1, 2000, the officers of the two companies discussed the terms of
a binding memorandum of understanding whereby Caldera would commit to providing 
a secured loan to SCO in the amount of $7 million, so long as The Canopy Group  
also executed a binding memorandum of understanding in which it would commit to 
provide a secured loan to SCO in the amount of $18 million. The board of        
directors of each of Caldera and SCO then reconvened to discuss the revised     
terms of the loan financings. After extensive discussion and consideration, the 
boards of each company approved the terms of the combination and revised loan   
financing and authorized its officers to complete the terms of the              
reorganization agreement and the ancillary agreements, including the binding    
memorandum of understanding between SCO and Caldera. Each company then executed 
and delivered the reorganization agreement. Voting agreements between The Canopy
Group and MTI Technology Corporation and SCO and between Doug Michels and       
Caldera were simultaneously executed, as were the binding memorandums of        
understanding concerning the loan financing.                                    

On August 2, 2000, the companies announced the entering into the      
reorganization agreement by the issuance of a joint press release.              

    On September 13, 2000 and, December 12, 2000, Caldera and SCO entered into
amendments to the reorganization agreement to provide for adjustments to the    
treatment of employee options, amend certain exhibits and provide for the       
sharing of some of the transition costs of SCO.                                 

 From November 17 through January 18, 2001, Caldera and The Canopy Group
negotiated the final terms and conditions of the secured loans to SCO.          

    On February 9, 2001, Caldera and SCO entered into a third amendment to the
reorganization agreement to provide for the addition of the OpenServer line of  
business to the assets to be acquired by New Caldera, to change the purchase    
price to be paid to SCO and to extend the date after which either party may     
terminate the reorganization agreement without being required to pay a          
termination fee.                                                                

REASONS FOR THE COMBINATION                                                     

The SCO board and the Caldera board unanimously recommend that the    
shareholders and the stockholders of their respective companies vote "FOR" the  
approval and adoption of the combination for the reasons set forth below.       

Joint reasons for the combination                                               

     We have identified a number of potential mutual benefits of the combination
that we believe will contribute to the success of New Caldera.                  

These potential benefits include:                                     

- The operating system software industry in which we both compete is  
extremely competitive. We recognized that substantial technical,  
       financial and other resources are necessary to compete with these larger,
       more diversified operating system software companies. The combination may
    allow each of us, through our participation in New Caldera, to achieve
  greater scale and greater presence in the operating systems software
       industry. We believe New Caldera will have a stronger position from which
to compete more effectively against larger software companies. Our
   combined experience, financial resources, size, complementary product
      offerings and the complementary scope of distribution channels may allow
  New Caldera to respond more quickly and effectively to technological
change, increased competition and customer demands in an industry 
experiencing rapid innovation and change;                         

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    - The combined research and development and technology resources resulting
from the combination may allow us to compete more effectively by  
       developing more advanced products in a shorter time period than either of
us could develop independently. Because achieving a rapid rate of 
technical innovation in the operating system software industry is 
   critical, increasing our technical personnel may permit us to respond
more quickly and effectively to changes and to anticipate the     
advancements in our industry more readily;                        

- The product portfolios of Caldera and SCO's server business are     
complementary. Products and technologies developed for SCO's UNIX 
       platform can be ported for use with Caldera's Linux product offerings and
       would create the opportunity for us to create and deliver a broader range
of solutions for eBusiness;                                       

   - We anticipate that we will benefit from the combined original equipment
      manufacturer and strategic alliance partner relationships of Caldera and
      the server and professional services groups, which include many industry
   leaders, including Compaq, Hewlett-Packard, IBM and Sun Microsystems,
among others;                                                     

- The server and professional services groups' direct sales, value    
    added-reseller and original equipment manufacturer channels complement
    Caldera's retail distribution capability, giving us the opportunity to
access a broader range of key management sales channels and market
segments;                                                         

- The combination of the server and professional services groups and  
   Caldera's Linux business will give us the opportunity to benefit from
       economies of scale generated by our greater critical mass when addressing
the eBusiness solution needs of large global businesses; and      

- The global development infrastructure allows not only worldwide     
       development cycles but the UNIX and Linux engineers can take advantage of
synergies in their respective expertises.                         

     In addition to the joint reasons discussed above, the board of directors of
each company also considered separate reasons for approving the combination,    
which are summarized below.                                                     

Caldera's reasons for the combination                                           

   The Caldera board of directors believes that the following are additional
reasons for stockholders of Caldera to vote "FOR" approval and adoption of the  
combination:                                                                    

- The server and professional services groups have a comprehensive,   
       international, multi-tiered distribution channel, including several joint
  venture, value added resellers and original equipment manufacturers.
       These could provide New Caldera with significant additional opportunities
to market its Linux offerings domestically and internationally;   

- The server and professional services groups have an extensive       
      international infrastructure that could accelerate New Caldera's ability
to market Linux technologies in foreign markets;                  

- The server and professional services groups own and have rights to  
     several technologies that, if ported for use on a Linux platform, could
significantly expand Caldera's Linux product offerings; and       

 - New Caldera would have significantly higher revenue than Caldera. New
    Caldera's pro forma net revenue was $143.5 million for fiscal 2000. We
 believe these revenue streams could provide greater flexibility for
purposes of financing operations of New Caldera.                  

     In the course of its deliberations, the Caldera board of directors reviewed
with Caldera's management a number of factors relevant to the combination.      

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In particular, it considered, among other things:                     

- The proposed terms of the combination, including the terms of the   
   stockholder agreement, the voting agreements, the promissory note and
   related security agreement, the convertible note and related security
agreements, the proposed employment agreements and other ancillary
agreements;                                                       

- The likelihood of realizing superior benefits through alternative   
business strategies, including internal growth and development;   

    - The likelihood of leveraging current distribution channels of the server
  and professional services groups to increase sales opportunities for
Caldera's Linux products;                                         

     - Information concerning Caldera's and the server and professional services
groups' respective businesses, historical financial performances, 
operations and products, including the due diligence reports from 
Caldera's management and legal, accounting and financial advisers;

  - The possibility of synergies from combining the Caldera and the server
and professional services groups product lines;                   

- An analysis of the relative value that the server and professional  
      services groups might contribute to the future business and prospects of
New Caldera;                                                      

     - The financial analysis presented by its financial advisor and the opinion
      that its financial advisor delivered that as of the date of such opinion
       and based upon the limitations set forth therein, the consideration to be
  paid for the server and professional services groups was fair from a
financial point of view to Caldera. See "-- Opinions of Financial 
Advisors" on pages 47 and 53; and                                 

     - The likelihood of increasing profitability of the server and professional
services groups through reducing costs.                           

 The Caldera board of directors also considered certain risks that could
arise in connection with the combination, including:                            

  - The difficulties of successfully integrating such a large company into
     Caldera, managing geographically dispersed operations and the risk that
   employees of the server and professional services groups may not stay
with New Caldera;                                                 

   - The material adverse effect the combination would have on New Caldera's
operating losses and working capital;                             

  - The effect on Caldera's business of declining revenue streams from the
server and professional services groups;                          

   - The risk that synergies and cost savings anticipated by the combination
would not be achieved;                                            

 - The potential disruption of Caldera's business that might result from
employee and customer uncertainty and lack of focus following     
     announcement of the combination or the integration of the operations of
Caldera and the server and professional services groups;          

- The risks of product integration due to overlapping products and    
technology;                                                       

- The possibility that the combination might not close;               

    - The substantial accounting charges to be incurred due to the combination
     related to the write-off of in-process research and development and the
     substantial amount of intangible assets that would have to be amortized
as a result of the combination being accounted for as a purchase; 

- The risk that redundancy in staffing and infrastructure could reduce
efficiency and increase costs;                                    

     - The risk that the other benefits sought to be achieved by the combination
will not be achieved; and                                         

- The other risks described under "Risk Factors" on page 17.          

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  In the view of the Caldera board, these risks were not sufficient either
individually or in the aggregate to outweigh the advantages of the combination. 
Specifically, with respect to the material increase in losses that will be      
incurred by New Caldera if the combination occurs, the Caldera board felt that  
the long-term benefits of the combination would outweigh this negative          
consequence. In view of the wide variety of factors, both positive and negative,
considered by the Caldera board, the Caldera board did not find it practical to 
and did not quantify or otherwise assign relative weights to the specific       
factors considered.                                                             

For the reasons discussed above, Caldera's board of directors has     
unanimously approved the reorganization agreement and the combination and has   
determined that the combination is advisable and in the best interests of       
Caldera and its stockholders and unanimously recommends that Caldera            
stockholders vote "FOR" approval of the reorganization agreement and the        
combination.                                                                    

SCO's reasons for the combination                                               

  At meetings held on July 31, 2000 and February 8, 2001, the SCO board of
directors concluded that the combination was in the best interests of SCO and   
its shareholders and determined to recommend that the shareholders approve and  
adopt the reorganization agreement and approve the combination. In its          
evaluation of the reorganization, the SCO board of directors identified several 
potential benefits of the combination, the most important of which included the 
board's belief that the combination would:                                      

  - combine SCO, the world's leader in UNIX server operating systems, with
 Caldera, a leader in the rapidly growing open source movement and a
      leading provider of Linux for eBusiness resulting in the very best range
      of products for both companies' existing customers and channel partners;

  - enable SCO to monetize its server and professional services groups and
    receive publicly traded New Caldera common stock and immediate cash to
fund the Tarantella business; and                                 

- permit SCO's management to focus on the Tarantella business.        

   SCO's board of directors consulted with senior management, as well as its
legal counsel, independent accountants and financial advisors, in reaching its  
decision to approve the combination. In its evaluation of the combination, the  
SCO board reviewed several factors, including, but not limited to, the          
following:                                                                      

   - SCO management's view of the financial condition, results of operations
   and business of SCO and Caldera before and after giving effect to the
combination and SCO's determination of the combination's effect on
shareholder value;                                                

     - historical information concerning SCO's and Caldera's business, financial
performance and condition, operations, technology and management, 
       including reports concerning results of operations during the most recent
fiscal period filed with the Securities and Exchange Commission;  

  - the consideration to be received by SCO in the combination in light of
comparable transactions;                                          

   - the current and prospective industry environment for SCO's products and
services;                                                         

- current financial market conditions and historical market prices,   
volatility and trading information for Caldera and SCO;           

  - the opinion of Chase H&Q that, as of the date of its opinion and based
     upon and subject to the assumptions made, matters considered and limits
     of the review undertaken by Chase H&Q, the consideration to be received
   in connection with the combination was fair from a financial point of
view to SCO;                                                      

     - the belief that the terms of the reorganization agreement are reasonable;

- the potential impact of the combination on SCO's customers, channel 
partners and employees;                                           

   - discussions with its management, legal and financial advisors as to the
results of the due diligence investigation of Caldera; and        

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    - the expectation that the combination will be a tax-free exchange, except
    with respect to cash and other non-stock consideration received by SCO
for United States federal income tax purposes.                    

The SCO board also identified and considered a number of potentially  
negative factors in its deliberations concerning the combination including the  
following:                                                                      

- the risk that the potential benefits of the combination may not be  
realized;                                                         

- uncertain prospects for the Linux market;                           

     - the difficulty and risk associated with the integration of management and
organizational structures;                                        

     - the effect of the public announcement and consummation of the combination
on Caldera's and SCO's existing customers and channel partners;   

   - limited visibility into the near and long-term financial performance of
New Caldera;                                                      

- the possibility that the combination may not be consummated; and    

     - other applicable risks described in this joint proxy statement/prospectus
under "Risk Factors" beginning on page 17.                        

The SCO board concluded that on balance the potential benefits of the 
combination outweighed the potential risks. This discussion of the information  
and factors considered by the board is not meant to be exhaustive. Given the    
complexity and the number of factors considered, the SCO board did not attempt  
to quantify or otherwise assign relative weight to specific factors.            

OPINIONS OF FINANCIAL ADVISORS                                                  

Opinion of Caldera's Financial Advisor                                          

Pursuant to a letter agreement dated as of June 6, 2000, Broadview was
engaged to act as financial advisor to the Caldera board and to render an       
opinion to the Caldera board regarding the fairness of the exchange ratio of one
share of new Caldera common stock issued per share of Caldera stock in the      
merger of Caldera with New Caldera which is part of the combination, from a     
financial point of view, to Caldera stockholders. The Caldera board selected    
Broadview to act as financial advisor based on Broadview's reputation and       
experience in the information technology, communication and media sector. At the
meeting of the Caldera board on February 5, 2001, Broadview delivered its       
written opinion that, as of February 5, 2001, based upon and subject to the     
various factors and assumptions, the exchange ratio was fair, from a financial  
point of view, to Caldera stockholders.                                         

BROADVIEW'S OPINION, WHICH DESCRIBES THE ASSUMPTIONS MADE, MATTERS    
CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY BROADVIEW, IS ATTACHED AS
APPENDIX B TO THIS DOCUMENT. CALDERA STOCKHOLDERS ARE URGED TO, AND SHOULD, READ
THE BROADVIEW OPINION CAREFULLY. THE BROADVIEW OPINION IS DIRECTED TO THE       
CALDERA BOARD AND ADDRESSES ONLY THE FAIRNESS OF THE CONSIDERATION PAID TO SCO  
FOR THE SERVER AND PROFESSIONAL SERVICES GROUPS. THE BROADVIEW OPINION DOES NOT 
ADDRESS ANY OTHER ASPECT OF THE TRANSACTION AND DOES NOT CONSTITUTE A           
RECOMMENDATION TO ANY HOLDER OF CALDERA COMMON STOCK AS TO HOW TO VOTE AT THE   
CALDERA ANNUAL MEETING. THE SUMMARY OF THE BROADVIEW OPINION SET FORTH IN THIS  
JOINT PROXY STATEMENT/PROSPECTUS, ALTHOUGH MATERIALLY COMPLETE, IS QUALIFIED IN 
ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.                     

In arriving at its opinion, Broadview, among other things:            

- reviewed the terms of a draft of the reorganization agreement, as   
       amended, furnished to them by Caldera's legal counsel on February 3, 2001
and the terms of a draft Registration Statement on Form S-4, dated
December 18, 2000, furnished to them by Caldera's legal counsel on
    January 29, 2001. For the purposes of this opinion, Broadview assumed,
  with Caldera's permission, that the reorganization agreement and the
amendments to the reorganization agreement furnished to them are  
    identical in all material respects to the reorganization agreement and
amendments that were                                              

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   executed, except that Broadview has assumed with Caldera's permission
 that the server and professional services groups (as defined in the
      reorganization agreement) includes, among other things, the professional
services business of SCO and its subsidiaries;                    

- reviewed the balance sheet relating to the server and professional  
       services groups as of September 30, 2000 from the draft Form S-4 provided
     to them by Caldera's legal counsel and assumed, with Caldera management
    permission, that there are no substantial changes to the balance sheet
    liabilities as a result of the inclusion of the OpenServer Business in
      the definition of the server and professional services groups as part of
the third amendment;                                              

  - reviewed annual financial projections through October 31, 2002 for New
     Caldera assuming completion of the combination prepared and provided to
them by Caldera management;                                       

    - reviewed certain internal financial and operating information concerning
       the server and professional services groups (without giving effect to the
    combination), including income statement projections through September
30, 2002 jointly prepared and provided to them by Caldera and SCO 
managements;                                                      

- participated in discussions with SCO management concerning the      
    operations, business strategy, financial performance and prospects for
the server and professional services groups;                      

     - discussed with SCO management its view of the strategic rationale for the
combination;                                                      

   - compared certain aspects of the financial performance of the server and
 professional services groups with public companies Broadview deemed
comparable;                                                       

     - analyzed available information, both public and private, concerning other
    mergers and acquisitions they believed to be comparable in whole or in
part to the combination;                                          

    - reviewed Caldera's Form 10-K, including the audited financial statements
    of Caldera for its fiscal years ended October 31, 1998, 1999, and 2000
       included therein, and Caldera's financial press release dated December 6,
 2000 for the period ended October 31, 2000, including the unaudited
financial statements included therein;                            

    - reviewed certain internal financial and operating information concerning
     Caldera (without giving effect to the combination), including quarterly
     projections through October 31, 2002, relating to Caldera, prepared and
furnished to them by Caldera management;                          

- participated in discussions with Caldera management concerning the  
operations, business strategy, current financial performance and  
prospects for Caldera;                                            

     - discussed with Caldera management its view of the strategic rationale for
the combination;                                                  

- reviewed the recent reported closing prices and trading activity for
Caldera Common Stock;                                             

 - compared certain aspects of the financial performance of Caldera with
public companies they deemed comparable;                          

- reviewed recent equity research analyst reports covering Caldera;   

- analyzed the anticipated effect of the combination on the future    
financial performance of New Caldera;                             

    - participated in discussions related to the combination with Caldera, SCO
and their respective advisors; and                                

  - conducted other financial studies, analyses and investigations as they
deemed appropriate for purposes of this opinion.                  

In rendering our opinion, Broadview relied, without independent       
verification, on the accuracy and completeness of all the financial and other   
information (including without limitation the representations and warranties    
contained in the reorganization agreement) that was publicly available or       
furnished to us by                                                              
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Caldera or SCO. With respect to the financial projections examined by Broadview,
they have assumed that they were reasonably prepared and reflected the best     
available estimates and good faith judgments of (i) management of Caldera as to 
the future performance of Caldera and New Caldera and (ii) management of Caldera
and SCO as to the future performance of the server and professional services    
groups.                                                                         

    The following is a brief summary of some of the sources of information and
valuation methodologies used by Broadview in rendering Broadview's opinion.     
These analyses were orally presented to the Caldera board at its meeting on     
February 5, 2001 and delivered with the opinion on February 5, 2001. This       
summary includes the financial analyses used by Broadview and deemed to be      
material, but does not purport to be a complete description of analyses         
performed by Broadview in arriving at its opinion. Broadview did not explicitly 
assign any relative weights to the various factors of analyses considered. This 
summary of financial analyses includes information presented in tabular format. 
In order to fully understand the financial analyses used by Broadview, the      
tables must be read together with the text of each summary. The tables alone do 
no constitute a complete description of the financial analyses.                 

    Broadview did not make or obtain any independent appraisal or valuation of
any of the server and professional services groups' assets. Broadview's opinion 
is based on market, economic, financial and other conditions as they existed and
could be evaluated as of February 4, 2001 and any change in such conditions     
since that date would require a reevaluation of Broadview's opinion. The        
Broadview opinion did not express any opinion as to the price at which Caldera  
or New Caldera common stock will trade at any time.                             

    Public Company Comparable Analysis.  Broadview considered ratios of market
capitalization, adjusted for cash and debt when necessary, to selected          
historical and projected operating results in order to derive multiples placed  
on a company in a particular market segment. In order to perform this analysis, 
Broadview compared financial information of the server and professional services
groups with publicly available information for the companies competing in the   
North American software and related services industry with revenues for the last
twelve months between $50 million to $500 million and negative projected annual 
revenue growth for the period ending September 30, 2001. The server and         
professional services groups Comparable Index consists of the following         
companies: AVT Corporation; answerthink, inc.; Brooktrout Inc.; BTG, Inc.; and  
Viant Corporation. For this analysis, as well as other analyses, Broadview      
examined publicly available information, as well as a range of estimates based  
on securities research analyst reports.                                         

The following table presents, as of February 2, 2001, the median total
market capitalization (defined as equity market capitalization plus total debt  
minus cash and cash equivalents) as multiples of selected operating metrics and 
the range of those multiples for the server and professional services groups    
Comparable Index:                                                               

                                                                [Download Table]

                                                              MEDIAN    RANGE OF  
                                                             MULTIPLE   MULTIPLES 
                                                             --------  -----------
                                                                                  
Total market capitalization/revenue for the last 12                               
  months....................................................   .53x    0.12x-0.98x
Total market capitalization/Projected 9/30/01 revenue.......   .60x    0.14x-0.99x

  The following table presents, as of February 2, 2001, the median implied
values and the range of implied values of the server and professional services  
groups, calculated by using the multiples shown above and the appropriate server
and professional services groups operating metric (in thousands):               

                                                                [Download Table]

                                                           IMPLIED                  
                                                           MEDIAN       RANGE OF    
                                                            VALUE    IMPLIED VALUES 
                                                           -------  ----------------
                                                                                    
Total market capitalization/revenue for the last 12                                 
  months.................................................. $62,743  $13,845-$115,922
Total market capitalization/Projected 9/30/01 revenue.....  52,639    11,932- 86,976

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    Broadview compared the implied values to the proposed transaction value of
$85 million, derived based on the closing price of Caldera common stock of $3.38
on February 2, 2001 multiplied by 16 million New Caldera shares plus $23 million
in cash, plus $8 million in debt and noted that the proposed transaction value  
was within the range.                                                           

No company utilized in the public company comparables analysis as a   
comparison is identical to the server and professional services groups. In      
evaluating the comparables, Broadview made numerous assumptions with respect to 
software and services industry performance and general economic conditions, many
of which are beyond the control of Caldera. Mathematical analysis, such as      
determining the median, average, or range, is not in itself a meaningful method 
of using comparable company data.                                               

  Transaction Comparables Analysis.  Broadview considered ratios of equity
purchase price, adjusted for the seller's cash and debt when appropriate, to    
selected historical operating results in order to indicate valuation multiples  
that strategic and financial acquirers have been willing to pay for companies in
a particular market segment. In order to perform this analysis, Broadview       
reviewed a number of transactions that they considered similar to the           
combination. Broadview selected these transactions by choosing transactions from
January 1, 2000 through February 4, 2001 involving sellers in the systems       
management software industry, with trailing revenues greater than $10 million   
and less than $200 million. Broadview used multiples derived from the median of 
the multiples calculated for the transactions used in valuing the server and    
professional services groups. For this analysis, as well as other analyses,     
Broadview examined publicly available information, as well as information from  
Broadview's proprietary database of published and confidential merger and       
acquisition transactions in the information technology, communication and media 
industries. These transactions consisted of the acquisition of:                 

- Ganymede Software Inc. by Mission Critical Software, Inc.;

  - Architel Systems Corporation by Nortel Networks Corporation;

- AXENT Technologies, Inc. by Symantec Corporation;         

- Vinca Corporation by Legato Systems, Inc.;                

- Softworks, Inc. by EMC Corporation;                       

- Confidential by Confidential;                             

- Simware Inc. by NetManage, Inc.;                          

   - Interlink Computer Sciences, Inc. by Sterling Software, Inc.;

   - Sterling Commerce, Inc. (Managed Systems Division -- formerly
Xcellenet, Inc.) by Francisco Partners, LP; and         

- Wall Data Inc. by NetManage, Inc.                         

   The following table presents, as of February 4, 2001, the median Adjusted
Price (defined as equity price plus total debt minus cash and cash equivalents) 
as a multiple of the seller's revenue in the last reported twelve months prior  
to acquisition for the transactions listed above and the range of those         
multiples:                                                                      

                                                                [Download Table]

                                                            MEDIAN      RANGE OF   
                                                           MULTIPLE    MULTIPLES   
                                                           --------  --------------
                                                                                   
Adjusted Price/revenue for the last reported 12 months....  3.11x    0.32x-0.16.35x

  The following table presents, as of February 4, 2001, the median implied
value and the range of implied values of the server and professional services   
groups, calculated by multiplying the multiples shown                           

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above by the appropriate server and professional services groups operating      
metric for the twelve months ended October 31, 2000 (in thousands):             

                                                        [Enlarge/Download Table]

                                                            IMPLIED                     
                                                             MEDIAN        RANGE OF     
                                                             VALUE      IMPLIED VALUES  
                                                            --------  ------------------
                                                                                        
Adjusted Price/revenue for the 12 months ended October 31,                              
   2000...................................................  $434,235  $44,335-$2,283,003

    Broadview compared the implied values to the proposed transaction value of
$85 million, derived based on the closing price of Caldera common stock of $3.38
on February 2, 2001 multiplied by 16 million New Caldera shares plus $23 million
in cash plus $8 million in debt, and noted that the proposed transaction value  
was within the range.                                                           

No transaction utilized as a comparable in the transaction comparables
analysis is identical to the combination. In evaluating the comparables,        
Broadview made numerous assumptions with respect to the software and services   
industry's performance and general economic conditions, many of which are beyond
the control of Caldera or SCO. Mathematical analysis, such as determining the   
average, median, or range, is not in itself a meaningful method of using        
comparable transaction data.                                                    

Relative Contribution Analysis.  Broadview examined the relative      
contribution of the server and professional services groups to Caldera for a    
number of historical and projected operating metrics. In this analysis,         
projected figures are derived from selected equity analyst reports covering     
Caldera and Caldera and SCO management estimates for the server and professional
services groups.                                                                

   The following reflect the relative contribution of the Group Business and
Caldera for each operating metrics:                                             

                                                                [Download Table]

                                                              GROUP           
                                                             BUSINESS  CALDERA
                                                             --------  -------
                                                                              
TTM Revenue.................................................   97.0%     3.0% 
Projected 9/30/01 Revenue...................................   92.5%     7.5% 
Projected 9/30/02 Revenue...................................   87.2%    12.8% 

 Given the Caldera ratio as defined in the reorganization agreement, the
results of the relative contribution analysis by themselves are supportive of   
Broadview's opinion.                                                            

   Relative Ownership Analysis.  A relative ownership analysis measures each
of the merging companies' relative equity ownership and relative entity         
ownership (entity ownership compares the relative entity values of the combining
companies; entity value equals equity value minus cash and cash equivalents plus
total debt). At the Caldera ratio defined in the reorganization agreement, the  
implied equity ownership is 74.1% for Caldera and 25.9% for the server and      
professional services groups, while the implied entity ownership is 63.9% for   
Caldera and 36.1% for the server and professional services groups.              

 Given the Caldera ratio as defined in the reorganization agreement, the
results of the relative ownership analysis by themselves are supportive of      
Broadview's opinion.                                                            

  Caldera Stock Performance Analysis.  Broadview compared the recent stock
performance of Caldera with that of the S&P500 and NASDAQ Composites and the    
Caldera Comparable Index. The Caldera Comparable Index is comprised of public   
companies that Broadview deemed comparable to Caldera. Broadview selected five  
public companies in the operating system and application infrastructure         
industry.                                                                       

The operating system and application infrastructure public companies  
consist of:                                                                     
Be Incorporated;                                              
Microware Systems Corp.;                                      
Red Hat, Inc.;                                                
VA Linux Systems, Inc.; and                                   
Wind River Systems, Inc.                                      

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Based on this analysis and the evaluation of Caldera equity analysis  
discussed below, Broadview was able to assess the public market valuation of the
Caldera common stock as compared to the selected comparables. Broadview found   
Caldera common stock performance to be consistent with that of its public       
company comparables.                                                            

    Evaluation of Caldera Equity.  Broadview compared financial information of
Caldera with publicly available information for companies comprising the Caldera
Comparable Index. For this analysis, as well as other analyses, Broadview       
examined publicly available information, as well as a range of estimates based  
on securities research analyst reports. Based on this analysis and the Caldera  
stock performance analysis discussed above, Broadview was able to assess the    
public market valuation of the Caldera common stock as compared to the selected 
comparables. Broadview found Caldera valuation statistics to be within the range
of valuation statistics of its public company comparables.                      

    Pro Forma Combination Analysis.  Broadview calculated the pro forma impact
of the combination on the combined entity's projected earnings per share for    
Caldera's fiscal year ending October 31, 2001, and fiscal year ending October   
31, 2002, taking into consideration various financial effects which will result 
from consummation of the combination. This analysis relies upon certain         
financial and operating assumptions provided by equity research analysts and    
publicly available data about Caldera and Caldera and SCO management estimates  
for the server and professional services groups. Broadview examined a purchase  
scenario under the assumption that no opportunities for cost savings or revenue 
enhancements exist. This analysis enabled Broadview to confirm that the pro     
forma purchase model indicates earnings per share accretion excluding           
acquisition expenses, purchased R&D write-off, goodwill, and foregone interest, 
for the fiscal year ending October 31, 2001 and earnings per share dilution     
excluding acquisition expenses, purchased R&D write-off, goodwill, and foregone 
interest, for the fiscal year ending October 31, 2002. Broadview also examined  
several scenarios that assume opportunities for cost savings or revenue         
enhancements, including one scenario using management's internal projections.   
This analysis enabled Broadview to confirm that the pro forma purchase model    
indicates earnings per share accretion excluding acquisition expenses, purchased
R&D write-off, goodwill, and foregone interest, for the fiscal year ending      
October 31, 2001 and earnings per share accretion excluding acquisition         
expenses, purchased R&D write-off, goodwill, and foregone interest, for the     
fiscal year ending October 31, 2002.                                            

 Consideration of the Discounted Cash Flow Methodology. While discounted
cash flow is a commonly used valuation methodology, Broadview did not employ    
such an analysis for the purposes of this opinion. Discounted cash flow analysis
is most appropriate for companies that exhibit relatively steady or somewhat    
predictable streams of future cash flow. For a business such as the server and  
professional services groups, a preponderance of the value in a valuation based 
on discounted cash flow will be in the terminal value of the entity, which is   
extremely sensitive to assumptions about the sustainable long-term growth rate  
of the company. Given the uncertainty in estimating both the future cash flows  
and a sustainable long-term growth rate for Caldera, Broadview considered a     
discounted cash flow analysis inappropriate for valuing the server and          
professional services groups.                                                   

In connection with the review of the combination by the Caldera board,
Broadview performed a variety of financial and comparative analyses. The summary
set forth above does not purport to be a complete description of the analyses   
performed by Broadview in connection with the combination.                      

The preparation of a fairness opinion is a complex process and is not 
necessarily susceptible to partial analysis or summary description. In arriving 
at its opinion, Broadview considered the results of all of its analyses as a    
whole and did not attribute any particular weight to any analysis or factor     
considered by it. Furthermore, Broadview believes that selecting any portion of 
its analyses, without considering all analyses, would create an incomplete view 
of the process underlying its opinion.                                          

In performing its analyses, Broadview made numerous assumptions with  
respect to industry performance and general business and economic conditions and
other matters, many of which are beyond the control of Caldera or SCO. The      
analyses performed by Broadview are not necessarily indicative of actual values 
or actual future results, which may be significantly more or less favorable than
suggested by such analyses. The Caldera Ratio pursuant to the reorganization    
agreement and other terms of the                                                
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agreement were determined through arm's length negotiations between Caldera and 
SCO, and were approved by the Caldera board. Broadview provided advice to the   
Caldera board during such negotiations; however, Broadview did not recommend any
specific consideration to the Caldera board or that any specific consideration  
constituted the only appropriate consideration for the combination. In addition,
Broadview's opinion and presentation to the Caldera board was one of many       
factors taken into consideration by the Caldera board in making its decision to 
approve the combination. Consequently, the Broadview analyses as described above
should not be viewed as determinative of the opinion of the Caldera board with  
respect to the value of the server and professional services groups or of       
whether the Caldera board would have been willing to agree to a different       
consideration.                                                                  

Upon completion of the combination, Caldera will be obligated to pay  
Broadview a transaction fee of approximately $1.4 million. The monthly retainer 
fees and the fairness opinion fees will be credited against the transaction fee 
payable by Caldera upon completion of the combination. In addition, Caldera has 
agreed to reimburse Broadview for its reasonable expenses, including fees and   
expenses of its counsel, and to indemnify Broadview and its affiliates against  
certain liabilities and expenses related to their engagement, including         
liabilities under the federal securities laws. The terms of the fee arrangement 
with Broadview, which Caldera and Broadview believe are customary in            
transactions of this nature, were negotiated at arm's length between Caldera and
Broadview, and the Caldera board was aware of the nature of the fee arrangement,
including the fact that a significant portion of the fees payable to Broadview  
is contingent upon completion of the combination.                               

Opinion of SCO's Financial Advisor                                              

   SCO engaged Chase H&Q, a division of Chase Securities Inc., to act as the
exclusive financial advisor to SCO in connection with the proposed merger. The  
SCO board of directors selected Chase H&Q to act as its exclusive financial     
advisor based on Chase H&Q's qualifications, expertise and reputation, as well  
as Chase H&Q's historic investment banking relationship and familiarity with    
SCO. Chase H&Q delivered its oral opinion on February 8, 2001, subsequently     
confirmed in writing, to the SCO board of directors that, as of such date, based
upon and subject to the assumptions made, matters considered and limits of the  
review undertaken by Chase H&Q, the consideration to be received by SCO in      
connection with the combination was fair from a financial point of view, to the 
shareholders of SCO.                                                            

 THE FULL TEXT OF THE OPINION DELIVERED BY CHASE H&Q TO THE SCO BOARD OF
DIRECTORS, DATED FEBRUARY 8, 2001, WHICH SETS FORTH THE ASSUMPTIONS MADE,       
GENERAL PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITATIONS ON THE SCOPE OF 
REVIEW UNDERTAKEN BY CHASE H&Q IN RENDERING ITS OPINION, IS ATTACHED AS ANNEX C 
TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY          
REFERENCE. THE CHASE H&Q OPINION DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SCO
SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE WITH RESPECT TO THE MERGER   
AGREEMENT OR ANY OTHER MATTER. THE SUMMARY OF THE CHASE H&Q OPINION SET FORTH   
BELOW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION
ATTACHED HERETO AS ANNEX C. SCO SHAREHOLDERS ARE URGED TO READ THE OPINION      
CAREFULLY IN ITS ENTIRETY.                                                      

  In reviewing the combination, and in arriving at its opinion, Chase H&Q,
among other things reviewed:                                                    

(i)      the reorganization agreement, as amended;                              

(ii)     the publicly available consolidated financial statements of Caldera for
     recent years and interim periods to date and certain other relevant
financial and operating data of Caldera (including its capital
structure) made available to us from published sources;       

(iii)    certain publicly available projected financial and operating           
information relating to Caldera;                              

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(iv)     publicly available terms of certain transactions involving companies   
        Chase H&Q determined to be comparable to Caldera and the consideration
received by such companies in such transactions;              

(v)      the internal unaudited financial statements of the Contributed         
    Companies for recent years and interim periods to date and certain
 other relevant financial data of the Contributed Companies made
available to us from the internal records of SCO;             

(vi)     certain internal projected financial and operating information relating
        to the Contributed Companies prepared by the senior management of SCO;

(vii)    certain internal projected financial and operating information relating
to Caldera prepared by the senior management of Caldera;      

(viii)   certain internal projections of potential synergies relating to the    
combination prepared by the senior management of Caldera;     

(ix)     the recent reported prices and trading activity for the common stock of
Caldera;                                                      

(x)      compared the recent reported prices and trading activity for the common
        stock of Caldera and certain financial information for Caldera and the
  Contributed Companies with similar information for certain other
companies engaged in businesses we consider comparable;       

(xi)     the terms of other business combinations that we deemed relevant; and  

(xii)    reviewed such other financial studies and analyses and considered such 
    other information as we deemed appropriate for the purposes of our
opinion.                                                      

  Chase H&Q did not assume responsibility for independent verification of,
and did not independently verify, any of the information concerning the         
Contributed Companies or Caldera considered in connection with its review of the
combination, including without limitation any financial information, forecasts  
or projections, considered in connection with the rendering of its opinion.     
Accordingly, for purposes of its opinion, Chase H&Q assumed and relied upon the 
accuracy and completeness of all such information. In connection with its       
opinion, Chase H&Q did not prepare or obtain any independent valuation or       
appraisal of any of the assets or liabilities of the Contributed Companies or   
Caldera, and it did not conduct a physical inspection of the properties and     
facilities of the Contributed Companies or Caldera. With respect to the         
financial forecasts and projections relating to the Contributed Companies and   
Caldera, prepared by the respective managements of SCO and Caldera, Chase H&Q   
assumed that they reflected the best currently available estimates and judgments
of the expected future financial performance of the Contributed Companies and   
Caldera and Chase H&Q expressed no view as to the reasonableness of such        
forecasts and projections or the assumptions on which such forecasts or         
projections were based. For the purposes of its opinion, Chase H&Q also assumed 
that none of the Company, the Contributed Companies nor Caldera was a party to  
any pending transactions, including without limitation external                 
recapitalizations or material merger or acquisition discussions, other than the 
proposed merger and transactions in the ordinary course of conducting their     
respective businesses. SCO advised Chase H&Q, and for purposes of its opinion   
Chase H&Q assumed, that (i) the combination will qualify as a tax-free          
reorganization for New Caldera and Caldera under the Internal Revenue Service   
Code of 1986, or the code, (ii) the contribution will qualify as a              
nonrecognition transfer for SCO and New Caldera under the code, except with     
respect to cash and other non-stock consideration received by SCO, and (iii) the
combination would be treated as a purchase for financial accounting purposes.   

In performing its analyses, Chase H&Q used financial forecasts and    
projections prepared by SCO management for the Contributed Companies and        
financial forecasts and projections prepared by Caldera management for Caldera  
which are based on numerous assumptions with respect to industry performance,   
general business and economic conditions and other matters, many of which are   
beyond the control of SCO, Caldera or Chase H&Q. The analyses performed by Chase
H&Q and summarized below are not necessarily indicative of actual values or     
actual future results, which may be significantly more or less favorable than   
suggested by such analyses. Because such analyses are inherently subject to     
uncertainty, being based upon numerous factors or events beyond the control of  
SCO, Caldera or their respective                                                

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advisors, neither SCO, Chase H&Q nor any other person assumes responsibility if 
future results or actual values are materially different from the results of    
analyses based on forecasts or assumptions. Additionally, analyses relating to  
the values of businesses do not purport to be appraisals or to reflect the      
prices at which businesses or securities actually may be acquired or bought or  
sold either at the time of such analyses or at any time in the future.          

   Chase H&Q's opinion is necessarily based upon market, economic, financial
and other conditions as they existed and could be evaluated as of the date of   
the opinion and any subsequent change in such conditions would require a        
reevaluation of such opinion. Although subsequent developments may affect its   
opinion, Chase H&Q has assumed no obligation to update, revise or reaffirm it.  

The preparation of a fairness opinion is a complex process and is not 
necessarily susceptible to summary description. The summary of Chase H&Q's      
analyses set forth below summarizes the material analyses presented to the SCO  
board of directors but is not a complete description of the presentation by     
Chase H&Q to the SCO board of directors or the analysis performed by Chase H&Q  
in connection with preparing its opinion. In arriving at its opinion, Chase H&Q 
did not attribute any particular weight to any analyses or factors considered by
it, but rather made subjective, qualitative judgments as to the significance and
relevance of each analysis and factor. Accordingly, Chase H&Q believes that its 
analyses and the summary set forth below must be considered as a whole and that 
selecting portions of its analyses, without considering all analyses, or of     
considering the following summary without considering all factors and analyses, 
could create an incomplete view of the processes underlying the analyses set    
forth in the Chase H&Q presentation to the SCO board of directors and Chase     
H&Q's opinion.                                                                  

   The terms of the combination were determined through negotiations between
SCO and Caldera, the terms of the combination were approved by the SCO board of 
directors and the decision to enter into the combination and related            
transactions was solely that of the SCO board of directors. As described above, 
the opinion of Chase H&Q and its presentation to the SCO board of directors were
only one of a number of factors taken into consideration by the SCO board of    
directors in making its determination to approve the combination.               

The following is a brief summary of the material financial analyses   
performed by Chase H&Q in connection with providing its opinion to the SCO board
of directors on February 8, 2000. The summary includes information presented in 
tabular format. You should read these tables together with the text of each     
summary, because the tables alone are not a complete description of the         
financial analysis.                                                             

 Comparable Publicly Traded Companies Analysis.  This analysis reviews a
business' operating performance and outlook relative to a group of peer         
companies to determine an implied value. Using publicly available research      
analysts' estimates, Chase H&Q compared, among other things, the enterprise     
values and revenues for calendar year 2000 and projected calendar year 2001 for 
the server and professional services groups to corresponding measures for       
certain publicly traded companies that Chase H&Q considered comparable.         

The companies that Chase H&Q considered comparable to the server group were:    

- NEON Systems, Inc.                                                  

- Informix Corp.                                                      

- Progress Software Corp.                                             

- Sapiens International Corp.                                         

- Persistence Software, Inc.                                          

The companies that Chase H&Q considered comparable to the professional services 
group were:                                                                     

- Agency.com Inc.                                                     

- AnswerThink Inc.                                                    

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- Complete Business Solutions, Inc.                                   

- Inforte Corp.                                                       

- Luminant Worldwide Corp.                                            

- marchFirst, Inc.                                                    

- Scient Corp.                                                        

- Syntel, Inc.                                                        

Chase H&Q determined enterprise value to revenue multiples for these  
companies. Enterprise value is defined as the share price multiplied by the     
diluted shares outstanding plus debt and minority interest less cash. Applying  
ranges of such multiples for the comparable companies of the server group to    
calendar year 2000 and projected calendar year 2001 revenues of the server group
resulted in an enterprise value range for the server group. Applying ranges of  
such multiples for the comparable companies of the professional services group  
to calendar year 2000 and projected calendar year 2001 revenues of the          
professional services group resulted in an enterprise value range for the       
professional services group. By combining these two values, Chase H&Q was able  
to derive a value for the Contributed Companies.                                

SCO Server Business                                                             

                                                        [Enlarge/Download Table]

                                                                            IMPLIED     
                                                           SELECTED     ENTERPRISE VALUE
                                                        MULTIPLE RANGE  ($ IN MILLIONS) 
                                                        --------------  ----------------
                                                         LOW     HIGH    LOW       HIGH 
                                                        -----    -----  ------    ------
                                                                                        
2000 Revenues.......................................... 0.35x    1.60x   $ 38      $175 
2001E Revenues......................................... 0.25     1.35      21       115 
                                                                         ----      ---- 
Selected Valuation Range of Server Group...............                  $ 25      $120 

Professional Services Group                                                     

                                                        [Enlarge/Download Table]

                                                                            IMPLIED     
                                                           SELECTED     ENTERPRISE VALUE
                                                        MULTIPLE RANGE  ($ IN MILLIONS) 
                                                        --------------  ----------------
                                                         LOW     HIGH    LOW       HIGH 
                                                        -----    -----  -----     ------
                                                                                        
2000 Revenues.......................................... 0.25x    0.70x   $ 1       $  3 
2001E Revenues......................................... 0.25     0.65      1          3 
                                                                         ---       ---- 
Selected Valuation Range of Professional Services                                       
  Group................................................                  $ 1       $  3 
Implied Valuation for the Contributed Companies........                  $26       $123 

   Chase H&Q compared these results to the combination value of $82 million,
derived based on the closing price of Caldera common stock of $3.56 on February 
7, 2001 multiplied by 16.0 million New Caldera shares plus $23 million of cash, 
plus an $8 million non-interest bearing note with an estimated value of $6      
million (discounted back utilizing a mid-point of the discount rate of 20%),    
plus a three year cash earn-out of 45% of the revenues from OpenServer in excess
of quarterly revenue targets with an estimated value of $0, less the Caldera    
portion of "commit" transactions with an estimated value of $4 million.         

    Precedent Transactions Analysis.  This analysis provides a valuation range
based on financial information of selected companies that have been recently    
acquired and are in similar industries as the businesses being evaluated. Using 
publicly available research analysts' estimates, Chase H&Q compared the         
combination with ten selected mergers and acquisitions transactions involving   
companies in the                                                                

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software and professional services industries. The acquirors and targets in the 
transactions that Chase H&Q deemed comparable to the proposed combination were: 

Precedent Transactions -- Server Group                                          

- Software AG/SAGA Systems, Inc.                                      

- Compuware Corporation/Viasoft, Inc.                                 

- Sterling Software Inc./Interlink Computer Sciences, Inc.            

- Cadence Design Systems Inc./OrCAD, Inc.                             

- Ardent Software Inc./Prism Solutions, Inc.                          

Precedent Transactions -- Professional Services Group                           

- Silverline Technologies Ltd./SeraNova, Inc.                         

- NCR Corporation/4Front Technologies, Inc.                           

- Computer Sciences Corp./Policy Management Systems Corp.             

- FutureLink Corp./Charon Systems Inc.                                

- Metamor Worldwide, Inc./GE Capital Consulting                       

  In examining these transactions, Chase H&Q analyzed, among other things,
the multiples of transaction values, defined as the offer price per share       
multiplied by the diluted shares outstanding plus debt and minority interest    
less cash for the most recent balance sheet prior to the announcement of the    
transaction, to (1) revenues of the target for the last four fiscal quarters    
preceding the public announcement of the transaction and (2) projected revenues 
of the target for the calendar year following the public announcement of the    
transaction. All multiples for the selected transactions were based on public   
information available at the time of public announcement, and Chase H&Q's       
analysis did not take into account different market and other conditions during 
the two-year period during which the selected transactions occurred. Chase H&Q  
determined enterprise value to revenue multiples for these companies. Applying  
ranges of such multiples for the precedent transactions of the server group to  
calendar year 2000 and projected calendar year 2001 revenues of the server group
allowed Chase H&Q to determine an enterprise value range for the server group.  
Applying ranges of such multiples for the precedent transactions of the         
professional services group to calendar year 2000 and projected calendar year   
2001 revenues of the professional services group allowed Chase H&Q to determine 
an enterprise value range for the professional services group. By combining     
these two values, Chase H&Q was able to derive a value for the Contributed      
Companies.                                                                      

Server Group                                                                    

                                                        [Enlarge/Download Table]

                                                                            IMPLIED    
                                                                          ENTERPRISE   
                                                          SELECTED           VALUE     
                                                       MULTIPLE RANGE   ($ IN MILLIONS)
                                                       --------------   ---------------
                                                        LOW     HIGH     LOW      HIGH 
                                                       -----    -----   -----    ------
                                                                                       
2000 Revenues.........................................  0.80x    1.55x   $88      $170 
2001E Revenues........................................  0.70     1.50     60       128 
                                                                         ---      ---- 
Selected Valuation Range of Server Group..............                   $60      $130 

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Professional Services Group                                                     

                                                        [Enlarge/Download Table]

                                                                            IMPLIED     
                                                           SELECTED     ENTERPRISE VALUE
                                                        MULTIPLE RANGE  ($ IN MILLIONS) 
                                                        --------------  ----------------
                                                         LOW     HIGH    LOW       HIGH 
                                                        -----    -----  -----     ------
                                                                                        
2000 Revenues.......................................... 1.10x    1.45x   $ 4       $  6 
2001E Revenues......................................... 0.60     1.25      3          5 
                                                                         ---       ---- 
Selected Valuation Range of Professional Services                                       
  Group................................................                  $ 3       $  6 
Implied Valuation for the Contributed Companies........                  $63       $136 

   Chase H&Q compared these results to the combination value of $82 million,
derived based on the closing price of Caldera common stock of $3.56 on February 
7, 2001 multiplied by 16.0 million New Caldera shares plus $23 million of cash, 
plus an $8 million non-interest bearing note with an estimated value of $6      
million (discounted back utilizing a mid-point of the discount rate of 20%),    
plus a three year cash earn-out of 45% of the revenues from OpenServer in excess
of quarterly revenue targets with an estimated value of $0, less the Caldera    
portion of "commit" transactions with an estimated value of $4 million.         

    Chase H&Q observed that no company used in the above analyses is identical
to SCO and the circumstances surrounding each of the companies are inherently   
different. Accordingly, an analysis of the results of the foregoing is not      
mathematical; rather it involves complex, qualitative considerations and        
judgments, reflected in Chase H&Q's opinion, concerning differences in the      
financial and operating characteristics of the compared companies and other     
factors that could affect the public trading values of the comparable companies 
and Caldera.                                                                    

Discounted Cash Flow Analysis.  This analysis calculates a theoretical
value based on the present value of the future cash flow from the Contributed   
Companies. Chase H&Q performed discounted cash flow analyses of the server and  
professional services groups based upon certain forecast and projection         
information provided to Chase H&Q by the management of SCO for the years ending 
September 30, 2001 through 2003. Utilizing such information, Chase H&Q          
calculated a range of values based upon the discounted present value of the sum 
of the projected stream of unlevered free cash flows, defined as EBITDA less    
taxes less the change in working capital less capital expenditures, to the      
server and professional services groups from September 30, 2001 through         
September 30, 2003 and the projected terminal value of the server and           
professional services groups at September 30, 2003 based upon a range of        
trailing twelve months revenue multiples applied to trailing twelve month       
revenues in 2003. Chase H&Q calculated a range of enterprise values of the      
server group as of December 31, 2000 based on discount rates of 14.0%, 15.0% and
16.0% and on 2003 trailing twelve months revenue terminal multiples of 0.4x,    
1.0x and 1.6x. The analysis resulted in an implied enterprise value for the     
server group. Chase H&Q calculated a range of enterprise values of the          
professional services group as of December 31, 2000 based on discount rates of  
14.0%, 15.0% and 16.0% and on 2003 trailing twelve months terminal multiples of 
0.25x, 0.50x and 0.75x. The analysis resulted in an implied enterprise value for
the professional services group. By combining these two values, Chase H&Q was   
able to derive a value for the Contributed Companies. The following table       
summarizes the analysis:                                                        

                                                                [Download Table]

                                                                   IMPLIED     
                                                              ENTERPRISE VALUE 
                                                               ($ IN MILLIONS) 
                                                              -----------------
                                                               LOW        HIGH 
                                                              -----      ------
                                                                               
Selected Valuation Range of Server                                             
  Group.....................................................   $ 8         $46 
Selected Valuation Range of Professional                                       
Services Group..............................................   $(3)         (2)
                                                               ---         --- 
Implied Valuation for the Contributed Companies.............   $ 5         $45 

   Chase H&Q compared these results to the combination value of $82 million,
derived based on the closing price of Caldera common stock of $3.56 on February 
7, 2001 multiplied by 16.0 million New Caldera shares plus $23 million of cash, 
plus an $8 million non-interest bearing note with an estimated                  

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value of $6 million (discounted back utilizing a mid-point of the discount rate 
of 20%), plus a three year cash earn-out of 45% of the revenues from OpenServer 
in excess of quarterly revenue targets with an estimated value of $0, less the  
Caldera portion of "commit" transactions with an estimated value of $4 million. 

Other Analysis.  Chase H&Q also performed, among other analyses, a    
strategic buyer EPS break-even analysis. This analysis calculates a theoretical 
value which determines the maximum cash purchase price an acquirer could pay for
the Combined Companies without causing EPS dilution in calendar year 2001. This 
analysis assumes pre-tax synergy values of $0, $5 million, and $10 million using
pre-tax borrowing rates of 7.0%, 8.0%, and 9.0%. This analysis also assumes     
purchase accounting, with goodwill amortized over a 5 year period, and a        
transaction closing of 6/30/01. The following table summarizes the analysis:    

                                                                [Download Table]

                                                                   IMPLIED     
                                                              ENTERPRISE VALUE 
                                                               ($ IN MILLIONS) 
                                                              -----------------
                                                               LOW        HIGH 
                                                              -----      ------
                                                                               
Selected Valuation Range of Server and Professional Services                   
  Groups....................................................   $11         $56 
Implied Valuation for the Contributed Companies.............   $11         $56 

The foregoing description of Chase H&Q's opinion is qualified in its  
entirety by reference to the full text of such opinion that is attached as Annex
C to this joint proxy statement/prospectus.                                     

     Chase H&Q, as part of its investment banking services, is regularly engaged
in the valuation of businesses and their securities in connection with mergers  
and acquisitions, strategic transactions, corporate restructurings, negotiated  
underwritings, secondary distributions of listed and unlisted securities,       
private placements and valuations for corporate and other purposes. Chase H&Q   
has previously provided investment banking and other financial advisory services
to SCO and has received fees for rendering these services.                      

Pursuant to an engagement letter with Chase H&Q, SCO has agreed to pay
Chase H&Q a retainer fee of $25,000 (creditable towards the transaction fee),   
plus a transaction fee of the greater of $1.0 million or 1% of the consideration
payable upon closing of the combination, plus a fairness opinion fee of $750,000
for the first fairness opinion, plus a fairness opinion fee of $375,000 for the 
second fairness opinion (creditable towards the transaction fee). SCO also      
agreed to reimburse Chase H&Q for its reasonable out-of-pocket expenses and to  
indemnify Chase H&Q against certain liabilities, including liabilities under the
federal securities laws or otherwise relating to or arising out of Chase H&Q's  
engagement as financial advisor. Other than the above listed fees, SCO has not  
paid or incurred any fees to Chase H&Q during the most recent two years.        

STRUCTURE OF THE COMBINATION                                                    

The Caldera merger                                                              

    A wholly owned subsidiary of New Caldera will merge with and into Caldera,
Caldera will survive the merger and become a wholly owned subsidiary of New     
Caldera. Caldera stockholders will become stockholders of New Caldera.          

The contribution of the server and professional services groups                 

     SCO will contribute the capital stock of the contributed companies, and SCO
and some of its subsidiaries will contribute to New Caldera the contributed     
assets. The contributed assets and the contributed companies will be owned by   
New Caldera.                                                                    

   "Contributed companies" means The Santa Cruz Operation Limited, The Santa
Cruz Operation (France) SARL, The Santa Cruz Operation (Deutschland) GmbH, The  
Santa Cruz Operation (Italia) Srl, The Santa Cruz Operation Pty. Limited, SCO   
Canada, CO, The Santa Cruz Operation de Mexico, S.De R.L. De C. V., The Santa   
Cruz Operation (Asia) Ltd, SCO Foreign Sales Corporation, SCO,                  

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Kabushiki Kaisha, The Santa Cruz Operation Latin America, Inc., Nihon SCO       
Limited, SCO do Brazil Limitada, SCO Software (China) Company, Ltd., and Unix   
System Technologies China Company, Ltd. (USTC).                                 

     "Contributed assets" means, subject to exceptions, (1) the assets listed on
certain schedules to the reorganization agreement, (2) intellectual property    
rights material to the products of the server and professional services groups, 
(3) assets used in the server and professional services groups and (4) certain  
accounts receivable of the server and professional services groups.             

   "Contributing companies" means SCO and certain other subsidiaries of SCO.

As a result of the transfer to New Caldera of the capital stock of the
contributed companies, New Caldera will own all of the outstanding equity       
capital of the contributed companies, each of which will remain liable for their
existing liabilities. In addition, New Caldera will not acquire the majority of 
the accounts receivable nor will it assume certain accounts payables and other  
liabilities of the server and professional services groups. New Caldera shall   
assume, however, the following liabilities relating to the server and           
professional services groups business:                                          

- all liabilities of the contributing companies under all contracts   
contributed as part of the contributed assets;                    

- all liabilities of the contributing companies that are included in a
      closing group account for the server and professional services groups as
of the closing date; and                                          

- identified tax liabilities including those taxes attributable to the
operations of the contributed companies after the closing date.   

Except for the liabilities of the contributed companies and their     
subsidiaries, which will remain the sole responsibility of the applicable       
contributed company, and the assumed liabilities described above, New Caldera   
will not assume or otherwise have any obligation for any liabilities of SCO.    

   SCO has agreed to take all actions reasonably necessary to fully transfer
to New Caldera the capital stock of the contributed companies and the           
contributed assets held by them or their subsidiaries and any contributed       
contracts to which they are a party.                                            

RESTRICTIONS ON RESALE OF NEW CALDERA COMMON STOCK                              

     The shares of New Caldera common stock to be issued in the combination will
have been registered under the Securities Act. These shares will be freely      
transferable without restriction, except for shares received by SCO or by any   
person who is an "affiliate" of either of us. Shares held by these affiliates   
may be resold by them only in transactions permitted by the resale provisions of
Rule 145 or Rule 144 in the case of persons who become affiliates of New        
Caldera. Persons who may be deemed to be affiliates of Caldera, SCO or New      
Caldera generally include individuals or entities that control, are controlled  
by, or are under common control with, that party and may include certain        
officers and directors of such party as well as principal stockholders of that  
party.                                                                          

   Pursuant to the reorganization agreement, SCO shall be able to distribute
its shares of New Caldera common stock to its shareholders six (6) months from  
the closing date; provided, however, that SCO cannot sell more than 25% of its  
shares of New Caldera in a six (6) month period.                                

     New Caldera and SCO will enter into a stockholder agreement. This agreement
provides that, so long as SCO owns 10% of the outstanding stock of New Caldera, 
it may not sell shares of New Caldera common stock to any person or group       
holding five percent (5%) or more of New Caldera common stock without the       
consent of New Caldera.                                                         

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RESALE OF SHARES ISSUED UNDER THE CALDERA OPTION PLANS                          

New Caldera will be required to file with the Securities and Exchange 
Commission a registration statement for the shares of New Caldera common stock  
issuable upon exercise of the New Caldera stock options issued in the exchange  
offer no later than the 10th day after the closing of the combination.          

NASDAQ LISTING                                                                  

  We expect that the New Caldera common stock will be traded on the Nasdaq
National Market under the symbol "CALD."                                        

    It is a condition to the closing of the combination that the shares of New
Caldera common stock to be issued to SCO be approved for listing on the Nasdaq  
National Market, subject to official notice of issuance.                        

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE COMBINATION       

The following discussions set forth the material federal income tax   
consequences relevant to the exchange of shares of Caldera common stock for New 
Caldera common stock pursuant to the combination that are generally applicable  
to holders of Caldera common stock, and the material federal income tax         
consequences relevant to SCO's exchange of assets for New Caldera common stock. 
These discussions are based on currently existing provisions of the Internal    
Revenue Code (the "Code"), existing and proposed treasury regulations thereunder
and current administrative rulings and court decisions, all of which are subject
to change. Any such change, which may or may not be retroactive, could alter the
tax consequences to Caldera stockholders and to SCO as described herein.        

     The Caldera stockholders should be aware that these discussions do not deal
with all federal income tax considerations that may be relevant to particular   
Caldera stockholders in light of their particular circumstances. For example,   
different rules may apply to dealers in securities, persons subject to the      
alternative minimum tax provisions of the Code, foreign persons, persons who do 
not hold their Caldera common stock as capital assets, or persons who acquired  
their shares in connection with stock option or stock purchase plans or in other
compensatory transactions. In addition, the following discussions do not address
the tax consequences of the combination under foreign, state or local tax laws, 
the tax consequences of transactions effectuated prior or subsequent to, or     
concurrently with, the combination (whether or not any such transactions are    
undertaken in connection with the combination), including without limitation any
transaction in which shares of Caldera common stock are acquired or shares of   
New Caldera common stock are disposed of, or the tax consequences of the        
assumption by New Caldera of Caldera or SCO options or warrants. Accordingly,   
CALDERA STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE      
SPECIFIC TAX CONSEQUENCES TO THEM OF THE COMBINATION, INCLUDING THE APPLICABLE  
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES.                             

Material Federal Income Tax Consequences of the Combination to the Caldera      
Stockholders                                                                    

    Brobeck, Phleger & Harrison LLP, counsel to Caldera and New Caldera, is of
the opinion that the following are the material federal income tax consequences 
relevant to the exchange of shares of Caldera common stock pursuant to the      
combination that are generally applicable to holders of Caldera common stock.   

As to Caldera and its stockholders, the combination is intended to    
constitute an exchange described in Section 351 of the Code as well as a        
"reorganization" within the meaning of Section 368 of the Code. Provided that   
the combination does so qualify as either an exchange under Section 351 or a    

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"reorganization," then, subject to the limitations and qualifications referred  
to herein, the combination will generally result in the following federal income
tax consequences to the Caldera stockholders:                                   

 - No gain or loss will be recognized by holders of Caldera common stock
   solely upon their receipt of New Caldera common stock in exchange for
Caldera common stock in the combination;                          

- The aggregate tax basis of the New Caldera common stock received by 
       Caldera stockholders in the combination will be the same as the aggregate
     tax basis of the Caldera common stock surrendered in exchange therefor;
and                                                               

- The holding period of the New Caldera common stock received by each 
      Caldera stockholder in the combination will include the period for which
      the Caldera common stock surrendered in exchange therefor was considered
       to be held, provided that the Caldera common stock so surrendered is held
as a capital asset at the time of the combination.                

Material Federal Income Tax Consequences of the Combination to SCO              

 Wilson, Sonsini Goodrich & Rosati, Professional Corporation, counsel to
SCO, is of the opinion that the following are the material federal income tax   
consequences relevant to SCO's exchange of assets for New Caldera common stock, 
cash and other non-stock consideration.                                         

     As to SCO, the combination is intended to constitute an exchange within the
meaning of Section 351 of the Code. Provided that the combination does so       
qualify, then, subject to the limitations and qualifications referred to herein,
the combination will result in the following federal income tax consequences to 
SCO:                                                                            

- SCO will recognize gain with respect to the cash and other non-stock
       consideration, if any, received by SCO in partial consideration for SCO's
    contribution of assets to New Caldera. For purposes of determining the
       amount of gain recognized by SCO, the non-stock consideration received by
    SCO from New Caldera will be allocated among the assets contributed by
    SCO to New Caldera in proportion to their relative fair market values.
  SCO will not recognize any loss for federal income tax purposes with
respect to any contributed asset;                                 

- No gain or loss will be recognized by SCO upon SCO's receipt of New 
   Caldera common stock in exchange for assets contributed by SCO to New
Caldera; and                                                      

   - The aggregate tax basis of the New Caldera common stock received by SCO
   in the combination will be the same as the aggregate tax basis of the
     assets surrendered in exchange therefor increased by the amount of gain
recognized and decreased by the amount of cash and other non-stock
consideration received and by liabilities assumed.                

   The parties are not requesting and will not request a ruling from the IRS
in connection with the combination. The consummation of the combination is      
conditioned on the receipt by Caldera of a tax opinion from Brobeck, Phleger &  
Harrison LLP that the combination will constitute a "reorganization" described  
in Section 368 of the Code and the receipt by SCO of an opinion from Wilson     
Sonsini Goodrich & Rosati, Professional Corporation, to the effect that the     
combination will constitute a transaction described in Section 351 of the Code. 
Caldera stockholders and SCO shareholders should be aware that the tax opinions 
do not bind the IRS and the IRS is therefore not precluded from successfully    
asserting a contrary opinion. The tax opinions referred to above will be subject
to certain assumptions and qualifications, including but not limited to the     
truth and accuracy of certain representations to be made by New Caldera,        
Caldera, SCO and certain Caldera stockholders.                                  

     A successful IRS challenge to tax treatment of the combination would result
in Caldera stockholders and SCO recognizing taxable gain or loss with respect to
each share of common stock of Caldera surrendered or with respect to the assets 
contributed by SCO to New Caldera, respectively, equal to the difference between
the stockholder's or SCO's basis in such share or assets, respectively and the  
fair market value, as of the effective time, of the New Caldera common stock    
received in exchange therefor. In such event, a stockholder's or SCO's aggregate
basis in the New Caldera common stock so received                               

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would equal its fair market value, and the stockholder's or SCO's holding period
for such stock would begin the day after the combination.                       

ACCOUNTING TREATMENT                                                            

Accounting treatment by New Caldera                                             

The combination will be accounted for under the purchase method of    
accounting. The purchase price of the contributed assets, or the aggregate      
merger consideration, including direct costs of the combination, will be        
allocated to the assets acquired, including in-process research and development,
and liabilities assumed based upon their estimated fair values. The excess      
purchase consideration will be allocated to goodwill.                           

     After the combination, the results of New Caldera's operations will include
the results of operations of Caldera and the server and professional services   
groups.                                                                         

   The combination and the resulting conversion of Caldera common stock into
New Caldera common stock will be treated as a reorganization with no change in  
the recorded amount of Caldera's assets and liabilities. The financial          
statements of Caldera will become the financial statements of New Caldera upon  
the closing of the combination.                                                 

Accounting treatment by SCO                                                     

 The combination will be accounted for as a proportional sale of the net
assets of the server and professional services groups. As SCO will retain a     
28.7% interest (based on New Caldera's outstanding shares as of February 1,     
2001) SCO will record a gain equal to 71.3% of the fair value of the New Caldera
stock plus cash consideration and the present value of the promissory note      
received by SCO less 71.3% of SCO's basis in the net assets of the server and   
professional services groups and expenses.                                      

  Subsequent to the combination, SCO will include in its financial results
its share of the net income or loss of New Caldera based upon the percentage of 
outstanding shares of New Caldera owned by SCO adjusted for the difference in   
the carrying amount of SCO's investment in New Caldera and its proportional     
share of the net income or loss of New Caldera.                                 

  The SCO unaudited pro forma condensed consolidated financials statements
beginning on page P-12 are based upon certain assumptions. The ultimate gain to 
be recognized by SCO is dependent upon the same factors described above for New 
Caldera and the price of New Caldera stock on the closing date of the           
transaction. As a result of these factors, the actual gain and related          
difference between SCO's investment in New Caldera and its proportional share of
New Caldera's net assets may differ materially from the amounts assumed in the  
SCO unaudited pro forma condensed consolidated financials statements.           

GOVERNMENTAL AND REGULATORY APPROVALS                                           

  The combination may not be completed until notifications have been given
and certain information has been furnished to the Federal Trade Commission and  
the Antitrust Division of the United States Justice Department and specified    
waiting period requirements under the Hart-Scott-Rodino Antitrust Improvements  
Act, or the HSR Act, have been satisfied. All required filings under the HSR Act
have been made and the waiting periods for the filings have expired.            

     The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of the transactions such as the combination. Despite the     
expiration of the waiting periods under the HSR Act, at any time before or after
the completion of the combination, the Federal Trade Commission, the antitrust  
division, state attorneys general or others could take action under antitrust   
laws. These actions could include seeking to enjoin the combination, seeking to 
cause the divestiture of significant assets of Caldera or SCO or seeking to     
impose conditions on New Caldera with respect to the business operations of the 
combined companies. If a challenge is made, we may not prevail or we may be     
required to terminate the reorganization agreement, to divest assets, to license
proprietary technology to third parties or accept conditions in order to        
complete the combination.                                                       

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DISSENTERS' OR APPRAISAL RIGHTS                                                 

  Caldera stockholders are not entitled to dissenters' or appraisal rights
with respect to the combination.                                                

If holders of 5% or more of the outstanding shares of SCO common stock
entitled to vote at the SCO special meeting vote against the reorganization     
agreement and comply with certain other procedures specified in Chapter 13 of   
the California Corporations Code, SCO shareholders of record who take such      
actions will be entitled to exercise dissenters' rights. In accordance with the 
provisions of Chapter 13 of the California Corporations Code, dissenting SCO    
shareholders will have the right to be paid in cash the fair market value of    
their shares of SCO common stock, determined as of the day before the first     
announcement of the combination, and excluding any appreciation or depreciation 
as a result of the combination.                                                 

   In order to exercise dissenters' rights, dissenting SCO shareholders must
comply with the procedural requirements of Chapter 13 of the California         
Corporations Code, a description of which is included here and the full text of 
which is attached to this document as Appendix O and is incorporated by         
reference to this discussion. SCO shareholders wishing to exercise dissenters'  
rights are advised to read Chapter 13 of the California Corporations Code       
carefully. The failure of a dissenting SCO shareholder to timely and properly   
comply with such procedures will result in the termination or waiver of such    
rights.                                                                         

DISSENTERS' RIGHTS CANNOT BE VALIDLY EXERCISED BY PERSONS OTHER THAN  
SHAREHOLDERS OF RECORD REGARDLESS OF THE BENEFICIAL OWNERSHIP OF THE SHARES.    
Persons who are beneficial owners of shares held of record by another person,   
such as brokers, banks or nominees, should instruct the record holder to follow 
the procedures outlined below if they wish to dissent from the combination with 
respect to any or all of their shares.                                          

 Dissenting SCO shareholders must submit a written demand to SCO that it
purchase for cash some or all of their shares. The demand must:                 

- contain the number and class of the shares held of record by the    
shareholder which the shareholder demands that SCO purchase; and  

     - contain a statement of what such shareholder claims to be the fair market
value of those shares as of the day before the announcement of the
proposed combination of short-form combination.                   

That statement of fair market value will constitute an offer by the dissenting  
SCO shareholder to sell such shares at that price. The demand must be received  
by SCO or its transfer agent not later than the date of the special meeting to  
vote upon the combination, or May 4, 2001 in the present instance. All written  
demands for purchase of SCO shares should be sent or delivered to The Santa Cruz
Operation, Inc. at 425 Encinal Street, Santa Cruz, California 94043, Attention: 
Steven Sabbath. SUCH DEMAND WILL NOT BE EFFECTIVE UNLESS IT IS RECEIVED NO LATER
THAN THE DATE OF THE SCO SPECIAL MEETING.                                       

  If SCO shareholders have a right to require SCO to purchase their shares
for cash under the dissenters' rights provisions of the California Corporations 
Code, SCO will mail to each such shareholder a notice of approval of the        
combination within ten days after the date of shareholder approval, stating the 
price determined by it to represent the "fair market value" of the dissenting   
shares, and a brief description of the procedure to be followed if the          
shareholder desires to exercise such dissenters' rights. The statement of price 
will constitute an offer to purchase any dissenting shares at that price.       

To perfect their dissenters' rights, shareholders of record must:     

    - make written demand for the purchase of their dissenting shares upon SCO
on or before the date of the SCO special meeting;                 

 - vote their shares against adoption and approval of the reorganization
agreement; and                                                    

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    - within 30 days after the mailing to shareholders by SCO of the notice of
approval of the principal terms of the combination, submit the    
certificate(s) representing their dissenting shares to SCO or its 
transfer agent for notation thereon that they represent dissenting
shares.                                                           

The notice of approval of the combination will specify the date by which the    
submission of certificates for endorsement must be made and a submission made   
after that date will not be effective for any purpose. Failure to follow any of 
these procedures may result in the loss of statutory dissenters' rights.        

  If a dissenting SCO shareholder and SCO agree that shares are dissenting
shares and agree upon the price of the shares, SCO, upon surrender of the       
certificates, will make payment of that amount (plus interest thereon at the    
legal rate on judgments from the date of such agreement) within 30 days after   
such agreement. Any agreement between dissenting SCO shareholders and SCO fixing
the "fair market value" of any dissenting shares must be filed with the         
Secretary of SCO.                                                               

If SCO denies that the shares are dissenting shares, or SCO and a     
dissenting shareholder fail to agree upon the "fair market value" of the shares,
the dissenting SCO shareholder may, within six months after the date on which   
notice of approval of the combination was mailed to the shareholder, but not    
thereafter, file a complaint in the Superior Court of the proper county. A      
dissenting SCO shareholder must bring such an action within six months after the
date on which the notice of approval of the reorganization agreement was mailed 
to the shareholder, whether or not SCO responds within such time to the         
shareholder's written demand that SCO purchase for cash shares voted against the
reorganization agreement. If such a complaint is timely filed, the court shall  
determine whether the shares constitute dissenting shares, and may either       
determine or appoint an appraiser to determine the fair market value of the     
shares. If the court finds the report of the appraiser reasonable, the court may
confirm the report. The fair market value of the shares will be determined      
excluding any appreciation or depreciation in consequence of the combination,   
and will be awarded to the dissenting SCO shareholder, together with a fair rate
of interest, if any, to be paid upon the amount determined to be the fair market
value. The costs of the action may be determined by the court and taxed upon the
parties as the court deems equitable, but SCO shall pay such costs if the fair  
market value of the shares as determined by the court exceeds the price offered 
pursuant to its notice of approval.                                             

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INTERESTS OF PERSONS IN THE COMBINATION 

  In considering the recommendations of the boards of directors of Caldera
and SCO with respect to the reorganization agreement, stockholders of Caldera   
and shareholders of SCO should be aware that certain executive officers and     
directors have some interests in the combination that may be different from or  
in addition to, the interests of stockholders of Caldera and shareholders of SCO
generally. The boards of directors were each aware of these interests and       
considered them, among other matters, in making its recommendations. These      
interests are described below.                                                  

  Employment with Caldera.  Each of Caldera's executive officers will have
positions with New Caldera, and each of the current directors of Caldera,       
excluding John R. Egan who has announced that he will not seek re-election as a 
director of Caldera, will become directors of New Caldera.                      

All of the Caldera executive officers and David McCrabb, Senior Vice  
President and President, SCO Server Division, will become executive officers of 
New Caldera. Further, these individuals will execute employment agreements with 
New Caldera that will provide for terms of employment and severance benefits,   
among other things. See "Agreements Related to the Combination -- Employment    
Agreements."                                                                    

     SCO Change of Control Agreements.  SCO's board of directors has resolved to
amend the change of control agreements with certain executive officers of SCO,  
including those executive officers who will become executive officers of New    
Caldera. The amended agreements will provide for:                               

 - the full vesting on all outstanding options issued prior to August 1,
2000 to each executive officer;                                   

- an extension of the option term through January 31, 2002 on options 
   issued to those individuals who will become executive officers of New
Caldera;                                                          

    - an extension of the option term through January 31, 2002, in the case of
options held by those executive officers staying with SCO, if such
       individuals are involuntarily terminated or terminated by mutual consent;
and                                                               

  - a cash payment payable in one year from the date of the closing of the
   combination, provided that such executive officer has not voluntarily
    terminated his employment with SCO or New Caldera, as the case may be,
equal to: that individual's current annual salary and 100% of such
     individual's target bonus, together with 8.5% interest from the date of
the closing of the combination.                                   

     Accordingly, the following individuals will receive vesting acceleration on
all outstanding options granted prior to August 1, 2000, and potential          
acceleration and cash payments as follows:                                      

- Doug Michels, President and Chief Executive Officer -- $601,836;    

- Randall Bresee, Senior Vice President and Chief Financial           
Officer -- $334,180;                                              

- Michael Orr, Senior Vice President and President of Tarantella      
Division -- $390,193;                                             

    - Steven M. Sabbath, Senior Vice President, Law and Corporate Affairs, and
Secretary, -- $350,923;                                           

     - Geoff Seabrook, Senior Vice President, Corporate Development -- $267,873;

- David McCrabb, Senior Vice President and President, Server Software 
Division -- $398,224;                                             

- Jack Moyer, Senior Vice President, Human Resources -- $320,658; and 

- James Wilt, Senior Vice President and Vice President, Professional  
Services Division -- $353,855.                                    

  SCO Stay Home Options.  On August 1, 2000, the compensation committee of
the SCO board granted options to purchase SCO common stock to certain executive 
officers to encourage those individuals to remain with SCO following the        
combination. All options shall vest over four years, which may accelerate in the
event of another change of control, and are exercisable at $3.125 per share, the
price                                                                           

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at the close of trading on July 31, 2000. The following individuals received    
grants of options to purchase shares of SCO common stock in the following       
amounts:                                                                        

- Randy Bresee -- 150,000 shares                                      

- Doug Michels -- 175,000 shares                                      

- Mike Orr -- 175,000 shares                                          

- Steve Sabbath -- 50,000 shares                                      

- Geoff Seabrook -- 50,000 shares                                     

   Stockholder Agreement.  New Caldera and SCO will enter into a stockholder
agreement at the time of the closing of the combination. This agreement will    
give SCO the right to have up to two directors become members of New Caldera's  
board at the closing of the combination. These nominees to the board of         
directors of New Caldera will initially be individuals to be named by SCO and   
approved by Caldera.                                                            

   Voting Agreements.  The Canopy Group, Inc. and MTI Technology Corporation
have entered into voting agreements with SCO by which they have agreed to vote  
in favor of the combination. Together, these stockholders hold approximately 72%
of the outstanding shares of Caldera. Doug Michels has entered into a voting    
agreement with Caldera by which he has agreed to vote in favor of the           
combination. Mr. Michels beneficially owns approximately 10% of the outstanding 
shares of SCO as of February 1, 2001.                                           

THE REORGANIZATION AGREEMENT

This section describes the reorganization agreement. A copy of the    
reorganization agreement is attached as Appendix A to this joint proxy          
statement/prospectus. The summary is materially complete, but you should read   
the full and complete text of the reorganization agreement as it may contain    
information that is important to you.                                           

CLOSING                                                                         

     The closing of the combination will take place as soon as practicable after
the Caldera annual stockholder meeting and SCO special shareholder meeting and  
no later than the third business day after all conditions to closing under the  
reorganization agreement are satisfied or waived. The merger of a wholly-owned  
subsidiary of New Caldera with and into Caldera will become effective upon the  
filing of a certificate of merger in the offices of the Secretary of State of   
the State of Delaware.                                                          

WHAT CALDERA SECURITY HOLDERS WILL RECEIVE                                      

Shares of Common Stock.  Each share of common stock of Caldera that is
issued and outstanding will be automatically converted into one share of New    
Caldera common stock. As of February 1, 2001 there were 39,684,082 shares of    
Caldera common stock outstanding.                                               

Stock options.  Each outstanding option to purchase shares of Caldera 
common stock will be automatically assumed and converted into an option to      
purchase an equivalent number of shares of New Caldera common stock. The        
exercise price per share will remain unchanged. As of February 1, 2001 there    
were options to purchase 5,848,708 shares of Caldera common stock outstanding.  

 Employee stock purchase plan rights.  Each of the outstanding rights to
purchase shares of Caldera common stock under the Caldera Employee Stock        
Purchase Plan will be assumed and converted into a right to purchase the same   
number of shares of New Caldera common stock on the next purchase date under the
Caldera stock purchase plan following the effective time. The purchase price per
share will be determined in accordance with the stock purchase plan.            

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CALDERA STOCKHOLDERS WILL NOT NEED TO SURRENDER SHARE CERTIFICATES              

Holders of Caldera common stock will not need to surrender their stock
certificates. After the effective time, their stock certificates will be deemed 
to represent an equivalent number of shares of New Caldera common stock.        

WHAT SCO WILL RECEIVE FOR CONTRIBUTING THE SERVER AND PROFESSIONAL SERVICES     
GROUPS TO NEW CALDERA                                                           

   At the closing of the combination, SCO will receive the amounts and kinds
of consideration described below. There will be no adjustments in the           
consideration for changes in the market price of Caldera's common stock.        

- SCO will receive 16 million shares of New Caldera common stock      
 (representing approximately 25.3% of New Caldera on a fully diluted
basis).                                                           

 - New Caldera will pay SCO $23 million in cash (of which $7 million was
advanced to SCO on January 26, 2001).                             

   - New Caldera will issue to SCO a non-interest bearing promissory note in
the principal amount of $8 million, secured by the assets of the  
      OpenServer line of business, that will be paid in quarterly installments
of $2 million beginning the fifth quarter after the combination is
completed.                                                        

- If the OpenServer line of business of the server and professional   
  services groups generates revenues in excess of specified thresholds
       during the three-year period following the completion of the combination,
       SCO will have earn-out rights entitling it to receive 45% of these excess
revenues.                                                         

SCO's earn-out rights discussed above will be payable on the 45th day 
following the completion of the fourth, eighth and twelfth full Caldera quarters
following the completion of the combination. On each of these dates, Caldera    
will pay to SCO an amount equal to 45% of the total OpenServer revenues for the 
prior four Caldera quarters that exceed the cumulative threshold amounts for the
same prior four quarters. The chart below sets forth the threshold amounts for  
each of the twelve Caldera quarters following the completion of the combination.

SCO REVENUE EARNOUT THRESHOLDS FOR OPENSERVER BUSINESS
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                         QUARTER 1(A)  QUARTER 2   QUARTER 3   QUARTER 4    TOTAL 
                                         ------------  ----------  ----------  ----------  -------
                                                                                                  
Revenue Earnout Thresholds..............   $10,500      $10,000      $9,500      $8,500    $38,500

                                                        [Enlarge/Download Table]

                                          QUARTER 5    QUARTER 6   QUARTER 7   QUARTER 8    TOTAL 
                                         ------------  ----------  ----------  ----------  -------
                                                                                                  
Revenue Earnout Thresholds..............   $ 7,500      $ 6,500      $5,000      $3,500    $22,500

                                                        [Enlarge/Download Table]

                                          QUARTER 9    QUARTER 10  QUARTER 11  QUARTER 12   TOTAL 
                                         ------------  ----------  ----------  ----------  -------
                                                                                                  
Revenue Earnout Thresholds..............   $ 3,000      $ 2,500      $2,000      $1,500    $ 9,000

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

(A) This quarter represents the first full Caldera quarter after the completion 
 of the combination. For example, if the combination is completed prior to
    April 30, 2001, this quarter will be the three months of May, June and July;
    if the combination is completed after April 30, 2001, then this quarter will
be the three months of August, September and October.                   

   Based on the closing price of Caldera's common stock on February 9, 2001,
the date the third amendment to the reorganization agreement was entered into,  
the aggregate value of the approximate 16 million shares of New Caldera, the $23
million cash and the $8 million promissory note to be paid for the server and   
professional services groups would have been approximately $84 million. In      
negotiating this                                                                

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purchase price, the parties discussed not only Caldera's and SCO's stock prices,
but also the relative values of the revenue streams, products and services,     
opportunities for growth and other contributions that were to be provided by    
each party to the combined entity. For a more detailed description of the       
various factors considered by the boards of SCO and Caldera, please see "The    
Combination -- Reasons for the Combination" beginning on page 43.               

     The New Caldera stock that SCO receives as a result of the combination will
be held as an asset of SCO. SCO has no current intention of distributing New    
Caldera stock directly to SCO shareholders, in part because the shares will     
serve as security for the $18 million line of credit to SCO from The Canopy     
Group, the majority stockholder of Caldera.                                     

STOCK OPTION AND BENEFIT PLANS AND RELATED SECURITIES                           

Caldera options                                                                 

   The term, exercisability, vesting schedule, status as an "incentive stock
option" under section 422 of the Internal Revenue Code, if applicable, and all  
other terms and conditions of the Caldera options assumed by New Caldera will be
unchanged.                                                                      

SCO options                                                                     

 New Caldera has agreed to assume or exchange the outstanding options of
those SCO employees who will become New Caldera employees, with the exception of
David McCrabb, Jack Moyer and Jim Wilt. Each option to purchase shares of SCO   
common stock shall be converted into a New Caldera option to purchase half the  
number of shares of New Caldera common stock. Under the assumption, the exercise
price of the New Caldera option will be twice the exercise price per share of   
such SCO option. Under the exchange, the exercise price of the New Caldera      
option will be the fair market value of New Caldera common stock immediately    
prior to the closing of the combination. Under either the replacement or the    
exchange, all New Caldera options granted will be vested as to the same         
percentage of underlying shares of New Caldera as the related SCO options were  
vested in underlying shares of SCO; the New Caldera options will continue to    
vest in accordance with the original vesting schedules of the related SCO       
options. A vote for the combination will be deemed to constitute approval of the
issuance of New Caldera options in exchange for the assumed SCO options.        

Caldera stock plans                                                             

In addition, the Caldera stock incentive and stock purchase plans, as 
proposed to be amended, will be assumed and continued by New Caldera. See       
Proposals Three and Four under "Proposals to be Voted Upon by Caldera           
Stockholders at the Caldera Annual Meeting" on page 165. A vote for the         
combination will be deemed to constitute approval of the assumption and         
continuation of the Caldera plans as proposed to be amended.                    

Employee benefit plans                                                          

 New Caldera has agreed to use reasonable efforts to provide the Caldera
benefit arrangements and Caldera employee plans to the employees of SCO who     
become New Caldera employees. To the extent that New Caldera does not have any  
such plan or arrangement in effect in a jurisdiction where there are            
transferring employees, New Caldera has agreed to adopt plans providing         
comparable benefits to the plans for the transferring employees.                

New Caldera has agreed to provide all transferring employees with the 
opportunity to participate in any employee stock option or other incentive      
compensation plan of New Caldera on substantially the same terms and conditions 
as are available to similarly situated employees of Caldera or New Caldera.     
Prior to the effective time, Caldera, New Caldera and SCO will mutually agree   
upon an integration plan which will include, among other things, provisions     
relating to compensation and other equity incentives for employees.             

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 New Caldera has agreed to take all steps necessary to cause each of the
benefit arrangements and employee plans of Caldera to waive any waiting period  
or other requirement for duration of employment with New Caldera which would    
prevent a transferring employee who is otherwise eligible to participate in the 
plan from participating in the plan immediately following the effective time.   

New Caldera has also agreed to pro rate any portion of a premium or   
deductible with respect to a plan for any transferring employee for any plan    
year that commenced prior to the effective time.                                

New Caldera has also agreed to take all steps necessary to cause each 
employee plan to recognize each transferring employee's length of service under 
comparable employee benefit plans maintained by SCO. Therefore, for purposes of 
eligibility, participation, vesting and benefit accrual, the transferring       
employee will be treated as if employed by New Caldera for such period.         

DISTRIBUTION AND REGISTRATION OF SHARES                                         

   SCO has agreed not to distribute to its shareholders any of its shares of
New Caldera for six months after the closing date. SCO has further agreed not to
distribute to its shareholders more than 25% of its New Caldera shares during   
any six (6) month period.                                                       

    Caldera has agreed to file a registration statement to facilitate any such
distribution of New Caldera shares to the SCO shareholders.                     

CONDITIONS TO THE COMBINATION                                                   

 The obligations of SCO and the other contributing companies, on the one
hand, and of New Caldera and Caldera, on the other, to effect the combination   
are subject to a number of conditions, including:                               

    - the combination shall have been approved and adopted by both the Caldera
stockholders and the SCO shareholders;                            

- the board of directors of New Caldera shall have appointed two      
     individuals to the board of directors of New Caldera to be named by SCO
and approved by Caldera;                                          

   - the relevant parties shall have entered into the stockholder agreement,
      the escrow agreement, the security agreement, and the voting agreements;

   - the New Caldera common stock to be issued in the combination shall have
   been approved for quotation on the Nasdaq National Market, subject to
notice of issuance;                                               

- the representations and warranties of each party contained in the   
       reorganization agreement shall be accurate except where the breaches have
not resulted in a material adverse effect;                        

     - each party shall have materially complied with the covenants contained in
the reorganization agreement;                                     

   - each of Caldera and SCO shall have received an opinion of their counsel
as to the tax consequences of the combination; and                

- any applicable waiting periods of anti-trust requirements shall have
    expired or been terminated and no order preventing the consummation of
      the combination, shall have been issued by any federal or state court or
governmental agency.                                              

     Any of the conditions to the obligations of one party may be waived by such
party.                                                                          

REPRESENTATIONS AND WARRANTIES                                                  

The reorganization agreement contains customary representations and   
warranties of the parties. These representations and warranties relate to, among
other things, the parties' organizations, capital structures, authority to enter
into the transaction, filings with securities regulatory authorities, absence of
material litigation, the accuracy of information supplied for this document and 
other matters. SCO has made                                                     

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additional representations and warranties including representations relating to 
absence of defaults under material contracts, intellectual property rights,     
title to, condition and sufficiency of the contributed companies and the        
contributed assets.                                                             

COVENANTS                                                                       

Covenants by both parties                                                       

The reorganization agreement contains mutual covenants, including:    

    - the negotiation of a mutually acceptable arrangement between SCO and New
Caldera and, if required, the other parties to the agreement, with
      respect to the contracts that govern products or assets relating to both
     the server and professional services groups and the Tarentella business
of SCO;                                                           

- the notification to the other party of:                             

   - any event reasonably likely to render any of their representations or
warranties untrue or inaccurate in any material respect;        

     - any event reasonably likely to have a material adverse effect on either
Caldera or the server and professional services groups; and     

   - any material breach by them of any covenant or agreement contained in
the reorganization agreement;                                   

    - carrying on and preserving its business in the ordinary and usual course
consistent with past practice;                                    

  - obtaining consents required in connection with the material contracts;

     - providing reasonable access to information, including without limitation,
any and all information related to taxes; and                     

    - cooperation on tax matters, including the preparation and defense of tax
returns.                                                          

In addition, each party has agreed that it will not, without the prior
consent of the other:                                                           

- borrow any money except for amounts which are not material;         

- cause any of the contributed assets to become subject to any        
non-permitted liens or encumbrance;                               

   - dispose of any of the assets except in the ordinary course of business,
consistent with past practice;                                    

- declare or pay any cash or stock dividend or other distribution in  
respect of capital stock;                                         

    - amend the certificate of incorporation or bylaws of Caldera or of any of
the contributed companies;                                        

- implement any layoffs or reductions in force; and                   

     - fail to pay or withhold any material tax when due to be paid or withheld.

Caldera and New Caldera covenants                                               

Caldera and New Caldera have agreed to:                               

  - qualify the New Caldera options to be granted upon cancellation of the
SCO options pursuant to the reorganization agreement under state  
securities or "blue sky" laws;                                    

   - have New Caldera adopt the Caldera employee plans, and have New Caldera
 use reasonable efforts to provide the Caldera employee plans to the
       transferring employees as provided to Caldera employees who are similarly
situated;                                                         

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- reimburse SCO for any pre-paid commissions and pre-paid royalties   
  relating to certain receivables to be collected by Caldera after the
closing;                                                          

     - maintain the indemnification, limitations of liability and directors' and
   officers' insurance for Caldera executive officers and directors; and

     - maintain indemnification and insurance for directors, officers, employees
       and agents of the contributed companies and SCO involved in the server or
professional services groups and who become employees, officers or
directors of New Caldera or Caldera.                              

SCO covenants                                                                   

SCO has agreed to:                                                    

- ensure that all intellectual property rights and intangible assets  
     required for the productions, development, marketing and support of the
products of the server and professional service groups have been  
transferred to New Caldera;                                       

     - informally encourage some of their key employees to enter into employment
agreements with New Caldera;                                      

- take action under the SCO stock option plans to prevent accelerated 
vesting of stock options as a result of the combination; and      

     - maintain directors' and officers' liability insurance covering acts on or
      before the effective time of employees who become New Caldera employees.

     In addition, SCO and the contributed companies and subsidiaries have agreed
that they will not, without the prior consent of Caldera, where it would cause a
material adverse effect:                                                        

  - grant any exclusive license to any of the intellectual property rights
       relating to the server or professional services groups or grant any other
license to those rights except in the ordinary course of business;

- materially amend or terminate any of its material contracts;        

 - cause any of the contributed companies to make any loans or grant any
     guarantees, except loans in the ordinary course of business or advances
that are not material in amount; or                               

  - cause any member of the contributed companies to merge, consolidate or
reorganize with or acquire any entity that is not a member of the 
contributed companies subject to certain exceptions.              

RESTRICTIONS ON SOLICITING ALTERNATIVE PROPOSALS                                

Obligations of SCO and related parties                                          

    SCO and the contributing companies have agreed that they will not directly
or indirectly:                                                                  

- solicit, initiate or encourage the submission of any SCO alternative
proposal described below;                                         

- engage in discussions or negotiations regarding any SCO alternative 
proposal;                                                         

- take any other action intended, designed or reasonably likely to    
     facilitate any inquiries or the making of any proposal that constitutes
       or would reasonably be expected to lead to, any SCO alternative proposal;

   - enter into any letter of intent, acquisition agreement or other similar
     agreement with any person with respect to any SCO alternative proposal;
or                                                                

- make or authorize any statement, recommendation or solicitation in  
support of any SCO alternative proposal.                          

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     "SCO alternative proposal" means any inquiry, proposal or offer relating to
any direct or indirect (a) acquisition, purchase, sale or other disposition of  
any of the server or professional services groups' assets other than in the     
ordinary course and disposal of worn or obsolete items consistent with past     
practice, (b) acquisition, purchase, sale or other disposition of any of the    
voting securities of any contributed company, or (c) merger, consolidation, sale
of any of the assets, liquidation, or similar transaction involving any         
contributed company.                                                            

SCO may, in response to an unsolicited SCO alternative proposal,      
participate in discussions or negotiations with, furnish information to a third 
party, make a recommendation in support of the proposal, or accept the proposal,
subject to the following:                                                       

  - the third party has made a bona fide written proposal to the SCO board
which identifies a price or range of values to be paid for the    
outstanding securities or assets of SCO;                          

- after consultation with investment bankers of nationally recognized 
      reputation, the SCO board determines that the transaction is financially
more favorable to the shareholders of SCO than the combination;   

   - the SCO board determines, after consultation with investment bankers of
   nationally recognized reputation, that the third party is financially
capable of consummating the SCO alternative proposal;             

    - the SCO board determines, after consultation with outside legal counsel,
that failure to take such action would be inconsistent with the   
director's fiduciary duties;                                      

- SCO has notified Caldera in writing of the SCO alternative proposal,
including its principal financial and other material terms and    
       conditions, including the identity of the person making the proposal; and

   - SCO must advise Caldera of any request for non-public information which
it reasonably believes would lead to any SCO alternative proposal.

INDEMNIFICATION                                                                 

General indemnification                                                         

SCO has agreed to indemnify New Caldera and Caldera against:          

   - all liabilities relating to the server and professional services groups
  not expressly assumed by Caldera or New Caldera, and all liabilities
whatsoever relating to the business retained by SCO;              

    - any claim by any contributing company asserting that the transfer of the
      capital stock of the contributed companies and the contributed stock and
   assets to New Caldera constitutes a fraudulent conveyance, fraudulent
     transfer or a preference under any applicable foreign, state or federal
law;                                                              

- any breach by any contributing company of its representations and   
     covenants relating to fraudulent conveyances or any liabilities related
to non-compliance with bulk transfer laws in connection with the  
combination;                                                      

- any liability relating to SCO's Tarantella business;                

- any material liability omitted from the financial statements of the 
    server and professional services groups that was required by generally
accepted accounting principles to be included or reflected in the 
financial statements;                                             

     - any claims brought by an SCO employee relating to such employment with or
termination by SCO prior to the closing;                          

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- any breach of representation in the reorganization agreement; or    

- any unforeseen tax liability, as described below.                   

This indemnification is triggered only when the aggregate of those    
liabilities exceed $1.0 million at which time, SCO shall be required to pay the 
entire amount of the loss.                                                      

   However, in no event shall the amount of indemnification exceed the value
of 1.6 million shares of New Caldera common stock on a fully diluted basis,     
based on the average closing price of Caldera common stock for the five days    
prior to the closing, except:                                                   

     - losses relating to intellectual property which shall not exceed the value
       of 8 million shares of New Caldera common stock on a fully diluted basis;
and                                                               

- there are no limits on intentional fraud or misrepresentation.      

Time limits for bringing indemnification claims                                 

  Claims for indemnification may generally be brought at any time prior to
the first anniversary of the closing of the combination.                        

ESCROW                                                                          

    An escrow consisting of 1.6 million shares of the New Caldera common stock
to be issued to SCO shall be available for one year after the closing to        
compensate Caldera and New Caldera for the indemnification obligations of SCO.  

TAX INDEMNIFICATION                                                             

   SCO shall also indemnify New Caldera with respect to certain tax matters,
including for any tax:                                                          

     - of SCO or any member of the affiliated group of corporations of which SCO
      is a member which is not related to the server and professional services
groups or to any contributed company;                             

   - relating to the income, business, assets, property or operations of the
      server and professional services groups or of any contributed company to
       the extent that the liability for tax is not disclosed to Caldera, and is
either (a) in respect of any taxable period that ends prior to the
     closing or in respect of any taxable period that includes, but does not
       end on, the closing, the portion of that period ending on the closing, or
(b) with respect to an excess loss account in the stock of any    
   contributed company or from a deferred intercompany transaction other
    than among the contributed companies entered into prior to the closing
   and is triggered as a result of any contributed company ceasing to be
affiliated with SCO;                                              

     - under Subpart F of the Internal Revenue Code attributable to transactions
by SCO; or                                                        

- as the result of a breach of representation or warranty, covenant or
agreement by SCO.                                                 

   New Caldera must indemnify SCO and its affiliates with respect to certain
tax matters including for:                                                      

    - any tax relating to the income, business, assets, property or operations
      of the server and professional services groups or any of the contributed
      companies in respect of all taxable periods beginning after the closing,
     or, in the case of any taxable period that includes but does not end on
     the closing, the portion of that period commencing on the day following
the closing;                                                      

- to the extent a liability for tax is reflected in the financial     
      statements for the server and professional services groups or previously
disclosed to New Caldera;                                         

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     - under Subpart F of the Internal Revenue Code attributable to transactions
by New Caldera or Caldera after the closing; and                  

- as the result of a breach of representation or warranty, covenant or
agreement by New Caldera or Caldera.                              

TAXES                                                                           

   SCO and Caldera shall share equally all sales, use, stamp and other taxes
on the combination, except that Caldera shall not pay more than $300,000.       

TERMINATION OF THE REORGANIZATION AGREEMENT                                     

The reorganization agreement may be terminated by:                    

- mutual written agreement of SCO and Caldera;                        

- any party, if there has been a material breach by the other of any  
  representation, warranty, the covenant or agreement set forth in the
      reorganization agreement, and the breach is not corrected within 30 days
after notice;                                                     

    - any party, if the combination is not completed on or before May 31, 2001
       for any reason, other than any wrongful action or as a result of a breach
     of the reorganization agreement or related agreement by the terminating
party;                                                            

    - by any party, if a permanent injunction or other order by any federal or
      state court restraining or prohibiting the combination shall have become
final and non-appealable;                                         

   - by any party, if the stockholders of Caldera or the shareholders of SCO
      do not approve the combination unless the failure to obtain approval was
caused by any breach by Caldera or SCO, as the case may be, of the
 reorganization agreement or any related agreement in which case the
breaching party cannot terminate it;                              

     - by Caldera, if (a) the board of directors of SCO withdraws or modifies in
     an adverse manner its approval or recommendation of the combination, or
(b) the board of directors of SCO recommends or approves any SCO  
alternative proposal;                                             

    - by SCO, if the board of directors of Caldera withdraws or modifies in an
  adverse manner its approval or recommendation of the combination; or

  - by any party at any time prior to the SCO shareholder approval, if the
   SCO board recommends or accepts a SCO alternative proposal, unless it
violates the non-solicitation obligations described under         
"-- Restrictions on Soliciting Alternative Proposals" on page 72. 

TERMINATION FEES                                                                

     SCO will pay Caldera a termination fee equal to approximately $4 million if
the reorganization agreement is terminated and the SCO board has changed its    
recommendation.                                                                 

     Caldera will pay SCO the termination fee if the reorganization agreement is
terminated and the Caldera board has changed its recommendation.                

SCO will pay Caldera the termination fee if:                          

- the SCO shareholders do not approve the combination after a Caldera 
    alternative proposal has been publicly disclosed and not withdrawn and
prior to the rejection; or                                        

- SCO has violated its non-solicitation obligations; and              

    - within 6 months an agreement is entered into for an alternative proposal
or within 12 months an alternative proposal is consummated.       

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EXPENSES OF THE COMBINATION                                                     

     Each party will bear its own fees and expenses incurred with respect to the
negotiation, preparation and performance of the reorganization agreement and the
related transactions.                                                           

     Caldera reimbursed SCO for $1.5 million of transition costs incurred by SCO
from August 2000 through December 2000. These costs related to the retention of 
various employees of SCO who will become employees of New Caldera.              

SURVIVAL OF REPRESENTATIONS AND WARRANTIES                                      

   All representations, warranties and covenants of the parties contained in
the reorganization agreement will remain operative for a period of two years    
after effective time or any earlier termination of the reorganization agreement,
except for covenants and other provisions that by their express terms survive   
for a longer period.                                                            

AMENDMENT AND WAIVER OF THE REORGANIZATION AGREEMENT                            

  Any term or provision of the reorganization agreement may at any time be
amended or waived in a writing signed by all of the parties. After approval by a
party's stockholders, no amendment will be made which by law requires the       
further approval of a party's stockholders without obtaining the further        
approval.                                                                       

SCO BUNDLED PRODUCTS                                                            

   Several SCO technology products traditionally bundled into OpenServer and
UnixWare7 are not being acquired by Caldera from SCO in the combination.        
Pursuant to the terms of the reorganization agreement, SCO will grant to Caldera
a royalty free license to use, modify and sublicense the current versions of    
SCO's Xdesktop and Panaroma products as part of OpenServer. In addition, Caldera
has agreed to remove or disable SCO's Webtop, Vision FS and Term Lite products  
from UnixWare7 and OpenServer within 60 days from the consummation of the       
combination. During this 60-day grace period, Caldera will receive a            
non-exclusive, royalty-free license to use and sublicense Webtop, Vision FS and 
Term Lite, as bundled with UnixWare7 and OpenServer. Following the expiration of
the grace period, Caldera will pay to SCO standard royalty fees whenever it     
sells Vision FS, Tarantella Express or Webtop, whether on a stand-alone basis or
bundled with OpenServer and UnixWare.                                           

AGREEMENTS RELATED TO THE COMBINATION 

VOTING AGREEMENTS                                                               

Voting agreements with SCO                                                      

   The Canopy Group, Inc. and MTI Technology Corporation have entered into a
voting agreement with SCO. Together these stockholders hold approximately 67% of
the outstanding shares of Caldera common stock. Doug Michels has entered into a 
voting agreement with Caldera. Mr. Michels holds approximately 10% of the       
outstanding shares of SCO common stock.                                         

Voting agreement terms                                                          

 Under the voting agreements, each of these stockholders has agreed that
they will vote their shares in favor of the adoption of the reorganization      
agreement and approval of the combination. They have also agreed to vote against
any dissolution or liquidation, any amendment to their respective governing     
documents which would prevent or impede the combination. Mr. Michels has also   
agreed to vote against a SCO alternative proposal.                              

    These stockholders have also delivered irrevocable proxies with respect to
matters covered by the voting agreements. In addition, subject to exceptions,   
these stockholders have agreed not to sell, transfer,                           

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dispose of or encumber any shares held by them until the effective time or the  
valid termination of the reorganization agreement.                              

These stockholders have also agreed that they shall not, directly or  
indirectly:                                                                     

   - solicit or initiate discussions or engage in negotiations regarding any
alternative proposal;                                             

     - furnish any nonpublic information regarding their respective companies to
any person in connection with respect to or likely to facilitate  
inquiries which could result in an acquisition proposal;          

     - enter into any letter of intent or other similar document relating to any
alternative proposal; or                                          

- make or authorize any statement or recommendation in support of any 
alternative proposal.                                             

STOCKHOLDER AGREEMENT                                                           

Nomination rights                                                               

    Caldera, New Caldera and SCO will enter into a stockholder agreement which
will provide that so long as SCO continues to own at least 10% and not more than
19.9% of the outstanding shares of New Caldera common stock, SCO shall be       
entitled to name one nominee to the New Caldera board. So long as SCO continues 
to own at least 20% of the outstanding shares of New Caldera common stock, SCO  
shall be entitled to name two nominees to the New Caldera board. So long as SCO 
owns at least 10% of the outstanding shares of New Caldera, the New Caldera     
board shall not be increased to a number greater than nine. Each nominee must be
reasonably acceptable to New Caldera. New Caldera is also obligated to use its  
best efforts to cause the New Caldera board to unanimously recommend to its     
stockholders to vote in favor of the SCO nominees and to cause the shares for   
which New Caldera's management holds proxies to be voted in favor of the SCO    
nominees. In addition, the Canopy Group, Inc. and MTI Technology Corporation    
agree to vote in favor of the SCO nominees.                                     

Limits on resales                                                               

    So long as SCO owns at least 5% of New Caldera's outstanding common stock,
they may sell their New Caldera shares only in accordance with the limitations  
of Rule 144 of the Securities Act. SCO also agrees not to sell New Caldera      
securities constituting 5% or more of the outstanding New Caldera securities to 
any one person or group.                                                        

Voting provisions                                                               

   So long as SCO owns at least 10% of the outstanding stock of New Caldera,
SCO agrees to vote all of its shares of New Caldera common stock in favor of the
New Caldera nominees for election to the New Caldera board of directors.        

 So long as SCO owns at least 10% of the outstanding common stock of New
Caldera, they shall vote all shares of New Caldera common stock owned by them in
accordance with the recommendation of the New Caldera board. SCO may, however,  
vote its shares in its sole discretion in the following specific matters:       

- a proposal involving the right to vote and participate pro rata with
 other common stockholders in any distribution to the holders of New
Caldera common stock;                                             

- a recapitalization in which New Caldera common stock is converted or
     exchanged for a security having substantially different rights than New
Caldera common stock;                                             

    - a transaction involving a conflict of interest between any member of the
board and New Caldera board;                                      

- actions brought by a stockholder of New Caldera; or                 

- any amendment to the bylaws of New Caldera.                         

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These voting provisions do not apply to any proposals for any         
recapitalization or combination accomplished in connection with any merger,     
acquisition, consolidation or combination, any transaction of a type            
contemplated by Section 351 of the Internal Revenue Code or any other similar   
transaction where (a) New Caldera is acquired by a third party, (b) there has   
been a "change of control" so that the stockholders of New Caldera prior to a   
transaction own, in the aggregate, less than a majority of the outstanding stock
of New Caldera or the acquiring entity after the transaction, (c) New Caldera   
acquires another entity, or (d) New Caldera acquires all or substantially all of
the assets of another entity.                                                   

  They also may not exercise dissenter's or appraisal rights for any event
described in clauses (a) through (d) of the preceding paragraph that has been   
approved by the New Caldera board of directors.                                 

Standstill provisions                                                           

   Until the fifth anniversary of the combination, SCO will not, without New
Caldera's prior written consent:                                                

- acquire, or enter into discussions, negotiations, arrangements or   
    understandings with any third party to acquire beneficial ownership of
  any New Caldera voting securities if SCO would then beneficially own
      and/or have the right to acquire more than the percentage of New Caldera
       common stock held by it immediately after the closing of the combination,
which we refer to as the standstill percentage;                   

- make, or in any way participate in, any solicitation of proxies with
respect to the voting of any voting securities of New Caldera; or 

    - seek, either alone or in concert with others, to control the New Caldera
board or the policies of New Caldera.                             

The limitations described above shall be suspended upon the earlier to
occur of:                                                                       

     - the date that a third party not affiliated with SCO commences a tender or
 exchange offer, that is not withdrawn or terminated, and that would
   result in a person or group beneficially owning in the aggregate more
   than 50.0% of the total voting power of New Caldera. If any tender or
       exchange offer is withdrawn or terminated, the standstill limitation will
be reinstated;                                                    

- the public announcement by New Caldera that it has entered into any 
       agreement with respect to a merger, consolidation, combination or similar
    transaction involving New Caldera in which all the stockholders of New
     Caldera collectively will own less than 50.0% of the outstanding voting
stock of the surviving or acquiring entity immediately after the  
transaction. The standstill limitation will be reinstated if the  
transaction is terminated prior to being completed; or            

 - the sale or disposition of substantially all of New Caldera's assets.

   If SCO acquires shares that cause it to own a percentage of New Caldera's
outstanding stock that is greater than the standstill percentage, it will not be
obliged to dispose of any New Caldera voting stock to the extent the increased  
shares were acquired as a result of a recapitalization of New Caldera or a      
repurchase or exchange of securities by New Caldera or any other action taken by
New Caldera or its affiliates.                                                  

EMPLOYMENT AGREEMENTS                                                           

  The employees of SCO who will become executive officers or are otherwise
considered key employees of New Caldera will enter into employment agreements   
with New Caldera. These agreements will provide for employment of one or two    
years and severance benefits, among other things. To identify those persons who 
are expected to become executive officers of New Caldera and enter into         
executive employment agreements, please refer to "Management of Caldera and New 
Caldera" on page 134.                                                           

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SECURED PROMISSORY NOTE AND SECURITY AGREEMENT                                  

     Under the terms of the secured promissory note, New Caldera will pay to SCO
the aggregate amount of $8 million in four quarterly installments beginning the 
fifth quarter after the closing of the combination. New Caldera may reduce the  
principal amount payable under the note by an amount equal to any advance       
purchase orders assigned to New Caldera at the closing of the combination that  
are not collected on within one year's time, plus 50% of New Caldera's external 
costs in collecting on these advance purchase orders.                           

    New Caldera's obligations under the secured promissory note are secured by
the assets of the OpenServer line of business pursuant to a security agreement  
to be entered into between New Caldera and SCO at the time of closing of the    
combination.                                                                    

LOAN AGREEMENTS                                                                 

  In conjunction with the signing of the reorganization agreement, Caldera
and The Canopy Group, Inc., the majority stockholder of Caldera, agreed to loan 
SCO $7 million and $18 million, respectively, on or before the closing of the   
combination.                                                                    

     If the combination is completed, Caldera's loan to SCO will be forgiven and
will be treated by Caldera and SCO as part of the cash portion of the           
consideration to SCO for the server and professional services groups. The loan  
is secured by a senior first priority security interest in all of SCO's assets. 
The interest rate is 10% per annum, and the principal plus interest of the note 
matures on the closing of the combination or the date of termination of the     
reorganization agreement. If payment of all amounts due under the note are not  
made on or before the maturity date, Caldera has the option to convert all of   
the outstanding principal plus unpaid interest accrued on that date into common 
stock of SCO at a price per share of $2.44, the closing price of SCO's common   
stock on January 26, 2001, the date Caldera funded the $7 million to SCO.       

  Under the terms of The Canopy Group's line of credit agreement with SCO,
The Canopy Group agreed to loan up to $18 million to SCO. The line of credit is 
secured by a junior first priority security interest in all of SCO's assets     
(other than shares of New Caldera common stock issued to SCO in the             
combination), subordinate only to the senior first priority security interest of
Caldera. In connection with entering into the loan agreement, The Canopy Group  
received a warrant to purchase 1,440,000 shares of SCO's common stock at a price
of $1.5625 per share, the closing price of SCO's common stock on January 8,     
2001, the date the loan agreement was entered into. If SCO borrows more than $9 
million under the line of credit, The Canopy Group will be entitled to          
additional warrants to purchase shares of SCO common stock at such price per    
share. The number of shares that may be purchased under these additional        
warrants shall equal the product of the amounts exceeding $9 million multiplied 
by 0.25, divided by $1.5625, up to an aggregate of 1,440,000 additional shares. 
The interest rate on outstanding loan amounts is 10% per annum, and all         
outstanding principal and interest matures on December 31, 2001. At any time    
prior to the maturity date, The Canopy Group may elect to convert the           
outstanding principal and accrued interest into shares of common stock of SCO at
a price per share of $1.5625, the closing price of SCO's common stock on January
8, 2001, subject to the limitation that total ownership may not exceed 19% of   
SCO common stock when combined with shares held by Caldera.                     

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THE EMPLOYEE STOCK OPTION ALTERNATIVES

GENERAL                                                                         

At the effective time of the combination, each outstanding option to  
purchase shares of SCO common stock under SCO's stock option plan may be either 
assumed or replaced on a grant by grant basis by New Caldera at the discretion  
of each employee, subject to the terms and conditions set forth in this section.

   A condition to New Caldera assuming or replacing an outstanding option is
that the optionee become employed with New Caldera or its subsidiaries. However,
any such employment relationship will be governed by the terms of an employment 
"offer letter" and will only be on an "at will" basis, to the extent permissible
under applicable laws.                                                          

SCO's stock option plan will continue to govern the option grants of  
employees of SCO who do not become employees of New Caldera and remain with SCO.
If you become an employee of New Caldera and do not choose to have your SCO     
options assumed or replaced, your options will terminate 90 days after the      
closing of the combination pursuant to SCO's stock option plan.                 

OUR REASONS FOR THE EMPLOYEE STOCK OPTION ASSUMPTION AND REPLACEMENT OFFER      

Caldera and SCO negotiated the employee stock option assumption and   
replacement offer to provide the server and professional services groups'       
employees similar equity incentives to those possessed by other New Caldera     
option holders and to allow them to participate in the success of New Caldera.  

Caldera and SCO agreed to halve the number of shares underlying each  
outstanding SCO option based on the fact that at the time the reorganization    
agreement was signed Caldera's common stock was trading at approximately twice  
the per share price of SCO's common stock.                                      

The replacement alternative is designed to incent the server and      
professional services groups' employees holding options for SCO common stock at 
an exercise price equal to more than half of the New Caldera trading price at   
closing. Based on the current trading price of Caldera common stock and the     
exercise prices of outstanding SCO options, New Caldera believes the replacement
alternative will be the desirable alternative for most of the former SCO        
employees. However, New Caldera is still offering the assumption alternative in 
recognition that some SCO employees have outstanding options with low exercise  
prices which may make the assumption option desirable.                          

The assumption alternative is designed to incent the server and       
professional services groups' employees holding options for SCO common stock at 
an exercise price equal to less than half of the New Caldera trading price at   
the closing of the combination. Under the assumption alternative, the exercise  
price per share of the New Caldera options will be twice that of the SCO options
because, as noted above, Caldera's common stock was trading at a price per share
twice that of SCO's common stock at the time the reorganization agreement was   
signed. A former SCO employee who chooses the assumption alternative will incur 
the same aggregate exercise price (number of shares times exercise price per    
share) in exercising options to purchase New Caldera common stock as he or she  
would have incurred in exercising SCO options; in this way, the assumption      
alternative preserves the benefit of the employee's low exercise price, relative
to the replacement alternative.                                                 

   Since the time of signing the reorganization agreement, the trading price
of Caldera common stock has fluctuated widely. Consequently, former SCO         
shareholders choosing between the replacement and the assumption alternative    
should obtain updated market price information before choosing an alternative.  

ASSUMPTION ALTERNATIVE                                                          

  Under the assumption alternative, each SCO stock option will continue to
have its original terms (including the vesting schedule and termination         
provisions), and be subject to the conditions that were applicable to the option
immediately prior to the effective time, except that:                           

   - each SCO stock option will become exercisable for shares of New Caldera
common stock;                                                     

- the number of shares of New Caldera common stock issuable upon the  
    exercise of any given SCO option will be determined by multiplying the
number of shares of SCO common stock underlying                   

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      the option immediately prior the effective time by 0.5 and rounding down
to the nearest whole share;                                       

  - the per share exercise price of any given option will be determined by
dividing the exercise price of the option immediately prior to the
  effective time by 0.5 and rounding up to the nearest whole cent; and

- the option for shares of New Caldera may not qualify as an incentive
stock option even though the SCO option may have qualified.       

To illustrate the effect of choosing the assumption alternative for a 
specific option grant, assume our combination closes on April 1, 2001 and, at   
that point, an employee had a SCO option to purchase 100 shares which was       
granted on April 1, 1999 when SCO's common stock was at $5.4375 per share, and  
which was vested as to 50 shares on April 1, 2001. The employee would receive   
the following:                                                                  

 - an option to purchase 50 shares of New Caldera common stock, which is
vested as to 25 shares; and                                       

- the exercise price of the option would be $10.875.                  

  The assumption alternative is intended to provide an equity incentive to
SCO employees who were granted SCO options with an exercise price that is       
currently in-the-money, or below the fair market value of SCO common stock. This
alternative allows these employees to retain the economic value of their SCO    
options.                                                                        

REPLACEMENT ALTERNATIVE                                                         

     Under the replacement alternative, each SCO stock option will be treated as
follows:                                                                        

  - each SCO stock option will be cancelled and replaced with a new option
exercisable for shares of New Caldera common stock;               

- the number of shares of New Caldera common stock issuable upon the  
      exercise of the replacement option will be determined by multiplying the
      number of shares of SCO common stock underlying the cancelled SCO option
     immediately prior to the effective time by 0.5 and rounding down to the
nearest whole share;                                              

    - the per share exercise price of any given option will be the fair market
     value of New Caldera common stock immediately after the effective time;
and                                                               

   - the New Caldera option granted will be vested as to the same percentage
      of underlying shares of New Caldera as the related SCO option was vested
       in underlying shares of SCO; the New Caldera option will continue to vest
 in accordance with the original vesting schedule of the related SCO
option.                                                           

    To illustrate the effect of choosing the replacement option for a specific
option grant, assume again our combination closes on April 1, 2001 and at that  
point an employee had a SCO option to purchase 100 shares which was granted on  
April 1, 1999 when SCO's common stock was at $5.4375 per share, and which was   
vested as to 50 shares on April 1, 2001. The employee would receive the         
following:                                                                      

 - an option to purchase 50 shares of New Caldera common stock, which is
vested as to 25 shares; and                                       

   - the exercise price would be the fair market value of New Caldera common
stock on April 1, 2001.                                           

   The replacement alternative is intended to provide an equity incentive to
SCO employees who were granted SCO options with an exercise price that is       
currently out-of-the-money, or above the fair market value of SCO common stock. 
This alternative will allow these employees to receive an option that is set at 
current fair market value.                                                      

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PROCEDURE FOR ELECTING OPTION ALTERNATIVE                                       

     If you tender to New Caldera your SCO options and New Caldera accepts them,
assuming the other conditions of the employee stock option assumption and       
replacement offer described in this section are met, you will have entered into 
a binding agreement with New Caldera upon the terms and subject to the          
conditions set forth in this section and in the accompanying notice of election 
to assume or replace options in Appendix N. You must send a properly completed  
and duly executed notice of election to SCO at the address under "-- SCO is     
Acting as Exchange Agent" on page 83 on or prior to the expiration date to      
participate in this assumption and exchange offer.                              

THE METHOD OF DELIVERY OF NOTICES OF ELECTION AND ALL OTHER REQUIRED  
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF THE DELIVERY IS BY     
MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN     
RECEIPT REQUESTED, BE USED IN ALL CASES. SUFFICIENT TIME SHOULD BE ALLOWED TO   
ASSURE TIMELY DELIVERY.                                                         

     New Caldera expressly reserves the right, at any time or from time to time,
to extend the period of time during which this assumption and replacement offer 
is open either to all offerees as a group, and delay acceptance of any election,
by mailing written notice of the extension to the relevant holders as described 
below. During any extension, all SCO options previously tendered will remain    
subject to the assumption and replacement offer.                                

NO NOTICES OF ELECTION SHOULD BE SENT TO CALDERA                                

All questions as to the validity, form, eligibility, including time of
receipt and acceptance of the notice of election will be determined by New      
Caldera and SCO in their sole discretion. This determination will be final and  
binding. New Caldera reserves the absolute right to reject any notice of        
election not properly delivered. New Caldera also reserves the absolute right in
its sole discretion to waive any defects or irregularities or conditions of the 
employee stock option assumption and replacement offer either before or after   
the expiration date, including the right to waive the ineligibility of any      
holder who seeks to tender SCO option agreements in this assumption or          
replacement offer. The interpretation of the terms and conditions of the        
assumption and replacement offer as to any particular SCO option either before  
or after the expiration date, including the notice of election and the related  
instructions, by New Caldera shall be final and binding on all parties. Unless  
waived, any defects or irregularities in connection with tenders of SCO options 
for assumption or replacement must be cured within a reasonable period of time  
that New Caldera shall determine. Neither New Caldera, SCO nor any other person 
shall be under any duty to give notification of any defect or irregularity with 
respect to any tender of SCO option for assumption or replacement, or shall any 
of them incur any liability for failure to give any notification.               

CONSEQUENCES OF FAILURE TO ELECT AN ALTERNATIVE                                 

If you are a server and professional services groups' employee and you
accept an offer of employment made by New Caldera, you will automatically become
an employee of New Caldera on the closing date of the combination and are       
entitled to participate in the employee stock option assumption and replacement 
offer subject to the terms and conditions set forth in this section and the     
notice of election. If you are a server and professional services groups'       
employee and your notice of election is not post-marked by the expiration date  
of the assumption and replacement offer period or if you do not submit a notice 
of election, your SCO options will terminate according to the terms of the SCO  
stock plan. This means that:                                                    

     - the unvested portion of your SCO options will terminate as of the closing
date of the combination;                                          

    - you will have 90 days from the completion of the combination to exercise
the vested portion of your SCO options; and                       

     - any vested options that you do not exercise will be cancelled on the 31st
day after the closing of the combination.                         

    These consequences will occur because you will no longer be an employee of
SCO and will not be eligible to participate in its plans.                       

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RESALES OF OPTION SHARES                                                        

 The assumed or replacement options as well as the shares of New Caldera
common stock issuable upon exercise of the assumed or replacement options will  
continue to be subject to restrictions on transfers. In general, the options are
not transferable and the shares of New Caldera common stock issuable upon their 
exercise may not be offered or sold unless registered under the Securities Act. 
New Caldera anticipates that it will register under the Securities Act the New  
Caldera common stock issuable under each assumed or replacement option shortly  
after the employee stock option assumption and replacement offer is completed.  

NO GUARANTEE OF EMPLOYMENT                                                      

   A condition to your receiving a New Caldera option in this assumption and
replacement offer is that you become employed by New Caldera or its             
subsidiaries. The tender of a SCO option is not a guarantee that you will be    
employed or will continue to be employed by New Caldera or any of its           
subsidiaries. Any employment relationship that is created in the future will be 
governed by the terms of an employment "offer letter" and will only be on an "at
will" basis.                                                                    

ACCEPTANCE OF OPTIONS FOR EXCHANGE AND DELIVERY OF NEW CALDERA OPTIONS          

New Caldera will accept, promptly after the expiration date, all SCO  
options properly tendered for cancellation under the notice of election and will
exchange New Caldera options for the cancelled SCO options promptly after:      

  - you deliver a properly completed and duly executed notice of election;

- the closing of the combination; and                                 

- the commencement of your employment with New Caldera or one of its  
subsidiaries.                                                     

  The same conditions must also be satisfied if you elect to have your SCO
options assumed by New Caldera.                                                 

CANCELLATION OF SCO OPTIONS                                                     

Upon the acceptance by New Caldera of your election to have your SCO  
options cancelled and replaced, the SCO options subject to that election will be
cancelled and may no longer by exercised.                                       

SCO IS ACTING AS EXCHANGE AGENT                                                 

  SCO is acting as the agent for the assumption and replacement offer. All
executed notices of election should be sent via mail, post-marked prior to the  
expiration date to SCO at the address set forth below or sent via facsimile to  
the number set forth below. We recommend that you use registered mail, return   
receipt requested. Questions and requests for assistance, requests for          
additional copies of this document or of the notice of election should be       
directed to SCO, addressed as follows:                                          

By mail or by hand:                                                     

The Santa Cruz Operation, Inc.                                          
425 Encinal Street                                                      
Santa Cruz, California 95061                                            

Attn: Steve Brown                                                       

  DELIVERY OF THE NOTICE OF ELECTION TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF THE NOTICE OF ELECTION.           

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SELECTED FINANCIAL DATA OF CALDERA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

  The following tables present portions of Caldera's financial statements.
You should read the selected financial data set forth below in conjunction with 
Caldera's financial statements and the related notes included elsewhere in this 
joint proxy statement/prospectus and in conjunction with "Caldera Management's  
Discussion and Analysis of Financial Condition and Results of Operations"       
appearing elsewhere in this joint proxy statement/prospectus. The selected      
statement of operations data for the years ended October 31, 1998, 1999 and 2000
and the selected balance sheet data as of October 31, 1999 and 2000 are derived 
from, and are qualified by reference to, the audited financial statements and   
related notes appearing elsewhere in this joint proxy statement/prospectus. The 
selected statement of operations data for the years ended October 31, 1996 and  
1997 and the selected balance sheet data as of October 31, 1996, 1997 and 1998  
are derived from audited and unaudited financial statements not appearing in    
this joint proxy statement/prospectus. The selected statement of operations data
for Caldera as of January 31, 2001 and for the three months ended January 31,   
2000 and 2001, have been derived from unaudited financial statements appearing  
elsewhere in this joint proxy statement/prospectus.                             

    Caldera began operations in 1994 as Caldera, Inc., a Utah corporation (the
"Predecessor"). In July 1996, the Predecessor acquired an additional business   
line which was not engaged in developing and marketing Linux software. The      
Predecessor subsequently made the strategic determination to separate its two   
business lines into separate entities and, under an asset purchase agreement,   
dated as of September 1, 1998, as amended, sold the assets relating to its      
business of developing and marketing Linux software to Caldera Systems, Inc., a 
newly formed corporation. Caldera Systems, Inc. has operated as a separate legal
entity engaged in developing and marketing Linux software since September 1,    
1998. For purposes of presenting Caldera's financial statements, Caldera has    
segregated or "carved-out" the operations relating to the Linux business from   
the historical financial statements of the Predecessor. Accordingly, Caldera's  
consolidated financial statements in this joint proxy statement/prospectus and  
the selected financial data present Caldera's financial condition and results of
operations as if Caldera had existed as a separate legal entity for all periods 
presented. The carved-out historical results presented are not necessarily      
indicative of what would have actually occurred had Caldera existed as a        
separate legal entity and any historical results are not necessarily indicative 
of results that may be expected for any future period.                          

                                                        [Enlarge/Download Table]

                                                                                      THREE MONTHS ENDED  
                                               YEAR ENDED OCTOBER 31,                     JANUARY 31,     
                                ----------------------------------------------------  ------------------- 
                                   1996        1997      1998      1999       2000      2000       2001   
                                -----------   -------   -------   -------   --------  --------   -------- 
                                (UNAUDITED)                                               (UNAUDITED)     
                                                                                                          
STATEMENT OF OPERATIONS DATA:                                                                             
Revenue:                                                                                                  
  Software and related                                                                                    
    products...................   $ 1,108     $ 1,117   $ 1,057   $ 2,773   $  2,993  $    395   $    452 
  Services.....................        --          --        --       277      1,281       158        602 
                                  -------     -------   -------   -------   --------  --------   -------- 
    Total revenue..............     1,108       1,117     1,057     3,050      4,274       553      1,054 
                                  -------     -------   -------   -------   --------  --------   -------- 
Cost of revenue:                                                                                          
  Software and related                                                                                    
    products...................       880       1,142     1,017     2,388      2,063       295        227 
  Services.....................        --          --        --       538      1,958       255        950 
  Write-off of prepaid                                                                                    
    royalties..................        --          --     1,381        --         --        --         -- 
                                  -------     -------   -------   -------   --------  --------   -------- 
    Total cost of revenue......       880       1,142     2,398     2,926      4,021       550      1,177 
                                  -------     -------   -------   -------   --------  --------   -------- 
Gross margin (deficit).........       228         (25)   (1,341)      124        253         3       (123)
                                  -------     -------   -------   -------   --------  --------   -------- 
Operating expenses:                                                                                       
  Sales and marketing..........     1,339       4,620     2,224     4,768     14,754     2,031      5,520 
  Research and development.....       826       2,136     1,489     2,302      4,954       965      1,869 
  General and administrative...       712         797     1,799     1,748      6,430     1,078      1,748 

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                                                        [Enlarge/Download Table]

                                                                                        THREE MONTHS ENDED  
                                                YEAR ENDED OCTOBER 31,                      JANUARY 31,     
                                 ----------------------------------------------------   ------------------- 
                                    1996        1997      1998      1999       2000       2000       2001   
                                 -----------   -------   -------   -------   --------   --------   -------- 
                                 (UNAUDITED)                                                (UNAUDITED)     
                                                                                                            
  SCO cost-sharing                                                                                          
    arrangement................    $    --     $    --   $    --   $    --   $    898   $     --   $    602 
  Non-cash compensation*.......         --          --        --       409      5,216      1,543        334 
                                   -------     -------   -------   -------   --------   --------   -------- 
    Total operating expenses...      2,877       7,553     5,512     9,227     32,252      5,617     10,073 
                                   -------     -------   -------   -------   --------   --------   -------- 
Loss from operations...........     (2,649)     (7,578)   (6,853)   (9,103)   (31,999)    (5,614)   (10,196)
                                   -------     -------   -------   -------   --------   --------   -------- 
Equity in loss of affiliate....         --          --        --        --       (387)        --       (648)
Other income (expense):                                                                                     
  Interest expense.............       (133)       (593)   (1,081)     (226)        --         --         -- 
  Interest income..............         --          --        --         2      3,238        113      1,008 
  Gain on sale of assets to                                                                                 
    Ebiz, Inc..................         --          --        --        --      2,306         --         -- 
  Other income (expense).......         25          23         5        (5)        --         --         20 
                                   -------     -------   -------   -------   --------   --------   -------- 
Other income (expense), net....       (108)       (570)   (1,076)     (229)     5,544        113      1,028 
                                   -------     -------   -------   -------   --------   --------   -------- 
Loss before income taxes.......     (2,757)     (8,148)   (7,929)   (9,332)   (26,842)    (5,501)    (9,816)
Provision for income taxes.....         --          --       (34)      (35)       (81)       (12)       (27)
                                   -------     -------   -------   -------   --------   --------   -------- 
Net loss.......................    $(2,757)    $(8,148)  $(7,963)  $(9,367)  $(26,923)  $ (5,513)  $ (9,843)
                                   =======     =======   =======   =======   ========   ========   ======== 
Preferred stock dividends......    $    --     $    --   $    --   $    --   $(12,253)  $(10,000)  $     -- 
                                   =======     =======   =======   =======   ========   ========   ======== 
Net loss attributable to common                                                                             
  stockholders.................    $(2,757)    $(8,148)  $(7,963)  $(9,367)  $(39,176)  $(15,513)  $ (9,843)
                                   =======     =======   =======   =======   ========   ========   ======== 
Basic and diluted net loss per                                                                              
  common share.................    $ (0.17)    $ (0.51)  $ (0.50)  $ (0.51)  $  (1.19)  $  (0.63)  $  (0.25)
                                   =======     =======   =======   =======   ========   ========   ======== 
Basic and diluted weighted                                                                                  
  average common shares                                                                                     
  outstanding..................     16,000      16,000    16,000    18,458     32,922     24,780     39,588 
                                   =======     =======   =======   =======   ========   ========   ======== 

                                                        [Enlarge/Download Table]

                                                          AS OF OCTOBER 31,                        AS OF   
                                       -------------------------------------------------------  JANUARY 31,
                                          1996          1997        1998      1999      2000       2001    
                                       -----------   -----------   -------   ------   --------  -----------
                                       (UNAUDITED)   (UNAUDITED)                                (UNAUDITED)
                                                                                                           
BALANCE SHEET DATA:                                                                                        
Cash and cash equivalents.............   $  207        $  398      $    76   $  122   $ 36,560    $28,359  
Working capital (deficit).............     (122)        1,313          290      678     88,680     82,051  
Total assets..........................    1,639         3,915       16,353    3,714    107,518     96,640  
Long-term liabilities.................       --            --           --        6         --         --  
Predecessor's equity in carved-out                                                                         
  operations..........................      576         2,319           --       --         --         --  
Total stockholders' equity............       --            --          708    1,516    102,215     91,077  

                                                        [Enlarge/Download Table]

                                                                             THREE MONTHS
                                                              YEAR ENDED        ENDED    
                                                             OCTOBER 31,     JANUARY 31, 
                                                             ------------    ------------
                                                             1999    2000    2000    2001
                                                             ----    ----    ----    ----
                                                                             (UNAUDITED) 
                                                                                         
(*)Non-cash compensation has been excluded from the                                      
  following operating expenses:                                                          
      Sales and marketing................................... $177    $1,970  $487    $140
      Research and development..............................  103    1,146    364     133
      General and administrative............................  129    2,100    692      61

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CALDERA MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS 

The following discussion should be read in conjunction with Caldera's 
Consolidated Financial Statements and Notes thereto, included elsewhere in this 
joint proxy statement/prospectus. This discussion contains forward-looking      
statements that involve risks and uncertainties. Caldera's actual results could 
differ materially from those anticipated in these forward-looking statements as 
a result of various factors, including those set forth under "Risk Factors" and 
elsewhere in this joint proxy statement/prospectus.                             

OVERVIEW                                                                        

    Caldera began operations in 1994 as Caldera, Inc., a Utah corporation (the
"Predecessor"). In July 1996, through an asset purchase, the Predecessor        
acquired an additional business unit, which was not engaged in developing and   
marketing Linux software. The Predecessor subsequently made the strategic       
determination to separate its two business lines into separate entities and,    
under an asset purchase agreement dated as of September 1, 1998, as amended,    
sold the assets relating to its business of developing and marketing Linux      
software to Caldera Systems, Inc., a newly formed corporation. Caldera Systems, 
Inc. has operated as a separate legal entity engaged in developing and marketing
Linux software since September 1, 1998. For purposes of presenting their        
financial statements Caldera has segregated or carved-out the operations related
to the Linux business from the historical financial statements of the           
Predecessor. Accordingly, Caldera's consolidated financial statements in this   
joint proxy statement/ prospectus and the following discussion present Caldera's
financial condition and results of operations as if Caldera had existed as a    
separate legal entity for all periods presented.                                

   Since September 1, 1998, Caldera has invested heavily in the expansion of
its sales, marketing and professional services organizations to support its     
long-term growth strategy. As a result, employee headcount has increased from 28
at September 1, 1998 to 178 at October 31, 2000. Caldera has incurred net losses
in each fiscal period since inception and as of October 31, 2000, had an        
accumulated deficit of $50.1 million.                                           

   Substantially all of Caldera's revenue since fiscal 1996 has been derived
from sales of Linux products and related services. Management expects that until
the closing of the combination, the majority of Caldera's revenue will continue 
to be derived from sales of eDesktop and eServer products. Subsequent to the    
closing of the combination, the majority of Caldera's revenues will be derived  
from sales of combined products resulting from the integration of Caldera's     
Linux products with the Unix server products and related applications that      
Caldera would acquire in conjunction with the acquisition of the server and     
professional services businesses. Related product sales are comprised of        
shipments of incomplete box units or documentation materials that customers     
request from time to time. Historically, Caldera has experienced substantial    
fluctuations in revenue from period to period relating to the introduction of   
new products and new versions of existing products. Upon announcement of an     
expected release date for new products or upgrades, Caldera often experiences a 
significant decrease in sales of existing products. Additionally, Caldera often 
experiences the strongest sales for a new product during the first 30 days after
its introduction as Caldera fills advance orders from its distribution channels.

Caldera began shipping its OpenLinux product in fiscal 1996 through   
indirect distribution channels such as distributors, value added resellers,     
original equipment manufacturers and system integrators, as well as directly to 
the end user using its internal sales and marketing force. Over time, Caldera's 
business model has evolved such that Caldera now sells primarily through its    
two-tier distribution channels. Caldera began offering Linux training, support  
and consulting services during fiscal 1999.                                     

Caldera markets its software and related products primarily in North  
America, Europe, Asia and Australia. Revenue from customers outside the United  
States was $56,000 in fiscal 1998, $203,000 in fiscal 1999, $1.3 million in     
fiscal 2000 and approximately $342,000 in the quarter ended January 31, 2001.   
The largest growth in international revenue has been in the Asia Pacific region 
where revenue increased from $91,000 in fiscal 1999 to $706,000 in fiscal 2000. 

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 Caldera recognizes revenue in accordance with the American Institute of
Certified Public Accountants, or AICPA, Statement of Position 97-2, or SOP 97-2.

Revenue from the sale of software is recognized upon delivery of the  
product when persuasive evidence of an arrangement exists, the price is fixed or
determinable and collection is probable. All sales into the distribution channel
or to OEMs and VARs require a binding purchase order. Prior to November 1, 2000,
sales to resellers for which payment was considered to be substantially         
contingent on the reseller's success in distributing individual units of the    
product or sales to resellers with which Caldera did not have historical        
experience were accounted for as consignments and the revenue was recognized    
once sell-through verification was received and payments from customers became  
due. Prior to October 31, 1999, Caldera did not have any consignment            
arrangements. During the year ended October 31, 2000, approximately 22% of      
product revenue was derived on a sell-through basis. Effective November 1, 2000,
Caldera began to defer revenue recognition for products sold through the        
distribution channel until the products have been sold through the channel to   
the end user. The effect of this change was not material as of November 1, 2000,
nor would it have been material to the net losses as presented in the           
accompanying statements of operations for the years ended October 31, 1998, 1999
and 2000. Direct sales to end-users are evidenced by concurrent payment for the 
product via credit card and are governed by a license agreement. Generally, the 
only multiple element arrangement of initial software sales is certain telephone
and e-mail technical support services Caldera provides at no additional charge. 
These services do not include product update or upgrade rights. After the       
initial support period, customers can elect to enter into separate support      
agreements. The cost of providing the initial support services are not          
significant; accordingly, Caldera accrues the estimated costs of providing the  
services at the time of revenue recognition. Revenue from the extended support  
agreements are deferred and recognized over the period of the contract or as the
services are provided.                                                          

     If other significant post-delivery vendor obligations exist or if a product
is subject to customer acceptance, revenue is deferred until no significant     
obligations remain or acceptance has occurred. To date, Caldera has not shipped 
any software and related products subject to acceptance terms or subject to     
other post-delivery vendor obligations. Additionally, Caldera has not recognized
revenue on any contracts with customers that may include customer cancellation  
or termination clauses that indicate a demonstration period or otherwise        
incomplete transaction.                                                         

   Caldera also offers its customers consulting, training and other services
separate from the software sale. The services are not integral to the           
functionality of the software and are available from other vendors. These       
services revenue are recognized as the services are performed.                  

    Since inception, Caldera has incurred substantial research and development
costs and has invested heavily in the expansion of its sales, marketing and     
professional services organizations to support its long-term growth strategy. As
a result of these investments, Caldera has incurred net losses in each fiscal   
period since inception and, as of January 31, 2001, had incurred total net      
losses of approximately $66.3 million since inception. Management anticipates   
that operating expenses will increase substantially for the foreseeable future  
as Caldera increases the number of people and programs in sales and marketing,  
product development and professional services. Accordingly, management expects  
to incur net losses until at least fiscal year 2002.                            

  In connection with the grant of stock options to employees during fiscal
1999 and 2000, Caldera recorded deferred compensation of $3.1 million and $6.8  
million, respectively, representing the difference between the deemed fair      
market value of the common stock for accounting purposes and the exercise price 
of these options as of the date of grant. Deferred compensation is presented as 
a reduction of stockholders' equity and is amortized over the vesting period of 
the applicable options. Caldera expensed $409,000 of deferred compensation in   
fiscal 1999, $5.2 million in fiscal 2000 and $334,000 during the quarter ended  
January 31, 2001. With respect to the options outstanding as of October 31,     
2000, Caldera expects to expense $2.1 million of deferred compensation in fiscal
2001, $1.1 million in fiscal 2002, $493,000 in fiscal 2003, and $57,000 in      
fiscal 2004.                                                                    

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  As a result of an option agreement between The Canopy Group and Ralph J.
Yarro III, which was subsequently rescinded, Caldera expensed a one-time        
compensation charge of approximately $372,000 during fiscal 2000. The option    
agreement allowed Mr. Yarro to purchase shares of Caldera common stock directly 
from The Canopy Group. No shares were purchased under the agreement. Mr. Yarro  
is the president and chief executive officer of The Canopy Group and the        
Chairman of Caldera's board of directors.                                       

In December 1999 and January 2000, Caldera sold 5.0 million shares of 
Series B convertible preferred stock at $6.00 per share, resulting in net       
proceeds of approximately $29.8 million. Each share of Series B convertible     
preferred stock was immediately convertible into one share of common stock. Due 
to the beneficial conversion feature associated with the Series B convertible   
preferred stock, during the first quarter of fiscal 2000, Caldera recorded a    
preferred stock dividend in the amount of $10.0 million thereby increasing the  
net loss applicable to common stockholders. On March 13, 2000, Caldera's major  
stockholder, The Canopy Group, sold a warrant for $10,000 to purchase 416,667   
shares of our common stock held by The Canopy Group at $5.98 per share for a    
two-year period to one of the Series B convertible preferred stockholders. Upon 
exercise of the warrant, all proceeds will be paid to The Canopy Group. Caldera 
recorded this transaction during the second quarter of fiscal 2000 as if Caldera
had sold the warrant to the stockholder with the fair value of the warrant of   
$2,252,717 being recorded as a dividend related to convertible preferred stock  
and an offsetting contribution to capital.                                      

     In December 1999 and January 2000, Caldera acquired an equity investment in
Lineo, Inc. in exchange for 1,250,000 shares of common stock, acquired an equity
investment in Evergreen Internet, Inc. in exchange for $2.0 million in cash and 
200,000 shares of common stock and acquired an equity investment in Troll Tech  
AS and certain license rights in exchange for 106,356 shares of common stock.   
These three companies provide strategic technology solutions for the Linux      
industry. Caldera has entered into agreements with Troll Tech AS and Evergreen  
Internet whereby it will be licensing their technology for inclusion in         
Caldera's products and service offerings. Caldera will pay future royalties to  
Troll Tech and Evergreen Internet based on its sales of products, which         
incorporate their technology. Caldera's licensing agreement with Evergreen      
Internet also calls for Evergreen Internet to include Caldera's technology in   
its products for which Caldera will be paid future royalties by Evergreen       
Internet based on sales of products that incorporate Caldera's technology.      
Management believes that these investments have the potential to benefit Caldera
through increased revenue from product sales, royalties and service             
opportunities. Management does not expect that these investments will have a    
material adverse impact on future liquidity. The investments in Evergreen       
Internet and Troll Tech have been accounted for under the cost method of        
accounting. Management has determined that Caldera's investment in Lineo should 
be accounted for as a transaction between entities under common control with the
transfer being reflected in its financial statements at Lineo's carryover basis.
However, at the date of the transfer, Lineo had a stockholders' deficit, of     
which approximately $124,000 would be associated with the 14% interest Caldera  
acquired. Accordingly, Caldera recorded the investment at a nominal value of    
$1.00 because Caldera does not have any obligation to fund or reimburse Lineo   
for its allocated portion of Lineo's stockholders' deficit. Caldera recorded the
estimated fair value of the shares of its common stock issued to Lineo at $10.0 
million with the difference between the $10.0 million and the $1.00 investment  
being a distribution to The Canopy Group.                                       

   On May 11, 2000, The Canopy Group transferred 1,761,563 shares of Lineo's
common stock held by The Canopy Group to Caldera. This transfer has been        
reflected as a capital contribution by The Canopy Group at Lineo's carryover    
basis of $1,966,173. As a result of this transaction, Caldera held a total of   
5,000,000 shares of Lineo's common stock (approximately 14% of Lineo's          
outstanding voting stock).                                                      

   In September 2000, Caldera and Metrowerks Holdings, Inc., an affiliate of
Motorola, Inc., entered into a Stock Purchase and Sale Agreement whereby Caldera
and The Canopy Group sold 2.0 million and 1.0 million shares, respectively, of  
common stock of Lineo, Inc. to Metrowerks Holdings at $7.50 per share. The      
difference between the $7.50 per share price and Caldera's carrying amount was  
reflected as a capital contribution.                                            

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RESULTS OF OPERATIONS                                                           

     Software and related products revenue is comprised of revenue from the sale
of software and other products such as shipments of incomplete box units or     
documentation materials. Services revenue is comprised of training royalties and
tuition fees, consulting fees and customer support fees.                        

   Cost of software and related products revenue primarily consists of costs
for production, packaging, fulfillment and shipment of product offerings.       
Additionally, royalties paid to third parties for inclusion of their software   
products in Caldera's product offering are included in these costs. Cost of     
services revenue is primarily comprised of salaries and related costs of support
services employees.                                                             

  Included in sales and marketing expenses are the following: advertising,
channel promotions, marketing development funds, promotional activities, public 
relations, trade show and personnel-related expenses such as salaries, benefits,
commissions, recruiting fees, travel and entertainment expenses.                

    Research and development expenses consist of payroll and related costs for
software engineers, technical writers, quality assurance and research and       
development management personnel and the costs of materials used by these       
employees in the development of new or enhanced product offerings. Also included
are the costs associated with outside contractors.                              

 General and administrative expenses are comprised of professional fees,
salaries and related costs for accounting, administrative, finance, human       
resources, information systems and legal personnel as well as costs associated  
with implementing and expanding our internal information and management         
reporting systems.                                                              

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  The following table sets forth certain statement of operations data as a
percentage of total revenue for the years indicated:                            

                                                        [Enlarge/Download Table]

                                                                                THREE MONTHS     
                                                 YEAR ENDED OCTOBER 31,      ENDED JANUARY 31,   
                                               --------------------------    ------------------  
                                                1998      1999      2000       2000       2001   
                                               ------    ------    ------    --------    ------  
                                                                                                 
Revenue:                                                                                         
  Software and related products...............  100.0%     90.9%     70.0%       71.4%     42.9% 
  Services....................................     --       9.1      30.0        28.6      57.1  
                                               ------    ------    ------    --------    ------  
     Total revenue............................  100.0     100.0     100.0       100.0     100.0  
                                               ------    ------    ------    --------    ------  
Cost of Revenue:                                                                                 
  Software and related products...............   96.2      78.3      48.3        53.3      21.5  
  Services....................................     --      17.6      45.8        46.1      90.2  
  Other.......................................  130.7        --        --          --        --  
                                               ------    ------    ------    --------    ------  
     Total cost of revenue....................  226.9      95.9      94.1        99.4     111.7  
                                               ------    ------    ------    --------    ------  
Gross (deficit) margin........................ (126.9)      4.1       5.9         0.6     (11.7) 
                                               ------    ------    ------    --------    ------  
Operating Expenses:                                                                              
  Sales and marketing (exclusive of non-cash                                                     
     compensation)............................  210.4     156.3     345.2       367.1     523.9  
  Research and development (exclusive of                                                         
     non-cash compensation)...................  140.8      75.5     115.9       174.4     177.4  
  General and administrative (exclusive of                                                       
     non-cash compensation)...................  170.2      57.3     150.4       195.0     165.9  
  Other.......................................     --      13.4     143.0       278.8      88.8  
                                               ------    ------    ------    --------    ------  
     Total operating expenses.................  521.4     302.5     754.5     1,015.3     956.0  
                                               ------    ------    ------    --------    ------  
Loss from operations.......................... (648.3)   (298.4)   (748.6)   (1,014.7)   (967.7) 
Equity in loss of affiliate...................     --        --      (9.1)         --     (61.4) 
Other (expense) income, net................... (101.8)     (7.5)    129.7        20.4      97.5  
                                               ------    ------    ------    --------    ------  
Loss before income taxes...................... (750.1)   (305.9)   (628.0)     (994.3)   (931.6) 
Provision for income taxes....................   (3.2)     (1.1)     (1.9)       (2.3)     (2.6) 
                                               ------    ------    ------    --------    ------  
Net loss...................................... (753.3)   (307.0)   (629.9)     (996.6)   (934.2) 
                                               ======    ======    ======    ========    ======  
Dividends related to convertible preferred                                                       
  stock.......................................     --        --    (286.7)   (1,807.7)       --  
                                               ======    ======    ======    ========    ======  
Net loss attributable to common                                                                  
  stockholders................................ (753.3)%  (307.0)%  (916.6)%  (2,804.3)%  (934.2)%
                                               ======    ======    ======    ========    ======  

FISCAL YEARS ENDED OCTOBER 31, 1998, 1999 AND 2000                              

Revenue                                                                         

    Revenue was $1.1 million for fiscal 1998, $3.1 million for fiscal 1999 and
$4.3 million for fiscal 2000. During fiscal 1998, all revenue was derived from  
our software and related products offerings. During fiscal 1999, approximately  
91 percent of our revenue was generated from the sale of software and related   
products. During fiscal 2000, approximately 70 percent of our revenue was       
generated from the sale of software and related products. Although the          
percentage of software and related products revenue as a percentage of total    
revenue has declined the last two years, software and related products revenue  
has increased in each of those years. Revenue from international customers was  
approximately 5 percent in fiscal 1998, 7 percent in fiscal 1999 and 30 percent 
in fiscal 2000. The increases in international revenue are the result of        
Caldera's increased focus on customers and markets outside the United States.   

   Software and Related Products.  Software and related products revenue was
$1.1 million in fiscal 1998, $2.8 million in fiscal 1999 and $3.0 million in    
fiscal 2000, representing an increase of $1.7 million, or 162 percent, from     
fiscal 1998 to fiscal 1999 and a $221,000, or 8 percent, increase from fiscal   
1999 to fiscal 2000. The increase in software and related products revenue from 
fiscal 1998 to fiscal 1999 was a result of management's expansion of sales and  
marketing efforts, as well as the increased market awareness of the             

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Linux operating system. The increase in software and related products revenue   
from fiscal 1999 to fiscal 2000 was due to improved sales and marketing         
strategies. Sales to customers in international locations also generated        
increased software and related products revenue in fiscal 2000 over the prior   
period.                                                                         

    Services.  Services revenue was $0 in fiscal 1998, $277,000 in fiscal 1999
and $1.3 million in fiscal 2000, representing an increase of $1.0 million, or   
362 percent, from fiscal 1999 to fiscal 2000. The increase in services revenue  
was primarily attributed to the formal introduction of our education and        
training-related offerings as well as from promotional fees received from our   
Linux training program. The Linux training program is targeted at informing and 
training customers and partners about the Linux operating system by conducting  
training and seminars in cities across North America. This program began in     
Caldera's third quarter of fiscal 2000 and a second program is planned for the  
first quarter of fiscal 2001. Caldera also plans to continue to expand its      
education, training and other services-related offerings and will increase sales
and marketing efforts for these programs.                                       

Cost of Revenue                                                                 

Cost of Software and Related Products Revenue.  Cost of software and  
related products revenue was $1.0 million in fiscal 1998, $2.4 million in fiscal
1999 and $2.1 million in fiscal 2000, representing an increase of $1.4 million, 
or 135 percent, from fiscal 1998 to fiscal 1999 and a decrease of $326,000, or  
14 percent, from fiscal 1999 to fiscal 2000. On a percentage basis of related   
revenue, cost of software and related products revenue was 96 percent in fiscal 
1998, 86 percent in fiscal 1999 and 67 percent in fiscal 2000. The decrease in  
the cost of revenue percentage from fiscal 1998 to fiscal 1999 primarily        
resulted from reduced royalty expenses as a component of product costs as       
certain third-party software packages were open sourced and the elimination of  
certain other royalty-bearing components. In addition, the decrease from fiscal 
1998 to fiscal 1999 resulted from improved margins on increased volumes.        

The decrease in the cost of software and related products revenue     
percentage from fiscal 1999 to fiscal 2000 was due to increased efficiencies in 
the production and fulfillment process as well as from reduced charges for      
obsolete inventory. During fiscal 1999, the Company recorded an inventory       
reserve of approximately $267,000 brought about by the over production of       
finished products in connection with the release of OpenLinux 2.3. During fiscal
2000, the Company recorded an inventory reserve of approximately $43,000 as a   
result of lower than expected sales of OpenLinux 2.3 and as a result of certain 
raw materials becoming unusable due to changes in product packaging. The Company
has continued to sell OpenLinux 2.3 since the introduction of OpenLinux eDesktop
2.4. None of the reserved inventory will be scrapped, abandoned or disposed of  
until sales of OpenLinux 2.3 are terminated.                                    

    Cost of Services Revenue.  Cost of services revenue was $0 in fiscal 1998,
$538,000 in fiscal 1999 and $2.0 million in fiscal 2000, an increase of $1.4    
million, or 264 percent, from fiscal 1999 to fiscal 2000. Caldera did not begin 
to recognize services revenue until fiscal 1999. The negative margin incurred   
during fiscal 2000 and fiscal 1999 is due to Caldera's hiring of employees and  
building infrastructure in anticipation of future training and support revenue. 
In addition, cost of services revenue for fiscal 2000 also includes the costs   
incurred in connection with the electronic Linux marketplace program. As a      
percentage of services revenue, cost of services was 194 percent of services    
revenue in fiscal 1999 and 153 percent of services revenue in fiscal 2000. The  
marginal improvement from fiscal 1999 to fiscal 2000 was due to increased       
revenue from services activities. The deficit achieved on services revenue is   
materially different from the margins on software and related products revenue  
due to the startup and infrastructure costs being incurred. Upon completion of  
the server software and professional services groups acquisition, New Caldera   
expects the margins on services revenue to improve because of the               
fully-developed support services group in place.                                

Write-off of Prepaid Royalties.  During fiscal 1996 and 1997, Caldera 
entered into royalty agreements with a supplier pursuant to which Caldera       
prepaid royalties of approximately $2.1 million. During fiscal 1998, Caldera    
asserted that the supplier breached the terms of the royalty agreements and     
determined that the remaining prepaid royalties, in the amount of $1.4 million, 
were impaired and accordingly Caldera wrote off the remaining balance.          
Management determined the asset was impaired because its value was              

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tied to the intellectual property value of the licenses Caldera had purchased.  
The vendor breached the terms of the contract in management's view, when it open
sourced some of the related software. When the vendor decided to open source the
software, the licenses Caldera had purchased had no value in relation to that   
software. Additionally, Caldera discontinued the development of a product       
related to the licensed software resulting in the complete impairment of the    
prepaid asset. Management determined that any attempt to pursue legal action    
against the supplier would be costly and uncertain given the resources required 
to pursue such an action and the uncertainties relating to interpreting the     
royalty agreements.                                                             

Operating Expenses                                                              

 Sales and Marketing.  Sales and marketing expenses were $2.2 million in
fiscal 1998, $4.8 million in fiscal 1999 and $14.8 million in fiscal 2000,      
representing an increase of $2.5 million, or 114 percent, from fiscal 1998 to   
fiscal 1999 and an increase of $10.0 million, or 209 percent, from fiscal 1999  
to fiscal 2000. Sales and marketing expenses represented 210 percent of total   
revenue in fiscal 1998, 156 percent of total revenue in fiscal 1999 and 345     
percent of total revenue in fiscal 2000. During fiscal 2000 and fiscal 1999,    
Caldera significantly expanded its internal sales and marketing staff as well as
increased its marketing programs and campaigns, advertising, channel and        
marketing development and trade show participation. Sales and marketing expenses
are expected to continue to increase in the future, and upon consummation of the
server software and professional services groups acquisition in an effort to    
increase awareness of Linux, Unix and combined products and related offerings.  

Research and Development.  Research and development expenses were $1.5
million in fiscal 1998, $2.3 million in fiscal 1999 and $5.0 million in fiscal  
2000, representing an increase of $813,000, or 55 percent, from fiscal 1998 to  
fiscal 1999 and an increase of $2.7 million, or 115 percent, from fiscal 1999 to
fiscal 2000. Research and development costs represented 141 percent of total    
revenue in fiscal 1998, 76 percent of total revenue in fiscal 1999 and 116      
percent of total revenue in fiscal 2000. The increase in research and           
development expenses from fiscal 1998 to fiscal 1999 and from fiscal 1999 to    
fiscal 2000 was due to an increased investment in the number of software        
developers, quality assurance personnel and outside contractors to support      
Caldera's product development and testing activities including the development  
of training courses and technical support offerings.                            

    General and Administrative.  General and administrative expenses were $1.8
million in fiscal 1998, $1.7 million in fiscal 1999, and $6.4 million in fiscal 
2000, representing a decrease of $51,000, or 3 percent, from fiscal 1998 to     
fiscal 1999 and an increase of $4.7 million, or 268 percent, from fiscal 1999 to
fiscal 2000. General and administrative expense represented 170 percent of total
revenue in fiscal 1998, 57 percent of total revenue in fiscal 1999 and 150      
percent of total revenue in fiscal 2000. General and administrative expenses    
remained constant from fiscal 1998 to fiscal 1999 as the nonrecurrence of the   
costs of reorganization of Caldera, Inc. was more than offset by the increase in
personnel in fiscal 1999. The significant increase from fiscal 1999 to fiscal   
2000 is the result of increased salaries and related personnel costs associated 
with additional employees in finance, administration, legal, human resources and
information systems consistent with our growth in headcount and overall         
business. Other increases in general and administrative expenses were for       
increased professional services and facilities costs.                           

   SCO cost-sharing arrangement.  During August 2000 and after entering into
the reorganization agreement with SCO to acquire the server software and        
professional services groups, the Company and SCO agreed that Caldera would     
reimburse SCO for certain employee payroll and related costs. The costs for     
which Caldera agreed to reimburse SCO for were related to employees that SCO had
identified for termination in a company-wide layoff in September 2000. Caldera  
viewed these employees as a critical part of the success of the new combined    
company and SCO agreed to retain the employees if Caldera would reimburse SCO   
for a portion of their payroll and related costs. At the time Caldera committed 
to reimburse SCO for these employee costs, the ultimate amount was not          
determinable and both parties agreed that the amount would be determined prior  
to the completion of the acquisition. During December 2000, both parties agreed,
pursuant to an amendment to the reorganization agreement, that Caldera would    
reimburse SCO $1.5 million relating to services rendered from August through    
December 2000. Accordingly, as of October 31, 2000, Caldera has accrued         
$898,026. Caldera will record the remaining                                     

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$601,974 during the first quarter of fiscal 2001. The actual payment will be    
made to SCO during Caldera's first quarter of fiscal 2001.                      

     Non-cash Compensation.  In connection with the granting of stock options to
employees during fiscal 1999 and fiscal 2000, Caldera recorded deferred         
compensation of $3.1 million and $6.8 million, respectively. During fiscal 1999 
and fiscal 2000, Caldera amortized $409,000 and $5.2 million, respectively, of  
deferred compensation. Caldera did not record any deferred compensation or      
amortization during fiscal 1998 as no stock options were granted during fiscal  
1998.                                                                           

Equity in Loss of Affiliate                                                     

     Caldera is accounting for its investment in Ebiz using the equity method of
accounting. Under the equity method, Caldera recognizes its portion of the net  
income or net loss of Ebiz in its consolidated statement of operations. For the 
year ended October 31, 2000, Caldera recognized $224,339 in its statement of    
operations that represented its portion of Ebiz's net loss since the time of    
Caldera's equity investment. In addition, because Ebiz had a stockholders'      
deficit at the time of Caldera's investment, Caldera is amortizing on a         
straight-line basis, the difference between its portion of the Ebiz net         
stockholders' deficit and Caldera's basis in the Ebiz common stock. For the year
ended October 31, 2000, Caldera recognized $162,656 in its statement of         
operations that represented this amortization. As of October 31, 2000, Caldera's
net investment amounted to $4,957,325. Subsequent to October 31, 2000, Caldera's
ownership interest in Ebiz has been diluted to approximately 12 percent as a    
result of Ebiz issuing new shares in connection with an acquisition and the     
conversion of convertible securities. As a result of these transactions, on     
January 5, 2001, Caldera discontinued use of the equity method of accounting for
its investment in Ebiz. Caldera will account for the investment as an           
available-for-sale security in accordance with SFAS 115. Under SFAS 115, Caldera
will carry its investment at fair market value using quoted trading prices and  
will record any unrecognized gains or losses as a component of other            
comprehensive income (loss). At the date of the change, Caldera reduced the     
carrying value of its investment to approximately $1.4 million.                 

Other Income (Expense), net                                                     

Other income (expense), net, which consists principally of interest   
expense, interest income and other income, was $(1.1) million in fiscal 1998,   
$(228,000) in fiscal 1999 and $5.5 million in fiscal 2000. The decrease in net  
expense from fiscal 1998 to fiscal 1999 was primarily the result of decreased   
borrowings from the Predecessor. After the incorporation in fiscal 1998, Caldera
entered into a secured convertible promissory note arrangement with its major   
stockholder. Caldera borrowed amounts during the last portion of fiscal 1998 and
during fiscal 1999 under this agreement. These borrowings were converted into   
common stock through the exercise of the conversion feature in August 1999. The 
significant increase from net other expense in fiscal 1999 to net other income  
in fiscal 2000 was attributed to $3.2 million in total interest income earned on
the proceeds from the Series B preferred stock offering, interest earned on the 
proceeds from the initial public offering and a gain recognized on the sale of  
the electronic Linux marketplace assets.                                        

Income Taxes                                                                    

    For fiscal years 1998, 1999 and 2000, Caldera's German subsidiary, Caldera
Deutschland, GmbH, incurred income tax expense of $34,000, $35,000 and $81,000, 
respectively. As of October 31, 2000, Caldera had net operating loss            
carryforwards for federal and state income tax reporting purposes of            
approximately $21.5 million that expire at various dates from 2018 to 2020. The 
Internal Revenue Code contains provisions that likely could reduce or limit the 
availability and utilization of Caldera's net operating loss carryforwards if   
certain ownership changes have taken place or will take place, as of October 31,
2000, no such ownership changes had occurred.                                   

Caldera had net deferred tax assets, including net operating loss     
carryforwards and other temporary differences between book and tax deductions,  
totaling approximately $15.4 million as of October 31, 2000.                    

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A valuation allowance in the amount of $15.3 million has been recorded as of    
October 31, 2000 as a result of uncertainties regarding the realizability of the
deferred tax asset balance.                                                     

Dividends Related to Convertible Preferred Stock                                

  During the year ended October 31, 2000, Caldera recorded preferred stock
dividends of $12.3 million. The preferred stock dividends were comprised of (i) 
a warrant that was sold to Egan-Managed Capital, an investor in Caldera's Series
B preferred stock, by Canopy and (ii) a beneficial conversion feature related to
the issuance of 5.0 million shares of Series B convertible preferred stock. The 
estimated fair market value of the warrant was determined to be $2.3 million    
using the Black-Scholes option-pricing model, and the value of the beneficial   
conversion feature was determined to be $10.0 million.                          

THREE-MONTH PERIODS ENDED JANUARY 31, 2000 AND 2001                             

Revenue                                                                         

    Our revenue was $553,000 for the three-month period ended January 31, 2000
and $1.1 million for the three-month period ended January 31, 2001. During the  
three-month period ended January 31, 2000, approximately 71 percent of our      
revenue was generated from the sale of software and related products. During the
three-month period ended January 31, 2001, approximately 43 percent of our      
revenue was generated from the sale of software and related products. Revenue   
from international customers was approximately 29 percent of total revenue for  
the three-month period ended January 31, 2000 and approximately 32 percent of   
total revenue for the three-month period ended January 31, 2001.                

   Software and Related Products.  Our software and related products revenue
was $395,000 for the three-month period ended January 31, 2000 and $452,000 for 
the three-month period ended January 31, 2001, an increase of $57,000, or 15%.  
The increase during the three-month period ended January 31, 2001 is primarily  
attributed to the release of Caldera Volution, our second eBusiness product that
was released late in January 2001. During the three-month period ended January  
31, 2001 revenue from corporate and OEM customers exceeded our revenue from     
retail sales as Caldera has continued to focus on corporate and OEM accounts    
while competition and pricing pressures have continued to weaken retail sales.  

 Services.  Our services revenue was $158,000 for the three-month period
ended January 31, 2000 and $601,000 for the three-month period ended January 31,
2001, an increase of $443,000, or 280%. The increase in services revenue over   
the same three-month period of the prior year was primarily attributed to our   
increased education and training-related offerings as well as from promotional  
fees received from our Linux training program tour. Caldera expects that        
quarterly services revenue for the duration of fiscal 2001 will be lower than   
services revenue generated in the first quarter of fiscal 2001. The trend of    
increased services revenue experienced in fiscal 2000 and in the first quarter  
of 2001 is not expected to continue throughout fiscal 2001 as Caldera believes  
that future Linux training program tours will not be offered.                   

Cost of Revenue                                                                 

  Cost of Software and Related Products Revenue.  Our cost of software and
related products revenue was $295,000 for the three-month period ended January  
31, 2000 and $227,000 for the three-month period ended January 31, 2001, a      
decrease of $68,000, or 23%. Cost of software and related products revenue as a 
percentage of software and related products revenue was 75% for the three-month 
period ended January 31, 2000 and 50% for the three-month period ended January  
31, 2001. The decrease as a percentage of software and related products revenue 
is attributed to the release of Caldera Volution and our focus on corporate and 
OEM accounts which have a higher gross margin percentage. In addition, we       
recorded an inventory reserve of approximately $43,000 during the three-month   
period ended January 31, 2000.                                                  

  Cost of Services Revenue.  Our cost of services revenue was $255,000 for
the three-month period ended January 31, 2000 and $950,000 for the three-month  
period ended January 31, 2001, an increase of $695,000, or 272%. The increase in
cost of services revenue was due in part to additional employees and            

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other internal costs to increase our support offerings as well as for costs     
related to our Linux training program. Cost of services revenue as a percentage 
of services revenue was 161% for the three-month period ended January 31, 2000  
and 158% for the three-month period ended January 31, 2001.                     

Operating Expenses                                                              

  Sales and Marketing.  Our sales and marketing expenses were $2.0 million
for the three-month period ended January 31, 2000 and $5.5 million for the      
three-month period ended January 31, 2001, an increase of $3.5 million, or 172%.
The increase was primarily attributed to additional marketing expenses in       
anticipation of our acquisition of the server software and professional services
groups of SCO, marketing expenses related to the launch and release of Caldera  
Volution, attendance at two major Linux tradeshows and increased personnel      
costs.                                                                          

    Research and Development.  Our research and development expenses were $1.0
million for the three-month period ended January 31, 2000 and $1.9 million for  
the three-month period ended January 31, 2001, an increase of $904,000, or 94%. 
The increase in research and development expenses was primarily attributed to   
payroll costs and related benefits for additional employees for software        
development and quality assurance as our research and development staff         
increased from 36 as of January 31, 2000 to 62 as of January 31, 2001.          

   General and Administrative.  Our general and administrative expenses were
$1.1 million for the three-month period ended January 31, 2000 and $1.7 million 
for the three-month period ended January 31, 2001, an increase of $669,000, or  
62%. The increase in expenses was mainly attributed to increased salaries and   
benefits for additional general and administrative employees and increased      
facilities and related costs consistent with our growth in personnel and overall
business.                                                                       

   SCO Cost-sharing Arrangement.  During August 2000 and after entering into
the reorganization agreement with SCO to acquire the server software and        
professional services groups, Caldera and SCO agreed that Caldera would         
reimburse SCO for certain employee payroll and related costs. Caldera agreed to 
reimburse SCO for costs related to certain employees that SCO had identified for
termination in a company-wide layoff in September 2000. Caldera viewed these    
employees as a critical part of the success of the new combined company and SCO 
agreed to retain the employees if Caldera would reimburse SCO for a portion of  
their payroll and related costs. At the time Caldera committed to reimburse SCO 
for these employee costs, the ultimate amount was not determinable and both     
parties agreed that the amount would be determined prior to the completion of   
the combination. During December 2000, both parties agreed, pursuant to an      
amendment to the reorganization agreement, that Caldera would reimburse SCO $1.5
million relating to services rendered from August through December 2000.        
Accordingly, as of October 31, 2000, Caldera accrued $898,026. Caldera recorded 
the remaining $601,974 during the three-month period ended January 31, 2001.    
Caldera made the $1.5 million payment to SCO on January 26, 2001.               

Non-cash Compensation.  In connection with stock options granted to   
employees, we amortized $1.5 million of deferred compensation during the        
three-month period ended January 31, 2000 and we amortized approximately        
$334,000 of deferred compensation during the three-month period ended January   
31, 2001.                                                                       

Equity in Loss of Affiliate                                                     

Through January 5, 2001, Caldera accounted for its investment in Ebiz 
Enterprises, Inc. ("Ebiz") using the equity method of accounting. Under the     
equity method, Caldera recognized its portion of the net income or net loss of  
Ebiz in its consolidated statement of operations. For the three months ended    
January 31, 2001, Caldera recognized approximately $431,000 in its statement of 
operations that represented its portion of Ebiz's net loss for the period from  
October 31, 2000 through January 5, 2001. Additionally, because Ebiz had a      
stockholders' deficit at the time of Caldera's investment, Caldera was          
amortizing, on a straight-line basis, the difference between its portion of the 
Ebiz net stockholders' deficit and Caldera's basis in the Ebiz common stock. For
the three months ended January 31, 2001, Caldera recognized approximately       
$217,000 of amortization in connection with its investment in Ebiz.             

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   During the three-month period ended January 31, 2001, Caldera's ownership
interest in Ebiz was diluted to approximately 12 percent as a result of Ebiz    
issuing new shares in connection with an acquisition and the conversion of      
convertible securities. As a result of these transactions, on January 5, 2001,  
Caldera discontinued the use of the equity method of accounting for its         
investment in Ebiz. Subsequent to January 5, 2001, Caldera has accounted for its
investment as an available-for-sale security in accordance with SFAS 115. Under 
SFAS 115, Caldera carries its investment at fair market value using quoted      
trading prices. As of January 31, 2001, Caldera had an unrecognized loss of     
approximately $2.3 million as a component of other comprehensive loss.          

Other Income (Expense), net                                                     

    Other income (expense), net consists primarily of interest income received
on cash and cash equivalents. Interest income was $113,000 during the           
three-month period ended January 31, 2000 and $1.0 million during the           
three-month period ended January 31, 2001. The increase is related to higher    
cash balances during the period ended January 31, 2001.                         

Provision for Income Taxes                                                      

For the three-month periods ended January 31, 2000 and 2001, our      
subsidiary, Caldera Deutschland, GmbH, incurred income tax expense of $13,000   
and $27,000, respectively.                                                      

QUARTERLY RESULTS OF OPERATIONS                                                 

 The following table sets forth certain unaudited quarterly statement of
operations data for the last eight quarters. This information has been derived  
from Caldera's unaudited consolidated financial statements, which, in           
management's opinion, have been prepared on the same basis as the audited       
financial statements and include all adjustments, consisting only of normal     
recurring adjustments, necessary for a fair presentation of the information for 
the quarters presented. This information should be read in conjunction with the 
audited financial statements and related notes included elsewhere in this joint 
proxy statement/prospectus. Caldera has experienced, and expects to continue to 
experience, fluctuations in operating results from quarter to quarter. The      
operating results for any quarter are not necessarily indicative of the         
operating results for any future period.                                        

                                                        [Enlarge/Download Table]

                                                               QUARTER ENDED                                        
                       ---------------------------------------------------------------------------------------------
                       APRIL 30,   JULY 31,   OCT. 31,   JAN. 31,   APRIL 30,   JULY 31,   OCTOBER 31,   JANUARY 31,
                         1999        1999       1999       2000       2000        2000        2000          2001    
                       ---------   --------   --------   --------   ---------   --------   -----------   -----------
                                                              (IN THOUSANDS)                                        
                                                                                                                    
Revenue:                                                                                                            
  Software and                                                                                                      
     related                                                                                                        
     products........   $   482    $ 1,008    $   775    $    395    $ 1,123    $   631      $   845      $    452  
  Services...........        62         87         98         158        238        557          327           602  
                        -------    -------    -------    --------    -------    -------      -------      --------  
     Total revenue...       544      1,095        873         553      1,361      1,188        1,172         1,054  
                        =======    =======    =======    ========    =======    =======      =======      ========  
Gross margin                                                                                                        
  (deficit)..........       139        117       (397)          3        279        (43)          14          (123) 
Operating loss.......    (1,725)    (2,097)    (4,469)     (5,614)    (7,726)    (8,808)      (9,851)      (10,196) 
Net loss.............    (1,753)    (2,157)    (4,465)     (5,513)    (6,992)    (7,531)      (6,887)       (9,843) 
Net loss to common                                                                                                  
  stockholders.......    (1,753)    (2,157)    (4,465)    (15,513)    (9,245)    (7,531)      (6,887)       (9,843) 
Basic and diluted net                                                                                               
  loss per common                                                                                                   
  share..............   $ (0.11)   $ (0.13)   $ (0.17)   $  (0.63)   $ (0.32)   $ (0.19)     $ (0.18)     $  (0.25) 
Weighted average                                                                                                    
  basic and diluted                                                                                                 
  common shares          16,000     16,232     25,518      24,780     28,602     39,037       39,176        39,588  

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FLUCTUATIONS IN QUARTERLY RESULTS                                               

    Historically, Caldera has experienced substantial fluctuations in revenues
from period to period relating to the introduction of new products and new      
versions of existing products. Upon announcement of an expected release date for
new products or upgrades, Caldera often experiences a significant decrease in   
sales of existing products. Additionally, Caldera often experiences the         
strongest sales for a new product during the first 30 days after its            
introduction as it fills advance orders from its distribution partners.         

     Our software and related products revenue decreased slightly in the quarter
ended April 30, 1999 from the quarter ended January 31, 1999 due to the timing  
of the release of version 2.2 of OpenLinux, which occurred in late April 1999.  
As a result of the version 2.2 release, software revenues for the quarter ended 
July 31, 1999 increased significantly from the prior quarter. Software and      
related products revenue during the quarter ended October 31, 1999 decreased    
from the prior quarter in spite of the release of version 2.3 of OpenLinux in   
September 1999. Sales of version 2.3 were lower than sales of version 2.2 due to
version 2.3 including only minor enhancements from version 2.2. The lower sales 
of version 2.3 continued into the quarter ended January 31, 2000, which resulted
in a decrease in software revenue during the quarter ended January 31, 2000 from
the prior quarter. Caldera released eDesktop 2.4 during the quarter ended April 
30, 2000, and consequently revenue increased from the prior quarter. Caldera did
not have a new release during the quarter ended July 31, 2000 when our revenue  
decreased. Software and related products revenue increased during the quarter   
ended October 31, 2000 from the prior quarter even though a new product release 
was not made. Most recently, software and related product revenue decreased     
during the quarter ended January 31, 2001. In addition, Caldera anticipates that
product revenue for the quarter that will end April 30, 2001 may be             
significantly lower than product revenue compared to the prior quarter.         

   Services revenue has increased consistently from fiscal 1999 through July
31, 2000 as Caldera has increased its education and training-related offerings, 
as well as support and consulting services. Services revenue during the quarter 
ended October 31, 2000 decreased from the prior quarter as Caldera did not have 
a Linux training program tour during the October 31, 2000 quarter, but did hold 
the Linux training program tour during the first quarter of fiscal 2001. Caldera
expects that quarterly services revenue for the duration of fiscal 2001 will be 
lower than services revenue generated in the first quarter of fiscal 2001. The  
trend of increased services revenue experienced in fiscal 2000 and in the first 
quarter of 2001 is not expected to continue throughout fiscal 2001 as Caldera   
believes that future Linux training program tours will not be offered. Caldera  
has also increased personnel to promote its services offerings.                 

     Caldera has incurred operating losses since inception and may never achieve
profitability in the future. Management believes that future operating results  
will be subject to quarterly fluctuations due to a variety of factors, many of  
which are beyond its control. Factors that may affect quarterly results include:

- the interest level of electronic solution providers in recommending 
Caldera's Linux business solutions to end users;                  

 - the introduction, development, timing, competitive pricing and market
acceptance of Caldera's products and services and those of its    
competitors;                                                      

  - changes in general economic conditions, such as recessions, that could
affect capital expenditures and recruiting efforts in the software
industry in general and in the Linux environment in particular;   

- the magnitude and timing of marketing initiatives;                  

 - changing business attitudes toward Linux as a viable operating system
alternative to other competing systems;                           

     - the maintenance and development of Caldera's strategic relationships with
technology partners and solution providers;                       

- the attraction, retention and training of key personnel; and        

- Caldera's ability to manage our anticipated growth and expansion.   

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     As a result of the factors listed above and elsewhere in the "Risk Factors"
section of this joint proxy statement/prospectus, it is possible that in some   
future periods Caldera's results of operations may fall below management's      
expectations as well as the expectations of public market analysts and          
investors. In addition, Caldera plans to significantly increase operating       
expenses to expand sales and marketing, administration, consulting and training,
maintenance and technical support and research and development groups. If       
revenue falls below management's expectations in any quarter and Caldera is     
unable to reduce spending quickly in response, operating results would be lower 
than expected.                                                                  

ACQUISITION OF THE SCO SERVER AND PROFESSIONAL SERVICES GROUPS                  

    The acquisition of the server and professional services groups is expected
to significantly increase the net revenue and operating expenses of New Caldera 
for the next twelve months and future periods. Pro forma combined net revenue   
and operating expenses were $143.5 million and $183.2 million, respectively, for
the year ended October 31, 2000 as compared to $4.3 million and $32.3 million,  
respectively, for Caldera. Pro forma combined net revenue and operating expenses
of New Caldera were $24.9 million and $34.0 million, respectively, for the three
months ended January 31, 2001, compared to $1.1 million and $10.1 million,      
respectively, for Caldera. Upon consummation of the combination, New Caldera is 
expected to have over 700 employees as compared to Caldera's 192 employees as of
January 31, 2001. The results of operations for New Caldera for fiscal 2001 and 
future periods will also include non-cash charges for the amortization of       
goodwill and other intangibles of approximately $5.3 million per quarter for the
first three years and $3.5 million per quarter for the next two years.          

    In connection with the acquisition of the server and professional services
groups, New Caldera anticipates additional working capital requirements to fund 
the acquired operations. During the year ended September 30, 2000 and the three 
months ended December 31, 2000, the server and professional services groups used
approximately $24.9 million and $4.9 million, respectively, in cash for         
operating activities. Although New Caldera hopes to reduce employee headcount   
and generate other cost reductions and efficiencies from the acquisition to     
minimize the negative impact on working capital, it may not be successful in    
attaining such cost reductions and efficiencies. Additionally, New Caldera will 
not acquire certain working capital accounts such as cash, accounts payable or  
the majority of accounts receivable. As a result, New Caldera will be required  
to provide all working capital for the initial 30 to 60 days of operations.     
However, management believes that New Caldera has sufficient available working  
capital to meet its operating needs for at least the next 12 months.            

LIQUIDITY AND CAPITAL RESOURCES                                                 

Since inception as a separate legal entity in August 1998, Caldera has
funded its operations primarily through loans from its major stockholder and    
through sales of common and preferred stock.                                    

As of January 31, 2001, we had cash and cash equivalents and          
available-for-sale securities of $78.7 million and working capital of $82.1     
million. Decreases in cash and cash equivalents and working capital from October
31, 2000 were the result of cash used in operations of approximately $7.2       
million, a cost-sharing payment to SCO of $1.5 million and an advance of $7.0   
million to SCO as part of the consideration for the server and professional     
services groups.                                                                

     Our net cash used in operations during the three-month period ended January
31, 2001 was $7.2 million. Cash used in operations was primarily attributed to  
the net loss of $9.8 million. The net loss was partially offset by non-cash     
charges for the amortization of deferred compensation, depreciation and         
amortization and equity in loss of affiliate.                                   

Net cash used in operations during the year ended October 31, 2000 was
$21.8 million. Cash used in operations was primarily attributed to the net loss 
of $26.9 million. Caldera also paid $1.25 million to Sun Microsystems, Inc. for 
certain rights to license software. These uses of cash were partially offset by 
non-cash compensation of $5.2 million and depreciation and amortization of      
$580,000. Net cash used in operating activities was $7.6 million in fiscal 1999 
and $5.1 million in fiscal 1998. Cash used in operating                         

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activities was primarily attributed to the net loss of $9.4 million in fiscal   
1999 and $8.0 million in fiscal 1998 offset by non-cash expenses and changes in 
working capital.                                                                

During the three-month period ended January 31, 2001, cash used in    
investing activities was $1.4 million. The primary uses of cash during the      
three-month period ended January 31, 2001 were for a $7.0 million payment made  
to SCO as part of the consideration for the combination as well as costs paid   
for capital expenditures and acquisition costs partially offset by the net      
proceeds received from the purchase and sale of available-for-sale securities.  
We anticipate that we will experience an increase in the level of our capital   
expenditures, lease commitments and investment activities as we grow our        
operations.                                                                     

   Investing activities have historically consisted of purchases of property
and equipment and certain intangible assets, investments in strategic partners  
as well as a $15.0 million payment during fiscal 1999 to the Predecessor, in    
connection with the reorganization of the Predecessor and Caldera's own         
incorporation. During the year ended October 31, 2000, cash used in investing   
activities was $47.0 million, of which $102.0 million was used to purchase      
available-for-sale securities to maximize the yield on available cash balances. 
Additionally, during the year ended October 31, 2000, Caldera invested $2.0     
million in the common stock of Evergreen Internet, Inc., a strategic partner,   
paid $3.0 million to Ebiz Enterprises, Inc. for common stock and paid $1.4      
million for property and equipment. Capital expenditures totaled $587,000 in    
fiscal 1999 and $170,000 in fiscal 1998. Additionally, Caldera invested $80,000 
in certain intangible technology during fiscal 1999. Historically, the          
acquisition of property and equipment has been primarily through cash purchases.
Management anticipates that Caldera will experience an increase in the level of 
capital expenditures, lease commitments and investment activities as Caldera    
grows its operations and completes the acquisition of the SCO server software   
and professional services groups.                                               

Our financing activities provided approximately $250,000 during the   
three-month period ended January 31, 2001 as a result of the exercise of vested 
stock options.                                                                  

    Financing activities provided $105.3 million during the year ended October
31, 2000. The primary sources of cash during the year ended October 31, 2000    
included net proceeds of $29.8 million received in connection with the Series B 
preferred stock financing completed in January 2000 and net proceeds of $71.8   
million received in connection with the initial public offering in March 2000.  
Caldera also received $3.0 million from a stock subscription receivable.        

     Financing activities provided $23.3 million in fiscal 1999 and $4.9 million
in fiscal 1998. During fiscal 1999, cash provided by financing activities       
consisted primarily of $15.5 million of equity funding received from The Canopy 
Group and $3.0 million of equity funding from MTI Technology Corporation.       
Additionally, Caldera received $4.8 million from The Canopy Group under a       
secured convertible promissory note agreement that accrued interest at the prime
rate less one-half percent (7.25 percent). Caldera accrued $88,000 in interest  
associated with these borrowings. These proceeds plus accrued interest were     
converted to equity during fiscal 1999. In fiscal 1998, cash provided by        
financing activities consisted primarily of $4.4 million additional borrowings  
from The Canopy Group that accrued interest at rates ranging from 8.00 percent  
to 8.50 percent based on the prime rate. Caldera accrued $882,000 in interest   
associated with these borrowings. Caldera also received $519,000 in equity      
funding from The Canopy Group upon its incorporation.                           

  In conjunction with the signing of the reorganization agreement, Caldera
agreed to advance $7 million to SCO in the form of a 10% interest-bearing       
promissory note that matures on either of the closing of the combination or the 
date of termination of the reorganization agreement. The loan was made on       
January 26, 2001. If the combination closes, the loan will be treated by New    
Caldera and SCO as a portion of the cash consideration to SCO for the server and
professional services groups. The loan is secured by a first priority security  
interest in all of SCO's assets and is convertible at Caldera's option into SCO 
common stock at a price per share of $2.44, the closing price of SCO's common   
stock on January 26, 2001.                                                      

  Upon completion of the combination, Caldera will pay SCO $23 million (of
which $7 million was advanced as described above on January 26, 2001) and issue 
a non-interest bearing promissory note for                                      

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$8 million that will be paid in quarterly installments of $2 million beginning  
in the fifth quarter after the combination is completed.                        

As of January 31, 2001, Caldera had no outstanding debt obligations.  

 Caldera's accounts receivable balance decreased from $1.5 million as of
October 31, 2000 to $840,000 as of January 31, 2001, a decrease of $705,000. The
decrease in accounts receivable relates to collections of customer balances as  
well as an increase in Caldera's reserve for sales returns. The allowance for   
doubtful accounts decreased from $312,000 as of October 31, 2000 to $225,000 as 
of January 31, 2001, a decrease of $87,000. As a percentage of total accounts   
receivable, the allowance increased slightly from 17 percent as of October 31,  
2000 to 21 percent as of January 31, 2001, as Caldera increased its general     
provision for uncollectable accounts as a result of concerns related to certain 
past due accounts.                                                              

   On September 15, 2000, Caldera sold to Ebiz Enterprises, Inc. the rights,
title and interest in and to all of the intellectual property and assets        
comprising Caldera's Electronic Linux Marketplace (the "ELM Assets"). Caldera   
transferred assets with a net book value of approximately $38,000 as well as    
cash of $3,000,000 for 4,000,000 shares of Ebiz common stock with an estimated  
fair value of $6,400,000. Caldera may also receive up to 4,000,000 additional   
shares of Ebiz common stock, depending on the amount of gross revenue generated 
by the ELM Assets during the twelve-month period ending December 15, 2001.      
Immediately after the closing of the transaction, Caldera owned approximately   
31% of the outstanding voting shares of Ebiz. On an ongoing basis, Caldera will 
account for its investment in Ebiz using the equity method of accounting. As a  
result, Caldera will include its proportional share of Ebiz' net income or loss 
in Caldera's results of operations.                                             

Management believes that its current cash and cash equivalents and    
short-term investments will be sufficient to meet capital expenditures and      
working capital requirements for at least the next twelve months. However,      
Caldera may need to raise additional funds to support more rapid expansion,     
respond to competitive pressures, acquire complimentary businesses or           
technologies or respond to unanticipated requirements. Additionally, Caldera may
use cash more rapidly to provide working capital for the SCO server software and
professional services groups following the consummation of the acquisition.     
Management cannot assure you that additional funding will be available in       
amounts or on terms acceptable to Caldera. If sufficient funds are not available
or are not available on acceptable terms, the ability to fund expansion, take   
advantage of acquisition opportunities, develop or enhance our services or      
products, or otherwise respond to competitive pressures would be significantly  
limited.                                                                        

RECENT ACCOUNTING PRONOUNCEMENTS                                                

 In June 1998, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative 
Instruments and Hedging Activities", or SFAS 133. SFAS 133 establishes new      
accounting and reporting standards for companies to report information about    
derivative instruments, including certain derivative instruments embedded in    
other contracts (collectively referred to as derivatives), and for hedging      
activities. This statement, as amended, became effective for Caldera beginning  
November 1, 2000. The adoption of this statement did not have a material impact 
on our results of operations, financial position or liquidity.                  

In December 1999, the Securities and Exchange Commission ("SEC") staff
issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in   
Financial Statements". This pronouncement summarizes certain of the SEC Staff's 
views in applying generally accepted accounting principles to selected revenue  
recognition issues. Caldera adopted SAB 101 during the quarter ended January 31,
2000. The adoption of SAB 101, did not have a material impact on Caldera's      
results of operations, financial position or liquidity.                         

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK                      

Caldera's products and services are primarily developed in the United 
States and marketed in North America, and to a lesser extent in Europe and      
Asia/Pacific regions. As a result, financial results                            

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could be affected by changes in foreign currency exchange rates or weak economic
conditions in foreign markets. Because all of the Caldera's revenues are        
currently denominated in U.S. dollars, a strengthening of the dollar could make 
its Linux products less competitive in foreign markets.                         

   Caldera's German subsidiary, Caldera Deutschland, GmbH, performs research
and development activities for us. This subsidiary is currently Caldera's only  
foreign subsidiary. To date, foreign currency fluctuations have had little      
effect on Caldera's business because only its German subsidiary's contracts,    
payables and receivables are denominated in a foreign currency. As of January   
31, 2001, the assets of Caldera Deutschland were approximately $953,000. All    
other transactions of Caldera's business are denominated in the U.S. dollar. As 
time passes and as management sees fit, more transactions in Europe and Asia may
be denominated in local currencies. As Caldera expands operations in Europe and 
Asia, management will continue to evaluate its foreign currency exposures and   
risks and develop appropriate hedging or other strategies to manage those risks.
Management has not revised its current business practices to conform to Europe's
conversion to the euro. Caldera has not modified any of its products to address 
Europe's conversion to the Euro. Additionally, Caldera has not engaged in any   
foreign currency hedging activities.                                            

FOREIGN CURRENCY RISK                                                           

New Caldera intends generally to maintain the foreign offices and     
operations of the server and professional services groups that are in place at  
the closing of the combination. As a result of the acquisition of the server and
professional services groups, substantial portions of New Caldera's revenue will
be derived from sales to customers outside the United States. A substantial     
portion of this international revenue will be denominated in U.S. dollars.      
However, a substantial portion of the operating expenses related to the         
foreign-based sales will be denominated in foreign currencies and therefore     
operating results will be affected by changes in the U.S. dollar exchange rate  
in relation to foreign currencies such as the U.K. pound sterling and the Euro, 
among others. If the U.S. dollar weakens compared to the U.K. pound sterling and
the Euro, then operating expenses of foreign operations will be higher when     
translated back into U.S. dollars and may require additional funds to meet these
obligations. New Caldera's revenue can also be affected by general economic     
conditions in the United States, Europe and other international markets.        
Historically, the server and professional services groups' operating strategy   
and pricing take into account changes in exchange rates over time. However, New 
Caldera's results of operations may be significantly affected in the short term 
by fluctuations in foreign currency exchange rates.                             

New Caldera is aware of the issues associated with the new European   
economic and monetary union (the "EMU"). One of the changes resulting from this 
union required EMU member states to irrevocably fix their respective currencies 
to a new currency, the Euro, on January 1, 1999. On that day, the Euro became a 
functional legal currency within these countries. During the subsequent two     
years, business in the EMU member states will have been conducted in both the 25
existing national currencies, such as the Franc or Deutsche Mark, and the Euro. 
As a result, companies operating in or conducting business in EMU member states 
have been required to ensure that their financial and other software systems are
capable of processing transactions and properly handling these currencies,      
including the Euro. The server and professional services groups have done a     
preliminary assessment of the impact that the EMU formation is having and will  
continue to have on both its internal systems and the products it sells and has 
commenced appropriate actions. New Caldera has not yet determined all of the    
costs related to addressing this issue, and there can be no assurance that this 
issue and its related costs will not have a materially adverse affect on New    
Caldera's business, operating results and financial condition.                  

    Because the EMU member states fixed the value of their respective national
currencies to the Euro, the dispositive exchange rate for determining the       
effects of foreign currency fluctuation on the results of operations of a U.S.  
company earning significant revenues from Europe is the U.S. dollar-Euro        
exchange rate. The overall trend since the adoption of the Euro in January 1999 
has been a devaluation compared to the U.S. dollar. Historically, Caldera has   
not been materially affected by fluctuations in the U.S. dollar-Euro exchange   
rates because the level of activity denominated in Euros has not been           
significant. However,                                                           
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New Caldera will have more significant sales in the EMU. If the Euro continues  
to weaken against the U.S. dollar, New Caldera's sales may be adversely impacted
because customers may require additional funds to settle revenue transactions   
denominated in U.S. dollars or New Caldera may be required to lower prices of   
its products in countries using the Euro in order to maintain consistent and    
competitive pricing in foreign locations.                                       

     Historically, the server and professional services groups have entered into
forward foreign exchange contracts to hedge foreign currency exposure for       
underlying assets, liabilities and other obligations. All forward contracts     
entered into by the server and professional services groups are components of   
hedging programs and are entered into for the sole purpose of hedging an        
existing or anticipated currency exposure, not for speculation or trading       
purposes. New Caldera expects to continue to hedge against the impact of foreign
currency fluctuations through the use of forward foreign exchange contracts.    
There can be no assurance that Caldera will not experience fluctuations in      
operating results or financial position as a result of these hedging activities.

INTEREST RATE RISK                                                              

  The primary objective of Caldera's cash management strategy is to invest
available funds in a manner that assures maximum safety and liquidity and       
maximizes yield within such constraints. A portion of the securities that       
Caldera invests in may be subject to market risk, which means that a change in  
prevailing rates or market conditions may adversely affect the principal amount 
of the investment. To minimize this risk, Caldera will invest in a broad range  
of short-term fixed income securities with varying maturities. As of January 31,
2001, available-for-sale securities included money market instruments,          
tax-exempt municipal funds, notes, and bonds, US government security backed     
instruments and our investment in Ebiz Enterprises, Inc. Caldera does not borrow
money for short-term investment purposes.                                       

INVESTMENT RISK                                                                 

 Caldera has invested in equity instruments of privately-held and public
companies for business and strategic purposes. Investments in privately-held    
companies are included under the caption "Investments" in the consolidated      
balance sheet and are accounted for under the cost method as Caldera's ownership
is less than 20% and Caldera is not able to exercise significant influence over 
operations. Caldera's only investment to date in a public company is in Ebiz    
Enterprises, Inc., which is recorded as "Equity Investment in Affiliate".       
Caldera's investment policy is to regularly review the assumptions and operating
performance of these companies and to record impairment losses when events and  
circumstances indicate that these investments may be impaired. To date, no such 
impairment losses have been recorded.                                           

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SELECTED FINANCIAL DATA OF THE SANTA CRUZ OPERATION, INC. 
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

   The following selected historical financial information of The Santa Cruz
Operation, Inc. ("SCO") as of September 30, 1999 and 2000 and for each of the   
three years in the period ended September 30, 2000 has been derived from audited
historical consolidated financial statements and should be read in conjunction  
with such financial statements and the notes incorporated herein by reference.  
Historical statement of operations data for periods prior to October 1, 1997 and
balance sheet data prior to September 30, 1999, for SCO, are derived from       
financial statements not incorporated herein by reference. The selected         
historical financial information of SCO as of December 31, 2000 and for the     
three months ended December 31, 1999 and 2000 has been derived from unaudited   
financial statements of SCO, which are incorporated herein by reference. In the 
opinion of management, the unaudited financial statements include all           
adjustments, consisting of normal recurring adjustments, which SCO considers    
necessary for a fair presentation of the results of operations for these        
periods. The results for the three months ended December 31, 2000 are not       
necessarily indicative of the results to be expected for the entire year.       

                                                        [Enlarge/Download Table]

                                                                                         THREE MONTHS ENDED    
                                         FISCAL YEAR ENDED SEPTEMBER 30,                    DECEMBER 31,       
                               ----------------------------------------------------   -------------------------
STATEMENT OF OPERATIONS DATA:    1996       1997       1998       1999       2000        1999          2000    
-----------------------------  --------   --------   --------   --------   --------   -----------   -----------
                                                                                      (UNAUDITED)   (UNAUDITED)
                                                                                                               
Net revenues..............     $207,890   $193,660   $171,900   $223,624   $148,923     $53,653       $26,455  
Gross margin..............      153,488    138,345    124,804    173,846    107,127      41,821        19,374  
Operating income (loss)...      (23,581)   (16,594)   (13,593)    16,373    (51,233)      2,108        (7,656) 
Net income (loss).........      (22,414)   (15,170)   (14,665)    16,858    (56,953)      2,875        (7,897) 
  Net income (loss) per                                                                                        
     share -- basic.......     $  (0.62)  $  (0.41)  $  (0.41)  $   0.49   $  (1.59)    $  0.08       $ (0.20) 
  Net income (loss) per                                                                                        
     share -- diluted.....     $  (0.62)  $  (0.41)  $  (0.41)  $   0.46   $  (1.59)    $  0.07       $ (0.20) 
  Shares used in per share                                                                                     
     calculation -- basic...     36,179     36,628     35,817     34,232     35,720      34,713        39,443  
  Shares used in per share                                                                                     
     calculation --                                                                                            
     diluted..............       36,179     36,628     35,817     36,402     35,720      41,258        39,443  

                                                        [Enlarge/Download Table]

                                           SEPTEMBER 30,                                   
                        ---------------------------------------------------  DECEMBER 31,  
BALANCE SHEET DATA:       1996       1997       1998       1999      2000        2000      
-------------------     --------   --------   --------   --------   -------  ------------  
                                                                             (UNAUDITED)   
                                                                                           
Cash and cash                                                                              
  equivalents and                                                                          
  short-term                                                                               
  investments.......... $ 54,831   $ 51,711   $ 51,076   $ 62,844   $26,446    $13,109     
Working capital........   61,935     46,164     32,221     44,813    16,654      8,961     
Total assets...........  166,807    146,665    131,189    139,284    82,202     63,206     
Long-term liabilities,                                                                     
  net of current                                                                           
  portion..............    9,332      9,545     12,027     11,094     5,462      5,488     
Shareholders' equity...  101,581     81,462     60,135     70,338    31,202     20,101     

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SELECTED FINANCIAL DATA OF THE SERVER AND 
PROFESSIONAL SERVICES GROUPS
(IN THOUSANDS)

The following selected historical financial data for the server and   
professional services groups as of September 30, 1999 and 2000 and for each of  
the three years in the period ended September 30, 2000 are derived from, and    
qualified by reference to, the audited carve out financial statements and       
related notes appearing elsewhere in this joint proxy statement/prospectus.     

The selected statement of operations data for the three months ended  
December 31, 1999 and 2000 and the balance sheet data as of December 31, 2000   
are derived from unaudited carve out financial statements included elsewhere in 
this joint proxy statement/prospectus. In the opinion of management, the        
selected financial data for the three months ended December 31, 1999 and 2000   
has been prepared on the same basis as the audited carve out financial          
statements and includes all adjusting entries, consisting only of normal        
recurring adjustments, necessary for a fair presentation of the server and      
professional services groups financial position and results of operations for   
such periods.                                                                   

For purposes of presenting the financial statements of the server and 
professional services groups, the related operations have been segregated or    
"carved-out" from the historical financial statements of SCO. Accordingly, the  
financial statements of the server and professional services groups included in 
this joint proxy statement/prospectus and the selected financial data present   
the financial condition and results of operations as if the server and          
professional services groups had existed as a separate legal entity for all     
periods presented. The carved-out historical results presented are not          
necessarily indicative of what would have actually occurred had the server and  
professional services groups existed as a separate legal entity and any         
historical results are not necessarily indicative of results that may be        
expected for any future period.                                                 

                                                        [Enlarge/Download Table]

                                                                                                  THREE MONTHS ENDED    
                                              FISCAL YEAR ENDED SEPTEMBER 30,                        DECEMBER, 31,      
                               -------------------------------------------------------------   -------------------------
STATEMENT OF OPERATIONS DATA:     1996          1997          1998         1999       2000        1999          2000    
-----------------------------  -----------   -----------   -----------   --------   --------   -----------   -----------
                               (UNAUDITED)   (UNAUDITED)                                       (UNAUDITED)   (UNAUDITED)
                                                                                                                        
Net revenues..............      $190,989      $181,915      $162,720     $214,083   $139,632     $50,780       $23,887  
Gross margin..............       139,809       128,815       118,239      165,558     98,221      38,976        16,845  
Net income (loss).........       (20,640)       (8,508)      (12,576)      19,867    (41,075)      2,072        (1,795) 

                                                        [Enlarge/Download Table]

                                                SEPTEMBER 30,                                         
                        -------------------------------------------------------------   DECEMBER 31,  
BALANCE SHEET DATA:        1996          1997          1998         1999       2000         2000      
-------------------     -----------   -----------   -----------   --------   --------   ------------  
                        (UNAUDITED)   (UNAUDITED)   (UNAUDITED)                         (UNAUDITED)   
                                                                                                      
Cash and cash                                                                                         
  equivalents.........   $     --      $     --      $   3,517    $  2,223   $    511     $    69     
Working capital                                                                                       
  deficit.............     (7,295)       (6,775)       (14,651)    (14,261)   (13,292)     (7,933)    
Total assets..........    102,995        84,553         73,355      70,117     40,051      36,052     
Long-term liabilities,                                                                                
  net of current                                                                                      
  portion.............      6,540         5,787          7,703       7,031      2,020       2,036     
Divisional surplus                                                                                    
  (deficit) and                                                                                       
  accumulated other                                                                                   
  comprehensive                                                                                       
  loss................     42,743        24,298          9,161       8,932     (2,201)      1,206     
                         --------      --------      ---------    --------   --------     -------     

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SERVER AND PROFESSIONAL SERVICES GROUPS 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
AND RESULTS OF OPERATIONS 

This Management's Discussion and Analysis of Financial Condition and  
Results of Operations as of December 31, 2000 and for the three months ended    
December 31, 1999 and 2000 should be read in conjunction with the sections of   
the server and professional services groups' unaudited financial statements and 
related notes included elsewhere in this joint proxy statement/prospectus. In   
addition, the portion of this Management's Discussion and Analysis of Financial 
Condition and Results of Operations as of September 30, 2000 and for the years  
ended September 30, 1998, 1999 and 2000 should be read in conjunction with the  
sections of the server and professional services groups' audited financial      
statements and related notes included elsewhere in this joint proxy             
statement/prospectus.                                                           

OVERVIEW                                                                        

On August 2, 2000, SCO announced that it had reached an agreement with
Caldera under which Caldera would purchase for stock and cash SCO's server and  
professional services groups. The plan of reorganization was subsequently       
amended on September 13, 2000, December 17, 2000 and February 9, 2001.          

  Under the terms of the reorganization agreement, as amended, Caldera has
agreed to purchase the SCO server and professional services groups (the         
"Groups"), including its employees, products, technology rights and channel     
resources. In exchange SCO will receive 16 million shares of Caldera common     
stock, $23 million in cash and a promissory note for $8 million. This promissory
note will be payable in 4 equal quarterly installments beginning the fifth      
quarter after the combination is completed. SCO will retain its Tarantella      
Division. In addition, if the OpenServer line of business of the server and     
professional services groups generates revenues in excess of specified          
thresholds during the three-year period following the completion of the         
combination, SCO will have earn-out rights entitling it to receive 45% of these 
excess revenues.                                                                

   The server and professional services groups operate as a global leader in
server software for networked business computing, and the world's leading       
provider of UNIX(R) server operating systems. The server and professional       
services groups sell and support their products through a worldwide network of  
more than 15,000 distributors, resellers, system integrators and OEMs.          

  The mission of the server and professional services groups is to create,
market and support the server software that system builders choose for networked
business computing. SCO believes that server-based network computing, which is  
based on Internet and web technologies, enables businesses to dramatically      
improve their customer information flow and business transaction efficiencies.  
Companies that adopt a server-based network computing model can understand their
customers better, reach wider potential markets, bring products to market faster
and improve their overall customer satisfaction levels. With server-based       
computing and products and services of the server and professional services     
groups, IT professionals can immediately leverage their existing investments,   
deploy applications faster and dramatically cut the cost of systems             
administration and management.                                                  

     In addition to historical information contained herein, this discussion and
analysis contains forward-looking statements. These statements involve risks and
uncertainties and can be identified by the use of forward-looking terminology   
such as "estimates," "projects," "anticipates," "plans," "future," "may,"       
"will," "should," "predicts," "potential," "continue," "expects," "intends,"    
"believes," and similar expressions. Examples of forward-looking statements     
include those relating to financial risk management activities and the adequacy 
of financial resources for operations. These and other forward-looking          
statements are only estimates and predictions. While SCO believes that the      
expectations reflected in the forward-looking statements are reasonable, the    
Groups' actual results could differ materially. Readers are cautioned not to    
place undue reliance on these forward-looking statements, which reflect         
management's expectations only as of the date hereof. SCO undertakes no         
obligation to publicly release the results of any                               

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revision to these forward-looking statements, which may be made to reflect      
events or circumstances after the date hereof or to reflect the occurrence of   
unanticipated events.                                                           

RESULTS OF OPERATIONS                                                           

NET REVENUES                                                                    

     The net revenues of the server and professional services groups are derived
from software licenses and fees for services, which include engineering         
services, consulting, custom engineering, support and training. Product license 
revenues are recognized upon shipment, provided a signed contract exists, the   
fee is fixed and determinable, collection is probable and returns can be        
reasonably estimated. An estimate for product returns is made upon recognition  
of revenue from customers having return rights. For sales through distributors  
we do not have the data to reasonably estimate returns and therefore recognize  
revenue when this right elapses, which occurs upon a sale by the distributor.   

Net revenues for the three months ended December 31, 2000 decreased to
$23.9 million from $50.8 million in the same period in fiscal 2000. Net revenues
for fiscal 2000 decreased to $139.6 million compared to $214.1 million in the   
same period in fiscal 1999. The fiscal 2001 decline in net revenue performance  
was worldwide across all geographies and is attributable to fewer large project 
deals, as well as other market factors. The Groups were directly impacted by the
reduction in information technology ("IT") investments by companies for         
application server software and service initiatives. Further, the Groups are    
experiencing the impact of being involved in a protracted transaction involving 
the sale of the Groups. The fiscal 2000 decline in revenue performance is       
attributable to customer delays and a slower than expected recovery of the      
customer channel from the impact of Year 2000. Net revenues for fiscal 1999     
increased by 32% from $162.7 million in fiscal 1998. The stronger revenue       
performance in fiscal 1999 was across all geographies and is attributable to    
several factors including the ease of electronic licensing, increased customer  
contacts as a result of added sales resources and Y2K upgrade sales. For the    
three months ended December 31, 2000 and 1999 and for the fiscal years ended    
September 30, 2000, 1999 and 1998, no single customer accounted for greater than
10% of the net revenues of the server and professional services groups.         

     License Revenues.  License revenues for the three months ended December 31,
2000 were $20.5 million compared to $46.7 million for the same period of fiscal 
2000. License revenues were $124.9 million for fiscal 2000 compared to $199.3   
million for the same period of fiscal 1999. The decline in fiscal 2001 is       
attributed to delays in large project deals as well as the impact of being      
involved in a protracted transaction involving the sale of the Groups. The      
fiscal 2000 decrease resulted from customer delays due to Year 2000 issues and a
slower than expected recovery of the customer channel from the impact of Y2K.   
License revenue for fiscal 1999 increased by 34% compared to $148.3 million in  
fiscal 1998. The fiscal 1999 revenue performance is due to strong revenue in all
geographies, growing electronic licensing sales, Y2K upgrade sales, and         
increased customer contacts due to higher sales resources.                      

Service Revenues.  Services revenues for the three month period ended 
December 31, 2000 were $3.3 million compared to $4.1 million in fiscal 2000.    
Service revenues were $14.7 million in fiscal 2000 compared with $14.8 million  
in fiscal 1999 and $14.4 million in fiscal 1998. The fiscal 2001 decline of $0.8
million was primarily due to customer delays in implementing services. Service  
revenues represented 14% of total revenue for the first three months of fiscal  
2001 compared to 8% of total revenues in the same three month period of fiscal  
2000. Service revenues represented 11% of total revenue for fiscal 2000, 7% for 
fiscal 1999 and 9% for fiscal 1998.                                             

COST OF REVENUES                                                                

    The server and professional services groups' overall cost of revenues as a
percentage of net revenues can be affected by mix changes in net revenue        
contribution between product families, geographic regions and channels of       
distribution, since both price and cost characteristics associated with these   
revenue streams can vary greatly. The server and professional services groups   
can also experience fluctuations in gross                                       

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margin as net revenues increase or decrease since certain costs of revenues     
including technology, service, product assembly and distribution act as fixed   
costs within certain volume ranges.                                             

     Cost of License Revenues.  Cost of license revenues includes royalties paid
to certain software vendors, amortization of acquired technologies, product     
packaging, documentation and all costs associated with the acquisition of       
components, assembling of finished products, warehousing and shipping. Cost of  
license revenues decreased to $3.7 million in the three months ending December  
31, 2000 from $6.9 million in the same period of fiscal 2000. Cost of license   
revenues as a percentage of license revenues increased to 18% for the three     
month period ending December 31, 2000 from 15% in the same period of fiscal     
2000. Cost of license revenues was $22.9 million in fiscal 2000, a decline of   
24% when compared to the cost of license revenues of $30.0 million in fiscal    
1999. Cost of license revenues as a percentage of license revenues increased to 
18% for fiscal 2000 compared to 15% for fiscal 1999. Cost of license revenues   
was $27.7 million, or 19% of license revenues, in fiscal 1998. The declining    
cost of license revenues is primarily due to lower sales. The fiscal 2001 and   
2000 cost of revenues includes increases as a result of the impact of fixed     
costs over lower unit sales volume. These fixed costs include technology and    
overhead costs. This impact is offset by declining material costs resulting from
the continuing growth of e-commerce business. The fiscal 1999 percentage        
decrease resulted from reduced royalty rates and reduced technology costs       
together with the impact of stable fixed costs over higher unit sales volume. In
addition, material costs declined as a result of increasing e-commerce trade.   

     Cost of Service Revenues.  Cost of service revenues includes documentation,
consulting and personnel related expenses associated with providing such        
services. Cost of service revenues for the three months ended December 31, 2000 
decreased by 31% to $3.4 million compared to $4.9 million in the same period of 
fiscal 2000. Cost of service revenues was $18.5 million for fiscal 2000 as      
compared to $18.6 million for fiscal 1999 and $16.8 million for fiscal 1998. The
fiscal 2001 decline is primarily a result of reduced staffing levels in both the
support and professional services organizations due to realignments of these    
organizations. The fiscal 1999 increase was a result of increased staffing      
levels in the professional services area as part of an effort by SCO to improve 
visibility to customers.                                                        

RESEARCH AND DEVELOPMENT                                                        

SCO invests in research and development both for new products and to  
provide continuing enhancements to current products of the server and           
professional services groups. Research and developments expenses were $4.8      
million in the three months ending December 31, 2000, a decrease of 48% when    
compared to $9.3 million in the same period of fiscal 2000. Research and        
development expenses decreased 10% to $33.9 million for fiscal 2000 from $37.6  
million in the same period of fiscal 1999, which in turn was a decrease of 1%   
from fiscal 1998 spending of $38.1 million. The decreased spending in both      
fiscal 2001 and fiscal 2000 is primarily the result of lower labor costs driven 
by lower headcount as a result of a planned reduction in force and attrition. In
fiscal 2000 this decline was partially offset by an increase in spending        
associated with accelerating development of Unixware 7. Research and development
expenses represented 20% of net revenues for the first quarter of fiscal 2001   
and 18% in the same quarter of fiscal 2000. Research and development expenses   
represented 24%, 18% and 23% of net revenues for fiscal 2000, 1999 and 1998,    
respectively.                                                                   

SALES AND MARKETING                                                             

  Sales and marketing expenses decreased 57% to $10.3 million in the first
quarter of fiscal 2001 from $23.8 million for the comparable quarter of the     
prior year. Sales and marketing expenses represented 43% of net revenues in the 
first quarter of fiscal 2001 and 47% in the same period of fiscal 2000. Sales   
and marketing expenses decreased to $73.2 million, or 52% of net revenues, in   
fiscal 2000 as compared to $92.3 million, or 43% of net revenues, for the same  
period of fiscal 1999. Sales and marketing expenses were $75.7 million, or 47%  
of net revenues, in fiscal 1998. The decline in spending in the first quarter of
fiscal 2001 is due to lower labor costs as a result of a planned reduction in   
force and attrition, combined with reductions in sales program costs that vary  
directly with revenue, including cooperative advertising. The fiscal 2000       
decline in spending was due to a decline in sales program costs that vary       
directly with                                                                   
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revenue, including commissions and cooperative advertising. This decline was    
partially offset by an increase in sales and marketing programs for Unixware    
products during the year. The fiscal 1999 increase was principally due to an    
increase in the size of our direct sales force and commissions as well as sales 
program costs that vary with increased sales.                                   

GENERAL AND ADMINISTRATIVE                                                      

   General and administrative expenses decreased by 7% for the first quarter
of fiscal 2001 to $2.8 million, or 12% on net revenues, compared to $3.1        
million, or 6% of net revenues, in the same quarter of fiscal 2000. For fiscal  
2000, general and administrative expenses increased 16% to $13.7 million, or 10%
of net revenues, compared to $11.9 million, or 6% of net revenues, in fiscal    
1999. Fiscal 1998 general and administrative expenses were $13.0 million, or 8% 
of net revenues. The fiscal 2000 increase in general and administrative expenses
is primarily driven by the transfer of certain staff from other functions due to
the divisionalization of SCO. The fiscal 1999 decline was due to the movement of
certain staff from other functions.                                             

RESTRUCTURING CHARGES                                                           

 Non-recurring charges of $9.9 million were incurred in fiscal 2000 that
related to worldwide restructurings undertaken in the second and fourth quarters
of fiscal 2000, representing 7% of total net revenues for the fiscal year. The  
restructuring charges included $6.6 million of severance and benefits, $1.9     
million of facilities charges, $0.7 million of technology charges and $0.7      
million of fixed asset disposals.                                               

SECOND QUARTER RESTRUCTURING PLAN                                               

 During the second quarter of fiscal 2000, SCO announced and completed a
restructuring plan, which resulted in a one-time charge of $5.9 million. SCO    
restructured its business operations into three independent divisions, each with
a separate management team and dedicated development, marketing and sales       
organizations -- the Server Software Division, the Tarantella Division and the  
Professional Services Division. SCO believes this reorganization, which was     
effective April 1, 2000, has created independent focused teams that can pursue  
revenue in their respective markets. SCO believes that as a result of creating  
these independent, focused organizations they will be better able to control and
measure the success of these businesses. The charge included a reduction in     
personnel of 70 employees, write-offs of certain acquired technologies,         
write-offs of certain fixed assets, and elimination of non-essential facilities.
Of the $5.9 million charge, $4.6 million related to cash expenditures and $1.3  
million related to non-cash charges. The restructuring charge related to cash   
expenditures included $3.6 million for severance costs and $1.0 million for     
facilities costs. SCO anticipates that all of the payments, with the exception  
of the facility lease payment, will be made by the end of fiscal 2001. Included 
in the non-cash charges were technology write-offs of $0.7 million relating to  
technology associated with the Unixware 7 product. This technology had          
previously been capitalized as it had alternative future use. However, in       
conjunction with the restructuring, certain personnel associated with product   
development of Unixware 7 were terminated and plans for future development      
related to this technology were terminated. As a result the technology had no   
other use and was written off. The disposal of fixed assets was comprised of    
computer equipment that will no longer be in use due to the reduction in        
development personnel. The computer equipment was taken out of service and      
disposed of during the third and fourth quarters of fiscal 2000. The timing of  
the fixed asset disposals directly corresponds to the time of employee          
terminations. The write-offs of the computer equipment occurred at the time that
the equipment was no longer in use and taken out of service. Depreciation, where
applicable, continued on these assets until disposal. The computer equipment was
scrapped or sold to the terminated employees. Proceeds from the sale of these   
assets were not significant. Additionally, the disposal of fixed assets includes
write-offs of leasehold improvements relating to the abandonment of certain     
leased space at SCO's Watford, United Kingdom facility. All fixed asset         
disposals were related to the server division. Included in the facilities charge
are amounts relating to the abandonment of certain leased space at SCO's        
Watford, United Kingdom facility. The space is being                            

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reconfigured in preparation for subletting. The restructuring provision includes
the estimated costs associated with the reconfiguring and the rent associated   
with the unoccupied space prior to sublet. The facility closure affected the    
server group. The Groups expect to recognize total annual savings of $9.4       
million from this reorganization beginning in the next fiscal year. The Groups  
believe they will be better able to control costs and measure the success of    
their businesses as a result of this reorganization.                            

The second quarter restructuring charges affected the server and the  
professional services groups. The professional services group had $0.1 million  
of severance costs accrued for the restructuring. The balance of the second     
quarter restructuring charge of $5.8 million related to the server group. The   
majority of the reduction in force was in product development for the server    
group. As of September 30, 2000, a total of 70 positions were eliminated        
including 66 in the server group and 4 in the professional services group.      

    SCO recorded an adjustment to the fiscal 2000 second quarter restructuring
provision of $0.9 million in severance costs in the fourth quarter of fiscal    
2000. The severance costs were adjusted to reflect changes to the estimated     
expenses as actual payments were made.                                          

FOURTH QUARTER RESTRUCTURING PLAN                                               

    In the fourth quarter of fiscal 2000, in connection with management's plan
to reduce operating expenses, SCO announced a further restructuring plan, which 
resulted in a one-time charge to the groups of $4.9 million. SCO believes this  
plan will bring the Groups' operating expenses to a level that is sustainable   
based on the Groups' revenues. The restructuring included the elimination of    
various regional offices in the United States, United Kingdom, Latin America and
Asia Pacific. The charge included a reduction in personnel of 163 employees of  
the server and professional services groups, write-offs of certain fixed assets 
and the elimination of nonessential facilities. The restructuring charges affect
the server group as well as corporate general and administrative areas. Of the  
$4.9 million charge, $4.7 million related to cash expenditures and $0.2 related 
to non-cash charges. The restructuring charge related to cash expenditures      
included $3.9 million for severance costs and $0.8 million for facilities costs.

   The severance charges include elimination of 75 positions in the U.S., 59
positions in the United Kingdom, 16 positions in Europe, 9 positions in Latin   
America and 4 position in the Asia Pacific region.                              

The United States regional facilities and the Watford, United Kingdom 
leases have been or will be vacated and restored, and subsequently sub-let or   
terminated by the second quarter of 2001. The remaining international offices   
are expected to be vacated immediately. The majority of the facility closures   
relate to the server group. A minor portion of the facility closures relate to  
the corporate division of SCO and is comprised primarily of the finance and     
general and administrative functions of SCO's United Kingdom subsidiary. The    
Groups anticipate that all of the payments, with the exception of the facility  
lease payment, will be made by the end of fiscal 2001.                          

     The fixed assets being disposed are made up of computer equipment that will
no longer be in use due to the reduction in personnel. The computer equipment   
will be taken out of service and disposed. Depreciation, where applicable, will 
continue on these assets until disposal. These assets will be scrapped or sold  
to the terminated employees. Any gain realized on the sale of these assets will 
be recorded as other income in the statement of operations. The disposal of     
fixed assets affects both the server group and the corporate division of SCO. As
of December 31, 2000 a total of 163 positions have been eliminated: 91 positions
in the server group and 72 in the corporate division of SCO. The corporate      
division of SCO is allocated to the Groups for segment reporting purposes. The  
Groups expect to recognize total annual savings of $12.7 million from this cost 
saving measure beginning in the next fiscal year. The Groups believe this will  
bring their operating expenses to a level that is sustainable based on the      
Groups' revenues.                                                               

INCOME TAXES                                                                    

 In the quarters ended December 31, 1999 and 2000, fiscal 2000, 1999 and
1998, SCO's effective income tax rates were 24% and (52)%, (25)%, 15% and (39)%,
respectively. The tax provision for the three months ended December 31, 2000 and
1999 reflects foreign taxes payable. The fiscal 2000 tax                        

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reflects the recognition of a valuation allowance against deferred tax assets of
$7.8 million and foreign income taxes of $0.5 million. The fiscal 1999 tax      
provision primarily reflects foreign income taxes, while the fiscal 1998 tax    
provision reflects losses and expenses without tax benefit for which a valuation
allowance has been established. For an analysis of income taxes, see Note 11 of 
Notes to Consolidated Carve Out Financial Statements.                           

SEGMENT INFORMATION                                                             

 SCO began reviewing its performance on the basis of its three divisions
during the third quarter of fiscal 2000. Prior year financial information has   
been reclassified for comparison purposes and is disclosed in Note 13.          

SERVER DIVISION                                                                 

   Net revenues for the server division for the first quarter of fiscal 2001
decreased 54% to $23.0 million from $49.5 million in the same period of fiscal  
2000. Net revenues for the server division were $135.4 million in fiscal 2000, a
decrease of 36% when compared to the fiscal 1999 revenues of $211.0 million. In 
fiscal 1999, net revenues increased by 34% from $157.2 million in fiscal 1998.  
The decline in revenue performance in the first quarter of fiscal 2001 was      
worldwide across all geographies and is attributable to fewer large project     
deals, as well as other market factors, including the impact of being involved  
in a protracted transaction involving the sale of the division. The fiscal 2000 
decline in revenue performance can be attributed to delays in large project     
deals and customer delays due to Year 2000 issues. The slower than expected     
recovery of the customer channel from the impact of Year 2000 also impacted the 
fiscal 2000 revenues for the server division. The fiscal 2000 decline was seen  
across most geographies worldwide. The increase in revenue performance in fiscal
1999 as compared to fiscal 1998 was attributed to Y2K upgrade sales, increased  
customer contracts as a result of added sales resources and the ease of         
electronic licensing. The fiscal 1999 increase was in all geographies.          

   Gross margin for the server division for the three months ending December
31, 2000 declined 57% to $17.0 million compared to $39.5 million for the same   
period of fiscal 2000. Gross margin for the server division declined 40% to     
$100.1 million for fiscal 2000 from $168.1 million in fiscal 1999. The fiscal   
1999 gross margin for the server division increased 43% compared to the fiscal  
1998 gross margin of $117.6 million. The decline in gross margin in fiscal 2001 
is mainly attributable to lower sales. The fiscal 2000 decline in gross margin  
is largely due to the lower revenues and stable fixed costs including technology
and overhead costs. In fiscal 2001, 2000 and 1999, material costs declined as a 
result of increasing e-commerce trade. Additionally, the positive gross margin  
growth in fiscal 1999 can be attributed to the impact of stable fixed costs over
higher unit sales volumes.                                                      

  The operating loss for the three months ending December 31, 2000 for the
server division was $0.2 million, a decline of $3.8 million from the operating  
income of $3.6 million in the same period of fiscal 2000. The server division's 
operating loss for fiscal 2000 was $28.2 million, a decline of $55.7 million    
from the operating income of $27.5 million in fiscal 1999. In fiscal 1998, the  
server division's operating loss was $8.1 million. The fiscal 2001 loss is      
primarily due to the reduced revenue levels in fiscal 2001. This was partially  
offset by lower operating expenses which declined year over year due to lower   
labor costs caused by a planned reduction in force and higher than normal       
attrition combined with reductions in sales program costs that vary directly    
with revenue, including cooperative advertising. The fiscal 2000 loss is a      
result of reduced revenue levels in fiscal 2000.                                

PROFESSIONAL SERVICES DIVISION                                                  

   Net revenues for the professional services division for the first quarter
of fiscal 2001 declined to $0.9 million compared to $1.3 million for the same   
period in fiscal 2000. Net revenues for the professional services division were 
$4.2 million in fiscal 2000, an increase of 34% compared to net revenues of $3.1
million in fiscal 1999. Fiscal 1998 net revenues were $5.5 million for the      
professional services division. The fiscal 2001 decrease can be attributed to   
customer delays in scheduling services. The fiscal year 2000                    

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growth in professional services revenue can be attributed to the dedicated      
professional services organization created in fiscal 2000.                      

    Gross loss for the professional services division was $0.1 million for the
three months ended December 31, 2000 compared with a loss of $0.5 million for   
the same period of fiscal 2000, an improvement of 80%. Gross loss for the       
professional services division was $1.9 million in fiscal 2000 compared with a  
loss of $2.5 million in fiscal 1999. The gross margin for the professional      
services division was $0.6 million in fiscal 1998. The reduction in gross loss  
in fiscal 2001 is directly attributable to improved control of operating        
expenses. Additionally, the fiscal 2001 numbers include the transfer of certain 
staff to general and administrative functions as a result of the creation of    
SCO's divisions. The reduction in gross loss as a percentage of revenue in      
fiscal 2000 can be attributed to the relatively constant costs spread over      
improved revenues. The fiscal 1999 decline is due to the decreased fiscal 1999  
revenues.                                                                       

 The operating loss for the professional services division for the first
quarter of fiscal 2001 was $0.9 million, compared to the operating loss of $0.8 
million in the same period of fiscal 2000. Operating loss for the professional  
services division was $4.4 million for fiscal year 2000, compared with $3.7     
million in fiscal 1999 and $0.5 million in fiscal 1998. The relatively stable   
loss in fiscal 2001 reflects improved spending controls offset by lower revenues
during the first quarter of the year. The creation of the professional services 
organization in fiscal 2000 increased the operating expenses of the division for
the fiscal year. While the revenue also increased, it did not proportionally    
offset the increased expenses in fiscal 2000.                                   

FACTORS THAT MAY AFFECT FUTURE RESULTS                                          

     The future operating results of the server and professional services groups
may be affected by various uncertain trends and factors which are beyond its    
control. These include adverse changes in general economic conditions and rapid 
or unexpected changes in the technologies affecting its products. The process of
developing new high technology products is complex and uncertain and requires   
accurate anticipation of customer needs and technological trends. The industry  
has become increasingly competitive and, accordingly, the server and            
professional services groups results may also be harmed by the actions of       
existing or future competitors, including the development of new technologies,  
the introduction of new products, and the reduction of prices by such           
competitors to gain or retain market share. The server and professional services
groups' results of operations could be adversely affected if it were required to
lower its prices significantly.                                                 

     The server and professional services groups participate in a highly dynamic
industry and future results could be subject to significant volatility,         
particularly on a quarterly basis. The server and professional services groups' 
revenues and operating results may be unpredictable due to shipment patterns.   
The server and professional services groups operate with little backlog of      
orders because its products are generally shipped as orders are received. In    
general, a substantial portion of the revenues of the server and professional   
services groups have been booked and shipped in the third month of the quarter, 
with a concentration of these revenues in the latter half of that third month.  
In addition, the timing of closing of large license contracts and the release of
new products and product upgrades increase the risk of quarter to quarter       
fluctuations and the uncertainty of quarterly operating results. Staffing and   
operating expense levels of the server and professional services groups are     
based on an operating plan and are relatively fixed throughout the quarter. As a
result, if revenues are not realized in the quarter as expected, the expected   
operating results and cash balances of the server and professional services     
groups could be harmed, and such effect could be substantial and could result in
an operating loss and depletion of the cash balances of the server and          
professional services groups.                                                   

   The server and professional groups experience seasonality of revenues for
both the European and the U.S. federal government markets. European revenues    
during the quarter ending June 30 are historically lower or relatively flat     
compared to the prior quarter. This reflects a reduction of customer purchases  
in anticipation of reduced selling activity during the summer months. Sales to  
the U.S. federal government generally increase during the quarter ending        
September 30. This seasonal increase is primarily attributable                  

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to increased purchasing activity by the U.S. federal government prior to the    
close of its fiscal year. Additionally, net revenues for the first quarter of   
the fiscal year are typically lower or relatively flat compared to net revenues 
of the prior quarter.                                                           

   The overall cost of revenues may be affected by changes in the mix of net
revenue contribution between licenses and services, product families,           
geographical regions and channels of distribution, as the costs associated with 
these revenues may have substantially different characteristics. The server and 
professional services groups may also experience a change in margin as net      
revenues increase or decrease since technology costs, service costs and         
production costs are fixed within certain volume ranges.                        

   As of September 30, 1999 the Groups carried a partial valuation allowance
against gross deferred tax assets to reduce such assets to the amount that was  
deemed, more likely than not, to be recoverable prior to expiration. The Groups 
considered, amongst other factors, the historical profitability, prior to one   
off charges, of the Groups, projections for future profits and the ability of   
the Groups to use deferred tax assets against these future profits prior to     
expiration of these assets, the ability of the Groups' foreign subsidiaries to  
utilize their deferred tax assets, and the tax effects of one time charges.     

  As at September 30, 2000 and December 31, 2000 the Groups reassessed the
recoverability of its net deferred tax assets. This analysis was based on       
revised earnings projections, the substantial net operating losses incurred     
during fiscal 2000 and the quarter ended December 31, 2000 and the effects of   
the restructurings undertaken during the fiscal 2000 upon the group's tax       
structure. As a result of this analysis management determined that it was more  
likely than not that the net deferred tax asset recorded as of September 30,    
1999 would not be recoverable against future earnings prior to expiration.      
Accordingly, the groups have established a full valuation allowance against     
gross deferred tax assets as of September 30, 2000. This resulted in a charge of
$7.8 million to the statement of operations during the year ended September 30, 
2000.                                                                           

Substantial portions of the revenues of the server and professional   
services groups are derived from sales to customers outside the United States. A
substantial portion of the international revenues of SCO's United Kingdom       
subsidiary are denominated in U.S. dollars, and operating results can vary with 
changes in the U.S. dollar exchange rate to the United Kingdom pound sterling.  
The revenues of the server and professional services groups may be affected by  
general economic conditions in the United States, Europe and other international
markets. The server and professional services groups' operating strategy and    
pricing take into account changes in exchange rates over time. However, the     
results of operations of the server and professional services groups may be     
significantly affected in the short term by fluctuations in foreign currency    
exchange rates.                                                                 

  The policy of the server and professional services groups is to amortize
purchased software and technology licenses using the straight-line method over  
the remaining estimated economic life of the product, or on the ratio of current
revenues to total projected product revenues, whichever is greater. Due to      
competitive pressures, it is reasonably possible that those estimates of        
anticipated future gross revenues, the remaining estimated economic life of the 
product, or both will be reduced significantly in the near future. As a result, 
the carrying amount of the server and professional services groups' purchased   
software and technology licenses may be reduced materially in the near future   
and, therefore, could create an adverse impact on the server and professional   
services groups' future reported earnings.                                      

  SCO is aware of the issues associated with the new European economic and
monetary union (the "EMU"). One of the changes resulting from this union        
required EMU member states to irrevocably fix their respective currencies to a  
new currency, the Euro, on January 1, 1999. On that day, the Euro became a      
functional legal currency within these countries. Through December 31, 2001,    
business in the EMU member states will be conducted in both the 25 existing     
national currencies, such as the Franc or Deutsche Mark, and the Euro. As a     
result, companies operating in or conducting business in EMU member states will 
need to ensure that their financial and other software systems are capable of   
processing transactions and properly handling these currencies, including the   
Euro. SCO has done a preliminary assessment of the impact the EMU formation will
have on both its internal systems and the products of the server and            
professional services groups and has commenced appropriate actions. SCO has not 
yet                                                                             
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determined all of the costs related to addressing this issue, and there can be  
no assurance that this issue and its related costs will not harm the server and 
professional services groups' business, operating results and financial         
condition.                                                                      

LIQUIDITY AND CAPITAL RESOURCES                                                 

   Cash and cash equivalents as of December 31, 2000, September 30, 2000 and
1999 were $69,000, $511,000 and $2.2 million, respectively. Historically, SCO   
has managed cash and cash equivalents on a centralized basis. Cash receipts     
associated with the server and professional services groups' business except for
amounts arising from specific research and development funding contracts have   
been transferred to SCO on a daily basis and SCO has funded the server and      
professional services groups' disbursements.                                    

  Net cash provided by (used for) operations during the three months ended
December 31, 2000 and the years ended September 30, 2000, 1999 and 1998 was     
$(4.9) million, $(24.9) million, $28.7 million and $12.5 million respectively.  
Cash provided by (used for)operations during each of these periods resulted     
primarily from net losses of $1.8 million and $41.1 million, net income of $19.9
million and net loss of $12.6 million offset by depreciation and amortization of
$2.1 million, $12.3 million, $11.3 million and $13.2 million, respectively. Net 
changes in operating assets and liabilities resulted in a net usage of cash of  
$5.1 million, $3.5 million and $2.5 million during the three months ended       
December 31, 2000 and the years ended September 30, 2000 and 1999, respectively,
and cash generated of $11.7 million during the year ended September 30, 1998.   

  Cash used in investing activities during the three months ended December
31, 2000 and the years ended September 30, 1999 and 1998 was $0.3 million, $4.5 
million, $6.8 million and 3.1 million, respectively. Cash used in investing     
activities was represented by investment in fixed assets and the purchase of    
software and technology licenses for use with our products.                     

  Cash provided by (used for) financing activities was $4.7 million, $27.4
million, $(23.3) million and $(5.4) million during the three months ended       
December 31, 2000 and the years ended September 30, 2000, 1999 and 1998,        
respectively. This came from advances from (to) SCO totaling $5.2 million, $30.3
million, $(19.6) million and $(2.9) million offset by payments made under       
capital leases.                                                                 

    The server and professional services groups have been and will continue to
be dependent upon funding from SCO in order to finance losses incurred in       
operations. Management expects to require additional funding from SCO during the
year ended September 30, 2001 and has received a commitment from them to        
continue funding until that date. There can be no assurance that SCO will       
provide additional funding after this date. In the event that SCO is unwilling  
to provide additional funding there can be no assurance that alternative funding
will be available on acceptable terms or at all.                                

SCO has incurred losses from operations of approximately $7.9 million 
during the first quarter of fiscal 2001 and $57.0 million during fiscal 2000 and
revenues have declined from $53.7 million for the first quarter of fiscal 2000  
to $26.5 million for the same quarter of fiscal 2001. Revenues declined from    
$223.6 million for the year ended September 30, 1999 to $148.9 million for the  
year ended September 30, 2000 and SCO has an accumulated deficit as of December 
31, 2000. These factors have caused SCO's management to evaluate SCO's liquidity
and to establish plans to reduce costs, and increase revenues and improve       
margins. SCO has recently announced cost reduction plans in order to reduce     
operating expenses to levels consistent with current revenues and is            
investigating financing alternatives. There can be no assurance that such cost  
reduction measures will be adequate or such financing will be available, if at  
all, on terms acceptable to SCO.                                                

  Under the financing commitment with The Canopy Group, SCO entered into a
Loan Agreement and a Secured Convertible Promissory Note effective January 8,   
2001 for borrowings up to $18.0 million. Drawings on this financing agreement   
are repayable on December 31, 2001 and bear interest at a rate per annum of 10%.
Drawings are collateralized by SCO's tangible and intangible assets and are     
convertible into common stock at the option of the lender at the closing price  
of SCO common stock on the date of issuance subject to certain limitations. The 
unconverted principal is repayable in cash. Further, Caldera                    

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Systems, Inc., has agreed to loan $7.0 million to SCO in the form of a          
short-term note repayable at the completion of the combination.                 

RECENT ACCOUNTING PRONOUNCEMENTS                                                

In November, 2000, the Emerging Issue Task Force ("EITF") issued EITF 
Abstract No. 00-19 (EITF 00-19), Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Company's Own Stock. EITF 00-19       
applies to all freestanding derivative financial instruments that are indexed   
to, and potentially settled in, a company's own stock and discusses the         
classification and measurement of these financial instruments. It provides that 
an entity recognizes all freestanding derivative financial instruments as equity
or as either assets or liabilities, and measure those instruments at fair value.
The guidance is effective for all new contracts and contract modifications      
entered into after September 20, 2000. For contracts that exist on September 20,
2000, EITF 00-19 should be applied on June 30, 2001, based on the contract terms
then in place. Management is in the process of evaluating the effect this       
guidance will have on its financial statements.                                 

    In March 2000, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 44, Accounting for Certain Transactions Involving Stock      
Compensation -- an interpretation of APB Opinion No. 25. FIN 44 clarifies the   
application of Opinion 25 for (a) the definition of employee for purposes of    
applying Opinion 25, (b) the criteria for determining whether a plan qualifies  
as a noncompensatory plan, (c) the accounting consequence of various            
modifications to the terms of a previously fixed stock option or award, and (d) 
the accounting for an exchange of stock compensation awards in a business       
combination. The groups adopted FIN 44 effective July 1, 2000, but certain      
conclusions cover specific events that occur after either December 15, 1998, or 
January 12, 2000. The adoption of FIN 44 did not have a material effect on the  
financial position or results of operations of the server and professional      
services groups.                                                                

 In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial   
Statements, which provides guidance on the recognition, presentation and        
disclosure of revenue in financials filed with the SEC. SAB 101 outlines the    
basic criteria that must be met to recognize revenue and provides guidance for  
disclosures related to revenue recognition policies. The Groups must adopt SAB  
101 by the fourth quarter of fiscal 2001. Management believes that the          
implementation of SAB 101 will not have a material effect on the financial      
position or results of operations of the server and professional services       
groups.                                                                         

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative 
Instruments and Hedging Activities, which establishes accounting and reporting  
standards for derivative instruments and hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the balance 
sheet and measure those instruments at fair value. In June 1999, the FASB issued
SFAS No. 137, Accounting for Derivative Instruments -- Deferral of the Effective
Date of SFAS Statement No. 133 and in June 2000, the FASB issued SFAS No. 138,  
Accounting for Certain Derivative Instruments -- an amendment of FAS 133,       
Accounting for Derivative instruments and Hedging Activities. As a result of    
SFAS No. 137, SFAS No. 133 and SFAS No. 138 will be effective for all fiscal    
quarters of all fiscal years beginning after June 15, 2000. The adoption of     
these standards did not have a material impact on their financial position and  
results of operations.                                                          

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BUSINESS OF CALDERA 

OVERVIEW                                                                        

Caldera enables the development, deployment and management of Linux   
specialized servers and internet access devices that simplify computing. Our    
Linux software products and service offerings are specifically designed to meet 
the complex needs of eBusiness, or business over the internet. During 1999 and  
2000, our OpenLinux technology received many awards and recognitions, including 
Linux Magazine's Emperor Award, Internetweek's Best of the Best, Network World's
Blue Ribbon Award, CNET Editors' Choice Award, Highest Rated Linux Distribution 
by VarBusines in 2000 Annual Report Card, The Linux Show's Best Distribution of 
Millennium, Linux Journal's Product of the Year award at Comdex and Network     
Computing's Well-Connected Award for Best Network Operating System. We          
facilitate the adoption of Linux by providing educational programs designed to  
help our customers to develop, deploy and administer Linux systems. We embrace  
the open source model and participate as a key member of many open source,      
industry standards and partner initiatives, including Linux Professional        
Institute, Linux Standards Base and Linux International Group. We primarily     
distribute our products and services through our indirect distribution channel  
model. Our customers include AST Computers, Cendant, First International        
Computers, Gates/Arrow, IBM, Ingram Micro, MediaGold, MTI Technology            
Corporation, Navarre Corporation, Support Net and Tech Data.                    

    Fiscal information relating to each of our geographic areas for the fiscal
years 1998, 1999 and 2000 is presented in Note 14, "Segment Information" of the 
Notes to our Consolidated Financial Statements, included in this joint proxy    
statement/prospectus.                                                           

INDUSTRY BACKGROUND                                                             

 The internet has accelerated the introduction of processes for managing
information, providing services and solutions and handling customers and has    
changed the way software applications are developed and deployed. These         
processes enable companies to utilize the internet to extend their businesses   
closer to their customers, partners and suppliers and to communicate more       
effectively with employees. The internet has also enabled and accelerated a     
trend towards distributed software applications. With a distributed application,
instead of installing and running software on an individual desktop, end-users  
can access the application from remote locations using the internet. The        
internet makes the physical location of a software application or service       
irrelevant to the end-user. Rather than individually installing programs on a   
number of PCs, businesses can use the internet to allow end users to access a   
single server maintaining the software. As a result of this trend, application  
service providers, or ASPs, have emerged. An ASP is a service provider that     
centrally hosts services and software applications and leases them to companies.
These companies can access these applications for a fee through the internet,   
rather than buying and installing the programs. However, operating under        
previous computing models, many companies have already invested tremendous      
amounts of capital in their existing legacy computer systems and applications.  
Therefore, new software applications must be developed to allow seamless        
integration between existing legacy systems and applications being offered by   
ASPs over the internet.                                                         

   Another trend in distributed applications is the advent of thin appliance
servers, or specialized servers. These specialized servers perform specific     
applications, such as file and print sharing, secure internet services, backup  
services and electronic mail services. Companies are realizing that they can    
deploy efficient, discrete applications on specialized servers and do not need  
to install massive, costly, multi-functional systems merely to install a new    
application or add a particular function. Companies have started using          
specialized servers to administer the new eBusiness software applications that  
are emerging. Having separate servers for each application improves performance 
and increases stability, while decreasing overall operating and maintenance     
costs.                                                                          

  In addition, the proliferation of information on the internet has driven
the need to customize information for individual use. As a result, manufacturers
have developed ways to separate the visual elements of a standard PC program    
from its computing functions, allowing most of the computing function           

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to be performed remotely. This has facilitated the creation of alternative      
internet access devices for individuals, such as personal digital assistants,   
internet-capable cellular telephones and television set-top boxes. These        
internet access devices are far less costly than personal computers and allow   
more users access to the internet and the ability to participate in eBusiness.  
internet devices are becoming popular worldwide as a way of getting businesses  
and consumers connected to the new eBusiness economy.                           

     The trend towards distributed software applications and specialized servers
and the proliferation of internet access devices have increased companies'      
ability to conduct eBusiness and consumers' access to eBusiness. The dynamic and
fast changing nature of eBusiness requires an operating system, the software    
that enables a computer and its various components to interact, that can change 
with the accelerated evolution of eBusiness. The optimal operating system must  
enable companies to connect specialized servers and internet access devices to  
the internet network to conduct eBusiness. It must be customizable to adapt to  
the changing software applications environment, shifting hardware               
infrastructures and emergence of new internet access devices. It must be        
scalable to accommodate the growing number of users and the ways that they      
access the internet. The optimal operating system must be highly stable and easy
to maintain to minimize overall operating and maintenance costs. It must allow  
for rapid deployment and development and be easily upgradeable to keep pace with
the changing needs of eBusiness. Finally, this operating system must interface  
with existing systems and embrace open technical and communications standards   
like Java and extensible mark-up language, or XML, to take full advantage of the
internet.                                                                       

Linux is an operating system well-suited for eBusiness. The term open 
source applies to software that has its internal source code open to the public 
for viewing, copying, examining and modification. As a result, the Linux source 
code is available for download over the internet. Open source code allows       
thousands of developers around the world to continually collaborate to improve  
and enhance the software. The internet has facilitated and greatly enhanced this
collaborative environment. Benefits of Linux include:                           

- comprehensive internet functionality;                               

- flexibility and customizability;                                    

- high scalability;                                                   

- stability;                                                          

- interoperability with multiple systems and networks;                

- multi-appliance capability, including internet access devices;      

- low acquisition and maintenance costs; and                          

- compliance with technical and communications standards.             

Despite these benefits, Linux as an open source system is not without 
drawbacks. Linux has not yet been widely adopted by business due to:            

- the absence of Linux products tailored for business;                

- the fragmentation of Linux offerings;                               

- inadequate education and training;                                  

- the lack of proper distribution channels for Linux solutions;       

- the lack of technical knowledge and support;                        

- difficulty in management and deployment; and                        

- the limited number of applications available for use on Linux.      

    Historically, business users have lacked a Linux solution that suits their
needs. For Linux to fully support eBusiness, a solution must consist not only of
advanced technology but also should be enhanced and tailored for business. This 
solution must promote the benefits of Linux for eBusiness and provide the       

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proper education and training to facilitate adoption. Proper distribution       
channels are required to facilitate access to the business user. The Linux for  
eBusiness solution must be able to accommodate business applications and be able
to interoperate properly with the diverse environment of internal corporate     
information systems and the internet. It must have the flexibility to be        
maintained centrally or managed remotely. Finally, a solution must adhere and   
conform to commercial standards to incorporate the latest technological         
advancement and ensure wide acceptance.                                         

THE CALDERA SYSTEMS SOLUTION                                                    

We develop and market software based on the Linux operating system and
provide related services that enable the development, deployment and management 
of Linux specialized servers and internet access devices that simplify          
computing. We believe that our Linux solution is a comprehensive solution for   
eBusiness. Key benefits of our solution include:                                

   Focused business framework.  We believe we were the first to tailor Linux
open source code from various sources into sound discrete products that are     
usable, deployable and manageable for eBusiness. Our development team consists  
of experienced Linux engineers and business professionals. We develop our       
products by first carefully choosing the Linux features that are the most       
relevant and useful for eBusiness. Then we assemble the code so that it is      
logically arranged and works together as seamless applications in which source  
and binary code match for logic and order. Our products are then tested for     
quality and performance. This enhances reliability and reduces the need for     
technical support when used under strenuous business conditions. This process,  
known as self-hosting, is unique in the Linux community and accounts for the    
high levels of stability and performance of our products. Our products are also 
designed to be interoperable with multiple platforms to enable businesses to    
make efficient use of existing information technology investments.              

  Effective distribution channel.  We provide products and services to the
people who serve the business community. Most of our products that are purchased
by corporate information systems departments are sold through our distribution  
channel to electronic solution providers. We define electronic solution         
providers to include value added resellers, or VARs, original equipment         
manufacturers, or OEMs, internet service providers, or ISPs, corporate          
information technology managers and partners, ranging from independent local    
technical specialists to large system integrator organizations, that offer      
value-added solutions for eBusiness. Business customers often rely on solution  
providers to recommend which technology to purchase. We provide solution        
providers with products, third-party applications, education, training and tools
to effectively facilitate or offer a Linux solution for eBusiness. Solution     
providers benefit from the lower maintenance and support costs necessary to     
maintain our Linux solution. We offer our services to solution providers on a   
worldwide basis.                                                                

    Comprehensive product offerings.  We believe that our OpenLinux technology
is the most advanced for eBusiness. OpenLinux is the technology foundation on   
which we are able to build multiple products that perform different tasks. Each 
product has specific components that can be modified. For example, our desktop  
product can be modified to perform client specific functions such as running    
business automation applications or accessing the internet as an email client on
hand-held appliances. Our server product contains modular components that can be
configured to run specialized servers such as an email server or a web site     
server. We continually enhance the OpenLinux technology through our development 
centers in Germany and the United States. As a result, we are able to           
incorporate the latest Linux enhancements or modifications into our products.   
Our business experience enables us to build relevant business enhancements to   
Linux through add-on segments of code that connect to the core source code.     
These enhancements include web administration applications, the Caldera Systems 
open administration system, and an easy-to-use Linux installation wizard. We    
also offer our products in multiple language versions.                          

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   Complementary value-added services.  In order for businesses to implement
our product offerings, we provide a wide range of valuable services. We believe 
that our service offerings provide significant benefits for eBusiness. These    
service offerings include:                                                      

 - Technical Support -- Our technical support provides assistance during
installation and operation of OpenLinux;                          

- Consulting and Custom Development -- Our consultants have extensive 
 technological and business knowledge, which allows us to assist our
     electronic solution provider customers in implementing Linux solutions;

   - Hardware Optimization and Certification -- Our consultants can optimize
       OpenLinux for a specific hardware platform and provide a rigorous testing
and certification process; and                                    

  - Documentation -- We provide consistent and up-to-date documentation on
Linux that is not readily available in the open source development
community.                                                        

     Comprehensive, distribution-neutral education and training.  Many companies
are delivering different versions of Linux called distributions. We provide a   
comprehensive distribution-neutral training program for Linux. Our courses focus
on educating and training the business community on Linux's benefits for        
business use. We offer a comprehensive set of courses designed to prepare       
students to develop, deploy and manage Linux in a business environment,         
including system, network and internet administration and programming. A student
who has successfully completed our courses will be proficient with the leading  
distributions of Linux. We offer high-quality instructor-led training through   
our own training center at our headquarters and also offer our educational      
programs indirectly through our Caldera Open Learning Providers around the      
world.                                                                          

   Business community catalyst and open source advocate.  We believe we were
the first Linux provider to introduce an open source operating system designed  
for the business environment. By demonstrating to key information technology    
companies such as Corel and Netscape that open source systems can work well with
proprietary systems, we believe that we have sparked the interest of more       
conservative technology adopters and accelerated acceptance of Linux for        
business use. We help port, or convert, business applications to the Linux      
platform and offer ways to incorporate those products into existing systems. We 
are a major driver of Linux standards based initiatives such as Linux           
Professional Institute, or LPI, an independent organization dedicated to the    
establishment of professional certification standards for Linux professionals,  
and Linux Standards Base, or LSB, an initiative that is designed to standardize 
application development for the Linux platform. An application that meets all   
the criteria for LSB should work on all compliant distributions of Linux. If LSB
is widely adopted, we believe it will significantly reduce the fragmentation of 
Linux.                                                                          

  We fully embrace the open source model and continuously contribute tools
and technology to the open source community. We give away CD ROMs containing our
Linux operating system at trade shows and allow it to be freely downloaded from 
the internet to encourage interest. We foster multiple development projects over
the internet and help each project progress smoothly.                           

SOFTWARE PRODUCTS                                                               

  We develop, market and support Linux products and solutions specifically
designed to meet the complex needs of eBusiness. According to PC Data, during   
1999, Caldera was third in sales of Linux operating systems in the United       
States, both in terms of units sold and aggregate dollar amount. Our products   
and solutions integrate both commercial and open source software products       
developed by us and third parties. For example, we have included applications   
that we have open sourced, such as LInux wiZARD (LIZARD), our award-winning     
graphical Linux step-by-step installation tool. We apply development and testing
procedures to the open source code included in our products similar to those    
procedures applied to commercial products. This process known as self-hosting is
unique in the Linux community and accounts for the high levels of stability and 
performance of our products. Our rigorous                                       

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development procedures result in a highly consistent product that enables easier
and more rapid customization, integration and support of our solutions. Our     
products are designed to work both individually and together to provide a       
rapidly expandable platform as enterprises extend their eBusiness               
infrastructure.                                                                 

OpenLinux eDesktop 2.4                                                          

We first released our principal product, OpenLinux, a Linux operating 
system, in calendar year 1995. In March, 2000, we began shipping our newest     
update of OpenLinux, OpenLinux eDesktop 2.4. OpenLinux eDesktop 2.4 is an       
integrated and pre-tested collection of approximately 300 business-relevant     
third-party software components, which provide for a variety of functions that  
can be utilized either on a single desktop computer or in a networked           
environment. We have historically developed OpenLinux for the first-time Linux  
user, which predominantly has come from a Windows, desktop environment.         
OpenLinux eDesktop 2.4 is currently available for the Intel and Sun SPARC       
platforms. Examples of some of the key components of OpenLinux eDesktop 2.4 and 
the functions they perform include:                                             

                                                                [Download Table]

    OPEN SOURCE COMPONENTS                           FUNCTION     
    ----------------------                           --------     
                                                                  
KDE                                        Graphical desktop      
Linux Kernel (Version 2.2.10)              Operating system core  
LIZARD                                     Installation software  
Netscape Communicator 4.61                 Web browser            
Apache                                     Web server             
Sendmail                                   E-mail routing software

                                                                [Download Table]

     COMMERCIAL COMPONENTS                           FUNCTION          
     ---------------------                           --------          
                                                                       
StarOffice 5.1 (personal edition)          Suite of office applications
Corel WordPerfect 8.0 (personal edition)   Word processor              
PartitionMagic                             Hard-drive partitioning     
BootMagic                                  Boot-up manager             
Applixware 4.4.2 office suite (trial       Suite of office applications
version)                                                               

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OpenLinux eServer 2.3                                                           

     OpenLinux eServer 2.3 is targeted at solution providers, system integrators
and resellers who provide specialized, thin and high-end servers to their       
customers. eServer supports server-oriented hardware. It is a component-based   
server operating system designed for OEMs, solution providers, system           
integrators and resellers and makes Linux server solutions easy to install,     
configure and operate. It is readily customizable and, in particular, has been  
developed for use by AST Computers, Fujitsu and Motorola. OpenLinux eServer 2.3 
has been shipped to strategic partners such as Fujitsu, IBM and Motorola and    
began shipping in late January 2000. Examples of some of the key components of  
OpenLinux eServer 2.3 and the functions they perform include:                   

                                                                [Download Table]

         COMPONENTS                                FUNCTION           
         ----------                                --------           
                                                                      
Webmin                                   Remote administration tool   
Linux Kernel (Version 2.2.14)            Operating system core        
BIND 8 DNS server                        Domain Name server           
DHCP server                              Configuration Protocol server
Apache                                   Web server                   
Sendmail                                 E-mail routing software      
FTP server                               FTP Server                   
INN                                      News Server                  
Squid                                    Web proxy server             
PPP                                      Dial-in server               
SAMBA                                    File and print server        
Majordomo                                List management server       
MySQL Database software                  Database software            
IBM Visual Age Java                      Programming language         

Volution                                                                        

     Volution is a comprehensive Linux management solution that reduces the cost
of ownership of implementing and managing Linux systems. Volution does so by    
enabling secure, remote management of multiple Linux systems through a browser. 
It enables administrators to manage the network with policies, without having to
individually manage each system. Volution is distribution-neutral, and designed 
to work with all major Linux distributions, and provides broad management       
functions. Volution provides the capabilities for administrators to effectively 
manage their systems through hardware and software inventory, electronic        
software distribution, health monitoring of Linux systems, printer configuration
and scheduled scripted actions. Volution began shipping in late January 2001.   

SERVICES                                                                        

Linux Education and Training Services                                           

  Our educational programs and products are designed to help our customers
learn to develop, deploy and administer Linux systems. Our courses provide      
preparation for Linux certification tests being provided by the Linux           
Professional Institute, an independent organization. We provide a comprehensive 
training program for Linux.                                                     

 We provide Linux training through our training center in Orem, Utah and
through 94 Caldera Open Learning Providers located in the United States and     
abroad. Caldera Open Learning Providers are independent centers that we have    
authorized to provide courses that we have developed. Currently, we offer eight 
separate courses relating to Linux training and network administration, which   
are categorized by                                                              

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their educational objective. The three categories of courses we provide allow   
multiple educational tracks, including:                                         

- Linux certification;                                                

- system administration; and                                          

- Linux developer training.                                           

eBusiness Consulting, Custom Development and Optimization Services              

Our eBusiness consulting services stem from our experience testing and
integrating software products to work in a Linux environment. We assist ISVs and
solution providers by helping them in creating customized internet solutions    
which they can then pass along as products and solutions for their customers.   
Examples of the eBusiness consulting services we provide include:               

- Customization and optimization of our products to support a client's
proprietary system or configuration.                              

- Assessment services relating to the proposed migration of a client's
software for use with Linux.                                      

  - Porting services for customers migrating their software to Linux. Fees
are billed on a daily, weekly or monthly basis.                   

Technical Support                                                               

     Customers who purchase OpenLinux products through our distribution channels
are entitled to 90 days or five incidents of e-mail or internet technical       
support at no additional charge. We support solution providers with second-tier 
support.                                                                        

   Customers seeking additional technical support directly from us may enter
into service agreements that best suit their needs. Examples of our service     
plans include:                                                                  

- yearly unlimited telephone support agreements for $950 per system;  

- yearly unlimited e-mail support agreements for $495 per system;     

- pay-as-you-go support agreements starting at $150 per incident;     

    - telephone support for up to 5, 10 or 20 calls ranging in price from $625
to $1,500 per call pack; and                                      

   - 7 day, 24 hour telephone support available at a 50% premium to the base
rates.                                                            

AWARDS AND RECOGNITIONS                                                         

 Caldera Systems and its products have received several recognitions and
awards, including:                                                              

- CNET Editor's Choice Award (October 2000);                          

- Network World Blue Ribbon Award (September 2000);                   

- Linux Magazine's Emperor Award (May 2000);                          

- PC ONLiNE Testsieger's (April 2000);                                

- a listing in Upside Magazine's Millennium 2000 eBusiness 150 (March 
2000);                                                            

- Andover.net Dave Central's Best of Linux winner (February 2000);    

- Linux Magazine's Cool Product Award (February 2000);                

- PC Direct (Ziff-Davis) Best Buy 2000 award (January 2000);          

- Internetweek's Best of the Best award for best software for 1999    
(December 1999);                                                  

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- The Linux Show's Best Distribution of Millennium (December 1999);   

- Linux Journal's Product of the Year award at Comdex (November 1999);

     - a listing in PC Magazine's Top 100 Technology Companies That Are Changing
the World (October 1999);                                         

  - Linuxworld Editor's Choice Award: Best Client and Distribution (August
1999);                                                            

 - Network Computing's Well-Connected Award for Best Networked Operating
System (May 1999); and                                            

- MikroPC's Product of the Year Award (1999).                         

CUSTOMERS                                                                       

 We sell our products primarily through indirect channels. Our customers
include:                                                                        

                                                                [Download Table]
                                                                          
AST Computers                                   Ingram Micro              
Cendant                                         MediaGold                 
First International Computers                   MTI Technology Corporation
Frank Kasper & Associates                       Navarre Corporation       
Gates/Arrow                                     Support Net               
IBM                                             Tech Data                 

   Navarre Corporation and Frank Kasper & Associates each accounted for more
than 10% of our revenue in fiscal 1999. Navarre Corporation was the only        
customer that accounted for more than 10% of our revenue in the year ended      
October 31, 2000. Substantially all of the revenue we have received from these  
two parties reflects revenue from sales of our Linux products.                  

STRATEGIC TECHNOLOGY ALLIANCES                                                  

 We have business alliances with key global industry partners, including
Citrix Systems, Fujitsu, IBM, Intel, Novell, Oracle and Sun Microsystems. These 
relationships encompass product integration, two-way technology transfers,      
channel partnerships and revenue generating initiatives in areas of product     
bundles, training and education, consulting and third-level technical support   
for our partners. The objectives of these partnerships include:                 

- providing complete hardware and software Linux solutions;           

  - licensing our education materials to be used in our partners' training
centers;                                                          

- supporting our partners' Linux engineering efforts as well as their 
end-user customers; and                                           

  - mutually developing our sales and distribution channel by coordinating
marketing initiatives in creating demand for our products.        

    These relationships are non-exclusive, leaving us opportunities to explore
other strategic partnerships on a global level. In particular, in January 2000, 
we entered into license agreements with Sun Microsystems which allow us to      
create and commercially distribute applications developed utilizing Java2       
Standard Edition for Linux, Java HotSpot Performance engine, EmbeddedJava and   
PersonalJava for use on the Itanium (Merced), PowerPC, Sun x86, and UltraSPARC  
processors. These licenses are non-exclusive. In connection with the licenses   
relating to the Java2 Standard Edition and the Java HotSpot Performance Engine, 
we paid Sun Microsystems $1.3 million.                                          

     Furthermore, in November 1999, we entered into a contributor agreement with
Intel to port OpenLinux products, including OpenLinux eServer, to Intel's IA64  
platform. In addition we will be porting the Java Development Toolkit and Java  
Runtime Environment to the IA64 platform.                                       

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INDUSTRY PARTICIPATION                                                          

    We participate as a key member of many industry standard, partner and open
source initiatives, including the following:                                    

  - Linux Professional Institute, an independent organization dedicated to
 the establishment of professional certification standards for Linux
professionals;                                                    

- Linux Standards Base, a Linux community initiative dedicated to     
 addressing problems and defining standards associated with the many
versions of Linux distributions currently in the marketplace;     

 - Linux Internationalization Group, a voluntary Linux community working
group, of which we are one of the founding members, dedicated to  
   addressing interoperability, internationalization and localization of
Linux applications in the international context;                  

- IA64 Linux Project, an Intel-sponsored initiative to port the Linux 
kernel to the Intel Itanium processor;                            

    - Distributed Management Task Force, an independent organization including
      most of the largest software and systems vendors in the world, dedicated
       to creating new standards for computer systems management. We are working
with this task force to incorporate into our OpenLinux products   
       commonality standards already in place among enterprise-level businesses;
and                                                               

 - Java, Sun Microsystem's proprietary software programming language. We
   plan to incorporate standards that will allow the majority of current
       Java applications to run on Linux and to provide for developers to create
new applications in Java for use on Linux.                        

SALES, MARKETING AND DISTRIBUTION                                               

 Our focus on Linux for eBusiness enables us to promote the development,
deployment, and management of Linux appliances and devices that facilitate the  
eBusiness infrastructure. Our primary strategy has been to distribute our       
products and services through our indirect distribution channel model.          

For the fiscal year ended October 31, 1999, our distributor channel   
represented 74% of our total software and related products revenue and included 
distributors such as Frank Kasper & Associates, Ingram Micro, Navarre           
Corporation and Tech Data, domestically, and MediaGold in Europe. Sales through 
this distributor channel represented 85% of our total software and related      
products revenue for the year ended October 31, 2000. We plan to continue to    
recruit new distributors to introduce OpenLinux technology into new markets,    
including into foreign countries with language specific products.               

 We sell directly to OEM partners, including AST Computers in the United
States and First International Computers in Taiwan. These arrangements are      
typically royalty-based and our revenue is determined by volume of OpenLinux    
products shipped on our partners' hardware or bundled together in distribution. 

Our marketing efforts support our sales and distribution efforts,     
promotions and product introductions and include marketing development funds to 
push OpenLinux products. Pull marketing, apart from delivering quality products 
and services needed in the marketplace, is focused on branding, solutions,      
advertising, tradeshows, press releases, white papers and marketing literature. 
We focus our marketing on public relations and press relations extensively to   
communicate the progress we are making in the business arena. In particular, our
marketing strategy consists of:                                                 

     - branding "Linux for eBusiness" through public relations announcements and
advertising;                                                      

- announcing technology and solution awards;                          

 - creating an effective partner program to generate brand awareness and
promote our products; and                                         

 - increasing public awareness through speaking engagements at strategic
  tradeshows and conferences worldwide and participating in technology
forums.                                                           

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     Our web site, www.calderasystems.com, is focused on strengthening our Linux
for eBusiness strategy. In addition to allowing visitors to download free       
software, our web team is expanding our current web strategy of branding, direct
sales through our online store and linking customers to channel partners.       
Through our web site, we plan to join together ISVs, hardware partners,         
customers, channel players, developers, ISPs and other Linux players who want to
connect for business reasons and to generate royalties based on introductions,  
advertising and transactions.                                                   

COMPETITION                                                                     

 The market for eBusiness solutions is emerging rapidly and is therefore
intensely competitive, characterized by rapidly changing technology and evolving
standards. We expect competition to increase both from existing competitors and 
new market entrants. We face direct competition in the area of specialized      
servers from other providers of solutions for specialized servers. We also face 
competition from traditional, non-Linux operating systems, other Linux operating
systems, technical support providers and professional services organizations.   

 Companies currently offering software solutions for specialized servers
include Berkeley Software Design, Microsoft and a joint venture involving SCO   
and Compaq. Cygnus Solutions, VA Linux and Wind River provide similar solutions 
embedded into their hardware offerings. In addition, Sun Microsystems has       
announced plans to open source its Solaris Unix operating system in an attempt  
to attract more developers to the platform. Many of these competitors are large,
well-established companies with significantly greater financial resources, more 
extensive marketing and distribution capabilities, larger development staffs and
more widely recognized brands and products.                                     

Companies currently offering competitive non-Linux operating systems  
include providers of hardware-independent multi-user operating systems for Intel
platforms, such as Microsoft, IBM and Novell. They also include providers of    
proprietary versions of the UNIX operating system, such as AT&T, Compaq,        
Hewlett-Packard, IBM, Olivetti, Sun Microsystems and Unisys. These competitors  
often bundle their operating systems with their hardware products, creating an  
additional barrier for us to overcome in penetrating their customer bases. There
are also significantly more user applications available for competing operating 
systems, such as Windows NT and UNIX, than there are for Linux operating        
systems.                                                                        

In the Linux operating system market, our competitors include Corel,  
MacMillan, Red Hat, SuSE and TurboLinux. In addition, IBM and Sun Microsystems  
have announced plans to invest significant resources into the development of    
Linux. Several of these competitors have established customer bases, strong     
brand names and continue to attract new customers. Red Hat, in particular, has  
had more visibility and a stronger brand. In addition, this market is not       
characterized by the traditional barriers to entry that are found in most other 
markets, due to the open source nature of our products. For example, anyone can 
readily download the Linux kernel and packages from the internet, optimize and  
add value to it, and thereafter market their own version of the Linux operating 
system. Similarly, anyone can copy, modify and freely redistribute the open     
source components of OpenLinux. Accordingly, new competitors or alliances among 
competitors may emerge and rapidly acquire significant market share. Our        
product, however, is specifically suited for and targeted toward the            
requirements of business. In addition, our education and training program is    
more pervasive and our distribution channel is more developed and mature. We    
believe that these three key advantages give us a competitive advantage in the  
Linux operating system market.                                                  

     We also compete for service revenue with a number of companies that provide
technical support and other professional services to users of Linux operating   
systems, including some original equipment manufacturers with which we have     
agreements. Many of these companies have larger and more experienced service    
organizations than we do. We also may face competition on this front from       
companies with larger customer bases and greater financial resources and name   
recognition, such as Corel, Cygnus Solutions and Sun Microsystems, which have   
indicated interest in the Linux operating systems market.                       

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Based upon these market factors, we believe that the most significant 
criteria affecting the competitive landscape for our products include:          

- networking capability;                                              

- distribution strength;                                              

- market perception of vendor;                                        

- education and training;                                             

- ease of customization;                                              

- commercial development process;                                     

- product performance, functionality and price;                       

- education and training;                                             

- ease of use;                                                        

- breadth of hardware compatibility;                                  

- quality of support and customer services;                           

- strength of relationships in the open source community; and         

- availability of user applications.                                  

We believe that we compete favorably with many of our competitors in a
number of respects, including product performance, functionality and price,     
networking capability and breadth of hardware compatibility. To solidify and    
improve our competitive ability, our near-term strategy is to strengthen our    
existing strategic relationships and enter into new ones in an effort to enhance
our name recognition, expand our distribution capabilities and attract more     
attention to the open source movement, which in turn should create additional   
incentives for software developers to write more applications for OpenLinux.    

 Additionally, although the Linux and Unix operating systems have in the
past been competing products, the server and professional services groups will  
provide us with an international and domestic, multi-tiered distribution        
channel, and an extensive international infrastructure that could accelerate our
ability to market Linux technologies in foreign markets. We believe that these  
additional distribution opportunities will provide us with additional markets to
offer Linux domestically and internationally. We believe that these             
opportunities will prevent the potential competitive effects of offering both   
Linux and Unix from being material to us.                                       

SOFTWARE ENGINEERING AND DEVELOPMENT                                            

We have invested and will continue to invest in the development of    
innovative new product features and technologies in response to the evolving    
market for Linux solutions and input from key customers. We seek to deliver     
consistently strong Linux products targeted at specific usage as opposed to the 
more traditional one-size-fits-all Linux distribution in which the customer may 
be required to re-build the kernel to attain the proper configuration. This     
product segmentation of eServer and eDesktop allows us to tailor the delivery of
the product to work optimally as installed off the CD, yet continue to provide  
customization, one of the essential values of Linux.                            

     One of our key strategies has been to focus on identifying and removing the
traditional barriers for mass deployment of Linux operating systems (e.g.,      
installation, system configuration and management). The delivery of the         
award-winning LIZARD installation system, initially shipped in OpenLinux 2.2 in 
April 1999, successfully paved the way for a much broader base of users to      
experience Linux with a much lower learning curve. Going forward, we intend to  
continue to apply this philosophy as we work toward addressing the broader      
issues of system configuration management and administration, specifically as it
pertains to the deployment of eServer-based information appliances and eDesktop 
platforms. Our latest                                                           

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component of this architecture, the LUI (Linux Unattended Install) was developed
in cooperation with a large European University to allow many systems (eServer  
or eDesktop) to be installed and upgraded without requiring direct user         
interaction. We intend to introduce new components with each subsequent product.

Our major commitment in the area of research is how to extract the    
management aspects of individual systems, new and legacy applications to enable 
the deployment, management and administration of platforms and applications to  
be handled from anywhere on the network. Leveraging Linux, open source and open 
standard technologies is a way of providing necessary infrastructure components.
We believe that contributing back to Linux much of our research will facilitate 
more of an industry standard as well as industry cooperation.                   

     Our product development process is modeled to standard, commercial software
engineering practices. We apply these practices to both documentation and       
procedures to ensure consistent product quality. As a result, we are able to    
offer our platform products to OEM customers in several configurations without  
significant effort. We are also able to move our platform products efficiently  
to new processor platforms as new business opportunities arise.                 

    As of January 31, 2001, we employed an in-house engineering staff of 62 in
addition to maintaining a contract consulting arrangement with a Japanese firm  
for product development needs specific to the Japanese market. The engineering  
staff consists of two primary teams, the U.S. Engineering group located near    
corporate headquarters in Utah and the European group located in Erlangen,      
Germany. Our staff members possess a broad range of both Linux and other        
industry experience.                                                            

INTELLECTUAL PROPERTY                                                           

     Our success depends significantly on our ability to protect our trademarks,
trade secrets, and certain proprietary technology. To accomplish this, we rely  
primarily on a combination of trademark and copyright laws and trade secrets. We
also require that our employees and consultants sign confidentiality and        
nondisclosure agreements. We generally regulate access to and distribution of   
our documentation and other proprietary information.                            

    Certain components of OpenLinux have been developed and made available for
licensing under the GNU General Public License and similar licenses, which      
generally allow any person or organization to copy, modify and distribute the   
software. The only restriction is that any resulting or derivative work must be 
made available to the public under the same terms. Therefore, although we retain
the copyrights to the code that we develop ourselves, due to the open source    
nature of our software products and the licenses under which we develop and     
distribute them, our collection of trademarks constitutes our most important    
intellectual property.                                                          

   We own the registered trademark "CALDERA(R)" and also have license rights
relating to "CALDERA SYSTEMS(TM)", a pending trademark application. In September
1999, the United States Trademark Office, or USTO, rejected our applications for
"OpenLinux(TM)" and "Linux for Business(TM)". We filed our response with respect
to the rejection of the "OpenLinux" trademark on March 28, 2000. Our trademark  
application for "Linux for Business" was suspended on April 24, 2000, pending   
disposition of prior applications. We have recently been informed by the USTO   
that resolution of these applications will remain pending until a determination 
has been made by the USTO as to the treatment of LINUX related trademark        
applications generally. In Europe, our application for registration of the      
trademark "OpenLinux(TM)" has been approved by the European Community Trade     
Marks Office.                                                                   

 Despite our efforts to protect our trademark rights, unauthorized third
parties have in the past attempted and in the future may attempt to             
misappropriate our trademark rights. We cannot be certain that we will succeed  
in preventing the continued misappropriation of our tradename and trademarks in 
these circumstances or that we will be able to prevent this type of unauthorized
use in the future. The laws of some foreign countries do not protect our        
trademark rights to the same extent as do the laws of the United States. In     
addition, policing unauthorized use of our trademark rights is difficult,       
expensive and                                                                   

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time consuming. The loss of any material trademark or trade name could have a   
significant negative effect on our business, operating results and financial    
condition.                                                                      

   We do not believe that our products infringe the rights of third parties.
However, our products are comprised of many distinct software components,       
developed by many independent parties, and therefore third parties have in the  
past asserted, and may in the future assert infringement claims against us which
may result in costly litigation or require us to obtain a license to third-party
intellectual rights. There can be no assurance that such licenses will be       
available on reasonable terms or at all, which could have a negative effect on  
our business, operating results and financial condition.                        

GOVERNMENT REGULATION                                                           

    Our success depends on the Linux operating systems industry, which in turn
depends on increased use of the internet for eBusiness and other commercial and 
personal activities. Laws and regulations have been proposed in the United      
States and Europe to address privacy and security concerns related to the       
collection and transmission of information over the internet. The United States 
Congress recently enacted internet laws regarding children's privacy and the    
transmission of sexually explicit material. The Federal Trade Commission, or    
FTC, may reconsider regulations that may require companies to:                  

  - give adequate notice to consumers regarding information collection and
disclosure practices;                                             

- provide consumers with the ability to have personal, identifying    
information deleted from a company's database;                    

    - clearly identify affiliations or a lack thereof with third parties which
       may collect information or sponsor activities on a company's website; and

  - obtain express parental consent prior to collecting and using personal
   identifying information obtained from children under 13 years of age.

     Under the proposed FTC regulations, businesses that violate the regulations
could face monetary fines. At the international level, the European Union, or   
EU, has adopted a directive that imposes restrictions on the collection and use 
of personal data from individuals in EU member countries. This EU directive     
could affect internet businesses elsewhere that have users in one or more EU    
member countries.                                                               

    The proposed FTC regulations, if adopted, or the EU directive, as adopted,
could adversely affect the ability of internet businesses to collect demographic
and personal information from users, which could have an adverse effect on the  
ability of internet businesses to target product offerings and attract          
advertisers. Any of these developments could harm the results of operations and 
financial condition of internet businesses and impair the growth of the         
internet.                                                                       

     In addition to government regulations related to internet privacy concerns,
it is possible that any number of additional laws and regulations may be adopted
with respect to the internet covering issues such as obscenity, freedom of      
expression, pricing, content and quality of products and services, copyright and
other intellectual property issues and taxation. As an example, a number of     
proposals have been made at the federal and local level and by various foreign  
governments to impose taxes on the sale of goods and services and other internet
activities. Recently, the U.S. Internet Tax Information Act was enacted, which  
places a three-year moratorium on new state and local taxes on internet         
commerce. However, the moratorium does not prevent the U.S. federal government  
or foreign governments from adopting laws that impose taxes on internet         
commerce.                                                                       

The law of the internet still remains largely unsettled, even in areas
where legislative action has already been undertaken. The passage of new laws or
changes to existing laws intended to address use of the internet could create   
uncertainty in the marketplace, increase the cost of doing business on the      
internet, increase legal liabilities from doing business on the internet or in  
some other manner have a negative impact on internet commerce and substantially 
impair its growth. In addition, the growth and development of the market for    
online commerce may initiate more stringent consumer protection laws,           

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both in the United States and abroad which may impose additional restrictions on
companies conducting business online.                                           

Since many of our customers conduct much of their business over the   
internet, if use of the internet decreases, our customers may see a decreased   
demand for their products. In that event, our customers may purchase fewer      
licenses for our products, which would cause our license and services revenue to
fall.                                                                           

EMPLOYEES                                                                       

As of January 31, 2001, we had a total of 192 employees. Of the total 
employees, 62 were in software engineering, 62 in sales and marketing, 16 in    
customer service and technical support, 13 in operations and 39 in finance and  
administration. From time to time we also employ independent contractors to     
support our professional services, product development, sales, marketing and    
business development organizations. Our employees are not represented by any    
labor union and are not subject to a collective bargaining agreement, and we    
have never experienced a work stoppage. We believe our relations with our       
employees are good.                                                             

FACILITIES                                                                      

    Our principal executive office is currently located in Orem, Utah where we
lease approximately 45,531 square feet of office space. Our annual rental       
expense under the lease is approximately $664,080. We also occupy an additional 
office facility in Orem, Utah, under a lease that costs $8,990 per month and    
occupy 5,544 square feet of warehouse space in Orem, Utah, under an 18 month    
lease that costs approximately $32,000 per year. Our German subsidiary occupies 
3,375 square feet in Erlangen, Germany under a five-year renewable lease for    
approximately $4,880 per month. This lease expires September 1, 2004, and       
additional space is available under similar terms. We believe that our existing 
facilities are adequate for our current requirements and that additional space  
can be obtained on commercially reasonable terms to meet our future             
requirements.                                                                   

LEGAL PROCEEDINGS                                                               

We are not a party to any material legal proceedings.                 

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BUSINESS OF SERVER AND PROFESSIONAL SERVICES GROUPS 

OVERVIEW                                                                        

   The server and professional services groups operate as a global leader in
server software for networked business computing, and the world's leading       
provider of UNIX server operating systems. The business of the server group     
originated over 20 years ago at AT&T and focuses on developing and marketing    
proprietary UNIX server software that runs on standard Intel hardware systems.  
The server group supplies the system software for approximately 37% of all UNIX 
servers for all hardware platforms. The professional services group complements 
the server group and provides professional services to implement and maintain   
UNIX system software products.                                                  

THE SERVER AND PROFESSIONAL SERVICES SOLUTION                                   

   The server and professional services groups' mission is to create, market
and support the server software that system builders choose for networked       
business computing. The server and professional services groups believe that    
server-based network computing enables businesses to improve their customer     
information flow and business transaction efficiencies. Key elements of the     
Group's strategy are:                                                           

- Leverage large global installed base;                               

- Effective distribution channel;                                     

- Focussed product offerings; and                                     

- Leverage professional services to complement server product line.   

The server and professional services groups believe that companies that adopt a 
server-based network computing model can understand their customers better,     
reach wider potential markets, bring products to market faster and improve their
overall customer satisfaction levels. With server-based computing and products  
and services, IT professionals can immediately leverage their existing          
investments, deploy applications faster and dramatically cut the cost of the    
systems administration and management.                                          

     The server products are used by enterprises of all sizes. These enterprises
and their characteristic usage of server products are divided into the following
market segments:                                                                

  - Small to Medium Enterprise -- Processing which is confined to one or a
     few small servers, typically in a single physical location per small or
medium sized enterprise;                                          

     - Replicated Site -- Processing which is replicated onto many small servers
       within a large enterprise, typically located across hundreds or thousands
of physical sites in a given enterprise; and                      

     - Large Enterprise -- Processing which is shared across one or a few medium
    to large sized servers (or clusters of servers) for use by many people
 across an entire large enterprise and/or between many people across
several enterprises.                                              

The Server Group's Large Installed Base                                         

 The server group has a large installed base of over 2 million licensees
worldwide, which include small to medium enterprises, replicated sites, and     
large enterprises.                                                              

  Small to medium enterprises provide the server and professional services
groups with many opportunities to gain a major market share in vertical market  
places such as pharmacies, lumber merchants or building access control systems. 

Replicated sites produce recurring revenue stream from upgrades and   
incremental systems deployment. Once the initial contract is awarded, there are 
also incremental opportunities to add new systems to augment capabilities of the
user's network, including e-business applications and other new product         
features. Since the sites are dispersed and there is a need for high reliability
with low operator invention, these customers are less inclined to change the    
system basis.                                                                   

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  SCO operating systems have also been in-built into many products such as
voice mail systems, telephone switches and badge or ticket readers. A           
characteristic of this market is very slow adoption of alternative technologies.
Once development of a product is complete, the systems will often have a        
marketing life of many years. These in-built systems continue to provide a      
regular source of revenue and potential for new solutions with existing         
customers. Examples of these systems include:                                   

- Private telephone exchanges from Siemens and Lucent;                

- Voice mail systems from Lucent;                                     

- Voice response systems from Wildfire;                               

- Cable television controllers from Scientific Atlanta; and           

- Automobile testers from BMW.                                        

    When SCO acquired the UNIX business from Novell in December, 1995, it also
assumed the legacy of many systems installed over the years by companies such as
Unisys, ICL, Olivetti, NCR and Siemens. Many of these systems were upgraded     
during the year 2000 conversion process to SCO Server products and have now     
transitioned to become server group customers. The group believes these         
customers will continue to provide steady streams of revenue for many years.    

SERVER PRODUCTS                                                                 

The server group is a vendor of UNIX operating systems for Intel-based
computers and serverware, networking software, development tools, and utilities 
to be used with SCO UNIX operating systems. Server products are primarily used  
on computers, which support the integration of information, communication and   
processing from more than one person. These products are used as a system       
software environment for the support of application software, whether the       
applications are processed on a single computer, within a cluster of computers, 
or across a network of computers.                                               

UnixWare 7                                                                      

    The UnixWare 7 operating system is designed to support distributed network
computing on Intel processor-based servers. Running on the new generation of    
"enterprise-class" Intel processors, UnixWare 7 delivers power, value and       
versatility to businesses of all sizes, permitting companies to simplify and    
increase business operations and better understand customers' needs.            

SCO OpenServer                                                                  

   The SCO OpenServer system is one of today's leading UNIX server operating
system for Intel processor-based platforms. Businesses use SCO OpenServer       
systems to simplify and speed business operations, better understand and respond
to their customers' needs, and achieve a competitive advantage. SCO OpenServer  
systems are exceptional at running multi-user, transaction-based DBMS and       
business applications, communications gateways, mail and messaging servers in   
both host and client/server environments. SCO OpenServer Release 5 combines     
minicomputer-level reliability and availability with the Intel platform's       
exceptional price/performance, value and flexibility. Unlike other advanced     
operating systems, SCO OpenServer Systems revolutionize business productivity   
without obsoleting existing business critical systems, applications or data.    
Designed expressly for business critical computing, SCO OpenServer systems      
deliver what today's organizations are seeking -- exceptional value and         
price/performance, extensive networking with existing LANs and WANs, easy       
integration with Windows desktops, built-in Internet access and services,       
simplified administration and management, and outstanding scalability for       
long-term growth.                                                               

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SCO OpenServer Operating Systems                                                

  SCO OpenServer Enterprise System -- In addition to the critical business
applications, SCO OpenServer Enterprise System reliably provides a variety of   
network services including file and print services for both UNIX(R) and Windows 
systems, E-mail services, web services, Internet connectivity, and calendar     
services.                                                                       

SCO OpenServer Host System -- The SCO OpenServer Host System is an    
excellent platform for delivering highly reliable, non-networked multi-user     
solutions.                                                                      

    SCO OpenServer Development System -- The SCO OpenServer Development System
is comprised of a core set of development tools that can be easily augmented    
with over 200 third-party products to create the most robust and efficient      
development environment.                                                        

SCO OpenServer Desktop System -- The Desktop System excels at running 
client-side, transaction-based applications, accessing databases and networked  
information, and providing file/resource sharing and communications across a    
range of peer, server and host environments.                                    

PROFESSIONAL SERVICES                                                           

The Group primarily offers the following services:                    

     - Consulting. These services include assessment services to help a customer
     understand and identify its needs and strengths prior to the use of the
       Server products, and assisting customers in developing complete solutions
for their needs.                                                  

     - Custom software development. These services typically involve customizing
 the products sold to a customer to support a customer's proprietary
system or configuration.                                          

   - Optimization. These services typically involve configuring a customer's
system and the products sold to the customer to reach an optimal  
operating efficiency for the customer's system as a whole.        

     - Technical support. Customers seeking technical support from the group may
     enter into service agreements that best suit their needs. These service
   agreement plans are designed to give customers the ability to receive
 direct support from our teams at pre-determined pricing and service
levels.                                                           

CUSTOMERS                                                                       

The server group's largest customers purchase their products through  
indirect channels. Typical customers include:                                   

                                                                [Download Table]
                                                             
Agriculture Bank -- China                       KFC          
Abbey National Bank                             Kmart        
BMW                                             Lufthansa    
CVS                                             Pep Boys     
Daimler-Chrysler                                Pizza Hut    
French Telecom                                  Polish Police

Many of the professional services projects have been with world class 
companies such as the Nasdaq, Kmart and Italian Telecom. None of the server or  
professional services groups customers accounts for more than 10% of the groups'
revenues for any fiscal period.                                                 

SALES, MARKETING AND DISTRIBUTION                                               

    The server group sells to small and medium enterprise purchasers through a
worldwide network of more than 15,000 distributors, resellers, system           
integrators and OEMs. The server group sells to replicated site and large       
enterprise purchasers through a collaboration between the group's own field     
sales and system engineering staff and the corresponding staffs of OEMs, large  
value added resellers, or system integrators.                                   

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    The sales channel is global. In addition to the North American and Western
European countries, the server group also operates in Eastern Europe, India and 
China. The management and support of the channel partners is a key core         
competence for the server group. The group makes investments in channel         
education, information dissemination and lead generation.                       

   The server group also sells to OEMs and has a strong working relationship
with a number of the major Intel system builders such as IBM, Compaq,           
ICL/Fujitsu, Siemens and Unisys. Each of these OEMs has their own channels of   
distribution. The server group has developed programs that allow the OEMs to    
work with the server group to mutually support both distribution channels.      

     The professional services group sells to customers through a combination of
referral sales from the server group and dedicated direct sales effort.         

   Server marketing supports the sales activity of both the direct SCO sales
team and the sales forces of our channel partners. Activities include product   
introductions, promotions, training and distribution of product information, as 
well as direct programs that focus on branding, solutions, advertising,         
tradeshows, press releases, and marketing literature. Marketing activities are  
often collaborative efforts with OEMs, independent hardware vendors, independent
software vendors, distributors, value added resellers, system integrators,      
education centers and support centers.                                          

COMPETITION                                                                     

   Throughout its long existence the server group has always had many fierce
competitors. These have included AT&T, Novell, SUN Solaris, Interactive systems 
and of course Microsoft. Most recently, the two major competitive alternatives  
to SCO's UNIX products have been Microsoft NT and Linux. While SCO believes that
the server group's products retain a competitive advantage in a number of       
targeted application areas, both of these competitors are restricting the       
overall market available to SCO products, including some markets where SCO has  
been successful in the past.                                                    

ENGINEERING AND DEVELOPMENT                                                     

The server group has invested and will continue to invest in the      
development of new products and new features for existing products. The         
development team includes the successors to the original Bell Labs team that    
originally developed UNIX over 25 years ago. The development process is modeled 
to standard, commercial software engineering practices. These practices are     
applied to both documentation and procedures. As result, products can be offered
on several operating platforms without significant additional efforts and with  
relatively quick adaptation times for new technologies. While most products and 
features are developed in-house, some modules, and base technologies are        
licensed from third parties and integrated into the final products.             

   The professional services group maintains strict standards of quality and
procedures by employing industry "best practices." The development teams seek to
deliver their services as modules or productized services that are easily       
replicated for different customers in different applications.                   

 As of December 12, 2000, the development team consists primarily of 108
employees, located in Murray Hill, New Jersey and Santa Cruz, California.       

INTELLECTUAL PROPERTY                                                           

   The success of the server group largely depends on the ability to protect
trademarks, trade secrets, and certain proprietary technology. To accomplish    
this, the group relies on a combination of trademark and copyright laws and     
trade secrets. Both the server and professional services groups also require    
their employees and consultants to sign confidentiality and nondisclosure       
agreements.                                                                     

  SCO also owns the trademark rights to "OPENSERVER" and "UNIXWARE" in the
United States and other jurisdictions. On or around May 23, 2000, SCO was made  
aware that X/Open (the owner of the UNIX trademark) filed a cancellation action 
against SCO's UnixWare trademark registration in Japan. On July 4, 2000, SCO,   
through its trademark counsel in Japan, Tani & Abe, submitted arguments to the  
Japanese Patent Office in response to the cancellation. On October 10, 2000, the
Japanese Patent Office rendered its decision that SCO's UnixWare trademark      
registration should be maintained. On or                                        

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around May 23, 2000, SCO was made aware that a joint opposition action had been 
filed by X/Open (the owner of the UNIX trademark) and Novell against our        
European Community Trademark Application. The parties requested and received an 
extension to the cooling off period, which was extended to November 17, 2000.   
X/Open has been granted the opportunity to submit further facts, evidence or    
arguments in support of the opposition on or before January 17, 2001. SCO must  
submit, through its trademark counsel in the UK, Clifford Chance, its           
observations in reply on or before March 17, 2001, which period may be extended 
to ensure that SCO has at least two full months to respond to any new material  
submitted by X/Open. The parties requested and received an additional extension 
to the cooling off period, which was extended to March 17, 2001.                

 Despite efforts to protect trademark rights, unauthorized third parties
have in the past attempted and in the future may attempt to misappropriate these
trademark rights. There is no certainty that the continued misappropriation of  
the trademarks can be prevented or enforced. The laws of some foreign countries 
do not protect these trademark rights to the same extent as do the laws of the  
United States. In addition, policing unauthorized use of these trademark rights 
is difficult, expensive and time consuming. The loss of any material trademark  
could have a material negative impact on the server and professional services   
groups' business, operating results and financial condition.                    

The server and professional services groups do not believe that their 
products infringe the rights of other third parties. However, these products are
comprised of many distinct software components, developed by many independent   
parties, and therefore third parties in the past asserted, and may in the future
assert infringement claims against us which may result in costly litigation or  
require the groups to obtain a license to third party intellectual property     
rights. There can be no assurance that such licenses can be obtained on         
reasonable terms or at all, which could have a material negative impact on the  
server and professional services groups' business, operating results and        
financial condition.                                                            

EMPLOYEES                                                                       

    As of December 12, 2000, the server group had a total of 464 employees and
the professional services group had a total of 40 employees. Of these totals,   
108 were in software, 170 in sales and marketing, 97 in customer service, and   
129 in operation, administrative and other positions. From time to time, the    
groups also employ independent contractors to complement and support the groups'
efforts. The employees are not represented by any labor union and are not       
subject to a collective bargaining agreement, and there has never been any work 
stoppage. The server and professional services groups believe that relations    
with employees are good.                                                        

FACILITIES                                                                      

 The server and professional services groups are presently headquartered
with SCO in Santa Cruz, California, where SCO leases administrative, sales and  
marketing, product development and distribution facilities. SCO leases          
additional facilities for administration, sales and marketing and product       
development in Murray Hill, New Jersey and Watford, England. The leases for     
SCO's facilities expire at various dates through 2020. SCO has renewal options, 
at fair market value, under many of these leases and believes that in any event 
additional or alternative space adequate to serve the server and professional   
services groups' foreseeable needs would be available on commercially reasonable
terms. SCO's field operations occupy leased facilities in 12 locations in the   
United States. In addition, SCO's subsidiaries and sales and representative     
offices in France, Germany, Italy, Spain, Sweden, Denmark, Singapore, Australia,
China, India, Canada, Brazil and Mexico lease space for their operations.       
Worldwide, SCO leases property in 38 locations consisting of an aggregate of    
approximately 370,000 square feet. SCO believes that these facilities are       
adequate for its needs and the needs of the server and professional services    
groups in the foreseeable future.                                               

LEGAL PROCEEDINGS                                                               

     The server and professional services groups are not a party to any material
proceedings.                                                                    

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BUSINESS OF NEW CALDERA 

    New Caldera has not conducted any business activities to date and will not
engage in any business activities until the combination has been completed. New 
Caldera currently has no assets or liabilities and no outstanding capital stock.
New Caldera will be the parent company of Caldera and will directly own the     
server and professional services groups. The business of New Caldera will be    
substantially similar to the business currently conducted by Caldera and the    
server and professional services groups, as described herein. However, it is    
anticipated that New Caldera will seek to integrate product lines from Caldera  
and the server and professional services groups to create and market new        
business solutions.                                                             

MANAGEMENT OF CALDERA AND NEW CALDERA 

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES                                 

 The following table presents information as of March 15, 2001 regarding
persons who are current executive officers, directors and key employees of      
Caldera and persons who are expected to serve as executive officers, directors  
and key employees of New Caldera:                                               

                                                        [Enlarge/Download Table]

NAME                                  AGE                         POSITION                
----                                  ---                         --------                
                                                                                          
Ransom H. Love(1).................... 41   Chief Executive Officer, Director              
Robert K. Bench(1)................... 51   Chief Financial Officer                        
Drew A. Spencer(1)................... 38   Chief Technology Officer                       
Benoy Tamang(1)...................... 35   Vice President, Strategic Development          
David McCrabb, Jr. .................. 52   President and Chief Operating Officer          
Richard Rife(1)(4)................... 47   General Counsel and Corporate Secretary        
Ralph J. Yarro III(1)(3)............. 36   Chairman of the Board of Directors and Director
Steve Cakebread(2)................... 49   Director                                       
John R. Egan(1)(2)(3)(5)............. 43   Director                                       
Edward E. Iacobucci(1)(2)............ 46   Director                                       
Raymond J. Noorda(1)................. 76   Director                                       
Thomas P. Raimondi, Jr.(1)(3)........ 43   Director                                       

---------------                                                                 
(1) current executive officer, director or key employee of Caldera              

(2) current member of Caldera's audit committee, and expected to be member of   
New Caldera's audit committee                                           

(3) current member of Caldera's compensation committee, and expected to be      
member of New Caldera's compensation committee                          

(4) Mr. Rife has announced his plan to resign from Caldera effective April 2,   
2001. J. Harrison Colter will replace Mr. Rife as General Counsel and   
Corporate Secretary at such time.                                       

(5) Mr. Egan has announced that he will not seek re-election to the Caldera     
Board of Directors and he therefore will not serve as a director of New 
 Caldera or as a member of New Caldera's compensation or audit committees.

    Ransom H. Love has served as Caldera's President, Chief Executive Officer,
and member of Caldera's board of directors since August 1998. Prior to that     
date, Mr. Love was a founder and served as Vice President of Marketing and      
Sales, Vice President of Business Development and General Manager of the        
OpenLinux division for Caldera, Inc., from January 1995 to September 1998. Prior
to Caldera, Inc., Mr. Love held senior marketing positions at Novell and Sanyo  
Icon. Mr. Love has been in various management positions in sales, marketing,    
support, testing and education in the computer industry since 1982. He holds a  
BA in international relations and a MBA from Brigham Young University.          

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Robert K. Bench has served as Caldera's Chief Financial Officer and   
Principal Financial and Accounting Officer since November 15, 2000. From April  
1991 through April 1996, he was Chief Financial Officer for CerProbe            
Corporation, and from April 1996 to May 1999, he was Vice President, Chief      
Financial Officer and a director for Sento Corporation. From January 1999       
through April 2000, Mr. Bench was Vice President and Chief Financial Officer for
WebMiles.com Corp., and from January 2000 through January 2001, he was Vice     
President and a director for Envirofoam Technologies, Inc. Mr. Bench holds a BS 
in accounting from Utah State University.                                       

Drew A. Spencer has served as Caldera's Chief Technology Officer since
April 2000 and served as its Vice President of Development from December 1998 to
April 2000. Prior to joining Caldera, Mr. Spencer spent ten years with Novell,  
Inc. in a variety of senior technical and management positions, including       
engineering consultant and was a member of the Corporate Architecture Team. He  
holds a BS degree in computer science from Westminster College.                 

     Benoy Tamang has served as Caldera's Vice President of Business Development
since April 2000 and served as its Vice President of Marketing from December    
1998 to April 2000. From January 1996 through August 1998, Mr. Tamang was       
General Manager of Viewpoint Datalabs, a three dimensional software imaging     
company, where he coordinated domestic and international sales. Previously, he  
served as Sales Director and Program Manager at Novell, Inc. from March 1993    
through August 1996. Mr. Tamang holds a BS in computer information systems from 
Brigham Young University -- Hawaii and an MBA from the Marriott School of       
Management at Brigham Young University.                                         

   David McCrabb, upon the closing of the combination, will become President
and Chief Operating Officer of New Caldera. Mr. McCrabb has served as Executive 
Vice President, Worldwide Sales and Field Operations of SCO since April 1998.   
Between January 1995 and June 1997, he served as Vice President, Marketing and  
Channel Sales of SCO, then as Senior Vice President, Market Planning of SCO     
between July 1997 and April 1998. Prior to joining SCO, Mr. McCrabb served as   
Vice President and General Manager for Applied Digital Data Systems, a wholly   
owned subsidiary of NCR, since February 1994. From November 1989 to February    
1992, he served as Vice President, Sales and Marketing for Primary Access       
Corporation.                                                                    

   Richard C. Rife has served as Caldera's Chief Legal Officer and Corporate
Secretary since June 2000. Prior to joining Caldera, he spent 12 years with     
Novell, Inc. in a variety of positions, including most recently Vice President, 
Deputy General Counsel, and Corporate Secretary. Before joining Novell, Mr. Rife
practiced international business law in Korea for five years. Mr. Rife has B.A. 
and J.D. degrees from Brigham Young University and is licensed to practice law  
before the State and Federal courts of Utah and Nevada.                         

   Ralph J. Yarro III has served as a member of Caldera's board of directors
since August 1998. Mr. Yarro has served as the President and Chief Executive    
Officer of The Canopy Group, Inc. since April 1995. Prior to joining The Canopy 
Group, Inc., he served as a graphic artist for the Noorda Family Trust. Mr.     
Yarro holds a BA from Brigham Young University.                                 

   John R. Egan has served as a member of Caldera's board of directors since
January 2000. He currently serves as a Managing Partner of Egan-Managed Capital,
Venture Capital, a position he has held since September 1998. Mr. Egan has been 
with EMC Corporation, a provider of storage-related hardware, software and      
service products, serving in various positions, since April 1983. He is a       
director of EMC Corporation and holds a BS from Boston College.                 

    Edward E. Iacobucci has served as a member of Caldera's board of directors
since January 2000. In 1989, Mr. Iacobucci co-founded Citrix Systems, Inc., a   
supplier of products and technologies that enable enterprise-wide deployment of 
software applications, and held the positions of Chief Technical Officer and    
Vice President of Strategy and Technology. In September 1991, he also became    
Chairman of the Board of Citrix. Mr. Iacobucci holds a BS from the Georgia      
Institute of Technology.                                                        

Steve Cakebread has served as a member of Caldera's board of directors
since July 2000. He is currently Senior Vice President and Chief Financial      
Officer of Autodesk, Inc. since 1997. Autodesk, Inc. is                         
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a provider of two-dimensional and three-dimensional products used across        
industries and in the home for architectural design, mechanical design, spatial 
data management and mapping, animation, and visual applications. Prior to       
joining Autodesk, he was Vice President of Finance with Silicon Graphics, Inc., 
a provider of computing and visualization solutions, from 1993 to 1997. Mr.     
Cakebread holds a BS from the University of California at Berkeley and an MBA   
from Indiana University.                                                        

  Raymond J. Noorda has served as a member of Caldera's board of directors
since August 1998. Mr. Noorda currently serves as chairman of the board of      
directors of MTI Technology Corporation and The Canopy Group, Inc. Mr. Noorda   
previously served as President, Chief Executive Officer and Chairman of Novell, 
Inc. from 1983 to 1994 and has served as a trustee of the Noorda Family Trust   
since 1994. He holds a BS in electrical engineering from the University of Utah.

Thomas P. Raimondi, Jr. has served as a member of Caldera's board of  
directors since September 1999. He has been with MTI Technology Corporation     
since 1987, serving as President and Chief Executive Officer since December     
1999, as Chief Operating Officer from April 1998 to December 1999, as Senior    
Vice President and General Manager from January 1996 to April 1998 and as Vice  
President of Marketing from 1991 to 1996. Mr. Raimondi holds a BS in            
communications from the University of Maryland.                                 

   J. Harrison Colter will commence service as Caldera's General Counsel and
Secretary upon the effective date of Richard Rife's resignation from such       
positions. Mr. Colter has been serving as Associate General Counsel of Novell,  
Inc. since 1994. Between 1983 and 1994, Mr. Colter practiced intellectual       
property protection and litigation law, most recently at Baker and McKenzie in  
Los Angeles, California. Mr. Colter received a B.A. in 1980 and a J.D. in 1983  
from Brigham Young University and is admitted to practice law in the states of  
California, Texas, Arizona and Utah and before the U.S. Patent office.          

COMPOSITION OF THE BOARD                                                        

  The board of directors of Caldera currently consists of seven directors.
The board of directors of New Caldera will have eight directors, consisting of  
Caldera's current directors, excluding John R. Egan who has announced that he   
will not seek re-election as a director of Caldera, as well as two directors to 
be named by SCO and approved by Caldera. Directors will be elected by           
stockholders at each annual meeting of stockholders to serve until the next     
annual meeting of stockholders or until their successors are duly elected and   
qualified. There are no family relationships among any of Caldera's directors,  
officers or key employees or any of New Caldera's expected directors, officers  
or key employees.                                                               

BOARD COMMITTEES                                                                

The board of directors of Caldera has and New Caldera will have the   
following committees.                                                           

     The compensation committee of the board of directors will recommend, review
and oversee the salaries, benefits and stock option plans for our employees,    
consultants, directors and other individuals compensated by us. The compensation
committee will also administer our compensation plans. The members of the       
compensation committee of Caldera are currently Messrs. Egan, Raimondi and      
Yarro, none of whom are employees of Caldera. The members of the compensation   
committee of New Caldera will be Messrs. Raimondi and Yarro and one additional  
director, none of whom will be employees of New Caldera.                        

The audit committee of the board of directors will review, act on and 
report to the board of directors with respect to various auditing and accounting
matters, including the recommendation of our auditors, the scope of the annual  
audits, fees to be paid to the auditors, the performance of our independent     
auditors and our accounting practices. The members of the audit committee of    
Caldera are currently Messrs. Cakebread, Iacobucci and Egan, none of whom are   
employees of Caldera. The members of the audit committee of New Caldera will be 
Messrs. Cakebread and Iacobucci and one additional director, none of whom will  
be employees of New Caldera.                                                    

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION                     

    None of the members of Caldera's compensation committee or the anticipated
members of New Caldera's compensation committee has at any time been one of     
Caldera's officers or employees. None of the executive officers of Caldera or   
the anticipated executive officers of New Caldera currently serves or in the    
past year has served as a member of the board of directors or compensation      
committee of any entity that has one or more executive officers serving on      
Caldera's board or compensation committee. Prior to the creation of Caldera's   
compensation committee, all compensation decisions were made by Caldera's full  
board. Mr. Love did not participate in discussions by Caldera's board with      
respect to his compensation.                                                    

DIRECTOR COMPENSATION                                                           

New Caldera's directors will not receive cash compensation for their  
services as directors, although members will be reimbursed for expenses in      
connection with attendance at board and committee meetings.                     

In December 1999, the Caldera board of directors granted an option to 
Thomas P. Raimondi, Jr., to purchase 100,000 shares of Caldera's common stock at
an exercise price $6.00 per share, which vest over a two-year period. In August 
1999, the Caldera board granted options to Ralph J. Yarro III to purchase       
100,000 shares of Caldera's common stock, which vest over a four-year period,   
and in December 1999, the Caldera board granted Mr. Yarro options to purchase   
50,000 shares of Caldera's common stock, which vest over a two-year period, at a
combined average exercise price of $2.67 per share. In March 2000, the Caldera  
board granted options to purchase 100,000 shares of Caldera's common stock to   
each of John R. Egan, and Edward Iacobucci at an exercise price of $7.00 per    
share. In each case, these options vest over a two year period. In August, 2000,
the Caldera board granted options to Steve Cakebread to purchase 79,167 shares  
of its common stock, which vest over a two year period at an exercise price of  
$6.937. New Caldera may grant its non-employee directors additional options in  
the future.                                                                     

CALDERA EXECUTIVE SEVERANCE AGREEMENTS                                          

 During July and August 2000, Caldera entered into a number of executive
severance agreements with several members of senior management, including each  
of its executive officers. The agreements provide for certain benefits upon a   
change of control, followed by termination or effective termination of          
employment with Caldera. Change of control is defined as: (1) any person or     
entity who becomes the beneficial owner of 51% or more of common stock, (2) sale
of substantially all of Caldera's assets, (3) approval of a merger or           
consolidation in which at least 50% of the voting securities are acquired, and  
(4) certain changes in the composition of Caldera's board of directors. Specific
provisions for senior vice presidents and executive officers include but are not
limited to the following: salary and bonus payments equal to 150% of then       
current annual base salary and insurance benefits for a period up to six months.
Specific provisions for vice presidents include but are not limited to the      
following: salary and bonus payments equal to 100% of then current annual base  
salary and bonuses, 12 months of accelerated vesting on outstanding stock       
options and continuation insurance benefits for a period of six months.         

EMPLOYMENT AGREEMENTS                                                           

 SCO has agreed to encourage the following management employees to enter
into employment agreements with New Caldera:                                    

David McCrabb; and                                                    

certain vice presidents and director level employees of the server and
professional services groups.                                         

Terms of the agreements                                                         

 Under the proposed terms of the employment agreements, these management
employees will be paid a base salary consistent with their current base salary. 
A bonus plan comparable to their current bonus plan will be put in place. These 
employment agreements would provide for a term of 1-2 years. In addition, each  
employment agreement would provide that at the end of its term, the employee    
would continue on an at-will basis.                                             

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Severance provisions                                                            

Generally, if New Caldera were to terminate one of these employment   
agreements without cause, the affected employee would be entitled to severance  
pay ranging from 75% - 150% of base salary and accelerated vesting ranging from 
9 months to 18 months.                                                          

 The employee would not be entitled to receive severance benefits if the
employee's employment terminates by reason of employee's voluntary resignation, 
if New Caldera terminated the employee's employment after the last day of the   
employment term or if the termination were for cause.                           

Noncompetition provisions                                                       

 The employment agreements would also provide that the employees may not
compete with New Caldera for the duration of the severance period, which ranges 
from 9 - 18 months after termination of employment.                             

  Severance payments would cease upon the employee accepting employment or
other position with a direct competitor of New Caldera.                         

EXECUTIVE COMPENSATION OF NEW CALDERA                                           

     It is anticipated that those employees of SCO who become executive officers
of New Caldera will be compensated generally in accordance with the proposed    
terms of the employment agreements described above. For employees of Caldera    
that become executive officers of New Caldera, New Caldera will assume the terms
of the senior executive severance agreements and will rely on its compensation  
committee to recommend any increase in the form and amount of compensation to be
paid above their current compensation levels at Caldera.                        

   It is anticipated that when the compensation committee meets to determine
compensation, the committee will generally adhere to compensation policies which
reflect the belief that:                                                        

  - New Caldera must attract and retain individuals of outstanding ability
and motivate and reward them for sustained performance;           

 - a portion of an executive's compensation should be at risk based upon
that executive's and New Caldera's performance; and               

   - levels of compensation should generally be in line with that offered by
comparable corporations.                                          

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION                   

  It is the duty of the compensation committee to review and determine the
salaries and bonuses of executive officers of Caldera, including the Chief      
Executive Officer, and to establish the general compensation policies for such  
individuals. The compensation committee also has the sole and exclusive         
authority to make discretionary option grants to Caldera's executive officers   
under the 1999 Omnibus Stock Incentive Plan.                                    

The compensation committee believes that the compensation programs for
Caldera's executive officers should reflect Caldera's performance and the value 
created for Caldera's stockholders. In addition, the compensation programs      
should support the short-term and long-term strategic goals and values of       
Caldera and should reward individual contribution to Caldera's success. Caldera 
is engaged in a very competitive industry, and Caldera's success depends upon   
its ability to attract and retain qualified executives through the competitive  
compensation packages it offers to such individuals.                            

 General Compensation Policy.  The compensation committee's policy is to
provide Caldera's executive officers with compensation opportunities which are  
based upon their personal performance, the financial performance of Caldera and 
their contribution to that performance and which are competitive enough to      
attract and retain highly skilled individuals. Each executive officer's         
compensation package is                                                         

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comprised of three elements: (i) base salary that is competitive with the market
and reflects individual performance, (ii) quarterly "Management by Objective"   
performance awards payable in cash and tied to performance of agreed-upon       
objectives, management of the relevant department budget and the overall        
financial performance of Caldera, and (iii) long-term stock-based incentive     
awards designed to strengthen the mutuality of interests between the executive  
officers and Caldera's stockholders. As an officer's level of responsibility    
increases, a greater proportion of his or her total compensation will be        
dependent upon Caldera's financial performance and stock price appreciation     
rather than base salary.                                                        

Factors.  The principal factors that were taken into account in       
establishing each executive officer's compensation package for the 2000 fiscal  
year are described below. However, the compensation committee may in its        
discretion apply entirely different factors, such as different measures of      
financial performance, for future fiscal years.                                 

Base Salary.  The base salary levels for the executive officers were  
established for the 2000 fiscal year on the basis of the following factors:     
personal performance, the estimated salary levels in effect for similar         
positions at a select group of companies within and outside Caldera's industry  
with which Caldera competes for executive talent, and internal comparability    
considerations. The compensation committee made its decision as to the          
appropriate market level of base salary for each executive officer on the basis 
of its understanding of the salary levels in effect for similar positions at    
those companies with which Caldera competes for executive talent. Base salaries 
will be reviewed on an annual basis, and adjustments will be made in accordance 
with the factors indicated above.                                               

  Quarterly "Management by Objective" Compensation. Each executive officer
may also earn a quarterly "Management by Objective" incentive bonus on the basis
of (i) performance of objectives agreed-upon by the executive officer and the   
Chief Executive Officer prior to the start of each quarter, (ii) managing his or
her department within the established budget and (iii) achievement by Caldera of
certain financial milestones approved by the board of directors and executive   
management.                                                                     

   Equity Incentive.  Equity incentives are provided primarily through stock
option grants under the 1999 Omnibus Stock Incentive Plan. The grants are       
designed to align the interests of each executive officer with those of the     
stockholders and provide each individual with a significant incentive to manage 
Caldera from the perspective of an owner with an equity stake in the business.  
Each grant allows the individual to acquire shares of Caldera's Common Stock at 
a fixed price per share (the market price of the grant date) over a specified   
period of time (up to 10 years). The shares subject to each option generally    
vest in installments over a 48-month period, contingent upon the executive      
officer's continued employment with Caldera. Accordingly, the option will       
provide a return to the executive officer only if the executive officer remains 
employed by Caldera during the applicable vesting period, and then only if the  
market price of the underlying shares appreciates over the option term.         

  The number of shares subject to each option grant will be set at a level
intended to create a meaningful opportunity for stock ownership based on the    
officer's current position with Caldera, the base salary associated with the    
position, the size of comparable awards made to individuals in similar positions
within the industry, the individual's potential for increased responsibility and
promotion over the option term, and the individual's personal performance in    
recent periods. The compensation committee will also take into account the      
executive officer's existing holdings of Caldera's Common Stock and the number  
of vested and unvested options held by that individual in order to maintain an  
appropriate level of equity incentive. However, the compensation committee does 
not intend to adhere to any specific guidelines as to the relative option       
holdings of Caldera's executive officers.                                       

   CEO Compensation.  In setting the total compensation payable to Caldera's
Chief Executive Officer for the 2000 fiscal year, the compensation committee    
sought to make that compensation competitive, while at the same time assuming   
that a significant percentage of compensation was tied to Caldera's performance 
and stock price.                                                                

During fiscal year 2000, the base salary paid to Ransom H. Love was   
approximately $142,600. There were no quarterly "Management by Objective"       
targets established for Mr. Love during that period.                            

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Mr. Love was granted 379,752 shares under Caldera's 1999 Omnibus Stock Incentive
Plan during that period.                                                        

  Compliance with Internal Revenue Code Section 162(m).  Section 162(m) of
the Internal Revenue Code disallows a tax deduction to publicly held companies  
for compensation paid to certain of their executive officers, to the extent that
compensation exceeds $1 million per covered officer in any fiscal year. The     
limitation applies only to compensation which is not considered to be           
performance-based. Non-performance based compensation paid to Caldera's         
executive officers for the 2000 fiscal year did not exceed the $1 million limit 
per officer, and the compensation committee does not anticipate that the non-   
performance based compensation to be paid to Caldera's executive officers for   
fiscal 2001 will exceed that limit. Caldera's 1999 Omnibus Stock Incentive Plan 
has been structured so that any compensation deemed paid in connection with the 
exercise of option grants made under that plan with an exercise price equal to  
the fair market value of the options shares on the grant date will qualify as   
performance-based compensation which will not be subject to the $1 million      
limitation. Because it is unlikely that the cash compensation payable to any of 
Caldera's executive officers in the foreseeable future will approach the $1     
million limit, the compensation committee has decided at this time not to take  
any action to limit or restructure the elements of cash compensation payable to 
Caldera's executive officers. The compensation committee will reconsider this   
decision should the individual cash compensation of any executive officer ever  
approach the $1 million level.                                                  

It is the opinion of the compensation committee that the executive    
compensation policies and plans provide the necessary total remuneration program
to properly align Caldera's performance and the interest of Caldera's           
stockholders through the use of competitive and equitable executive compensation
in a balanced and reasonable manner, for both the short and long-term.          

                     Submitted by:

                          Ralph J. Yarro III
                    John R. Egan
                               Thomas P. Raimondi, Jr.

                                   Members of the Compensation
                 Committee

HISTORICAL COMPENSATION OF CALDERA                                              

For information concerning the compensation historically paid to the  
executive officers of SCO and who will serve as executive officers or directors 
of New Caldera, see "SCO is Incorporating its SEC Filings in this Document by   
Reference" on page 32. Information concerning compensation historically paid to 
the executive officers and directors of Caldera who will serve as executive     
officers or directors of New Caldera is set forth below.                        

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  The following table presents compensation information for Caldera's most
recent fiscal year, ended October 31, 2000, paid or accrued by Caldera's Chief  
Executive Officer and each of its other executive officers whose salary and     
bonus for fiscal 2000 was more than $100,000.                                   

SUMMARY COMPENSATION TABLE

                                                                [Download Table]

                                                                       LONG-TERM  
                                                                      COMPENSATION
                                                                         AWARDS   
                                                        ANNUAL        ------------
                                                    COMPENSATION(1)    SECURITIES 
                                                   -----------------   UNDERLYING 
NAME                                                SALARY     BONUS    OPTIONS   
----                                               --------    -----  ------------
                                                                                  
Ransom H. Love.............................. 2000  $142,596     --      879,752   
  Chief Executive Officer                    1999   106,077     --                
Alan J. Hansen.............................. 2000   126,756     --      167,813   
  Chief Financial Officer(2)                 1999        --     --                
Benoy Tamang................................ 2000   122,673     --      162,813   
  Senior Vice President, Strategic                                                
     Development                             1999        --     --                
Drew A. Spencer............................. 2000   121,846     --      165,313   
  Chief Technology Officer                   1999   105,333     --                
Royce Bybee................................. 2000   111,912     --       44,625   
  Senior Vice President, Sales and                                                
     Marketing(3)                            1999        --     --                

---------------                                                                 
(1) The column for "Other Annual Compensation" has been omitted because there is
    no compensation required to be reported in that column. The aggregate amount
of perquisites and other personal benefits provided to each executive   
    officer listed above is less than the lesser of $50,000 and 10% of his total
annual salary and bonus.                                                

(2) Mr. Hansen resigned as Chief Financial Officer effective November 15, 2000. 

(3) Mr. Bybee resigned as Senior Vice President, Sales and Marketing on November
1, 2000.                                                                

OPTION GRANTS IN LAST FISCAL YEAR                                               

  The following table presents the grants of stock options under Caldera's
1999 Omnibus Stock Incentive Plan during fiscal 2000, to each of Caldera's      
executive officers named in the Summary Compensation Table.                     

All option grants under the 1999 Omnibus Stock Incentive Plan are     
nonqualified stock options. Options expire ten years from the date of grant.    

     The exercise price of each option granted is equal to the fair market value
of Caldera's common stock, as determined by Caldera's board on the date of      
grant. In fiscal 2000, Caldera granted to its employees options to purchase a   
total of 4,451,020 shares of Caldera's common stock.                            

Potential realizable values are computed by                           

- Multiplying the number of shares of common stock subject to a given 
option by the exercise price per share,                           

- Assuming that the aggregate option exercise price derived from that 
    calculation compounds at the annual 5% or 10% rates shown in the table
for the entire 10 year term of the option, and                    

- Subtracting from that result the aggregate option exercise price.   

The 5% and 10% assumed annual rates of stock price appreciation are   
required by the rules of the Securities and Exchange Commission and do not      
represent our estimate or projection of future common stock prices.             

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                                                        [Enlarge/Download Table]

                                     PERCENT                                                                  
                       NUMBER OF     OF TOTAL                            POTENTIAL REALIZABLE VALUE AT ASSUMED
                       SECURITIES    OPTIONS      EXERCISE                    ANNUAL RATES OF STOCK PRICE     
                       UNDERLYING   GRANTED TO   PRICE PER                    APPRECIATE FOR OPTION TERM      
                        OPTIONS    EMPLOYEES IN    SHARE     EXPIRATION  -------------------------------------
                        GRANTED    FISCAL YEAR   ($/ SHARE)     DATE        0%           5%            10%    
                       ----------  ------------  ----------  ----------  ---------   -----------   -----------
                                                                                                              
Ransom H. Love........  200,000        8.53%       $6.00     12/19/2009  $400,000    $1,406,231    $2,949,988 
                        179,752                    $6.00     01/03/2010   359,504     1,263,865     2,651,331 
Alan J. Hansen........  100,000        3.77%       $1.13     11/22/2009   487,500       864,837     1,443,745 
                         67,813                    $6.00     12/19/2009   135,626       476,804      1,00,238 
Benoy Tamang..........   67,813        1.52%       $6.00     12/19/2009   135,626       476,804     1,000,238 
Drew A. Spencer.......   67,813        1.52%       $6.00     12/19/2009   135,626       476,804     1,000,238 
Royce Bybee...........   25,430        0.67%       $6.00     12/19/2009    50,860       178,802       375,091 
                          4,196                    $9.50     05/18/2010        --        25,069        63,530 

AGGREGATED OPTION EXERCISES IN THE YEAR ENDED OCTOBER 31, 2000 AND YEAR-END     
OPTION VALUES                                                                   

   The following table presents the number of shares of common stock subject
to vested and unvested stock options held as of October 31, 2000 by each of     
Caldera's executive officers named in the Summary Compensation Table. Also      
presented are values of "in-the-money" options, which represent the positive    
difference between the exercise price of each outstanding stock option and the  
price per share of Caldera's common stock on October 31, 2000.                  

                                                        [Enlarge/Download Table]

                                                          NUMBER OF SHARES                         
                                                             UNDERLYING       VALUE OF UNEXERCISED 
                                                        UNEXERCISED OPTIONS   IN-THE-MONEY OPTIONS 
                             SHARES ACQUIRED   VALUE    AT OCTOBER 31, 2000    AT OCTOBER 31, 2000 
                               ON EXERCISE    REALIZED  --------------------  ---------------------
NAME                               (#)          ($)      VESTED    UNVESTED    VESTED     UNVESTED 
----                         ---------------  --------  --------   ---------  ---------   ---------
                                                                                                   
Ransom H. Love..............     60,000       $264,359  577,680     302,072   $949,735    $300,265 
Alan J. Hansen..............         --             --       --     167,813         --     237,500 
Benoy Tamang................      5,000         22,030   71,914      90,899    102,083     135,417 
Drew A. Spencer.............      2,500         11,015   84,901      80,412    123,955     119,795 
Royce Bybee.................     22,500         97,354   44,625          --     35,623          -- 

1998 STOCK OPTION PLAN                                                          

   The 1998 Stock Option Plan was adopted by Caldera's board of directors on
December 29, 1998 and subsequently approved by the stockholders. The plan became
effective upon its adoption by the board and has been amended on various        
occasions as Caldera has grown and changed. The 1998 Stock Option Plan was      
superseded by the 1999 Omnibus Stock Incentive Plan, and no additional options  
may be granted under the 1998 Stock Option Plan (upon the expiration of         
previously granted options or otherwise).                                       

 5,000,000 shares of common stock were authorized for issuance under the
1998 Stock Option Plan. Options to purchase 3,252,088 shares of common stock    
were granted under the 1998 Stock Option Plan of which 813,800 options have been
exercised or cancelled and 2,438,288 of which remain outstanding.               

     Under the 1998 Stock Option Plan, Caldera may grant eligible individuals in
Caldera's employ or service (including officers, non-employee board members and 
consultants) non-qualified options to purchase shares of Caldera's common stock.

The 1998 Stock Option Plan is administered by Caldera's compensation  
committee. The compensation committee determines which eligible individuals are 
to receive options under the 1999 Omnibus Stock Incentive Plan, the time or     
times when each option is to be granted, the number of shares subject to each   
option, the exercise price of each option and the vesting schedule and the other
terms to be in effect for each option. The exercise price for the options       
granted under the 1998 Stock Option Plan may be less than the fair market value 
of a share of common stock on the date of grant, payment is immediately due and 
payable upon exercise of an option and must be paid in cash or with a check made
payable to Caldera.                                                             

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 In the event that Caldera is acquired, whether by merger or asset sale,
each outstanding option granted under the 1998 Stock Option Plan that has vested
may, at Caldera's discretion, be cashed out, be converted to options of the     
acquiring entity, be assumed by the acquiring entity, or otherwise disposed of  
in the manner provided in any stockholder-approved agreement or plan governing  
such transaction. In addition, in the absence of any governing provisions in any
stockholder-approved agreement or plan governing such transaction, Caldera may, 
on a case-by-case basis, require any vested, exercisable options to be cashed   
out and terminated in exchange for a lump sum cash payment, shares of the       
acquiring entity or a combination thereof equal in value to the fair market     
value of the option.                                                            

 In the event Caldera is acquired, whether by merger or asset sale, each
outstanding option granted under the 1998 Stock Option Plan that has not vested 
shall terminate as of the effective date of such transaction, unless otherwise  
provided in the stockholder-approved agreement or plan governing such           
transaction or by the compensation committee in its sole discretion on a        
case-by-case basis.                                                             

 If options are assumed by the purchasing or successor corporation, each
option assumed will be adjusted to apply to the number and class of securities  
which would have been issuable to the option holder had the option been         
exercised immediately prior to the merger or asset sale. Following such merger  
or asset sale, appropriate adjustments will also be made to the number and class
of securities available for issuance under the 1998 Stock Option Plan and the   
exercise price payable per share under each outstanding option, provided the    
aggregate exercise price payable for such securities shall remain the same.     

The board may amend or modify the 1998 Stock Option Plan at any time, 
subject to any stockholder approval required by governing laws and exchange     
regulations. The 1998 Stock Option Plan will terminate no later than December   
29, 2008.                                                                       

1999 OMNIBUS STOCK INCENTIVE PLAN                                               

The 1999 Omnibus Stock Incentive Plan (the "1999 Plan") is intended to
serve as the successor equity incentive program to Caldera's 1998 Stock Option  
Plan. The 1999 Plan became effective upon its adoption by the board of directors
and stockholders on December 1, 1999. It was amended by the board on March 10,  
2000 to increase by 500,000 the number of shares authorized for issuance under  
the 1999 Plan.                                                                  

   This amendment was approved by the stockholders of Caldera in March 2000.
It was again amended by the board of directors on July 14, 2000 in order to make
the following changes:                                                          

     - to permit the grant of non-qualified options with an exercise price below
fair market value,                                                

- to permit the exercise of non-qualified options up to 120 days after
termination of service,                                           

- to permit exercise of an option up to 30 days after termination of  
service for cause,                                                

   - in connection with a sale, change of control or liquidation of Caldera,
       to permit Caldera or the acquiring entity to cash out, convert to options
     of the acquiring entity, or assume any vested options granted under the
1999 Plan,                                                        

   - in connection with a sale, change of control or liquidation of Caldera,
 to provide that non-vested options shall terminate unless otherwise
      provided in the governing agreements or determined by the committee, and

   - to permit Caldera to grant shares of restricted stock and phantom stock
that vest without regard to the satisfaction of pre-established   
performance goals.                                                

This amendment was approved by the board on July 14, 2000 and became  
effective at the time of such approval.                                         

In addition, the board has approved amendments that will effect the   
following changes: (i) increase the maximum number of shares of common stock    
authorized for issuance over the term of the 1999 Plan by an additional         
6,800,000 shares to 10,905,238 shares, (ii) establish an automatic share        
increase feature                                                                
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pursuant to which the number of shares available for issuance under the 1999    
Plan will automatically increase, beginning with the 2000 calendar year, as of  
November 1 of each year, by 3% of the total number of shares of common stock    
outstanding on the previous October 31st, (iii) add a formula awards program    
pursuant to which directors of Caldera will automatically be granted options to 
purchase shares of common stock at specified times, including an option to      
purchase 100,000 shares of common stock on the date of the annual shareholders  
meeting during each even numbered calendar year. These amendments are the       
subject of Proposal Three. Please see page 170.                                 

The 1999 Plan presently authorizes the grant of incentive awards with 
respect to 4,105,238 shares of common stock (subject to increase if the         
amendments included in Proposal Three are approved by the stockholders). The    
1999 Plan allows for the grant of awards in the form of incentive and           
non-qualified stock options, stock appreciation rights, restricted shares,      
phantom stock and stock bonuses.                                                

Persons eligible to receive awards under the 1999 Plan include all    
employees and directors of Caldera and its subsidiaries and such other persons  
whom the committee determines are expected to make a contribution to Caldera. No
one participant in the 1999 Plan may receive option grants or any other awards  
for more than 200,000 shares in the aggregate in any tax year of Caldera        
Systems, except for grants of options for a total of 379,752 shares to Mr. Love 
authorized by our board of directors in December 1999 and January 2000.         

The 1999 Plan is administered by Caldera's compensation committee. The
compensation committee determines which eligible individuals are to receive     
awards under the 1999 Plan, the type of award to be made, the time or times when
such awards are to be made, the number of shares subject to each such award, and
the vesting schedule and the other terms to be in effect for the award.         

The exercise price for the options may be paid in cash, in shares of  
Caldera's common stock valued at fair market value on the exercise date or by   
having Caldera retain sufficient shares of its common stock from shares which   
would be issuable upon the exercise of the option. The option may also be       
exercised through a same-day sale program without any cash outlay by the        
optionee.                                                                       

The 1999 Plan also permits grant of the following:                    

- tandem stock appreciation rights, which provide the holders with the
election to surrender his or her options for a cash appreciation  
    distribution from Caldera equal to the fair market value of the vested
  shares subject to the surrendered option less the aggregate exercise
price payable for such shares;                                    

- stand-alone stock appreciation rights, which entitle the holder to  
       receive a cash payment from Caldera equal to the fair market value of the
    vested shares subject to the right less the base price for such right;

 - phantom stock awards, which entitle the holder to receive in cash the
      fair market value of a specified number of shares of our common stock on
the vesting date;                                                 

 - restricted stock awards, which involves the grant of shares of common
stock that are subject to restrictions on transferability during a
     vesting period and are forfeited if certain conditions are not met; and

- stock bonus awards, which involve outright grant of shares of common
stock without condition.                                          

  In the event that Caldera is acquired (whether by merger, liquidation or
asset sale) or there is a change in who controls Caldera (effected through an   
acquisition of 50% or more of Caldera's voting stock or by specified change in  
the composition of Caldera's board), the incentive awards granted under the 1999
Plan are treated as follows:                                                    

- each option and stock appreciation right that has vested may, at    
 Caldera's discretion, be cashed out, be converted to options of the
acquiring entity, be assumed by the acquiring entity, or otherwise
      disposed of in the manner provided in any shareholder-approved agreement
or plan governing such                                            

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     transaction. In addition, in the absence of any governing provisions in
    any stockholder-approved agreement or plan governing such transaction,
   Caldera may, on a case-by-case basis, require any vested, exercisable
     options to be cashed out and terminated in exchange for a lump sum cash
       payment, shares of the acquiring entity or a combination thereof equal in
value to the fair market value of the option;                     

  - each outstanding option and stock appreciation right granted under the
       1999 Plan that has not vested shall terminate as of the effective date of
     such transaction, unless otherwise provided in the stockholder-approved
 agreement or plan governing such transaction or by the compensation
committee in its sole discretion on a case-by-case basis;         

 - each outstanding phantom stock award that has not vested prior to the
date of a change of control shall immediately expire;             

   - all restrictions on vested shares of restricted stock shall immediately
     lapse, and all unvested shares of restricted stock shall immediately be
canceled; and                                                     

- each outstanding stock bonus shall not be affected.                 

The board may amend or modify the 1999 Plan at any time, subject to   
stockholder approval if required by governing exchange regulations or if        
necessary to satisfy applicable provisions of governing tax laws.               

2000 EMPLOYEE STOCK PURCHASE PLAN                                               

 The 2000 Employee Stock Purchase Plan was adopted by Caldera's board of
directors on February 15, 2000 and was approved by its stockholders on March 1, 
2000. The plan became effective on March 20, 2000. The plan is designed to allow
eligible employees of Caldera Systems, Inc. and its participating subsidiaries  
to purchase shares of its common stock, at semi-annual intervals, through their 
periodic payroll deductions. A total of 500,000 shares of Caldera's common stock
has been reserved for issuance under the plan. In connection with the           
combination, the board has approved an increase by 1.5 million in the number of 
shares authorized for issuance under the plan. This increase is being submitted 
to the stockholders for approval pursuant to Proposal Four. Please see page 185.
The share reserve will increase on the first trading day of each calendar year  
beginning with the 2001 calendar year by 1% of the total number of shares of    
common stock outstanding on the last day of the immediately preceding year but  
no such annual increase will exceed 750,000 shares. In no event, however, may a 
participant purchase more than 750 shares, nor may all participants in the      
aggregate purchase more than 125,000 shares on any one semi-annual purchase     
date.                                                                           

 The plan will have a series of successive offering periods, each with a
maximum duration of 24 months. However, the initial offering period began on    
March 20, 2000 and will end on the last business day in April 2002. The next    
offering period will begin on the first business day in May 1, 2002, and        
subsequent offering periods will be set by Caldera's compensation committee.    
Shares will be purchased on semi-annual purchase dates (the last business day of
April and October each year) during the offering period. The first purchase date
was October 31, 2000. Should the fair market value of Caldera's common stock on 
any semi-annual purchase date be less than the fair market value on the first   
day of the offering period, then the current offering period will automatically 
end and a new offering period will begin, based on the lower fair market value. 
On October 31, 2000, 61,807 shares of common stock were purchased at a price of 
$2.94.                                                                          

  Individuals who are eligible employees on the start date of any offering
period may enter the plan on that start date or on any subsequent semi-annual   
entry date (generally May 1 or November 1 each year). Individuals who become    
eligible employees after the start date of the offering period may join the plan
on any subsequent semi-annual entry date within that period.                    

    A participant may contribute up to 10% of his or her cash earnings through
payroll deductions and the accumulated payroll deductions will be applied to the
purchase of shares on the participant's behalf on                               

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each semi-annual purchase date (the last business day in April and October each 
year). The purchase price per share will be 85% of the lower of the fair market 
value of our common stock on the participant's entry date into the offering     
period or the fair market value on the semi-annual purchase date.               

The board may at any time amend or modify the plan.  The plan will    
terminate no later than the last business day in April 2010.                    

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CERTAIN TRANSACTIONS OF CALDERA AND NEW CALDERA 

   Other than the transactions described below, since October 31, 1998 there
has not been, nor is there currently proposed, any transaction or series of     
similar transactions to which Caldera was or will be a party:                   

- in which the amount exceeds $60,000; and                            

   - in which any director, executive officer, holder of more than 5% of our
     common stock or any member of their immediate family had or will have a
direct or indirect material interest.                             

RELATIONSHIP WITH CALDERA, INC., A UTAH CORPORATION                             

Caldera began operations in 1994 as a business unit comprising        
substantially all of the operations of Caldera, Inc., a Utah corporation. In    
July 1996, through an asset purchase, Caldera, Inc. acquired an additional      
business unit which was not engaged in developing and marketing Linux software. 
Caldera, Inc. subsequently made the strategic determination to separate its two 
business lines into separate entities. Therefore, pursuant to an Asset Purchase 
and Sale Agreement dated as of September 1, 1998, as amended, by and between    
Caldera, Inc. and Caldera Systems, Inc., Caldera, Inc. sold to Caldera Systems  
certain assets of its Linux software business unit for $19.9 million, $15.0     
million of which was paid in the form of a cash payment in fiscal year 1999,    
$36,174 of which was in the form of assumption of liabilities and $4.9 million  
of which was in the form of forgiveness of a note receivable from Caldera, Inc. 
Caldera, Inc. was dissolved in January 2000.                                    

 On September 1, 1998, we entered into a sublease with Caldera, Inc. for
office space in Orem, Utah. The sublease provided for annual rent of            
approximately $150,000 and was terminated pursuant to its terms on August 31,   
2000.                                                                           

   Ralph J. Yarro III, chairman of Caldera's board of directors, and Raymond
J. Noorda, one of Caldera's directors, were directors of Caldera, Inc. Prior to 
its dissolution in January 2000, Caldera, Inc. was majority-owned by The Canopy 
Group, Inc. which holds more than 5% of our common stock. The Noorda Family     
Trust, of which Mr. Noorda and his spouse are co-trustees, is the controlling   
stockholder of The Canopy Group, Inc.                                           

RELATIONSHIP WITH THE CANOPY GROUP, INC.                                        

    The Canopy Group, formerly NFT Ventures, is a venture capital company that
invests primarily in start-up high technology companies that encourage the      
adoption, deployment and promotion of Linux. The Canopy Group currently holds   
equity interests in companies in the fields of data storage and protection,     
Linux operating systems, data satellites, clustering, universal voice messaging,
Java and eCommerce.                                                             

 Effective August 31, 1998, Caldera sold 16,000,000 shares of its common
stock to The Canopy Group, Inc. for an aggregate purchase price of $21.0        
million. Of this amount, $16.0 million was paid in cash ($519,000 in fiscal year
1998 and $15.5 million -- non-interest bearing -- in fiscal year 1999), and $4.9
million was in the form of a note receivable from Caldera, Inc., which The      
Canopy Group transferred to us.                                                 

    Effective September 1, 1998, Caldera entered into a convertible promissory
note with The Canopy Group. The note, which was secured by all of Caldera's     
assets, was due on December 31, 1999. The note accrued interest at the prime    
rate, less  1/2%, and was convertible into our common stock at $1.00 per share. 
A total of $4.8 million was advanced under the note. The principal balance,     
along with approximately $455,000 of accrued interest was converted into        
5,273,974 shares of our common stock on August 19, 1999.                        

Under a secured promissory note dated as of December 29, 1999, Caldera
borrowed $300,000 from The Canopy Group. The note bears interest of 9.5% per    
annum and was payable upon demand or on January 14, 2000. Caldera paid the note 
in full on January 5, 2000.                                                     

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    The Canopy Group holds more than 5% of Caldera's common stock. Mr. Noorda,
one of Caldera's directors, and his spouse are co-trustees of the Noorda Family 
Trust, which is the controlling stockholder of The Canopy Group.                

 Until June 2000, Caldera utilized a 401(k) plan sponsored by The Canopy
Group for its employees, under which it made matching contributions from January
1, 2000 through June 2000. In June 2000, Caldera adopted its own 401(k) plan.   

  As a result of an option agreement between The Canopy Group and Ralph J.
Yarro III, which was subsequently rescinded, Caldera expensed a one-time        
compensation charge of approximately $372,000 during the quarter ended April 30,
2000. The option agreement allowed Mr. Yarro to purchase shares of Caldera's    
common stock directly from The Canopy Group. No shares were purchased under the 
agreement. Mr. Yarro is the president and chief executive officer of The Canopy 
Group and the Chairman of Caldera's board of directors.                         

   During May through October 2000, we subleased office space to Canopy on a
month-to-month basis. The rent payments to Caldera from Canopy were             
approximately $5,100 per month.                                                 

RELATIONSHIP WITH MTI TECHNOLOGY CORPORATION                                    

    Effective July 27, 1999, Caldera sold 5,333,333 shares of its common stock
to MTI Technology Corporation for an aggregate purchase price of $6.0 million.  
Of this amount, $3.0 million was paid at closing, $1.5 million was due at       
January 1, 2000, and $1.5 million was due in July 2000. The $1.5 million due at 
January 1, 2000, was paid on November 15, 1999 in return for a waiver by Caldera
of accrued and future interest on the unpaid portions of the purchase price.    
Caldera believes that the waiver of interest in consideration for the           
acceleration of payment was not more favorable to MTI than the terms Caldera    
would have been able to negotiate with an unrelated party. The remaining $1.5   
million was paid in full in August 2000.                                        

On August 12, 1999, Caldera entered into a Distribution and License   
Agreement with MTI Technology Corporation. Under this agreement, MTI Technology 
Corporation includes as available for sale in its price book all of Caldera's   
products, technology or services that are commercially available for sale, and  
Caldera sells or licenses, as applicable, to MTI Technology Corporation, and    
allow MTI Technology Corporation to sell, re-sell, license, reproduce, use,     
distribute, sublicense, have made and prepare derivative works of all of        
Caldera's products, technology, or services that are commercially available.    
This agreement is terminable by either party on 90 days prior written notice.   

Caldera uses a computer system provided by MTI Technology Corporation 
without charge. The computer system is valued at $105,000.                      

     MTI Technology Corporation owns more than 5% of Caldera's common stock. The
Canopy Group, Inc. holds more than 45% of the outstanding common stock of MTI   
Technology Corporation. The Noorda Family Trust, of which Mr. Noorda and his    
spouse are co-trustees, is the controlling stockholder of The Canopy Group. Mr. 
Noorda is one of Caldera's directors and is chairman of the board of directors  
of MTI Technology Corporation. Thomas P. Raimondi, Jr., one of our directors, is
president and chief executive officer of MTI Technology Corporation.            

RELATIONSHIP WITH LINEO, INC.                                                   

In January 2000, we exchanged with Lineo, Inc. 1,250,000 shares of our
common stock in return for 3,238,437 shares of common stock of Lineo. On May 11,
2000, The Canopy Group transferred 1,761,563 additional shares of Lineo's common
stock held by The Canopy Group to us in the form of a capital contribution.     

    On August 31, 2000, Caldera and Metrowerks Holdings, Inc., an affiliate of
Motorola, Inc., entered into a Stock Purchase and Sale Agreement whereby Caldera
and The Canopy Group sold 2.0 million and 1.0 million shares of common stock of 
Lineo, Inc, respectively, to Metrowerks Holdings at $7.50 per share.            

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The sale closed upon the receipt of certain required regulatory approvals and   
the completion of other closing conditions.                                     

 In conjunction with the sale of the common stock of the common stock of
Lineo, Caldera also entered into a stockholder agreement among The Canopy Group,
Lineo Inc. and certain other stockholders of Lineo, which provide for right of  
first refusal for the benefit of Metrowerks Holdings with request to Lineo      
shares held by Caldera and the other Lineo stockholders party to the agreement. 
Caldera has also agreed to indemnify Metrowerks Holdings for any damage         
sustained by Metrowerks Holdings as a result of breaches by Caldera under the   
stock purchase and sale agreement and the stockholder agreement or for breaches 
by Lineo under a warrant agreement between Lineo and Metrowerks Holdings.       
Caldera's indemnification obligation is limited to the amount of proceeds       
received by Caldera in its sale to Metrowerks Holdings.                         

Lineo distributes copies of our OpenLinux products to certain of its  
customers. Lineo is majority-owned by The Canopy Group, Inc. The Noorda Family  
Trust, of which Mr. Noorda and his spouse are co-trustees, is the controlling   
stockholder of The Canopy Group, Inc. Mr. Noorda, John R. Egan and Ralph T.     
Yarro III, each of whom is one of Caldera's directors, are directors of Lineo,  
Inc.                                                                            

RELATIONSHIP WITH THE SANTA CRUZ OPERATION                                      

On February 1, 2000, Caldera and SCO entered into a Strategic Business
Agreement. The Agreement provides for a number of joint marketing activities    
between the parties, including, but not limited to, the following: (i)          
participation together in industry shows, (ii) cross recruit and cross match    
channel partners for SCO's Tarantella product line and Caldera's OpenLinux      
e-Server, (iii) cross-reference each others websites and product solutions and  
(iv) discussion of Caldera's channel initiatives. Additionally, Caldera agreed  
to provide ten copies of OpenLinux to SCO for its internal use and SCO agrees to
provide three copies of SCO's Tarantella Express product. Caldera and SCO also  
agreed to cooperate and work together to port Tarantella Express products to    
Caldera's OpenLinux, eServer and eDesktop. The term of the agreement is for one 
year with automatic renewals for additional one year periods unless the         
agreement is terminated.                                                        

On February 28, 2000, Caldera entered into an agreement for Linux     
professional services with SCO, pursuant to which SCO is to provide customer    
support and other related services to customers of Caldera from time to time for
specified fees. This agreement is currently being performed by SCO's            
professional services group, and will be extinguished upon the closing of the   
combination, at which time New Caldera would become the owner of the            
professional services group.                                                    

On June 27, 2000, Caldera and SCO entered into an OEM Distribution    
Agreement. Under the terms of the agreement, Caldera is granted a non-exclusive,
non-transferable, worldwide license certain of SCO's products, including        
enhancements and improvements, for distribution and sale to end users and       
specified resellers. Caldera pays current list price, less 42% for all SCO      
products under the agreement. The term of the agreement is for one year with    
automatic renewals for additional one year periods unless the agreement is      
terminated. Caldera had sales to SCO totalling $331,500 during the year ended   
October 31, 2000.                                                               

PREFERRED STOCK TRANSACTIONS                                                    

  Effective December 30, 1999, Caldera entered into a Conversion Agreement
with The Canopy Group and MTI Technology Corporation. Under this agreement,     
Caldera issued and exchanged 5,273,974 shares of its Series A convertible       
preferred stock for 5,273,974 shares of our common stock held by The Canopy     
Group. Caldera also issued and exchanged 1,322,172 shares of its Series A       
convertible preferred stock for 1,322,172 shares of its common stock held by MTI
Technology Corporation.                                                         

    From December 31, 1999 through January 10, 2000, we issued an aggregate of
5,000,000 shares of our Series B convertible preferred stock at a purchase price
of $6.00 per share to various investors including Chicago Venture Partners,     
Citrix Systems, Inc., Egan Managed-Capital, Novell, Inc., Sun Microsystems and  
The Santa Cruz Operation, Inc. All aspects of the Series B private placement    
were                                                                            

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completed as of January 10, 2000. The Series A convertible preferred stock and  
the Series B convertible preferred stock converted automatically into Caldera's 
common stock at the closing of Caldera's initial public offering in March 2000. 

In connection with the Series B financing, the holders of the Series A
convertible preferred stock and the holders of the Series B convertible         
preferred stock also entered into a second amended and restated investors rights
agreement with Caldera, under which:                                            

    - Caldera is obligated to provide certain registration rights with respect
to shares of our capital stock held by the other parties to this  
agreement. See, "Description of Caldera and New Caldera Capital   
Stock -- Registration Rights."                                    

    - Caldera granted the other parties a right of first offer with respect to
    any future issuance and sale of shares of our capital stock other than
     shares of our common stock to be issued publicly. This right terminated
  upon the closing of Caldera's initial public offering in March 2000.

INDEMNIFICATION AGREEMENTS                                                      

Caldera has entered into indemnification agreements with each of its  
executive officers and directors.                                               

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PRINCIPAL STOCKHOLDERS OF NEW CALDERA 

    The following table presents information as to the beneficial ownership of
New Caldera's common stock if the combination had occurred on February 1, 2001  
by:                                                                             

- Each beneficial owner of more than 5% of New Caldera's common stock;

- Each of New Caldera's directors;                                    

- Certain executive officers; and                                     

- All directors and executive officers of New Caldera as a group.     

  Beneficial ownership is determined under the rules of the Securities and
Exchange Commission and generally includes voting or investment power with      
respect to securities. Unless indicated below, to our knowledge, the persons and
entities named in the table have sole voting and sole investment power with     
respect to all shares beneficially owned, subject to community property laws    
where applicable. Shares of common stock subject to options that are currently  
exercisable or exercisable within 60 days of February 1, 2001 are deemed to be  
outstanding and to be beneficially owned by the person holding the options for  
the purpose of computing the percentage ownership of that person but are not    
treated as outstanding for the purpose of computing the percentage ownership of 
any other person.                                                               

                                                        [Enlarge/Download Table]

                                                              NUMBER OF SHARES   PERCENT OF SHARES 
NAME AND ADDRESS                                             BENEFICIALLY OWNED  BENEFICIALLY OWNED
----------------                                             ------------------  ------------------
                                                                                                   
The Canopy Group, Inc. .....................................     21,273,974(1)          38.2%      
MTI Technology Corporation..................................      5,333,333(2)           9.6       
The Santa Cruz Operation....................................     16,000,000(3)          28.7       
Ransom H. Love..............................................        656,481(4)           1.2       
Robert K. Bench.............................................             --(5)             *       
Drew A. Spencer.............................................        102,383(6)             *       
Benoy Tamang................................................         89,394(7)             *       
Ralph J. Yarro, III.........................................     27,954,881(8)          50.2       
Steve Cakebread.............................................             --(9)             *       
John R. Egan................................................        883,333(10)          1.6       
Edward E. Iacobucci.........................................         50,000(11)            *       
Doug Michels................................................     16,000,000(12)         28.7       
Raymond J. Noorda...........................................     27,857,307(13)         50.0       
Thomas P. Raimondi, Jr. ....................................      5,383,333(14)          9.7       
All directors and executive officers as a group.............     45,785,772(15)         82.2       

---------------                                                                 
*  Less than 1%                                                             

(1) The address for The Canopy Group, Inc. is 333 South 520 West, Suite 300,  
Lindon, Utah 84042.                                                   

 (2) The address for MTI Technology Corp. is 4905 East La Palma Avenue, Anaheim,
California 92807.                                                     

 (3) The address for The Santa Cruz Operation is 425 Encinal Street, Santa Cruz,
California 95061.                                                     

(4) Consists of options to purchase 656,481 shares of common stock.           

 (5) Does not include options to purchase 200,000 shares of common stock granted
to Mr. Bench in December, 2000.                                       

(6) Consists of options to purchase 102,383 shares of common stock.           

(7) Consists of options to purchase 89,394 shares of common stock.            

(8) Includes options to purchase 96,874 shares of common stock, 700 shares of 
   common stock, 21,273,974 shares of common stock held by The Canopy Group,
    Inc., 5,333,333 shares of common stock held by MTI Technology Corporation,
 and 1,250,000 shares held by Lineo, Inc. Mr. Yarro is the President and
Chief Executive Officer of The Canopy Group, Inc. Mr. Yarro disclaims 
beneficial                                                            

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ownership of the shares held by The Canopy Group, MTI Technology      
     Corporation and Lineo, Inc., except to the extent of his pecuniary interest
therein.                                                              

(9) Does not include options to purchase 79,167 shares of common stock granted
to Mr. Cakebread in August, 2000.                                     

(10) Consists of 833,333 shares of common stock held by Egan-Managed Capital,   
   L.P. and options to purchase 50,000 shares of common stock. Mr. Egan is a
managing partner of Egan-Managed Capital, L.P. Mr. Egan disclaims     
beneficial ownership of the shares held by Egan-Managed Capital, L.P.,
except to the extent of his pecuniary interest therein.               

(11) Consists of options to purchase 50,000 shares of common stock.             

(12) Consists of 16,327,323 shares of common stock held by The Santa Cruz       
Operation. Mr. Michels is president and chief executive officer of The
     Santa Cruz Operation. Mr. Michels disclaims his beneficial ownership of the
shares held by The Santa Cruz Operation.                              

(13) Includes 21,273,974 shares of common stock held by The Canopy Group, Inc., 
 5,333,333 shares of common stock held by MTI Technology Corporation and
   1,250,000 shares held by Lineo, Inc. Mr. Noorda is chairman of the boards
    of directors of The Canopy Group, Inc. and MTI Technology Corporation, and
is a director of Lineo, Inc. Additionally, the Noorda Family Trust, of
 which Mr. Noorda and his spouse serve as co-trustees is the controlling
 stockholder of The Canopy Group, Inc. The Canopy Group, Inc. holds more
 than 45% of the outstanding common stock of MTI Technology Corporation.
     Lineo, Inc. is majority-owned by The Canopy Group. By virtue of his holding
   corporate offices, his stock ownership and his service as co-trustee, all
   as described above, Mr. Noorda may be deemed to control The Canopy Group,
 Inc., MTI Technology Corporation and Lineo, Inc., and Mr. Noorda may be
     deemed to possess indirect beneficial ownership of the common stock held by
The Canopy Group, Inc., MTI Technology Corporation and Lineo, Inc. Mr.
Noorda disclaims beneficial ownership of the shares held by The Canopy
Group, Inc., MTI Technology Corporation and Lineo, Inc., except to the
     extent of his pecuniary interest therein. The address for Mr. Noorda is c/o
    MTI Technology Corporation, 4905 East La Palma Avenue, Anaheim, California
92807.                                                                

(14) Includes options to purchase 50,000 shares of common stock and 5,333,333   
    shares of common stock held by MTI Technology Corporation. Mr. Raimondi is
     the President and Chief Executive Officer of MTI Technology Corporation and
   by virtue of his corporate office may be deemed to control MTI Technology
   Corporation and may be deemed to possess indirect beneficial ownership of
     the common stock held by MTI Technology Corporation. Mr. Raimondi disclaims
beneficial ownership of the shares held by MTI Technology Corporation,
except to the extent of his pecuniary interest therein.               

(15) See notes 4 through 14, as applicable.                                     

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PRINCIPAL STOCKHOLDERS OF CALDERA 

    The following table presents information as to the beneficial ownership of
Caldera's common stock as of February 1, 2001 by:                               

     - Each stockholder known by Caldera to be the beneficial owner of more than
5% of Caldera's common stock;                                     

- Each of Caldera's directors;                                        

  - Each executive officer listed in Caldera's summary compensation table;
and                                                               

- All directors and executive officers of Caldera as a group.         

  Beneficial ownership is determined under the rules of the Securities and
Exchange Commission and generally includes voting or investment power with      
respect to securities. Unless indicated below, to our knowledge, the persons and
entities named in the table have sole voting and sole investment power with     
respect to all shares beneficially owned, subject to community property laws    
where applicable. Shares of common stock subject to options that are currently  
exercisable or exercisable within 60 days of February 1, 2001 are deemed to be  
outstanding and to be beneficially owned by the person holding the options for  
the purpose of computing the percentage ownership of that person but are not    
treated as outstanding for the purpose of computing the percentage ownership of 
any other person.                                                               

                                                        [Enlarge/Download Table]

                                                              NUMBER OF SHARES   PERCENT OF SHARES 
NAME AND ADDRESS                                             BENEFICIALLY OWNED  BENEFICIALLY OWNED
----------------                                             ------------------  ------------------
                                                                                                   
The Canopy Group, Inc. .....................................     21,273,974(1)          53.6%      
MTI Technology Corporation..................................      5,333,333(2)          13.4       
Ransom H. Love..............................................        656,481(3)           1.6       
Robert K. Bench.............................................             --(4)             *       
Drew A. Spencer.............................................        102,383(5)             *       
Benoy Tamang................................................         89,394(6)             *       
Ralph J. Yarro, III.........................................     27,954,881(7)          70.4       
Steve Cakebread.............................................             --(8)             *       
John R. Egan................................................        883,333(9)           2.2       
Edward E. Iacobucci.........................................         50,000(10)            *       
Raymond J. Noorda...........................................     27,857,307(11)         70.2       
Thomas P. Raimondi, Jr. ....................................      5,383,333(12)         13.6       
All directors and executive officers as a group.............     29,785,772(13)         75.1       

---------------                                                                 
*  Less than 1%                                                             

(1) The address for The Canopy Group, Inc. is 333 South 520 West, Suite 300,  
Lindon, Utah 84042.                                                   

 (2) The address for MTI Technology Corp. is 4905 East La Palma Avenue, Anaheim,
California 92807.                                                     

(3) Consists of options to purchase 656,481 shares of common stock.           

 (4) Does not include options to purchase 200,000 shares of common stock granted
to Mr. Bench in December, 2000.                                       

(5) Consists of options to purchase 102,383 shares of common stock.           

(6) Consists of options to purchase 89,394 shares of common stock.            

(7) Consists of options to purchase 96,874 shares of common stock, 700 shares 
of common stock, 21,273,974 shares of common stock held by The Canopy 
     Group, 5,333,333 shares of common stock held by MTI Technology Corporation,
   and 1,250,000 shares of common stock held by Lineo, Inc. Mr. Yarro is the
   President and Chief Executive Officer of The Canopy Group, Inc. Mr. Yarro
    disclaims beneficial ownership of the shares held by The Canopy Group, MTI
Technology Corporation and Lineo, Inc., except to the extent of his   
pecuniary interest therein.                                           

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(8) Does not include options to purchase 79,167 shares of common stock granted
to Mr. Cakebread in August, 2000.                                     

(9) Consists of 833,333 shares of common stock held by Egan-Managed Capital,  
   L.P. and options to purchase 50,000 shares of common stock. Mr. Egan is a
managing partner of Egan-Managed Capital, L.P. Mr. Egan disclaims     
beneficial ownership of the shares held by Egan-Managed Capital, L.P.,
except to the extent of his pecuniary interest therein.               

(10) Consists of options to purchase 50,000 shares of common stock.             

(11) Includes 21,273,974 shares of common stock held by The Canopy Group, Inc., 
 5,333,333 shares of common stock held by MTI Technology Corporation and
   1,250,000 shares held by Lineo, Inc. Mr. Noorda is chairman of the boards
    of directors of The Canopy Group, Inc. and MTI Technology Corporation, and
is a director of Lineo, Inc. Additionally, the Noorda Family Trust, of
 which Mr. Noorda and his spouse serve as co-trustees is the controlling
 stockholder of The Canopy Group, Inc. The Canopy Group, Inc. holds more
 than 45% of the outstanding common stock of MTI Technology Corporation.
     Lineo, Inc. is majority-owned by The Canopy Group. By virtue of his holding
   corporate offices, his stock ownership and his service as co-trustee, all
   as described above, Mr. Noorda may be deemed to control The Canopy Group,
 Inc., MTI Technology Corporation and Lineo, Inc., and Mr. Noorda may be
     deemed to possess indirect beneficial ownership of the common stock held by
The Canopy Group, Inc., MTI Technology Corporation and Lineo, Inc. Mr.
Noorda disclaims beneficial ownership of the shares held by The Canopy
Group, Inc., MTI Technology Corporation and Lineo, Inc., except to the
     extent of his pecuniary interest therein. The address for Mr. Noorda is c/o
    MTI Technology Corporation, 4905 East La Palma Avenue, Anaheim, California
92807.                                                                

(12) Includes options to purchase 50,000 shares of common stock and 5,333,333   
    shares of common stock held by MTI Technology Corporation. Mr. Raimondi is
     the President and Chief Executive Officer of MTI Technology Corporation and
   by virtue of his corporate office may be deemed to control MTI Technology
   Corporation and may be deemed to possess indirect beneficial ownership of
     the common stock held by MTI Technology Corporation. Mr. Raimondi disclaims
beneficial ownership of the shares held by MTI Technology Corporation,
except to the extent of his pecuniary interest therein.               

(13) See notes 3 through 12, as applicable.                                     

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PRINCIPAL SHAREHOLDERS OF SCO 

The following table sets forth certain information with respect to the
beneficial ownership of SCO's common stock as of February 1, 2001, by:          

  - each person known by SCO to beneficially own more than five percent of
SCO's outstanding common stock;                                   

- each of SCO's directors;                                            

 - each of the four most highly compensated executive officers in fiscal
2000 besides SCO's chief executive officer; and                   

- all of SCO's executive officers and directors as a group.           

    Unless otherwise indicated, the address for each shareholder on this table
is c/o The Santa Cruz Operation, Inc., 425 Encinal Street, Santa Cruz,          
California 95061-1900. Except as otherwise noted, and subject to applicable     
community property laws, to the best of our knowledge, the persons named in this
table have sole voting and investing power for all of the shares of common stock
held by them.                                                                   

                                                        [Enlarge/Download Table]

FIVE PERCENT SHAREHOLDERS,                              COMMON STOCK     PERCENT OWNERSHIP 
DIRECTORS AND CERTAIN EXECUTIVE OFFICERS             BENEFICIALLY OWNED  OF COMMON STOCK(1)
----------------------------------------             ------------------  ------------------
                                                                                           
Douglas L. Michels(2)..............................      4,218,543             10.44%      
Alok Mohan(3)......................................        682,332              1.68%      
Robert M. McClure(4)...............................        142,082            *            
Gilbert P. Williamson(5)...........................        136,750            *            
R. Duff Thompson(5)................................         30,250            *            
Ninian Eadie(5)....................................        107,250            *            
Ronald Lachman(6)..................................        159,250            *            
James Wilt(7)......................................        495,062              1.23%      
Jack Moyer(8)......................................        107,387            *            
Steven M. Sabbath(9)...............................        173,099            *            
Michael Orr(5).....................................         87,500            *            
All directors and executive officers as a group (15                                        
  persons)(10).....................................      6,981,498             16.33%      

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

*  Represents less than one percent.                                      

(1) Based on 39,875,042 shares of common stock outstanding as of February 1,
    2001. Beneficial ownership is determined in accordance with the rules of
     the Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that 
      person, shares of common stock subject to options held by that person that
  are currently exercisable or exercisable within 60 days of February 1,
2001 are deemed outstanding. Such shares, however, are not deemed   
      outstanding for the purposes of computing the percentage ownership of each
other person.                                                       

(2) Includes 512,776 shares of common stock issuable pursuant to options    
exercisable within 60 days of February 1, 2001.                     

(3) Includes 622,497 shares of common stock issuable pursuant to options    
exercisable within 60 days of February 1, 2001.                     

(4) Includes 138,750 shares of common stock issuable pursuant to options    
exercisable within 60 days of February 1, 2001.                     

  (5) Represents shares of common stock issuable pursuant to options exercisable
within 60 days of February 1, 2001.                                 

(6) Includes 87,250 shares of common stock issuable pursuant to options     
exercisable within 60 days of February 1, 2001.                     

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(7) Includes 283,386 shares of common stock issuable pursuant to options    
exercisable within 60 days of February 1, 2001.                     

(8) Includes 88,748 shares of common stock issuable pursuant to options     
exercisable within 60 days of February 1, 2001.                     

(9) Includes 152,874 shares of common stock issuable pursuant to options    
exercisable within 60 days of February 1, 2001.                     

(10) Includes 2,870,779 shares of common stock issuable pursuant to options   
exercisable within 60 days of February 1, 2001.                     

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DESCRIPTION OF CALDERA AND NEW CALDERA CAPITAL STOCK

GENERAL                                                                         

  The following summary includes all of the material provisions of Caldera
and New Caldera's capital stock. Except where otherwise indicated, they are     
identical. However, you should read the New Caldera amended and restated        
certificate of incorporation attached as Appendix D and the New Caldera amended 
and restated bylaws attached as Appendix E.                                     

    The authorized capital stock of Caldera consists of 100,000,000 shares, of
which 75,000,000 are common stock, par value $0.001 per share, and 25,000,000   
are preferred stock, par value $0.001 per share. If Proposal Five included in   
this joint proxy statement/prospectus is approved by the stockholders, the      
authorized capital stock of Caldera and New Caldera will consist of 200,000,000 
shares, of which 175,000,000 will be common stock, par value $0.001 per share,  
and 25,000,000 will be preferred stock, par value $0.001 per share. Please see  
page 191. Based on the shares of Caldera common stock outstanding on October 31,
2000, immediately following the combination, there will be outstanding          
approximately 55.7 million shares of New Caldera common stock.                  

COMMON STOCK                                                                    

Dividend Rights.  Subject to preferences that may apply to shares of  
preferred stock outstanding at the time, the holders of outstanding shares of   
common stock are entitled to receive dividends out of assets legally available  
at the times and in the amounts as the board of New Caldera may from time to    
time determine.                                                                 

  Voting Rights.  Each common stockholder is entitled to one vote for each
share of common stock held on all matters submitted to a vote of stockholders.  
Cumulative voting for the election of directors are not provided for in New     
Caldera's certificate of incorporation, which means that the holders of a       
majority of the shares voted will be able to elect all of the directors then    
standing for election.                                                          

No Preemptive or Similar Rights.  New Caldera's common stock is not   
entitled to preemptive rights and is not subject to conversion or redemption.   

Right to Receive Liquidation Distributions.  Upon a liquidation,      
dissolution, or winding up of New Caldera, the assets legally available for     
distribution to New Caldera's stockholders are distributable ratably among the  
holders of New Caldera's common stock and any participating preferred stock     
outstanding at that time after payment of liquidation preferences, if any, on   
any outstanding preferred stock and payment of other claims of creditors.       

PREFERRED STOCK                                                                 

   Upon the closing of the combination, there will be no shares of preferred
stock outstanding. The board of directors of New Caldera will be authorized,    
without further stockholder approval, to issue from time to time up to an       
aggregate of 25,000,000 shares of preferred stock in one or more series and to  
fix or alter the designations, preferences, rights and any qualifications,      
limitations or restrictions of the shares of each series thereof, including the 
dividend rights, dividend rates, conversion rights, voting rights, terms of     
redemption, including sinking fund provisions, redemption price or prices,      
liquidation preferences and the number of shares constituting any series or     
designation of series. See "-- Delaware Anti-Takeover Law and Charter           
Provisions" and "-- Charter and Bylaws."                                        

REGISTRATION RIGHTS                                                             

     Pursuant to a second amended and restated investors rights agreement, dated
January 7, 2000, which Caldera Systems entered into with holders of 11,596,146  
shares of its common stock (assuming conversion of all outstanding shares of    
preferred stock), the holders of these shares will be entitled to certain       
registration rights regarding the same number of shares of New Caldera to be    
owned by them upon the                                                          

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closing of the combination. The registration rights provide that if New Caldera 
proposes to register any securities under the Securities Act, either for its own
account or for the account of other security holders exercising registration    
rights, they are entitled to notice of the registration and are entitled to     
include shares of their common stock in the registration. This right is subject 
to conditions and limitations, including the right of the underwriters in an    
offering to limit the number of shares included in the registration. Beginning  
on September 20, 2000, the holders of at least 22% of these shares may also     
require New Caldera to file up to two registration statements under the         
Securities Act at its expense with respect to their shares of common stock. New 
Caldera is required to use its best efforts to effect these registrations,      
subject to conditions and limitations. Furthermore, the holders of these shares 
may require New Caldera to file additional registration statements on Form S-3, 
subject to conditions and limitations. These rights terminate on the earlier of 
March 20, 2003, or when a holder is able to sell all its shares pursuant to Rule
144 under the Securities Act in any 90-day period.                              

Pursuant to the reorganization agreement, New Caldera has agreed to   
register shares of New Caldera held by SCO for distribution to SCO's            
shareholders. See "The Reorganization Agreement -- Distribution and Registration
of Shares."                                                                     

DELAWARE ANTI-TAKEOVER LAW AND CHARTER PROVISIONS                               

The provisions of the Delaware General Corporation Law, New Caldera's 
amended and restated certificate of incorporation and its amended and restated  
bylaws described below may have the effect of delaying, deferring, or           
discouraging another person from acquiring control of New Caldera.              

 New Caldera is subject to the provisions of Section 203 of the Delaware
General Corporation Law regulating corporate takeovers. This section prevents   
Delaware corporations from engaging, under limited circumstances, in a business 
combination, which includes a merger or sale of more than 10% of the            
corporation's assets, with any interested stockholder, which is a stockholder   
who owns 15% or more of the corporation's outstanding voting stock, as well as  
affiliates and associates of stockholders, for three years following the date   
that the stockholder became an interested stockholder unless:                   

     - the transaction is approved by the board of directors before the date the
interested stockholder attained that status;                      

- upon the closing of the transaction that resulted in the stockholder
       becoming an interested stockholder, the stockholder owned at least 85% of
the voting stock of the corporation outstanding at the time the   
transaction commenced; or                                         

     - on or after the date the business combination is approved by the board of
      directors and authorized at an annual or special meeting of stockholders
      by at least two-thirds of the outstanding voting stock that is not owned
by the interested stockholder.                                    

A Delaware corporation may opt out of this provision with an express  
provision in its original certificate of incorporation or an express provision  
in its certificate of incorporation or bylaws resulting from a stockholders'    
amendment approved by at least a majority of the outstanding voting shares.     
However, New Caldera has not opted out of this provision. This provision of the 
Delaware General Corporation Law could prohibit or delay mergers or other       
takeover or change-in-control attempts and may discourage attempts to acquire   
New Caldera.                                                                    

CHARTER AND BYLAWS                                                              

Charter                                                                         

  New Caldera's amended and restated certificate of incorporation provides
that all stockholder actions must be effected at a duly-called annual or special
meeting and not by a consent in writing. New Caldera's amended and restated     
certificate of incorporation also requires the approval of its board of         
directors to adopt, amend or repeal its bylaws. In addition, New Caldera's      
amended and restated certificate of incorporation permits the stockholders to   
adopt, amend or repeal its bylaws only upon the affirmative vote                

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of the holders of at least two-thirds of the voting power of all then           
outstanding shares of stock entitled to vote.                                   

   Directors are removable for cause only by stockholders holding a majority
of the then-outstanding shares of stock entitled to vote. Vacancies on the board
of directors resulting from death, resignation, removal or other reason may be  
filled by a majority of the directors then in office, even if less than a       
quorum. Vacancies from newly created directorships must be filled by a majority 
of the directors then in office. Lastly, the provisions in the certificate of   
incorporation described above and other provisions pertaining to the limitation 
of liability and indemnification of directors may be amended or repealed only   
with the affirmative vote of the holders of at least two-thirds of the voting   
power of all then outstanding shares of stock entitled to vote.                 

These provisions may have the effect of deterring hostile takeovers or
delaying changes in the control or management of New Caldera, which could have  
an adverse effect on the market price of its common stock.                      

Bylaws                                                                          

New Caldera's amended and restated bylaws also contain many of the    
provisions in its certificate of incorporation described above. Its bylaws will 
not permit stockholders to call a special meeting. In addition, New Caldera's   
amended and restated bylaws establish an advance notice procedure for matters to
be brought before an annual or special meeting of its stockholders, including   
the election of directors. Business permitted to be conducted at any annual     
meeting or special meeting of stockholders is limited to business properly      
brought before the meeting.                                                     

New Caldera's amended and restated bylaws also provide that it will   
indemnify officers and directors against losses that they may incur in          
investigations and legal proceedings resulting from their services to New       
Caldera, which may include services in connection with takeover defense         
measures. These provisions may have the effect of preventing changes in New     
Caldera's management.                                                           

INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY 

    New Caldera's amended and restated certificate of incorporation limits the
liability of directors to the fullest extent permitted by the Delaware General  
Corporation Law. In addition, New Caldera's amended and restated certificate of 
incorporation and bylaws provide that it will indemnify its directors and       
officers to the fullest extent permitted by the Delaware General Corporation    
Law. New Caldera will enter into separate indemnification agreements with its   
directors and executive officers that provide them indemnification protection if
its certificate of incorporation is subsequently amended.                       

TRANSFER AGENT AND REGISTRAR                                                    

 The transfer agent and registrar for New Caldera's common stock will be
American Securities Transfer and Trust, Inc.                                    

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COMPARISON OF RIGHTS OF HOLDERS OF SCO COMMON STOCK 
AND NEW CALDERA COMMON STOCK

 The following is a summary of certain differences between the rights of
holders of SCO common stock and holders of New Caldera common stock. While we   
believe that this summary covers the material differences, it may not contain   
all of the information that is important to holders of SCO common stock. In     
order to more completely understand the differences between the rights of       
holders of SCO common stock and holders of New Caldera common stock, SCO        
shareholders should carefully read all of the original documents and statutes   
referenced in this summary.                                                     

  The rights of holders of SCO common stock with respect to such stock are
governed by the articles of incorporation and bylaws of SCO, each as currently  
in effect, and the Corporation Code of the State of California. The shares of   
New Caldera common stock that will be acquired by SCO and the options to        
purchase shares of New Caldera common stock that will be acquired by certain SCO
option holders as a result of the combination will have rights that are governed
by the amended and restated certificate of incorporation and amended and        
restated bylaws of New Caldera, each as in effect as of the effective time of   
the combination, and the General Corporation Law of the State of Delaware.      

APPLICABLE STATE CORPORATE LAW                                                  

SCO is incorporated under the laws of the State of California and is  
governed by the Corporation Code of the State of California. New Caldera is     
incorporated under the laws of the State of Delaware and is governed by the     
General Corporation Law of the State of Delaware. As a result of this difference
in governing law, the shares of New Caldera common stock that will be acquired  
by SCO and the options to purchase shares of New Caldera common stock that will 
be acquired by SCO option holders as a result of the combination may have       
statutory rights different than those associated with shares of SCO common      
stock.                                                                          

Important differences between the Corporation Code of the State of    
California and the General Corporation Law of the State of Delaware include, but
are not limited to, the following:                                              

- Delaware law allows a corporation to limit directors' liability and 
      indemnify directors against claims to a greater extent than is permitted
under California law.                                             

  - Delaware law allows a corporation to take more extensive anti-takeover
    measures than are permitted under California law, including allowing a
   Delaware corporation to eliminate special stockholder meetings and to
elect a classified board of directors.                            

- Delaware law includes a specific anti-takeover statute that prevents
certain business combinations not approved by the incumbent board.
California law has no analogous statute.                          

   In addition, Delaware law and California law differ in their treatment of
appraisal rights, the payment of dividends, and shareholder voting related to   
business combinations and combinations.                                         

As a Delaware corporation, New Caldera is subject to the provisions of
Section 203 of the General Corporation Law of the State of Delaware. Under      
certain circumstances, the provisions of Section 203 may make the consummation  
of various business transactions by "interested stockholders," as defined in    
Section 203, with New Caldera more difficult for a three-year period following  
the time that a stockholder becomes an "interested stockholder." A corporation  
may waive the protective provisions of Section 203 in its certificate of        
incorporation or bylaws, but New Caldera has not currently done so.             

CERTIFICATES OF INCORPORATION AND BYLAWS                                        

Authorized and Outstanding Capital Stock                                        

    SCO has two classes of authorized capital stock, designated "common stock"
and "preferred stock." SCO is authorized to issue 100,000,000 shares of common  
stock and, as of February 1, 2001, there were 36,121,982 shares of common stock 
outstanding. SCO is authorized to issue 20,000,000 shares of preferred stock,   
with such rights, preferences and designations that the board of directors of   
SCO may determine. Currently there are no outstanding shares of SCO preferred   
stock.                                                                          

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   New Caldera will have two classes of authorized capital stock, designated
"common stock" and "preferred stock," each with a par value of $0.001 per share.
If Proposal Five described in this joint proxy statement/prospectus is approved,
New Caldera will be authorized to issue 175,000,000 shares of common stock. New 
Caldera will be authorized to issue 25,000,000 shares of preferred stock, with  
such rights, preferences and designations that the board of directors of New    
Caldera may determine. There are currently no outstanding shares of New Caldera 
preferred stock.                                                                

Voting Rights                                                                   

 Except with respect to the election of directors, holders of SCO common
stock are entitled to one vote on all matters submitted to SCO shareholders for 
their approval for each share of common stock held. Under certain circumstances,
holders of SCO common stock are entitled to cumulate votes for the election of  
directors. Where votes are cumulated for the election of directors, each holder 
of SCO common stock is entitled to that number of votes which is equal to the   
total number of shares of SCO common stock held, multiplied by the number of    
directors being elected. The cumulative number of votes allotted to each SCO    
shareholder using this formula may be allocated by such shareholder in any      
manner, including for a single director, or for two or more directors, at the   
discretion of such SCO shareholder. Under SCO's bylaws, all matters submitted to
the shareholders (including the election of directors) must be approved by a    
majority of the votes cast in a meeting where a quorum is present.              

  Holders of New Caldera common stock are also entitled to one vote on all
matters submitted to New Caldera stockholders for their approval for each share 
held. However, holders of New Caldera common stock are not entitled to cumulate 
votes for the election of directors. Pursuant to New Caldera's amended and      
restated bylaws, all matters submitted to the stockholders (including the       
election of directors) must be approved by a majority of the votes cast in a    
meeting where a quorum is present.                                              

BOARD OF DIRECTORS                                                              

Board Size                                                                  

    The bylaws of SCO currently provide that the board of directors of SCO may
consist of between seven and twelve directors, and the exact number of directors
has been fixed at nine by resolution of SCO's board. Pursuant to SCO's bylaws,  
the permissible range of size of SCO's board of directors may only be changed by
an amendment to the bylaws approved by the shareholders, but the board may      
unilaterally fix the size of the board at any level within the permissible      
range. SCO's articles of incorporation do not place any restrictions on the size
of SCO's board of directors.                                                    

Pursuant to New Caldera's amended and restated certificate of         
incorporation, New Caldera's board of directors may consist of between five and 
fifteen directors, as designated in the bylaws. Within the range permitted by   
the certificate of incorporation, the size of New Caldera's board of directors  
may be changed by resolution of the board. Pursuant to the reorganization       
agreement and the stockholders agreement, the size of the New Caldera board will
be fixed at eight.                                                              

Board Classification                                                        

 Neither the board of directors of SCO nor the board of directors of New
Caldera is classified.                                                          

Board Vacancies                                                             

  SCO's bylaws provide that any vacancy on SCO's board of directors may be
filled by the remaining members of the board of directors (even if less than a  
quorum), or the sole remaining director, except that any vacancies created by   
removal of a director by vote of the shareholders or court order may only be    
filled by a vote of the shareholders. In addition, the shareholders may fill any
vacancies not filled by the directors. SCO's bylaws provide that a vacancy in   
the board of directors can result from the death, resignation or removal of a   
director, a further increase in the size of the board of directors, or a failure
of the shareholders to elect enough directors to fill the board.                

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  New Caldera's amended and restated certificate of incorporation provides
that any vacancy on New Caldera's board of directors, whether from the death,   
resignation or removal of a director or an increase in the size of the board of 
directors, may be filled in a meeting where a quorum exists by a majority of the
directors then in office, even if less than a quorum, or the sole remaining     
directors.                                                                      

Removal of Directors                                                        

   SCO's articles of incorporation and bylaws make no special provisions for
the removal of directors. Under the Corporation Code of the State of California,
any member of SCO's board of directors, or the entire board of directors, may be
removed with or without cause by the holders of a majority of the outstanding   
shares of SCO capital stock entitled to vote generally for the election of      
directors. Notwithstanding the foregoing, if less than the entire board of      
directors is removed, no director may be removed if the votes cast against his  
or her removal would be sufficient to elect such director if voted cumulatively.

The removal of New Caldera's directors is governed by the General     
Corporation Law of the State of Delaware, which provides that any member of     
SCO's board of directors, or the entire board of directors, may be removed with 
or without cause by the holders of a majority of the outstanding shares of SCO  
capital stock entitled to vote generally for the election of directors.         

Shareholder/Stockholder Action by Written Consent                               

    Pursuant to SCO's bylaws, shareholders may take formal action at a meeting
of shareholders duly called and held in accordance with the bylaws and          
applicable law or pursuant to a written consent. Where shareholders take action 
by written consent, such written consent is effective only if signed by         
shareholders holding at least the number of shares of capital stock that would  
be required to authorize or take such action at a meeting of shareholders at    
which all shares of capital stock entitled to vote on such action were present  
and voted, except that in the case of election of directors, a written consent  
is effective only if signed by the holders of all outstanding shares entitled to
vote for the election of directors.                                             

 Pursuant to New Caldera's amended and restated bylaws, stockholders may
only take formal action at a duly called stockholder meeting held in accordance 
with the bylaws and applicable law. New Caldera's amended and restated bylaws do
not permit stockholders to take action by written consent.                      

Ability to Call Special Meetings                                                

Pursuant to SCO's bylaws, a special meeting of SCO shareholders may be
called by the board of directors of SCO, the chairman of the board of directors,
SCO's president, or the holders of at least 10% of the outstanding shares of SCO
capital stock entitled to vote at the meeting. If any person or group of persons
other than the board of directors, chairman, or president desires to call a     
special meeting of SCO shareholders, the person or group must give the chairman,
president, vice-president, or secretary of SCO a written notice stating the     
general nature of the business proposed to be transacted. Such written notice   
must be delivered not less than 35 nor more than 60 days before the date of the 
proposed special meeting. SCO's bylaws provide that no business other than that 
specified in the notice may be transacted at a special meeting.                 

     Pursuant to New Caldera's amended and restated bylaws, a special meeting of
New Caldera stockholders may be called only by the chairman of the board or by a
majority of the board. The amended and restated bylaws of New Caldera further   
provide that the only business that may be conducted at a special meeting of New
Caldera stockholders is such business as is set forth in the notice of the      
special meeting.                                                                

Advance Notice Provisions for Shareholder/Stockholder Nominations and Proposals 

SCO's bylaws impose no additional notice requirements for shareholder 
nominations and proposals beyond those generally necessary for annual and       
special meetings.                                                               

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New Caldera's amended and restated bylaws provide that stockholder    
proposals (and nominations of directors) will not be considered at any annual   
meeting of New Caldera stockholders unless timely made. Stockholder proposals   
(and nominations of directors) are timely made only if delivered to the New     
Caldera's principal executive offices at least 120 days prior to the date of the
meeting. Both stockholder proposals and stockholder nominations of directors    
must include certain information specified in the amended and restated bylaws.  

Amendment of Articles/Certificate of Incorporation And Bylaws                   

SCO's articles of incorporation may be amended in accordance with the 
applicable provisions the Corporation Code of the State of California, which    
generally require the affirmative vote of the holders of a majority of          
outstanding capital stock entitled to vote. SCO's bylaws may be amended by a    
majority of the outstanding capital stock entitled to vote or by action of the  
board of directors (except that the board may not amend the bylaws to change the
number or permissible range of numbers of authorized directors).                

  New Caldera has reserved the right to amend, alter, change or repeal any
provision of its amended and restated certificate of incorporation in accordance
with the applicable provisions of the General Corporation Law of the State of   
Delaware, which generally require the affirmative vote of the holders of a      
majority of outstanding capital stock entitled to vote to approve an amendment  
to a certificate of incorporation. New Caldera's amended and restated           
certificate of incorporation further requires the affirmative vote of two-thirds
the outstanding voting stock to amend, alter, change or repeal the provisions of
the certificate of incorporation regarding directors, stockholder meetings,     
limitations of directors' liability, indemnification, amendment of the bylaws,  
or amendment of the certificate of incorporation.                               

     Pursuant to New Caldera's amended and restated certificate of incorporation
and amended and restated bylaws, New Caldera's amended and restated bylaws may  
be altered, amended, or repealed by a majority vote of the board of directors   
taken at any regular meeting or at a special meeting where notice of the        
proposed alteration, amendment, or repeal is given. New Caldera's amended and   
restated bylaws may also be altered, amended, or repealed by a vote of 66 2/3%  
of the outstanding voting stock.                                                

Limitation of Liability of Directors                                            

SCO's articles of incorporation provide that the personal liability of
SCO's directors to SCO and its shareholders for monetary damages arising out of 
a breach of the directors' fiduciary duties has been expressly eliminated to the
fullest extent permitted by the Corporation Code of the State of California.    
Currently, the Corporation Code of the State of California permits a corporation
to include a provision in its articles of incorporation or bylaws enabling the  
corporation to limit or eliminate the personal liability of its directors to the
corporation for damages arising out of a breach of the directors' fiduciary     
duties, subject to certain limitations. The limitation of liability permitted by
California law does not apply to actions brought directly by shareholders (such 
as a shareholder class action lawsuit) or to liabilities resulting from "acts or
omissions that show a reckless disregard for the director's duty to the         
corporation or its shareholders in circumstances in which the director was      
aware, or should have been aware, in the ordinary course of performing a        
director's duties, of a risk of serious injury to the corporation or its        
shareholders" or "acts or omissions that constitute an unexcused pattern of     
inattention that amounts to an abdication of the director's duty to the         
corporation or its shareholders."                                               

  New Caldera's amended and restated certificate of incorporation provides
that the personal liability of New Caldera's directors to New Caldera and its   
stockholders for monetary damages arising out of a breach of the directors'     
fiduciary duties has been expressly eliminated to the fullest extent permitted  
by the General Corporation Law of the State of Delaware. In addition, New       
Caldera's amended and restated certificate of incorporation provides that if the
General Corporation Law of the State of Delaware is amended to authorize the    
further elimination or limitation of the liability of a director, then the      
liability of New Caldera's directors will be eliminated or limited to the       
fullest extent permitted by the General Corporation Law of the State of Delaware
as so amended. Currently, the General Corporation Law of the State of Delaware  
permits a corporation to include a provision in its certificate of incorporation
or bylaws                                                                       

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enabling the corporation to limit or eliminate the personal liability of its    
directors to the corporation or its stockholders for damages arising out of a   
breach of the directors' fiduciary duties, subject to certain limitations.      

  While these provisions provide the directors of SCO and New Caldera with
protection against awards for monetary damages arising out of a breach of       
fiduciary duties, they do not eliminate the duty itself. Accordingly, these     
provisions will have no effect on the availability of equitable remedies such as
an injunction or rescission based upon a director's breach of his or her        
fiduciary duties.                                                               

Indemnification of Directors and Officers                                       

   SCO's bylaws require SCO to indemnify any person who is or was a director
or officer of SCO (or any predecessor of SCO) for any expenses, judgments and   
fines actually incurred and amounts paid in settlement in connection with any   
third party action, suit or other proceeding (other than a suit by or in the    
right of SCO) to the fullest extent permitted by the Corporation Code of the    
State of California. To the extent that SCO is required to indemnify a person   
for expenses in accordance with the foregoing, SCO's bylaws require SCO to      
advance such expenses to a person entitled to indemnification during a          
proceeding if such person provides SCO with an undertaking to repay such        
expenses if it is ultimately determined that such person is not entitled to     
indemnification under SCO's bylaws. The indemnification provisions of SCO's     
bylaws are not exclusive of any other rights that a person may have under any   
bylaws, agreements between SCO and such person, or vote of SCO shareholders or  
disinterested directors or otherwise.                                           

  The Corporation Code of the State of California permits a corporation to
indemnify its directors, officers, employees and agents for any liability       
arising out of an action or threatened action, other than an action by or in the
right of the corporation, to which such person is a party due to his or her     
service as a director, officer, employee or agent, provided that such person    
acted in good faith and in a manner he or she reasonably believed to be in the  
best interests of the corporation, and with respect to any criminal action,     
which he or she had no reason to believe was unlawful. The Corporation Code of  
the State of California permits a corporation to indemnify its directors,       
officers, employees and agents for any expenses actually and reasonably occurred
in connection with the defense or settlement of an action threatened action by  
or in the right of the corporation to which such person is a party due to his or
her service as a director, officer, employee or agent, provided that such person
acted in good faith and in a manner he or she reasonably believed to be in the  
best interests of the corporation, except that there may be no such             
indemnification if the person is found liable to the corporation unless, in such
a case, the court determines that such person is entitled to indemnification.   

    New Caldera's amended and restated bylaws require New Caldera to indemnify
any person who is or was a director or officer of New Caldera (or any           
predecessor of New Caldera) for any expenses, liabilities and losses reasonably 
incurred in connection with any action, suit or proceeding to the fullest extent
permitted by the General Corporation Law of the State of Delaware. To the extent
that New Caldera is required to indemnify a person for expenses in accordance   
with the foregoing, New Caldera is also required to advance expenses during a   
proceeding if the person provides New Caldera with an undertaking to repay such 
expenses if it is ultimately determined that such person is not entitled to     
indemnification under New Caldera's amended and restated bylaws. Notwithstanding
the foregoing, New Caldera is not required to advance expenses to any person    
against whom New Caldera brings a claim alleging that such person willfully     
misappropriated corporate assets, disclosed confidential information, or        
willfully and in bad faith breached such person's duty to New Caldera or its    
stockholders.                                                                   

    The General Corporation Law of the State of Delaware permits a corporation
to indemnify its directors, officers, employees and agents for any liability    
arising out of an action or threatened action, other than an action by or in the
right of the corporation, to which such person is a party due to his or her     
service as a director, officer, employee or agent, provided that such person    
acted in good faith and in a manner he or she reasonably believed to be in, or  
not opposed to, the best interests of the corporation, and with respect to any  
criminal action, which he or she had no reason to believe was unlawful. The     
General Corporation Law of the State of Delaware permits a corporation to       
indemnify its directors, officers,                                              

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employees and agents for any liability arising out of an action or threatened   
action by or in the right of the corporation to which such person is a party due
to his or her service as a director, officer, employee or agent, provided that  
such person acted in good faith and in a manner he or she reasonably believed to
be in, or not opposed to, the best interests of the corporation, except that    
there may be no such indemnification if the person is found liable to the       
corporation unless, in such a case, the court determines that such person is    
entitled to indemnification.                                                    

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PROPOSALS TO BE VOTED UPON BY CALDERA STOCKHOLDERS AT THE CALDERA ANNUAL MEETING

    At the Caldera annual meeting of stockholders, Caldera's stockholders will
be asked to consider the following proposals:                                   

    1. Combination of Caldera with the server and professional services groups
     of The Santa Cruz Operation, Inc. In connection with the combination,
        SCO will receive 16 million shares of Caldera International, Inc. common
     stock (representing approximately 25.3% of Caldera International on a
  fully diluted basis), $23 million in cash (of which $7 million was
advanced to SCO on January 26, 2001) and a non-interest bearing 
       promissory note in the amount of $8 million that will paid in quarterly
installments of $2 million beginning the fifth quarter after the
      combination is completed. SCO employees who join Caldera International
    will receive options to purchase approximately 1.8 million shares of
      common stock of Caldera International (representing approximately 2.8%
       of Caldera International on a fully diluted basis). In the combination,
       Caldera will become a subsidiary of a new parent company, which we will
      call New Caldera, and SCO will contribute to New Caldera the assets of
its server and professional services groups.                    

    2. Election of six (6) directors to serve for one year terms ending in the
year 2002 or until successors are duly elected and qualified.   

    3. Amendments to the Caldera 1999 Omnibus Stock Incentive Plan to increase
       the number of shares reserved for issuance from 4,105,238 to 10,905,238
and to provide for an automated director option grant program.  

  4. Amendments to Caldera's 2000 Employee Stock Purchase Plan to increase
    the number of share reserved for issuance from 500,000 to 2,000,000.

 5. Amendment to the Caldera Certificate of Incorporation increasing the
      number of authorized shares of common stock of Caldera from 75,000,000
to 175,000,000.                                                 

6. Ratification of the appointment of Arthur Andersen LLP as Caldera's
 independent auditors for the fiscal year ending October 31, 2001.

     None of the proposals is contingent upon the passage of any other proposal.

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PROPOSAL ONE: APPROVAL AND ADOPTION OF THE AGREEMENT
AND PLAN OF REORGANIZATION

   Caldera's board of directors adopted a resolution approving the Agreement
and Plan of Reorganization on August 1, 2000. The reorganization agreement must 
be approved by the affirmative vote, in person or by proxy, of at least a       
majority of the votes properly cast at the Caldera annual meeting. The          
combination contemplated by the reorganization agreement cannot be completed    
unless Caldera stockholders approve and adopt the reorganization agreement. See 
"The Combination" and "The Reorganization Agreement."                           

RECOMMENDATION OF THE BOARD OF DIRECTORS                                        

     The board of directors recommends that the stockholders of Caldera vote FOR
the approval and adoption of the reorganization agreement.                      

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PROPOSAL TWO: ELECTION OF DIRECTORS 

   At the annual meeting, six directors are to be elected to serve until the
next annual meeting of stockholders or until a successor for such director is   
elected and qualified, or until the death, resignation, or removal of such      
director. It is intended that the proxies will be voted for the six nominees    
named below for election to Caldera's board of directors unless authority to    
vote for any such nominee is withheld. There are six nominees, each of whom is  
currently a director of Caldera. Each person nominated for election has agreed  
to serve if elected, and the board of directors has no reason to believe that   
any nominee will be unavailable or will decline to serve. In the event, however,
that any nominee is unable or declines to serve as a director at the time of the
annual meeting, the proxies will be voted for any nominee who is designated by  
the current board of directors to fill the vacancy. Unless otherwise instructed,
the proxy holders will vote the proxies received by them "FOR" the nominees     
named below. The six candidates receiving the highest number of the affirmative 
votes of the shares entitled to vote at the annual meeting will be elected      
directors of Caldera. If Proposal Two is approved by the stockholders of Caldera
and the combination closes, the six candidates receiving the highest number of  
the affirmative votes to the shares entitled to vote at the annual meeting will 
become directors of New Caldera, and two individuals to be determined by SCO and
approved by Caldera will also become directors of New Caldera.                  

 The names of the nominees, their ages as of March 15, 2001, and certain
other information about each nominee are set forth below.                       

                                                        [Enlarge/Download Table]

NAME                                   POSITION(S) WITH THE COMPANY            AGE  DIRECTOR SINCE
----                                   ----------------------------            ---  --------------
                                                                                                  
Ransom H. Love............... Chief Executive Officer, Director                41       1998      
Ralph J. Yarro III........... Chairman of the Board of Directors and Director  36       1998      
Steve Cakebread.............. Director                                         49       2000      
Edward E. Iacobucci.......... Director                                         46       2000      
Raymond J. Noorda............ Director                                         76       1998      
Thomas P. Raimondi, Jr. ..... Director                                         43       1999      

  For biographical summaries of these nominees, see "Management of Caldera
and New Caldera."                                                               

John R. Egan, who currently serves as a member of Caldera's board of  
directors, has announced that he will resign from the board prior to the annual 
meeting, at which point the size of the board will be reduced by one member.    
Following the annual meeting, New Caldera will undertake to identify a new      
independent board member, who will also become a member of the audit committee. 

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS                               

  During the period from November 1, 1999 through October 31, 2000, or the
last fiscal year, Caldera's board of directors met 20 times and no director     
attended fewer than 75% of the aggregate number of meetings of Caldera's board  
of directors and meetings of the committees of the Caldera board of directors on
which he or she serves. Caldera's board of directors has an audit committee and 
a compensation committee.                                                       

     The compensation committee of the board of directors, which held 8 meetings
during the last fiscal year, recommends, reviews, and oversees the salaries,    
benefits and stock option plans for Caldera's employees, consultants, directors 
and other individuals compensated by Caldera. The compensation committee also   
administers Caldera's compensation plans. The members of the compensation       
committee are Messrs. Raimondi, Yarro and John R. Egan, all of whom are         
non-employee directors of Caldera. Mr. Egan is not running for re-election as a 
director.                                                                       

     The audit committee of the board of directors, which held 3 meetings during
the last fiscal year, reviews, acts and reports to the board of directors with  
respect to various auditing and accounting matters, including the recommendation
of Caldera's auditors, the scope of the annual audits, fees to be paid to the   
auditors, the performance of Caldera's independent auditors and Caldera's       
accounting practices. The members of the audit committee are Messrs. Cakebread, 
Iacobucci and John R. Egan, all of whom are non-employee directors of Caldera.  
Mr. Egan is not running for re-election as a director.                          
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DIRECTOR COMPENSATION                                                           

See "Management of Caldera and New Caldera -- Director Compensation." 

RECOMMENDATION OF THE BOARD OF DIRECTORS                                        

The board of directors unanimously recommends that the stockholders of
Caldera vote FOR the election of all of the nominees listed above.              

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PROPOSAL THREE: APPROVAL OF AMENDMENTS TO THE 
STOCK INCENTIVE PLAN

     Caldera's stockholders are being asked to approve a series of amendments to
Caldera's 1999 Omnibus Stock Incentive Plan (the "1999 Plan") that will effect  
the following changes: (i) increase the maximum number of shares of common stock
authorized for issuance over the term of the 1999 Plan by an additional         
6,800,000 shares to 10,905,238 shares, (ii) establish an automatic share        
increase feature pursuant to which the number of shares available for issuance  
under the 1999 Plan will automatically increase, beginning with the 2000        
calendar year, as of November 1 of each year, by 3% of the total number of      
shares of common stock outstanding on the previous October 31st, (iii) add a    
formula awards program pursuant to which directors of Caldera will automatically
be granted options to purchase shares of common stock at specified times,       
including an option to purchase 100,000 shares of common stock on the date of   
the annual shareholders meeting during each even numbered calendar year. The    
proposed amendments are set forth in this section and attached hereto as        
Appendices G, H, I, J and K.                                                    

The purpose of the proposed share increase and automatic annual share 
increase feature is to assure that a sufficient reserve of common stock is      
available under the 1999 Plan to attract and retain the services of individuals 
essential to Caldera's long-term growth and success. The purpose of establishing
the director formula awards program is to provide directors an inducement for   
continued service on the board of directors of Caldera.                         

The 1999 Plan became effective on December 1, 1999, subject to the    
requisite approval of the stockholders of Caldera, which was received on        
December 1, 1999. The 1999 Plan was amended on March 10, 2000 to increase the   
number of shares of common stock subject to the 1999 Plan and then again on July
14, 2000 to increase the number of shares subject to the 1999 Plan, add the     
formula award program, and make various other changes to the provisions         
governing awards granted under the 1999 Plan. Unless earlier terminated by the  
board of directors, the right to grant incentive awards under the 1999 Plan will
terminate on December 1, 2009. Incentive awards outstanding when the 1999 Plan  
terminates will remain in effect according to their terms and the provisions of 
the 1999 Plan.                                                                  

The following is a summary of the principal features of the 1999 Plan,
including the amendments which will become effective upon stockholder approval  
of this Proposal Three, together with the applicable tax and accounting         
implications for Caldera and the participants. However, the summary does not    
purport to be a complete description of all the provisions of the 1999 Plan. Any
stockholder of Caldera who wishes to obtain a copy of the actual plan document  
may do so upon written request to Caldera's Chief Financial Officer at its      
principal executive office located at 240 West Center Street Orem, Utah 84057.  
The telephone number of such office is (801) 765-4999.                          

     You should note that, if the proposed transactions with New Caldera and SCO
are approved and consummated, New Caldera will assume the 1999 Plan, and all    
incentive awards granted under the 1999 Plan will apply to shares of common     
stock of New Caldera. All references in the following summary to "Caldera"      
should be read to include all successors in interest to Caldera, including, if  
the proposed transactions are consummated, New Caldera.                         

GENERAL                                                                         

The 1999 Plan is intended to promote the interests of Caldera and its 
stockholders by providing directors, officers, employees and other persons,     
including outside consultants, who are expected to make a long-term contribution
to the success of Caldera with appropriate incentives and rewards to encourage  
them to enter into and continue in the employ of Caldera and to acquire a       
proprietary interest in the long-term success of Caldera, thereby aligning their
interests more closely to the interests of Caldera's stockholders.              

     In addition to the 1999 Plan, Caldera has previously adopted the 1998 Stock
Option Plan pursuant to which the Caldera has granted options to purchase       
3,252,088 shares of common stock, of which 813,800 options have been exercised  
or cancelled and 2,438,288 options remain outstanding. Upon approval of the     

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1999 Plan, the 1998 Stock Option Plan was terminated. Accordingly, although     
previously granted options remain outstanding and subject to the terms of the   
1998 Stock Option Plan, Caldera may not grant any new options (upon the         
expiration of previously granted options or otherwise) under the 1998 Stock     
Option Plan.                                                                    

SHARES COVERED BY THE 1999 PLAN                                                 

The 1999 Plan presently authorizes the grant of incentive awards with 
respect to an aggregate of 4,105,238 shares of common stock. If the stockholders
approve this Proposal Three, the number of shares authorized for incentive      
awards under the 1999 Plan will increase to 10,905,238, and such number will    
automatically increase, as of November 1 of each year beginning in 2000, by 3%  
of the total number of shares of common stock outstanding on the previous       
October 31st. Notwithstanding a greater increase in the number of shares subject
to the 1999 Plan, the number of shares that may be issued upon the exercise of  
incentive stock options under the 1999 Plan shall in no event exceed 10,905,238 
shares, increased by 100,000 shares on November 1 of each year between 2000 and 
2008.                                                                           

Shares issued pursuant to the 1999 Plan may be authorized and unissued
shares, treasury shares or shares acquired by Caldera for purposes of the 1999  
Plan. Generally, shares subject to an incentive award that remain unissued upon 
expiration, cancellation, surrender, exchange, or termination of the incentive  
award will be available for other incentive awards under the 1999 Plan.         

CHANGES IN CAPITALIZATION                                                       

In the event that the committee appointed by the board of directors to
administer the 1999 Plan (the "Committee") determines that any dividend or other
distribution, stock split, reverse stock split, recapitalization,               
reorganization, merger, consolidation, spin-off, combination, repurchase, share 
exchange, or other similar corporate transaction or event affects the common    
stock such that an adjustment is appropriate in order to prevent dilution or    
enlargement of the rights of participants under the 1999 Plan, then the         
Committee will make such equitable changes or adjustments as it deems necessary 
to the aggregate number of shares available under the 1999 Plan, the number and 
kinds of shares that may thereafter be used for any incentive award, and the    
number of shares subject to and exercise price, grant price, or purchase price  
of each outstanding award.                                                      

ADMINISTRATION                                                                  

  The 1999 Plan is administered by the Committee, which consists of two or
more persons appointed (and removable) by the board of directors in its         
discretion, each of whom must be an "outside director" within the meaning of    
Section 162(m) of the Internal Revenue Code the ("Code") and a "nonemployee     
director" within the meaning of Rule 16b-3 promulgated under the Securities     
Exchange Act 1934, as amended. The Committee is authorized, among other things, 
to do the following:                                                            

 - to construe, interpret and implement the provisions of the 1999 Plan;

- to select the persons to whom incentive awards will be granted;     

- to determine when incentive awards will be granted;                 

- to determine the terms and conditions of such incentive awards;     

   - to establish the performance criteria under which incentive awards will
be granted;                                                       

    - to determine when and under what circumstances an incentive award can be
settled, canceled, forfeited, exchanged, or surrendered;          

- to make rules with respect to the 1999 Plan;                        

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- to determine the terms and provisions of award agreements, which are
   required to accompany and evidence any incentive award under the 1999
      Plan (the terms of which are accepted by any Participant through the act
of accepting the incentive award); and                            

  - to make all other determinations deemed necessary or advisable for the
administration of the 1999 Plan.                                  

    The 1999 Plan provides that no member of the Committee shall be liable for
any action, omission or determination relating to the 1999 Plan and that Caldera
shall indemnify and hold harmless each member of the Committee and each other   
director or employee of Caldera to whom any duty or power relating to the       
administration or interpretation of the 1999 Plan has been delegated against any
cost, expense or liability arising out of any action, omission or determination 
relating to the 1999 Plan, if, in either case, such action, omission or         
determination was taken or made by such member, director or employee in good    
faith and in a manner such member, director or employee reasonably believed to  
be in or not opposed to the best interests of Caldera.                          

ELIGIBILITY                                                                     

  The persons who are eligible to receive awards pursuant to the 1999 Plan
include all employees and directors of Caldera and its subsidiaries and such    
other persons, including outside consultants, whom the Committee determines are 
expected to make a contribution to Caldera. The Committee may grant incentive   
awards to any, all or none of such eligible persons at any time, from time to   
time, during the term of the 1999 Plan. "Participants" in the 1999 Plan are     
persons who both are eligible to receive an incentive award pursuant to the 1999
Plan and to whom an incentive award is granted pursuant to the 1999 Plan, and,  
upon his or her death, his or her successors, heirs, executors and              
administrators, as the case may be.                                             

VALUATION                                                                       

    The fair market value per share of common stock on any relevant date under
the 1999 Plan will be the closing selling price per share or that date on the   
Nasdaq National Market. On March 22, 2001, the closing selling price of Caldera 
common stock was $1.50.                                                         

INCENTIVE AWARDS UNDER THE 1999 PLAN                                            

   Awards under the 1999 Plan may be made in the form of (i) incentive stock
options, (ii) non-qualified stock options, (iii) tandem or stand-alone stock    
appreciation rights, (iv) restricted stock, (v) phantom stock and (vi) stock    
bonuses. Each award granted under the 1999 Plan (except an unconditional stock  
bonus) shall be evidenced by an award agreement containing such provisions as   
the Committee shall deem desirable.                                             

STOCK OPTIONS                                                                   

   General. The Committee determines, and sets forth in the applicable award
agreement, whether an option is an incentive stock option or a non-qualified    
stock option, the vesting schedule of each option, and the expiration date of   
each option; provided, however, no incentive stock option may be exercisable    
more than 10 years after the date of grant. The purchase price per share payable
upon the exercise of an option is established by the Committee. With respect to 
non-qualified stock options, the Option Exercise Price may be less than the fair
market value of a share of our common stock on the date such option is granted. 
With respect to incentive stock options, the Option Exercise Price may not be   
less than the fair market value of a share of common stock on the date the      
option is granted. During the period our common stock is traded on the Nasdaq   
National Market, the fair market value of a share of common stock is the closing
sales price of a share of our common stock on such market on the most recent    
trading day on which there was a sale of our common stock on such market. The   
closing sales price of a share of our common stock on October 31, 2000 was      
$3.50. Unless the applicable award agreement provides otherwise, an option      

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becomes cumulatively exercisable as to 25% of the shares covered thereby on each
of the first, second, third and fourth anniversaries of the date of grant. Only 
individuals who are employees of Caldera or any subsidiary of Caldera as of the 
date of the grant are eligible to receive incentive stock options.              

 Exercise of Options. An option may be exercised by delivering notice to
Caldera's Secretary no later than one business day in advance of the effective  
date of the proposed exercise. Subject to the terms of the award agreement,     
payment for shares of common stock purchased upon the exercise of an option     
shall be made on the effective date of such exercise by one or a combination of 
the following means:                                                            

- in cash, by certified check, bank cashier's check or wire transfer; 

 - subject to any restrictions imposed by applicable securities laws, by
       delivering a properly executed exercise notice to Caldera together with a
 copy of irrevocable instructions to a broker to deliver promptly to
       Caldera the amount of sale or loan proceeds to pay the full amount of the
purchase price;                                                   

- by delivering shares of common stock owned by the Participant with  
appropriate stock powers;                                         

 - by electing to have Caldera retain shares of common stock which would
otherwise be issued on the exercise of the option; or             

 - any combination of the foregoing forms, as approved by the Committee.

   The options granted under the 1999 Plan to date do not permit exercise by
delivery of common stock owned by the Participant or by electing to have Caldera
retain shares of common stock that would otherwise be issued on exercise.       

    Certain Limitations on Incentive Stock Options. The total number of shares
of common stock subject to incentive awards awarded to any employee during any  
tax year of Caldera shall not exceed 200,000 shares of common stock.            

To the extent that the aggregate fair market value of shares of common
stock with respect to which incentive stock options are exercisable for the     
first time by a Participant during any calendar year under the 1999 Plan and any
other stock option plan of Caldera (or any subsidiary of Caldera) exceed        
$100,000, such options are treated as non-qualified stock options. Fair market  
value in this context refers to the fair market value of the common stock       
subject to the option on the date on which each such incentive stock option is  
granted.                                                                        

 In addition, the 1999 Plan prevents the issuance of any incentive stock
options to an individual if, at the time of such proposed grant, the individual 
owns stock that represents more than ten percent (10%) of the total combined    
voting power of all classes of stock of Caldera. This limitation does not apply 
if the Option Exercise Price per share of the proposed incentive stock option is
at least one hundred ten percent (110%) of the fair market value of a share of  
common stock at the time such proposed incentive stock option is granted and it 
is not exercisable after five years from the date of grant.                     

     Termination of Employment. In the event that the employment or service as a
director of a Participant with Caldera or a subsidiary of Caldera is terminated 
by the employee or by Caldera for cause, unless the applicable award agreement  
provides otherwise, (i) options granted to such Participant, to the extent that 
they are exercisable at the time of such termination, remain exercisable until  
the date that is 30 after such termination, on which date they shall expire, and
(ii) options granted to such Participant, to the extent that they were not      
exercisable at the time of such termination, expire at the close of business on 
the date of such termination. No option shall be exercisable after the          
expiration of its original term.                                                

    In the event that the employment or service as a director of a Participant
with Caldera or a subsidiary of Caldera is terminated by Caldera in connection  
with a reduction in force or by Caldera for any other reason other than death,  
disability or cause, unless the applicable award agreement provides otherwise,  
(i) options granted to such Participant, to the extent that they are exercisable
at the time of such termination, remain exercisable until the date that is 90   
days (120 days in the case of a non-qualified option) after such termination, on
which date they shall expire, and (ii) options granted to such                  
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Participant, to the extent that they were not exercisable at the time of such   
termination, expire at the close of business on the date of such termination. No
option shall be exercisable after the expiration of its original term.          

In the event that the employment of a Participant with Caldera or a   
subsidiary of Caldera is terminated by reason of death or disability of the     
Participant, unless the applicable award agreement provides otherwise, (i)      
options granted to such Participant, to the extent that they are exercisable at 
the time of such termination, remain exercisable until the date that is one year
after such termination, on which date they shall expire, and (ii) options       
granted to such Participant, to the extent that they were not exercisable at the
time of such termination, expire at the close of business on the date of such   
termination. No option shall be exercisable after the expiration of its original
term.                                                                           

   Effect of a Change in Control. Under the 1999 Plan, a "Change in Control"
includes the following:                                                         

- acquisition by any person (with certain exceptions), directly or    
     indirectly, of fifty percent (50%) or more of the combined voting power
of Caldera's then outstanding securities;                         

- during a period of not more than two consecutive years following the
 adoption of the 1999 Plan, individuals who at the beginning of such
period constitute the board and any new director (with certain    
    exemptions) whose election by the board or nomination for election was
   approved by 2/3 of the directors then still in office who were either
     directors when the 1999 Plan was adopted or approved as provided herein
cease to constitute a majority of the board of directors;         

- Caldera's stockholders approve and Caldera consummates a merger or  
      consolidation, except for such a merger or consolidation after which the
       stockholders prior to such merger or consolidation retain more than fifty
     percent (50%) of the combined voting power of the corporation surviving
       the merger and except for a merger or consolidation effected to implement
       a recapitalization of Caldera in which no person acquired more than fifty
      percent (50%) of the combined voting power of Caldera's then outstanding
securities; and                                                   

    - Caldera's stockholders approve a plan of complete liquidation of Caldera
or an agreement for the sale or disposition by Caldera of all or  
substantially all of Caldera's assets.                            

     Upon the occurrence of a Change in Control, each outstanding option granted
under the 1999 Plan that has vested may be, at Caldera's discretion, (i) cashed 
out, (ii) converted to options of the acquiring entity, (iii) assumed by the    
acquiring entity, or (iv) or otherwise disposed of in the manner provided in any
shareholder-approved agreement or plan governing such Change in Control. In the 
absence of any governing provisions in any stockholder-approved agreement or    
plan governing such Change in Control, the Committee may, on a case-by-case     
basis, require any vested, exercisable options that remain outstanding following
a Change in Control to be cashed out and terminated in exchange for a lump sum  
cash payment, shares of the acquiring entity or a combination thereof equal in  
value to the fair market value of the option.                                   

     In the event of a Change in Control , each outstanding option granted under
the 1999 Plan that has not vested shall terminate, unless (i) otherwise provided
in the stockholder-approved agreement or plan governing such Change in Control, 
or (ii) the Committee in its sole discretion on a case-by-case basis elects in  
writing to waive termination.                                                   

TANDEM STOCK APPRECIATION RIGHTS                                                

 General. The Committee may grant, in connection with any option granted
under the 1999 Plan, tandem stock appreciation rights ("SARs") relating to a    
number of shares of common stock less than or equal to the number of shares of  
common stock subject to the related option. The exercise of a tandem SAR with   
respect to any number of shares of common stock, which occurs through notice to 
Caldera's Secretary no less than one business day in advance of the effective   
date of the proposed exercise, entitles the Participant to a cash payment, for  
each such share, equal to the excess of (i) the fair market value of            

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a share of common stock on the exercise date over (ii) the Option Exercise Price
per share of the related option.                                                

     Term and Exercisability. A tandem SAR is exercisable (i) only if and to the
extent that its related option is exercisable and (ii) only if at the time of   
such exercise, the fair market value of a share of common stock exceeds the     
Option Exercise Price per share of the related option. The exercise of a tandem 
SAR with respect to a number of shares of common stock causes the immediate and 
automatic cancellation of its related option with respect to an equal number of 
shares. The exercise of an option, or the cancellation, termination or          
expiration of an option with respect to a number of shares of common stock      
generally causes the automatic and immediate cancellation of any related tandem 
SARs. Such tandem SARs are canceled in the order in which they became           
exercisable. The 1999 Plan allows partial exercise of tandem SAR rights,        
provided that no such partial exercise is for less than a number of shares      
having an aggregate Option Exercise Price of less than $1,000.                  

STAND-ALONE STOCK APPRECIATION RIGHTS                                           

   The Committee may also grant stand-alone SARs independently of any option
granted under the 1999 Plan. The exercise of a stand-alone SAR with respect to  
any number of shares of common stock entitles the Participant to a cash payment,
for each such share, equal to the excess of (i) the fair market value of a share
of common stock on the exercise date over (ii) the "Reference Value" per share  
of the stand-alone SAR. The "Reference Value" is the greater of the fair market 
value per share on the date of grant or the Reference Value set by the          
Committee. Unless the applicable award agreement provides otherwise, a          
stand-alone SAR becomes cumulatively exercisable as to 25% of the shares covered
thereby on each of the first, second, third and fourth anniversaries of the date
of grant. The Committee determines the expiration date of each stand-alone SAR. 
The termination of a Participant's employment with Caldera or the occurrence of 
an event that constitutes a Change in Control has the same effect on a          
stand-alone SAR as on an option. The 1999 Plan allows for the partial exercise  
of any stand-alone SAR, provided that no partial exercise shall be for an       
aggregate Reference Value of less than $1,000.                                  

RESTRICTED STOCK                                                                

    General. The Committee may grant restricted shares of common stock to such
persons, in such amounts, and subject to such terms and conditions as the       
Committee determines in its discretion. The Committee establishes vesting dates 
for restricted stock, and, if awards of restricted stock are intended to be     
"performance based compensation" for Section 162(m) of the Code, awards of      
restricted stock must be contingent on the attainment by Caldera or a subsidiary
of Caldera of one or more pre-established performance goals (the "Performance   
Goals") established by the Committee. The Performance Goals are based on the    
attainment by Caldera (and/or its subsidiaries, if applicable) of any one or    
more of the following criteria:                                                 

 - a specified percentage return on total stockholder equity of Caldera;

  - a specified percentage increase in earnings per share of common stock;

- a specified percentage increase in net income of Caldera; and/or    

 - a specified percentage increase in profit before taxation of Caldera.

The Committee in its discretion may require that any dividends paid on shares of
restricted stock be held in escrow until all restrictions on such shares have   
lapsed. Performance goals are measured according to generally accepted          
accounting principles and must be certified as being achieved by the Committee. 

    Restrictions on Transfer Prior to Vesting. When shares of restricted stock
are initially granted, the certificates representing such shares bear a legend  
stating that the transferability of such shares is subject to the 1999 Plan and 
the governing award agreement, and, unless the Committee determines otherwise,  
such certificates are retained by Caldera, along with stock powers for the      
benefit of Caldera relating to                                                  

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such shares. Prior to the vesting of a share of restricted stock, no transfer of
a Participant's rights with respect to such share, whether voluntary or         
involuntary, by operation of law or otherwise, is permitted. Immediately upon   
any attempt to transfer such rights, such share, and all of the rights related  
thereto, will be forfeited by the Participant. Upon the vesting of a share of   
restricted stock pursuant to the terms of the applicable award agreement, such  
restrictions on transfer lapse, and Caldera is required to issue a certificate  
without restrictive legend (other than any legend that may be required by law). 
The Committee may impose at the time of granting any restricted stock any       
vesting conditions that it, in its absolute discretion, deems appropriate.      

Effect of Termination of Employment or Removal from Board. Upon the   
termination of a Participant's employment or service with Caldera or any        
subsidiary of Caldera for any reason other than cause, any and all non-vested   
shares of restricted stock are immediately forfeited by the Participant and     
transferred to Caldera, unless the applicable restricted stock agreement        
provides otherwise or, in its sole discretion, the Committee gives notice to the
Participant within thirty (30) days of the termination that the Participant     
shall continue to be the owner of the restricted stock. If shares of restricted 
stock are so forfeited, Caldera also has the right to require the return of all 
dividends paid on such shares, whether by termination of any escrow arrangement 
under which such dividends are held or otherwise. In the event of the           
termination of a Participant's employment for cause, all shares of restricted   
stock granted to such Participant that have not vested as of the date of such   
termination shall immediately be returned to Caldera, together with any         
dividends paid on such shares.                                                  

Effect of Change in Control. Upon the occurrence of an event that     
constitutes a Change in Control, all restrictions on outstanding vested shares  
of restricted stock immediately lapse and all outstanding shares of restricted  
stock that have not vested as of the date the Change in Control occurs          
immediately expire and are cancelled.                                           

PHANTOM STOCK                                                                   

   General. The Committee may grant shares of phantom stock to such persons,
in such amounts, and subject to such vesting terms and conditions as the        
Committee determines in its discretion. If the vesting requirements specified by
the Committee are met, the grantee of phantom stock will receive, within thirty 
(30) days of the day such phantom stock vests, a cash payment equal to the sum  
of (i) the fair market value of the shares of common stock on the date on which 
such share of phantom stock vests and (ii) the aggregate amount of cash         
dividends paid with respect to a share of common stock during the period        
commencing on the date on which the share of phantom stock was granted and      
terminating on the date on which such share vests. If awards of phantom stock   
granted to Executive Officers of Caldera are intended to be "performance based  
compensation" for Section 162(m) of the Code, the vesting of such awards of     
phantom stock must be contingent on the attainment by Caldera or a subsidiary of
Caldera of any one or more of the Performance Goals noted above in the          
discussion of restricted stock awards. Attainment of performance goals will be  
measured based upon generally accepted accounting principles and must be        
certified by the Committee as having been achieved.                             

Termination of Employment. Except as provided in the applicable award 
agreement, shares of phantom stock that have not vested, together with any      
dividends credited on such shares, will be forfeited upon the Participant's     
termination of employment for any reason other than cause. Termination for cause
results in the immediate forfeiture of all shares of phantom stock granted to   
the terminated Participant, together with any dividends credited on such shares.

Effect of Change in Control. Upon the occurrence of an event that     
constitutes a Change in Control, all outstanding shares of phantom stock that   
have not yet vested prior to the date constituting the Change in Control shall  
immediately expire and be cancelled.                                            

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STOCK BONUS                                                                     

     The Committee may grant bonuses comprised of shares of common stock free of
restrictions to such persons, in such amounts, as the Committee determines in   
its discretion.                                                                 

AMENDMENT OR TERMINATION OF THE 1999 PLAN                                       

The board may suspend, revise, terminate or amend the 1999 Plan at any
time; provided, however, that shareholder approval must be obtained if and to   
the extent that the Board deems it appropriate to satisfy Section 162(m) of the 
Code, Section 422 of the Code or the rules of any stock exchange on which the   
common stock is listed. No action under the 1999 Plan may, without the consent  
of the Participant, reduce the Participant's rights under any outstanding award.

TRANSFERABILITY OF AWARDS DURING PARTICIPANT'S LIFETIME/FORFEITURE FOR FAILURE  
TO COMPLY                                                                       

   During a Participant's lifetime, the Committee may permit or prohibit, in
its discretion, the transfer, assignment or other encumbrance of an outstanding 
option or outstanding shares of restricted stock unless such option is an       
incentive stock option. To the extent the Committee and respective participant  
desire that incentive stock options shall remain incentive stock options,       
incentive stock options are nontransferable except upon death. Subject to any   
conditions the Committee imposes, options granted under the 1999 Plan may be    
transferred to an immediate family member, if notice of such transfer is        
received in exchange for such transfer to Caldera and no consideration is given 
for the transfer. Rights with respect to other incentive awards granted under   
the 1999 Plan may not be transferred, assigned or pledged.                      

    Failure by a Participant (or beneficiary or transferee) to comply with any
of the terms and conditions of the 1999 Plan or the applicable award agreement, 
unless such failure is remedied by such Participant (or beneficiary or          
transferee) within ten (10) days after notice of such failure by the Committee, 
is grounds for the cancellation and forfeiture of the respective incentive      
award, in whole or in part, as the Committee, in its absolute discretion, may   
determine.                                                                      

PROPOSED DIRECTORS FORMULA AWARD PROGRAM                                        

    If this Proposal Three is approved by the stockholders, the 1999 Plan will
be amended to establish a program providing for the automatic grant of options  
to directors of Caldera at specified times. If approved by the stockholders of  
Caldera, the proposed formula awards program will have the following features:  

GENERAL PROVISIONS OF PROPOSED FORMULA AWARD PROGRAM.                           

 - Grant in 2002 Calendar Year. Each director who is elected to serve or
   continues to serve as a director of Caldera following the date of the
regularly scheduled annual meeting of stockholders during the 2002
       calendar year will automatically be granted an option to purchase 100,000
  shares of common stock at an Option Exercise Price equal to the fair
market value of a share of common stock on the date of such annual
meeting.                                                          

- Grant in Subsequent Even-Number Calendar Years. Each director who is
       elected to serve or continues to serve as a director of Caldera following
the date of the regularly scheduled annual meeting during each    
   even-numbered calendar year beginning with 2004 will automatically be
       granted an option to purchase 100,000 shares of common stock at an Option
      Exercise Price equal to the fair market value of a share of common stock
on the date of such annual meeting.                               

- Grant to Directors First Elected Between Even-Numbered Calendar     
  Years. Each director who is first elected or appointed to serve as a
director other than at an annual meeting of stockholders in an    
even-number calendar year will automatically be granted, upon the 
       commencement of such service, an option to purchase a number of shares of
   common stock equal to the product of (i) a fraction, the numerator of
  which is the number of full calendar months between the date of such

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    election or appointment and March 1 of the next even-numbered calendar
   year, and the denominator of which is 24, multiplied by (ii) 100,000.
       Such options shall have an Option Exercise Price equal to the fair market
value of a share of common stock on the date of grant.            

    - Top-Up Grant For Certain Directors. Each director whose existing options
    are all scheduled to vest prior to March 1, 2002 will automatically be
 granted, on the date all such options vest, an option to purchase a
      number of shares of common stock equal to the product of (i) a fraction,
      the numerator of which is the number of full calendar months between the
  date all such options vest and March 1, 2002, and the denominator of
 which is 24, multiplied by (ii) 100,000. Such options shall have an
       Option Exercise Price equal to the fair market value of a share of common
stock on the date of grant. All options granted under the director
       formula awards program will vest 50% on the first anniversary of the date
of grant and 50% on the second anniversary of the date of grant.  

  Limitations on Options Granted. No option may be granted pursuant to the
formula awards program on a date when the number of shares of common stock      
authorized for issuance pursuant to the 1999 Plan is less than the sum of (i)   
all shares of common stock issued under the 1999 Plan, (ii) all shares of common
stock subject to outstanding options, and (iii) all options that would, but for 
the effect of this limitation, be granted on that date.                         

Other Provisions. Options granted under the formula awards program are
otherwise generally subject to the same terms and conditions as other options   
granted under the 1999 Plan.                                                    

WITHHOLDING TAXES                                                               

    Whenever cash is to be paid pursuant to an award, Caldera has the right to
deduct therefrom an amount sufficient to satisfy any federal, state and local   
withholding tax requirements related thereto. Whenever shares of common stock   
are to be delivered pursuant to an award, Caldera has the right to require the  
Participant to remit to Caldera in cash an amount sufficient to satisfy any     
federal, state and local withholding tax requirements related thereto. With the 
approval of the Committee, a Participant may satisfy the foregoing requirement  
by electing to have Caldera withhold from delivery shares of common stock having
a fair market value equal to the amount of tax to be withheld.                  

COMPLIANCE WITH TAX LAWS                                                        

 The 1999 Plan is intended to provide performance-based compensation and
thereby avoid the limitations of Section 162(m) of the Code. Section 162(m)     
denies a deduction by an employer for certain compensation in excess of $1      
million per year paid by a publicly-traded corporation to the following         
individuals who are employed at the end of the employer's taxable year ("Covered
Employees"): the chief executive officer and the four most highly compensated   
executive officers (other than the chief executive officer), for whom           
compensation disclosure is required under the proxy rules. Certain compensation,
including compensation based on the attainment of performance goals, is excluded
from this deduction limit if certain requirements are met. Among the            
requirements for compensation to qualify for "performance based" exception to   
Section 162(m) of the Code is that the material terms pursuant to which the     
compensation is to be paid be disclosed to and approved by the shareholders in a
separate vote prior to the payment. Accordingly, because the 1999 Plan has been 
approved by the shareholders of Caldera and the Committee intends to administer 
the 1999 Plan so that the other conditions of Section 162(m) of the Code        
relating to performance-based compensation are satisfied, compensation paid to  
Covered Employees pursuant to the 1999 Plan will not be subject to the deduction
limit of Section 162(m).                                                        

FEDERAL INCOME TAX CONSEQUENCES                                                 

    The following discussion is a brief summary of the principal United States
Federal income tax consequences relating to incentive awards under the 1999     
Plan. This discussion is based on currently existing provisions of the Code,    
existing and proposed Treasury Regulations promulgated thereunder and           

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current administrative rulings and court decisions, all of which are subject to 
change. Any such change, which may or may not be retroactive, could alter the   
tax consequences to stockholders described herein. Stockholders should be aware 
that this discussion does not deal with all United States Federal income tax    
considerations that may be relevant to an individual stockholder granted        
incentive awards pursuant to the 1999 Plan. ACCORDINGLY, STOCKHOLDERS AND       
INCENTIVE AWARD RECIPIENTS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES RELATING TO INCENTIVE AWARDS UNDER THE 1999 PLAN.     

 Non-Qualified Stock Options. An optionee will not recognize any taxable
income upon the grant of a non-qualified stock option. Caldera will not be      
entitled to a tax deduction with respect to the grant of a non-qualified stock  
option. Upon exercise of a non-qualified stock option, the excess of the fair   
market value of the common stock on the exercise date over the Option Exercise  
Price will be taxable as compensation income to the optionee and will be subject
to applicable withholding taxes. Caldera will generally be entitled to a tax    
deduction at such time in the amount of such compensation income. The optionee's
tax basis for the common stock received pursuant to the exercise of a           
non-qualified stock option will equal the sum of the compensation income        
recognized and the exercise price.                                              

In the event of a sale of common stock received upon the exercise of a
non-qualified stock option, any appreciation or depreciation after the exercise 
date generally will be taxed as capital gain or loss and will be long-term      
capital gain or loss if the holding period for such common stock is more than   
one year.                                                                       

The exercise of a non-qualified stock option through the delivery of  
previously acquired stock will generally be treated as a non-taxable, like-kind 
exchange as to the number of shares surrendered and the identical number of     
shares received under the option. That number of shares will take the same basis
and, for capital gains purposes, the same holding period as the shares that are 
given up. The value of the shares received upon such an exchange that are in    
excess of the number given up will be includible as ordinary income to the      
participant at the time of the exercise. The excess shares will have a new      
holding period for capital gain purposes and a basis equal to the value of such 
shares determined at the time of exercise.                                      

   Neither the Participant nor the transferee will realize taxable income at
the time of a non-arm's-length transfer of a non-qualified stock option as a    
gift. Upon the subsequent exercise of the option by the transferee, the         
Participant will realize ordinary income in an amount equal to the excess of the
fair market value of the shares on the date of exercise over the option price.  
Upon a subsequent disposition of the shares by the transferee, the transferee   
will generally realize short-term or long-term capital gain or loss, with the   
basis for computing such gain or loss equal to the fair market value of the     
stock at the time of exercise. If a Participant makes a gift of an option, and  
surrenders all dominion and control of the option, the gift should be complete  
for Federal gift tax purposes at the time of transfer and should be valued at   
that time (or, if later, at the time the option becomes vested). For gift and   
estate tax purposes, the gift of an option would generally cause the option (and
the stock acquired by exercise) to be excluded from the participant's estate.   
Special rules may apply if the participant makes a gift of an award to a charity
or to a "living trust" under which the participant retains the right to revoke  
the trust or substantially alter its terms.                                     

Incentive Stock Options. An optionee generally will not recognize any 
taxable income at the time of grant or timely exercise of an incentive stock    
option for regular U.S. Federal income tax purposes, and Caldera will not be    
entitled to a tax deduction with respect to such grant or exercise. Exercise of 
an incentive stock option may, however, give rise to taxable compensation income
subject to applicable withholding taxes, and a tax deduction to Caldera, if the 
optionee subsequently engages in a "disqualifying disposition," as described    
below. Additionally, the spread between the fair-market value of shares obtained
upon exercise of an incentive stock option and the exercise price is an         
adjustment to alternative minimum taxable income and may result in the option   
holder having to pay federal alternative minimum tax for the year of exercise.  

   A sale or exchange by an optionee of shares acquired through the exercise
of an incentive stock option more than one year after the transfer of the shares
to such optionee and more than two years after the date of grant of the         
incentive stock option will result in any difference between the net sale       
proceeds                                                                        
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and the exercise price paid being treated a long-term capital gain (or loss) to 
the optionee. If such sale or exchange (including inter vivos gifts) takes place
within two years after the date of grant of the incentive stock option or within
one year from the date of transfer of the incentive stock option shares to the  
optionee, such sale or exchange will generally constitute a "disqualifying      
disposition" of such shares. A disqualifying disposition that will have the     
following results: any excess of (i) the lesser of (a) the fair market value of 
the shares at the time of exercise of the incentive stock option and (b) the    
amount realized on such disqualifying disposition of the shares over (ii) the   
Option Exercise Price of such shares, will be ordinary income to the optionee,  
subject to applicable reporting requirements, and Caldera will be entitled to a 
tax deduction in the amount of such income. Any further gain generally will     
qualify as capital gain and will not result in any deduction by Caldera.        

The exercise of an incentive stock option through the exchange of     
previously acquired common stock will generally be treated in the same manner as
such an exchange would be treated in connection with the exercise of a          
non-qualified stock option; that is, as a non-taxable, like-kind exchange as to 
the number of shares given up and the identical number of shares received under 
the option. That number of shares will take the same basis and, for capital gain
purposes, the same holding period as the shares that are given up. However, such
holding period will not be credited for purposes of the one-year holding period 
required for the new shares to receive incentive stock option treatment. Shares 
received in excess of the number of shares given up will have a new holding     
period and will have a basis of zero or, if any cash was paid as part of the    
exercise price, the excess shares received will have a basis equal to the amount
of the cash. If a disqualifying disposition (a disposition before the end of the
applicable holding period) occurs with respect to any of the shares received    
from the exchange, it will be treated as a disqualifying disposition of the     
shares with the lowest basis.                                                   

   If the exercise price of an incentive stock option is paid with shares of
stock of Caldera acquired through a prior exercise of an incentive stock option,
gain will be realized on the shares given up (and will be taxed as ordinary     
income) if those shares have not been held for the minimum incentive stock      
option holding period (two years form the date of grant and one year from the   
date of transfer), but the exchange will not affect the tax treatment, as       
described in the immediately preceding paragraph, of the shares received.       

Restricted Stock. A grantee of restricted stock will not recognize any
income upon the receipt of restricted stock unless the holder elects under      
Section 83(b) of the Code within thirty days of such receipt, to recognize      
ordinary income in an amount equal to the fair market value of the restricted   
stock at the time of receipt. If the election is made, the holder will not be   
allowed a deduction for amounts subsequently required to be returned to Caldera.
Any Section 83(b) election must be filed with the IRS within the applicable     
30-day period. If the Section 83(b) election is not made, the holder will       
generally recognize ordinary income, on the date that the restrictions to which 
the restricted stock are subject are removed, in an amount equal to the fair    
market value of such shares on such date, less any amount paid for the shares.  
At that time the holder will recognize ordinary income, subject to applicable   
reporting and withholding requirements, and Caldera generally will be entitled  
to a deduction in the same amount.                                              

Generally, upon a sale or other disposition of restricted stock with  
respect to which the holder has recognized ordinary income (i.e., a Section     
83(b) election was previously made or the restrictions were previously removed),
the holder will recognize capital gain or loss in an amount equal to the        
difference between the amount realized on such sale or other disposition and the
holder's basis in such shares. Such gain or loss will be long-term capital gain 
or loss if the holding period for such shares is more than one year.            

    Other Incentive Awards. The grant of a stock appreciation right or phantom
stock award will not result in taxable income to the grantee or in a tax        
deduction for Caldera. Upon the settlement of such a right or award, the grantee
will recognize ordinary income equal to the aggregate value of the payment      
received, subject to applicable reporting and withholding requirements, and     
Caldera generally will be entitled to a tax deduction in the same amount. A     
stock bonus generally will result in compensation                               

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income for the grantee and a tax deduction for Caldera, equal to the fair market
value of the shares of common stock granted.                                    

   Withholding of Taxes. Pursuant to the 1999 Plan, Caldera may deduct, from
any payment or distribution of shares thereunder, the amount of any tax required
by law to be withheld with respect to such payment, or may require the          
Participant to pay such amount to Caldera prior to, and as a condition of,      
making such payment or distribution. Subject to rules and limitations           
established by the Committee, a participant may elect to satisfy the withholding
required, in whole or in part, either by having Caldera withhold shares of      
common stock from any payment under the plan or by the Participant delivering   
shares of common stock to Caldera. Any election must be made in writing on or   
before the date when the amount of taxes to be withheld is determined. The      
portion of the withholding that is so satisfied will be determined using the    
fair market value of the common stock on the date when the amount of taxes to be
withheld is determined.                                                         

  The use of shares of common stock to satisfy any withholding requirement
will be treated, for federal income tax purposes, as a sale of such shares for  
an amount equal to the fair market value of the stock on the date when the      
amount of taxes to be withheld is determined. If previously-owned shares of     
common stock are delivered by a Participant to satisfy a withholding            
requirement, the disposition of such shares would result in the recognition of  
gain or loss by the participant for tax purposes, depending on whether the basis
in the delivered shares is less than or greater than the fair market value of   
the shares at the time of disposition.                                          

 Change in Control. Any acceleration of the vesting or payment of awards
under the 1999 Plan in the event of a change in control in Caldera may cause    
part or all of the consideration involved to be treated as an "excess parachute 
payment" under the Internal Revenue Code, which may subject the participant to a
20% excise tax and which may not be deductible by Caldera.                      

VALUE OF BENEFITS TO CERTAIN PERSONS                                            

   If this Proposal Three is approved by the stockholders, and the directors
formula award program is adopted, any current or future director of Caldera that
is elected to serve or continues to serve as a director of Caldera following the
date of the regularly scheduled annual meeting of stockholders during the 2002  
calendar year and each even number thereafter will, subject to the availability 
of a sufficient number of shares under the 1999 Plan, be granted an option to   
purchase 100,000 shares of common stock at an Option Exercise Price equal to the
fair market value of a share of common stock on the date of such annual meeting.

In addition, under the top-up provisions of the director formula award
plan, five of the current non-employee directors of Caldera will receive an     
aggregate of options to acquire 195,833 shares (Steve Cakebread, 79,167; Ralph  
J. Yarro III, 75,000; Thomas P. Raimondi, Jr., 25,000; John R. Egan, 8,333; and 
Edward E. Iacobucci, 8,333) prior to March 1, 2002. Additional directors        
appointed to the board of Caldera or New Caldera prior to March 1, 2002 will be 
entitled to receive options to acquire a pro rata portion of 100,000 shares     
determined by multiplying 100,000 by a fraction, the numerator of which is the  
number of full calendar months between the date of appointment and March 1, 2002
and the denominator of which is 24.                                             

    On completion of the combination, New Caldera anticipates granting options
to the following individuals: Drew A. Spencer, options to acquire 2,000 shares, 
the current executive officers of Caldera as a group, including Mr. Spencer,    
options to acquire 6,000 shares, and all other employees, including current     
officers who are not executive officers as a group, options to acquire 208,300  
shares.                                                                         

     All of the foregoing options have, or will have on grant, an exercise price
equal to the fair market value of a share of common stock on the date of grant. 
Except as set forth above, Caldera is unable to determine the amount of benefits
that may be received in the future by participants under the 1999 Plan if the   
proposed amendments are approved, as the receipt of incentive awards under the  
1999 Plan is generally subject to the discretion of the Committee.              

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STOCK AWARDS                                                                    

    The table below shows, as to each of Caldera's executive officers named in
the Summary Compensation Table of the Management of Caldera and New Caldera     
section of this joint proxy statement/prospectus and the various indicated      
individuals and groups, the number of shares of common stock subject to options 
granted under the 1999 Plan between December 1, 1999, the effective date of the 
1999 Plan and October 31, 2000, together with the weighted average exercise     
price per share.                                                                

OPTION TRANSACTIONS(1)

                                                        [Enlarge/Download Table]

                                                               OPTIONS                     
                                                               GRANTED    WEIGHTED AVERAGE 
                                                               (NUMBER    EXERCISE PRICE OF
NAME                                                         OF SHARES)    GRANTED OPTIONS 
----                                                         -----------  -----------------
                                                                                           
Ransom H. Love, President and Chief Executive Officer.......    379,752         $6.00      
Alan J. Hansen, Chief Financial Officer(2)..................     67,813         $6.00      
Benoy Tamang, Sr. Vice President, Strategic Development.....     67,813         $6.00      
Drew A. Spencer, Chief Technology Officer...................     67,813         $6.00      
Royce Bybee, Sr. Vice President, Sales and Marketing........     77,813         $6.75      
All current executive officers as a group (6 persons).......    743,504         $6.39      
All current non-employee directors as a group (5 persons)...    529,167         $5.57      
All employees, including current officers who are not                                      
  executive officers, as a group............................  3,030,642         $6.96      

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

(1) To date, no restricted stock, phantom stock, stock bonus or stock           
appreciation right awards have been granted under the 1999 Plan.        

(2) Resigned as Chief Financial Officer of Caldera on November 15, 2000.        

   As of October 31, 2000, options covering 3,415,954 shares of common stock
were outstanding under the 1999 Plan, 7,152,902 shares remained available for   
future option grant or direct issuance (assuming stockholder approval of the    
increase which forms part of this proposal), and 13,882 shares have been issued 
pursuant to the exercise of outstanding options under the 1999 Plan.            

DEDUCTIBILITY OF EXECUTIVE COMPENSATION                                         

   Caldera anticipates that any compensation deemed paid by it in connection
with the disqualifying disposition of incentive stock option shares or the      
exercise of non-statutory options granted with exercise prices equal to the fair
market value of the shares on the grant date will qualify as performance-based  
compensation for purposes of Section 162(m) of the Code and will not have to be 
taken into account for purposes of the $1 million limitation per covered        
individual on the deductibility of the compensation paid to certain executive   
officers of Caldera. Accordingly, all compensation deemed paid under the 1999   
Plan will remain deductible by Caldera without limitation under Section 162(m)  
of the Code.                                                                    

ACCOUNTING TREATMENT                                                            

  Option grants or stock issuances with exercise or issue prices less than
the fair market value of the shares on the grant or issue date will result in a 
direct compensation expense to Caldera's earnings equal to the difference       
between the exercise or issue price and the fair market value of the shares on  
the grant or issue date. Such expense will be recognized by Caldera over the    
period that the option shares or issued shares are to vest. Option grants or    
stock issuances at 100% or more of fair market value will not result in any     
direct charge to Caldera's earnings. However, the fair value of those options is
required to be disclosed in the notes to Caldera's financial statements, and    
Caldera must also disclose, in pro-forma statements to                          

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Caldera's financial statements, the impact those options would have upon        
Caldera's reported earnings were the value of those options at the time of grant
treated as compensation expense. Whether or not granted at a discount, the      
number of outstanding options may be a factor in determining Caldera's earnings 
per share on a fully-diluted basis.                                             

   SAR or Tandem SAR grants will result in compensation expense to Caldera's
earnings. While an SAR is outstanding, the ultimate amount of compensation      
inherent in the right is indeterminate. Accounting Principles Board Opinion No. 
25 and FASB Interpretation No. 28, Accounting for Stock Appreciation Rights and 
Other Variable Stock Option or Award Plans, require interim calculations of the 
amount of compensation inherent in the SAR (variable plan accounting). Under    
variable plan accounting, compensation expense can fluctuate significantly from 
period to period based upon the fluctuations in the fair market value of the    
underlying securities. The measurement of the expense in the financial          
statements is made at the end of each reporting period based on the increase in 
the fair market value since the date of grant or award multiplied by the total  
number of shares or rights outstanding, regardless of exercisable status of the 
rights. Such expense will generally be recognized by Caldera at the end of each 
fiscal quarter.                                                                 

Restricted stock awards are accounted for in a manner similar to the  
granting of non-qualified stock option unless the award contains some type of   
performance criteria. Compensation cost is generally measured under restricted  
stock plans as the difference between the grant price of the restricted stock   
and the fair market value of the unrestricted stock at the grant date. This cost
is recognized ratably over the period that ends when all risks of forfeiture    
have passed. Restricted stock may be forfeited (or repurchased by the employer  
at the employee's original purchase price) if the employee terminates prior to  
the lapsing of restrictions. When restricted stock is forfeited, compensation   
cost previously recognized is reversed. Any unrecognized compensation is treated
as part of the purchased treasury stock. To the extent the compensation         
originally measured exceeds the market value of the treasury stock acquired, the
excess is charged to paid-in capital.                                           

     If restricted stock awards combine performance criteria, measurement of the
ultimate compensation to be recognized occurs at the date the performance       
criteria are met. This type of award is classified as a variable plan and       
interim estimates of compensation are required based on a combination of the    
then-fair market value of the stock as of the end of the reporting period and   
the extent or degree of compliance with the performance criteria.               

   Grants of shares of phantom stock are accounted for similar to SAR grants
as discussed above. Bonuses of stock are recorded as compensation at the fair   
market value of the granted shares at the date of the bonus.                    

Statement of Financial Accounting Standards No. 123, Accounting for   
Stock-based Compensation, requires that all equity instruments transferred to   
non-employees in exchange for goods and services be measured at fair value and  
recorded as an expense in the financial statements. As a result, an option to   
purchase common stock at an exercise price equal to the fair market value on the
date of the grant to a non-employee consultant would require Caldera to record  
compensation based on the fair value of the option as calculated by a valuation 
methodology such as the Black-Scholes option pricing model; whereas, the same   
option granted at the current fair market value to an employee does not require 
the recording of such compensation in the financial statements. As a result,    
Caldera may incur non-cash charges related to the value of stock awards should  
it grant them to non-employee consultants or contractors.                       

 Should one or more optionees be granted stock appreciation rights which
have no conditions upon exercisability other than a service or employment       
requirement, then such rights will result in compensation expense to Caldera's  
earnings.                                                                       

STOCKHOLDER APPROVAL                                                            

The affirmative vote of a majority of the outstanding voting shares of
Caldera present or represented and entitled to vote at the annual meeting is    
required for approval of the amendments to the 1999 Plan. Should such           
stockholder approval not be obtained, then the 6,800,000 share increase to the  
share reserve                                                                   

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will not be implemented, and any stock options granted on the basis of the      
6,800,000 share increase to the 1999 Plan will immediately terminate without    
becoming exercisable for the shares of common stock subject to those options,   
and no additional options will be granted on the basis of such share increase.  
The automatic annual share increase feature pursuant to which the number of     
shares available for issuance under the 1999 Plan will automatically increase on
November 1 of each calendar year by an amount equal to 3% of the total number of
shares outstanding on the previous October 31st will also not be implemented    
should such stockholder approval not be obtained. In addition, the director     
formula awards program, pursuant to which directors are automatically granted   
options to purchase common stock at periodic intervals, will not become part of 
the 1999 Plan if stockholder approval is not obtained. The 1999 Plan will,      
however, continue to remain in effect, and award grants may continue to be made 
pursuant to the provisions of the 1999 Plan in effect prior to the amendments   
summarized in this Proposal No. Three, until the available reserve of common    
stock as last approved by the stockholders has been issued pursuant to award    
grants made under the 1999 Plan.                                                

RECOMMENDATION OF THE BOARD OF DIRECTORS                                        

     The Board of Directors recommends that the stockholders of Caldera vote FOR
the amendments to the 1999 Plan.                                                

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PROPOSAL FOUR: APPROVAL OF AMENDMENTS TO THE EMPLOYEE STOCK PURCHASE PLAN 

     Caldera's stockholders are being asked to approve an amendment to Caldera's
2000 Employee Stock Purchase Plan (the "Purchase Plan") which will increase the 
maximum number of shares of common stock authorized for issuance over the term  
of the Purchase Plan by an additional 1.5 million shares to 2.0 million shares. 

The purpose of the amendment is to ensure that Caldera or if the      
combination is consummated, New Caldera will continue to have a sufficient      
reserve of common stock available under the Purchase Plan to provide eligible   
employees of Caldera (or New Caldera) and its participating affiliates with the 
opportunity to acquire a proprietary interest in Caldera (or New Caldera)       
through participation in a payroll-deduction based employee stock purchase plan 
under Section 423 of the Internal Revenue Code (the "Code") immediately after   
the combination.                                                                

The Purchase Plan was originally adopted by the board of directors on 
February 15, 2000 and approved by Caldera's stockholders on March 1, 2000. The  
Purchase Plan became effective on March 20, 2000 in connection with the initial 
public offering of Caldera's common stock.                                      

    The following is a summary of the principal features of the Purchase Plan,
as amended. The summary, however, does not purport to be a complete description 
of all the provisions of the Purchase Plan. Any stockholder who wishes to obtain
a copy of the actual plan document may do so by written request to Caldera's    
Chief Financial Officer at Caldera's executive offices in Orem, Utah.           

ADMINISTRATION                                                                  

   The Purchase Plan is currently administered by the compensation committee
of the board of directors. Such committee, as Plan Administrator, has full      
authority to adopt administrative rules and procedures and to interpret the     
provisions of the Purchase Plan. All costs and expenses incurred in plan        
administration are paid by Caldera without charge to participants.              

SECURITIES SUBJECT TO THE PURCHASE PLAN                                         

     Two million shares of common stock have been reserved for issuance over the
ten (10)-year term of the Purchase Plan. Such share reserve includes the 1.5    
million-share increase for which stockholder approval is sought under this      
Proposal No. Four. In addition, the share reserve will increase automatically on
the first trading day of January each calendar year beginning with the calendar 
year 2001 by an amount equal to one percent (1%) of the total number of shares  
of common stock outstanding on the last trading day of December of the          
immediately preceding calendar year, but in no event will any such annual       
increase exceed 750,000 shares. The shares may be made available from authorized
but unissued shares of Caldera's common stock or from shares of common stock    
repurchased by Caldera, including shares repurchased on the open market.        

     As of October 31, 2000, 61,087 shares of common stock had been issued under
the Purchase Plan, and 1,938,913 shares were available for future issuance,     
assuming approval of this Proposal No. Four.                                    

OFFERING PERIODS AND PURCHASE RIGHTS                                            

  Shares of common stock will be offered under the Purchase Plan through a
series of successive offering periods, each with a maximum duration of          
twenty-four (24) months. The first offering period began on March 20, 2000, in  
connection with the initial public offering of the Common Stock, and will end on
the last business day in April 2002. The next offering period will begin on the 
first business day in May 2002 and will end on the last business day of April   
2004. Subsequent offering periods will begin as designated by the Plan          
Administrator.                                                                  

  At the time the participant joins the offering period, he or she will be
granted a purchase right to acquire shares of common stock at semi-annual       
intervals over the remainder of that offering period. The                       

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purchase dates will occur on the last business day in October and April each    
year, and all payroll deductions collected from the participant for the period  
ending with each such semi-annual purchase date will automatically be applied to
the purchase of common stock.                                                   

     Should the fair market value per share of common stock on any purchase date
within the twenty-four (24) month offering period be less than the fair market  
value per share of common stock on the start date of that offering period, then 
that offering period will terminate immediately after the purchase of shares of 
common stock on such purchase date. A new offering period will commence on the  
next business day following that purchase date, and all participants in the     
terminated offering period will be automatically enrolled in that new offering  
period. The new offering period will have a duration of twenty-four (24) months,
unless a shorter duration is established by the Plan Administrator within five  
(5) business days following the start date of that offering period.             

ELIGIBILITY AND PARTICIPATION                                                   

     Any individual who is employed on a basis under which he or she is expected
to work for more than 20 hours per week for more than five (5) months per       
calendar year in the employ of Caldera or any participating parent or subsidiary
corporation (including any corporation which subsequently becomes such at any   
time during the term of the Purchase Plan) will be eligible to participate in   
the Purchase Plan.                                                              

     An individual who is an eligible employee on the start date of any offering
period may join that offering period at that time or on any subsequent          
semi-annual entry date (the first business day in May or November each year)    
within that offering period. An individual who first becomes an eligible        
employee after such start date may join the offering period on any semi-annual  
entry date within that offering period on which he or she is an eligible        
employee.                                                                       

     As of October 31, 2000, Caldera estimates that approximately 178 employees,
including 6 executive officers, were eligible to participate in the Purchase    
Plan.                                                                           

PURCHASE PRICE                                                                  

The purchase price of the common stock acquired on each semi-annual   
purchase date will be equal to 85% of the lower of (i) the fair market value per
share of common stock on the participant's entry date into the offering period  
or (ii) the fair market value on the semi-annual purchase date.                 

  The fair market value of the common stock on any relevant date under the
Purchase Plan will be deemed to be equal to the closing selling price per share 
on such date on the Nasdaq National Market. However, the fair market value of   
the common stock on the start date of the initial offering period was deemed to 
be equal to the $14.00 price per share at which the common stock was sold in the
initial public offering. On October 31, 2000, the closing selling price per     
share of common stock on the Nasdaq National Market was $3.50 per share.        

PAYROLL DEDUCTIONS AND STOCK PURCHASES                                          

    Each participant may authorize periodic payroll deductions in any multiple
of 1% (up to a maximum of 10%) of his or her cash earnings each offering period.
Cash earnings include the participant's regular base salary plus all overtime   
payments, bonuses, profit-sharing distributions and other incentive-type        
payments. The accumulated payroll deductions of each participant will           
automatically be applied on each semi-annual purchase date (the last business   
day in October and April of each year) to the purchase of whole shares of common
stock at the purchase price in effect for the participant for that purchase     
date. The first purchase date under the Purchase Plan will occur on October 31, 
2000.                                                                           

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SPECIAL LIMITATIONS                                                             

     The Purchase Plan imposes certain limitations upon a participant's right to
acquire common stock, including the following:                                  

- Purchase rights may not be granted to any individual who owns stock 
 (including stock purchasable under any outstanding purchase rights)
      possessing 5% or more of the total combined voting power or value of all
classes of stock of Caldera or any of its affiliates.             

   - Purchase rights granted to a participant may not permit such individual
     to purchase more than $25,000 worth of common stock (valued at the time
   each purchase right is granted) for each calendar year those purchase
rights are outstanding at any time.                               

   - No participant may purchase more than 750 shares of common stock on any
semi-annual purchase date.                                        

- The aggregate shares of common stock purchased on any semi-annual   
purchase date may not exceed 125,000 shares.                      

   The Plan Administrator will have the discretionary authority, exercisable
prior to the start of any offering period, to increase or decrease the          
limitations to be in effect for the number of shares purchasable per participant
and in total by all participants on each purchase date within that offering     
period.                                                                         

TERMINATION OF PURCHASE RIGHTS                                                  

     The participant may withdraw from the Purchase Plan at any time, and his or
her accumulated payroll deductions will, at the participant's election, either  
be refunded immediately or applied to the purchase of common stock on the next  
semi-annual purchase date.                                                      

     The participant's purchase right will immediately terminate upon his or her
cessation of employment or loss of eligible employee status. Any payroll        
deductions which the participant may have made for the semi-annual period in    
which such cessation of employment or loss of eligibility occurs will be        
refunded and will not be applied to the purchase of common stock.               

STOCKHOLDER RIGHTS                                                              

    No participant will have any stockholder rights with respect to the shares
covered by his or her purchase rights until the shares are actually purchased on
the participant's behalf. No adjustment will be made for dividends,             
distributions or other rights for which the record date is prior to the date of 
such purchase.                                                                  

ASSIGNABILITY                                                                   

   No purchase rights will be assignable or transferable by the participant,
and the purchase rights will be exercisable only by the participant.            

CHANGES IN CAPITALIZATION                                                       

    In the event that any change is made to Caldera's outstanding common stock
(whether by reason of any recapitalization, stock dividend, stock split,        
exchange or combination of shares or other change in corporate structure        
effected without Caldera's receipt of consideration), appropriate adjustments   
will be made to (i) the class and maximum number of securities issuable over the
term of the Purchase Plan, (ii) the class and maximum number of securities by   
which the share reserve is to increase automatically each year, (iii) the class 
and maximum number of securities purchasable in total by all participants on any
one purchase date, (iv) the class and maximum number of securities purchasable  
per participant on any one semi-annual purchase date and (v) the class and      
number of securities and the price per share in effect under each outstanding   
purchase right.                                                                 

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CHANGE IN CONTROL                                                               

   In the event Caldera is acquired by merger or asset sale, all outstanding
purchase rights will automatically be exercised immediately prior to the        
effective date of such acquisition. The purchase price will be equal to 85% of  
the lower of (i) the fair market value per share of common stock on the         
participant's entry date into the offering period in which such acquisition     
occurs or (ii) the fair market value per share of common stock immediately prior
to the effective date of such acquisition. The limitation on the maximum number 
of shares purchasable in total by all participants on any one purchase date will
not be in effect for the purchase date attributable to such change in control.  

SHARE PRO-RATION                                                                

    Should the total number of shares of common stock to be purchased pursuant
to outstanding purchase rights on any particular date exceed the number of      
shares at the time available for issuance under the Purchase Plan, then the Plan
Administrator will make a pro-rata allocation of the available shares on a      
uniform and nondiscriminatory basis, and the payroll deductions of each         
participant, to the extent in excess of the aggregate purchase price payable for
the common stock allocated to such individual, will be refunded.                

AMENDMENT AND TERMINATION                                                       

     The Purchase Plan will terminate upon the earliest of (i) the last business
day in April 2010, (ii) the date on which all shares available for issuance     
thereunder are sold pursuant to exercised purchase rights or (iii) the date on  
which all purchase rights are exercised in connection with a change in control  
of the Company.                                                                 

    The board may at any time alter, suspend or discontinue the Purchase Plan.
However, the board may not, without stockholder approval, (i) increase the      
number of shares issuable under the Purchase Plan or the maximum number of      
shares purchasable per participant on any one semi-annual purchase date, except 
in connection with certain changes in Caldera's capital structure, (ii) alter   
the purchase price formula so as to reduce the purchase price or (iii) modify   
the requirements for eligibility to participate in the Purchase Plan.           

FEDERAL TAX CONSEQUENCES                                                        

The Purchase Plan is intended to be an "employee stock purchase plan" 
within the meaning of Section 423 of the Internal Revenue Code. Under a plan    
which so qualifies, no taxable income will be recognized by a participant, and  
no deductions will be allowable to Caldera, upon either the grant or the        
exercise of the purchase rights. Taxable income will not be recognized until    
there is a sale or other disposition of the shares acquired under the Purchase  
Plan or in the event the participant should die while still owning the purchased
shares.                                                                         

If the participant sells or otherwise disposes of the purchased shares
within two (2) years after his or her entry date into the offering period in    
which such shares were acquired or within one (1) year after the semi-annual    
purchase date on which those shares were actually acquired, then the participant
will recognize ordinary income in the year of sale or disposition equal to the  
amount by which the fair market value of the shares on the purchase date        
exceeded the purchase price paid for those shares, and Caldera will be entitled 
to an income tax deduction, for the taxable year in which such disposition      
occurs, equal in amount to such excess.                                         

    If the participant sells or disposes of the purchased shares more than two
(2) years after his or her entry date into the offering period in which the     
shares were acquired and more than one (1) year after the semi-annual purchase  
date of those shares, then the participant will recognize ordinary income in the
year of sale or disposition equal to the lower of (i) the amount by which the   
fair market value of the shares on the sale or disposition date exceeded the    
purchase price paid for those shares or (ii) fifteen percent (15%) of the fair  
market value of the shares on the participant's entry date into that offering   
period. Any                                                                     

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additional gain upon the disposition will be taxed as a long-term capital gain. 
Caldera will not be entitled to an income tax deduction with respect to such    
disposition.                                                                    

  If the participant still owns the purchased shares at the time of death,
his or her estate will recognize ordinary income in the year of death equal to  
the lower of (i) the amount by which the fair market value of the shares on the 
date of death exceeds the purchase price or (ii) fifteen percent (15%) of the   
fair market value of the shares on his or her entry date into the offering      
period in which those shares were acquired.                                     

ACCOUNTING TREATMENT                                                            

   The issuance of common stock under the Purchase Plan will not result in a
direct compensation expense chargeable against Caldera's reported earnings.     
However, Caldera must disclose, in pro-forma statements to Caldera's financial  
statements, the impact the purchase rights granted under the Purchase Plan would
have upon Caldera's reported earnings were the fair value of those purchase     
rights treated as compensation expense.                                         

STOCK ISSUANCES                                                                 

    The table below shows, as to each of Caldera's executive officers named in
the Summary Compensation Table included in the "Management of Caldera and New   
Caldera" section of this joint proxy statement/prospectus and the various       
indicated groups, the number of shares of common stock purchased under the      
Purchase Plan between March 20, 2000 and October 31, 2000, the most recent      
purchase date, together with the weighted average purchase price paid per share.

PURCHASE PLAN TRANSACTIONS

                                                        [Enlarge/Download Table]

                                                                NUMBER OF      WEIGHTED AVERAGE
NAME                                                         PURCHASED SHARES   PURCHASE PRICE 
----                                                         ----------------  ----------------
                                                                                               
Ransom H. Love, Director, Chief Executive Officer...........         750            $2.98      
Alan J. Hansen, Chief Financial Officer(1)..................           0            $  --      
Drew Spencer, Chief Technology Officer......................           0            $  --      
Benoy Tamang, Vice President, Strategic Development.........         750            $2.98      
Royce Bybee, Senior Vice President, Sales and Marketing.....           0            $  --      
All current executive officers as a group (6 persons).......       1,500            $2.98      
All employees, including current officers who are not                                          
  executive officers, as a group............................      60,307            $2.98      

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

(1) Resigned as Chief Financial Officer of Caldera on November 15, 2000.        

NEW PLAN BENEFITS                                                               

  No purchase rights have been granted, and no shares of common stock have
been issued, on the basis of the 1.5 million share increases for which          
stockholder approval is sought.                                                 

STOCKHOLDER APPROVAL                                                            

The affirmative vote of a majority of the outstanding voting shares of
Caldera present or represented and entitled to vote at the 2000 annual meeting  
is required for approval of the 1.5 million-share increase to the Purchase Plan.
Should such stockholder approval not be obtained, then the 1.5 million-share    
increase will not be implemented, and any purchase rights granted on the basis  
of the 1.5 million-share increase to the Purchase Plan will immediately         
terminate. No additional purchase rights will be granted on the basis           

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of such share increase, and the Purchase Plan will terminate once the existing  
share reserve has been issued.                                                  

RECOMMENDATION OF THE BOARD OF DIRECTORS                                        

    The board of directors believes that the amendment to the Purchase Plan is
necessary in order to continue to provide equity incentives to attract and      
retain the services of high quality employees including through acquisitions.   
For this reason, the board of directors recommends that the stockholders of     
Caldera vote FOR the amendment to the Purchase Plan.                            

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PROPOSAL FIVE: AMENDMENTS TO CALDERA'S
CERTIFICATE OF INCORPORATION

  The present capital structure of Caldera authorizes 75,000,000 shares of
common stock and 25,000,000 shares of preferred stock each having a par value of
$0.001 per share. The board of directors believes this capital structure is     
inadequate for the present and future needs of Caldera. Therefore, the board of 
directors has unanimously approved the amendment and restatement of Caldera's   
Restated Certificate of Incorporation to increase the authorized number of      
shares of common stock from 75,000,000 shares to 175,000,000 shares. The board  
believes this capital structure more appropriately reflects the present and     
future needs of Caldera and recommends such amendment and restatement to        
Caldera's stockholders for adoption. The undesignated preferred stock may be    
issued from time to time in one or more series with such rights, preferences and
privileges as may be determined by the board of directors. On October 31, 2000, 
39,444,457 shares of common stock were outstanding and no shares of preferred   
stock were outstanding.                                                         

PURPOSE OF AUTHORIZING ADDITIONAL COMMON STOCK                                  

     Authorizing an additional 100,000,000 shares of common stock would give the
board of directors the express authority, without further action of the         
stockholders, to issue such common stock from time to time as the board of      
directors deems necessary. The board of directors believes it is necessary to   
have the ability to issue such additional shares of common stock for general    
corporate purposes. Potential users of the additional authorized shares may     
include acquisition transactions, equity financings, stock dividends or         
distributions, issuance of options pursuant to Caldera's 1999 Omnibus Stock     
Incentive Plan and issuances of common stock pursuant to Caldera's Employee     
Stock Purchase Plan without further action by the stockholders, unless such     
action were specifically required by applicable law or rules of any stock       
exchange on which Caldera's securities may then be listed.                      

  The proposed increase in the authorized number of shares of common stock
could have a number of effects on Caldera's stockholders depending upon the     
exact nature and circumstances of any actual issuances of authorized but        
unissued shares. The increase could have an anti-takeover effect, in that       
additional shares could be issued (within the limits imposed by applicable law) 
in one or more transactions that could make a change in control or takeover of  
Caldera more difficult. For example, additional shares could be issued by       
Caldera so as to dilute the stock ownership or voting rights of persons seeking 
to obtain control of Caldera. Similarly, the issuance of additional shares of   
certain persons allied with Caldera's management could have the effect of making
it more difficult to remove Caldera's current management by diluting the stock  
ownership or voting rights of persons seeking to cause such removal. In         
addition, an issuance of additional shares by Caldera could have an effect on   
the potential realizable value of a stockholders' investment. In the absence of 
a proportionate increase in Caldera's earnings and book value, an increase in   
the aggregate number of outstanding shares of Caldera caused by the issuance of 
the additional shares would dilute the earnings per share and book value per    
share of all outstanding shares of Caldera's common stock. If such factors were 
reflected in the price per share of common stock, the potential realizable value
of a stockholder's investment could be adversely affected. The common stock     
carries no preemptive rights to purchase additional shares.                     

     The proposed amendment and restatement of Caldera's Restated Certificate of
Incorporation was approved by unanimous written consent of the directors of     
Caldera in August 2000.                                                         

STOCKHOLDER APPROVAL                                                            

   The affirmative vote of a majority of Caldera's outstanding voting shares
is required for approval of the amendment and restatement of Caldera's Restated 
Certificate of Incorporation authorizing 100,000,000 additional shares of common
stock.                                                                          

RECOMMENDATION OF THE BOARD OF DIRECTORS                                        

     The board of directors recommends that the stockholders of Caldera vote FOR
the amendment and restatement of Caldera's Restated Certificate of Incorporation
authorizing 100,000,000 additional shares of common stock.                      

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PROPOSAL SIX: RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS

Caldera is asking the stockholders to ratify the selection of Arthur  
Andersen LLP as Caldera's independent public accountants for the fiscal year    
ending October 31, 2001. The affirmative vote of the holders of a majority of   
the shares represented and voting at the annual meeting will be required to     
ratify the selection of Arthur Andersen LLP.                                    

 In the event the stockholders fail to ratify the appointment, the audit
committee of the board of directors will consider it as a direction to select   
other auditors for the subsequent year. Even if the selection is ratified, the  
board of directors in its discretion may direct the appointment of a different  
independent accounting firm at any time during the year if the board of         
directors determines that such change would be in the best interest of Caldera  
and its stockholders.                                                           

Arthur Andersen LLP has audited the Caldera's financial statements for
fiscal year 2000. Its representatives are expected to be present at the annual  
meeting, will have the opportunity to make a statement if they desire to do so, 
and will be available to respond to appropriate questions.                      

AUDIT FEES                                                                      

  The aggregate fees for professional services rendered by Arthur Andersen
LLP in connection with its audit of Caldera's consolidated financial statements 
and reviews of the consolidated financial statements included in Caldera's      
quarterly reports on Form 10-Q for the 2000 fiscal year was approximately       
$92,000.                                                                        

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES                    

Arthur Andersen did not provide to Caldera any services related to    
financial systems design and implementation in the 2000 fiscal year.            

ALL OTHER FEES                                                                  

 In addition to performing the audit of Caldera's consolidated financial
statements, Arthur Andersen LLP provided various other services to Caldera      
during the 2000 fiscal year. The aggregate fees for these other services was    
approximately $748,000.                                                         

"All other services" includes services rendered to Caldera primarily  
related to the following: (i) Caldera's initial public offering, (ii)           
acquisition due diligence reviews, integration services and registration        
statement work, (iii) tax planning and preparation of tax returns of Caldera,   
and (iv) evaluating the effects of various accounting issues and changes in     
professional standards.                                                         

RECOMMENDATION OF THE BOARD OF DIRECTORS                                        

     The board of directors recommends that the stockholders of Caldera vote FOR
the proposal to ratify the selection of Arthur Andersen LLP to serve as         
Caldera's independent public accountants for the fiscal year ending October 31, 
2001.                                                                           

AUDIT COMMITTEE REPORT                                                          

The audit committee, which currently consists of directors Cakebread, 
Iacobucci and Egan, is responsible for, among other things:                     

- reviewing Caldera's annual financial statements and other relevant  
financial reports,                                                

- reviewing the internal financial reports prepared by management,    

- recommending engagement of Caldera's independent accountants,       

- approving the services performed by such accountants,               

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   - consulting with such accountants and reviewing with them the results of
their audit, and                                                  

   - reviewing and evaluating Caldera's systems of internal controls and the
audit and financial reporting process.                            

 The audit committee has adopted a written charter, which is attached to
this joint proxy statement/prospectus as Appendix P. Each member of our audit   
committee is "independent" as defined under Rule 4200(a)(15) of the National    
Association of Securities Dealers' listing standards.                           

The audit committee has reviewed and discussed Caldera's audited      
consolidated financial statements with its management and has discussed with    
Caldera's independent public accountants the matters to be discussed by         
Statement on Auditing Standards No. 61 (Communication with Audit Committees).   

 The audit committee has received the written disclosures and the letter
from Caldera's independent public accountants required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committee).           

    The audit committee has also considered whether the provision of non-audit
services provided by Arthur Andersen LLP to Caldera is compatible with          
maintaining their independence and has discussed with the auditors such         
auditors' independence.                                                         

Based on its review, the audit committee recommended to the board of  
directors that the audited financial statements for Caldera's fiscal year ended 
October 31, 2000 be included in Caldera's Annual Report on Form 10-K for        
Caldera's fiscal year ended October 31, 2000.                                   

                     Submitted by:

                               Steve Cakebread (Chair)
                           Edward E. Iacobucci
                    John R. Egan

                                      Members of the Audit Committee

STOCK PERFORMANCE GRAPH                                                         

The following graph shows a comparison of cumulative total stockholder
return on Caldera's common stock, based on the market price of our common stock,
assuming reinvestment of dividends, with the cumulative total return on the     
Nasdaq Stock Market (U.S.) Index as reported by Media General Financial Services
and the MG Group Index for internet software and services as reported by Media  
General Financial Services, for the period beginning March 21, 2000, the day our
common stock began trading, through October 31, 2000.                           

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COMPARISON OF CUMULATIVE TOTAL RETURN 

[PERFORMANCE GRAPH] 

                                                        [Enlarge/Download Table]

--------------------------------------------------------------------------------------------
                                                   3/21/00    4/30/00    7/31/00    10/31/00
--------------------------------------------------------------------------------------------
                                                                                            
 Caldera Systems, Inc.                             100.00      44.16      23.94       11.89 
 MG Group Index                                    100.00      70.11      57.24       44.01 
 Nasdaq Stock Market (U.S.) Index                  100.00      84.19      82.17       73.50 

(1) The graph assumes that $100 was invested in Caldera on March 21, 2000 in    
Caldera's common stock and in each index, and that all dividends were   
   reinvested. No cash dividends have been declared on Caldera's common stock.

(2) Stockholder returns over the indicated period should not be considered      
indicative of future stockholder returns.                               

Notwithstanding anything to the contrary set forth in any of Caldera's
previous filings made under the Securities Act of 1933, as amended, or the      
Securities Exchange Act of 1934, as amended, that might incorporate future      
filings made by Caldera under those statutes, neither the preceding Stock       
Performance Graph nor the Compensation Committee Report is to be incorporated by
reference into any such prior filings, nor shall such graph or report be        
incorporated by reference into any future filings made by Caldera under those   
statutes.                                                                       

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE                         

    Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Caldera's directors, executive officers and persons who own more than 10% of    
Caldera's common stock, or the reporting persons, to file with the Securities   
and Exchange Commission, or the SEC, initial reports of ownership and changes in
ownership of Caldera's common stock. Reporting persons are required by SEC      
regulations to furnish Caldera with copies of all Section 16(a) reports they    
file. To Caldera's knowledge, based solely on its review of the copies of such  
reports received or written representations from certain reporting persons that 
no other reports were required. Caldera believes that during its fiscal year    
ended June 30, 2000, all reporting persons complied with all applicable filing  
requirements, with the exception of one late Form 4 filing by Mr. Bybee.        
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FORM 10-K                                                                       

Caldera filed an Annual Report on Form 10-K with the Securities and   
Exchange Commission on January 29, 2001. Stockholders may obtain a copy of this 
report, without charge, by writing to Kathy Allred at Caldera's principal       
executive offices located at 240 West Center Street, Orem, Utah 84057.          

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PROPOSALS TO BE VOTED UPON BY SCO SHAREHOLDERS
AT THE SCO SPECIAL MEETING

At the SCO special meeting of shareholders, SCO's shareholders will be
asked to consider the following proposals:                                      

 1. To approve and adopt the agreement and plan of reorganization, dated
       August 1, 2000 and amended on September 13, 2000, December 12, 2000 and
      February 9, 2001, by and among The Santa Cruz Operation, Inc., Caldera
Systems, Inc., and Caldera International, Inc.                  

 2. To approve an amendment to SCO's articles of incorporation to change
SCO's corporate name to "Tarantella, Inc."                      

PROPOSAL ONE: APPROVAL AND ADOPTION OF THE
AGREEMENT AND PLAN OF REORGANIZATION

   SCO's board of directors adopted resolutions approving the reorganization
agreement on August 1, 2000. The reorganization agreement must be approved by   
the affirmative vote, in person or by proxy, of at least a majority of the votes
properly cast at the SCO special meeting. The combination contemplated by the   
reorganization agreement cannot be completed unless SCO shareholders approve and
adopt the reorganization agreement. See "The Combination" and "The              
Reorganization Agreement."                                                      

RECOMMENDATION OF THE BOARD OF DIRECTORS                                        

     The board of directors recommends that the shareholders of SCO vote FOR the
approval and adoption of the reorganization agreement.                          

PROPOSAL TWO: APPROVAL OF AN AMENDMENT TO THE SCO 
ARTICLES OF INCORPORATION TO CHANGE SCO'S 
CORPORATE NAME TO "TARANTELLA, INC."

At the SCO special meeting, SCO's shareholders will also be asked to  
approve a proposed amendment to SCO's articles of incorporation, that if        
approved, will change SCO's corporate name to "Tarantella, Inc." SCO seeks this 
change in the corporate name because, as a result of the combination            
contemplated by the reorganization agreement, New Caldera will acquire the SCO  
brand and logo. Though SCO will retain usage rights in the SCO brand and logo,  
SCO's focus will shift to the Tarantella business.                              

     Tarantella is software that allows centralized deployment and management of
server-based applications. Tarantella is designed for information technology    
professionals who need to provide users with instant access to applications and 
services, and provides centralized management of application access.            

     The SCO board of directors believes that the proposed name change is in its
best interest because the proposed new corporate name reflects SCO's principal  
line of business after the completion of the combination. The SCO board of      
directors believes that, notwithstanding the goodwill associated with the SCO   
name, it is necessary to change the corporate name in order to connect the image
of the company among the investment community and among our customers and       
potential customers to our products and services and in order to avoid confusion
with SCO's historical business.                                                 

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    SCO's board of directors has unanimously adopted a resolution declaring it
advisable to amend SCO's articles of incorporation to change the corporate name.
SCO's board of directors further directed that the proposed name change be      
submitted for consideration by shareholders at the special meeting. As amended, 
Article I of the articles of incorporation would read in its entirety as        
follows:                                                                        

"Article I

The name of the corporation is Tarantella, Inc."

     In the event the proposed name change is approved by shareholders, SCO will
thereafter file a certificate of amendment to its articles of incorporation with
the Secretary of State of the State of California, amending Article I, which    
will become effective on the date such filing is accepted by the Secretary of   
State. The SCO board of directors, however, reserves the right not to file the  
certificate of amendment even if the proposed name change is approved by the    
shareholders in the event the shareholders do not approve and adopt the         
reorganization agreement or the reorganization agreement is otherwise           
terminated.                                                                     

RECOMMENDATION OF THE BOARD OF DIRECTORS                                        

     The board of directors recommends that the shareholders of SCO vote FOR the
approval of the amendment of SCO's articles of incorporation.                   

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LEGAL MATTERS 

 Certain legal matters in connection with the combination will be passed
upon by Brobeck, Phleger & Harrison LLP on behalf of Caldera and New Caldera,   
and by Wilson Sonsini Goodrich & Rosati, Professional Corporation, on behalf of 
SCO.                                                                            

EXPERTS 

The financial statements and schedule of Caldera and the financial    
statements of Ebiz Enterprises, Inc. included in this joint proxy               
statement/prospectus to the extent and for the periods indicated in their       
reports have been audited by Arthur Andersen LLP, independent public            
accountants, as indicated in their reports with respect thereto, and are        
included herein in reliance upon the authority of said firm as experts in giving
said reports.                                                                   

     The consolidated financial statements of The Santa Cruz Operation, Inc. and
subsidiaries incorporated in this joint proxy statement/prospectus by reference 
to the Annual Report on Form 10-K/A of the Santa Cruz Operation, Inc. for the   
year ended September 30, 2000 have been so incorporated in reliance on the      
report of PricewaterhouseCoopers LLP, independent accountants, given on the     
authority of said firm as experts in auditing and accounting.                   

     The financial statements of The SCO Server and Professional Services Groups
as of September 30, 2000 and 1999 and for each of the three years in the period 
ended September 30, 2000 included in this joint proxy statement/prospectus have 
been so included in reliance on the report of PricewaterhouseCoopers LLP,       
independent accountants, given on the authority of said firm as experts in      
auditing and accounting.                                                        

  Representatives of Arthur Andersen LLP are expected to be present at the
Caldera annual meeting, will have the opportunity to make a statement at the    
Caldera annual meeting if they desire to do so and are expected to be available 
to respond to appropriate questions.                                            

     Representatives of PricewaterhouseCoopers LLP are expected to be present at
the SCO special meeting, will have the opportunity to make a statement at the   
SCO special meeting if they desire to do so and are expected to be available to 
respond to appropriate questions.                                               

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

INTRODUCTION TO PRO FORMA FINANCIAL INFORMATION 

   On August 1, 2000 and as amended on September 13, 2000, December 12, 2000
and February 9, 2001, Caldera Systems, Inc. ("Caldera"), Caldera International, 
Inc. ("New Caldera"), and The Santa Cruz Operation, Inc. ("SCO") entered into an
Agreement and Plan of Reorganization (the "Reorganization Agreement"). As a     
result of the transactions proposed by the Reorganization Agreement (the        
"Reorganization"), (i) a newly formed, wholly owned subsidiary of New Caldera   
will be merged with and into Caldera, with Caldera being the surviving          
corporation, and all outstanding Caldera securities will be converted, on a     
share for share basis, into New Caldera securities having identical rights,     
preferences and privileges, with New Caldera assuming any and all outstanding   
options and other rights to purchase shares of capital stock of Caldera (with   
all such New Caldera securities issued to former Caldera security holders       
initially representing a fully diluted equity interest of approximately 71.9% in
New Caldera); (ii) SCO and certain of its subsidiaries will contribute to New   
Caldera, all of the capital stock held of certain contributed companies as well 
as certain assets of SCO collectively representing the server and professional  
services groups of SCO, in consideration for the issuance by New Caldera to SCO 
of shares of common stock of New Caldera, $0.001 par value ("New Caldera Common 
Stock"); (iii) New Caldera will assume or replace, as elected by the option     
holders, all options to acquire common stock of SCO held by SCO employees (other
than certain officers of SCO) hired or retained by Caldera and such options will
be converted into options to purchase New Caldera Common Stock on a two SCO     
options in exchange for one New Caldera option basis representing in the        
aggregate a fully diluted equity interest of approximately 2.8% in New Caldera; 
(iv) SCO will receive 16,000,000 shares of New Caldera Common Stock representing
in the aggregate a fully diluted equity interest of approximately 25.3% in New  
Caldera; (v) New Caldera will pay to SCO $23 million in cash, of which $7       
million was advanced to SCO in January, 2001 under a promissory note arrangement
bearing interest at 10 percent; (vi) New Caldera will issue to SCO a            
non-interest bearing, secured promissory note in the amount of $8 million that  
will be payable in quarterly installments of $2 million beginning on the first  
day of the fifth fiscal quarter following the closing; and (vii) SCO shall be   
entitled to receive from New Caldera earn-out provisions during the three-year  
period following the closing representing 45% of the amount by which OpenServer 
revenues exceed certain threshold amounts. In conjunction with the              
Reorganization Agreement, The Canopy Group, Inc., a major stockholder of Caldera
has agreed to loan $18 million to SCO. If the Reorganization is not completed,  
SCO will be obligated to repay the $7 million advance to Caldera. Assets of SCO 
will secure each of these loans.                                                

  The SCO server and professional services groups operate as a provider of
server software for networked business computing. The solutions delivered by the
groups are UNIX(R) based server operating systems. The groups' products enable  
business and government organizations of all sizes to integrate technologies and
products from different vendors to create cost-effective, powerful, networked   
information systems that perform highly complex, mission-critical business      
functions. Products are sold via the groups' direct sales force or through      
indirect channel partners, which include some of the leading distribution       
companies in the United States, Europe and the rest of the world. Caldera is    
acquiring the rights, associated technology and assigned license arrangements   
for the UnixWare products, OpenServer products and other server software        
products.                                                                       

 The unaudited pro forma condensed combined balance sheet of New Caldera
gives effect to the Reorganization as if it had been completed as of January 31,
2001. The unaudited pro forma condensed combined balance sheet of New Caldera   
combines the historical balance sheet of Caldera as of January 31, 2001 and the 
historical balance sheet of the server and professional services groups as of   
December 31, 2000. The unaudited pro forma condensed combined statements of     
operations of New Caldera give effect to the Reorganization as if it had        
occurred on November 1, 1999. The unaudited pro forma condensed combined        
statement of operations for the year ended October 31, 2000 combines the        
historical statement of operations of Caldera for the year ended October 31,    
2000 and the historical statement of operations for the server and professional 
services groups for the year ended September 30, 2000. The unaudited pro forma  
condensed combined statement of operations for the three months ended           

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January 31, 2001 combines the historical statement of operations of Caldera for 
the three months ended January 31, 2001 and the historical statement of         
operations for the server and professional groups for the three months ended    
December 31, 2000. New Caldera does not currently have any assets, liabilities  
or outstanding capital stock, nor has it had any activity in its statement of   
operations. As a result, no historical information for New Caldera has been     
included in the pro forma financial statements.                                 

The acquisition of the server and professional services groups will be
accounted for using the purchase method of accounting. Under this method, the   
total purchase price, including fees and expenses, will be allocated to the     
tangible and identifiable intangible assets acquired and the liabilities assumed
based upon their respective fair values as of the effective date of the         
acquisition. New Caldera has estimated the fair value of the assets acquired and
liabilities assumed. The remaining purchase price over the tangible and         
identifiable intangible assets will be allocated to goodwill. Since the         
acquisition has not yet been completed, the actual consideration cannot yet be  
determined. For the purpose of the pro forma combined financial information     
included herein, the number of options to purchase shares of New Caldera common 
stock to be issued in the acquisition has been estimated based upon the number  
of SCO's options to purchase common shares outstanding at January 31, 2001. The 
actual number of New Caldera options to purchase common shares to be issued will
be based on the actual options outstanding as of the completion of the          
Reorganization. Additionally, the actual allocation of the amount of such       
consideration may differ from that reflected in these unaudited pro forma       
condensed combined financial statements after final valuations and other        
procedures have been completed.                                                 

    The fair value of the in-process research and development will be recorded
as an expense in the period in which the acquisition is completed. The valuation
of the in-process research and development was determined using the income      
approach method, which includes an analysis of the markets, cash flows and risks
associated with achieving such cash flows. The amount allocated to the          
in-process research and development represents the estimated purchased          
in-process technology for projects that have not yet reached technological      
feasibility and have no alternative future use. Based on preliminary            
assessments, the value of these projects was determined by estimating the costs 
to develop the purchased in-process technology into commercially viable         
products; estimating the resulting net cash flows from the sale of the products 
resulting from completion of the projects reduced by the portion of the revenue 
attributable to core technology; and discounting the net cash flows back to     
their present value.                                                            

   The unaudited pro forma condensed consolidated balance sheet of SCO gives
effect to the reorganization as if it had been completed as of December 31,     
2000. The unaudited pro forma condensed consolidated statements of operations of
SCO for the year ended September 30, 2000 and the three months ended December   
31, 2000 give effect to the reorganization discussed as if it had occurred on   
October 1, 1999. SCO will treat this transaction as a disposal of its server and
professional services groups and record a gain upon completion of the           
transaction. On an ongoing basis it will account for its investment in New      
Caldera using the equity method of accounting.                                  

     The unaudited pro forma condensed combined financial statements included in
this joint proxy statement/prospectus are presented for illustrative purposes   
only. Such information is not necessarily indicative of the operating results or
financial position that would have taken place if the Reorganization had been   
completed at the beginning of the earliest period presented, nor is it          
indicative of the results that may be expected for future periods. The pro forma
adjustments are based upon information and assumptions available at the time of 
the filing of this joint proxy statement/prospectus. The pro forma information  
should be read in conjunction with the accompanying notes thereto and with the  
historical financial statements and related notes of Caldera, as well as the    
historical financial statements and related notes of SCO and the server and     
professional services groups included elsewhere in this joint proxy             
statement/prospectus.                                                           

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CALDERA SYSTEMS, INC. AND THE SCO SERVER
AND PROFESSIONAL SERVICES GROUPS

UNAUDITED PRO FORMA CONDENSED COMBINED
BALANCE SHEET AS OF JANUARY 31, 2001

(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                   HISTORICAL                                          
                                                   ------------------------------------------                          
                                                                           SCO SERVER AND                              
                                                                        PROFESSIONAL SERVICES   PRO FORMA     PRO FORMA
                                                        CALDERA                GROUPS          ADJUSTMENTS    COMBINED 
                                                   ------------------   ---------------------  -----------    ---------
                                                   (JANUARY 31, 2001)    (DECEMBER 31, 2000)                           
                                                                                                                       
                                                         ASSETS                                                        

Current assets:                                                                                                        
  Cash and cash equivalents......................       $ 28,359               $    69          $(16,000)(a)           
                                                                                                  (3,100)(b)  $  9,328 
  Available-for-sale securities..................         50,294                    --                          50,294 
  Accounts receivable, net.......................            840                19,456           (13,751)(c)     6,545 
  Note Receivable from The Santa Cruz                                                                                  
    Operation....................................          7,000                    --            (7,000)(a)        -- 
  Other current assets...........................          1,121                 5,352            (5,352)(c)     1,121 
                                                        --------               -------          --------      -------- 
        Total current assets.....................         87,614                24,877           (45,203)       67,288 
Property and equipment, net......................          1,550                 6,020                           7,570 
Investments in non-marketable securities.........          5,179                    --                           5,179 
Goodwill and other intangible assets, net........             --                 4,574            90,766(d)     95,340 
Other assets.....................................          2,297                   581                           2,878 
                                                        --------               -------          --------      -------- 
        Total assets.............................       $ 96,640               $36,052          $ 45,563      $178,255 
                                                        ========               =======          ========      ======== 

                                          LIABILITIES AND STOCKHOLDERS' EQUITY                                         

Current liabilities:                                                                                                   
  Accounts payable...............................       $  2,603               $ 2,935          $ (2,935)(c)  $  2,603 
  Income and other taxes payable.................             73                 2,177            (1,957)(c)       293 
  Accrued liabilities............................          2,478                22,355           (19,636)(c)           
                                                                                                     500(e)      5,697 
  Deferred revenue...............................            409                 5,343                           5,752 
                                                        --------               -------          --------      -------- 
        Total current liabilities................          5,563                32,810           (24,028)       14,345 
                                                        --------               -------          --------      -------- 
Deferred tax liabilities.........................             --                    --             5,443(f)      5,443 
                                                        --------               -------          --------      -------- 
Other long-term liabilities......................             --                 2,036             6,987(a)      9,023 
                                                        --------               -------          --------      -------- 
Stockholders' equity:                                                                                                  
  Common stock...................................             40                    --                16(a)         56 
  Additional paid-in capital.....................        155,308                    --            59,951(a)    215,259 
  Deferred compensation..........................         (2,790)                   --                          (2,790)
  Accumulated comprehensive loss.................         (1,579)                   --                          (1,579)
  Accumulated deficit............................        (59,902)                   --            (1,600)(g)   (61,502)
  Divisional surplus.............................             --                 1,206            (1,206)(h)        -- 
                                                        --------               -------          --------      -------- 
        Total stockholders' equity...............         91,077                 1,206            57,161       149,444 
                                                        --------               -------          --------      -------- 
        Total liabilities and stockholders'                                                                            
          equity.................................       $ 96,640               $36,052          $ 45,563      $178,255 
                                                        ========               =======          ========      ======== 

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CALDERA SYSTEMS, INC. AND THE SCO SERVER
AND PROFESSIONAL SERVICES GROUPS

UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS 
FOR THE YEAR ENDED OCTOBER 31, 2000 

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        [Enlarge/Download Table]

                                                                   HISTORICAL                                          
                                                     ---------------------------------------                           
                                                                           SCO SERVER AND                              
                                                                            PROFESSIONAL       PRO FORMA     PRO FORMA 
                                                          CALDERA          SERVICES GROUPS    ADJUSTMENTS    COMBINED  
                                                     -----------------   -------------------  -----------    --------- 
                                                        (YEAR ENDED          (YEAR ENDED                               
                                                     OCTOBER 31, 2000)   SEPTEMBER 30, 2000)                           
                                                                                                                       
Revenue.............................................     $  4,274             $139,632         $   (381)(i)  $ 143,525 
Cost of revenue.....................................        4,021               41,411             (381)(i)     45,051 
                                                         --------             --------         --------      --------- 
  Gross margin......................................          253               98,221                          98,474 
                                                         --------             --------         --------      --------- 
Operating expenses:                                                                                                    
  Sales and marketing...............................       14,754               73,223                          87,977 
  Research and development..........................        4,954               33,942                          38,896 
  General and administrative........................        6,430               13,748                          20,178 
  SCO cost-sharing arrangement......................          898                   --             (898)(j)         -- 
  Non-cash compensation*............................        5,216                   --                           5,216 
  Amortization of goodwill and other intangibles....           --                   --           21,008(k)      21,008 
  Restructuring charge..............................           --                9,882                           9,882 
                                                         --------             --------         --------      --------- 
         Total operating expenses...................       32,252              130,795           20,110        183,157 
                                                         --------             --------         --------      --------- 
Loss from operations................................      (31,999)             (32,574)         (20,110)       (84,683)
                                                         --------             --------         --------      --------- 
Equity in loss of affiliate.........................         (387)                  --                            (387)
                                                         --------             --------         --------      --------- 
Other income (expense), net.........................        5,544                 (283)            (727)(l)      4,534 
                                                         --------             --------         --------      --------- 
Loss before income taxes............................      (26,842)             (32,857)         (20,837)       (80,536)
Provision for income taxes..........................          (81)              (8,218)                         (8,299)
                                                         --------             --------         --------      --------- 
Net loss............................................     $(26,923)            $(41,075)        $(20,837)     $ (88,835)
                                                         ========             ========         ========      ========= 
Preferred stock dividends...........................     $(12,253)            $     --                       $ (12,253)
                                                         ========             ========                       ========= 
Net loss attributable to common stockholders........     $(39,176)            $(41,075)        $(20,837)     $(101,088)
                                                         ========             ========         ========      ========= 
Basic and diluted net loss per common share.........     $  (1.19)                                           $   (2.07)
                                                         ========                                            ========= 
Basic and diluted weighted average shares                                                                              
  outstanding.......................................       32,922                                16,000(m)      48,922 
                                                         ========                              ========      ========= 

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

                                                                [Download Table]
                                                                           
* Non-cash compensation has been excluded from the                         
  following expenses:                                                      
    Sales and marketing............................. $  1,970  --  $  1,970
    Research and development........................    1,146  --     1,146
    General and administrative......................    2,100  --     2,100

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CALDERA SYSTEMS, INC. AND THE SCO SERVER
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UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS 
FOR THE THREE MONTHS ENDED JANUARY 31, 2001 
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        [Enlarge/Download Table]

                                                HISTORICAL                                          
                                ------------------------------------------                          
                                                         SCO SERVER AND                             
                                                          PROFESSIONAL       PRO FORMA     PRO FORMA
                                      CALDERA            SERVICES GROUPS    ADJUSTMENTS    COMBINED 
                                -------------------    -------------------  -----------    ---------
                                (THREE MONTHS ENDED    (THREE MONTHS ENDED                          
                                 JANUARY 31, 2001)     DECEMBER 31, 2000)                           
                                                                                                    
Revenue........................      $  1,054                $23,887                       $ 24,941 
Cost of revenue................         1,177                  7,042              210(j)      8,429 
                                     --------                -------          -------      -------- 
  Gross margin (deficit).......          (123)                16,845             (210)       16,512 
                                     --------                -------          -------      -------- 
Operating expenses:                                                                                 
  Sales and marketing..........         5,520                 10,308              585(j)     16,413 
  Research and development.....         1,869                  4,836              330(j)      7,035 
  General and administrative...         1,748                  2,841              375(j)      4,964 
  SCO cost-sharing                                                                                  
     arrangement...............           602                     --             (602)(j)        -- 
  Non-cash compensation*.......           334                     --                            334 
  Amortization of goodwill and                                                                      
     other intangibles.........            --                     --            5,252(k)      5,252 
                                     --------                -------          -------      -------- 
          Total operating                                                                           
            expenses...........        10,073                 17,985            5,940        33,998 
                                     --------                -------          -------      -------- 
Loss from operations...........       (10,196)                (1,140)          (6,150)      (17,486)
Equity in loss of affiliate....          (647)                    --                           (647)
                                     --------                -------          -------      -------- 
Other income (expense), net....         1,027                    (39)            (155)(l)       833 
                                     --------                -------          -------      -------- 
Loss before income taxes.......        (9,816)                (1,179)          (6,305)      (17,300)
Provision for income taxes.....           (27)                  (616)              --          (643)
                                     --------                -------          -------      -------- 
Net loss attributed to common                                                                       
  stockholders.................      $ (9,843)               $(1,795)         $(6,305)     $(17,943)
                                     ========                =======          =======      ======== 
Basic and diluted net loss per                                                                      
  common share.................      $  (0.25)                                             $  (0.32)
                                     ========                                              ======== 
Basic and diluted weighted                                                                          
  average shares outstanding...        39,588                                  16,000(m)     55,588 
                                     ========                                 =======      ======== 

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

*Non-cash compensation has been excluded from the following expenses:           

                                                                [Download Table]
                                                  
Sales and marketing............ $  140  --  $  140
Research and development.......    133  --     133
General and administrative.....     61  --      61

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CALDERA SYSTEMS, INC. AND THE SCO SERVER
AND PROFESSIONAL SERVICES GROUPS

NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS 

1. BASIS OF PRESENTATION                                                        

    The pro forma condensed combined financial statements included herein have
been prepared pursuant to the rules and regulations of the Securities and       
Exchange Commission. Certain information and certain footnote disclosures       
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or       
omitted pursuant to such rules and regulations; however, management believes    
that the disclosures are adequate to make the information presented not         
misleading.                                                                     

2. REORGANIZATION                                                               

  For purposes of computing the estimated purchase price, the value of the
common stock was determined by taking the closing price of Caldera's common     
stock as quoted on NASDAQ for the two days before, the day of and the two days  
following the signing of the third amendment to the Reorganization Agreement.   
The estimated consideration to be exchanged in the Reorganization is based on   
preliminary estimates and is subject to certain adjustments. The following table
sets forth the estimated consideration to be exchanged for the SCO server and   
professional services groups, including estimated direct expenses to be paid in 
connection with the Reorganization (dollars in thousands, except per share      
amounts).                                                                       

                                                                [Download Table]
                                                                     
Estimated consideration:                                             
  Fair value of Caldera common stock (16,000,000 shares at           
     $3.47 per share).......................................  $55,520
  Fair value of options to purchase 1,758,569 shares of              
     common stock to be issued in exchange for 3,517,138             
     outstanding SCO options................................    4,447
  Cash......................................................   23,000
  Note payable (discounted at 10 percent)...................    6,987
  Estimated direct expenses.................................    3,100
                                                              -------
          Total.............................................  $93,054
                                                              =======

     For purposes of computing the estimated fair value of the New Caldera stock
options to be issued to SCO employees, the Black-Scholes option pricing model   
was used with the following assumptions: fair value of Caldera's stock of $3.47 
as described above, expected life of 2 1/2 years, risk free interest rate of 5  
percent, expected dividend yield of 0 percent, and volatility of 134 percent.   

   The option holders of SCO may elect to transfer their options to purchase
SCO common stock into options to purchase New Caldera common stock through      
either a replacement or an assumption alternative. As of January 31, 2001, there
were 3,517,138 outstanding SCO options with exercise prices ranging from $1.28  
to $32.00 per share and a weighted average exercise price of $7.29 per share. As
of March 9, 2001, Caldera's stock price was $1.88 per share. If Caldera's stock 
price on the date of the Reorganization does not increase to a price higher than
$1.88 per share, then none of the outstanding SCO options would result in a more
favorable exercise price to the holders of the options upon conversion to       
Caldera options under the assumption alternative versus the replacement         
alternative. For purposes of the pro forma presentation, management of Caldera  
believes it is highly unlikely that Caldera's stock price will rise to a level  
in order for option holders to benefit in any material amount under the         
assumption model and therefore has assumed that all options to be issued to SCO 
option holders will be done under the replacement alternative. If Caldera's     
market price were to increase to a price of $6.00 per share, only 31,025 options
would receive a favorable exercise price and therefore be more likely to elect  
the assumption alternative rather than the replacement alternative. To the      
extent that New Caldera assumes unvested options with intrinsic value, New      
Caldera will be required to record prepaid compensation for the intrinsic value 
and amortize it over the future vesting period. Based on the present            

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CALDERA SYSTEMS, INC. AND THE SCO SERVER
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NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

assumptions from Caldera's current market price, Caldera will not be required to
record any material amount of prepaid compensation for unvested shares.         

   The following table sets forth the allocation of the consideration to the
tangible and intangible assets acquired and liabilities assumed.                

                                                                [Download Table]
                                                                      
Purchase price allocation:                                            
  Tangible assets acquired net of liabilities assumed.......  $ 2,057 
  Accrual for shut-down of non-essential facilities and               
     related costs..........................................     (500)
  Deferred income taxes associated with non-deductible                
     intangible assets......................................   (5,443)
  Intangible assets acquired:                                         
     Acquired intangible assets of SCO......................    4,574 
     Distribution/reseller channel..........................   26,200 
     Assembled workforce....................................   20,000 
     Existing technology (consisting primarily of UnixWare            
      and OpenServer).......................................    6,200 
     Acquired in-process research and development...........    1,600 
     Trade name and trademarks..............................    1,400 
     Distribution agreement.................................    1,400 
     Goodwill...............................................   35,566 
                                                              ------- 
          Total.............................................  $93,054 
                                                              ======= 

    The value allocated to in-process research and development will be charged
to expense upon consummation of the acquisition. The write-off was necessary    
because the acquired in-process research and development had not yet reached    
technological feasibility and had no future alternative uses. Management        
believes that the acquired in-process research and development will be          
successfully developed; however, these technologies may not achieve commercial  
viability.                                                                      

     Current engineering efforts are focused on developing the UnixWare v8.0 and
Messaging Server products. Developing and enhancing these products are          
time-consuming, costly, and complex. There is a risk that this development will 
not be competitive with other products using alternative technologies that offer
comparable functionality.                                                       

    The UnixWare product is expected to deliver purpose-built operating system
configurations designed to power departmental databases, application servers,   
intranet servers, mail and messaging servers and environments specifically      
tailored to run telecommunications and other embedded environments. Version 8.0 
of UnixWare will contain a large proportion of new code in comparison to        
previous revisions to support new hardware specifications and business          
structures. SCO expects the development cycle for UnixWare v8.0 to continue for 
another four to five months after the anticipated closing of this transaction,  
with an expected completion date in the third quarter of calendar year 2001. SCO
has invested approximately 76 man months of effort (or $770,000) in the project 
and anticipates 122 man months of effort (or $1,233,000) to complete UnixWare   
v8.0. UnixWare v8.0 is estimated to be approximately 38% complete.              

    The Messaging Server product is an entirely new development which provides
messaging functionality on top of SCO's UnixWare products. SCO expects the      
development cycle for the Messaging Server product to continue for another two  
months after the anticipated closing date of this transaction, with an expected 
completion date at the end of the second quarter of calendar year 2001. SCO has 
invested approximately 36 man months effort (or $366,000) in the project and    
anticipates 12 man months effort                                                

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NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(or $121,000) to complete Messaging Server. Messaging Server is estimated to be 
approximately 75% complete.                                                     

    The valuation of the in-process research and development included, but was
not limited to, an analysis of the market for the acquired products and         
technologies, the completion costs for the projects, the expected cash flows    
attributed to the projects and the risks associated with achieving such cash    
flows. The assumptions used in valuing the in-process research and development  
were based upon assumptions management believes to be reasonable, but which are 
inherently uncertain and unpredictable. For these reasons, actual results may   
vary from the estimated results.                                                

     The value assigned to in-process research and development was determined by
estimating the resulting net cash flows from the project when completed and     
discounting the net cash flows to their present value. The cash flows have been 
discounted at a rate of return of 20%, which has been risk adjusted based on a  
weighted average cost of capital of 14.5%. The project's percentage of          
completion of 38% for UnixWare and 75% for Messaging Server have also been      
applied to the cash flows to recognize the portion of the development completed.
Application of this approach results in an estimated value of the UnixWare v8.0 
and Messaging Server products of approximately $1,600,000.                      

    New Caldera will not acquire certain assets nor assume certain liabilities
pursuant to the Reorganization Agreement. The excluded assets and liabilities   
included in the December 31, 2000 historical carved-out balance sheet of the    
server and professional services groups were as follows:                        

                                                                [Download Table]
                                                                       
Receivables.................................................  $ 13,751 
Other current assets........................................     5,352 
Accounts payable............................................    (2,935)
Income taxes payable........................................    (1,957)
Accrued liabilities.........................................   (19,636)
                                                              -------- 
Net liabilities of the server and professional services                
  groups not assumed by New Caldera.........................  $ (5,425)
                                                              ======== 

In connection with the Reorganization, SCO has agreed to pay three    
executive officers who will become executive officers of New Caldera cash       
bonuses amounting to $1,073,000 in aggregate if they have not voluntarily       
terminated their employment with SCO or New Caldera for one year following the  
closing of the Reorganization. Although these obligations will be settled by    
SCO, Caldera will recognize expense in its financial statements for these       
amounts over the one-year period since the services performed will benefit New  
Caldera. The expense for these payments has not been included in the            
accompanying pro forma condensed combined statements of operations as it        
represents a non-recurring charge directly related to the acquisition.          

3. PRO FORMA COMBINED NET LOSS PER COMMON SHARE                                 

   The pro forma combined net loss per common share is based on the weighted
average number of common shares of Caldera and the shares to be issued to SCO   
for the year ended October 31, 2000 and the three months ended January 31, 2001.
The dilutive effect of common share equivalents has not been included since the 
pro forma combined condensed statements of operations reflect net losses for the
year ended October 31, 2000 and the three months ended January 31, 2001.        

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CALDERA SYSTEMS, INC. AND THE SCO SERVER
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NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

    The pro forma combined basic and diluted net loss per common share for the
year ended October 31, 2000 and the three months ended January 31, 2001 was     
determined as follows (in thousands):                                           

                                                        [Enlarge/Download Table]

                                                             OCTOBER 31,  JANUARY 31,
                                                                2000         2001    
                                                             -----------  -----------
                                                                                     
Caldera basic and diluted shares............................   32,922       39,588   
Shares to be issued to SCO..................................   16,000       16,000   
                                                               ------       ------   
Pro forma combined basic and diluted shares used for net                             
  loss per share............................................   48,922       55,588   
                                                               ======       ======   

4. EARN-OUT PROVISION                                                           

 In connection with the Reorganization, SCO shall be entitled to receive
earn-out payments from New Caldera representing 45% of the amount by which      
OpenServer revenues exceed certain threshold amounts during the three-year      
period following the closing. Any earn-out amounts will be payable on the 45th  
day following the completion of the fourth, eighth and twelfth full Caldera     
quarters following the completion of the combination. On each of these dates,   
Caldera will pay to SCO an amount equal to 45% of the total OpenServer revenues 
for the prior four Caldera quarters that exceed the cumulative threshold amounts
for the same prior four quarters. The chart below sets forth the threshold      
amounts for each of the twelve Caldera quarters following the completion of the 
combination.                                                                    

SCO REVENUE EARNOUT THRESHOLDS FOR OPENSERVER BUSINESS
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                         QUARTER 1(A)  QUARTER 2   QUARTER 3   QUARTER 4    TOTAL 
                                         ------------  ----------  ----------  ----------  -------
                                                                                                  
Revenue Earnout Thresholds..............   $10,500      $10,000      $9,500      $8,500    $38,500

                                                        [Enlarge/Download Table]

                                          QUARTER 5    QUARTER 6   QUARTER 7   QUARTER 8    TOTAL 
                                         ------------  ----------  ----------  ----------  -------
                                                                                                  
Revenue Earnout Thresholds..............   $ 7,500      $ 6,500      $5,000      $3,500    $22,500

                                                        [Enlarge/Download Table]

                                          QUARTER 9    QUARTER 10  QUARTER 11  QUARTER 12   TOTAL 
                                         ------------  ----------  ----------  ----------  -------
                                                                                                  
Revenue Earnout Thresholds..............   $ 3,000      $ 2,500      $2,000      $1,500    $ 9,000

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

(A)This quarter represents the first full Caldera quarter after the completion  
of the combination. For example, if the combination is completed prior to 
  April 30, 2001, this quarter will be the three months of May, June and July;
  if the combination is completed after April 30, 2001, then this quarter will
be the three months of August, September and October.                     

   Any amounts to be paid under the earn-out provision will be accounted for
as contingent consideration and recorded as additional purchase price at the    
date the amount becomes determinable. The additional cost will be allocated to  
goodwill and will be amortized over the remaining life of the goodwill.         
Management does not expect the amounts, if any, to be paid under the earn-out   
provision will be significant because the earn-out thresholds were established  
considering the declining revenue that has been experienced in OpenServer       
revenues and management's expectation that OpenServer revenues will continue to 
decline in future periods. No earn-out payments are reflected in the            
accompanying pro forma statements.                                              

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NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

If the earn-out provision for the first four quarters following the   
combination would have been in effect for the year ended October 31, 2000,      
Caldera would have paid a royalty to SCO of approximately $10.9 million. As     
discussed above, the payment would be recorded as additional purchase price and 
would be amortized over the remaining life of the goodwill. The quarterly       
amortization would amount to $681,000. Accordingly, the pro forma net loss and  
net loss per share would not change for the year ended October 31, 2000; however
the pro forma net loss for the three months ended January 31, 2001 would have   
increased by $681,000, or $0.02 per share, to $18,624,000, or $0.34 per share.  

5. ROYALTY AGREEMENTS                                                           

     Several SCO products traditionally bundled with OpenServer and UnixWare are
not being acquired by Caldera from SCO. Pursuant to the terms of the            
Reorganization Agreement, SCO will grant to Caldera a royalty-free license to   
use, modify and sublicense SCO's Xdesktop and Panorama products as part of all  
current versions of OpenServer and UnixWare. In addition, Caldera has 60 days   
from the consummation of the combination to remove or disable SCO's Webtop,     
Vision FS and Term Lite products from future UnixWare and OpenServer versions.  
Caldera has received from SCO a non-exclusive, royalty-free license to use and  
sublicense Webtop, Vision FS and Term Lite, as bundled in existing versions of  
OpenServer and UnixWare during the 60-day grace period. None of the non-acquired
bundled products is critical to the functionality of the OpenServer and UnixWare
products and Caldera plans to replace the non-acquired SCO products with other  
open source products or Caldera developed products. At the conclusion of the    
60-day grace period, Caldera may incur a royalty if a customer elects to include
a bundled version of Webtop or Vision FS in the current versions of OpenServer  
and UnixWare. In these situations, the customers electing to purchase either    
Webtop or Vision FS will be billed an additional amount for the bundled         
products. In addition, Caldera believes that all necessary modifications for    
future versions of OpenServer and UnixWare will be completed within the 60-day  
grace period and that future royalties, if any, to be paid to SCO as a result of
these royalty agreements will be minimal. As a result, no pro forma adjustments 
are necessary in connection with the royalty agreements.                        

6. PRO FORMA ADJUSTMENTS                                                        

  The pro forma condensed combined financial statements give effect to the
following pro forma adjustments in connection with the Reorganization:          

PRO FORMA CONDENSED COMBINED BALANCE SHEET                                      

 (a) To reflect the estimated consideration to be exchanged as
    summarized in Note 2 including the issuance of common stock and options to
 purchase common stock amounting to $59,967,000 and the $23,000,000 cash
     payment, and the non-interest bearing note payable of $8,000,000, which has
 been discounted to its net present value of $6,987,000 using a discount
   rate of 10%. Under the Reorganization, Caldera advanced $7,000,000 of the
cash payment to SCO in January, 2001 prior to closing under a loan    
arrangement.                                                          

         (b) To reflect the $3,100,000 of estimated direct expenses related to
 the Reorganization including legal, accounting, printing and investment
banking fees.                                                         

        (c) To remove the net liabilities of the SCO server and professional
     services groups of $5,425,000 (see Note 2) which will not be assumed by New
Caldera pursuant to the Reorganization Agreement.                     

  (d) To reflect the identifiable intangible assets and goodwill
amounting to $90,766,000 as summarized in Note 2.                     

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CALDERA SYSTEMS, INC. AND THE SCO SERVER
AND PROFESSIONAL SERVICES GROUPS

NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

    (e) To reflect an accrual of $500,000 for estimated shut-down of
  non-essential facilities and related costs. Certain facilities have been
identified by management of New Caldera that will be closed following 
   consummation of the Reorganization. The accrual for shut-down and related
costs has not been included in the accompanying pro forma condensed   
  combined statement of operations as it represents a non-recurring charge
directly related to the acquisition.                                  

       (f) To record a deferred tax liability related to book-to-tax basis
   differences of acquired identifiable intangible assets using an estimated
effective tax rate of 37.5 percent.                                   

     (g) To reflect the impact of the write-off of acquired in-process
  research and development. The in-process research and development charge
has not been included in the accompanying pro forma condensed combined
  statement of operations as it represents a non-recurring charge directly
related to the acquisition.                                           

      (h) To record the elimination of the divisional surplus of the SCO
server and professional services groups.                              

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS                            

         (i) To eliminate services provided by the SCO server and professional
 services groups to Caldera and licensed products sold by Caldera to the
     server and professional services groups. There were no services provided by
the SCO server and professional services groups to Caldera during the 
 periods included in the pro forma statement of operations for the three
months ended January 31, 2001.                                        

      (j) Caldera agreed to reimburse SCO for $1.5 million of transition
     costs to be incurred by SCO in connection with the retention of various SCO
    employes who will become employees of New Caldera. This adjustment for the
year ended December 31, 2000 eliminates the portion of the expenses   
 included in both Caldera's and the SCO server and professional services
groups' historical financial statements. This adjustment for the three
months ended January 31, 2001 eliminates the portion of the expenses  
recorded by Caldera during the three months ended January 31, 2001 and
 reverses the entry recorded by the SCO server and professional services
group during the three months ended December 31, 2000 to reflect the  
reimbursement by decreasing the respective expenses.                  

     (k) To reflect the amortization of intangible assets and goodwill
  related to the acquisition calculated using the straight-line method and
estimated useful lives of five years for the distribution/ reseller   
     channel, existing technology, distribution agreement and goodwill and three
years for the assembled workforce and trade name and trademarks.      

        (l) To reflect the interest expense associated with the accretion of
the $8 million note payable to SCO.                                   

        (m) To reflect the additional shares of common stock to be issued as
discussed in Note 3.                                                  

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THE SANTA CRUZ OPERATION, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET AS OF DECEMBER 31, 2000 

(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                LESS SERVER AND                          
                                               THE SANTA CRUZ    PROFESSIONAL     PRO FORMA              
                                               OPERATION, INC.  SERVICES GROUPS  ADJUSTMENTS    PRO FORMA
                                               ---------------  ---------------  -----------    ---------
                                                                                                         
ASSETS                                                                                                   

Current assets:                                                                                          
  Cash and cash equivalents...................    $  10,009         $    69        $23,000(a)   $ 44,177 
                                                                                    (3,745)(a)           
                                                                                    18,000(c)            
                                                                                    (3,018)(d)           
  Short-term investments......................        3,100                                        3,100 
  Receivables, net............................       22,155          19,456         13,751(b)     16,450 
  Available-for-sale equity securities........        5,313                                        5,313 
  Other current assets........................        6,001           5,352          5,352(b)      6,001 
                                                  ---------         -------        -------      -------- 
         Total current assets.................       46,578          24,877         53,340        75,041 
Note receivable...............................                                       7,020(a)      7,020 
Property and equipment, net...................        7,906           6,020                        1,886 
Purchased software and technology licenses,                                                              
  net.........................................        5,030           4,574                          456 
Equity investment in New Caldera..............                                      23,293(a)     23,293 
Other assets..................................        3,692             581             --         3,111 
                                                  ---------         -------        -------      -------- 
         Total assets.........................    $  63,206         $36,052        $83,653      $110,807 
                                                  =========         =======        =======      ======== 

LIABILITIES AND SHAREHOLDERS' EQUITY                                                                     

Current liabilities:                                                                                     
  Trade accounts payable......................    $   4,205         $ 2,935        $ 2,935(b)   $  4,205 
  Short term debt.............................                                      18,000(c)     13,640 
                                                                                    (4,360)(c)           
  Income taxes payable........................        2,178           2,178         17,176(a)     19,133 
                                                                                     1,957(b)            
  Accrued restructuring charges...............        2,903           2,585          2,585(b)      2,903 
  Accrued expenses and other current                                                                     
    liabilities...............................       22,157          19,770         17,051(b)     19,438 
  Deferred revenues...........................        6,174           5,343                          831 
                                                  ---------         -------        -------      -------- 
         Total current liabilities............       37,617          32,810         55,343        60,150 
                                                  ---------         -------        -------      -------- 
Long-term lease obligations...................          346             296                           50 
Long-term deferred revenues...................        1,626           1,594                           32 
Other long-term liabilities...................        3,516             146                        3,370 
                                                  ---------         -------        -------      -------- 
         Total long-term liabilities..........        5,488           2,036                        3,452 
                                                  ---------         -------        -------      -------- 
         Shareholders' equity:                                                                           
  Common stock................................      118,947                             97(d)    123,404 
                                                                                     4,360(c)            
  Accumulated comprehensive income (loss).....        2,275            (756)                       3,031 
  Accumulated deficit.........................     (101,121)                        25,762(a)    (79,230)
                                                                                     1,206(a)            
                                                                                    (3,018)(d)           
                                                                                       (97)(d)           
  Divisional surplus..........................                        1,962                              
                                                  ---------         -------        -------      -------- 
         Total shareholders' equity...........       20,101           1,206         28,310        47,205 
                                                  ---------         -------        -------      -------- 
         Total liabilities and stockholders'                                                             
           equity.............................    $  63,206         $36,052        $83,653      $110,807 
                                                  =========         =======        =======      ======== 

See accompanying notes to the unaudited pro forma condensed consolidated
financial statements. 

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THE SANTA CRUZ OPERATION, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS 
FOR THE YEAR ENDED SEPTEMBER 30, 2000 

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        [Enlarge/Download Table]

                                                              LESS SERVER AND                           
                                             THE SANTA CRUZ     PROFESSIONAL     PRO FORMA              
                                             OPERATION, INC.  SERVICES GROUPS   ADJUSTMENTS    PRO FORMA
                                             ---------------  ----------------  -----------    ---------
                                                                                                        
Net revenues................................    $148,923          $139,632       $             $  9,291 
Cost of revenues............................      41,796            41,411             --           385 
                                                --------          --------       --------      -------- 
  Gross margin..............................     107,127            98,221             --         8,906 
                                                --------          --------       --------      -------- 
Operating expenses:                                                                                     
  Research and development..................      39,673            33,942                        5,731 
  Sales and marketing.......................      89,313            73,223                       16,090 
  General and administrative................      18,691            13,748             --         4,943 
  Restructuring charges.....................      10,683             9,882             --           801 
                                                --------          --------       --------      -------- 
          Total operating expenses..........     158,360           130,795                       27,565 
                                                --------          --------       --------      -------- 
Operating loss..............................     (51,233)          (32,574)                     (18,659)
Equity interest in results of New Caldera...          --                --        (23,293)(e)   (23,293)
Other income (expense), net.................       2,498              (283)        (6,160)(c)    (2,677)
                                                                                      702(f)            
                                                --------          --------       --------      -------- 
Loss before income taxes....................     (48,735)          (32,857)       (28,751)      (44,629)
Provision for income taxes..................       8,218             8,218                              
                                                --------          --------       --------      -------- 
Net loss....................................    $(56,953)         $(41,075)      $(28,751)     $(44,629)
                                                ========          ========       ========      ======== 
Basic and diluted net loss per share........    $  (1.59)                                      $  (1.25)
                                                --------                                       -------- 
Shares used in basic and diluted net loss                                                               
  per share calculation.....................      35,720                                         35,720 
                                                ========                                       ======== 

See accompanying notes to the unaudited pro forma condensed consolidated
financial statements. 

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THE SANTA CRUZ OPERATION, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS 
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        [Enlarge/Download Table]

                                                           LESS SERVER AND                         
                                                            PROFESSIONAL                           
                                          THE SANTA CRUZ      SERVICES       PRO FORMA             
                                          OPERATION, INC.      GROUPS       ADJUSTMENTS   PRO FORMA
                                          ---------------  ---------------  -----------   ---------
                                                                                                   
Net revenues.............................     $26,455          $23,887        $    --      $ 2,568 
Cost of revenues.........................       7,081            7,042             --           39 
                                              -------          -------        -------      ------- 
  Gross margin...........................      19,374           16,845             --        2,529 
                                              -------          -------        -------      ------- 
Operating expenses:                                                                                
  Research and development...............       6,432            4,836             --        1,596 
  Sales and marketing....................      16,331           10,308             --        6,023 
  General and administrative.............       4,267            2,841             --        1,426 
                                              -------          -------        -------      ------- 
          Total operating expenses.......      27,030           17,985             --        9,045 
                                              -------          -------        -------      ------- 
Operating loss...........................      (7,656)          (1,140)            --       (6,516)
Equity interest in the results of New                                                              
  Caldera................................          --               --             --(e)           
Other income (expense), net..............         375              (39)           138(f)       552 
                                              -------          -------        -------      ------- 
Loss before income taxes.................      (7,281)          (1,179)           138       (5,964)
Provision for income taxes...............         616              616             --           -- 
                                              -------          -------        -------      ------- 
Net loss.................................     $(7,897)         $(1,795)       $   138      $(5,964)
                                              =======          =======        =======      ======= 
  Basic and diluted net loss per share...     $ (0.20)                                     $ (0.15)
                                              =======                                      ======= 
  Shares used in basic and diluted net                                                             
     loss per share calculation..........      39,433                                       39,433 
                                              =======                                      ======= 

See accompanying notes to unaudited pro forma condensed consolidated financial
statements. 

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THE SANTA CRUZ OPERATION, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED 
FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION                                                        

The unaudited pro forma condensed consolidated financial statements   
included herein have been prepared pursuant to the rules and regulations of the 
Securities and Exchange Commission. Certain information and certain footnote    
disclosures normally included in financial statements prepared in accordance    
with accounting principles generally accepted in the United States have been    
condensed or omitted pursuant to such rules and regulations; however, we believe
that the disclosures are adequate to make the information presented not         
misleading.                                                                     

    On August 1, 2000 Caldera Systems Inc. ("Caldera"), Caldera International,
Inc. ("New Caldera") and The Santa Cruz Operation, Inc. ("SCO") entered into an 
Agreement and Plan of Reorganization (the "Reorganization"). This agreement was 
subsequently amended on September 13, 2000, December 12, 2000 and February 9,   
2001. Under the terms of the Reorganization, as amended, SCO will contribute the
capital stock of certain companies as well as certain assets collectively       
representing the server and professional services group. In exchange, SCO will  
receive 16 million shares of New Caldera common stock together with $23 million 
in cash and an $8 million non-interest bearing note paid in quarterly           
installments of $2 million per quarter beginning in the fifth quarter after the 
closing of the transaction. SCO will treat this transaction as a disposal of its
server and professional services groups and record a gain upon completion of the
transaction. On an ongoing basis it will account for its investment in New      
Caldera using the equity method of accounting. (See Note 2 for a further        
explanation of the effects).                                                    

   The unaudited pro forma condensed consolidated balance sheet of SCO gives
effect to the Reorganization as if it had been completed as of December 31,     
2000. The unaudited pro forma condensed consolidated statements of operations of
SCO for the year ended September 30, 2000 and the three month period ended      
December 31, 2000 give effect to the Reorganization as if it had occurred on    
October 1, 1999.                                                                

2. REORGANIZATION                                                               

 The accompanying pro forma statements reflect the contribution of SCO's
server and professional services groups to New Caldera in exchange for the      
issuance of 16 million shares of New Caldera common stock, representing an      
approximate 28.7% interest in New Caldera on an outstanding shares basis and an 
approximate 25.3% interest on a fully diluted basis, plus $23 million in cash   
and an $8 million non-interest bearing note receivable. SCO currently holds     
approximately 42,000 shares of Caldera's Stock.                                 

  As SCO will retain a 28.7% interest in New Caldera, including the server
and professional services groups, after the Reorganization it will not recognize
a gain on 100% of the contribution of the server and professional services      
groups. SCO will record a gain calculated at 71.3% of the fair value of the New 
Caldera stock received less 71.3% of SCO's basis in the assets of the server and
professional services groups plus net cash consideration and the fair value of  
the note receivable at the date of closing as follows (dollars in thousands     
except per share amounts):                                                      

                                                                [Download Table]
                                                                      
Estimated Consideration:                                              
  Adjusted fair value of New Caldera common stock (16                 
     million at $1.875 per share times 71.3%)...............  $21,390 
Cash consideration..........................................   23,000 
Note receivable discounted to present value at 10% per                
  annum.....................................................    7,020 
Estimated expenses..........................................   (3,745)
                                                              ------- 
                                                               47,665 
71.3% of net assets of server and professional services               
  groups to be sold.........................................   (4,728)
                                                              ------- 
Estimated pretax gain.......................................  $42,937 
                                                              ======= 

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THE SANTA CRUZ OPERATION, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED 
FINANCIAL STATEMENTS -- (CONTINUED) 

    The gain calculation assumes a fair value for New Caldera Stock of $1.875.
The actual gain recognized will depend on the fair value for New Caldera Stock  
on the closing date of the transaction; for purposes of the pro forma statements
the closing price of New Caldera Stock on March 9, 2001 has been utilized as an 
estimate of fair value for New Caldera Stock at the closing date of the         
transaction. The actual fair value on the day of closing and the resulting gain 
on sale of The Server and Professional Services Groups could be materially      
different.                                                                      

Every $1 increase (decrease) in per share value of New Caldera stock would      
result in an increase (decrease) in the gain by approximately $11,318,000.      

    Subsequent to the completion of the Reorganization SCO's operating results
will include 28.7% of the operating results of New Caldera, adjusted to amortize
identified intangible assets acquired and goodwill.                             

 The estimated basis of SCO's investment in New Caldera is calculated as
follows (dollars in thousands):                                                 

                                                                [Download Table]
                                                                     
Adjusted fair value of New Caldera common stock.............  $21,390
Portion of investment in New Caldera with no step up in              
  basis.....................................................    1,903
                                                              -------
Basis of investment.........................................   23,293
SCO's share in New Caldera's tangible and identifiable               
  intangible assets, less liabilities after completion of            
  the reorganization........................................   34,060
                                                              -------
Excess of net assets acquired over the value of the                  
  investment................................................  $10,767
                                                              =======

     The following table sets forth the allocation of the basis of investment to
the tangible and intangible assets acquired and liabilities assumed (dollars in 
thousands).                                                                     

                                                                [Download Table]
                                                                      
Purchase price allocation:                                            
  Current assets............................................  $19,312 
  Non-current assets........................................   12,250 
  Current liabilities.......................................   (4,117)
  Long term liabilities.....................................   (4,152)
                                                              ------- 
                                                              $23,293 
                                                              ======= 

 To record the investment at the carrying value, non-current assets have
been proportionately reduced as follows:                                        

                                                        [Enlarge/Download Table]

                                                   SHARE IN FAIR                              
                                                     VALUE OF                        AMOUNT   
                                                   IDENTIFIABLE                   ALLOCATED TO
                                                      ASSETS       PROPORTIONATE  NON-CURRENT 
                                                     ACQUIRED        REDUCTION       ASSETS   
                                                  ---------------  -------------  ------------
                                                                                              
Property and equipment, net......................       2,173           1,017         1,156   
Investment in non-marketable securities..........       1,486             695           791   
Intangible assets, net...........................      18,533           8,670         9,863   
Other assets.....................................         825             385           440   
                                                      -------         -------       -------   
          Total..................................      23,017          10,767        12,250   
                                                      =======         =======       =======   

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THE SANTA CRUZ OPERATION, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED 
FINANCIAL STATEMENTS -- (CONTINUED) 

   The purchase price allocated to intangible assets is detailed as follows:

                                                                [Download Table]
                                                                    
Distribution/reseller channel...............................  $4,002
Assembled workforce.........................................   3,788
Existing technology.........................................     947
Tradename and trademarks....................................     214
Other.......................................................     912
                                                              ------
          Total.............................................  $9,863
                                                              ======

The excess of SCO's share in net assets acquired over the basis of    
investment as allocated to long-term assets is amortized over the assets'       
expected useful life as follows:                                                

                                                        [Enlarge/Download Table]

                                                     AMOUNT    AMORTIZATION     ANNUAL   
                                                    ALLOCATED      LIFE      AMORTIZATION
                                                    ---------  ------------  ------------
                                                                                         
Property and equipment, net........................  $ 1,017     3 years        $  339   
Investment in marketable securities................      695          --            --   
Intangible assets                                                                        
  Distribution/reseller channel....................    3,518     3 years           703   
  Assembled workforce..............................    3,330     3 years         1,110   
  Technology (mainly UnixWare).....................      832     5 years           166   
  Trade name and trademarks........................      188     3 years            63   
  Other............................................      802     5 years           160   
                                                     -------                    ------   
                                                       8,670                     2,202   
Other assets.......................................      385     3 years           129   
                                                     -------                    ------   
          Total....................................  $10,767                    $2,670   
                                                     =======                    ======   

   After completion of the Reorganization, SCO will account for 28.7% of New
Caldera's net income, adjusted for the effects of the allocation of the purchase
price to non-current assets. These effects will be calculated based on the      
estimated remaining useful live of the underlying assets and will result in a   
reduction of the New Caldera losses recognized in SCO's financial statements of 
$668 per quarter.                                                               

The calculations are estimated based on the gain assumptions discussed
herein and based on New Caldera's unaudited pro-forma condensed consolidated    
balance sheet as of December 31, 2000. The actual amounts recorded will be      
calculated based on the balance sheet of Caldera after closing of the           
transaction and could be materially different to the amounts above.             

3. BENEFITS TO BE PROVIDED TO SCO EXECUTIVES                                    

On July 31, 2000 the Board of Directors approved the following option 
benefits to be provided to five Executive Officers who will remain employed with
SCO after the Reorganization:                                                   

a. The full acceleration of vesting provisions of options to purchase 
approximately 918,000 shares of common stock.                         

    b. An extension of the term of these 918,000 options and a further 608,000
   options which were fully vested and unexercised as of July 31, 2000 until
January 31, 2002, in the event that any of these five officers is     
involuntarily terminated or terminated by mutual agreement.           

Their benefits are contingent upon the approval and completion of the 
Reorganization.                                                                 

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THE SANTA CRUZ OPERATION, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED 
FINANCIAL STATEMENTS -- (CONTINUED) 

    These options were granted at exercise prices ranging from $2.56 to $16.31
and were granted with original terms of 5 and 10 years between December 1993 and
April 2000. The weighted average exercise price of these options is $6.15.      

    Under the guidance given in FASB Interpretation No. ("FIN") 44 "Accounting
for Certain Transactions involving Stock Compensation" SCO remeasured these     
options as of the date that the Board of Directors approved these modifications.

   For the options accelerated in a. above, SCO measured the intrinsic value
of the award at the date of the modification and will record any intrinsic value
over and above that recorded on the original grant date as compensation if,     
absent the acceleration, the award would have been forfeited. SCO's estimate of 
the compensation expense to be recorded in respect of options, which would have 
been forfeited, will be based on historical retention rates and the remaining   
vesting period on each of these options.                                        

    SCO has estimated that based on an actual stock price of $3.47 at the time
of the modification was made the total excess intrinsic value of the options    
accelerated would be approximately $92,000.                                     

     SCO estimates that each of the Executive Officers will remain employed with
SCO for the remaining part of the original vesting period and as a result has   
estimated that there will be no shares which should have been forfeited. This is
based on the average remaining vesting period of approximately 2 years and the  
average period of employment of each of the Executive Officers of 10 years. As a
result no compensation expense is expected to be recorded. However, this        
estimate could change based on the number of Executive Officers whose employment
is terminated prior to the date that the options would have been forfeited under
the original terms of the option grants. Such changes could be material to the  
results of operations of SCO.                                                   

   For the 608,000 options discussed in b. above the Board of Directors also
measured the intrinsic value of these options as of the date the modification   
was made. Compensation expense, equivalent to the excess of the intrinsic value 
of these options at the date of the modification over the intrinsic value       
recorded on the original issuance will be recorded as compensation expense in   
the event that any of these Executive Officers is involuntarily terminated or is
terminated by mutual consent prior to January 31, 2002.                         

     SCO has estimated that based on the stock price at the date of modification
of $3.47 the total excess intrinsic value of these options would be             
approximately $71,000.                                                          

     SCO expects that these Executive Officers will remain employed by SCO until
after January 2002 and as a result has estimated that the charge to be recorded 
is zero. This is based on the factors discussed above. However in the event that
one of the five Executive Officers is involuntarily terminated or is terminated 
by mutual consent prior to January 31, 2002, SCO will record a charge as        
discussed above. Such charge could be material to the results of operations of  
SCO.                                                                            

In addition to the option modifications discussed above the Board of  
Directors approved the following modifications to options held by three         
Executive Officers who will be employed by New Caldera after consummation of the
Reorganization:                                                                 

a. Full acceleration of vesting of options to purchase approximately  
799,000 shares of SCO common stock.                             

    b. The term of the approximately 799,000 options in a. above together with
    the term of further options to purchase approximately 527,000 shares
will be extended to January 31, 2002. The modifications are also
contingent upon the completion of the Reorganization.           

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THE SANTA CRUZ OPERATION, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED 
FINANCIAL STATEMENTS -- (CONTINUED) 

The total number of options subject to modification was approximately 
1,326,000. These options had original contractual terms of 10 years, were issued
at dates between December 1991 and September 1999 at exercise prices ranging    
between $1.50 and $9.25. The weighted average exercise price of the outstanding 
options is $5.35. As a result of these modifications the original contractual   
term of options to purchase 5,100 shares at an exercise price of $1.50 will be  
extended.                                                                       

  As of the date of modification SCO measured the intrinsic value of these
options and upon consummation of the Reorganization will record a compensation  
expense equivalent to the excess of this intrinsic value over the original      
intrinsic value recorded. SCO estimated that, based on the stock price of $3.47 
as of the date the modifications were made, this compensation expense will be   
approximately $97,000. As such a pro forma adjustment has been recorded to      
reflect the estimated expense, which SCO expects to record upon consummation of 
the Reorganization.                                                             

     In addition the Board of Directors approved cash payments on the earlier of
(a) one year, provided that such executive officer has not voluntarily          
terminated his employment with SCO or New Caldera, or (b) immediately upon an   
involuntary termination or a termination by mutual consent, equal to that       
individual's current annual salary plus 100% of his target bonus.               

  SCO expects to record a charge of approximately $1,073,000 to operations
over one year in connection with the expected cash payments to be made to the   
executives remaining with SCO and approximately $1,945,000 in respect of        
payments to be made to the three executives who will be transferred to New      
Caldera as part of the Reorganization. These charges will be recorded to        
operations over the service period which will commence on the date of           
consummation of the Reorganization and last for a period of one year from this  
date.                                                                           

The accompanying unaudited pro forma condensed consolidated financial 
statements include adjustments for the expenses to be recorded in respect of the
option amendment and the bonus payments which are expected to be made by SCO.   

4. LOAN AGREEMENT WITH THE CANOPY GROUP                                         

  In connection with the Reorganization, SCO entered into a Loan Agreement
and a Secured Convertible Promissory Note as of January 8, 2001, with The Canopy
Group ("Lender") under which SCO can borrow up to $18 million. Drawings on this 
line of credit are repayable on December 31, 2001 and bear interest at a rate   
per annum of 10%. Drawings on the line of credit are immediately convertible    
into common stock at the option of the Lender at the closing price of SCO common
stock on the closing date which was $1.5625 per share. The unconverted principal
is repayable in cash. Drawings on the line of credit are collateralized by SCO's
tangible and intangible assets.                                                 

  The number of shares that may be converted under the secured convertible
promissory note is limited so that the aggregate of shares converted together   
with shares acquired under the warrants described below may not exceed 19% of   
the total outstanding shares of SCO's common stock.                             

In connection with the loan agreement, SCO issued warrants to purchase
1,440,000 shares of common stock at an exercise price of $1.5625, the closing   
price on the date of issuance on January 8, 2001. SCO is obligated to issue     
additional warrants to purchase shares of SCO common stock at an exercise price 
of $1.5625 to the extent advances on the line of credit exceed $9 million. The  
number of shares that may be purchased under these additional warrants equals   
the product of the amounts advanced in excess of $9 million multiplied by 0.25  
and divided by the exercise price of $1.5625. The term of the warrants is two   
years. For purposes of the accompanying pro forma condensed consolidated        
financial statements, a                                                         

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THE SANTA CRUZ OPERATION, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED 
FINANCIAL STATEMENTS -- (CONTINUED) 

maximum drawing on the line of credit has been assumed. The total number of     
warrant shares to be issued by SCO under this assumption therefore amounts to   
2,880,000.                                                                      

 The proceeds under the promissory note have been allocated based on the
relative fair values of the loan and the warrants. The fair value of the loan   
equals its face amount as it bears a 10% market rate of interest. The fair value
of the warrants has been calculated using the Black-Scholes option pricing model
with the following assumptions: contractual term of two years, a risk free      
interest rate of 4.72%, a dividend yield of 0% and a volatility of 102%. The    
fair value of the warrants under these assumptions amounts to approximately     
$2,480,000. Based on the relative fair values of the warrants and the debt SCO  
has allocated approximately $2,180,000 to the warrants. This amount has been    
expensed as interest expense in the pro forma condensed consolidated statement  
of operations and has been recorded as debt discount in the pro forma condensed 
consolidated balance sheet.                                                     

Assuming all warrants are exercised, and based on the number of shares
outstanding at December 31, 2000, a maximum of 4,615,000 shares could be        
converted under the promissory note, resulting in a conversion of approximately 
$7,211,000 of the principal and a remaining required cash repayment of          
$10,789,000. SCO has recorded a beneficial conversion feature of $2,180,000     
resulting from the difference between the accounting conversion of $5,031,000   
and the actual value of the conversion of $7,211,000 as a debt discount in the  
pro forma condensed consolidated balance sheet and as additional interest       
expense in the pro forma condensed consolidated statement of operations.        

5. EARN-OUT PROVISION                                                           

In connection with the Reorganization, SCO will be entitled to receive
earn-out payments from New Caldera representing 45% of the amount by which      
OpenServer revenues exceed certain thresholds during the three-year period      
following the closing. Any earn-out amounts will be payable to SCO on the 45th  
day following the completion of the fourth, eighth and twelfth full New Caldera 
quarter following the completion of the combination. No earn-out payments are   
reflected in the accompanying pro forma statements as such earn-out is          
contingent on future sales of OpenServer products. Any amounts payable to SCO   
under the earn-out provision will be recorded as other income. If the earn-out  
provision for the first four quarters following the combination would have been 
in effect for the year ended September 30, 2000, and the three month period     
ended December 31, 2000, SCO would have received a royalty of approximately     
$10.9 million during the three month period ended December 31, 2000, calculated 
based on sales of OpenServer products during four New Caldera quarters.         
Accordingly, the pro forma net loss and net loss per share would not change for 
the year ended September 30, 2000. Assuming an effective tax rate of 40% the pro
forma net loss for the three month period ended December 31, 2000 would have    
decreased by approximately $6,540,000 to result in pro forma net income of      
$576,000 and a basic and diluted net income per share of $0.02.                 

6. PRO FORMA ADJUSTMENTS                                                        

  The unaudited pro forma condensed consolidated financial statements give
effect to the following pro forma adjustments in connection with the            
Reorganization:                                                                 

       (a) To reflect the gain and related taxation payable on the sale of
   the assets and liabilities of the server and professional services groups
and the recognition of the pro rata gain in connection with this      
   transaction (see Note 2). Taxation payable on the gain has been estimated
at 40%.                                                               

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THE SANTA CRUZ OPERATION, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED 
FINANCIAL STATEMENTS -- (CONTINUED) 

      The equity investment in New Caldera is calculated as follows: (in
thousands, except per share amounts)                                  

                                                                [Download Table]
                                                                    
Market value of Caldera shares (16 million shares at a fair         
  value of $1.875 per share)...............................  $30,000
                                                             =======
Value of net assets sold (71.3% of above amount)...........   21,390
Net assets over which significant interest is retained.....    1,903
                                                             -------
Equity investment in New Caldera...........................  $23,293
                                                             =======

(b) To reflect the assets and liabilities of the server and 
professional services groups which will not be assumed pursuant to the
Reorganization.                                                       

      (c) To reflect the $18 million loan to be received from The Canopy
 Group and related interest expenses as discussed in Note 4 for the year
ended September 30, 2000.                                             

The related interest expenses comprise the following:                 

                                                                [Download Table]
                                                                    
10% interest payable on principal...........................  $1,800
Debt discount related to warrants...........................   2,180
Beneficial conversion feature recognized as interest                
  expense...................................................   2,180
                                                              ------
Total interest expense......................................  $6,160
                                                              ======

    No interest expense was recorded for the three month period ended December
31, 2000 as the loan is repayable within one year.                              

    (d) To reflect the recognition of expenses related to the option
modifications and bonus payments discussed in Note 3.                 

         (e) To reflect SCO's equity share of New Caldera's pro forma combined
results of operations for the respective periods.                     

     SCO's equity share in New Caldera's pro forma combined results for the year
ended September 30, 2000 has been calculated as follows:                        

                                                                [Download Table]
                                                                     
New Caldera's pro forma net loss.........................  $(101,088)
Less: amortization of goodwill relating to the                       
  acquisition of SCO included in above net loss..........      7,113 
                                                           --------- 
                                                             (93,077)
                                                           --------- 
SCO's 28.7% equity interest thereof......................    (26,713)
Add: amortization of Caldera's existing assembled                    
  workforce acquired.....................................       (459)
Add: amortization of the excess of net assets acquired               
  over purchase price....................................      2,670 
                                                           --------- 
Net loss from equity investment in New Caldera                       
  attributable to SCO....................................  $ (24,502)
Limited to the carrying value of the investment..........    (23,293)
                                                           ========= 

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THE SANTA CRUZ OPERATION, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED 
FINANCIAL STATEMENTS -- (CONTINUED) 

    The losses attributable to SCO exceed the carrying value of the investment
and SCO has no ongoing obligation to fund New Caldera's losses. Therefore, SCO  
will discontinue applying the equity-method once the investment is reduced to   
zero.                                                                           

    SCO has not recognized an equity share in New Caldera's pro forma combined
results for the three month period ended December 31, 2000 because the basis of 
the investment in New Caldera has been reduced to zero and no ongoing obligation
exists by SCO to fund New Caldera's losses.                                     

       (f) To record interest income relating to the note receivable of $8
million.                                                              

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INDEX TO FINANCIAL STATEMENTS 

                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
CALDERA SYSTEMS, INC., THE CARVED-OUT PORTION OF CALDERA,         
  INC. AND THEIR SUBSIDIARY                                       
Report of Independent Public Accountants....................  F-2 
Consolidated Balance Sheets.................................  F-3 
Consolidated Statements of Operations and Comprehensive           
  Loss......................................................  F-4 
Consolidated Statements of Stockholders' Equity.............  F-5 
Consolidated Statements of Cash Flows.......................  F-6 
Notes to Consolidated Financial Statements..................  F-8 
THE SCO SERVER AND PROFESSIONAL SERVICES GROUPS                   
Report of Independent Accountants...........................  F-34
Consolidated Carve Out Balance Sheets.......................  F-35
Consolidated Carve Out Statements of Operations and               
  Comprehensive Loss........................................  F-36
Consolidated Statements of Divisional Surplus (Deficit) and       
  Accumulated Other Comprehensive Loss......................  F-37
Consolidated Carve Out Statements of Cash Flows.............  F-38
Notes to Consolidated Carve Out Financial Statements........  F-39
EBIZ ENTERPRISES, INC.                                            
Report of Independent Public Accountants....................  F-55
Balance Sheets..............................................  F-56
Statements of Operations....................................  F-57
Statements of Stockholders' Equity..........................  F-58
Statements of Cash Flows....................................  F-59
Notes to Financial Statements...............................  F-60

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Caldera Systems, Inc.:                                                       

 We have audited the accompanying consolidated balance sheets of Caldera
Systems, Inc. (a Delaware corporation), the carved-out portion of Caldera, Inc. 
(a Utah corporation) and their subsidiary as of October 31, 1999 and 2000, and  
the related consolidated statements of operations and comprehensive loss,       
stockholders' equity and cash flows for each of the three years in the period   
ended October 31, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these      
financial statements based on our audits.                                       

 We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform 
the audit to obtain reasonable assurance about whether the financial statements 
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An 
audit also includes assessing the accounting principles used and significant    
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audits provide a reasonable basis   
for our opinion.                                                                

 In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Caldera     
Systems, Inc., the carved-out portion of Caldera, Inc. and their subsidiary as  
of October 31, 1999 and 2000, and the results of their operations and their cash
flows for each of the three years in the period ended October 31, 2000 in       
conformity with accounting principles generally accepted in the United States.  

ARTHUR ANDERSEN LLP                                                             

Salt Lake City, Utah                                                            
December 5, 2000                                                            
(except with respect to the Reorganization Agreement discussed in Note 1,       
as to which the date is February 9, 2001)                                       

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CALDERA SYSTEMS, INC., THE CARVED-OUT 
PORTION OF CALDERA, INC. AND THEIR SUBSIDIARIES 

CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                                      OCTOBER 31,                        
                                                              ---------------------------   JANUARY 31,  
                                                                  1999           2000           2001     
                                                              ------------   ------------   ------------ 
                                                                                            (UNAUDITED)  
                                                                                                         
                                                 ASSETS                                                  
CURRENT ASSETS:                                                                                          
  Cash and cash equivalents.................................  $    121,989   $ 36,560,267   $ 28,358,943 
  Available-for-sale securities.............................            --     54,179,307     50,294,010 
  Accounts receivable, net of allowance for doubtful                                                     
    accounts of $90,000, $312,300 and $224,700,                                                          
    respectively............................................       670,043      1,544,526        839,650 
  Note receivable from The Santa Cruz Operation.............            --             --      7,000,000 
  Stock subscription receivable.............................     1,500,000             --             -- 
  Other receivables.........................................       375,000             --             -- 
  Inventories...............................................       169,409        389,438        381,969 
  Other current assets......................................        33,524      1,310,173        738,811 
                                                              ------------   ------------   ------------ 
    Total current assets....................................     2,869,965     93,983,711     87,613,383 
                                                              ------------   ------------   ------------ 
PROPERTY AND EQUIPMENT:                                                                                  
  Computer equipment........................................       609,665      1,321,806      1,399,861 
  Furniture and fixtures....................................       675,181      1,097,048      1,180,060 
  Leasehold improvements....................................        86,973        342,015        343,374 
                                                              ------------   ------------   ------------ 
                                                                 1,371,819      2,760,869      2,923,295 
  Less accumulated depreciation and amortization............      (652,399)    (1,171,549)    (1,372,943)
                                                              ------------   ------------   ------------ 
    Net property and equipment..............................       719,420      1,589,320      1,550,352 
                                                              ------------   ------------   ------------ 
INVESTMENTS IN NON-MARKETABLE SECURITIES:                                                                
  Affiliate.................................................            --      1,179,704      1,179,704 
  Non-affiliates............................................            --      3,999,497      3,999,497 
                                                              ------------   ------------   ------------ 
                                                                        --      5,179,201      5,179,201 
                                                              ------------   ------------   ------------ 
EQUITY INVESTMENT IN AFFILIATE..............................            --      4,957,325             -- 
                                                              ------------   ------------   ------------ 
OTHER ASSETS, net...........................................       124,430      1,808,746      2,297,009 
                                                              ------------   ------------   ------------ 
    Total assets............................................  $  3,713,815   $107,518,303   $ 96,639,945 
                                                              ============   ============   ============ 
                                  LIABILITIES AND STOCKHOLDERS' EQUITY                                   
CURRENT LIABILITIES:                                                                                     
  Accounts payable..........................................  $  1,309,255   $  2,414,359   $  2,602,530 
  Payable to The Santa Cruz Operation.......................            --        898,026             -- 
  Accrued liabilities.......................................       792,057      1,664,818      2,551,129 
  Deferred revenue..........................................        38,080        326,330        408,866 
  Current portion of long-term debt.........................         3,698             --             -- 
  Related party payables....................................        48,933             --             -- 
                                                              ------------   ------------   ------------ 
    Total current liabilities...............................     2,192,023      5,303,533      5,562,525 
                                                              ------------   ------------   ------------ 
LONG-TERM DEBT, net of current portion......................         5,762             --             -- 
                                                              ------------   ------------   ------------ 
COMMITMENTS AND CONTINGENCIES (Notes 1 and 10)                                                           
STOCKHOLDERS' EQUITY:                                                                                    
  Preferred stock, $0.001 par value; 25,000,000 shares                                                   
    authorized..............................................            --             --             -- 
  Common stock, $0.001 par value; 75,000,000 shares                                                      
    authorized, 26,607,329, 39,444,457 and 39,684,082 shares                                             
    outstanding, respectively...............................        26,607         39,444         39,684 
  Additional paid-in capital................................    16,160,312    155,649,244    155,307,844 
  Stock subscription receivable.............................    (1,500,000)            --             -- 
  Deferred compensation.....................................    (2,734,934)    (3,714,720)    (2,789,786)
  Accumulated comprehensive income (loss)...................        (4,365)       299,456     (1,578,683)
  Accumulated deficit.......................................   (10,431,590)   (50,058,654)   (59,901,639)
                                                              ------------   ------------   ------------ 
    Total stockholders' equity..............................     1,516,030    102,214,770     91,077,420 
                                                              ------------   ------------   ------------ 
    Total liabilities and stockholders' equity..............  $  3,713,815   $107,518,303   $ 96,639,945 
                                                              ============   ============   ============ 

See accompanying notes to consolidated financial statements.

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CALDERA SYSTEMS, INC., THE CARVED-OUT 
PORTION OF CALDERA, INC. AND THEIR SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

                                                        [Enlarge/Download Table]

                                                                                            THREE MONTHS ENDED      
                                                    YEAR ENDED OCTOBER 31,                     JANUARY 31,          
                                          ------------------------------------------   ---------------------------- 
                                             1998           1999            2000           2000            2001     
                                          -----------    -----------    ------------   ------------    ------------ 
                                                                                               (UNAUDITED)          
                                                                                                                    
REVENUE:                                                                                                            
  Software and related products.......... $ 1,057,088    $ 2,772,878    $  2,993,489   $    394,840    $    452,356 
  Services...............................          --        277,429       1,280,834        158,359         601,304 
                                          -----------    -----------    ------------   ------------    ------------ 
    Total revenue........................   1,057,088      3,050,307       4,274,323        553,199       1,053,660 
                                          -----------    -----------    ------------   ------------    ------------ 
COST OF REVENUE:                                                                                                    
  Software and related products..........   1,016,682      2,388,601       2,062,724        294,802         226,503 
  Services...............................          --        537,877       1,958,612        255,284         950,331 
  Write-off of prepaid royalties.........   1,381,695             --              --             --              -- 
                                          -----------    -----------    ------------   ------------    ------------ 
    Total cost of revenue................   2,398,377      2,926,478       4,021,336        550,086       1,176,834 
                                          -----------    -----------    ------------   ------------    ------------ 
GROSS MARGIN (DEFICIT)...................  (1,341,289)       123,829         252,987          3,113        (123,174)
                                          -----------    -----------    ------------   ------------    ------------ 
OPERATING EXPENSES:                                                                                                 
  Sales and marketing (exclusive of                                                                                 
    non-cash compensation of $0,                                                                                    
    $177,050, $1,969,903, $487,132, and                                                                             
    $140,120 respectively)...............   2,223,814      4,767,508      14,753,756      2,030,556       5,520,108 
  Research and development (exclusive of                                                                            
    non-cash compensation of $0,                                                                                    
    $103,070, $1,146,490, $363,959, and                                                                             
    $133,074 respectively)...............   1,489,041      2,302,302       4,954,354        964,740       1,869,177 
  General and administrative (exclusive                                                                             
    of non-cash compensation of $0,                                                                                 
    $129,176, $2,099,623, $691,776, and                                                                             
    $60,630 respectively)................   1,798,872      1,748,087       6,429,874      1,078,510       1,747,820 
  SCO cost-sharing arrangement...........          --             --         898,026             --         601,974 
  Non-cash compensation..................          --        409,296       5,216,016      1,542,867         333,824 
                                          -----------    -----------    ------------   ------------    ------------ 
    Total operating expenses.............   5,511,727      9,227,193      32,252,026      5,616,673      10,072,903 
                                          -----------    -----------    ------------   ------------    ------------ 
LOSS FROM OPERATIONS.....................  (6,853,016)    (9,103,364)    (31,999,039)    (5,613,560)    (10,196,077)
                                          -----------    -----------    ------------   ------------    ------------ 
EQUITY IN LOSS OF AFFILIATE..............          --             --        (386,995)            --        (647,689)
                                          -----------    -----------    ------------   ------------    ------------ 
OTHER INCOME (EXPENSE):                                                                                             
  Interest expense.......................  (1,081,179)      (225,657)             --             --              -- 
  Interest income........................          --          2,512       3,237,798        113,374       1,007,819 
  Gain on sale of assets to Ebiz,                                                                                   
    Inc. ................................          --             --       2,306,357             --              -- 
  Other income (expense).................       4,838         (5,304)           (478)          (547)         19,662 
                                          -----------    -----------    ------------   ------------    ------------ 
    Other income (expense), net..........  (1,076,341)      (228,449)      5,543,677        112,827       1,027,481 
                                          -----------    -----------    ------------   ------------    ------------ 
LOSS BEFORE INCOME TAXES.................  (7,929,357)    (9,331,813)    (26,842,357)    (5,500,733)     (9,816,285)
PROVISION FOR INCOME TAXES...............     (33,780)       (34,775)        (81,141)       (12,650)        (26,700)
                                          -----------    -----------    ------------   ------------    ------------ 
NET LOSS................................. $(7,963,137)   $(9,366,588)   $(26,923,498)  $ (5,513,383)   $ (9,842,985)
                                          ===========    ===========    ============   ============    ============ 
DIVIDENDS RELATED TO CONVERTIBLE                                                                                    
  PREFERRED STOCK........................ $        --    $        --    $(12,252,717)  $(10,000,000)   $         -- 
                                          ===========    ===========    ============   ============    ============ 
NET LOSS ATTRIBUTABLE TO COMMON                                                                                     
  STOCKHOLDERS........................... $(7,963,137)   $(9,366,588)   $(39,176,215)  $(15,513,383)   $ (9,842,985)
                                          ===========    ===========    ============   ============    ============ 

BASIC AND DILUTED NET LOSS PER COMMON                                                                               
  SHARE.................................. $     (0.50)   $     (0.51)   $      (1.19)  $      (0.63)   $      (0.25)
                                          ===========    ===========    ============   ============    ============ 
WEIGHTED AVERAGE COMMON SHARES                                                                                      
  OUTSTANDING............................  16,000,000     18,457,543      32,922,135     24,779,808      39,588,452 
                                          ===========    ===========    ============   ============    ============ 
OTHER COMPREHENSIVE LOSS:                                                                                           
  Net loss attributable to common                                                                                   
    stockholders......................... $(7,963,137)   $(9,366,588)   $(39,176,215)  $(15,513,383)   $ (9,842,985)
  Unrealized gain (loss) on                                                                                         
    available-for-sale securities........          --             --         356,419             --      (1,865,030)
  Foreign currency translation                                                                                      
    adjustments..........................       3,991         (8,356)        (52,598)       (15,766)        (13,109)
                                          -----------    -----------    ------------   ------------    ------------ 
COMPREHENSIVE LOSS....................... $(7,959,146)   $(9,374,944)   $(38,872,394)  $(15,529,149)   $(11,721,124)
                                          ===========    ===========    ============   ============    ============ 

See accompanying notes to consolidated financial statements.

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CALDERA SYSTEMS, INC., THE CARVED-OUT 
PORTION OF CALDERA, INC. AND THEIR SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 

                                                        [Enlarge/Download Table]

                                       CONVERTIBLE                                                                         
                                     PREFERRED STOCK           COMMON STOCK        ADDITIONAL       STOCK                  
                                  ----------------------   --------------------     PAID-IN     SUBSCRIPTION     DEFERRED  
                                    SHARES       AMOUNT      SHARES     AMOUNT      CAPITAL      RECEIVABLE    COMPENSATION
                                  -----------   --------   ----------   -------   ------------  -------------  ------------
                                                                                                                           
Balance, October 31, 1997.......           --   $    --            --   $   --    $        --    $        --   $        -- 
Debt funding and related accrued                                                                                           
 interest applicable to                                                                                                    
 carved-out operations of                                                                                                  
 Caldera, Inc. .................           --        --            --       --             --             --            -- 
Net loss applicable to                                                                                                     
 carved-out operations of                                                                                                  
 Caldera, Inc. through August                                                                                              
 31, 1998.......................           --        --            --       --             --             --            -- 
Incorporation of Caldera                                                                                                   
 Systems, Inc. and issuance of                                                                                             
 common shares to majority                                                                                                 
 stockholder for cash and note                                                                                             
 receivable ....................           --        --    16,000,000   16,000     20,912,848             --            -- 
Distribution to Caldera, Inc.                                                                                              
 for amount paid in excess of                                                                                              
 the net book value of assets                                                                                              
 received in reorganization.....           --        --            --       --    (19,160,155)            --            -- 
Cumulative translation                                                                                                     
 adjustment.....................           --        --            --       --             --             --            -- 
Net loss for the period                                                                                                    
 subsequent to incorporation....           --        --            --       --             --             --            -- 
                                  -----------   --------   ----------   -------   ------------   -----------   ----------- 
Balance, October 31, 1998.......           --        --    16,000,000   16,000      1,752,693             --            -- 
Conversion of promissory note                                                                                              
 and accrued interest to common                                                                                            
 shares at $1.00 per share......           --        --     5,273,974    5,274      5,268,700             --            -- 
Issuance of common shares for                                                                                              
 cash and stock subscription                                                                                               
 receivable at $1.13 per                                                                                                   
 share..........................           --        --     5,333,333    5,333      5,994,667     (1,500,000)           -- 
Issuance of common shares upon                                                                                             
 exercise of stock options at                                                                                              
 $1.00 per share................           --        --            22       --             22             --            -- 
Cumulative translation                                                                                                     
 adjustment.....................           --        --            --       --             --             --            -- 
Deferred compensation related to                                                                                           
 stock option grants............           --        --            --       --      3,144,230             --    (3,144,230)
Amortization of deferred                                                                                                   
 compensation...................           --        --            --       --             --             --       409,296 
Net loss........................           --        --            --       --             --             --            -- 
                                  -----------   --------   ----------   -------   ------------   -----------   ----------- 
Balance, October 31, 1999.......           --        --    26,607,329   26,607     16,160,312     (1,500,000)   (2,734,934)
Conversion of common shares to                                                                                             
 Series A convertible preferred                                                                                            
 shares.........................    6,596,146     6,596    (6,596,146)  (6,596)            --             --            -- 
Issuance of Series B convertible                                                                                           
 preferred shares for cash at                                                                                              
 $6.00 per share, net...........    5,000,000     5,000            --       --     29,785,674             --            -- 
Dividend related to Series B                                                                                               
 convertible preferred shares...           --        --            --       --     10,000,000             --            -- 
Dividend related to stock                                                                                                  
 warrant........................           --        --            --       --      2,252,717             --            -- 
Issuance of common shares upon                                                                                             
 exercise of stock options at                                                                                              
 prices ranging from $1.00 to                                                                                              
 $6.00 per share................           --        --       452,132      452        531,673             --            -- 
Issuance of common shares under                                                                                            
 employee stock purchase program                                                                                           
 at $2.98 per                                                                                                              
 share..........................           --        --        61,807       62        183,814             --            -- 
Issuance of common shares in                                                                                               
 exchange for investments.......           --        --       306,356      306      2,450,040             --            -- 
Distribution to majority                                                                                                   
 stockholder for acquired                                                                                                  
 license rights.................           --        --            --       --             --             --            -- 
Issuance of common shares in                                                                                               
 exchange for investment in                                                                                                
 Lineo, Inc. and distribution to                                                                                           
 majority stockholder for fair                                                                                             
 value of shares issued in                                                                                                 
 excess of the carryover basis                                                                                             
 of investment..................           --        --     1,250,000    1,250      9,998,750             --            -- 
Capital contribution from                                                                                                  
 majority stockholder of Lineo,                                                                                            
 Inc., recorded at carryover                                                                                               
 basis..........................           --        --            --       --      1,966,173             --            -- 
Sale of common shares of Lineo,                                                                                            
 Inc. at $7.50 per share........           --        --            --       --      4,213,531             --            -- 
Issuance of common shares for                                                                                              
 services.......................           --        --        16,833       17        134,647             --            -- 
Conversion of preferred shares                                                                                             
 to common shares...............  (11,596,146)  (11,596)   11,596,146   11,596             --             --            -- 
Issuance of common shares for                                                                                              
 cash in an initial public                                                                                                 
 offering at $14.00 per share,                                                                                             
 net............................           --        --     5,750,000    5,750     71,776,111             --            -- 
Reclassification of stock                                                                                                  
 subscription receivable due to                                                                                            
 subsequent receipt of                                                                                                     
 cash...........................           --        --            --       --             --      1,500,000            -- 
Deferred compensation related to                                                                                           
 stock option grants............           --        --            --       --      5,370,605             --    (5,370,605)
Amortization of deferred                                                                                                   
 compensation...................           --        --            --       --             --             --     4,390,819 
Compensation expense for                                                                                                   
 modifications made to certain                                                                                             
 option grants..................           --        --            --       --        825,197             --            -- 
Cumulative translation                                                                                                     
 adjustment.....................           --        --            --       --             --             --            -- 
Unrealized gain on                                                                                                         
 available-for-sale                                                                                                        
 securities.....................           --        --            --       --             --             --            -- 
Net loss........................           --        --            --       --             --             --            -- 
                                  -----------   --------   ----------   -------   ------------   -----------   ----------- 
Balance October 31, 2000........           --   $    --    39,444,457   $39,444   $155,649,244   $        --   $(3,714,720)
Amortization of deferred                                                                                                   
 compensation (unaudited).......           --        --            --       --             --             --       333,824 
Removal of deferred compensation                                                                                           
 related to option grants for                                                                                              
 terminated employees                                                                                                      
 (unaudited)....................           --        --            --       --       (591,110)            --       591,110 
Issuance of common shares upon                                                                                             
 exercise of stock options at                                                                                              
 prices ranging from $1.00-                                                                                                
 $4.00 per share (unaudited)....           --        --       239,625      240        249,710             --            -- 
Cumulative translation                                                                                                     
 adjustment (unaudited).........           --        --            --       --             --             --            -- 
Unrealized loss on                                                                                                         
 available-for-sale securities                                                                                             
 (unaudited)....................           --        --            --       --             --             --            -- 
Net loss (unaudited)............           --        --            --       --             --             --            -- 
                                  -----------   --------   ----------   -------   ------------   -----------   ----------- 
Balance, January 31, 2001                                                                                                  
 (unaudited)....................  $        --   $    --    39,684,082   $39,684   $155,307,844   $        --   $(2,789,786)
                                  ===========   ========   ==========   =======   ============   ===========   =========== 


                                                                             CALDERA, INC.'S                               
                                   ACCUMULATED                                  EQUITY IN                                  
                                  COMPREHENSIVE    LICENSE    ACCUMULATED      CARVED-OUT                                  
                                  INCOME (LOSS)      FEE        DEFICIT        OPERATIONS                                  
                                  -------------   ---------   ------------   ---------------                               
                                                                                                                           
Balance, October 31, 1997.......   $        --    $      --   $         --     $ 2,319,393                                 
Debt funding and related accrued                                                                                           
 interest applicable to                                                                                                    
 carved-out operations of                                                                                                  
 Caldera, Inc. .................            --           --             --       5,347,435                                 
Net loss applicable to                                                                                                     
 carved-out operations of                                                                                                  
 Caldera, Inc. through August                                                                                              
 31, 1998.......................            --           --             --      (6,898,135)                                
Incorporation of Caldera                                                                                                   
 Systems, Inc. and issuance of                                                                                             
 common shares to majority                                                                                                 
 stockholder for cash and note                                                                                             
 receivable ....................            --           --             --              --                                 
Distribution to Caldera, Inc.                                                                                              
 for amount paid in excess of                                                                                              
 the net book value of assets                                                                                              
 received in reorganization.....            --           --             --        (768,693)                                
Cumulative translation                                                                                                     
 adjustment.....................         3,991           --             --              --                                 
Net loss for the period                                                                                                    
 subsequent to incorporation....            --           --     (1,065,002)             --                                 
                                   -----------    ---------   ------------     -----------                                 
Balance, October 31, 1998.......         3,991           --     (1,065,002)             --                                 
Conversion of promissory note                                                                                              
 and accrued interest to common                                                                                            
 shares at $1.00 per share......            --           --             --              --                                 
Issuance of common shares for                                                                                              
 cash and stock subscription                                                                                               
 receivable at $1.13 per                                                                                                   
 share..........................            --           --             --              --                                 
Issuance of common shares upon                                                                                             
 exercise of stock options at                                                                                              
 $1.00 per share................            --           --             --              --                                 
Cumulative translation                                                                                                     
 adjustment.....................        (8,356)          --             --              --                                 
Deferred compensation related to                                                                                           
 stock option grants............            --           --             --              --                                 
Amortization of deferred                                                                                                   
 compensation...................            --           --             --              --                                 
Net loss........................            --           --     (9,366,588)             --                                 
                                   -----------    ---------   ------------     -----------                                 
Balance, October 31, 1999.......        (4,365)          --    (10,431,590)             --                                 
Conversion of common shares to                                                                                             
 Series A convertible preferred                                                                                            
 shares.........................            --           --             --              --                                 
Issuance of Series B convertible                                                                                           
 preferred shares for cash at                                                                                              
 $6.00 per share, net...........            --           --             --              --                                 
Dividend related to Series B                                                                                               
 convertible preferred shares...            --           --    (10,000,000)             --                                 
Dividend related to stock                                                                                                  
 warrant........................            --           --     (2,252,717)             --                                 
Issuance of common shares upon                                                                                             
 exercise of stock options at                                                                                              
 prices ranging from $1.00 to                                                                                              
 $6.00 per share................            --           --             --              --                                 
Issuance of common shares under                                                                                            
 employee stock purchase program                                                                                           
 at $2.98 per                                                                                                              
 share..........................            --           --             --              --                                 
Issuance of common shares in                                                                                               
 exchange for investments.......            --     (450,849)            --              --                                 
Distribution to majority                                                                                                   
 stockholder for acquired                                                                                                  
 license rights.................            --      450,849       (450,849)             --                                 
Issuance of common shares in                                                                                               
 exchange for investment in                                                                                                
 Lineo, Inc. and distribution to                                                                                           
 majority stockholder for fair                                                                                             
 value of shares issued in                                                                                                 
 excess of the carryover basis                                                                                             
 of investment..................            --           --     (9,999,999)             --                                 
Capital contribution from                                                                                                  
 majority stockholder of Lineo,                                                                                            
 Inc., recorded at carryover                                                                                               
 basis..........................            --           --             --              --                                 
Sale of common shares of Lineo,                                                                                            
 Inc. at $7.50 per share........            --           --      9,999,999              --                                 
Issuance of common shares for                                                                                              
 services.......................            --           --             --              --                                 
Conversion of preferred shares                                                                                             
 to common shares...............            --           --             --              --                                 
Issuance of common shares for                                                                                              
 cash in an initial public                                                                                                 
 offering at $14.00 per share,                                                                                             
 net............................            --           --             --              --                                 
Reclassification of stock                                                                                                  
 subscription receivable due to                                                                                            
 subsequent receipt of                                                                                                     
 cash...........................            --           --             --              --                                 
Deferred compensation related to                                                                                           
 stock option grants............            --           --             --              --                                 
Amortization of deferred                                                                                                   
 compensation...................            --           --             --              --                                 
Compensation expense for                                                                                                   
 modifications made to certain                                                                                             
 option grants..................            --           --             --              --                                 
Cumulative translation                                                                                                     
 adjustment.....................       (52,598)          --             --              --                                 
Unrealized gain on                                                                                                         
 available-for-sale                                                                                                        
 securities.....................       356,419           --             --              --                                 
Net loss........................            --           --    (26,923,498)             --                                 
                                   -----------    ---------   ------------     -----------                                 
Balance October 31, 2000........   $   299,456    $      --   $(50,058,654)    $        --                                 
Amortization of deferred                                                                                                   
 compensation (unaudited).......            --           --             --              --                                 
Removal of deferred compensation                                                                                           
 related to option grants for                                                                                              
 terminated employees                                                                                                      
 (unaudited)....................            --           --             --              --                                 
Issuance of common shares upon                                                                                             
 exercise of stock options at                                                                                              
 prices ranging from $1.00-                                                                                                
 $4.00 per share (unaudited)....            --           --             --              --                                 
Cumulative translation                                                                                                     
 adjustment (unaudited).........       (13,109)          --             --              --                                 
Unrealized loss on                                                                                                         
 available-for-sale securities                                                                                             
 (unaudited)....................    (1,865,030)          --             --              --                                 
Net loss (unaudited)............            --           --     (9,842,985)             --                                 
                                   -----------    ---------   ------------     -----------                                 
Balance, January 31, 2001                                                                                                  
 (unaudited)....................   $(1,578,683)   $      --   $(59,901,639)    $        --                                 
                                   ===========    =========   ============     ===========                                 

See accompanying notes to consolidated financial statements.

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CALDERA SYSTEMS, INC., THE CARVED-OUT 
PORTION OF CALDERA, INC. AND THEIR SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

                                                        [Enlarge/Download Table]

                                                                                                    THREE MONTHS ENDED     
                                                              YEAR ENDED OCTOBER 31,                    JANUARY 31,        
                                                    ------------------------------------------   ------------------------- 
                                                       1998           1999           2000           2000          2001     
                                                    -----------   ------------   -------------   -----------   ----------- 
                                                                                                        (UNAUDITED)        
                                                                                                                           
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                      
  Net loss......................................... $(7,963,137)  $ (9,366,588)  $ (26,923,498)  $(5,513,383)  $(9,842,985)
  Adjustments to reconcile net loss to net cash                                                                            
    used in operating activities:                                                                                          
    Depreciation and amortization..................     132,221        288,797         579,552        93,071       201,394 
    Non-cash compensation..........................          --        409,296       5,216,016     1,542,867       333,824 
    Equity in loss of affiliate....................          --             --         386,995            --       647,689 
    Gain on sale of assets to Ebiz, Inc. ..........          --             --      (2,306,357)           --            -- 
    Issuance of common stock for services..........          --             --         134,664       134,664            -- 
    Accrued interest converted to equity...........   1,082,260        254,910              --            --            -- 
    Changes in operating assets and liabilities:                                                                           
      Accounts receivable, net.....................     134,075       (518,497)       (874,483)     (153,296)      704,876 
      Other receivables............................          --       (375,000)        375,000       375,000            -- 
      Inventories..................................     281,936       (119,663)       (220,029)       54,994         7,469 
      Other current assets.........................   1,617,138        143,081      (1,276,649)      (68,719)      571,362 
      Other assets.................................     625,712        (10,097)         10,356         4,454       (38,427)
      Accounts payable.............................    (908,994)     1,044,050       1,056,171        31,072       188,171 
      Accrued liabilities..........................    (105,496)       625,109         827,761       274,363       886,311 
      Payable to The Santa Cruz Operation..........          --             --         898,026            --      (898,026)
      Deferred revenue.............................          --         38,080         288,250       105,455        82,536 
                                                    -----------   ------------   -------------   -----------   ----------- 
        Net cash used in operating activities......  (5,104,285)    (7,586,522)    (21,783,225)   (3,119,458)   (7,155,806)
                                                    -----------   ------------   -------------   -----------   ----------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                      
  Cash payment to Caldera, Inc. in asset                                                                                   
    acquisition....................................          --    (14,963,826)             --            --            -- 
  Purchase of property and equipment...............    (169,764)      (587,375)     (1,443,416)     (154,958)     (162,426)
  Purchase of other long-lived assets..............          --        (80,000)             --            --            -- 
  Purchase of available-for-sale securities........          --             --    (101,989,203)           --    (8,128,152)
  Sale of available-for-sale securities............          --             --      48,188,287            --    14,368,676 
  Deferred acquisition costs.......................          --             --      (1,731,672)           --      (449,836)
  Loan to The Santa Cruz Operation.................          --             --              --            --    (7,000,000)
  Sale of Lineo, Inc. common stock.................          --             --      15,000,000            --            -- 
  Acquisition of equity investment in affiliate....          --             --      (3,000,000)           --            -- 
  Acquisition of investment in non-marketable                                                                              
    security.......................................          --             --      (2,000,000)   (2,000,000)           -- 
                                                    -----------   ------------   -------------   -----------   ----------- 
        Net cash used in investing activities......    (169,764)   (15,631,201)    (46,976,004)   (2,154,958)   (1,371,738)
                                                    -----------   ------------   -------------   -----------   ----------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                      
  Borrowings from majority stockholder under                                                                               
    convertible promissory note....................          --      4,819,000              --            --            -- 
  Borrowings from majority stockholder.............          --             --         300,000       300,000            -- 
  Repayment of borrowings from majority                                                                                    
    stockholder....................................          --             --        (300,000)     (300,000)           -- 
  Proceeds from long-term debt.....................          --         11,486              --            --            -- 
  Repayments of long-term debt.....................          --         (2,026)         (9,460)       (9,460)           -- 
  Borrowings from majority stockholder prior to                                                                            
    reorganization.................................   4,429,065             --              --            --            -- 
  Proceeds from common shares upon incorporation...     519,000     15,481,000              --            --            -- 
  Proceeds from sale of common stock, net..........          --      2,963,000      74,781,861       758,743            -- 
  Proceeds from sale of Series B convertible                                                                               
    preferred stock, net...........................          --             --      29,790,674    29,790,674            -- 
  Proceeds from sale of common stock through ESP                                                                           
    program........................................          --             --         183,876            --            -- 
  Proceeds from exercise of common stock options...          --             22         532,125        41,143       249,950 
                                                    -----------   ------------   -------------   -----------   ----------- 
        Net cash provided by financing                                                                                     
          activities...............................   4,948,065     23,272,482     105,279,076    30,581,100       249,950 
                                                    -----------   ------------   -------------   -----------   ----------- 
NET INCREASE (DECREASE) IN CASH AND CASH                                                                                   
  EQUIVALENTS......................................    (325,984)        54,759      36,519,847    25,306,684    (8,277,594)
EFFECT OF FOREIGN EXCHANGE RATES ON CASH...........       3,991         (8,356)        (81,569)      (15,766)       76,270 
CASH AND CASH EQUIVALENTS, beginning of period.....     397,579         75,586         121,989       121,989    36,560,267 
                                                    -----------   ------------   -------------   -----------   ----------- 
CASH AND CASH EQUIVALENTS, end of period........... $    75,586   $    121,989   $  36,560,267   $25,412,907   $28,358,943 
                                                    ===========   ============   =============   ===========   =========== 

See accompanying notes to consolidated financial statements.

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CALDERA SYSTEMS, INC., THE CARVED-OUT 
PORTION OF CALDERA, INC. AND THEIR SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) 

                                                        [Enlarge/Download Table]

                                                                                         THREE MONTHS ENDED    
                                                     YEAR ENDED OCTOBER 31,                  JANUARY 31,       
                                             --------------------------------------   -------------------------
                                                1998          1999         2000          2000          2001    
                                             -----------   ----------   -----------   -----------   -----------
                                                                                             (UNAUDITED)       
                                                                                                               
SUPPLEMENTAL DISCLOSURE                                                                                        
  OF CASH FLOW INFORMATION:                                                                                    
Cash paid for income taxes.................  $        --   $       --   $    41,031   $        --   $     4,223
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING                                                                     
  AND FINANCING ACTIVITIES:                                                                                    
Issuance of common shares upon                                                                                 
  incorporation for Subscription                                                                               
  receivable...............................  $15,481,000   $       --   $        --   $        --   $        --
Note receivable from Caldera, Inc..........  $ 4,928,848   $       --   $        --   $        --   $        --
Liabilities assumed in acquisition of                                                                          
  assets from Caldera, Inc. ...............  $   (36,174)  $       --   $        --   $        --   $        --
Issuance of common shares for a note                                                                           
  receivable...............................  $        --   $3,000,000   $        --   $        --   $        --
Issuance of common shares upon conversion                                                                      
  of secured convertible promissory note                                                                       
  payable to majority stockholder and                                                                          
  related accrued interest.................  $        --   $5,273,974   $        --   $        --   $        --
Issuance of common shares and the                                                                              
  acquisition of license fee for                                                                               
  non-marketable securities................  $        --   $       --   $ 1,999,497   $ 1,999,497   $        --
Conversion of 6,596,146 shares of common                                                                       
  stock to 6,596,146 shares of Series A                                                                        
  convertible preferred stock..............  $        --   $       --   $     6,596   $     6,596   $        --
Conversion of 6,596,146 shares of Series A                                                                     
  convertible preferred stock and 5,000,000                                                                    
  shares of Series B convertible preferred                                                                     
  stock to 11,596,546 shares of common                                                                         
  stock....................................  $        --   $       --   $    11,596   $        --   $        --
Dividends related to Series B convertible                                                                      
  preferred stock..........................  $        --   $       --   $12,252,717   $10,000,000   $        --
Issuance of common shares in exchange for                                                                      
  investment in Lineo, Inc. ...............  $        --   $       --   $10,000,000   $10,000,000   $        --
Distribution to majority stockholder for                                                                       
  fair value of shares issued in excess of                                                                     
  the carry over basis of the investment in                                                                    
  Lineo, Inc...............................  $        --   $       --   $(9,999,999)  $(9,999,999)  $        --
Distribution to majority stockholder for                                                                       
  license rights...........................  $        --   $       --   $  (450,849)  $        --   $        --
Receipt of additional shares of Lineo, Inc.                                                                    
  from majority stockholder................  $        --   $       --   $ 1,966,173   $        --   $        --
Net book value of Electronic Linux                                                                             
  Marketplace assets exchanged for equity                                                                      
  investment in Ebiz, Inc..................  $        --   $       --   $   (37,963)  $        --   $        --
Reclassification and write-down of equity                                                                      
  method investment in marketable                                                                              
  security.................................  $        --   $       --   $        --   $        --   $ 2,309,636

See accompanying notes to consolidated financial statements.

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CALDERA SYSTEMS, INC., THE CARVED-OUT 
PORTION OF CALDERA, INC. AND THEIR SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) ORGANIZATION AND DESCRIPTION OF BUSINESS                                    

Caldera Systems, Inc. ("Caldera"), which was incorporated as a Utah   
corporation on August 21, 1998, and reincorporated as a Delaware corporation on 
March 6, 2000, began operations in 1994 as Caldera, Inc. (the "Predecessor").   
The Predecessor developed and marketed Linux operating system software and      
related products.                                                               

In July 1996, through an asset purchase, the Predecessor acquired an  
additional business line which was not engaged in developing and marketing Linux
software and related products. The Predecessor subsequently made the strategic  
determination to separate its two business lines into separate entities and,    
under an asset purchase agreement, dated as of September 1, 1998, as amended,   
sold the assets relating to its business of developing and marketing Linux      
software and related products to Caldera for $19,928,848. This amount was based 
upon the amount of funding that had been received by the Predecessor related to 
the Linux software business. The purchase price was paid as follows: a cash     
payment of $14,963,826 (8% interest bearing demand note) in fiscal year 1999,   
the assumption of $36,174 of liabilities, and the transfer of a note receivable 
due from the Predecessor in the amount of $4,928,848 (see below).               

 Upon incorporation, Caldera agreed to issue 16,000,000 shares of common
stock to The Canopy Group ("Canopy"), the majority stockholder of the           
Predecessor, in exchange for $20,928,848. Of this amount, $16,000,000 was paid  
in cash ($519,000 in fiscal year 1998 and $15,481,000 -- non-interest           
bearing -- in fiscal year 1999) and Canopy transferred to Caldera a note        
receivable from the Predecessor of $4,928,848.                                  

   Since Canopy was the majority stockholder of the Predecessor and the sole
stockholder of Caldera, this transaction has been accounted for as a            
reorganization of entities under common control with the assets and liabilities 
reflected at carry-over basis in a manner similar to pooling of interests. The  
accompanying consolidated financial statements include the carved-out operations
of the Predecessor related to the Linux business through September 1, 1998, the 
date of the reorganization. The acquired assets and liabilities had a net book  
value of $768,693. The excess of the purchase price of $19,928,848 over the net 
book value of the assets acquired of $768,693 was charged to equity.            

     The revenue of the carved-out operations of the Predecessor reflects actual
revenue derived from Linux software sales and the expenses of the carved-out    
operations reflect actual expenses associated with the Linux business and an    
allocated portion of common expenses. The allocated common expenses consist     
primarily of rent, depreciation, interest and personnel benefits. Rent,         
depreciation and personnel benefits were allocated based upon headcount.        
Interest was allocated based upon borrowings related to the carved-out          
operations of the Predecessor. Management believes that the allocation methods  
used are reasonable.                                                            

    Prior to the reorganization, the net losses of the Predecessor were funded
through loans and equity contributions from Canopy. The funding applicable to   
the carved-out operations has been reflected as a component of Caldera, Inc.'s  
Equity in Carved-out Operations included in the accompanying consolidated       
statements of stockholders' equity. This funding has been offset by the         
accumulated losses applicable to the carved-out operations.                     

In connection with the reorganization, Caldera acquired a wholly owned
subsidiary in Germany, Caldera Deutschland, GmbH ("Caldera GmbH"), that performs
research and development activities. Collectively, Caldera, the carved-out      
operations of the Predecessor and Caldera GmbH are referred to as the "Company."

    The Company develops, markets and supports Linux operating system software
products and related services. The Company's strategy is to provide commercial  
products and services that enable the development, deployment and management of 
Linux-based specialized servers and Internet devices that                       

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extend the e-Business infrastructure. The Company sells and distributes its     
software and related products indirectly through distributors, value added      
resellers ("VARs"), original equipment manufacturers ("OEMs") and system        
integrators and directly to end-user customers. These sales occur throughout the
United States and in certain international locations.                           

   On August 1, 2000 and as amended on September 13, 2000, December 12, 2000
and February 9, 2001, Caldera Systems, Inc. ("Caldera"), Caldera International, 
Inc. ("New Caldera"), and The Santa Cruz Operation, Inc. ("SCO") entered into an
Agreement and Plan of Reorganization (the "Reorganization Agreement"). As a     
result of the transactions proposed by the Reorganization Agreement (the        
"Reorganization"), (i) a newly formed, wholly owned subsidiary of New Caldera   
will be merged with and into Caldera, with Caldera being the surviving          
corporation, and all outstanding Caldera securities will be converted, on a     
share for share basis, into New Caldera securities having identical rights,     
preferences and privileges, with New Caldera assuming any and all outstanding   
options and other rights to purchase shares of capital stock of Caldera (with   
all such New Caldera securities issued to former Caldera security holders       
initially representing a fully diluted equity interest of approximately 71.9% in
New Caldera); (ii) SCO and certain of its subsidiaries will contribute to New   
Caldera, all of the capital stock held of certain contributed companies as well 
as certain assets of SCO collectively representing the server and professional  
services groups of SCO, in consideration for the issuance by New Caldera to SCO 
of shares of common stock of New Caldera, $0.001 par value ("New Caldera Common 
Stock"); (iii) New Caldera will assume or replace, as elected by the option     
holders, all options to acquire common stock of SCO held by SCO employees (other
than certain officers of SCO) hired or retained by Caldera and such options will
be converted into options to purchase New Caldera Common Stock on a two SCO     
options in exchange for one New Caldera option basis representing in the        
aggregate a fully diluted equity interest of approximately 2.8% in New Caldera; 
(iv) SCO will receive 16,000,000 shares of New Caldera Common Stock representing
in the aggregate a fully diluted equity interest of approximately 25.3% in New  
Caldera; (v) New Caldera will pay to SCO $23 million in cash, of which $7       
million was advanced to SCO on January 26, 2001 under a promissory note         
arrangement bearing interest at 10 percent; (vi) New Caldera will issue to SCO a
non-interest bearing, secured promissory note in the amount of $8 million that  
will be payable in quarterly installments of $2 million beginning on the first  
day of the fifth fiscal quarter following the closing; and (vii) SCO shall be   
entitled to receive from New Caldera earn-out provisions during the three-year  
period following the closing representing 45% of the amount by which OpenServer 
revenues exceed certain threshold amounts. If the Reorganization is not         
completed, SCO will be obligated to repay the $7 million advance to Caldera.    
Caldera's $7 million advance is secured by a first priority interest in all of  
SCO's assets and is convertible at Caldera's option into SCO common stock at a  
price per share of $2.44, the closing price of SCO's common stock on January 26,
2001. In conjunction with the Reorganization Agreement, The Canopy Group, Inc., 
a major stockholder of Caldera has agreed to loan up to $18 million to SCO.     

     The Company is subject to certain risks including the uncertainty of market
acceptance and demand for Linux related products and services, competition from 
larger, more established companies, short product life cycles, the Company's    
ability to develop and bring to market new products on a timely basis,          
dependence on key employees, the ability to attract and retain additional       
qualified personnel and the ability to obtain adequate financing to support     
growth.                                                                         

(2) SIGNIFICANT ACCOUNTING POLICIES                                             

UNAUDITED INTERIM FINANCIAL STATEMENTS                                          

  The unaudited interim financial statements as of January 31 2001 and for
the three months ended January 31, 2000 and 2001 have been prepared on the same 
basis as the audited financial statements and,                                  

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in the opinion of management, reflect all normal recurring adjustments necessary
to present fairly the financial information set forth therein in accordance with
generally accepted accounting principles. All financial statement disclosures   
related to the interim financial statements are unaudited.                      

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS                     

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amounts of assets and liabilities and      
disclosure of contingent assets and liabilities at the date of the financial    
statements and the reported amounts of revenues and expenses during the         
reporting period. Actual results could differ from these estimates.             

FAIR VALUE OF FINANCIAL INSTRUMENTS                                             

  The carrying amounts reported in the accompanying consolidated financial
statements for cash, accounts receivable, other receivables and accounts payable
approximate fair values because of the immediate or short-term maturities of    
these financial instruments. The carrying amounts of the Company's debt         
obligations approximate fair value based on current interest rates. The fair    
values of available-for-sale securities are determined using quoted market      
prices for these securities.                                                    

PRINCIPLES OF CONSOLIDATION                                                     

The consolidated financial statements include the accounts of the     
carved-out operations of the Predecessor prior to Caldera's incorporation,      
Caldera, and their wholly owned subsidiaries after elimination of intercompany  
accounts and transactions.                                                      

FOREIGN CURRENCY TRANSLATION                                                    

    For purposes of consolidating the Caldera GmbH operations, the Company has
determined the functional currency for the Caldera GmbH operations to be the    
German Mark. Accordingly, translation gains and losses are included as a        
component of comprehensive loss.                                                

CASH AND CASH EQUIVALENTS                                                       

 For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with maturities of three or fewer      
months to be cash equivalents. Cash equivalents primarily consist of investments
in money market mutual funds, commercial paper or other short-term debt         
instruments.                                                                    

AVAILABLE-FOR-SALE SECURITIES                                                   

    Available-for-sale securities include investments in equity securities and
debt securities such as commercial paper, treasury notes and bonds. These       
investments are recorded at fair market value, based on quoted market prices and
unrealized gains and losses are recorded as a component of comprehensive income 
(loss). Realized gains and losses, which are calculated based on the specific   
identification method, are recorded in operations as incurred. As of October 31,
2000 and January 31, 2001, equity securities totaled $0 and $2.0 million,       
respectively, debt securities with maturity dates less than one year totaled    
approximately $38.2 million and $15.7 million, respectively, and investments    
with maturity dates ranging from one year to two years totaled approximately    
$16.0 million and $32.6 million, respectively.                                  

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INVENTORIES                                                                     

Inventories consist primarily of completed products and raw materials.
Inventories are stated at the lower of cost (using the first-in, first-out      
method) or market value. As of October 31, 1999 and 2000 and January 31, 2001,  
inventories consisted of raw materials of approximately $79,400, $201,800 and   
$219,300, respectively, and finished goods of approximately $90,000, $187,600   
and $162,700, respectively.                                                     

Provisions, when required, are made to reduce excess and obsolete     
inventories to their estimated net realizable values. Due to competitive        
pressures and technological innovation, it is possible that estimates of the net
realizable value could change in the near term.                                 

PROPERTY AND EQUIPMENT                                                          

  Property and equipment are stated at cost, less accumulated depreciation
and amortization. Computer equipment and furniture and fixtures are depreciated 
using the straight-line method over the estimated useful life of the asset,     
typically three to five years. Leasehold improvements are amortized using the   
straight-line method over the shorter of the estimated useful life of the       
improvement or the remaining term of the applicable lease.                      

Expenditures for repairs and maintenance are charged to expense when  
incurred. Expenditures for major renewals and betterments that extend the useful
lives of existing equipment are capitalized and depreciated. Upon retirement or 
disposition of property and equipment, the cost and related accumulated         
depreciation are removed from the accounts and any resulting gain or loss is    
recognized in the statement of operations.                                      

CAPITALIZED SOFTWARE COSTS                                                      

    In accordance with Financial Accounting Standards Board ("FASB") Statement
of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer 
Software to be Sold, Leased or Otherwise Marketed" ("SFAS 86"), development     
costs incurred in the research and development of new software products to be   
sold, leased or otherwise marketed are expensed as incurred until technological 
feasibility in the form of a working model has been established. Internally     
generated capitalizable software development costs have not been material for   
the years ended October 31, 1998, 1999 and 2000 and the three months ended      
January 31, 2001. The Company has charged its software development costs to     
research and development expense in the accompanying consolidated statements of 
operations.                                                                     

OTHER ASSETS                                                                    

 Other assets consist of deposits and purchased technology that is to be
used in the development of the Company's current web-based products. The        
purchased technology is being amortized using the straight-line method over a   
period of two years. Other non-current assets consist primarily of deferred     
acquisition costs incurred through October 31, 2000 that are directly           
attributable to the pending reorganization with SCO. The deferred acquisition   
costs consist primarily of legal, accounting and human resource due diligence   
costs, legal, accounting and registration fees associated with obtaining        
shareholder approval and costs associated with obtaining a fairness opinion.    

IMPAIRMENT OF LONG-LIVED ASSETS                                                 

 The Company reviews its long-lived assets for impairment when events or
changes in circumstances indicate that the book value of an asset may not be    
recoverable. The Company evaluates, at each balance sheet date, whether events  
and circumstances have occurred which indicate possible impairment. The         

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Company uses an estimate of future undiscounted net cash flows of the related   
asset or group of assets over the remaining life in measuring whether the assets
are recoverable. As of October 31, 2000 and January 31, 2001, the Company does  
not consider any of its long-lived assets to be impaired.                       

ACCRUED LIABILITIES                                                             

   As of October 31, 1999 and 2000 and January 31, 2001, accrued liabilities
consisted of the following:                                                     

                                                        [Enlarge/Download Table]

                                                        OCTOBER 31,                  
                                                   ---------------------  JANUARY 31,
                                                     1999        2000        2001    
                                                   --------   ----------  -----------
                                                                                     
Accrued vacation.................................. $ 98,425   $  319,863  $  366,895 
Accrued sales returns and other allowances........  169,000      363,928      10,750 
Accrued accounting, legal and annual report                                          
  fees............................................       --      205,000     195,000 
Accrued payroll and related costs.................   45,284      200,887   1,002,289 
Post contract support.............................   50,000      145,000     145,000 
Accrued marketing development funds...............  172,900      119,993     236,111 
Foreign income taxes payable......................   30,139       78,808      72,834 
Other accrued liabilities.........................  226,309      231,339     522,250 
                                                   --------   ----------  ---------- 
          Total accrued liabilities............... $792,057   $1,664,818  $2,551,129 
                                                   ========   ==========  ========== 

REVENUE RECOGNITION                                                             

The Company generates revenue from software and related products sold 
indirectly through distributors and solutions providers and directly to         
end-users. The Company also generates services revenue from training royalties  
and tuition fees, consulting fees, and customer support fees. During fiscal     
1998, all of the Company's revenue was derived from software offerings and      
related products such as shipments of incomplete box units or documentation     
materials.                                                                      

Revenue from the sale of software is recognized upon delivery of the  
product when persuasive evidence of an arrangement exists, the price is fixed or
determinable and collection is probable. All sales into the distribution channel
or to OEMs and VARs require a binding purchase order. Prior to November 1, 2000,
sales to resellers for which payment was considered to be substantially         
contingent on the reseller's success in distributing individual units of the    
product or sales to resellers with which Caldera did not have historical        
experience were accounted for as consignments and the revenue was recognized    
once sell-through verification was received and payments from customers became  
due. Prior to October 31, 1999, Caldera did not have any consignment            
arrangements. During the year ended October 31, 2000, approximately 22 percent  
of product revenue was derived on a sell-through basis. Effective November 1,   
2000, the Company began to defer revenue recognition for products sold through  
the distribution channel until the products have been sold through the channel  
to the end user. The effect of this change was not material as of November 1,   
2000, nor would it have been material to the net losses as presented in the     
accompanying statements of operations for the years ended October 31, 1998, 1999
and 2000. Direct sales to end users are evidenced by concurrent payment for the 
product via credit card and are governed by a license agreement. Generally, the 
only multiple element arrangement of the Company's initial software sales is    
certain telephone and e-mail technical support services the Company provides at 
no additional charge. These services do not include product update or upgrade   
rights. After the initial support period, customers can elect to enter into     
separate support agreements. The cost of providing the initial support services 
are not significant; accordingly, the Company accrues the estimated costs of    
providing the services at the time of revenue recognition. Revenues from the    
extended support agreements are deferred and recognized over the period of the  
contract or as the services are provided.                                       

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     If other significant post-delivery vendor obligations exist or if a product
is subject to customer acceptance, revenues are deferred until no significant   
obligations remain or acceptance has occurred. To date, the Company has not     
shipped any software and related products subject to acceptance terms or subject
to other post-delivery vendor obligations. Additionally, the Company has not    
recognized revenue on any contracts with customers that may include customer    
cancellation or termination clauses that indicate a demonstration period or     
otherwise incomplete transaction.                                               

The Company also offers its customers consulting, training and other  
services separate from the software sale. The services are not integral to the  
functionality of the software and are available from other vendors. Services    
revenue is recognized as the services are performed.                            

ROYALTY COSTS                                                                   

   Royalties paid by the Company on applications licensed from third parties
that are incorporated into the software products sold by the Company are        
expensed as cost of revenue on a per unit basis as software products are sold.  
Royalties paid in advance of product sales are included in prepaid expenses and 
recorded as cost of revenue when the related products are sold.                 

    During the years ended October 31, 1996 and 1997, the Company entered into
royalty agreements with a supplier pursuant to which the Company prepaid        
royalties of approximately $2,055,000. During fiscal year 1998, the Company     
asserted that the supplier breached the terms of the royalty agreements and     
management determined that the remaining prepaid royalties, in the amount of    
$1,381,700, were impaired and accordingly were written off and classified as    
part of cost of revenue in the accompanying consolidated statement of operations
for the year ended October 31, 1998. Management determined the asset was        
impaired because its value was tied to the intellectual property value of the   
licenses the Company had purchased. The vendor breached the terms of the        
contract in management's view, when it open sourced some of the related         
software. When the vendor decided to open source the software, the license the  
Company had purchased had no value in relation to that software. Additionally,  
the Company discontinued the development of a product related to the licensed   
software resulting in the complete impairment of the prepaid asset. Management  
further determined that any attempt to pursue legal action against the supplier 
would be costly and uncertain given the resources required to pursue such an    
action and the uncertainties related to interpreting the provisions of the      
royalty agreements.                                                             

SALES AND MARKETING EXPENSES                                                    

     Sales and marketing expenses consist of the following: advertising, channel
promotions, marketing development funds, promotional activities, public         
relations, trade shows and the salaries, commissions and related expenses of all
personnel involved in the sales process. The Company expenses the cost of       
advertising the first time the advertising takes place. Advertising expenses    
totaled approximately $967,700, $1,228,600, $1,508,200 and $907,000 for the     
years ended October 31, 1998, 1999 and 2000 and the three months ended January  
31, 2001, respectively.                                                         

The Company has agreements with certain retailers whereby the Company 
issues a credit for certain marketing development activities initiated by the   
retailer that directly relate to the promotion of the Company's products. As of 
October 31, 1999 and 2000 and January 31, 2001, the Company recorded an accrual 
of $172,900, $120,000 and $236,100, respectively, for these costs.              

INCOME TAXES                                                                    

The Company recognizes a liability or asset for the deferred tax      
consequences of all temporary differences between the tax bases of assets and   
liabilities and their reported amounts in the consolidated                      

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financial statements that will result in taxable or deductible amounts in future
years when the reported amounts of the assets and liabilities are recovered or  
settled. These deferred tax assets or liabilities are measured using the enacted
tax rates that will be in effect when the differences are expected to reverse.  
Deferred tax assets are reviewed periodically for recoverability and valuation  
allowances are provided as necessary.                                           

CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS                          

 The Company offers credit terms on the sale of its software products to
certain customers. The Company performs ongoing credit evaluations of its       
customers' financial condition and requires no collateral from its customers.   
The Company maintains an allowance for uncollectable accounts receivable based  
upon the expected collectibility of all accounts receivable. As of October 31,  
1999, three distributors accounted for approximately 71 percent of the gross    
accounts receivable balance. As of October 31, 2000, four distributors accounted
for approximately 35 percent of the gross accounts receivable balance. As of    
October 31, 1999 and 2000 and January 31, 2001, the allowance for bad debts was 
$90,000, $312,300 and $224,700, respectively.                                   

RECENT ACCOUNTING PRONOUNCEMENTS                                                

   In June 1998, the FASB issued Statement of Financial Accounting Standards
("SFAS") 133, "Accounting for Derivative Instruments and Hedging Activities."   
SFAS 133 establishes new accounting and reporting standards for companies to    
report information about derivative instruments, including certain derivative   
instruments embedded in other contracts (collectively referred to as            
derivatives), and for hedging activities. This statement, as amended, became    
effective for the Company beginning November 1, 2000. The adoption of this      
statement did not have a material impact on the Company's results of operations,
financial position or liquidity.                                                

In December 1999, the Securities and Exchange Commission ("SEC") staff
issued Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial 
Statements." This pronouncement summarizes certain of the SEC staff's views in  
applying generally accepted accounting principles to selected revenue           
recognition issues. The Company adopted SAB 101 during the quarter ended January
31, 2001. The adoption of SAB 101, did not have a material impact on the        
Company's results of operations, financial position or liquidity.               

COMPREHENSIVE INCOME (LOSS)                                                     

 The Company has adopted SFAS No. 130, "Reporting Comprehensive Income."
SFAS 130 establishes standards for reporting comprehensive income (loss) and its
components in financial statements and unrealized gains on short-term           
investments. Comprehensive income (loss) consists of net loss, foreign currency 
translation adjustments and unrealized gain (loss) on available for sale        
securities and is presented in the accompanying consolidated statements of      
operations and comprehensive loss. The adoption of SFAS 130 had no impact on    
total stockholders' equity at the time of adoption.                             

NET LOSS PER COMMON SHARE                                                       

  The Company computes net loss per share in accordance with SFAS No. 128,
"Earnings Per Share," and SAB 98. Under the provisions of SFAS 128 and SAB 98,  
basic net loss per common share ("Basic EPS") is computed by dividing net loss  
available to common stockholders by the weighted average number of common shares
outstanding. Diluted net loss per common share ("Diluted EPS") is computed by   
dividing net loss by the sum of the weighted average number of common shares and
the dilutive                                                                    

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potential common share equivalents then outstanding. Potential common share     
equivalents consist of shares issuable upon the exercise of stock options and   
shares issuable upon the conversion of Series A and Series B convertible        
preferred stock for periods during which they were outstanding. For the years   
ended October 31, 1999 and 2000, 1,241,390 and 6,326,247 common share           
equivalents, respectively, were not included in the computation of diluted net  
loss per common share as their effect would have been anti-dilutive, thereby    
decreasing the net loss per common share. As of January 31, 2000, there were    
6,596,146 and 5,000,000 shares of Series A and Series B convertible preferred   
stock outstanding, respectively, and there were 5,472,649 and 5,848,708         
outstanding options to purchase common shares as of January 31, 2000 and 2001,  
respectively, that were not included in the computation of diluted net loss per 
common share as their effect would have been anti-dilutive, thereby decreasing  
the net loss per common share. For the year ended October 31, 1998, the         
16,000,000 shares of common stock issued in the initial capitalization of       
Caldera were treated as outstanding for the entire fiscal year.                 

(3) INITIAL PUBLIC OFFERING                                                     

  On March 20, 2000, the Company completed the sale of an aggregate of 5.0
million shares of common stock at a price of $14.00 per share in its initial    
public offering. The offering was effected pursuant to a Registration Statement 
on Form S-1 (Registration No. 333-94351), which was declared effective on March 
20, 2000 by the SEC. On April 17, 2000, the underwriters exercised their over   
allotment option for an additional 750,000 shares of common stock at $14.00 per 
share,                                                                          

 The Company received approximately $80.5 million in gross proceeds from
this offering, of which approximately $5.6 million was paid to the underwriters 
and approximately $3.0 million was paid for direct offering expenses.           

(4) OTHER RECEIVABLES                                                           

    Other receivables as of October 31, 1999 consisted of amounts due from two
strategic partners that participated in a marketing program with the Company.   
The amounts received by the Company from the strategic partners have been       
applied against actual expenses incurred and have reduced the related sales and 
marketing expense of the Company. Aside from the collection of the short-term   
receivable balances, there are no other future commitments or consideration     
related to these arrangements.                                                  

(5) INVESTMENTS IN NON-MARKETABLE SECURITIES                                    

   The Company is accounting for each of these investments in non-marketable
securities under the cost method as the Company has no ability to exercise      
significant influence over any of the entities. The Company's management        
routinely assesses its investments for impairment and adjusts the carrying      
amount to estimated realizable values when impairment has occurred. As of       
October 31, 2000 and January 31, 2001, the Company does not consider any of its 
investments to be impaired.                                                     

BUSINESS ALLIANCE WITH EVERGREEN INTERNET, INC.                                 

 In January 2000, the Company and Evergreen Internet, Inc. ("Evergreen")
entered into a master agreement which sets forth the terms and conditions of a  
business alliance. Evergreen and the Company agreed as follows: (i) Evergreen   
granted to the Company an original equipment manufacturer license permitting the
bundling of certain of Evergreen's software products with the Company's software
products in exchange for the Company paying royalties to Evergreen based on     
future sales; (ii) the Company and Evergreen will engage in joint development   
and integration of their respective software products; (iii) the Company and    
Evergreen will cooperate to create educational training courses for the combined
products;                                                                       

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(iv) the Company agreed to acquire 370,370 shares of common stock of Evergreen  
for $2,000,000 and Evergreen agreed to transfer an additional 222,222 shares of 
its common stock to the Company in exchange for 200,000 shares of the Company's 
common stock; and (v) the parties agreed to work together to identify new       
business solution opportunities for their joint products. On January 10, 2000,  
the Company paid the $2.0 million and issued 200,000 shares of common stock in  
exchange for the 592,592 shares of Evergreen's common stock.                    

The Company and Evergreen have agreed to certain referral fees. If the
Company enters into a support agreement with a customer that has been referred  
by Evergreen, the Company will pay a portion of the total contract to Evergreen 
as a referral fee. The remaining portion of the support agreement will be       
recorded as deferred revenue, and recognized ratably over the term of the       
agreement. The referral fees will be recorded as sales and marketing expenses as
earned by Evergreen.                                                            

    The Company has recorded its investment in Evergreen at cost, based on the
cash consideration paid by the Company and the estimated fair market value of   
the Company's common stock on the date of the agreement of $8.00 per share. The 
Company determined that the estimated fair value of the Company's common stock  
is more clearly evident of the value of the transaction since Evergreen is a    
privately owned company. In management's opinion, the consideration exchanged by
the Company for the common shares of Evergreen was equal to the fair value of   
the shares acquired. Furthermore, in management's opinion the terms of the OEM  
arrangement and joint development and educational efforts are based on strategic
rationales and the related transactions will be at arm's length. The Company    
currently intends on holding the shares indefinitely.                           

     The total investment of $3.6 million is included in the caption Investments
in Non-marketable Securities -- Non-affiliates in the accompanying October 31,  
2000 and January 31, 2001 consolidated balance sheets.                          

STOCK EXCHANGE AGREEMENT WITH LINEO                                             

  In January 2000, the Company and Lineo entered into a stock purchase and
sale agreement. Lineo is the successor entity to the operations of the          
Predecessor which were not acquired by Caldera in the reorganization discussed  
in Note 1. As of January 2000, Lineo was majority owned by Canopy. Pursuant to  
the stock purchase agreement, the Company agreed to purchase 3,238,437 shares of
common stock of Lineo (approximately 17 percent of Lineo's outstanding voting   
stock) in exchange for 1,250,000 shares of the Company's common stock.          

  Because Lineo was also majority owned by Canopy, the investment in Lineo
was accounted for as a transaction between entities under common control with   
the transfer being reflected in the Company's financial statements at Lineo's   
carry over basis. At the date of the agreement, Lineo had a stockholders'       
deficit, of which approximately $150,000 would be associated with the 17%       
interest the Company acquired. Accordingly, the investment was recorded at a    
nominal value of $1.00 because the Company does not have any obligation to      
provide additional funding to Lineo. The Company has recorded the estimated fair
value of the shares of its common stock issued to Lineo at $10.0 million with   
the difference between the $10.0 million and the $1.00 investment recorded as a 
distribution to Canopy.                                                         

On May 11, 2000, Canopy transferred 1,761,563 shares of Lineo's common
stock held by Canopy to the Company. This transfer has been reflected as a      
capital contribution by Canopy at Lineo's carry over basis of $1,966,173. As a  
result of this transaction, the Company had a total of 5,000,000 shares of      
Lineo's common stock (approximately 14 percent of Lineo's outstanding voting    
stock).                                                                         

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

On August 31, 2000, the Company, Canopy and Metrowerks Holdings, Inc. 
("Metrowerks"), an affiliate of Motorola, Inc., entered into a Stock Purchase   
and Sale Agreement whereby the Company and Canopy sold 2.0 million and 1.0      
million shares, respectively, of common stock of Lineo to Metrowerks at $7.50   
per share. Prior to this transaction, Caldera, Canopy and Lineo had no          
relationship with Metrowerks; however, Motorola, Inc. is a preferred stockholder
of Lineo. The Company received the $15.0 million net proceeds of the sale in    
October 2000.                                                                   

     In conjunction with the sale of the common stock of Lineo, the Company also
entered into a stockholder agreement by and among Canopy, Lineo and certain     
other stockholders of Lineo which provides for a right of first refusal for the 
benefit of Metrowerks with respect to Lineo shares held by the Company and other
Lineo stockholders. The Company has also agreed to indemnify Metrowerks for any 
damages sustained by Metrowerks as a result of breaches by the Company under the
stock purchase and sale agreement and the stockholder agreement or for breaches 
by Lineo under a warrant agreement between Lineo and Metrowerks. The Company's  
indemnification obligation is limited to the amount of proceeds received by the 
Company in its sale to Metrowerks.                                              

   The difference between the $7.50 per share price received from Metrowerks
and the Company's per share carrying value was recorded as a contribution to    
equity. The total investment of $1,179,704 is included in the caption           
Investments in Non-marketable Securities -- Affiliate in the accompanying       
October 31, 2000 and January 31, 2000 consolidated balance sheets.              

STOCK EXCHANGE AGREEMENT WITH TROLL TECH AS                                     

 In December 1999, the Company and Canopy entered into an agreement with
Troll Tech AS and its stockholders. Pursuant to the agreement, the Company      
acquired 159 shares of common stock of Troll Tech (approximately 2 percent of   
Troll Tech's outstanding common stock) in exchange for 106,356 shares of the    
Company's common stock and Canopy agreed to acquire 398 shares of common stock  
of Troll Tech in exchange for $1,000,000, payable in monthly installments of    
$100,000. The agreement also grants to Canopy and its affiliates certain license
rights with respect to Troll Tech's software. Royalties will be paid based upon 
future sales of products by the Company. To date, the Company has not sold any  
products that incorporate Troll Tech's technology and has not paid any royalties
to Troll Tech.                                                                  

 The Company has recorded its investment in Troll Tech's common stock at
$399,999, based on the cash price per share paid by Canopy. The Company         
determined that the cash price per share paid by Canopy is the most reliable    
evidence of the value of Troll Tech's common stock. The difference between the  
estimated fair value of the 106,356 shares of the Company's common stock at     
$8.00 per share of $850,848 and the $399,999 investment was recorded as a       
license fee. The license fee was classified as contra-equity and was            
subsequently reflected as a distribution to Canopy because the license rights   
were used by Canopy and its affiliates. The Company currently intends on holding
the shares of Troll Tech indefinitely.                                          

    The total investment of $399,999 is included in the caption Investments in
Non-marketable Securities -- Non-affiliates in the accompanying October 31, 2000
and January 31, 2001 consolidated balance sheets.                               

(6) EQUITY INVESTMENT IN EBIZ ENTERPRISES, INC.                                 

    On September 15, 2000, Caldera sold to Ebiz Enterprises, Inc. ("Ebiz") the
rights, title and interest in and to all of the intellectual property and assets
comprising Caldera's Electronic Linux Marketplace concept (the "ELM assets").   
Caldera transferred assets with a net book value of $38,000 as well as cash of  
$3,000,000 for 4,000,000 shares of Ebiz common stock. Caldera may also receive  
up to 4,000,000                                                                 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

additional shares of Ebiz common stock, depending upon the amount of gross      
revenue generated by the ELM Business during the twelve-month period ending     
December 15, 2001. Immediately after the closing of the transaction, Caldera    
owned approximately 31 percent of the outstanding voting shares of Ebiz.        
Subsequent to Caldera's investment, additional shares of Ebiz common            
stock -- including 2,500,000 shares to Canopy -- were issued that reduced       
Caldera's ownership interest to approximately 17 percent.                       

Caldera accounted for its interest in Ebiz using the equity method of 
accounting due to its ability to exercise influence on Ebiz. Under the equity   
method, Caldera recognized its portion of the net income or net loss of Ebiz in 
its consolidated statement of operations. For the year ended October 31, 2000,  
Caldera recognized $224,339 in its statement of operations that represented its 
portion of Ebiz's net loss. In addition, because Ebiz had a stockholders'       
deficit at the time of Caldera's investment, Caldera amortized on a             
straight-line basis, the difference between its investment and the amount of    
underlying equity in the net assets of Ebiz which has been calculated as        
follows:                                                                        

                                                                [Download Table]
                                                                          
Fair value of Ebiz shares received (4,000,000 shares at                   
  $1.60 per share)..........................................  $ 6,400,000 
Less portion of gain deferred due to Caldera's continuing                 
  ownership interest........................................   (1,055,680)
                                                              ----------- 
Basis of recorded investment................................    5,344,320 
Caldera's portion of Ebiz' deficit..........................    1,162,000 
                                                              ----------- 
                                                              $ 6,506,320 
                                                              =========== 

     Caldera allocated this difference to goodwill and was amortized this amount
on a straight-line basis over five years. At the time of the investment, Ebiz   
had no other substantial identifiable intangible assets. For the year ended     
October 31, 2000, Caldera recognized $162,656 in its statement of operations    
that represented this amortization. The net investment of $4,957,325 was        
included in the caption Equity Investment in Affiliate in the accompanying      
October 31, 2000 consolidated balance sheet.                                    

DILUTION OF EBIZ OWNERSHIP                                                      

 On January 5, 2001, Caldera's ownership interest in Ebiz was diluted to
approximately 12 percent as a result of Ebiz issuing new shares in connection   
with an acquisition and the conversion of convertible securities. As a result of
these transactions, on January 5, 2001, Caldera discontinued the use of the     
equity method of accounting for its investment in Ebiz. Caldera now accounts for
the investment as an available-for-sale security in accordance with SFAS 115.   
Under SFAS 115, Caldera carries its investment at fair market value using quoted
trading prices and records any unrecognized gains or losses as a component of   
other comprehensive income (loss). At the date of the change, Caldera reduced   
the carrying value of its investment to approximately $1.4 million.             

 Ebiz' common stock is currently traded on the Over-the-Counter Bulletin
Board. As of January 31, 2001, Management believes that the decline in market   
value of the stock is not permanent in nature and resulted primarily from market
conditions related to technology stocks and that Caldera's ability to recover   
its original investment has not been permanently impaired.                      

(7) BORROWINGS FROM CANOPY                                                      

SECURED CONVERTIBLE PROMISSORY NOTE PAYABLE                                     

     In connection with the incorporation of Caldera, Caldera and Canopy entered
into a Secured Convertible Promissory Note Agreement (the "Note Agreement")     
pursuant to which the Company could borrow up to $2,000,000, or such other      
greater amount as determined necessary, to fund ongoing operations. Interest    
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

percent compounded annually, which was 7.25 percent. Borrowings under the Note  
Agreement were convertible to shares of Caldera's common stock at $1.00 per     
share, which was deemed to be the estimated fair market value of Caldera's      
common stock on September 1, 1998. Under the Note Agreement, the Company        
borrowed $4,819,000 during the year ended October 31, 1999. Additionally,       
accrued interest of $454,974 was incurred by the Company related to borrowings  
under the Note Agreement and the amount payable to the Predecessor for the      
assets acquired in the reorganization (see Note 1). On August 19, 1999, the     
principal borrowings and accrued interest were converted into 5,273,974 shares  
of common stock and the Note Agreement was cancelled.                           

SECURED PROMISSORY NOTE WITH CANOPY                                             

On December 29, 1999, Caldera entered into a Secured Promissory Note  
Agreement with Canopy under which the Company borrowed $300,000. Borrowings     
under this note bore interest at 9.5 percent per annum and were repaid in full  
during January 2000.                                                            

(8) STOCKHOLDERS' EQUITY                                                        

REINCORPORATION AS A DELAWARE CORPORATION                                       

   On March 6, 2000, Caldera reincorporated in Delaware. The reincorporation
into Delaware was effected by way of a merger with a newly-formed Delaware      
subsidiary, and the associated issuance of one share of common stock of the     
subsidiary for each share of common stock of the Company held by the            
stockholders of record. Additionally, stockholders of record of Series A and    
Series B of the Company received shares of Series A and Series B preferred stock
of the subsidiary. All share and per share amounts in the accompanying          
consolidated financial statements have been adjusted to give effect to the      
reincorporation.                                                                

STOCK SPLIT                                                                     

   On December 29, 1998, Caldera's board of directors approved a two-for-one
stock split for holders of common stock. This stock split has been retroactively
reflected in the accompanying consolidated financial statements for all periods 
presented.                                                                      

PREFERRED STOCK                                                                 

  On December 30, 1999, the stockholders approved articles of amendment to
the Company's articles of incorporation. The amended articles of incorporation  
authorized the Company to issue 25,000,000 shares of no par value preferred     
stock and 75,000,000 shares of no par value common stock. The Company's board of
directors is authorized, without stockholder approval, to designate and         
determine the preferences, limitations and relative rights granted to or imposed
upon each share of preferred stock which are not fixed by the amended articles  
of incorporation. The amended articles of incorporation designated 6,596,146    
shares as Series A Convertible Preferred Stock ("Series A") and 5,000,000 shares
as Series B Convertible Preferred Stock ("Series B").                           

    The Series A and B shares had initial stated values per share of $4.03 and
$6.00, respectively, and ranked on parity with each other and prior to any other
class or series of capital stock of the Company with respect to dividend rights,
rights upon liquidation, winding up or dissolution, and redemption rights. The  
Series A and B shares were entitled to receive, when, as and if declared by the 
board of directors, cumulative and accruing preferential dividends at eight     
percent per annum, compounded annually, based on the stated value per share;    
provided, however, solely for dividend purposes the Series A stated value per   
share was deemed to be $6.00. Any holder of Series A or B shares could convert  
all or any shares of                                                            

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Series A or B into common shares and each share of Series A or B automatically  
converted into common shares immediately prior to the closing of a firm         
commitment underwritten public offering of at least $25,000,000, as defined.    
Each Series A and B share initially converted into one share of common stock.   
The holders of Series A and B shares were entitled to vote on all matters       
submitted to the stockholders of the Company, including the election of         
directors, together with the holders of common stock voting together as a single
class. Each share of Series A and B was entitled to one vote for each share of  
common stock that would be issuable upon conversion of such share.              

  In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, each holder of Series A and B then outstanding would 
be entitled to receive, on a pari passu basis, out of the assets available for  
distribution to stockholders an amount equal to the greater of (i) the sum of   
(1) the respective stated value per share plus (2) an amount equal to all unpaid
accruing dividends (whether or not declared) plus (3) any other dividends       
declared but unpaid, and (ii) the amount that such holder of Series A or B      
shares would hold had all shares of Series A and B been converted to common     
immediately prior to the liquidation, dissolution, or winding up.               

   In connection with the Company's initial public offering, all outstanding
preferred stock was converted to common stock on March 20, 2000.                

CONVERSION OF COMMON SHARES INTO SERIES A SHARES                                

   Prior to the offering of Series B shares discussed below, on December 30,
1999 the Company entered into a Conversion Agreement with its two major         
stockholders, Canopy and MTI Technology Corporation ("MTI"). These stockholders 
held 99 percent of the outstanding shares of the Company's common stock at      
December 30, 1999. Pursuant to the Conversion Agreement, the Company converted  
6,596,146 shares of outstanding common stock held by Canopy and MTI into        
6,596,146 shares of Series A.                                                   

ISSUANCE OF SERIES B CONVERTIBLE PREFERRED STOCK AND RELATED AGREEMENTS         

On December 30, 1999, the Company's board of directors authorized the 
issuance of 5,000,000 shares of Series B convertible preferred stock at $6 per  
share with the rights, preferences, privileges and restrictions as described    
above. On January 10, 2000, the 5,000,000 shares were sold for net proceeds of  
$29,790,674.                                                                    

Each share of Series B convertible preferred stock was immediately    
convertible to one share of common stock upon issuance. During the year ended   
October 31, 2000, the Company recorded a dividend related to the Series B       
convertible preferred stock in the amount of $10 million representing the value 
of the beneficial conversion feature. The beneficial conversion feature was     
calculated based on the difference between the conversion price of $6.00 per    
share and the estimated fair value of the common stock of $8.00 per share for   
financial reporting purposes based on the estimated price range for the         
Company's IPO. The Company's board of directors determined that the $6.00 per   
share price for the Series B preferred stock represented their estimate of the  
fair value of the Series B preferred stock at the time sold and that the Series 
B preferred shares were not issued for other consideration or goods and         
services.                                                                       

     In connection with the preferred stock purchase agreements, the Company and
the investors entered into a second amended and restated investor rights        
agreement (the "Rights Agreement") and a voting agreement. Pursuant to the      
voting agreement, the Company and the preferred stockholders established the    
composition of the Company's board of directors.                                

  Pursuant to the Rights Agreement, Canopy and MTI, the Series A preferred
stockholders, and the investors in the Series B preferred stock (collectively   
the "Preferred Stockholders") have certain rights                               

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

beginning six months following the closing of a qualified public offering with  
respect to registration of the common shares issued or issuable upon conversion 
of the Series A and Series B preferred shares in compliance with the Securities 
Exchange Act of 1934. The Preferred Stockholders have certain demand and        
piggy-back rights that require the Company to use its best efforts to register  
the requested shares and/or permit the Preferred Stockholders to include shares 
in certain secondary offerings of the Company's common stock. The Company has   
agreed to bear all expenses in connection with any registration, other than     
underwriting discounts and commissions.                                         

WARRANT AGREEMENT BETWEEN CANOPY AND SERIES B PREFERRED STOCKHOLDER             

In connection with the Series B preferred stock offering, Canopy and  
Egan-Managed Capital, L.P. ("EMC"), one of the investors in the Series B        
preferred stock offering, entered into an agreement wherein Canopy agreed to    
purchase the shares of Series B convertible preferred stock purchased by EMC if 
EMC did not receive a warrant in a satisfactory form to EMC to purchase 416,667 
shares of the Company's common stock from Canopy. On March 13, 2000, Canopy sold
to EMC a warrant for $10,000 to purchase 416,667 shares of the Company's common 
stock held by Canopy at $5.98 per share for a two-year period. Upon exercise of 
the warrant, all proceeds will be paid to Canopy. Since the sale of this warrant
directly related to the issuance of Series B preferred stock, the Company       
accounted for this transaction as if the Company had sold the warrant to EMC    
with an offsetting contribution to capital. Accordingly, the Company recorded   
the fair value of the warrant of $2,252,717, determined using the Black-Scholes 
option-pricing model, as a beneficial conversion feature reflected as a dividend
related to the Series B preferred stock during the year ended October 31, 2000. 
Assumptions used in the Black-Scholes option-pricing model were the following:  
estimated fair value of common stock of $8.00 per share; risk-free interest rate
of 6 percent; expected dividend yield of 0 percent; volatility of 118 percent;  
and expected exercise life of two years.                                        

COMMON STOCK TRANSACTIONS                                                       

    Effective September 1, 1998, in connection with the initial capitalization
of Caldera, Canopy purchased 16,000,000 shares of Caldera's common stock for    
$20,928,848. Of this amount, $16,000,000 was paid in cash ($519,000 in fiscal   
year 1998 and $15,481,000 in fiscal year 1999) and Canopy transferred to Caldera
a note receivable from the Predecessor of $4,928,848. As of October 31, 1998,   
the Company had recorded the $15,481,000 to be received from Canopy as a stock  
subscription receivable and the purchase price and related accrued interest     
totalling $15,163,890 as a payable to Caldera, Inc. (see Note 1).               

At the time of incorporation, Canopy agreed to continue to fund the   
operations of the Company through a secured convertible promissory note (see    
Note 7). The conversion terms of the secured promissory note allowed Canopy to  
convert the borrowings and accrued interest into common stock at a price of     
$1.00 per share, which was determined by the Company's board of directors to be 
the estimated fair market value of the Company's common stock on September 1,   
1998, the date of the convertible promissory note agreement. In August 1999,    
Canopy elected to convert the outstanding principal borrowings and accrued      
interest into 5,273,974 shares of the Company's common stock.                   

  In July 1999, the Company negotiated with MTI, a publicly traded company
which at the time was 50 percent owned by Canopy, to sell 5,333,333 common      
shares for $6,000,000, or $1.13 per share. The Company received $3,000,000 in   
cash at the time of closing and issued a note receivable for $3,000,000 that    
bore interest at the prime rate plus one percent (9 1/4 percent as of October   
31, 1999). This note receivable was to be received in two installments of       
$1,500,000 due in January and July 2000. The Company negotiated to receive the  
initial installment of $1,500,000 in November 1999 in exchange for the Company  
agreeing to forego the interest component attached to the note receivable. As a 
result of this                                                                  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

modification, the Company did not record any accrued interest in the            
consolidated balance sheet as of October 31, 1999. The $1,500,000 received in   
November 1999 and the $1,500,000 received in August 2000 have been reflected as 
current assets and contra-equity in the accompanying consolidated balance sheets
as of October 31, 1999 and October 31, 2000, respectively. In connection with   
MTI's investment, the Company entered into an Investors' Rights Agreement with  
MTI and Canopy pursuant to which MTI received registration rights applicable to 
the stock acquired. This Investors' Rights Agreement was amended and superceded 
in connection with the Conversion Agreement and the offering of Series B        
preferred shares discussed above.                                               

STOCK OPTION PLANS                                                              

 During fiscal year 1998, the Company adopted the 1998 Stock Option Plan
(the "1998 Plan") that provided for the granting of nonqualified stock options  
to purchase shares of common stock. Under the 1998 Plan, the Company could grant
up to 5,000,000 options to employees, non-employee members of the board of      
directors or consultants who provide services to the Company. Options granted   
under the 1998 Plan are subject to expiration and vesting terms as determined by
a committee of the Company's board of directors. No options can expire more than
ten years from the date of grant. The exercise price for the options may be paid
in cash or in shares of the Company's common stock valued at fair market value  
on the exercise date. The options may also be exercised through a same-day sale 
program without any cash outlay by the optionee. At October 31, 2000, options to
purchase 218,202 shares of common stock were available for future grants under  
the 1998 Plan.                                                                  

 On December 1, 1999, the Company's board of directors approved the 1999
Omnibus Stock Incentive Plan (the "1999 Plan"), which is intended to serve as   
the successor equity incentive program to the 1998 Plan. The 1999 Plan initially
increased the aggregate number of shares available for issuance under both plans
to 6,700,000 and designated that 700,000 shares be used as director incentives. 
On March 10, 2000, the Company's board of directors authorized an additional    
500,000 shares to be issued under the 1999 Plan and during July 2000 the board  
of directors approved an additional 2,300,000 shares to be issued under the 1999
Plan. The 1999 Plan allows for the grant of awards in the form of incentive and 
non-qualified stock options, stock appreciation rights, restricted shares,      
phantom stock and stock bonuses. Awards may be granted to individuals in the    
Company's employ or service.                                                    

     The 1999 Plan is administered by the compensation committee of the board of
directors. This committee determines which eligible individuals are to receive  
awards under the 1999 Plan, the type of award to be made, the time or times when
such awards are to be made, the number of shares subject to each such award, and
the vesting schedule and the other terms to be in effect for the award.         

  The exercise price for the options may be paid in cash, in shares of the
Company's common stock valued at fair market value on the exercise date or by   
having the Company retain sufficient shares of common stock from shares which   
would be issuable upon the exercise of the option. The option may also be       
exercised through a same-day sale program without any cash outlay by the        
optionee. To date, all options granted under the 1998 and 1999 Plans require the
exercise price to be paid in cash. If future grants are made with a cashless    
exercise feature, the Company will be required to use variable plan accounting  
for those grants.                                                               

  Tandem stock appreciation rights may be issued under the 1999 Plan which
will provide the holders with the election to surrender their outstanding       
options for a cash appreciation distribution from the Company equal to the fair 
market value of the vested shares subject to the surrendered option less the    
aggregate exercise price payable for such shares. In addition, the Company may  
issue stand-alone stock                                                         

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

appreciation rights which will entitle the holder to receive a cash payment from
the Company equal to the fair market value of the vested shares subject to the  
right less the base price for such right.                                       

  Phantom stock awards will entitle the holder to receive in cash the fair
market value of common stock on the vesting date.                               

    If the Company is acquired (whether by merger or asset sale) or there is a
change in control (effected through an acquisition of 50% or more of the        
Company's voting stock or by proxy contest for the election of board members),  
options and stand-alone stock appreciation rights exercisable at that time will 
remain exercisable until their expiration, and options and stand-alone stock    
appreciation rights not exercisable at that time will expire. Also, if the      
Company is acquired or experiences a change in control, all restrictions on     
outstanding vested shares of restricted stock granted under the 1999 Plan will  
lapse, and all outstanding, unvested shares of such restricted stock will expire
and be cancelled. Similarly, all outstanding, unvested shares of phantom stock  
will expire and be cancelled.                                                   

     On July 14, 2000, Caldera's board of directors approved an amendment to the
1999 Plan. This amendment allows the board to extend the exercise period after  
termination of service from 90 days to 120 days. The amendment also permits the 
exercise of options for up to 30 days after termination of service for cause.   
Through October 31, 2000, the board had granted the extended terms to line      
function employees and senior management employees who held a total of          
approximately 1.3 million options to purchase common shares. The modified shares
had exercise prices ranging from $1.00-$7.00 per share and the fair market value
of Caldera's common stock ranged from $3.94-$7.09 per share on the dates that   
modifications were made. The modifications to the exercise terms constitute a   
new measurement date in accordance with FIN 44 on the date the modifications    
were made. However, any compensation related to the modifications will only be  
recorded to the extent the option holders actually benefit from the             
modification. All modifications during fiscal 2000 did benefit the option       
holders due to their terminations, accordingly, compensation expense of         
approximately $640,000 was recorded during the fourth quarter of fiscal 2000    
related to these option modifications.                                          

The July 14, 2000 amendment to the 1999 Plan also provides that in    
connection with a sale, change of control or liquidation of Caldera, Caldera or 
the acquiring entity may elect to cash out, convert to options of the acquiring 
entity or assume any vested options granted under the 1999 Plan. Additionally,  
non-vested shares shall terminate unless otherwise provided in the governing    
agreements or as determined by the compensation committee of the board of       
directors. The amendment also permits Caldera to grant shares of restricted     
stock and phantom stock that vest without regard to the satisfaction of         
pre-established performance goals.                                              

In addition, the board has approved amendments that will effect the   
following changes: (i) establish an automatic share increase feature pursuant to
which the number of shares available for issuance under the 1999 Plan will      
automatically increase, beginning with the 2000 calendar year, as of November 1 
of each year, by 3% of the total number of shares of common stock outstanding on
the previous October 31st, and (ii) add a formula awards program pursuant to    
which directors of the Company will automatically be granted options to purchase
shares of common stock at specified times, including an option to purchase      
100,000 shares of common stock on the date of the annual stockholders meeting   
during each even numbered calendar year beginning in 2004. All amendments are   
subject to approval by the stockholders of Caldera.                             

 During September and October 2000, the Company approved the accelerated
vesting of stock options for certain employees who were terminated as a result  
of the sale of the ELM assets to Ebiz or were terminated in preparation for the 
SCO acquisition. Each employee received three months of additional vesting on   
existing stock option grants on their last day of employment with the Company.  
All of the                                                                      

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affected employees had ceased employment with the Company prior to October 31,  
2000. The existing option grants had exercise prices ranging from $1.00-$9.50   
per share and the fair market value of Caldera's common stock ranged from       
$5.75-$7.09 per share on the dates that employment was terminated. Because the  
accelerated vesting for these stock options represented a modification to the   
existing stock option, the Company recorded compensation expense on each option 
to the extent the difference between the fair market value and the exercise     
price was greater than compensation cost previously recorded. The Company       
recorded approximately $184,200 in non-cash compensation related to the         
accelerated vesting of approximately 129,000 stock options for the year ended   
October 31, 2000.                                                               

 A summary of stock option activity under the stock option plans for the
years ended October 31, 1999 and 2000 and the three months ended January 31,    
2001, is as follows:                                                            

                                                        [Enlarge/Download Table]

                                                                      WEIGHTED AVERAGE 
                                          OPTIONS     PRICE RANGE      EXERCISE PRICE  
                                         ---------   --------------  ------------------
                                                                                       
Granted................................. 3,106,566   $1.00 - $1.13         $1.04       
Exercised...............................       (22)       1.00              1.00       
Forfeited...............................  (142,304)       1.00              1.00       
                                         ---------                                     
Balance, October 31, 1999............... 2,964,240    1.00 - 1.13           1.04       
Granted................................. 4,451,020    1.13 - 14.75          6.53       
Exercised...............................  (452,132)   1.00 - 6.00           1.18       
Forfeited...............................  (786,386)   1.00 - 9.50           4.98       
                                         ---------                                     
Balance, October 31, 2000............... 6,176,742    1.00 - 14.75          4.48       
Granted.................................   507,500    2.00 - 2.97           2.10       
Exercised...............................  (239,625)   1.00 - 4.00           1.04       
Forfeited...............................  (595,909)   1.00 - 9.50           4.62       
                                         ---------                                     
Balance January 31, 2001................ 5,848,708   $1.00 - $14.75        $4.40       
                                         =========                                     

     A summary of stock option grants with exercise prices equal to or less than
the estimated fair market value on the date of grant during the years ended     
October 31, 1999 and 2000 is as follows:                                        

                                                        [Enlarge/Download Table]

                                                                                   WEIGHTED AVERAGE
                                                                 WEIGHTED AVERAGE   FAIR VALUE OF  
                                                OPTIONS GRANTED   EXERCISE PRICE       OPTIONS     
                                                ---------------  ----------------  ----------------
                                                                                                   
Fiscal 1999:                                                                                       
Grants with exercise price equal to estimated                                                      
  fair market value...........................       645,728          $1.00             $0.20      
Grants with exercise price less than estimated                                                     
  fair market value...........................     2,460,838           1.04              1.54      
                                                   ---------                                       
                                                   3,106,566           1.04              1.26      
                                                   =========                                       
Fiscal 2000:                                                                                       
  Grants with exercise price equal to                                                              
     estimated fair market value..............       592,883           8.57              0.57      
  Grants with exercise price less than                                                             
     estimated fair market value..............     3,858,137           6.22              1.29      
                                                   ---------                                       
                                                   4,451,020          $6.53             $1.19      
                                                   =========                                       

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

A summary of the options outstanding and options exercisable under the
Company's stock option plans at October 31, 2000 is as follows:                 

                                                        [Enlarge/Download Table]

                                          OPTIONS OUTSTANDING                    OPTIONS EXERCISABLE      
                              --------------------------------------------  ------------------------------
                                             WEIGHTED                                                     
                                              AVERAGE         WEIGHTED                        WEIGHTED    
                                OPTIONS     CONTRACTUAL       AVERAGE         OPTIONS         AVERAGE     
       EXERCISE PRICES        OUTSTANDING      LIFE        EXERCISE PRICE   EXERCISABLE    EXERCISE PRICE 
       ---------------        -----------   -----------   ----------------  -----------   ----------------
                                                                                                          
$1.00........................  1,678,862       8.51 years      $1.00           899,029         $1.00      
$1.13-$3.99..................    744,426       8.95             1.13           187,416          1.13      
$4.00-$5.99..................    210,109       9.60             5.21             4,609          4.00      
$6.00-$7.99..................  3,015,274       9.22             6.34           949,507          6.03      
$8.00 and above..............    528,071       9.49             9.37             9,446          9.14      
                               ---------                                     ---------                    
                               6,176,742       9.03            $4.48         2,050,007         $3.39      
                               =========                                     =========                    

STOCK-BASED COMPENSATION                                                        

  The Company accounts for its stock options issued to directors, officers
and employees under APB 25 and related interpretations. Under APB 25,           
compensation expense is recognized if an option's exercise price on the         
measurement date is below the intrinsic fair value of the Company's common      
stock. During the year ended October 31, 1999, the Company granted 2,460,838    
stock options with exercise prices that were below the estimated fair market    
value on the measurement date resulting in $3,144,230 in deferred compensation. 
This deferred compensation has been recorded as a component of stockholders'    
equity and will be expensed consistent with the vesting of the underlying stock 
options. Amortization of deferred compensation amounted to $409,296 for the year
ended October 31, 1999. During the year ended October 31, 2000, the Company     
granted 3,858,137 additional stock options with exercise prices below the fair  
market value on the measurement date resulting in $6,790,264 of additional      
deferred compensation to be recognized as expense over the vesting period of the
options. Amortization of deferred compensation amounted to $5,216,016 during the
year ended October 31, 2000. During the year ended October 31, 2000, the Company
reversed the cumulative amortization of deferred compensation previously        
recorded from unvested options of terminated employees. As a result, $652,875   
was recorded as an offset to the non-cash compensation caption in the           
accompanying fiscal 2000 statement of operations. During the three months ended 
January 31, 2001, the Company recorded $333,824 in non-cash compensation        
expense.                                                                        

   As a result of an option agreement between Canopy and Ralph J. Yarro III,
which was subsequently rescinded, the Company recorded a one-time compensation  
charge of $372,000 during the year ended October 31, 2000. The option agreement 
allowed Mr. Yarro to purchase shares of the Company's common stock directly from
Canopy. No shares were purchased under the agreement. Mr. Yarro is the president
and chief executive officer of Canopy and the Chairman of the Company's board of
directors.                                                                      

    SFAS No. 123, "Accounting for Stock-Based Compensation" requires pro forma
information regarding net loss as if the Company had accounted for its stock    
options granted under the fair value method. The fair market value of the stock 
options is estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions for grants during the years ended October  
31, 1999 and 2000: risk-free interest rates of 5.5 and 6.1 percent,             
respectively; expected dividend yield of 0 percent; volatility of 0 and 132     
percent, respectively; and expected exercise lives of five and four years,      
respectively. For purposes of the pro forma disclosure, the estimated fair      
market value of the stock options                                               

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

is amortized over the vesting periods of the respective stock options. The      
following is the pro forma disclosure and the related impact on net loss for the
years ended October 31, 1999 and 2000:                                          

                                                                [Download Table]

                                                       1999           2000     
                                                    -----------   ------------ 
                                                                               
  Net loss attributable to common stockholders, as                             
     reported.....................................  $(9,366,588)  $(39,176,215)
  Net loss attributable to common stockholders,                                
     pro forma....................................   (9,773,906)   (43,291,164)
Per share:                                                                     
  Net loss attributable to common stockholders, as                             
     reported.....................................  $     (0.51)  $      (1.19)
  Net loss attributable to common stockholders,                                
     pro forma....................................        (0.53)         (1.31)

2000 EMPLOYEE STOCK PURCHASE PLAN                                               

     The 2000 Employee Stock Purchase Plan was adopted by the board of directors
on February 15, 2000 and was approved by the stockholders on March 1, 2000. The 
plan became effective upon the closing of the Company's initial public offering.
The plan is designed to allow eligible employees of Caldera and its             
participating subsidiaries to purchase shares of Caldera common stock, at       
semi-annual intervals, through periodic payroll deductions. A total of 500,000  
shares of common stock has been reserved for issuance under the plan. The share 
reserve will increase on the first trading day of each calendar year beginning  
with the 2001 calendar year by 1% of the total number of shares of common stock 
outstanding on the last day of the immediately preceding year but no such annual
increase will exceed 750,000 shares. In no event, however, may a participant    
purchase more than 750 shares, nor may all participants in the aggregate        
purchase more than 125,000 shares on any semi-annual purchase date.             

 The plan will have a series of successive offering periods, each with a
maximum duration of 24 months. The initial offering period began on the date of 
the Company's initial public offering and will end on the last business day in  
April 2002. The next offering period will begin on May 1, 2002. Subsequent      
offering periods will be set by the compensation committee. Shares will be      
purchased on semi-annual purchase dates (the last business day of April and     
October each year) during the offering period. The first purchase date was      
October 31, 2000. Should the fair market value of the Company's common stock on 
any semi-annual purchase date be less than the fair market value on the first   
day of the offering period, the current offering period will automatically end  
and a new offering period will begin, based on the lower fair market value.     

  Individuals who are eligible employees on the start date of any offering
period may enter the Plan on that start date or on any subsequent semi-annual   
entry date (generally May 1 or November 1 each year). Individuals who become    
eligible employees after the start date of the offering period may join the plan
on any subsequent semi-annual entry date within that period.                    

    A participant may contribute up to 10% of his or her cash earnings through
payroll deductions and the accumulated payroll deductions will be applied to the
purchase of shares on the participant's behalf on each semi-annual purchase date
(the last business day in April and October of each year). The purchase price   
per share will be 85% of the lower of the fair market value of our common stock 
on the participant's entry date into the offering period or the fair market     
value on the semi-annual purchase date.                                         

     The board may at any time amend or modify the plan. The plan will terminate
no later than the last business day in April 2010.                              

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

In July 2000, the board of directors amended the plan to increase the 
maximum number of shares of common stock authorized for issuance over the term  
of the plan by an additional 1,500,000 shares.                                  

On October 31, 2000, 61,807 shares of common stock of the Company were
purchased through the plan at a price of $2.98 per share.                       

(9) INCOME TAXES                                                                

  As described in Note 1, Caldera became a separate legal entity effective
September 1, 1998. The income tax attributes associated with the carved-out     
portion of the Predecessor prior to September 1, 1998 remained with the         
Predecessor.                                                                    

Since incorporation, Caldera has reported for income tax purposes as a
stand-alone taxable entity. For income tax purposes, the reorganization of the  
Predecessor and the sale of the Linux software business to Caldera has been     
treated as a taxable asset sale. Accordingly, the tax basis of the assets       
received from the Predecessor is based on the $19,928,848 purchase price (see   
Note 1). The reorganization did not qualify as a tax-free reorganization because
the Predecessor did not transfer substantially all of its assets to Caldera.    

    The net loss before income taxes consisted of the following components for
the period from the reorganization (September 1, 1998) through October 31, 1998 
and for the years ended October 31, 1999 and 2000:                              

                                                        [Enlarge/Download Table]

                                                   1998          1999           2000     
                                                -----------   -----------   ------------ 
                                                                                         
Domestic U.S. operations....................... $(1,070,632)  $(9,401,363)  $(26,980,396)
Operations of foreign subsidiary, Caldera                                                
  GmbH.........................................      11,260        69,550        138,039 
                                                -----------   -----------   ------------ 
  Total........................................ $(1,059,372)  $(9,331,813)  $(26,842,357)
                                                ===========   ===========   ============ 

  The components of the provision for income taxes for the period from the
reorganization (September 1, 1998) through October 31, 1998 and for the years   
ended October 31, 1999 and 2000 are as follows:                                 

                                                        [Enlarge/Download Table]

                                                  1998         1999          2000     
                                                ---------   -----------   ----------- 
                                                                                      
Current:                                                                              
  U.S. Federal................................. $      --   $        --   $        -- 
  U.S. State...................................        --            --            -- 
  Non-U.S. ....................................    33,780        34,775        81,141 
                                                ---------   -----------   ----------- 
                                                   33,780        34,775        81,141 
                                                ---------   -----------   ----------- 
Deferred:                                                                             
  U.S. Federal ................................  (368,163)   (3,022,242)   (3,976,810)
  U.S. State ..................................   (53,436)     (293,335)     (385,985)
  Change in valuation allowance................   421,599     3,315,577     4,362,795 
                                                ---------   -----------   ----------- 
                                                       --            --            -- 
                                                ---------   -----------   ----------- 
     Total provision for income taxes.......... $  33,780   $    34,775   $    81,141 
                                                =========   ===========   =========== 

     Deferred tax assets and liabilities are determined based on the differences
between the financial reporting and tax bases of assets and liabilities. They   
are measured by applying the enacted tax rates and                              

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

laws in effect for the years in which such differences are expected to reverse. 
The significant components of the Company's deferred income tax assets and      
liabilities at October 31, 1999 and 2000 are as follows:                        

                                                                [Download Table]

                                                           1999           2000     
                                                       ------------   ------------ 
                                                                                   
Deferred income tax assets:                                                        
  Net operating loss carryforwards                     $  3,967,242   $  8,029,416 
  Tax basis in excess of book basis related to assets                              
     acquired by Caldera from Predecessor                 6,599,942      6,122,838 
  Book to tax basis difference in equity investee                --        393,769 
  Reserves and accrued expenses                             268,510        606,389 
  Book depreciation in excess of tax                         62,570        114,002 
  Foreign tax credit                                         46,617        101,793 
                                                       ------------   ------------ 
     Total deferred income tax assets                    10,944,881     15,368,207 
Deferred tax liability -- tax on foreign earnings           (51,142)      (111,673)
Valuation allowance                                     (10,893,739)   (15,256,534)
                                                       ------------   ------------ 
     Net deferred income tax assets                    $         --   $         -- 
                                                       ============   ============ 

     The amount of and ultimate realization of the deferred income tax assets is
dependant, in part, upon the tax laws in effect, Caldera's future earnings, and 
other future events, the effects of which cannot be determined. The Company has 
established a full valuation allowance against its deferred income tax assets.  
Management believes that as of October 31, 2000, based on a number of factors,  
the available objective evidence creates sufficient uncertainty regarding the   
realizability of these deferred income tax assets.                              

  As of October 31, 2000, the Company had net operating loss carryforwards
for federal income tax reporting purposes totaling approximately $21,527,000    
that expire in 2018 to 2020.                                                    

   The Internal Revenue Code contains provisions that likely could reduce or
limit the availability and utilization of net operating loss carryforwards if   
certain changes in ownership have taken place or will take place. As of October 
31, 2000, no such ownership changes had occurred.                               

The differences between the provision for income taxes at the U.S.    
statutory rate and the Company's effective tax rate is as follows:              

                                                                [Download Table]

                                                             1998    1999    2000   
                                                             -----   -----   -----  
                                                                                    
Benefit at statutory rate................................... (34.0%) (34.0%) (34.0%)
Non-deductible items........................................   0.1%    0.1%   21.2% 
State income taxes, net of federal effect...................  (3.3%)  (3.3%)  (3.3%)
Foreign income taxes........................................   0.6%   (0.1%)   0.1% 
Increase in valuation allowance.............................  39.8%   37.7%   16.3% 
                                                             -----   -----   -----  
  Total provision for income taxes..........................   3.2%    0.4%    0.3% 
                                                             =====   =====   =====  

(10) COMMITMENTS AND CONTINGENCIES                                              

LITIGATION                                                                      

     The Company is a party to certain legal proceedings arising in the ordinary
course of business. Management believes, after consultation with legal counsel, 
that the ultimate outcome of such legal proceedings will not have a material    
adverse effect on the Company's financial position, liquidity or results of     
operations.                                                                     

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

COST-SHARING ARRANGEMENT                                                        

    In connection with the Definitive Agreement with SCO to acquire the server
software and professional services groups (see Note 1), the Company and SCO     
agreed that Caldera would reimburse SCO for certain employee payroll and related
costs. The costs to be reimbursed by Caldera related to SCO employees that SCO  
had identified for termination in a company-wide layoff in September 2000.      
Caldera viewed these employees as critical to the new combined company and SCO  
agreed to retain the employees if Caldera would reimburse SCO for a portion of  
their payroll and related costs. At the time Caldera committed to reimburse SCO 
for these employee costs, the ultimate amount was not determinable and both     
parties agreed that the amount would be determined prior to the completion of   
the acquisition. During December 2000, both parties agreed that Caldera would   
reimburse SCO $1.5 million relating to services rendered from August through    
December 2000. Accordingly, as of October 31, 2000 Caldera has accrued $898,026 
representing the portion incurred through that time. The Company recorded the   
remaining $601,974 during the first quarter of fiscal 2001. The full payment was
made to SCO during Caldera's first quarter of fiscal 2001.                      

SEVERANCE AGREEMENTS                                                            

    During July and August 2000, the Company entered into severance agreements
with certain members of management. The agreements apply to a change of control 
or termination or effective termination of employment with the Company. Change  
of control is defined as: (1) any person or entity who becomes the beneficial   
owner of 51 percent or more of the Company's common stock, (2) sale of          
substantially all of the Company's assets, (3) approval of a merger or          
consolidation in which at least 50 percent of the voting securities are         
acquired, and (4) during any period of two consecutive years, individuals who at
the beginning of such period constitute the board of directors of the Company   
and any new director whose election by the board of directors or nomination for 
election by the Company's stockholders was approved by a vote of at least two   
thirds of the directors then still in office who either were directors at the   
beginning of the period or whose election or nomination for election was        
previously so approved, cease for any reason to constitute a majority thereof.  
The acquisition of the SCO server and professional services groups and resulting
addition of two board members does not qualify as a change in control. Specific 
provisions for Senior Vice Presidents and Executive Officers include but are not
limited to the following; salary and bonus payments equal to 150 percent of the 
then current annual base salary and bonuses, 18 months of accelerated vesting   
for outstanding stock options and continuing insurance benefits for a period up 
to six months. Specific provisions for Vice-Presidents include but are not      
limited to the following; salary and bonus payments equal to 100% of the then   
current annual base salary and bonuses, 12 months of accelerated vesting on     
outstanding stock options and continuing insurance benefits for a period of six 
months.                                                                         

     Because each of the severance agreements allows for the accelerated vesting
of stock options that was not included in each employees' original stock option 
grant, a new measurement date has occurred. The total potential compensation    
cost associated with the accelerated vesting provisions of the severance        
agreements is approximately $1.4 million. The members of the executive          
management team who entered into severance agreements hold a total of 1.7       
million options to purchase common shares at prices ranging from $1.00 to $9.50 
per share. The fair value of Caldera's common stock on the dates the severance  
agreements were signed ranged from $5.50 to $9.25 per share. This amount will be
expensed in future financial statements to the extent of unvested shares        
outstanding at the date of a change in control based on remaining service period
and employee turnover rates.                                                    

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

OPERATING LEASE AGREEMENTS                                                      

The Company had been leasing its corporate office facilities from the 
Predecessor. On April 5, 2000, the Company entered into an amended operating    
lease agreement whereby the Company leases additional office space adjacent to  
its corporate offices. The amended lease agreement requires lease payments of   
approximately $55,300 per month, and the lease expires in October 2002. The     
lease may be terminated at an earlier date in accordance with the provisions of 
the original lease agreement. Rent expense under this arrangement totaled       
approximately $19,200, $144,700 and $474,000 for the years ended October 31,    
1998, 1999 and 2000, respectively. This lease requires the Company to pay taxes,
maintenance, insurance and certain other operating costs of the leased property.
After entering into the amended operating lease, the Company subleased a portion
of the space to the Predecessor and to another majority owned company of the    
Predecessor. These sublease agreements were month-to-month agreements that      
required payments of approximately $5,100 per tenant to be paid to the Company. 
These subleases terminated in October, 2000.                                    

     The Company had also been leasing additional office space from an unrelated
party. The lease requires monthly payments of $8,990 to be made through June    
2002. Subsequent to the Company's sale of its Electronic Linux Marketplace      
assets to Ebiz, the Company entered into an agreement to sublease this office   
space to Ebiz. The sublease is for a period of one year and the Company is      
receiving $4,000 per month.                                                     

On September 1, 1999, the Company entered into an operating lease     
arrangement for its Caldera GmbH facility. The lease requires monthly minimum   
payments of 8,750 DM (approximately $3,850 U.S. dollars based on the exchange   
rate as of October 31, 2000) and expires five years from the date of            
commencement. Caldera GmbH also has the option of extending the agreement for   
two consecutive five-year terms. This lease requires the Company to pay taxes,  
maintenance, insurance and certain other operating costs of the property.       

The Company leases warehouse space from two unrelated parties under   
separate operating lease agreements. Each agreement is for a term of eighteen   
months and expires in November 2000. Rent expense under the lease is            
approximately $37,200 per year.                                                 

  On March 30, 2000, the Company entered into an operating lease agreement
for its education facilities whereby the Company agreed to lease 5,146 square   
feet of office space for $8,255 per month. This lease is for a term of five     
years and commenced on June 1, 2000.                                            

   Total rent expense for all of the Company's operating leases was $19,200,
$161,200 and $722,000 for the years ended October 31, 1998, 1999 and 2000.      
Operating lease commitments for the next five years are $1.0 million for fiscal 
2001, $897,000 for fiscal 2002, $158,000 for fiscal 2003, $153,000 for fiscal   
2004 and $66,000 for fiscal 2005 and thereafter.                                

SOFTWARE LOCALIZATION AGREEMENT                                                 

On October 1, 1999, the Company entered into an agreement with United 
Systems Engineers, Inc. ("USE") to localize certain of the Company's software   
products for the Japanese market. As consideration, the Company agreed to pay   
$250,000 in cash or issue to the engineering firm shares of the ]Company's      
common stock with a market value of $202,000, based on the initial public       
offering price per share. On January 4, 2000, the Company and USE amended the   
agreement pursuant to which the Company agreed to issue 33,667 shares of common 
stock to USE for the services, of which 16,833 were to be issued immediately for
services rendered and the remaining 16,834 are to be issued upon completion of  
the services. Should USE not perform under the agreement, USE will not be issued
the remaining 16,834 shares of common stock, and USE has committed to pay       
$100,000 to the Company. Based on the                                           

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performance commitment, the date of the amended contract has been determined to 
be the measurement date and the estimated fair value of the Company's common    
stock on that date of $269,336, or $8 per share, will be expensed as the        
services are rendered. As of October 31, 2000 $134,664 has been expensed.       

SOFTWARE LICENSE AGREEMENTS WITH SUN MICROSYSTEMS, INC.                         

In January 2000, the Company and Sun Microsystems, Inc. ("Sun"), an   
investor in the Company's Series B preferred stock, entered into certain        
software license agreements. These license agreements are for a term of 18      
months and expire in June 2001. Pursuant to one of the software license         
agreements, the Company agreed to pay Sun a nonrefundable payment in the amount 
of $1,250,000. During the year ended October 31, 2000, the Company made the     
required payments to Sun and recorded the payments as prepaid license fees and  
marketing expense. Under the agreements, the Company has access to certain of   
Sun's technologies and participates with Sun in various marketing activities    
such as tradeshow appearances, speaking events and web site advertising. The    
value allocated to the marketing activities of $450,000 was determined based    
upon management's estimate of the amount the Company would pay for similar      
marketing services. The portion of the fee allocated to the marketing activities
is being expensed as the marketing activities occur. The Company is expensing   
$800,000 of the fee allocated to the technology as cost of revenue or research  
and development expense over the 18-month term of the license agreements. The   
technology is principally being used for internal purposes to create and enhance
e-commerce applications to be used in connection with current and future Caldera
products. Beginning in the fourth quarter of fiscal 2000, certain of the        
technology has been included in one the Company's products. A portion of the    
license fee has been allocated to cost of revenue based on the estimated fair   
value of the included technology. For the year ended October 31, 2000, the      
Company has expensed the total $450,000 of marketing expenses and approximately 
$314,200 of the total $800,000 in engineering expenses. As of October 31, 2000, 
the balance of prepaid fees was approximately $485,800.                         

STRATEGIC BUSINESS AGREEMENT WITH THE SANTA CRUZ OPERATION                      

On February 1, 2000, the Company and The Santa Cruz Operation ("SCO") 
entered into a strategic business agreement. The agreement provides for certain 
joint marketing activities between the parties, including, but not limited to   
participation in tradeshows, cross recruiting and cross matching of partners,   
cross-referencing each others' websites and product solutions, and discussing   
certain channel initiatives. In addition, the Company agreed to provide ten     
copies of OpenLinux to SCO for its internal use and SCO agreed to provide three 
copies of SCO's Tarantella Express product to the Company for internal use. The 
Company recorded the fair value of the OpenLinux products provided to SCO as an 
engineering expense since the products received were used for internal          
development purposes. In addition, the Company will record the costs of the     
joint initiatives as either marketing or engineering expenses depending on the  
nature of the activities conducted.                                             

(11) RELATED PARTY TRANSACTIONS                                                 

 As of October 31, 2000 and January 31, 2001, the Company did not owe or
have any amounts due from related parties.                                      

CANOPY                                                                          

 As discussed in Note 1, Canopy was the sole stockholder of Caldera upon
incorporation and was the majority stockholder of the Predecessor. Canopy       
invested $20,928,848 in Caldera in exchange for 16,000,000 shares of common     
stock. In addition to the initial equity investment, Canopy advanced $4,819,000 
under a secured convertible promissory note agreement (see Note 7). In August   
1999, the                                                                       

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CALDERA SYSTEMS, INC., THE CARVED-OUT 
PORTION OF CALDERA, INC. AND THEIR SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

principal borrowings and accrued interest of $454,974 were converted into       
5,273,974 shares of common stock. The chairman of the Company's board of        
directors is the president and chief executive officer and a director of Canopy.
Additionally, another director of the Company is the chairman of Canopy's board 
of directors.                                                                   

 The Company has entered into certain transactions with Canopy and other
entities that are majority-owned by Canopy. These transactions consist mainly of
participating in joint insurance coverage, training and testing services, and   
rent. The Company believes that the terms of these related party transactions   
are at least as favorable as the terms that could have been obtained from an    
unaffiliated third party in similar transactions. During the years ended October
31, 1998, 1999 and 2000, transactions with these related parties were as        
follows:                                                                        

                                                                [Download Table]

                                                      1998      1999      2000  
                                                     -------  --------  --------
                                                                                
Revenue............................................. $    --  $     --  $ 46,600
                                                     =======  ========  ========

Rent (see Note 10).................................. $19,200  $144,700  $ 94,200
Training, testing and other.........................      --    48,200    82,600
Insurance...........................................  13,200    13,800     6,700
                                                     -------  --------  --------
  Total expenses.................................... $32,400  $206,700  $183,500
                                                     =======  ========  ========

LINEO, INC.                                                                     

    As discussed in Note 5, in January 2000, the Company acquired an ownership
interest in Lineo, Inc. ("Lineo"), the successor entity to the operations of the
Predecessor which were not acquired by Caldera in the reorganization discussed  
in Note 1. The chairman of the Company's board of directors and two directors   
are also directors of Lineo. Sales to Lineo amounted to $1,700 and $34,300      
during the years ended October 31, 1999 and 2000, respectively.                 

MTI                                                                             

In July 1999, MTI, a company which at the time was 50 percent owned by
Canopy, agreed to purchase 5,333,333 shares of common stock for $6,000,000 of   
which $3,000,000 was paid at closing and $3,000,000 was payable through an      
interest bearing note receivable. Subsequent to signing the agreement, the      
Company agreed to forego the interest component of the note receivable in       
exchange for an acceleration of the payment terms (see Note 8). A director of   
the Company is the chairman of the board of MTI. Additionally, another Company  
director is the current president and chief executive officer of MTI.           

 The Company is using certain computer equipment provided by MTI without
charge. The equipment is valued at approximately $105,000. Sales to MTI amounted
to $2,985 and $31,350 during the years ended October 31, 1999 and 2000,         
respectively.                                                                   

(12) EMPLOYEE BENEFIT PLAN                                                      

     Until June 2000, Caldera utilized a 401(k) plan sponsored by Canopy for its
employees, through which Caldera made matching contributions from January 1     
through June 2000. In June 2000, Caldera adopted its own 401(k) plan through    
which eligible participants can elect to make contributions to the plan, subject
to certain limitations under the Internal Revenue Code. Under the terms of the  
new plan, the Company may make discretionary matching contributions to partially
match employee contributions to the                                             
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CALDERA SYSTEMS, INC., THE CARVED-OUT 
PORTION OF CALDERA, INC. AND THEIR SUBSIDIARIES 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

plan, up to predetermined limits. During the year ended October 31, 2000, the   
Company contributed approximately $145,000 to the plan for matching             
contributions.                                                                  

(13) SIGNIFICANT CUSTOMERS                                                      

During the year ended October 31, 1998, the Company had sales to one  
customer that accounted for approximately 11 percent of total revenue. During   
the year ended October 31, 1999, the Company had sales to two customers that    
accounted for approximately 33 percent and 20 percent of total revenue,         
respectively. During the year ended October 31, 2000, the Company had sales to  
one customer that accounted for approximately 19 percent of total revenue. No   
other customer accounted for more than ten percent of total revenue during the  
years ended October 31, 1998, 1999 and 2000.                                    

(14) SEGMENT INFORMATION                                                        

   In June 1998, the FASB issued SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS 131 establishes disclosures related to
components of a company for which separate financial information is available   
and evaluated regularly by a company's chief operating decision makers in       
deciding how to allocate resources and in assessing performance. It also        
requires segment disclosures about products and services as well as geographic  
areas. The Company has determined that it did not have any separately reportable
operating segments as of October 31, 1998, 1999 and 2000. However, the Company  
does sell software and related products in geographic locations outside of the  
United States. Revenue attributed to individual countries based on the location 
of sales to unaffiliated customers for the years ended October 31, 1998, 1999   
and 2000 and the three months ended January 31, 2000 and 2001, is as follows:   

                                                        [Enlarge/Download Table]

                                                                  THREE MONTHS ENDED  
                                  YEAR ENDED OCTOBER 31,              JANUARY 31,     
                           ------------------------------------  ---------------------
                              1998         1999         2000       2000        2001   
                           ----------   ----------   ----------  --------   ----------
                                                                                      
Revenue:                                                                              
United States............. $1,000,943   $2,847,789   $2,982,275  $390,710   $  711,384
Asia pacific..............         --       91,133      705,701    41,923      284,184
Europe....................     33,687       81,007      366,682    94,325       40,537
Other countries...........     22,458       30,378      219,665    26,241       17,555
                           ----------   ----------   ----------  --------   ----------
  Total revenue........... $1,057,088   $3,050,307   $4,274,323  $553,199   $1,053,660
                           ==========   ==========   ==========  ========   ==========

   Long-lived assets by location consists of the following as of October 31,
1999 and 2000:                                                                  

                                                                [Download Table]

                                                               1999       2000   
                                                             --------  ----------
                                                                                 
Long lived assets:                                                               
United States............................................... $673,002  $1,494,582
Europe......................................................   46,418      94,738
                                                             --------  ----------
  Total long-lived assets................................... $719,420  $1,589,320
                                                             ========  ==========

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REPORT OF INDEPENDENT ACCOUNTANTS 

To the Board of Directors and Shareholders of The Santa Cruz Operation, Inc.:   

    In our opinion, the accompanying consolidated carve out balance sheets and
the related consolidated carve out statements of operations, of divisional      
surplus (deficit) and accumulated other comprehensive loss and of cash flows    
present fairly, in all material respects, the financial position of the SCO     
Server and Professional Services Groups at September 30, 1999 and 2000, and the 
results of their operations and their cash flows for each of the three years in 
the period ended September 30, 2000 in conformity with accounting principles    
generally accepted in the United States of America. These financial statements  
are the responsibility of the management of the SCO Server and Professional     
Services Groups; our responsibility is to express an opinion on these financial 
statements based on our audits. We conducted our audits of these statements in  
accordance with auditing standards generally accepted in the United States of   
America, which require that we plan and perform the audit to obtain reasonable  
assurance about whether the financial statements are free of material           
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements, assessing the          
accounting principles used and significant estimates made by management, and    
evaluating the overall financial statement presentation. We believe that our    
audits provide a reasonable basis for our opinion.                              

    As discussed in Note 1 to these consolidated financial statements, the SCO
Server and Professional Services Groups are dependent upon financing from The   
Santa Cruz Operation, Inc. ("SCO"). There can be no assurance that SCO will     
provide such funding beyond September 30, 2001.                                 

/s/ PricewaterhouseCoopers LLP                                                  
PricewaterhouseCoopers LLP                                                      

San Jose, California                                                            
February 9, 2001                                                                

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CONSOLIDATED CARVE OUT BALANCE SHEETS 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                        SEPTEMBER 30,  SEPTEMBER 30,  DECEMBER 31,
                                                            1999           2000           2000    
                                                        -------------  -------------  ------------
                                                                                      (UNAUDITED) 
                                                                                                  
ASSETS                                                                                            

Current assets:                                                                                   
  Cash and cash equivalents............................    $ 2,223        $   511       $    69   
  Receivables, net.....................................     30,851         22,711        19,456   
  Deferred tax assets..................................      1,202             --            --   
  Other current assets.................................      5,617          3,718         5,352   
                                                           -------        -------       -------   
          Total current assets.........................     39,893         26,940        24,877   
                                                           -------        -------       -------   
  Property and equipment, net..........................     10,560          7,093         6,020   
  Purchased software and technology licenses, net......      9,690          5,282         4,574   
  Long-term deferred tax assets........................      6,623             --            --   
  Other assets.........................................      3,351            736           581   
                                                           -------        -------       -------   
          Total assets.................................    $70,117        $40,051       $36,052   
                                                           -------        -------       -------   

LIABILITIES, DIVISIONAL SURPLUS (DEFICIT) AND OTHER                                               
  COMPREHENSIVE LOSS                                                                              

Current liabilities:                                                                              
  Trade accounts payable...............................    $ 6,788        $ 4,130       $ 2,935   
  Royalties payable....................................      7,212          4,450         2,295   
  Income taxes payable.................................      1,983          1,964         2,177   
  Accrued restructuring charges........................         --          5,163         2,585   
  Accrued expenses and other current liabilities.......     30,086         17,845        17,475   
  Deferred revenues....................................      8,085          6,680         5,343   
                                                           -------        -------       -------   
          Total current liabilities....................     54,154         40,232        32,810   
                                                           -------        -------       -------   
  Long-term lease obligations..........................      2,167            477           296   
  Long-term deferred revenues..........................      2,503          1,393         1,594   
  Other long-term liabilities..........................      2,361            150           146   
                                                           -------        -------       -------   
          Total long-term liabilities..................      7,031          2,020         2,036   
                                                           -------        -------       -------   
  Commitments and contingencies (Note 9)                                                          

  DIVISIONAL SURPLUS (DEFICIT) AND ACCUMULATED OTHER                                              
     COMPREHENSIVE LOSS                                                                           
     Divisional surplus (deficit)......................      9,338         (1,483)        1,962   

     Accumulated other comprehensive loss..............       (406)          (718)         (756)  
                                                           -------        -------       -------   
          Total divisional surplus (deficit) and                                                  
            accumulated other comprehensive loss.......      8,932         (2,201)        1,206   
                                                           -------        -------       -------   
          Total liabilities, divisional surplus                                                   
            (deficit) and accumulated other                                                       
            comprehensive loss.........................    $70,117        $40,051       $36,052   
                                                           -------        -------       -------   

See accompanying notes to consolidated carve out financial statements.

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CONSOLIDATED CARVE OUT STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                            THREE MONTHS ENDED 
                                              YEAR ENDED SEPTEMBER 30,         DECEMBER 31,    
                                           ------------------------------   -------------------
                                             1998       1999       2000       1999       2000  
                                           --------   --------   --------   --------   --------
                                                                                (UNAUDITED)    
                                                                                               
Net revenues                                                                                   
  Licenses................................ $148,280   $199,326   $124,931   $46,682    $20,543 
  Services................................   14,440     14,757     14,701     4,098      3,344 
                                           --------   --------   --------   -------    ------- 
          Total net revenues..............  162,720    214,083    139,632    50,780     23,887 
Cost of revenues                                                                               
  Licenses................................   27,689     29,963     22,901     6,888      3,673 
  Services................................   16,792     18,562     18,510     4,916      3,369 
                                           --------   --------   --------   -------    ------- 
          Total cost of revenues..........   44,481     48,525     41,411    11,804      7,042 
                                           --------   --------   --------   -------    ------- 
  Gross margin............................  118,239    165,558     98,221    38,976     16,845 
                                           --------   --------   --------   -------    ------- 
Operating expenses:                                                                            
  Research and development................   38,110     37,617     33,942     9,291      4,836 
  Sales and marketing.....................   75,671     92,275     73,223    23,776     10,308 
  General and administrative..............   13,045     11,869     13,748     3,069      2,841 
  Restructuring charges...................       --         --      9,882        --         -- 
                                           --------   --------   --------   -------    ------- 
          Total operating expenses........  126,826    141,761    130,795    36,136     17,985 
                                           --------   --------   --------   -------    ------- 
Operating income (loss)...................   (8,587)    23,797    (32,574)    2,840     (1,140)
  Other expenses..........................     (430)      (534)      (283)      (98)       (39)
                                           --------   --------   --------   -------    ------- 
          Income (loss) before income                                                          
            taxes.........................   (9,017)    23,263    (32,857)    2,742     (1,179)
  Income taxes............................    3,559      3,396      8,218       670        616 
                                           --------   --------   --------   -------    ------- 
          Net income (loss)...............  (12,576)    19,867    (41,075)    2,072     (1,795)
                                           --------   --------   --------   -------    ------- 
Other comprehensive income (loss), net of                                                      
  tax                                                                                          
  Foreign currency translation                                                                 
     adjustment...........................      299       (507)      (312)      (78)       (38)
                                           --------   --------   --------   -------    ------- 
          Comprehensive income (loss)..... $(12,277)  $ 19,360   $(41,387)  $ 1,994    $(1,833)
                                           ========   ========   ========   =======    ======= 

See accompanying notes to consolidated carve out financial statements.

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CONSOLIDATED CARVE OUT STATEMENTS OF DIVISIONAL SURPLUS (DEFICIT) 
AND ACCUMULATED OTHER COMPREHENSIVE LOSS
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                        DIVISIONAL                               
                                                         SURPLUS    ACCUMULATED OTHER            
                                                        (DEFICIT)   COMPREHENSIVE LOSS   TOTAL   
                                                        ----------  ------------------  -------- 
                                                                                                 
Balances, October 1, 1997..............................  $ 24,496         $(198)        $ 24,298 
Intercompany transfers.................................    (2,860)           --           (2,860)
Other comprehensive income.............................        --           299              299 
Net loss...............................................   (12,576)           --          (12,576)
                                                         --------         -----         -------- 
Balances, September 30, 1998...........................     9,060           101            9,161 
Intercompany transfers.................................   (19,589)           --          (19,589)
Other comprehensive loss...............................        --          (507)            (507)
Net income.............................................    19,867            --           19,867 
                                                         --------         -----         -------- 
Balances, September 30, 1999...........................     9,338          (406)           8,932 
Intercompany transfers.................................    30,254            --           30,254 
Other comprehensive loss...............................        --          (312)            (312)
Net loss...............................................   (41,075)           --          (41,075)
                                                         --------         -----         -------- 
Balances, September 30, 2000...........................    (1,483)         (718)          (2,201)
Intercompany transfers.................................     5,240            --            5,240 
Other comprehensive loss...............................        --           (38)             (38)
Net loss...............................................    (1,795)           --           (1,795)
                                                         --------         -----         -------- 
Balances, December 31, 2000 (unaudited)................  $  1,962         $(756)        $  1,206 
                                                         ========         =====         ======== 

The intercompany transfers comprise the following:                    

                                                        [Enlarge/Download Table]

                                                             YEAR ENDED             THREE MONTH 
                                                            SEPTEMBER 30,              ENDED    
                                                    -----------------------------   DECEMBER 31,
                                                      1998       1999      2000         2000    
                                                    --------   --------   -------   ------------
                                                                                    (UNAUDITED) 
                                                                                                
Cash transferred from (to) SCO for operating                                                    
  activities......................................  $(12,522)  $(28,740)  $24,903      $4,944   
Cash transferred from SCO for purchase of property                                              
  and equipment...................................       896      3,781     4,039         120   
Cash transferred from SCO for purchase of software                                              
  and technology licenses.........................     2,995      2,565       271         197   
Cash funding from SCO for capital lease                                                         
  payments........................................     2,582      3,676     2,838         542   
Net financing of long-term assets.................     3,189       (871)   (1,797)       (563)  
                                                    --------   --------   -------      ------   
Total intercompany transfers......................  $ (2,860)  $(19,589)  $30,254      $5,240   
                                                    ========   ========   =======      ======   

See accompanying notes to consolidated carve out financial statements.

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CONSOLIDATED CARVE OUT STATEMENTS OF CASH FLOWS 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                             THREE MONTHS ENDED 
                                               YEAR ENDED SEPTEMBER 30,         DECEMBER 31,    
                                            ------------------------------   -------------------
                                              1998       1999       2000       1999       2000  
                                            --------   --------   --------   --------   --------
                                                                                 (UNAUDITED)    
                                                                                                
Cash flows from operating activities:                                                           
Net income (loss).........................  $(12,576)  $ 19,867   $(41,075)  $ 2,072    $(1,795)
Adjustments to reconcile net income (loss)                                                      
  to net cash provided by (used for)                                                            
  operating activities -                                                                        
  Depreciation and amortization...........    13,234     11,340     12,250     2,562      2,137 
  Deferred taxes..........................       203         --      7,821        --          0 
  Foreign currency exchange (gain) loss...       (83)         7       (420)     (128)      (164)
  Changes in operating assets and                                                               
     liabilities-                                                                               
     Receivables..........................     8,104     (3,573)     7,484     6,972      3,254 
     Other current assets.................    (1,977)     2,042      1,512       840     (1,681)
     Other assets.........................     2,316        506      2,157       542         23 
     Trade accounts payable...............       322       (280)    (2,564)   (1,469)    (1,199)
     Royalties payable....................    (6,200)     2,135     (2,771)      723     (2,150)
     Income taxes payable.................       522        176        170       786        238 
     Accrued restructuring charges........        --         --      5,163        --     (2,578)
     Accrued expenses and other current                                                         
       liabilities........................    (2,714)     4,096    (11,124)   (2,825)       203 
     Deferred revenues....................     7,895     (4,414)    (2,337)   (2,448)    (1,104)
     Other long-term liabilities..........     3,476     (3,162)    (1,169)   (1,136)      (128)
                                            --------   --------   --------   -------    ------- 
          Net cash provided by (used in)                                                        
            operating activities..........    12,522     28,740    (24,903)    6,491     (4,944)
                                            --------   --------   --------   -------    ------- 
Cash flows from investing activities:                                                           
  Purchases of property and equipment.....      (896)    (3,781)    (4,039)   (1,203)      (120)
  Purchases of software and technology                                                          
     licenses.............................    (2,995)    (2,565)      (271)     (108)      (197)
  Changes in other assets.................       774       (496)      (154)   (1,859)        46 
                                            --------   --------   --------   -------    ------- 
          Net cash used in investing                                                            
            activities....................    (3,117)    (6,842)    (4,464)   (3,170)      (271)
                                            --------   --------   --------   -------    ------- 
Cash flows from financing activities:                                                           
  Intercompany cash transfers.............    (2,860)   (19,589)    30,254    (3,292)     5,240 
  Payments on capital leases..............    (2,582)    (3,676)    (2,838)     (776)      (542)
                                            --------   --------   --------   -------    ------- 
          Net cash provided by (used in)                                                        
            financing activities..........    (5,442)   (23,265)    27,416    (4,068)     4,698 
                                            --------   --------   --------   -------    ------- 
Effects of exchange rate changes on cash                                                        
  and cash equivalents....................      (446)        73        239      (356)        75 
                                            --------   --------   --------   -------    ------- 
Change in cash and cash equivalents.......     3,517     (1,294)    (1,712)   (1,103)      (442)
Cash and cash equivalents at beginning of                                                       
  period..................................  $     --      3,517      2,223     2,223        511 
                                            --------   --------   --------   -------    ------- 
Cash and cash equivalents at end of                                                             
  period..................................  $  3,517   $  2,223   $    511   $ 1,120    $    69 
                                            ========   ========   ========   =======    ======= 
Supplemental disclosure of cash flow                                                            
  information:                                                                                  
  Non-cash financing and investing                                                              
     activities -                                                                               
          Assets acquired under capital                                                         
            leases........................  $  4,701   $  1,978   $     20   $    --    $    -- 
                                            ========   ========   ========   =======    ======= 

See accompanying notes to consolidated carve out financial statements.

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

(1) INTRODUCTION AND BASIS OF PRESENTATION                                      

    On August 2, 2000 The Santa Cruz Operation, Inc. ("SCO") announced that it
had reached an agreement with Caldera Systems, Inc. ("Caldera"), whereby Caldera
will purchase the SCO server and professional services groups. The Plan of      
Reorganization was subsequently amended on September 13, 2000, December 17, 2000
and February 9, 2001.                                                           

  Under the terms of the Reorganization Agreement, as amended, Caldera has
agreed to purchase the SCO server and professional services groups (the         
"Groups"), including its employees, products, technology rights and channel     
resources. In return SCO will receive 16 million shares of New Caldera common   
stock, $23 million in cash and a promissory note for $8 million. This promissory
note will be payable as 4 equal quarterly installments beginning one year after 
closure of the transaction. SCO will retain its Tarantella Division.            

  The SCO server and professional services groups operate as a provider of
server software for networked business computing. The solutions delivered by the
Groups are UNIX(R) based server operating systems. The Group's products enable  
business and government organizations of all sizes to integrate technologies and
products from different vendors to create cost-effective, powerful, networked   
information systems that perform highly complex, mission-critical business      
functions. Products are sold via the Groups' direct sales force or through      
indirect channel partners which include some of the leading distribution        
companies within the United States, Europe and the rest of the world.           

The consolidated carve out financial statements include the assets,   
liabilities, operating results and cash flows of the server and professional    
services groups and have been prepared using SCO's historical bases in the      
assets and liabilities and the historical results of the Groups' operations.    
Changes in divisional surplus (deficit) represent SCO's funding of the Groups,  
after giving effect to the net earnings of the Groups plus net cash transfers to
and from SCO. No interdivision interest income or expense has been allocated to,
or included in, the accompanying consolidated carve out financial statements.   

The consolidated carve out financial statements include allocations of
certain SCO corporate expenses, including centralized research and development, 
legal, accounting, employee benefits, real estate, insurance services,          
information technology services, treasury and other SCO corporate and           
infrastructure costs. The expense allocations have been determined on bases that
SCO and management of the Groups considered to be a reasonable reflection of the
utilization of services provided or the benefit received by the Groups.         

However, the financial information included herein may not reflect the
consolidated financial position, operating results, changes in divisional       
surplus (deficit) and cash flows of the Groups in the future or what they would 
have been had the Groups operated as a separate, stand-alone entity during the  
periods presented.                                                              

In the opinion of management, the accompanying unaudited, interim     
consolidated carve out statements of operations, balance sheets and statements  
of cash flows for the three months ended December 31, 1999 and 2000 have been   
prepared in accordance with generally accepted accounting principles and include
all material adjustments (consisting of only normal recurring adjustments)      
necessary for their fair presentation. The financial statements include the     
accounts of the Groups and its wholly owned subsidiaries after all material     
intercompany balances and transactions have been eliminated. The consolidated   
interim results presented are not necessarily indicative of results to be       
expected for a full year.                                                       

DEPENDENCE UPON SCO FUNDING                                                     

  The Groups have incurred losses from operations in two of the last three
fiscal years and have relied upon SCO to provide adequate financing to fund     
these losses. Management of the Groups expect to incur                          

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

further losses from operations and have received a commitment from SCO to       
provide further funding until September 30, 2001, however, there can be no      
assurance that SCO will provide funding beyond this date. SCO has incurred      
losses from operations of approximately $57.0 million during the year ended     
September 30, 2000 and $7.9 million during the three months ended December 31,  
2000. SCO's revenues have declined from $223.6 million for the year ended       
September 30, 1999 to $148.9 million for the year ended September 30, 2000.     
SCO's revenues have declined from $53.7 million in the three months ended       
December 31, 1999 to $26.5 million for the three months ended December 31, 2000.
SCO has recently announced cost reduction plans (see Note 12) in order to reduce
operating expenses to levels consistent with current revenues and is            
investigating financing alternatives. There can be no assurance that such cost  
reduction measures will be adequate or that such financing will be available, if
at all, on terms acceptable to SCO.                                             

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                  

Business Risks and Uncertainties.  The Groups operate in the software 
industry, which is characterized by intense competition, rapid technological    
advances and evolving industry standards. Factors that could affect the Group's 
future operating results and cause actual results to vary materially from       
expectations include, but are not limited to, dependence on an industry that is 
characterized by rapid technological changes, fluctuations in end-user demands, 
evolving industry standards, competition, and risks associated with foreign     
currencies. Failure by the Groups to anticipate or respond adequately to        
technological developments in its industry, changes in customer or supplier     
requirements or changes in industry standards could have a material adverse     
effect on the Group's business and operating results.                           

     Principles of Consolidation.  The consolidated financial statements include
the results of the overseas incorporated entities which form part of the Groups.
These entities are wholly owned subsidiaries of SCO. All significant            
intradivision transactions and balances have been eliminated.                   

  Use of Estimates.  The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make       
estimates and assumptions that affect the reported amounts of assets and        
liabilities, the disclosure of contingent assets and liabilities at the date of 
the financial statements and the reported amounts of revenues and expenses      
during the reporting period. Such estimates include the allowances for bad debt,
product returns and certain accrued expenses and liabilities, and the valuation 
allowance for deferred tax assets. Actual results could differ from those       
estimates.                                                                      

   Cash Equivalents and Investments.  Historically, SCO has managed cash and
cash equivalents on a centralized basis. Cash receipts associated with the      
Groups' business, except for amounts arising from specific research and         
development funding contracts, have been transferred to SCO on a daily basis and
SCO has funded the Groups' disbursements.                                       

 Property and Equipment.  Property and equipment are stated at cost and,
except for assets recorded under capital lease and leasehold improvements, are  
depreciated using the straight-line method over the estimated useful lives of   
the assets, ranging from three to five years. Leasehold improvements and assets 
recorded under capitalized leases are amortized using the straight-line method  
over the lesser of the remaining term of the lease or the estimated economic    
life of the asset, ranging from one to ten years.                               

     Purchased Software and Technology Licenses.  Purchased software consists of
core intellectual property rights owned by SCO but which relate to the Groups'  
products. Technology licenses represent payments for the rights to use and      
integrate third party technology into the Groups' product offerings. Amounts    
capitalized are amortized on a straight-line basis over the estimated product   
life, ranging from three to ten years, or on the ratio of current revenues to   
total projected product revenues, whichever results in greater amortization.    

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

Accounting for Long-Lived Assets.  Management reviews property and    
equipment for impairment whenever events or changes in circumstances indicate   
that the carrying amount of an asset may not be recoverable. Recoverability is  
measured by comparison of an asset's carrying amount to estimated future net    
cash flows the assets are expected to generate. If such assets are considered to
be impaired, the impairment to be recognized is measured as the amount by which 
the carrying value of the asset exceeds the projected discounted future         
operating cash flows.                                                           

    At each balance sheet date, management compares the unamortized balance of
purchased software and technology with its net realizable value. Any amount by  
which the unamortized balance exceeds the net realizable value is written off.  
The net realizable value is calculated as the estimated future gross revenues   
from that product reduced by the estimated future costs of completing and       
disposing of that product, including the costs of performing maintenance and    
customer support required to satisfy the Groups' responsibility set forth at the
time of sale.                                                                   

  Software Development Costs.  Statement of Financial Accounting Standards
("SFAS") No. 86 provides for the capitalization of certain software development 
costs once technological feasibility is established. Capitalized costs are then 
amortized on a straight-line basis over the estimated product life, or on the   
ratio of current revenues to total projected product revenues, whichever is     
greater. Through December 31, 2000, management has estimated that the process   
for developing software was essentially completed concurrent with the           
establishment of technological feasibility, and accordingly, no software        
development costs have been capitalized to date.                                

 Revenue Recognition.  The Groups' revenue is derived primarily from two
sources, across many industries: (i) products license revenue, derived primarily
from product sales to resellers and end users, including large scale enterprises
and royalty revenue, derived primarily from initial license fees and ongoing    
royalties from product sales by source code OEMs; and (ii) service and support  
revenue, derived primarily from providing software updates, support and         
education and consulting services to end users.                                 

 The Groups adopted the provisions of Statement of Position 97-2, or SOP
97-2, Software Revenue Recognition, as amended by Statement of Position 98-4,   
Deferral of the Effective Date of Certain Provisions of SOP 97-2, effective     
October 1, 1998. SOP 97-2 supercedes Statement of Position 91-1, Software       
Revenue Recognition, and delineates the accounting for software product and     
maintenance revenue. Under SOP 97-2, the Groups recognize product revenue upon  
shipment if a signed contract exists, the fee is fixed and determinable,        
collection of resulting receivables is probable and product returns are         
reasonably estimable, except for sales to distributors, which are recognized    
upon sale by the distributor to resellers or end users. Estimated product       
returns are recorded upon recognition of revenue from customers having rights of
return, including exchange rights for unsold products and product upgrades. In  
1998, the Groups' revenue recognition policy was the same as set forth above.   

    The Groups sell one type of software product -- their UNIX based operating
system software, which is sold under the Unixware and OpenServer names. The     
Groups have sold Unixware and OpenServer products separately and as a result for
contracts involving the sale of Unixware and OpenServer which contain multiple  
obligations (e.g. deliverable and undeliverable products, maintenance and other 
services), the Groups allocate revenue to each component of the contract based  
on Group-specific objective evidence of its fair value. The fair value of each  
element is based on the price sold separately. The Groups recognize revenue     
allocated to undelivered products when the criteria for product revenue set     
forth above are met.                                                            

 The Groups recognize revenue from maintenance fees and fees for ongoing
customer support and product updates ratably over the period of the maintenance 
contract. Payments for maintenance fees and support contracts are generally made
in advance and are non-refundable. For revenue allocated to                     

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

education and consulting services or derived from the separate sale of such     
services, the Groups recognize revenue as the related services are performed. In
1998, the revenue recognition policy for maintenance, education and consulting  
services was the same as set forth above.                                       

    The Groups recognize product revenue from royalty payments upon receipt of
quarterly royalty reports from OEMs related to their product sales.             

   The Groups perform ongoing credit evaluations of its customers' financial
condition and do not require collateral. The Groups maintain allowances for     
potential credit losses and such losses have been within management's           
expectations.                                                                   

     Cooperative Advertising.  The Groups expense advertising costs as incurred.
The Groups reimburse certain qualified customers for a portion of the           
advertising costs related to their promotion of the Groups' products. The       
Groups' liability for reimbursement is accrued at the time revenue is recognized
as a percentage of the qualified customer's net revenue derived from the Groups'
products. For the years ended September 30, 1998, 1999 and 2000, and the three  
months ended December 31, 1999 and 2000, cooperative advertising expense totaled
approximately $9.2 million, $10.5 million, $7.8 million, $2.0 million and $1.0  
million, respectively.                                                          

Income Taxes.  The Groups' operating results historically have been   
included in SCO's consolidated U.S. and state income tax returns and in tax     
returns of certain SCO foreign subsidiaries. The provision for income taxes in  
the Groups' consolidated financial statements has been determined on a U.S.     
consolidated return basis. The Groups record income taxes using an asset and    
liability approach that results in the recognition of deferred tax assets and   
liabilities for the expected future tax consequences of events that have been   
recognized in the Groups' consolidated financial statements or tax returns. In  
estimating future tax consequences, all expected future events other than       
enactment of changes in tax laws are considered. When necessary, a valuation    
allowance is recorded to reduce tax assets to an amount whose realization is    
more likely than not.                                                           

Comprehensive Income.  In the first quarter of fiscal 1999, the Groups
adopted SFAS No. 130, Reporting Comprehensive Income. Under SFAS 130 the Groups 
are required to report comprehensive income, which includes the Groups' net     
income, as well as changes in divisional equity from other sources. In the      
Groups' case, the only change in equity included in comprehensive income is the 
foreign currency cumulative translation adjustment.                             

  Segment Information.  In 1999, the Groups adopted Statement of Financial
Accounting Standards No. 131, Disclosures about Segments of an Enterprise and   
Related Information. SFAS 131 supercedes SFAS 14, Financial Reporting for       
Segments of a Business Enterprise. Under the new standard the Groups are        
required to use the "management" approach to reporting their segments. The      
management approach designates the internal organization used by management for 
making operating decisions and assessing performance as the source of the       
Groups' segments.                                                               

  Recent Accounting Pronouncements.  In November, 2000, the Emerging Issue
Task Force ("EITF") issued EITF Abstract No. 00-19 (EITF 00-19), Accounting for 
Derivative Financial Instruments Indexed to, and Potentially Settled in, a      
Company's Own Stock. EITF 00-19 applies to all freestanding derivative financial
instruments that are indexed to, and potentially settled in, a company's own    
stock and discusses the classification and measurement of these financial       
instruments. It provides that an entity recognizes all freestanding derivative  
financial instruments as equity or as either assets or liabilities, and measure 
those instruments at fair value. The guidance is effective for all new contracts
and contract modifications entered into after September 20, 2000. For contracts 
that exist on September 20, 2000, EITF 00-19 should be applied on June 30, 2001,
based on the contract terms then in place. Management is in the process of      
evaluating the effect this guidance will have on its financial statements.      

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

    In March 2000, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 44, Accounting for Certain Transactions Involving Stock      
Compensation -- an interpretation of APB Opinion No. 25. FIN 44 clarifies the   
application of Opinion 25 for (a) the definition of employee for purposes of    
applying Opinion 25, (b) the criteria for determining whether a plan qualifies  
as a noncompensatory plan, (c) the accounting consequence of various            
modifications to the terms of a previously fixed stock option or award, and (d) 
the accounting for an exchange of stock compensation awards in a business       
combination. FIN 44 is effective July 1, 2000, but certain conclusions cover    
specific events that occur after either December 15, 1998, or January 12, 2000. 
The adoption of the provisions of FIN 44 did not have a material effect on the  
financial position or results of operations.                                    

 In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial   
Statements, which provides guidance on the recognition, presentation and        
disclosure of revenue in financial statements filed with the SEC. SAB 101       
outlines the basic criteria that must be met to recognize revenue and provides  
guidance for disclosures related to revenue recognition policies. The Groups    
must adopt SAB 101 by the fourth quarter of fiscal 2001. Management believes    
that the implementation of SAB 101 will not have a material effect on the       
financial position or results of operations of the server and professional      
services groups.                                                                

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative 
Instruments and Hedging Activities, which establishes accounting and reporting  
standards for derivative instruments and hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the         
statement of financial position and measure those instruments at fair value. In 
June 1999, the FASB issued SFAS No. 137 (No. 137), Accounting for Derivative    
Instruments -- Deferral of the Effective Date of SFAS Statement No. 133 and in  
June 2000, the Financial Accounting Standards Board issued SFAS No. 138 (FAS    
138), Accounting for Certain Derivative Instruments -- an amendment of SFAS 133,
Accounting for Derivative instruments and Hedging Activities. As a result of    
SFAS 137, SFAS 133 and SFAS 138 will be effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000 and was adopted by the Groups on     
October 1, 2000. The adoption of this standard did not have a material impact on
their financial position and results of operations.                             

Stock-Based Compensation.  The Groups account for employee stock-based
compensation plans using the intrinsic value method. As such, compensation      
expense would be recorded on the date of grant only if the current market price 
of the underlying stock exceeded the exercise price.                            

Foreign Currency Translation.  The functional currency of the Groups' 
foreign subsidiaries is the local foreign currency. All assets and liabilities  
denominated in foreign currencies are translated into U.S. dollars at the       
exchange rate on the balance sheet date. Revenues, costs and expenses are       
translated at average rates of exchange prevailing during the period.           
Translation adjustments resulting from translation of interdivision accounts are
accumulated as a separate component of accumulated other comprehensive income   
(loss). Gains and losses resulting from foreign currency transactions are       
included in the consolidated statements of operations and have not been         
significant.                                                                    

  Fair Value of Financial Instruments.  Carrying amounts of certain of the
Groups' financial instruments, including cash and cash equivalents, accrued     
payroll and other accrued liabilities, approximate fair value because of their  
short term maturities.                                                          

(3) CASH AND CASH EQUIVALENTS                                                   

                                                        [Enlarge/Download Table]

                                                SEPTEMBER 30,   SEPTEMBER 30,  DECEMBER 31,
                                                    1999            2000           2000    
                                                -------------   -------------  ------------
                                                               (IN THOUSANDS)              
                                                                                           
Bank demand deposits...........................    $2,223           $511           $69     
                                                   ======           ====           ===     

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

(4) RECEIVABLES                                                                 

                                                        [Enlarge/Download Table]

                                                SEPTEMBER 30,   SEPTEMBER 30,  DECEMBER 31,
                                                    1999            2000           2000    
                                                -------------   -------------  ------------
                                                               (IN THOUSANDS)              
                                                                                           
Trade accounts receivable......................    $36,787         $25,434       $22,678   
Less allowance for returns and doubtful                                                    
  accounts.....................................     (5,936)         (2,723)       (3,222)  
                                                   -------         -------       -------   
                                                   $30,851         $22,711       $19,456   
                                                   =======         =======       =======   

 The Groups generate a significant portion of their net revenues through
distributors of computer software in North America, Europe, South America and   
the Pacific Rim. The Groups maintain reserves for potential credit losses. No   
one customer accounted for greater than 10% of the Groups' net revenues for each
of the years ended September 30, 1998, 1999 and 2000 and the three months ended 
December 31, 1999 and 2000. No one customer's balance exceeded 10% of trade     
receivables as of September 30, 1999. One customer's balance accounted for 16%  
and 13% of trade receivables at September 30, 2000 and December 31, 2000,       
respectively.                                                                   

(5) OTHER CURRENT ASSETS                                                        

                                                        [Enlarge/Download Table]

                                                SEPTEMBER 30,   SEPTEMBER 30,  DECEMBER 31,
                                                    1999            2000           2000    
                                                -------------   -------------  ------------
                                                               (IN THOUSANDS)              
                                                                                           
Other receivable...............................    $  880          $  674         $2,740   
Prepaid expenses...............................     3,215           2,403          2,005   
Other current assets...........................       737             434            383   
Inventory......................................       785             207            224   
                                                   ------          ------         ------   
                                                   $5,617          $3,718         $5,352   
                                                   ======          ======         ======   

(6) PROPERTY AND EQUIPMENT                                                      

                                                        [Enlarge/Download Table]

                                                SEPTEMBER 30,   SEPTEMBER 30,  DECEMBER 31,
                                                    1999            2000           2000    
                                                -------------   -------------  ------------
                                                               (IN THOUSANDS)              
                                                                                           
Computer and office equipment..................   $ 36,003        $ 17,036       $ 14,998  
Furniture and fixtures.........................      7,490           4,594          4,509  
Leasehold improvements.........................      7,263           6,813          6,718  
                                                  --------        --------       --------  
                                                    50,756          28,443         26,225  
Less accumulated depreciation and                                                          
  amortization.................................    (40,196)        (21,350)       (20,205) 
                                                  --------        --------       --------  
                                                  $ 10,560        $  7,093       $  6,020  
                                                  ========        ========       ========  

   Depreciation and amortization of property and equipment was $6.0 million,
$5.5 million, $4.4 million, $1.1 million and $0.9 million during the years ended
September 30, 1998, 1999 and 2000, and the three months ended December 31, 1999 
and 2000, respectively.                                                         

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

(7) PURCHASED SOFTWARE AND TECHNOLOGY LICENSES                                  

                                                        [Enlarge/Download Table]

                                                 SEPTEMBER 30,   SEPTEMBER 30,  DECEMBER 31,
                                                     1999            2000           2000    
                                                 -------------   -------------  ------------
                                                                (IN THOUSANDS)              
                                                                                            
Purchased software and technology licenses, at                                              
  cost..........................................   $ 32,112        $ 28,022       $ 28,033  
Less accumulated amortization...................    (22,422)        (22,740)       (23,459) 
                                                   --------        --------       --------  
                                                   $  9,690        $  5,282       $  4,574  
                                                   ========        ========       ========  

  Amortization expense for this purchased software and technology was $6.1
million, $4.7 million, $3.7 million, $0.9 million and $0.8 million during the   
years ended September 30, 1998, 1999 and 2000, and the three months ended       
December 31, 1999 and 2000, respectively.                                       

(8) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES                              

                                                        [Enlarge/Download Table]

                                                 SEPTEMBER 30,   SEPTEMBER 30,  DECEMBER 31,
                                                     1999            2000           2000    
                                                 -------------   -------------  ------------
                                                                (IN THOUSANDS)              
                                                                                            
Accrued wages, commissions, bonuses.............    $11,644         $ 5,490       $ 5,664   
Accrued advertising.............................      6,015           3,130         3,539   
Accrued fringe benefits.........................      1,669             754         1,803   
Capital lease obligations.......................      2,743           1,576         1,214   
Other accrued expenses..........................      8,015           6,895         5,255   
                                                    -------         -------       -------   
                                                    $30,086         $17,845       $17,475   
                                                    =======         =======       =======   

(9) COMMITMENTS AND CONTINGENCIES                                               

   Lease Commitments.  SCO has entered into a number of lease agreements for
the rental of office premises used by the Groups. Rentals and other expenses in 
respect of these leases are allocated to the Groups based on relative space     
occupied.                                                                       

The Groups also are committed to make payments under noncancelable    
operating leases (with initial or remaining lease terms in excess of one year)  
and future minimum capital lease payments as of December 31, 2000 which were as 
follows:                                                                        

                                                                [Download Table]

                                                             CAPITAL   OPERATING
                                                             LEASES     LEASES  
                                                             -------   ---------
                                                               (IN THOUSANDS)   
                                                                                
Year Ending September 30,                                                       
2001........................................................ $1,105     $ 2,948 
2002........................................................    428       4,945 
2003........................................................      2       3,876 
2004........................................................     --       3,769 
2005........................................................     --       3,407 
Later years, through 2020...................................     --       7,909 
                                                             ------     ------- 
Total minimum lease payments................................  1,535     $26,854 
                                                                        ======= 
Less amount representing interest...........................     25             
                                                             ------             
Present value of net minimum capital lease payments.........  1,510             
Less current installments of obligations under capital                          
  leases....................................................  1,214             
                                                             ------             
Obligations under capital leases, excluding current                             
  installments.............................................. $  296             
                                                             ======             

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

  The cost of assets recorded under capital leases was $12.1 million, $7.2
million and $6.0 million at September 30, 1999 and 2000 and December 31, 2000,  
respectively. Accumulated amortization on those dates was $7.3 million, $5.4    
million and $5.9 million, respectively.                                         

 Rent expense amounted to approximately $7.0 million, $7.0 million, $6.6
million, $1.7 million and $1.2 million in the years ended September 30, 1998,   
1999 and 2000, and the three months ended December 31, 1999 and 2000,           
respectively.                                                                   

   Included within SCO's operating lease commitments recharged to the Groups
are facilities leased from Encinal Partners, a partnership which includes SCO's 
President and Chief Executive Officer. SCO's Board of Directors has reviewed and
approved the lease agreements and determined that the lease agreements entered  
into by SCO are equivalent to agreements that would be negotiated with          
independent third parties on an "arms-length" basis. The remaining lease term of
these facilities is between one and six years. Rent expense for these facilities
amounted to approximately $0.4 million in each of the years ended September 30, 
1998, 1999 and 2000, and $0.1 million in the three months ended December 31,    
1999 and 2000.                                                                  

   Contingencies.  In December 1995, SCO acquired from Novell certain assets
related to UnixWare, one of the products currently sold by the Groups. As       
consideration, SCO may be required to make cash payments periodically to Novell 
provided certain unit volumes of UNIX distribution are achieved. To date,       
distribution unit volumes of UNIX have not reached levels which have required   
SCO to make cash payments to Novell. Such payment obligation will terminate at  
the end of calendar year 2002.                                                  

     From time to time, SCO and its subsidiaries may experience claims on behalf
of the Groups in the ordinary course of business, including among others        
employee legal actions and alleged trademark infringements. Due to the nature of
these matters, it is not possible to either determine the range of loss that may
result from them or their ultimate resolution.                                  

(10) EMPLOYEE BENEFITS                                                          

Savings Plan.  SCO maintains an employee savings plan, which qualifies
under section 401(k) of the Internal Revenue Code. Under the plan, participating
U.S. employees may defer up to 20% of their pre-tax salary, up to certain       
statutory limits. SCO matches 50% of employee contributions up to the lower of  
6% of the employee's annual salary or $3,000. For fiscal years ended September  
30, 1998, 1999 and 2000, and the three months ended December 31, 1999 and 2000, 
the Groups' total contributions towards the 401(k) plan amounted to $0.8        
million, $0.9 million, $0.8 million, $0.2 million and $0.1 million,             
respectively.                                                                   

     1993 Employee Stock Purchase Plan.  SCO has an Employee Stock Purchase Plan
(ESPP) for all eligible employees which is administered by the Board of         
Directors. Under the ESPP, shares of SCO's ESPP stock may be purchased at       
six-month intervals at 85% of the fair market value on the first or last day of 
each six-month period whichever is lower. Employees may purchase shares through 
payroll deductions of up to 10% of gross compensation during an offering period.
During the years ended September 30, 1998, 1999 and 2000, employees of the      
Groups purchased 187,324, 324,482 and 251,477 shares at an average per share    
price of $3.07, $3.52 and $4.31, respectively. There were no shares purchased   
under the ESPP during the three months ended December 31, 1999 and 2000. The    
number of shares reserved for issuance under the purchase plan increased by     
750,000 shares in February 2000. As of December 31, 2000 a total of 1,617,057   
shares were reserved for future issuance.                                       

1994 Incentive Stock Option Plan.  As of December 31, 2000, SCO had   
authorized 20,013,665 shares of Common Stock for issuance under the 1994        
Incentive Stock Option Plan (the "Option Plan"). SCO's Board of Directors       
administers the Option Plan and determines the terms of the options granted     
under the                                                                       
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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

Option Plan, including the exercise price, number of shares subject to each     
option and the exercisability thereof. In addition, the stock option committee  
of SCO's Board of Directors is authorized to grant up to 20,000 shares to an    
individual employee or consultant under the terms of the Option Plan.           

   The exercise price of all incentive options granted under the Option Plan
must be at least equal to the fair market value of SCO stock. Options granted   
under the Option Plan prior to January 31, 1996 generally become exercisable    
over a five year period. Effective January 31, 1996, the vesting period for     
subsequent grants was changed to four years. The term of each option is ten     
years.                                                                          

    1993 Director Option Plan.  SCO's 1993 Director Option Plan (the "Director
Plan") provides for the granting of nonstatutory stock options to non-employee  
directors of SCO and is administered by the Board of Directors. In February of  
2000, the number of shares available for issuance under the Director Plan was   
increased by 250,000 shares from 1,150,000 shares to 1,400,000 shares.          

   A summary of the status of the options held by the Groups employees under
SCO's stock option plans as of September 30, 1998, 1999 and 2000, and December  
31, 2000 and changes during the periods then ended is presented below:          

                                                        [Enlarge/Download Table]

                                                  SEPTEMBER 30,                                            
                           ------------------------------------------------------------     DECEMBER 31,   
                                  1998                 1999                 2000                2000       
                           ------------------   ------------------   ------------------  ------------------
                                    WEIGHTED-            WEIGHTED-            WEIGHTED-           WEIGHTED-
                                     AVERAGE              AVERAGE              AVERAGE             AVERAGE 
                                    EXERCISE             EXERCISE             EXERCISE            EXERCISE 
OPTION AND DIRECTOR PLANS  SHARES     PRICE     SHARES     PRICE     SHARES     PRICE    SHARES     PRICE  
-------------------------  ------   ---------   ------   ---------   ------   ---------  ------   ---------
                                                 (IN THOUSANDS, EXCEPT PER SHARE DATA)                     
                                                                                                           
Outstanding at beginning                                                                                   
  of                                                                                                       
  period...............     4,387     $5.25     4,362      $4.69      4,809     $4.94    4,349      $7.41  
Granted................     1,033      3.94     1,682       5.53      2,190     11.51       29       2.63  
Exercised..............       (58)     2.80      (679)      4.47       (668)     4.75       (8)      1.79  
Cancelled..............    (1,000)     5.52      (556)      5.27     (1,982)     8.26     (916)      7.19  
                           ------               -----                ------              -----             
Outstanding at end of                                                                                      
  period...............     4,362      4.69     4,809       4.94      4,349      7.41    3,454       7.43  
                           ======               =====                ======              =====             
Options exercisable at                                                                                     
  period end...........                                               1,542     $4.97    1,303      $4.92  
                                                                     ======     =====    =====      =====  
Weighted-average fair                                                                                      
  value of options                                                                                         
  granted during the                                                                                       
  period...............               $2.19                $3.61                $6.18               $2.63  
                                      =====                =====                =====               =====  

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

    The following table summarizes information about stock options outstanding
at December 31, 2000:                                                           

                                                        [Enlarge/Download Table]

                     OPTIONS OUTSTANDING                          OPTIONS EXERCISABLE    
                ------------------------------                ---------------------------
                  NUMBER                                         NUMBER                  
                OUTSTANDING     WEIGHTED-AVG    WEIGHTED-AVG  EXERCISABLE    WEIGHTED-AVG
   RANGE OF     AT 12/31/00      REMAINING        EXERCISE    AT 12/31/00      EXERCISE  
EXERCISE PRICE     (000)      CONTRACTUAL LIFE     PRICE         (000)          PRICE    
--------------  -----------   ----------------  ------------  ------------   ------------
                                                                                         
$ 1.50 -  2.00        15         0.9 years         $1.84            15          $1.84    
  2.45 -  3.69       240               8.2          3.49           135           3.58    
  3.75 -  5.63     1,948               7.1          4.44           922           4.63    
  5.75 -  8.56       435               7.0          6.47           198           6.52    
  8.88 - 13.19        92               8.5          9.98            31           9.91    
 14.94 - 20.75       713               9.0         16.98             2          15.00    
 25.31 - 32.00        11               9.1         29.20            --             --    
                   -----                                         -----                   
$ 1.50 - 32.00     3,454         7.5 years         $7.43         1,303          $4.92    
                   =====                                         =====                   

 Pro Forma Fair Value Accounting for Stock-Based Compensation.  SFAS No.
123, Accounting for Stock-Based Compensation, requires pro forma information    
regarding net income and earnings per share be determined as if the Company had 
accounted for its employee stock options and other stock-based compensation     
granted subsequent to September 30, 1996 under the fair value method of that    
Statement. The fair value of the options granted to the employees of the Groups 
under SCO's Incentive Option Plan and the Director Option Plan was estimated at 
the date of grant using a Black-Scholes option pricing model with the following 
weighted-average assumptions for the years ended September 30, 1998, 1999 and   
2000; risk-free interest rate of 5.45% for 1998, 5.27% for 1999 and 6.31% for   
2000; dividend yield of 0%; volatility factor of the expected market price of   
the Company's common stock of 65% for 1998 and 1999 and 75% for 2000, an average
turnover rate of 15% and a four year and five year expected life for options    
granted to employees and executives of the Groups, respectively.                

The fair value for the Employee Stock Purchase Plan rights were also  
estimated at the date of grant using a Black-Scholes option pricing model with  
the following assumptions for the year ended September 30, 1998, 1999 and 2000: 
risk-free interest rates of 5.31%, 4.91% and 5.07% respectively; dividend yield 
of 0%; volatility factors of 65%; and six month expected life. The weighted     
average fair value of the ESPP rights granted during the year ended September   
30, 1999 and 2000 was $1.31 and $2.86, respectively.                            

                                                        [Enlarge/Download Table]

                                                       FISCAL YEAR ENDED SEPTEMBER 30, 
                                                       --------------------------------
                                                         1998        1999       2000   
                                                       ---------   --------   ---------
                                                                (IN THOUSANDS)         
                                                                                       
Pro forma net income (loss)........................... $(19,164)   $16,679    $(41,537)

  During the initial phase-in period, the effects of applying SFAS No. 123
for recognizing compensation expense may not be representative of the effects on
the reported net income or loss for future years because the options granted by 
SCO vest over several years and additional awards may be made in the future.    

(11) INCOME TAXES                                                               

  Income (loss) before income taxes for fiscal 2000, 1999 and 1998 include
foreign pretax profits (losses) of approximately $3.1 million, $6.5 million,    
$(3.1) million, respectively.                                                   

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

The components of income taxes are as follows:                        

                                                        [Enlarge/Download Table]

                                                                 SEPTEMBER 30,       
                                                            ------------------------ 
                                                             1998     1999     2000  
                                                            ------   ------   ------ 
                                                                 (IN THOUSANDS)      
                                                                                     
Current:                                                                             
  Federal.................................................. $        $  500   $ (147)
  State....................................................     20       20       20 
  Foreign..................................................  3,334    2,876      521 
                                                            ------   ------   ------ 
          Total current....................................  3,354    3,396      394 
                                                            ------   ------   ------ 
Deferred:                                                                            
  Federal..................................................     --       --    6,289 
  State....................................................     --       --      139 
  Foreign..................................................    205       --    1,396 
                                                            ------   ------   ------ 
          Total deferred...................................    205       --    7,824 
                                                            ------   ------   ------ 
                                                            $3,559   $3,396   $8,218 
                                                            ======   ======   ====== 

Income taxes differ from the amount computed by applying the statutory
federal income tax rate to income (loss) before income taxes as follows:        

                                                        [Enlarge/Download Table]

                                                                SEPTEMBER 30,         
                                                         ---------------------------- 
                                                          1998      1999       2000   
                                                         -------   -------   -------- 
                                                                (IN THOUSANDS)        
                                                                                      
Statutory federal income tax (benefit) at 34%........... $(3,066)  $ 7,907   $(11,171)
State income tax (benefit), net of federal effect.......    (338)      247        159 
Foreign taxes less related tax benefit, if any..........   3,659       669       (229)
Losses and expenses without tax benefit.................   3,304        --     11,635 
Current utilization of losses...........................      --    (5,427)        -- 
Net deferred tax asset charge...........................      --        --      7,824 
                                                         -------   -------   -------- 
                                                         $ 3,559   $ 3,396   $  8,218 
                                                         =======   =======   ======== 

     The tax effect of losses and expenses without tax benefit mainly relates to
current year net operating loss carryforwards for which no tax benefit was      
recorded as the Groups consider it more likely than not that the related        
deferred tax asset would not be recoverable.                                    

The tax effect of temporary differences that give rise to significant 
portions of the deferred tax assets and deferred tax liabilities are as follows:

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

                                                        [Enlarge/Download Table]

                                                                  SEPTEMBER 30,       
                                                             ------------------------ 
                                                                 1999          2000   
                                                             -------------   -------- 
                                                                  (IN THOUSANDS)      
                                                                                      
Deferred tax assets:                                                                  
Accruals and reserve accounts...............................   $  6,150      $  5,280 
Property and equipment......................................      1,472           777 
Net operating loss carryforward.............................      5,095        27,609 
Research credit.............................................      7,602         9,299 
Other credits...............................................     12,346         2,105 
                                                               --------      -------- 
Total gross deferred tax assets.............................     32,665        45,070 
Less valuation allowance....................................    (23,315)      (45,070)
                                                               --------      -------- 
Net deferred tax assets.....................................      9,350            -- 
Deferred tax liabilities:                                                             
Amortization................................................      1,525            -- 
                                                               --------      -------- 
          Total deferred tax liabilities....................      1,525            -- 
                                                               --------      -------- 
Net deferred tax assets and liabilities.....................   $  7,825      $     -- 
                                                               ========      ======== 

The net change in the total valuation allowance for the year ended    
September 30, 2000 was an increase of approximately $21.7 million. Subsequently 
recognized tax benefits relating to the valuation allowance for deferred tax    
assets at September 30, 2000 will be allocated to income tax benefit and        
additional paid in capital in the amounts of $38.9 million and $6.1 million,    
respectively.                                                                   

As of September 30, 1999 the Groups established a partial valuation   
allowance against its gross deferred tax assets to reduce such asset to the     
amount that was deemed, more likely than not, to be recoverable prior to        
expiration. The Groups considered, amongst other factors, the historical        
profitability, prior to one off charges, of the Groups, projections for future  
profits and the ability of the Groups deferred tax assets against these future  
profits prior to expiration of these assets, the ability of the Groups' foreign 
subsidiaries to utilize their deferred tax assets, and the tax effects of one   
time charges.                                                                   

  As at September 30, 2000 the Groups reassessed the recoverability of its
net deferred tax assets. This analysis was based on revised earnings            
projections, the substantial net operating losses incurred during fiscal 2000   
and the effects of the restructurings undertaken during the year upon the       
Group's tax structure. As a result of this analysis management determined that  
it was more likely than not that the net deferred tax asset recorded as of      
September 30, 1999 would not be recoverable against future earnings prior to    
expiration. Accordingly the groups have established a full valuation allowance  
against gross deferred tax assets as of September 30, 2000. This resulted in a  
charge of $7.8 million to the statement of operations during the year ended     
September 30, 2000.                                                             

    At September 30, 2000, the groups have net operating loss carryforwards of
approximately $80.8 million which expire in fiscal years 2012 through 2020, and 
foreign tax credit and research credit carryforwards of approximately $1.2      
million and $9.3 million, respectively, which expire in fiscal years 2001       
through 2013. Additionally, the groups have other tax credits of approximately  
$0.9 million that have no expiration date.                                      

  At September 30, 2000, the cumulative unremitted foreign earnings of the
groups were not material. The groups intends to reinvest those earnings         
indefinitely.                                                                   

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

(12) RESTRUCTURING CHARGE                                                       

 Non-recurring charges of $9.9 million were incurred in fiscal 2000 that
related to worldwide restructurings undertaken in the second and fourth quarters
of fiscal 2000, representing 7.1% of total net revenues for the fiscal year. The
restructuring charges included $6.6 million of severance and benefits, $1.9     
million of facilities charges, $0.7 million of technology charges and $0.7      
million of fixed asset disposals.                                               

SECOND QUARTER RESTRUCTURING PLAN                                               

 During the second quarter of fiscal 2000, SCO announced and completed a
restructuring plan, which resulted in a one-time charge of $5.9 million. SCO    
restructured its business operations into three independent divisions, each with
a separate management team and dedicated development, marketing and sales       
organizations -- the Server Software Division, the Tarantella Division and the  
Professional Services Division. The charge included a reduction in personnel of 
70 employees, write-offs of certain acquired technologies, write-offs of certain
fixed assets, and elimination of non-essential facilities. Of the $5.9 million  
charge, $4.6 million related to cash expenditures and $1.3 million related to   
non-cash charges. The restructuring charge related to cash expenditures included
$3.6 million for severance costs and $1.0 million for facilities costs. SCO     
anticipates that all of the payments, with the exception of the facility lease  
payment, will be made by the end of fiscal 2001. Included in the non-cash       
charges were technology write-offs of $0.7 million relating to technology       
associated with the Unixware 7 product. This technology had previously been     
capitalized as it had alternative future use. However, in conjunction with the  
restructuring, certain personnel associated with product development of Unixware
7 were terminated and future development related to this technology was         
terminated. As a result the technology had no other use and was written off. The
disposal of fixed assets was comprised of computer equipment that will no longer
be in use due to the reduction in development personnel. The computer equipment 
was taken out of service and disposed of during the third and fourth quarters of
fiscal 2000. The disposals correspond to the time of employee terminations, and 
the computer equipment was not written off until it was no longer in use.       
Depreciation, where applicable, continued on these assets until disposal. The   
computer equipment was scrapped or sold to the terminated employees. The        
proceeds from the sale of these assets were not significant. Additionally, the  
disposal of fixed assets includes write-offs of leasehold improvements relating 
to the abandonment of certain leased space at the Company's Watford, United     
Kingdom facility. All fixed asset disposals were related to the server division.
Included in the facilities charge are amounts relating to the abandonment of    
certain leased space at the Company's Watford, United Kingdom facility. The     
space is being reconfigured in preparation for subletting. The restructuring    
provision includes the estimated costs associated with the reconfiguring and the
rent associated with the unoccupied space prior to sublet. The facility closure 
affected the server group. The Groups expect to recognize total annual savings  
of $9.4 million from this reorganization beginning in the next fiscal year.     

The second quarter restructuring charges affected the server and the  
professional services groups. The professional services group had $0.1 million  
of severance costs accrued for the restructuring. The balance of the second     
quarter restructuring charge related to the server group. The majority of the   
reduction in force was in product development for the server group. As of       
September 30, 2000, a total of 70 positions were eliminated including 66 in the 
server group and 4 in the professional services group.                          

The Groups recorded an adjustment to the fiscal 2000 second quarter   
restructuring provision of $0.9 million in severance costs in the fourth quarter
of fiscal 2000. The severance costs were adjusted to reflect changes to the     
estimated expenses as actual payments were made.                                

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

The fiscal 2000 second quarter restructuring charge is summarized as  
follows:                                                                        

SECOND QUARTER RESTRUCTURING ACCRUAL

                                                        [Enlarge/Download Table]

                                   REDUCTION                            DISPOSAL OF           
                                   IN FORCE   FACILITIES   TECHNOLOGY   FIXED ASSETS   TOTAL  
                                   ---------  ----------   ----------   ------------  ------- 
                                                         (IN THOUSANDS)                       
                                                                                              
Restructuring charge accrued......  $ 3,574     $1,052       $ 667         $ 594      $ 5,887 
Payments/utilization of the                                                                   
  accrual.........................   (2,660)       (94)       (667)         (256)      (3,677)
Provision adjustment..............     (914)        --          --            --         (914)
                                    -------     ------       -----         -----      ------- 
Accrual at September 30, 2000.....       --        958          --           338        1,296 
Payments/utilization of the                                                                   
  accrual.........................       --        (75)         --            (4)         (79)
                                    -------     ------       -----         -----      ------- 
Accrual at December 31, 2000......       --        883          --           334        1,217 
                                    =======     ======       =====         =====      ======= 

FOURTH QUARTER RESTRUCTURING PLAN                                               

    In the fourth quarter of fiscal 2000, in connection with management's plan
to reduce operating expenses, SCO announced a further restructuring plan, which 
resulted in a one-time charge to the Groups of $4.9 million. The restructuring  
included the elimination of various regional offices in the United States,      
United Kingdom, Latin America and Asia Pacific. The charge included a reduction 
in personnel of 163 of the Server and Professional Service groups' employees,   
write-offs of certain fixed assets and the elimination of nonessential          
facilities. The restructuring charges affect the server group as well as        
corporate general and administrative areas. Of the $4.9 million charge, $4.7    
million related to cash expenditures and $0.2 related to non-cash charges. The  
restructuring charge related to cash expenditures included $3.9 million for     
severance costs and $0.8 million for facilities costs. The severance charges    
include elimination of 75 positions in the U.S., 59 positions in the United     
Kingdom, 16 positions in Europe, 9 positions in Latin America and 4 position in 
the Asia Pacific region. The United States regional facilities and the Watford, 
United Kingdom leases have been or will be vacated and restored, and            
subsequently sub-let or terminated by the second quarter of 2001. The remaining 
international offices are expected to be vacated immediately. The majority of   
the facility closures relate to the server group. A minor portion of the        
facility closures relate to the corporate division of SCO and is comprised      
primarily of the finance and general and administrative functions of SCO's      
United Kingdom subsidiary. The Groups anticipate that all of the payments, with 
the exception of the facility lease payment, will be made by the end of fiscal  
2001. The non-cash charges were made up of fixed asset disposal costs, including
$0.2 million at U.S. locations and $0.4 million at the Group's Watford, U.K.    
location. The fixed assets being disposed are made up of computer equipment that
will no longer be in use due to the reduction in personnel. The computer        
equipment will be taken out of service and disposed. Depreciation, where        
applicable, will continue on these assets until disposal. These assets will be  
scrapped or sold to the terminated employees. Any gain realized on the sale of  
these assets will be recorded as other income in the statement of operations. As
of December 31, 2000 a total of 163 positions have been eliminated: 91 positions
in the server group and 72 in the corporate division of SCO. The corporate      
division of SCO is allocated to the groups for segment reporting purposes.      

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

The fiscal 2000 fourth quarter restructuring charge is summarized as  
follows:                                                                        

FOURTH QUARTER RESTRUCTURING ACCRUAL

                                                        [Enlarge/Download Table]

                                                                       DISPOSAL OF          
                                               REDUCTION                  FIXED             
                                               IN FORCE   FACILITIES     ASSETS      TOTAL  
                                               ---------  ----------   -----------   ------ 
                                                             (IN THOUSANDS)                 
                                                                                            
Restructuring charge accrued..................  $3,857       $804      $       248   $4,909 
Payments/utilization of the accrual...........  (1,042)        --               --   (1,042)
                                                ------       ----      -----------   ------ 
Accrual at September 30, 2000.................   2,815        804              248    3,867 
Payments/utilization of the accrual...........  (2,311)      (167)             (21)  (2,499)
                                                ------       ----      -----------   ------ 
Accrual at December 31, 2000..................     504        637              227    1,368 
                                                ======       ====      ===========   ====== 

    As of December 31, 2000 all terminations had been made but payments to the
terminated employees had not been made. These payments will be made during the  
second quarter of fiscal 2001.                                                  

(13) INDUSTRY AND GEOGRAPHIC SEGMENT INFORMATION                                

The Groups have adopted the Financial Accounting Standards Board's    
Statement of Financial Accounting Standards No. 131 (SFAS 131), Disclosures     
about Segments of an Enterprise and Related Information.  The Groups review the 
performance of each division -- the Server and Professional Services groups.    
Each segment markets the Division's software products and services to companies 
in a number of industries including telecommunications, manufacturing and       
government bodies. These products and services are either sold directly by each 
segment's sales force or are sold to end users through distributors or OEMs.    

The following table presents information about reportable segments (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                           FISCAL YEAR ENDED          THREE MONTHS  THREE MONTHS
                                             SEPTEMBER 30,               ENDED         ENDED    
                                     ------------------------------   DECEMBER 31,  DECEMBER 31,
                                       1998       1999       2000         1999          2000    
                                     --------   --------   --------   ------------  ------------
                                                            (IN THOUSANDS)                      
                                                                                                
Net revenues:                                                                                   
  Server division................... $157,224   $210,954   $135,433     $49,496       $23,026   
  Professional services division....    5,496      3,129      4,199       1,284           861   
                                     --------   --------   --------     -------       -------   
          Total net revenues........ $162,720   $214,083   $139,632     $50,780       $23,887   
                                     ========   ========   ========     =======       =======   
Gross margin:                                                                                   
  Server division................... $117,615   $168,091   $100,120      39,501       $16,951   
  Professional services division....      624     (2,533)    (1,899)       (525)         (106)  
                                     --------   --------   --------     -------       -------   
          Total gross margin........ $118,239   $165,558   $ 98,221     $38,976       $16,845   
                                     ========   ========   ========     =======       =======   
Restructuring charge:                                                                           
  Server division................... $     --   $     --   $  9,763     $    --       $    --   
  Professional services division....       --         --        119          --            --   
                                     --------   --------   --------     -------       -------   
          Total restructuring                                                                   
            charge.................. $     --   $     --   $  9,882     $    --       $    --   
                                     ========   ========   ========     =======       =======   
Operating income (loss):                                                                        
  Server software division.......... $ (8,082)  $ 27,522   $(28,193)    $ 3,615       $  (210)  
  Professional services division....     (505)    (3,725)    (4,381)       (775)         (930)  
                                     --------   --------   --------     -------       -------   
          Total operating income                                                                
            (loss).................. $ (8,587)  $ 23,797   $(32,574)    $ 2,840       $(1,140)  
                                     ========   ========   ========     =======       =======   

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NOTES TO CONSOLIDATED CARVE OUT FINANCIAL STATEMENTS -- (CONTINUED) 
INFORMATION AS OF DECEMBER 31, 2000 AND/OR FOR THE THREE MONTHS ENDED DECEMBER
31, 1999 AND 2000 IS UNAUDITED

  The following table presents revenue and long-lived asset information by
geographic area (in thousands):                                                 

                                                        [Enlarge/Download Table]

                                                                              THREE MONTHS ENDED 
                                            FISCAL YEAR ENDED SEPTEMBER 30,      DECEMBER 31,    
                                           ---------------------------------  -------------------
                                             1998        1999        2000       1999       2000  
                                           ---------   ---------   ---------  --------   --------
                                                          (IN THOUSANDS)                         
                                                                                                 
Net revenues:                                                                                    
  Americas................................ $ 91,833    $106,819    $ 73,489   $23,622    $13,257 
  EMEIA(1)................................   58,312      91,052      57,880    24,301      8,950 
  Asia Pacific............................   12,575      16,212       8,263     2,857      1,680 
                                           --------    --------    --------   -------    ------- 
  Total net revenues...................... $162,720    $214,083    $139,632   $50,780    $23,887 
                                           ========    ========    ========   =======    ======= 
Restructuring charge:                                                                            
  Americas................................ $     --    $     --    $  4,119   $    --    $    -- 
  EMEIA(1)................................       --          --       5,616        --         -- 
  Asia Pacific............................       --          --         147        --         -- 
                                           --------    --------    --------   -------    ------- 
  Total restructuring charge.............. $     --    $     --    $  9,882   $    --    $    -- 
                                           ========    ========    ========   =======    ======= 
Long-lived assets:                                                                               
  Americas................................ $ 27,481    $ 25,895    $ 10,648                      
  EMEIA(1)................................    3,834       4,175       2,222                      
  Asia Pacific............................      200         154         241                      
                                           --------    --------    --------                      
  Total long-lived assets................. $ 31,515    $ 30,224    $ 13,111                      
                                           ========    ========    ========                      

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

(1) Europe, Middle East, India and Africa                                       

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To EBIZ Enterprises, Inc.:                                                      

    We have audited the accompanying balance sheets of EBIZ Enterprises, Inc.,
a Nevada corporation, (the "Company") as of June 30, 2000 and 1999, and the     
related statements of operations, stockholders' equity (deficit) and cash flows 
for the years then ended. These financial statements are the responsibility of  
the Company's management. Our responsibility is to express an opinion on these  
financial statements based on our audits.                                       

 We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform 
the audit to obtain reasonable assurance about whether the financial statements 
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An 
audit also includes assessing the accounting principles used and significant    
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audits provide a reasonable basis   
for our opinion.                                                                

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of EBIZ Enterprises, Inc. as of
June 30, 2000 and 1999, and the results of its operations and its cash flows for
the years then ended in conformity with accounting principles generally accepted
in the United States.                                                           

    The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the         
financial statements, the Company incurred net losses and had negative cash     
flows from operations in 2000 and 1999, has an accumulated deficit, and does not
have sufficient capital to support its operations. These factors raise          
substantial doubt about the Company's ability to continue as a going concern.   
Management's plans in regard to these matters are also described in Note 1. The 
accompanying financial statements do not include any adjustments to             
classification of asset carrying amounts or the amount and classification of    
liabilities that might result should the Company be unable to continue as a     
going concern.                                                                  

ARTHUR ANDERSEN LLP                                                             

Phoenix, Arizona                                                                
October 5, 2000                                                                 

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EBIZ ENTERPRISES, INC.

BALANCE SHEETS
JUNE 30, 2000 AND 1999

                                                        [Enlarge/Download Table]

                                                                  2000          1999     
                                                              ------------   ----------- 
                                                                                         
                                         ASSETS                                          

Current Assets:                                                                          
  Cash......................................................  $     50,997   $    76,366 
  Accounts receivable, net of allowance for doubtful                                     
     accounts of $75,988 and $40,000 in 2000 and 1999,                                   
     respectively...........................................       585,846     1,669,816 
     Inventory, net.........................................       747,545     1,568,148 
     Prepaid expenses and other current assets..............        28,158       128,184 
                                                              ------------   ----------- 
          Total current assets..............................     1,412,546     3,442,514 
Property and Equipment, net.................................       532,896       474,778 
Deferred Loan Fees, net.....................................       131,079            -- 
Restricted Cash.............................................     4,504,164            -- 
Goodwill....................................................       629,162            -- 
                                                              ------------   ----------- 
                                                              $  7,209,847   $ 3,917,292 
                                                              ============   =========== 

                     LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                      

Current Liabilities:                                                                     
  Accounts payable..........................................  $  1,880,822   $ 1,423,178 
  Accrued expenses..........................................     1,367,135       468,549 
  Line of credit............................................       250,000       350,000 
  Notes payable.............................................        71,928       610,000 
                                                              ------------   ----------- 
          Total current liabilities.........................     3,569,885     2,851,727 
Convertible Debenture, net of discount......................     4,503,579            -- 
                                                              ------------   ----------- 
          Total liabilities.................................     8,073,464     2,851,727 
                                                              ------------   ----------- 
Commitments and Contingencies                                                            
Redeemable Common Stock.....................................     1,200,000            -- 
                                                              ------------   ----------- 
Stockholders' Equity (Deficit):                                                          
  Convertible preferred stock; $.001 par value; 5,000,000                                
     shares authorized; 7,590 and 10,895 shares issued and                               
     outstanding at June 30, 2000 and 1999, respectively;                                
     liquidation value $100 per share.......................       366,737       868,599 
  Common stock; $.001 par value; 70,000,000 shares                                       
     authorized; 8,497,566 and 7,261,715 shares issued and                               
     outstanding at June 30, 2000 and 1999, respectively....         8,498         7,262 
  Additional paid-in capital................................     9,808,580     2,315,832 
  Accumulated deficit.......................................   (12,247,432)   (2,126,128)
                                                              ------------   ----------- 
          Total stockholders' equity (deficit)..............    (2,063,617)    1,065,565 
                                                              ------------   ----------- 
                                                              $  7,209,847   $ 3,917,292 
                                                              ============   =========== 

The accompanying notes are an integral part of these balance sheets.

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EBIZ ENTERPRISES, INC.

STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999

                                                        [Enlarge/Download Table]

                                                                 2000          1999     
                                                             ------------   ----------- 
                                                                                        
Net Revenue................................................. $ 11,900,667   $15,290,202 
Cost of Sales...............................................   10,961,638    14,358,772 
Restructuring Charge -- Inventory...........................      125,430            -- 
                                                             ------------   ----------- 
     Gross profit...........................................      813,599       931,430 
Selling, General and Administrative Expense.................    7,312,259     2,425,895 
Depreciation and Amortization...............................      265,000        68,483 
Provision for Doubtful Accounts.............................      274,074        86,520 
Restructuring Charge........................................       26,500            -- 
                                                             ------------   ----------- 
Loss from Operations........................................   (7,064,234)   (1,649,468)
Other Income (Expense):                                                                 
  Interest Expense..........................................   (3,188,415)     (119,291)
  Interest & Other Income...................................      235,434         2,538 
  Other.....................................................           --      (110,903)
                                                             ------------   ----------- 
Net Loss....................................................  (10,017,215)   (1,877,124)
Dividends on Preferred Stock................................     (104,089)      (77,057)
                                                             ------------   ----------- 
Net Loss Attributable to Common Stockholders................ $(10,121,304)  $(1,954,181)
                                                             ============   =========== 
Net Loss per Common Share, Basic and Diluted................ $      (1.32)  $     (0.29)
                                                             ============   =========== 
Weighted Average Common Shares, Basic and Diluted...........    7,685,232     6,821,083 
                                                             ============   =========== 

The accompanying notes are an integral part of these financial statements.

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EBIZ ENTERPRISES, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999

                                                        [Enlarge/Download Table]

                                                    ADDITIONAL COMMON                                               
                                PREFERRED STOCK           STOCK                         TOTAL                       
                               ------------------   ------------------   PAID-IN     ACCUMULATED     STOCKHOLDERS'  
                               SHARES    AMOUNT      SHARES     AMOUNT   CAPITAL       DEFICIT      EQUITY (DEFICIT)
                               ------   ---------   ---------   ------  ----------   ------------   ----------------
                                                                                                                    
Balance, June 30, 1998.......      --   $      --   6,256,450   $6,256  $  858,712   $   (171,947)    $    693,021  
  Sale of common stock, net                                                                                         
    of offering costs of                                                                                            
    $80,000..................      --          --     455,781     457      900,845             --          901,302  
  Sale of preferred stock,                                                                                          
    net of offering costs of                                                                                        
    $220,901.................  10,895     868,599          --      --           --             --          868,599  
  Common stock issued for                                                                                           
    services and inventory...      --          --     158,528     158      218,593             --          218,751  
  Common stock issued for                                                                                           
    warrants exercised.......      --          --     390,956     391      293,057             --          293,448  
  Deemed dividend on                                                                                                
    preferred stock for                                                                                             
    beneficial conversion                                                                                           
    feature..................      --          --          --      --       44,625        (44,625)              --  
  Accrued dividends on                                                                                              
    preferred stock..........      --          --          --      --           --        (32,432)         (32,432) 
  Net loss...................      --          --          --      --           --     (1,877,124)      (1,877,124) 
                               ------   ---------   ---------   ------  ----------   ------------     ------------  
Balance, June 30, 1999.......  10,895     868,599   7,261,715   7,262    2,315,832     (2,126,128)       1,065,565  
  Exercise of stock                                                                                                 
    options..................      --          --     101,500     102      101,398             --          101,500  
  Warrants issued for                                                                                               
    consulting services......      --          --          --      --      199,185             --          199,185  
  Warrants issued to                                                                                                
    debenture holder.........      --          --          --      --      796,219             --          796,219  
  Stock issued for                                                                                                  
    services.................      --          --      30,822      30       98,969             --           98,999  
  Stock issuance costs.......      --    (171,362)         --      --       (3,370)            --         (174,732) 
  Accrued dividends on                                                                                              
    preferred stock..........      --          --          --      --           --       (104,089)        (104,089) 
  Preferred stock                                                                                                   
    conversion...............  (3,305)   (330,500)     55,086      55      330,445             --               --  
  Beneficial conversion                                                                                             
    feature of convertible                                                                                          
    debentures...............      --          --          --      --    3,793,448             --        3,793,448  
  Conversion of debt and                                                                                            
    interest.................      --          --     264,028     265      577,238             --          577,503  
  Stock issued for business                                                                                         
    acquisition..............      --          --     200,000     200      699,800             --          700,000  
  Private placement of common                                                                                       
    stock....................      --          --     584,415     584      899,416             --          900,000  
  Net loss...................      --          --          --      --           --    (10,017,215)     (10,017,215) 
                               ------   ---------   ---------   ------  ----------   ------------     ------------  
Balance, June 30, 2000.......   7,590   $ 366,737   8,497,566   $8,498  $9,808,580   $(12,247,432)    $ (2,063,617) 
                               ======   =========   =========   ======  ==========   ============     ============  

The accompanying notes are an integral part of these financial statements.

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EBIZ ENTERPRISES, INC.

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2000 AND 1999

                                                        [Enlarge/Download Table]

                                                                 2000          1999     
                                                             ------------   ----------- 
                                                                                        
Cash Flows from Operating Activities:                                                   
  Net loss.................................................. $(10,017,215)  $(1,877,124)
  Adjustments to reconcile net loss to net cash used in                                 
     operating activities --                                                            
     Depreciation and amortization..........................      265,000        68,483 
     Stock exchanged for services and interest..............    1,349,000        80,599 
     Warrants issued for consulting services................      199,185            -- 
     Interest cost on beneficial conversion feature.........    2,106,379            -- 
     Amortization of discounts and loan fees................      381,379            -- 
     Changes in assets and liabilities, net of effect of                                
      business acquired:                                                                
       Accounts receivable..................................    1,083,970    (1,396,987)
       Due from officers....................................           --         3,432 
       Inventory............................................      834,244    (1,122,551)
       Prepaid expenses and other current assets............      100,026       (32,919)
       Accounts payable.....................................      457,644       898,054 
       Accrued expenses.....................................      794,495       436,117 
                                                             ------------   ----------- 
          Net cash used in operating activities.............   (2,445,893)   (2,942,896)
                                                             ------------   ----------- 
Cash Flows from Investing Activities:                                                   
  Purchase of furniture and equipment.......................     (265,921)     (472,738)
                                                             ------------   ----------- 
Cash Flows from Financing Activities:                                                   
  Net (repayments) borrowings under line of credit..........     (100,000)      350,000 
  Borrowings under notes payable............................      488,000       871,786 
  Principle repayments of notes payable.....................   (1,026,072)     (261,786)
  Issuance of convertible debenture, net....................    6,903,391            -- 
  Increase in restricted cash, net..........................   (4,504,164)           -- 
  Sale of stock, net of expenses............................      925,290     2,063,349 
                                                             ------------   ----------- 
          Net cash provided by financing activities.........    2,686,445     3,023,349 
                                                             ------------   ----------- 
Net decrease in cash........................................      (25,369)     (392,285)
Cash, beginning of year.....................................       76,366       468,651 
                                                             ------------   ----------- 
Cash, end of year........................................... $     50,997   $    76,366 
                                                             ============   =========== 
Supplemental Disclosures of Cash Flow Information:                                      
  Cash paid during the year for interest.................... $    251,635   $   108,765 
Supplemental Disclosure of Noncash Financing Activities:                                
  Issuance of common stock for services, assets and                                     
     interest............................................... $  1,362,641   $   218,751 
  Dividends accrued on preferred stock......................      104,089        32,432 
  Deemed dividend on preferred stock for beneficial                                     
     conversion feature.....................................           --        44,625 
  Issuance of warrants for consulting services..............      199,185            -- 
  Issuance of warrants to debenture holder..................      796,219            -- 
  Conversion of debt and related interest to common stock...      577,503            -- 
  Issuance of common stock for business acquisition.........      700,000            -- 

The accompanying notes are an integral part of these financial statements.

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EBIZ ENTERPRISES, INC.

NOTES TO FINANCIAL STATEMENTS 
JUNE 30, 2000 AND 1999
1. ORGANIZATION AND OPERATIONS                                                  

a. Nature of the Business                                                   

   Ebiz Enterprises, Inc. ("Company") is a designer and operator of Internet
e-commerce Web sites and a developer and distributor of computer systems,       
components and accessories for personal and business computing. During the      
second quarter of fiscal 2000, management decided to concentrate the Company's  
strategic focus on the Linux segment of the computer market, which was believed 
to offer stronger growth and profitability opportunities than the market for low
price, conventional computer systems. The Company de-emphasized programs for the
mass merchant and brokerage channels of distribution and restructured its       
organization to implement Linux development and marketing programs. The results 
of operations for the second quarter included restructuring charges for         
inventory, collection and other costs resulting from this change in strategic   
direction.                                                                      

     On October 5, 2000, the Company completed the acquisition of LinuxMall.com,
Inc. ("LinuxMall") by the merger of LinuxMall into a newly formed wholly owned  
subsidiary of the Company. Under the terms of the final transaction, the Company
paid $14.7 million comprised of 7.4 million shares of the Company's common stock
valued at $9.6 million, options for 0.9 million shares of the Company's common  
stock valued at $0.9 million, warrants for 4.6 million shares of the Company's  
common stock valued at $4.1 million and related transaction costs totaling $0.1 
million. The fair value of all shares to be issued to acquire LinuxMall equals  
approximately $9.6 million or $1.30 per share. In addition, the Company assumed 
$5.7 million in net liabilities for total consideration of $20.5 million. In    
January 2001, an additional 2.5 million shares will be issued upon conversion of
the remaining outstanding preferred convertible debentures. The amendments to   
the original purchase agreement were not significant, except for a change in the
conversion ratio, reduced from 2.2 to 1 for all shares to a ratio of 2.0 to 1   
for preferred stock and 1.8 to 1 for common stock, which triggered a new change 
in the measurement date for the purchase price determination. The transaction   
will be accounted for under the purchase method of accounting in accordance with
APB 16. The Company engaged a third party to determine the purchase price       
allocation of the intangible assets acquired. The allocation of the total       
purchase price is as follows:                                                   

                                                        [Enlarge/Download Table]

                                                                            PERIOD OF  
                                                                           AMORTIZATION
                                                               AMOUNT        IN YEARS  
                                                             -----------   ------------
                                                                                       
ALLOCATION:                                                                            
Current assets.............................................. $   722,071               
Other non-current assets....................................     461,163               
Current liabilities.........................................  (4,387,921)              
Long-term debt..............................................  (2,526,270)              
Assembled workforce.........................................     330,000        3      
Technology..................................................   1,310,000        3      
Customer List...............................................     770,000        2      
Trademarks..................................................   4,210,000        5      
Goodwill....................................................  13,845,771        5      
                                                             -----------               
                                                             $14,734,814               
                                                             ===========               

    The liabilities assumed were comprised of convertible debt, trade accounts
payable and accrued expenses.                                                   

 The Company was originally incorporated in Colorado in May 1984, as VDG
Capital Corporation. Following a reorganization, the Company's name was changed 
to Vinculum Incorporated (Vinculum) in August 1994. In June 1998, the Company   
acquired the operating assets and liabilities of Genras, Inc.                   

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EBIZ ENTERPRISES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(an Arizona corporation) and reincorporated in Nevada as CPU Micromart, Inc. In 
May 1999, the Company changed its name to Ebiz Enterprises, Inc.                

b. Management Plans                                                         

 The Company has directed its primary strategic thrust towards the Linux
operating system segment of the market. Management believes that the demand for 
Linux-based products and services represent a rapidly growing business          
opportunity for the Company. The completion of the acquisition of LinuxMall was 
a major step in the implementation of this strategy.                            

     On August 7, 2000, the Company entered into an Agreement and Plan of Merger
with LinuxMall. The agreement was amended on October 3, 2000 and became         
effective October 5, 2000. Under the terms of the agreement, the Company        
acquired all of the outstanding stock and assumed outstanding convertible       
debentures of LinuxMall. The current Ebiz stockholders will own approximately   
56% of the resulting company which will retain the Ebiz Enterprises, Inc. name. 
The agreement specifies the conditions for the closing of the merger which      
included a fairness opinion evaluation by an independent investment banker. The 
agreement identified the principal officers and certain persons to be appointed 
to the Company's Board of Directors, which will be headquartered in Scottsdale, 
Arizona, and defines the basic steps for combining the operations of the two    
companies. The acquisition was effective October 5, 2000.                       

  In addition to anticipated strategic synergies, management believes that
the business logic of the combination and the strength of the proposed business 
plan will help attract new investor interest to help generate the funding       
required to implement the Company's strategies. The first such investment was   
the $6.4 million equity purchase by Caldera Systems, Inc. (Caldera) that was    
announced on September 19, 2000. The purchase price included $3.0 million of    
cash and a business concept and certain fixed and intangible assets valued at   
$3.4 million. Under the terms of this agreement, the Company will use the       
proceeds to create and fund a new, wholly-owned subsidiary, partnerAxis Inc.,   
which will receive the assets and personnel of an existing division of Caldera. 
The new subsidiary will be a Web-based B2B entity providing knowledge exchange, 
Linux product sales, advertising and a vehicle for facilitating Linux product   
development that it believes will strengthen the Company's overall marketing    
program. Caldera is based in Utah and is a provider of Linux e-business internet
solutions including its OpenLinux, NetWare for Linux, Linux technical training, 
certification and support. Under the agreement, Caldera will have the right to  
appoint a member to the Company's Board of Directors.                           

 Management believes that additional funding will likely be available to
meet the Company's growth needs through 2001. In addition, management believes  
that the holder of the $7.1 million convertible debenture that was placed in    
August 1999 will expand its conversion to common stock and thus provide         
additional working capital to the Company (see Note 7). Without additional      
capital, the Company may not be able to fully implement its business or         
operating and development plans. No assurance can be given that any such        
financing, if obtained, will be adequate to meet its ultimate capital needs. If 
adequate capital cannot be obtained or obtained on satisfactory terms,          
operations could be negatively impacted.                                        

    The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company incurred losses and had   
negative cash flows from operations in 2000 and 1999 and does not have          
sufficient capital needed to support its operations. These factors raise        
substantial doubt about the Company's ability to continue as a going concern.   
The accompanying financial statements do not include any adjustments relating to
the recoverability and classification of asset carrying amounts or the amount   
and classification of liabilities that might result should the Company be unable
to continue as a going concern.                                                 

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EBIZ ENTERPRISES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

c. Industry Environment                                                     

     Successful future operations are subject to certain risks and uncertainties
including, among others, actual and potential competition by entities with      
larger customer bases, greater financial resources, longer operating histories, 
greater name recognition and more established relationships in the industry than
the Company. The Company's future success will greatly depend on its ability to 
timely and effectively address the rapid changes in the computer product        
industry and customers' acceptance of the Linux system in general and the       
Company's products and services in particular. As a result, certain of these    
competitors may be able to develop and expand their network infrastructures more
quickly, and take advantage of acquisitions more readily than can the Company.  
The Company's future operating results will depend substantially on the ability 
of its officers and key employees to manage changing business conditions.       
Further risks and uncertainties relate to technological advancements, the       
regulatory environment and the ability of the Company to generate sufficient    
revenue and obtain additional financing to fund current operating losses.       

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   

a. Cash and Cash Equivalents                                                

     For purposes of the statements of cash flows, all highly liquid investments
with a maturity of three months or less at the time of purchase are considered  
to be cash equivalents.                                                         

b. Inventory                                                                

Inventory is stated at the lower of cost (first-in, first-out) or net 
realizable value. Reserves and writedowns are established against Company-owned 
inventory for excess, slow-moving, and obsolete items and for items where the   
estimated net realizable value is less than cost.                               

Inventory consists of the following:                                  

                                                                [Download Table]

                                                                   JUNE 30,       
                                                             ---------------------
                                                               2000        1999   
                                                             --------   ----------
                                                                                  
Components.................................................. $578,649   $1,155,981
  Work-in-process...........................................    8,008       44,947
  Finished goods............................................  160,888      367,220
                                                             --------   ----------
                                                             $747,545   $1,568,148
                                                             ========   ==========

c. Furniture and Equipment                                                  

     Furniture and equipment consists primarily of computer equipment and office
furniture. Furniture and equipment is stated at cost and depreciated using the  
straight-line method over the estimated useful lives of the respective assets.  

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EBIZ ENTERPRISES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Furniture and equipment at June 30 consists of the following:         

                                                        [Enlarge/Download Table]

                                                        USEFUL                       
                                                         LIFE      2000       1999   
                                                        -------  --------   -------- 
                                                                                     
Furniture, fixtures and office equipment............... 3 years  $562,487   $295,566 
Software............................................... 3 years   188,981    200,495 
Leasehold improvements................................. 2 years    63,807     53,293 
                                                        -------  --------   -------- 
                                                                  815,275    549,354 
Less -- Accumulated depreciation.......................          (282,379)   (74,576)
                                                                 --------   -------- 
                                                                 $532,896   $474,778 
                                                                 ========   ======== 

d. Goodwill                                                                 

   During March 2000, the Company recorded goodwill as part of the InfoMagic
acquisition (see Note 9). This is being amortized using the straight-line method
over three years and is net of $57,197 of accumulated amortization at June 30,  
2000.                                                                           

e. Impairment of Long-Lived Assets                                          

    The Company periodically evaluates the carrying value of long-lived assets
in accordance with Statement of Financial Accounting Standards (SFAS) No. 121,  
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to 
be Disposed of.  Under SFAS No. 121, long-lived assets and certain identifiable 
intangible assets to be held and used in operations are reviewed for impairment 
whenever events or circumstances indicate that the carrying amount of an asset  
may not be fully recoverable. An impairment loss is recognized if the sum of the
expected long-term undiscounted cash flows is less than the carrying amount of  
the long-lived assets being evaluated. In management's opinion, no such amounts 
or changes in circumstances have occurred.                                      

f. Accounts Payable                                                         

     Included in accounts payable is approximately $169,000 of bank overdraft at
June 30, 2000.                                                                  

g. Accrued Expenses                                                         

Accrued expenses consist primarily of amounts accrued for employee    
compensation, customer deposits, professional fees, interest and advertising.   

h. Revenue Recognition                                                      

     Sales revenue is recognized at the date of shipment to customers. Provision
is made for an estimate of doubtful accounts and is based on historical         
experience. Revenue from separately priced service and extended warranty        
programs is deferred and recognized over the respective service or extended     
warranty period. System component and replacement costs are generally covered   
under the third-party manufacturer's warranty. The Company had an allowance for 
warranty repair costs of approximately $6,000 and $8,000 at June 30, 2000 and   
1999, respectively, related to the sales of its M2 system and Linux computers.  

  The Securities and Exchange Commission ("SEC") released Staff Accounting
Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements," on       
December 3, 1999. On June 26, 2000 the SEC staff announced that they are        
delaying the required implementation date for SAB No. 101 with the issuance of  
SAB No. 101B. The SAB provides additional guidance on the accounting for revenue
recognition, including both broad conceptual discussions as well as certain     
industry-specific guidance. The                                                 

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EBIZ ENTERPRISES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

new guidance concerning customer acceptance and installation terms may have a   
significant impact on the timing of the Company's revenue recognition. The      
Company does not anticipate any material impact from the adoption of SAB No. 101
on its future results of operations and financial position. The SEC guidance    
will be adopted in the fourth quarter of fiscal year 2001 by recording the      
effect of any prior revenue transaction affected as a "cumulative effect of     
change in accounting principle" as of April 1, 2001.                            

i. Research and Development                                                 

In accordance with SFAS No. 86, "Accounting for the costs of computer 
software to be sold, leased or otherwise marketed," the Company expenses the    
research and development costs incurred until technological feasibility is      
attained. The Company would consider technological feasibility upon the         
completion of a working model.                                                  

j. Advertising Costs                                                        

  Advertising costs are expensed as incurred and are included in sales and
marketing expenses in the accompanying statements of operations. Advertising    
expense was approximately $1,970,000 and $100,000 for the years ended June 30,  
2000 and 1999, respectively. As part of the CNET Agreement, the Company incurred
approximately $1,700,000 of integration and advertising fees to CNET in exchange
for a direct link from CNET's Web site to the Company's Web site.               

k. Restructuring Expense                                                    

In November 1999, the Company implemented a change in its strategic   
business plan to concentrate its focus on the Linux market and to de-emphasize  
the sales of low-priced Windows-based systems. Consequently, the Company        
incurred a restructuring charge of $26,500 for asset revaluation and $125,430   
for markdown of inventory that was directly related to the business being       
de-emphasized. As of June 30, 2000, approximately $150,200 in charges have been 
made against these reserves.                                                    

l. Use of Estimates                                                         

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amounts of assets and liabilities and      
disclosure of contingent assets and liabilities at the date of the financial    
statements and the reported amounts of revenues and expenses during the         
reporting period. Actual results could differ from those estimates.             

m. Loss Per Share                                                           

No outstanding options or warrants were assumed to be exercised for   
purposes of calculating diluted earnings per share for the years ended June 30, 
2000 and 1999, as their effect was anti-dilutive.                               

n. Income Taxes                                                             

The Company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes. SFAS No. 109 required a change from the deferred   
method of accounting for income taxes to the asset and liability method of      
accounting for income taxes. Under SFAS No. 109, deferred tax assets and        
liabilities are recognized for the future tax consequences attributable to      
differences between the financial statement carrying amounts of existing assets 
and liabilities and their respective tax bases. Deferred tax assets and         
liabilities are measured using enacted tax rates expected to be recovered or    
settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities  
of a change in tax rates is recognized in income in the period that includes the
enactment date.                                                                 

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NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

o. Concentrations of Credit Risk                                            

Financial instruments which potentially expose the Company to         
concentrations of credit risk, as defined by SFAS No. 105, Disclosure of        
Information About Financial Instruments with Off-Balance-Sheet Risk and         
Financial Instruments with Concentrations of Credit Risk, consist primarily of  
trade accounts receivable.                                                      

  The Company does not require collateral upon delivery of its products or
services. The Company derives a significant portion of its total revenue from   
relatively few customers. The Company's business is moving towards a more       
diversified customer base. The percentage of total revenue of customers to whom 
sales exceed 10% of total revenue for the years ended June 30 were as follows:  

                                                        [Enlarge/Download Table]

                                                         ACCOUNTS RECEIVABLE             
                                                           OUTSTANDING AT                
                                                              JUNE 30,           SALES   
                                                         -------------------  -----------
                                                          2000       1999     2000   1999
                                                         ------   ----------  ----   ----
                                                                                         
Customer #1.............................................  $ --     $441,000    14%   26% 
Customer #2.............................................    --           --     2%   19% 
Customer #3.............................................    --      930,000     2%   15% 

p. Fair Value of Financial Instruments                                      

     At June 30, 2000 and 1999, the carrying value of cash, accounts receivable,
accounts payable and accrued expenses approximate fair values since they are    
short-term in nature or payable upon demand. Notes payable approximate fair     
value as they are short-term in nature or have stated interest rates based on   
current market rates. It is not practical to estimate fair value of the notes   
payable to related parties as the agreements are between related parties.       

The Company estimates fair values of financial instruments by using   
available market information. Considerable judgment is required in interpreting 
market data to develop the estimates of fair value. Accordingly, the estimates  
may not be indicative of the amounts that the Company could realize in a current
market exchange. The use of different market assumptions or valuation           
methodologies could have a material effect on the estimate fair value amounts.  

q. Recently Adopted Accounting Pronouncement                                

     Effective July 1, 1999, the Company adopted SFAS No. 131, Disclosures About
Segments of an Enterprise and Related Information, which established revised    
standards for the reporting of financial and descriptive information about      
operating segments in financial statements. The Company has determined that it  
has one reportable operating segment. Accordingly, the Company's financial      
statements present its one reportable segment.                                  

r. Recently Issued Accounting Pronouncement                                 

   In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, (as amended by SFAS No. 137 and SFAS No. 138), Accounting for          
Derivative Instruments and Hedging Activities. This statement establishes       
accounting and reporting standards for derivative instruments, including        
derivative instruments embedded in other contracts, and for hedging activities. 
The statement, as amended, is effective for the Company's year ending June 30,  
2001. The Company does not anticipate any material impact from the adoption of  
SFAS No. 133, as amended, on its future results of operations and financial     
position.                                                                       

In March 2000, the Financial Accounting Standard Board issued FASB    
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock     
Compensation -- An interpretation of APB Opinion                                

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NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

No. 25 ("FIN 44")." FIN 44 clarifies the application of APB Opinion No. 25 and  
among other issues clarifies the following: the definition of an employee for   
purposes of applying APB Opinion No. 25; the criteria for determining whether a 
plan qualifies as a non-compensatory plan; the accounting consequence of various
modifications to the terms of previously fixed stock options or awards; and the 
accounting for an exchange of stock compensation awards in a business           
combination. FIN 44 is effective July 1, 2000, but certain conclusions in FIN 44
cover specific events that occurred after either December 15, 1998 or January   
12, 2000. The Company does not expect the application of FIN 44 to have a       
material impact on the Company's financial position or results of operations.   

s. Website Development Costs.                                               

On March 16, 2000 the Emerging Issues Task Force released EITF 00-02  
"Accounting for Website Development Costs" effective for website development    
costs incurred for fiscal quarters beginning after June 30, 2000, earlier       
application is acceptable. The Company adopted EITF 00-2 effective upon its     
release. EITF 00-2 requires certain website development costs to be expensed and
others to be capitalized. The Company capitalized website development costs of  
$12,000 and $68,000 and expensed $223,000 and $152,000 during the years ended   
June 30, 2000 and 1999, respectively, in accordance with EITF 00-2. The Company 
amortizes website development costs that have been capitalized over 3 years.    

3. RELATED PARTY TRANSACTIONS                                                   

a. Consulting Services                                                      

    During fiscal year 1999, the Company contracted with a consulting company,
controlled by an outside director of the Company, to supply financial consulting
services related to accounting and financial systems. This agreement ended      
February 1999 and, as of June 30, 1999, the Company had paid an aggregate of    
$22,700 and issued 31,325 common shares of common stock for services rendered.  
There were no transactions with this company during fiscal year 2000.           

b. Exodus Group, LLC                                                        

  During 1999, certain of the Company's employees and officers purchased a
total of 65% of the available membership units in The Exodus Group, LLC, a      
franchisee that purchases products from the Company. Sales to this customer were
approximately $67,000 and $36,000 for the years ended June 30, 2000 and 1999,   
respectively.                                                                   

4. INCOME TAXES                                                                 

 The Company has cumulative net operating losses as of June 30, 2000, in
excess of $12,400,000. The Company's ability to utilize its net operating losses
to offset future taxable income may be limited under the Internal Revenue Code  
Section 382 change in ownership rules. The Company has established a valuation  
reserve as it has not determined that it is more likely than not that the       
deferred tax asset is realizable.                                               

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NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

    The components of the provision for (benefit from) income taxes consist of
the following:                                                                  

                                                                [Download Table]

                                                              2000   1999
                                                              ----   ----
                                                                         
Current income taxes:                                                    
  Federal...................................................  $--    $-- 
  State.....................................................   --     -- 
Deferred income taxes:                                                   
  Federal...................................................   --     -- 
  State.....................................................   --     -- 
                                                              ---    --- 
          Total provision for (benefit from) income taxes...  $--    $-- 
                                                              ===    === 

   The components of the deferred tax accounts as of June 30, 2000 and 1999,
consist of the following:                                                       

                                                        [Enlarge/Download Table]

                                                               2000          1999     
                                                            -----------   ----------- 
                                                                                      
Current deferred tax assets (liabilities):                                            
Reserves and other accruals................................ $    32,809   $    19,305 
Valuation Allowance........................................     (32,809)      (19,305)
                                                            -----------   ----------- 
          Total current deferred tax assets                                           
            (liabilities)..................................          --            -- 
                                                            -----------   ----------- 
Long-term deferred tax assets (liabilities):                                          
Amortization of goodwill...................................       9,152            -- 
Net operating loss carry forward...........................   4,960,000     1,400,000 
Valuation allowance........................................  (4,969,152)   (1,400,000)
                                                            -----------   ----------- 
          Total non-current deferred tax assets                                       
            (liabilities)..................................          --            -- 
                                                            -----------   ----------- 
Net deferred tax asset (liability)......................... $        --   $        -- 
                                                            ===========   =========== 

   A reconciliation of the federal statutory rate to the Company's effective
tax rate for the years ended June 30 are as follows:                            

                                                                [Download Table]

                                                              2000    1999 
                                                              ----    ---- 
                                                                           
Statutory federal rate......................................  (34)%   (34)%
State taxes, net of federal benefit.........................   (6)     (6) 
Change in valuation allowance...............................   40      40  
                                                              ---     ---  
          Total.............................................   --%     --% 
                                                              ===     ===  

5. BANK LINE OF CREDIT                                                          

    The Company had borrowings under its line of credit of $350,000 as of June
30, 1999. During August 1999, the Company used proceeds from the $7.1 million   
Debenture (see Note 7) to repay the outstanding balance on the line of credit.  

 In December 1999, the Company obtained a line of credit from a bank for
borrowings up to $250,000. Interest accrues at prime (9.50% at June 30, 2000)   
plus 1.5% and is payable monthly. Principal is due at maturity. The line of     
credit is guaranteed by the Company's two largest stockholders and is secured by
the Company's accounts receivable and inventory. The line was fully borrowed at 
June 30, 2000. The weighted average interest rate on amounts outstanding was    
10.6% during the year ended June 30, 2000.                                      

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NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. NOTES PAYABLE                                                                

Notes payable at June 30 consist of the following:                    

                                                                [Download Table]

                                                               2000       1999  
                                                              -------   --------
                                                                                
Note payable to a stockholder, fixed interest amount, due on                    
  demand, unsecured.........................................  $71,928   $     --
Note payable to a stockholder, interest at 10%, due on                          
  demand, unsecured. Paid July, 1999........................       --     30,000
Note payable to a stockholder, interest at 10%, due on                          
  demand, unsecured. Paid July, 1999........................       --     30,000
Note payable to related party, interest at 10%, principal                       
  and interest, due April 19, 2000, secured by the Company's                    
  assets, convertible into shares of common stock at a rate                     
  of one share per $6.00 of note principal converted. Paid                      
  August, 1999..............................................       --    500,000
Note payable to an individual, interest at 10%, principal                       
  and interest due September 25, 1999, secured by the                           
  Company's assets. Paid August, 1999.......................              50,000
                                                              -------   --------
                                                              $71,928   $610,000
                                                              =======   ========

    In connection with the $500,000 note above, the Company issued warrants to
purchase 250,000 common shares, at an exercise price of $100 per share. The fair
value of each warrant as estimated using the Black-Scholes option pricing model,
was estimated using the following assumptions: stock price of $7.50, risk free  
interest rate at 5.26%, expected life of 1 year, a volatility factor of 80% and 
a dividend yield of 0%. Since the exercise price was substantially in excess of 
the then fair value of the common stock at the date of grant, the fair value of 
each warrant was nominal. These warrants are exercisable at any time during the 
term of the warrants and expire two years from the note repayment date.         

7. CONVERTIBLE DEBENTURE                                                        

     In August, 1999 the Company completed a private placement of a $7.1 million
convertible debt facility (the "Debenture"). In conjunction with the Debenture, 
the Company issued warrants to acquire 245,000 shares of common stock at a      
market-based exercise price as defined by the Debenture agreement. The warrants 
are exercisable for the purchase of shares of common stock of 60,000 at $7.4723 
per share, 60,000 at $8.6219 per share and 125,000 at $6.3227 per share. The    
fair value of these warrants, as calculated by using the Black-Scholes pricing  
model, was estimated to be approximately $796,000 using the following weighted  
average assumptions: stock price of $7.625, risk free interest rate at 5.63%,   
expected life of 2 years, a volatility factor of 80% and a dividend yield of 0% 
and is recorded as a debt discount in the accompanying financial statements.    
Additional issuance costs of approximately $197,000 were paid and recorded as   
deferred loan fees in the accompanying financial statements. Discounts and      
deferred loan fees are amortized using the straight-line method which           
approximates the effective interest method as additional interest expense over  
the term of the loan.                                                           

The Company received an initial infusion of $2.1 million from the     
Debenture, which was utilized to repay the Company's outstanding debt at June   
30, 1999 and to provide working capital. The remaining $5.0 million was         
deposited with a bank as collateral for the Debenture. In February 2000,        
$500,000 of the cash collateral was released by the holder. The net cash        
collateral is reflected as restricted cash in the accompanying financial        
statements. The Debenture is convertible, at the holder's option, into shares of
the Company's common stock over an 18 month period at approximately $394,000 per
month. The Company's ability to reduce the cash collateral and to have these    
amounts available for working capital is contingent upon the holder converting  
the Debenture or the Company's ability to pay down the Debenture with cash from 
other sources. If the holder, at its discretion, converts the Debenture, the    
Company can draw                                                                

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approximately $.70 for each $1 of Debenture principal converted to fund         
operations. The unconverted balance, if any, of the Debenture and the           
unconverted accrued interest is due February 24, 2002.                          

 The per share conversion price was initially equal to the lesser of (a)
$7.4953 or (b) the average of the three lowest closing bid prices of the        
Company's common stock for the 15 consecutive trading days ending on the trading
day immediately preceding submission of a notice to convert by the holder. In   
the event the closing bid price of the Company's common stock is less than      
$7.4953 at any time during the five trading days preceding a due date, the      
Company has the right to redeem for cash the monthly conversion amount of the   
Debenture at premiums ranging from 105% to 108%.                                

    The Company recorded a beneficial conversion feature of approximately $3.6
million related to the Debenture. The beneficial conversion feature was based on
the difference between the closing trade price and the conversion price on the  
date of issuance on the portion of the Debenture that was convertible, net of   
the proceeds allocated to the Warrant. For the portion of the Debenture not     
convertible upon issuance, the holder accrues the right to convert it over a    
period of 18 months. However, until the restricted cash is released to the      
Company, there can be no conversion.                                            

    In February 2000, the Debenture was amended to reduce the conversion price
on accrued principal of $2,761,108 and interest of $140,203 to equal the lesser 
of (a) $3.84 or (b) the average of the three lowest closing bid prices of the   
Company's common stock for the 15 consecutive trading days ending on the trading
day immediately preceding submission of a notice to convert by the holder. In   
March 2000, the Debenture was amended to change the formula on the variable     
conversion price from the three lowest closing bid prices to the three lowest   
trading prices in the 15 consecutive trading days ending on the trading day     
immediately preceding submission of a notice to convert by the holder. In       
connection with the amendments to the Debenture, the Company recorded additional
deferred loan fees of approximately $140,000, which will be amortized over the  
remaining term of the Debenture that the holder accrues the right to convert.   

The Debenture required that the related shares of the Company's common
stock be registered under the Securities Act of 1933 and the regulations of the 
Securities and Exchange Commission ("SEC") before the holder could begin to     
convert the Debenture to common stock. The necessary registration was initiated 
by the Company in October 1999 and became effective in February 2000. The holder
began accruing rights to convert the Debenture upon its signing and as of June  
30, 2000 the holder had accrued the rights to convert approximately $4,334,000  
of the principal of the Debenture into shares of the Company's common stock,    
however only $2.1 million was convertible because the holder of the debenture   
had not released the restricted cash. Interest payable to the holder has been   
accrued monthly since September 1999 with approximately $150,000 paid in cash,  
as required by the terms of the Debenture, prior to the completion of the       
registration process. During February 2000, approximately $140,500 of interest  
was converted into 36,546 shares of common stock. An additional $8,200 of       
interest converted into 4,799 shares of common stock during March through June  
2000. The fair value of the Company's common stock ranged from $6.90 to $1.92 on
the dates of the interest conversions during the period from February to June   
2000. The Company recorded a beneficial conversion feature on the conversion of 
interest of approximately $86,000, which is reflected as additional interest    
expense during the twelve months ending June 30, 2000. As of June 30, 2000 the  
remaining balance of accrued interest payable was approximately $236,000. During
February through June 2000, approximately $429,000 of principal was converted to
222,683 shares.                                                                 

8. STOCKHOLDERS' EQUITY                                                         

a. Reverse Stock Split                                                      

 Share amounts in the accompanying financial statements and notes to the
financial statements give retroactive effect to a one-for-ten reverse stock     
split effective June 1998.                                                      

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NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

b. Capitalization                                                           

    The Company amended its Articles of Incorporation in 1999 to authorize the
issuance of up to 70,000,000 shares of Class A common stock. In addition, the   
Articles of Incorporation authorize the issuance of up to 5,000,000 shares of   
preferred stock. The Board of Directors of the Company, at its sole discretion, 
may establish par value, divide the shares of preferred stock into series, and  
fix and determine the dividend rate, designations, preferences, privileges,     
ratify powers, if any, and determine the restrictions and qualifications of the 
shares of each series of preferred stock as established.                        

c. Preferred Stock                                                          

The Board of Directors has designated 100,000 shares of Series A      
Convertible Preferred Stock, (Preferred Stock) and during fiscal 1999, the      
Company issued 10,895 shares of Preferred Stock, at $100 per share. Net proceeds
from the issuance of Preferred Stock was approximately $869,000. These shares   
have a liquidation preference of $100 per share, and are entitled to a $10 per  
share cumulative, annual dividend, accrued quarterly commencing April 1, 1999,  
and payable at the discretion of the Company. The Company, at its discretion,   
may redeem the Preferred Stock whenever the price of its common stock is equal  
to or greater than $9.00 per share 20 out of 30 consecutive trading days. Each  
share of Preferred Stock may be converted, at the option of the holder into     
common stock at a conversion rate of one share for every $6.00 of principal     
converted. In addition, the Preferred Stock automatically converts into common  
stock whenever the price of the Company's common stock is equal to or greater   
than $13.50 per share 20 out of 30 consecutive trading days.                    

During March through May 2000, shareholders converted 3,305 shares of 
Preferred Stock to 55,086 shares of the Company's common stock.                 

d. Warrants to Purchase Common Stock                                        

   The Company had outstanding warrants, issued in connection with financing
transactions, to purchase 86,644 shares of common stock through December 2000.  

As of June 30, 2000 the following groups of warrants were outstanding:

                                                        [Enlarge/Download Table]

EXPIRATION DATE                                            EXERCISE PRICE  COMMON SHARES
---------------                                            --------------  -------------
                                                                                        
December 10, 2000.........................................  $2.10-$3.00        86,664   
February 28, 2002.........................................     $7.20            9,086   
December 1, 2003..........................................  $3.00-$8.25       230,000   
August 22, 2004...........................................  $6.32-$8.62       250,000   

e. Warrants Issued for Consulting Services                                  

The Company records equity instruments that are issued for goods and  
services at the fair value of the consideration received or the fair value of   
the equity instrument issued, whichever is more readably determinable. The      
Company utilizes the Black-Scholes model to determine fair value.               

In November 1998, the Company issued 30,000 options to a director and 
20,000 options to an outside consultant for consulting services for the period  
of November through February 1999. The fair value of the options using the      
Black-Scholes model was nominal, using the following assumptions: stock price of
$1.00, risk free rate of 5.26%, expected life of two years, a volatility factor 
of 80% and a dividend yield of 0%. The options vested 100% upon issuance and had
an exercise price of $1.00.                                                     

   In October, 1999 the Company engaged a consulting firm to assist with its
strategic planning and corporate development programs. In conjunction with the  
engagement, the Company issued warrants to                                      

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purchase 220,000 shares of common stock at a market-based exercise price. The   
warrants are exercisable for the purchase of shares of common stock of 55,000 at
$4.54 per share, 55,000 at $5.16 per share, 55,000 at $6.19 per share, and      
55,000 at $8.25 per share. The fair value of these warrants, as calculated by   
using the Black-Scholes pricing model, was estimated to be approximately        
$199,000, using the following weighted average assumptions: stock price of      
$4.13, risk free interest rate of 5.49%, expected life of one year, a volatility
factor of 80% and a dividend yield of 0%, and is recorded as an expense in      
selling, general and administration expenses in the accompanying financial      
statements. All warrants are 100% vested upon issuance.                         

f. Common Stock Issued for Advertising                                      

  In January, 2000 the Company entered into a Premier Advertiser Agreement
with CNET, Inc. Under the agreement, the Company became a part of CNET's        
"Premier Advertiser" program for CNET's Linux Center and received advertising   
for, and links to, the Company's Web site, TheLinuxStore.com. The term of the   
agreement is through February 2001, subject to earlier termination. The Company 
is required to purchase a minimum of $2 million of advertising under the        
agreement during its stated term. Additionally, the Company paid an integration 
fee equal to $1.2 million by issuing 240,000 shares of its common stock to CNET,
Inc. valued at the fair value of $5.00 per share on the date of the agreement.  
This integration fee has been recorded as prepaid advertising and is being      
amortized over the term of the agreement. The advertising on the CNET Linux     
Center began in February, 2000. The 240,000 shares of common stock issued are   
redeemable at the discretion of the holder within one year of the signing of the
agreement which is reflected in the accompanying balance sheet as redeemable    
common stock.                                                                   

     In May 2000, the Company negotiated the termination of the agreement. Under
the terms of the termination agreement, CNET is to release the Company from its 
liabilities under the agreement upon the Company's registration of the 240,000  
shares of common stock. Accordingly, the remaining balance of the integration   
fee, $1,050,000, was expensed in the fourth quarter of fiscal 2000 and $501,000 
was recorded as a liability for unpaid promotions pending release upon the      
registration of the common stock.                                               

g. Private Placement of Common Stock                                        

     On March 31, 2000, the Company entered into a Securities Purchase Agreement
with two persons, who had no prior relationship with the Company (the           
"Purchasers"). The agreement provided for the purchase of 2.5 million shares of 
the Company's common stock at a price of $2.00 per share (subject to adjustment 
as described in the Securities Purchase Agreement). The $2.00 per share price   
was based on numerous factors including the size of the investment, the         
restrictions on the resale of the stock, the current status of the Company's    
financing requirements and the Company's prospects at the time of the issuance. 
An additional factor related to the agreement and the pricing of the stock was  
that the Purchasers were to also facilitate a strategic relationship with an    
approved Asian manufacturer on behalf of the Company. The purchase agreement    
provided that the price of the stock be adjusted to $3.00 per share in the event
the note (described below) was not timely paid or if a manufacturing agreement  
acceptable to the Company was not consummated.                                  

At the closing, the Purchasers paid $500,000 in cash and executed a   
promissory note, due May 5, 2000, for $4.5 million. The due date of the note was
later extended to June 23, 2000 and the price of the common stock was adjusted  
to $1.54, based upon arms-length negotiations to induce additional cash         
investment into the Company. No further extensions of the note due date have    
been granted. No strategic manufacturing agreement with Company was consummated.
During May and June 2000, the Purchasers paid an additional $400,000 in cash for
the additional stock issued. A total of 584,415 shares of common stock were     
issued. The $900,000 aggregate cash received was recorded as common stock and   
additional paid-in capital. The remainder of the $4.1 million due on the note   
was forgiven.                                                                   

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NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

h. Stock Option Plan                                                        

In November 1998, the Company adopted the CPU MicroMart 1998 Equity   
Incentive Plan ("Plan"). The Plan will terminate 10 years after the effective   
date. The Plan authorizes awards of incentive stock options to employees and    
non-qualified stock options to officers, directors, employees, and consultants  
of the Company. A total of 1,000,000 shares of common stock was reserved for    
issuance under the Plan. The Plan is administered by a committee appointed by   
the Board who have the exclusive authority to administer and interpret the Plan.
The committee has the power to, among other things, designate participants,     
determine types of awards to be granted and the price, timing, terms and        
duration of awards.                                                             

  The Company accounts for its stock option plan under APB Opinion No. 25,
under which no compensation cost has been recognized in fiscal 2000 and 1999,   
respectively.                                                                   

A summary of the status of all the Company's stock options at June 30, 2000 and 
1999 and changes during the years then ended is presented in the following table
and narrative below:                                                            

                                                                [Download Table]

                                                 2000                 1999        
                                          -------------------  -------------------
                                               WEIGHTED             WEIGHTED      
                                           AVERAGE EXERCISE     AVERAGE EXERCISE  
                                          -------------------  -------------------
                                          OPTIONS       PRICE  OPTIONS       PRICE
                                          --------      -----  --------      -----
                                                                                  
Outstanding at beginning of year........   663,000      $1.96        --      $  --
  Granted...............................   533,000       2.77   663,000       1.96
  Exercised.............................  (101,500)      1.00        --         --
  Canceled..............................  (347,500)      1.35        --         --
                                          --------      -----  --------      -----
Outstanding at end of year..............   747,000      $2.94   663,000      $1.96
                                          ========      =====  ========      =====
Exercisable at end of year..............   169,940      $3.59   140,000      $1.28
                                          ========      =====  ========      =====
Weighted average fair value per share of                                          
  options granted.......................                $1.93                $1.29
                                                        =====                =====

 Options outstanding and exercisable by price range as of June 30, 2000:

                                                        [Enlarge/Download Table]

                                          OPTIONS OUTSTANDING                                 
                                  ------------------------------------   OPTIONS EXERCISABLE  
                                                 WEIGHTED               ----------------------
                                                  AVERAGE     WEIGHTED                WEIGHTED
            RANGE OF                             REMAINING    AVERAGE                 AVERAGE 
            EXERCISE                OPTIONS     CONTRACTUAL   EXERCISE    OPTIONS     EXERCISE
             PRICES               OUTSTANDING      LIFE        PRICE    EXERCISABLE    PRICE  
--------------------------------  -----------   -----------   --------  -----------   --------
                                                                                              
$2.25...........................    416,000        9.09        $1.76       78,220      $1.32  
$3.00 -- 3.75...................    298,000        9.33         3.63       61,000       3.69  
$4.88 -- 5.50...................     33,000        8.58         4.93       30,720       4.89  
                                    -------        ----        -----      -------      -----  
                                    747,000        9.16         2.94      169,940       3.57  

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EBIZ ENTERPRISES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The following pro forma disclosures of net loss are made assuming the 
Company had accounted for the stock options pursuant to the provision of SFAS   
No. 123, Accounting for Stock-Based Compensation.                               

                                                                [Download Table]

                                                             JUNE 30,   JUNE 30,
                                                               2000       1999  
                                                             --------   --------
                                                                                
Net loss:                                                                       
  As reported............................................... $(10,121)  $(1,954)
  Pro forma.................................................  (11,066)   (2,098)
Loss per common and common share equivalent:                                    
  As reported -- basic and diluted..........................    (1.32)     (.29)
  Pro forma -- basic and diluted............................    (1.43)     (.31)

   The fair value of each option is estimated on the date of grant using the
Black-Scholes options pricing model with the following weighted average         
assumptions used for grants during fiscal 2000: risk-free interest rate of      
6.48%, expected life of five years, and a volatility factor of 80%. The weighted
average assumptions used for grants during fiscal 1999 were as follows:         
risk-free interest rate of 5.26%, expected lives of three to five years, and a  
volatility factor of 80%. The assumed dividend yield is 0% for 2000 and 1999.   

9. ACQUISITION OF INFOMAGIC, INC.                                               

   On March 31, 2000, the Company acquired all of the issued and outstanding
common stock of InfoMagic, Inc. ("InfoMagic"), which distributes open source and
low cost software products with its principal emphasis in Linux software through
its Website, www.InfoMagic.com and selected distributors. The Company issued    
200,000 shares of its common stock valued at a fair market value of $3.50 per   
share to the shareholders of InfoMagic, for total consideration of $700,000. In 
addition to the acquisition of assets and the assumption of liabilities, the    
Company acquired InfoMagic's customer base of clients. This acquisition has been
accounted for under the purchase method of accounting in accordance with APB16. 
The purchase price in excess of the fair value of assets acquired and           
liabilities assumed of InfoMagic of approximately $686,000 has been recorded as 
goodwill and is being amortized over three years (see Note 2).                  

The fair value of the assets acquired was allocated as follows:       

                                                                [Download Table]
                                                                       
Net assets acquired.........................................   $ 13,641
Goodwill....................................................    686,359
                                                               --------
                                                               $700,000
                                                               ========

  The following table depicts, for the years ended June 30, 2000 and 1999,
unaudited pro forma consolidated information as if the acquisition of InfoMagic 
took place on July 1, 1999 and 1998, respectively.                              

                                                        [Enlarge/Download Table]

                                                               2000          1999     
                                                            -----------   ----------- 
                                                                                      
Net sales.................................................. $12,888,966   $17,018,281 
Net loss................................................... (10,096,3343)  (1,994,529)
Income per basic and diluted share.........................       (1.28)        (0.28)

10. COMMITMENTS AND CONTINGENCIES                                               

a. Operating Leases                                                         

   The Company entered into a two-year lease in May, 1999 for its office and
warehouse facility in Scottsdale, Arizona. Rental expense related to this lease,
and the terminated lease for it previous facility                               

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EBIZ ENTERPRISES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

amounted to approximately $292,000 and $165,000 for the years ended June 30,    
2000 and 1999, respectively.                                                    

    Future minimum payments under the Company's current lease which expires in
April, 2001 are approximately $157,000.                                         

b. Litigation                                                               

 In the normal course of its business, the Company is subject to certain
contractual obligations and litigation. In management's opinion, upon           
consultation with legal counsel, there is no current litigation which will      
materially affect the Company's financial position or results of operations.    

11. SUBSEQUENT EVENT                                                            

The Company entered into an "exclusive marketing alliance" with       
UserFriendly on September 20, 2000 for a period of twelve months. Under the     
terms of the agreement, UserFriendly provides advertising services on its       
website and a direct link to Ebiz's website, TheLinuxStore.com, where all       
purchase transactions are made by customers. Under the terms of the agreement,  
Ebiz is to pay UserFriendly a fixed monthly advertising fee and a percentage of 
the gross margin recorded by Ebiz for sales to customers coming through the     
direct connection between the web sites. These payments will be recorded as     
advertising and commission expenses, respectively. No revenue generating        
transactions or advertising had occurred under the terms of the Agreement as of 
September 30, 2000.                                                             

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INDEX TO APPENDICES 

                                                                [Download Table]
                                                                   
A.      Agreement and Plan of Reorganization by and among Caldera  
        Systems, Inc., Caldera International, Inc. and The Santa   
        Cruz Operation, Inc., including Amendment No. 1, Amendment 
        No. 2 and Amendment No. 3 to the Agreement and Plan of     
        Reorganization.                                            
B.      Broadview International LLC fairness opinion.              
C.      Chase H&Q fairness opinion.                                
D.      Form of Caldera International, Inc.'s Amended and Restated 
        Certificate of Incorporation to be in effect upon the      
        closing of the combination.                                
E.      Form of Caldera International, Inc.'s Amended and Restated 
        Bylaws to be in effect upon the closing of the combination.
F.      Caldera Systems, Inc. 1999 Omnibus Stock Incentive Plan.   
G.      Amendment No. 1 to the Caldera Systems, Inc. 1999 Omnibus  
        Stock Incentive Plan.                                      
H.      Amendment No. 2 to the Caldera Systems, Inc. 1999 Omnibus  
        Stock Incentive Plan.                                      
I.      Amendment No. 3 to the Caldera Systems, Inc. 1999 Omnibus  
        Stock Incentive Plan.                                      
J.      Amendment No. 4 to the Caldera Systems, Inc. 1999 Omnibus  
        Stock Incentive Plan.                                      
K.      Amendment No. 5 to the Caldera Systems, Inc. 1999 Omnibus  
        Stock Incentive Plan.                                      
L.      Caldera Systems, Inc. 2000 Employee Stock Purchase Plan, as
        amended.                                                   
M.      Form of Caldera Systems, Inc. Amended and Restated         
        Certificate of Incorporation.                              
N.      Notice of Election to Assume or Replace Options.           
O.      Chapter 13 of the California Corporations Code, Dissenters'
        Rights.                                                    
P.      Audit Committee Charter of Caldera Systems, Inc.           

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                                                                      APPENDIX A

AGREEMENT AND PLAN OF REORGANIZATION

BY AND AMONG

CALDERA SYSTEMS, INC.,
A DELAWARE CORPORATION

CALDERA INTERNATIONAL, INC.,
A DELAWARE CORPORATION

AND 

THE SANTA CRUZ OPERATION, INC.
A CALIFORNIA CORPORATION

AUGUST 1, 2000

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TABLE OF CONTENTS 

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1.  PLAN OF REORGANIZATION..............................................    A-1
     1.1    The Organization of Newco and Merger Sub....................    A-1
     1.2    The Merger..................................................    A-2
     1.3    SCO Transaction.............................................    A-2
     1.4    Contribution and Transfer of Contributed Stock and                 
            Contributed Assets..........................................    A-3
     1.5    Closing Matters.............................................    A-6
     1.6    Dissenter's Rights..........................................    A-6
     1.7    Newco Plans.................................................    A-6
     1.8    Registration on Form S-8....................................    A-6
     1.9    Effects of the Caldera Merger...............................    A-6
     1.10   Tax-Free Reorganization.....................................    A-6
     1.11   Tax-Free Section 351 Transaction............................    A-7
     1.12   HSR Filings.................................................    A-7
     1.13   Board of Directors and Officers of Newco; Newco Certificate        
            of Incorporation                                                   
            and Bylaws..................................................    A-7
     1.14   Registration on Form S-4....................................    A-8
2.  REPRESENTATIONS AND WARRANTIES OF SCO...............................    A-8
     2.1    Organization; Good Standing; Qualification and Power........    A-8
     2.2    Capital Structure...........................................    A-8
     2.3    Authority...................................................    A-9
     2.4    SEC Documents...............................................   A-10
     2.5    Disclosure; Information Supplied............................   A-11
     2.6    Compliance with Applicable Laws.............................   A-12
     2.7    Litigation..................................................   A-12
     2.8    ERISA and Other Compliance..................................   A-13
     2.9    Absence of Certain Changes or Events........................   A-15
     2.10   Full Force and Effect.......................................   A-17
     2.11   Agreements..................................................   A-17
     2.12   No Defaults.................................................   A-18
     2.13   Certain Agreements..........................................   A-18
     2.14   Taxes.......................................................   A-18
     2.15   Intellectual Property.......................................   A-19
     2.16   Fees and Expenses...........................................   A-21
     2.17   Insurance...................................................   A-21
     2.18   Ownership of Property.......................................   A-21
     2.19   Environmental Matters.......................................   A-21
     2.20   Interested Party Transactions...............................   A-22
     2.21   Fairness Opinion............................................   A-22
     2.22   Title to and Condition and Sufficiency of Group Assets......   A-22
     2.23   No Restrictive Agreements...................................   A-22
     2.24   Supplier and Customer Relationships.........................   A-22
     2.25   Product and Inventory Status................................   A-23
     2.26   Affirmative Vote............................................   A-23
     2.27   State Takeover Statutes.....................................   A-23
     2.28   Competition and Fair Trading Laws...........................   A-23
     2.29   Grants......................................................   A-23
3.  REPRESENTATIONS AND WARRANTIES OF CALDERA AND NEWCO.................   A-24
     3.1    Organization; Good Standing; Qualification and Power........   A-24
     3.2    Capital Structure...........................................   A-24

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                                                                           ----
                                                                               
     3.3    Authority...................................................   A-25
     3.4    SEC Documents...............................................   A-26
     3.5    Disclosure; Information Supplied............................   A-26
     3.6    Vote Required...............................................   A-27
     3.7    Litigation..................................................   A-27
     3.8    Valid Issuance..............................................   A-27
     3.9    Absence of Certain Changes or Events........................   A-27
     3.10   Taxes.......................................................   A-29
     3.11   Intellectual Property.......................................   A-29
     3.12   Fees and Expenses...........................................   A-29
     3.13   Environmental Matters.......................................   A-30
     3.14   Fairness Opinion............................................   A-30
     3.15   Tax Representations.........................................   A-30
4.  SCO COVENANTS.......................................................   A-30
     4.1    Advice of Changes...........................................   A-30
     4.2    Maintenance of Business.....................................   A-31
     4.3    Conduct of Business.........................................   A-31
     4.4    SCO Corporate Approvals.....................................   A-32
     4.5    Letter of SCO's Accountants.................................   A-32
     4.6    Prospectus/Proxy Statement..................................   A-32
     4.7    Regulatory Approvals........................................   A-33
     4.8    Necessary Consents..........................................   A-33
     4.9    Access to Information.......................................   A-33
     4.10   Satisfaction of Conditions Precedent........................   A-33
     4.11   Voting Agreement............................................   A-33
     4.12   Sales Representative and Support Agreement..................   A-34
     4.13   Stockholders Agreement......................................   A-34
     4.14   No Other Negotiations.......................................   A-34
     4.15   Books and Records...........................................   A-35
     4.16   [Intentionally Omitted.]....................................   A-35
     4.17   Modification of Joint Contributed Agreements and Shared            
            Contributed Assets..........................................   A-35
     4.18   Key Employee Employment Agreements..........................   A-35
     4.19   SCO IP Rights...............................................   A-35
     4.20   Directors' and Officers' Liability Insurance................   A-36
     4.21   Closing Group Account.......................................   A-36
     4.22   SCO Retained Business.......................................   A-36
     4.23   Taking of Necessary Action; Further Action..................   A-36
     4.24   Accounting Treatments.......................................   A-36
5.  CALDERA AND NEWCO COVENANTS.........................................   A-36
     5.1    Advice of Changes...........................................   A-36
     5.2    Maintenance of Business.....................................   A-37
     5.3    Conduct of Business.........................................   A-37
     5.4    Stockholder Approval........................................   A-37
     5.5    Letter of Caldera's Accountants.............................   A-37
     5.6    Prospectus/Proxy Statement..................................   A-38
     5.7    State Securities Law Compliance.............................   A-38
     5.8    Regulatory Approvals........................................   A-38
     5.9    Necessary Consents..........................................   A-39
     5.10   Access to Information.......................................   A-39

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                                                                           ----
                                                                               
     5.11   Books and Records...........................................   A-39
     5.12   Satisfaction of Conditions Precedent........................   A-39
     5.13   Voting Agreement............................................   A-39
     5.14   Sales Representative and Support Agreement..................   A-39
     5.15   Stockholders Agreement......................................   A-39
     5.16   Caldera Employee Plans......................................   A-39
     5.17   Indemnification and Insurance -- Caldera....................   A-40
     5.18   Indemnification and Insurance -- Employees..................   A-41
     5.19   Distribution to SCO Shareholders............................   A-42
6.  CONDITIONS PRECEDENT TO OBLIGATIONS OF SCO..........................   A-43
     6.1    Accuracy of Representations and Warranties..................   A-43
     6.2    Covenants...................................................   A-43
     6.3    Compliance with Law.........................................   A-43
     6.4    Form S-4....................................................   A-43
     6.5    Opinion of Caldera and Newco's Counsel......................   A-43
     6.6    Stockholder Approval........................................   A-43
     6.7    Tax Opinion.................................................   A-43
     6.8    Designees to the Board of Directors of Newco................   A-43
     6.9    Nasdaq Listing..............................................   A-44
     6.10   HSR Act.....................................................   A-44
     6.11   Ancillary Agreements........................................   A-44
     6.12   Delivery of Newco Shares....................................   A-44
7.  CONDITIONS PRECEDENT TO OBLIGATIONS OF CALDERA AND NEWCO............   A-44
     7.1    Accuracy of Representations and Warranties..................   A-44
     7.2    Covenants...................................................   A-44
     7.3    Compliance with Law.........................................   A-44
     7.4    Consents....................................................   A-44
     7.5    Form S-4....................................................   A-44
     7.6    Opinion of Counsel to SCO...................................   A-44
     7.7    Caldera Stockholder Approval................................   A-44
     7.8    Tax Opinion.................................................   A-44
     7.9    HSR Act.....................................................   A-45
     7.10   Ancillary Agreements........................................   A-45
     7.11   Key Employee Term Sheets....................................   A-45
8.  TERMINATION OF AGREEMENT............................................   A-45
     8.1    Termination.................................................   A-45
     8.2    Notice of Termination.......................................   A-46
     8.3    Liability...................................................   A-46
     8.4    Termination Fee.............................................   A-47
9.  SURVIVAL OF REPRESENTATIONS.........................................   A-47
     9.1    Survival of Representations.................................   A-47
10.  ESCROW AND INDEMNIFICATION.........................................   A-47
     10.1   Escrow Fund.................................................   A-47
     10.2   Indemnification by SCO......................................   A-48
     10.4   Limitations on Indemnification..............................   A-48
     10.5   Indemnification Procedures..................................   A-48

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11.  EMPLOYEE MATTERS...................................................   A-50
     11.1   Right to Offer Employment...................................   A-50
     11.2   Termination of Employment...................................   A-51
     11.3   Cooperation.................................................   A-52
12.  TAX MATTERS........................................................   A-52
     12.1   Transaction Taxes; Representation; Transaction Tax                 
            Indemnity...................................................   A-52
     12.2   Treatment of Indemnity Payments.............................   A-52
     12.3   Indemnity for Taxes.........................................   A-52
     12.4   Other Tax Matters...........................................   A-54
     12.5   Tax Representations.........................................   A-56
13.  MISCELLANEOUS......................................................   A-57
     13.1   Governing Law; Venue........................................   A-57
     13.2   Assignment; Binding upon Successors and Assigns.............   A-57
     13.3   Severability................................................   A-57
     13.4   Counterparts................................................   A-57
     13.5   Other Remedies..............................................   A-57
     13.6   Amendment and Waivers.......................................   A-57
     13.7   Expenses....................................................   A-57
     13.8   Attorneys' Fees.............................................   A-58
     13.9   Notices.....................................................   A-58
     13.10  Construction of Agreement...................................   A-58
     13.11  No Joint Venture............................................   A-58
     13.12  Further Assurances..........................................   A-59
     13.13  Absence of Third Party Beneficiary Rights...................   A-59
     13.14  Public Announcement.........................................   A-59
     13.15  Certain Defined Terms.......................................   A-59
     13.16  Entire Agreement............................................   A-68

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                                                                [Download Table]
                                                                              
EXHIBITS                                                                      
Exhibit A              -- Certificate of Merger                               
Exhibit A-1            -- Certificate of Incorporation                        
Exhibit 1.4(b)         -- Excluded Assets                                     
Exhibit 1.4(c)(i)(B)   -- Assumed Liabilities                                 
Exhibit 1.3(b)         -- Escrow Agreement                                    
Exhibit 1.13(b)        -- Officers                                            
Exhibit 1.13(c)A       -- Form of Newco Amended and Restated Certificate of   
                          Incorporation                                       
Exhibit 1.13(c)B       -- Form of Newco Amended and Restated Bylaws           
Exhibit 1.4(a)(i)      -- Non US-Contributed Companies and Contributed Assets 
Exhibit 4.11A          -- Form of Voting Agreement                            
Exhibit 4.11B          -- SCO Affiliates Who Executed Voting Agreements       
Exhibit 4.12           -- Sales Representative and Support Agreement          
Exhibit 4.13B          -- Stockholder Agreement                               
Exhibit 4.18A          -- SCO Key Employees                                   
Exhibit 4.18B          -- Form of Key Employee Term Sheet                     
Exhibit 5.13B          -- Caldera Affiliates Who Executed Voting Agreements   
Exhibit 6.5            -- Opinion of Counsel of Caldera and Newco             
Exhibit 7.6            -- Opinion of Counsel of SCO and Contributing Companies
Exhibit 13.15A         -- Contributed Assets                                  
Exhibit 13.15B         -- Contributed Contracts                               
Exhibit 13.15C         -- Contributed Subsidiaries                            
Exhibit 13.15D         -- Group Products                                      
Exhibit 13.15E         -- Permitted Encumbrances                              
SCHEDULES                                                                     
                       -- Caldera Disclosure Letter                           
                       -- SCO Disclosure Letter                               

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AGREEMENT AND PLAN OF REORGANIZATION

 THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is entered
into as of August 1, 2000, by and among Caldera Systems, Inc., a Delaware       
corporation including for all purposes Caldera Surviving Corporation,           
("Caldera"), Caldera International, Inc., a Delaware corporation ("Newco") and  
The Santa Cruz Operation, Inc., a California corporation ("SCO"). The terms     
defined in Section 13.15 of this Agreement shall have the meanings therein      
specified in this Agreement.                                                    

RECITALS

 A. The parties intend that, subject to the terms and conditions of this
Agreement, (i) a new Delaware corporation referred to herein as Newco has been  
formed by Caldera solely for the purpose of the transactions contemplated       
hereunder; (ii) a newly formed, wholly owned subsidiary of Newco ("Merger Sub") 
will be merged with and into Caldera, with Caldera being the surviving          
corporation of such merger (the "Merger"), and all outstanding Caldera          
securities will be converted, on a share for share basis, into Newco securities 
having identical rights, preferences and privileges, with Newco assuming any and
all outstanding options and other rights to purchase shares of capital stock of 
Caldera (with all such Newco securities issued to former Caldera security       
holders initially representing the Caldera Percentage Interest in Newco), all on
the terms set out in this Agreement and in the Certificate of Merger            
substantially in the form of Exhibit A hereto (the "Certificate of Merger") and 
the applicable provisions of Delaware Law; (iii) SCO and certain of its         
subsidiaries as herein specified will contribute to Newco, all on the terms     
herein specified, all of the Contributed Stock of the Contributed Companies     
(with each of the Contributed Companies thereby becoming a wholly owned         
subsidiary of Newco) and the Contributed Assets in consideration for the        
issuance by Newco to SCO of shares of Common Stock of Newco, $0.001 par value   
("Newco Common Stock"), and (iv) Newco will assume all options to acquire common
stock of SCO held by the Employees (other than David McCrabb, Jack Moyer and Jim
Wilt) hired or retained by Caldera (the "Optionees") and such options will be   
converted into options to purchase Newco Common Stock ("Newco Options") as set  
forth herein, which Newco Common Stock issued to SCO and Newco Options will     
represent in the aggregate a fully diluted equity interest in Newco equal to the
difference between 100% and the Caldera Percentage Interest. The transactions   
described in subpart (iii) and (iv) of the foregoing sentence are collectively  
the "SCO Transaction."                                                          

     B. The Newco Common Stock and the Newco Options issued in the Merger and in
the SCO Transaction will be registered under the Securities Act, pursuant to a  
Newco registration statement on Form S-4 or Form S-8, as set forth herein.      

C. For federal income tax purposes, it is intended that (i) the Merger
qualify as a reorganization under the provisions of Section 368(a) of the       
Internal Revenue Code and (ii) that the Merger and the portion of the SCO       
Transaction described in Recital A (iii) above qualify as an exchange under the 
provisions of Section 351 of the Internal Revenue Code.                         

NOW, THEREFORE, the parties hereto hereby agree as follows:           

1. Plan of Reorganization.                                            

 1.1 The Organization of Newco and Merger Sub.  Caldera has formed Newco
under the laws of the State of Delaware for the purposes of the transactions    
contemplated by the Merger and in accordance with the terms of this Agreement.  
Newco currently has no outstanding securities and has conducted no business and,
prior to the Effective Time, will not issue any securities, will conduct no     
business or operations, will have no assets and will enter into no agreements   
nor incur any obligations or Liabilities, except as required or contemplated by 
this Agreement or necessary to perform its obligations hereunder. As soon as    
practicable after the date hereof, Newco shall form the Merger Sub as a wholly  
owned subsidiary, which will conduct no business prior to Closing except as     
expressly contemplated hereunder.                                               

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  1.2  The Merger.  At the Closing, subject to the terms and conditions of
this Agreement, Caldera will execute and deliver and will file with the         
Secretary of State of the State of Delaware in accordance with relevant         
provisions of the Delaware Law, a Certificate of Merger providing for the Merger
of Merger Sub with and into Caldera, with Caldera being the surviving           
corporation upon the effectiveness of the Merger and thereby becoming a wholly  
owned subsidiary of Newco, pursuant to this Agreement, the Certificate of Merger
and in accordance with applicable provisions of the Delaware Law as follows:    

     (a) Conversion of Caldera Common Stock.  Each share of the Common
  Stock of Caldera ("Caldera Common Stock") that is issued and outstanding
     immediately prior to the Effective Time will by virtue of the Merger and at
    the Effective Time, and without any further action on the part of Caldera,
  Newco or any holder of Caldera Common Stock, be converted into one share
     (the "Caldera Ratio") of validly issued, fully paid and nonassessable Newco
Common Stock.                                                         

(b) Conversion of Caldera Options.                          

  (i) Conversion.  At the Effective Time, each of the then
outstanding options to purchase shares of Caldera Common Stock  
    (collectively, the "Caldera Options") (consisting of all outstanding
      options granted under the stock option plans of Caldera or the Caldera
     Subsidiaries, including but not limited to its 1998 Stock Option Plan
     and its 1999 Omnibus Stock Incentive Plan (collectively, the "Caldera
     Plans"), and any individual non-Plan options), will, by virtue of the
Merger, and without any further action on the part of any holder
        thereof, be assumed by Newco and converted into an option to purchase an
       equivalent number of shares of Newco Common Stock, at an exercise price
      per share equal to the per share exercise price of such Caldera Option
  in effect at the Effective Time. The term, exercisability, vesting
        schedule, status as an "incentive stock option" under Section 422 of the
        Internal Revenue Code, if applicable, and all other terms and conditions
  of the Caldera Options will be unchanged and all references in any
    option agreement governing such option to Caldera shall be deemed to
       refer to Newco, where appropriate. Continuous service as an employee or
  consultant with Caldera or any of the Caldera Subsidiaries will be
  credited to an optionee of Caldera for purposes of determining the
       number of shares of Newco Common Stock vested and exercisable under the
assumed Caldera Option after the Closing.                       

             (ii) Stock Rights.  At the Effective Time, Newco will assume all of
       Caldera's obligations under Caldera's 2000 Employee Stock Purchase Plan
    (the "Caldera Stock Purchase Plan") and each of the then outstanding
 rights to purchase shares of Caldera Common Stock under such plan
        (collectively, the "Caldera Stock Purchase Plan Rights"), will by virtue
       of the Merger, and without any further action on the part of any holder
   thereof, be assumed and converted into a right to purchase the same
      number of shares of Newco Common Stock on the next "purchase date" (as
      such term is defined in the Caldera Stock Purchase Plan) following the
     Effective Time at a purchase price per share determined in accordance
with the Caldera Stock Purchase Plan.                           

    (c) Cancellation of Caldera-Owned Shares.  Each share of Caldera
   Common Stock held in the treasury of Caldera or any of which are owned by
    Newco, Caldera, or any direct or indirect wholly owned subsidiary of Newco
   or Caldera immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof.                          

1.3  SCO Transaction.                                                 

          (a) Issuance of Newco Common Stock.  At the Effective Time and subject
     to the terms and conditions of this Agreement, Newco will, in consideration
    for the contribution and transfer of the Contributed Stock and Contributed
   Assets to Newco as contemplated by this Agreement, perform the following:

            (i) Consideration.  Issue to SCO that number of issued, fully paid
and nonassessable shares of Newco Common Stock equal to The SCO 
        Percentage Interest, less (a) the number of shares of Newco Common Stock
issuable upon exercise of the Newco Options pursuant to         

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     Section 1.3(a)(iii) below and (b) the Escrow Shares issued to SCO and
        placed directly into escrow by Caldera pursuant to Section 1.3(b) below,
       with such number of shares to be appropriately adjusted in the event of
     any Caldera stock split, stock combination, reclassification or other
     similar capital change (the "First SCO Certificate") and pay SCO cash
    consideration equal to seven million dollars ($7,000,000) (the "Cash
        Consideration"), by wire transfer of immediately available funds or upon
the cancellation of SCO's outstanding indebtedness to Caldera.  

(ii) [Intentionally Omitted.]                         

           (iii) Assumption and Conversion of SCO Options.  At the Effective
    Time, each of the then outstanding options to purchase shares of SCO
    Common Stock held by the Optionees (collectively, the "SCO Options")
     (consisting of all outstanding options granted under the stock option
 plans of SCO or the SCO Subsidiaries, and any individual non-plan
  options held by the Optionees), will, by virtue of the Merger, and
        without any further action on the part of any holder thereof, be assumed
    by Newco and converted into an option to purchase one share of Newco
     Common Stock for each two shares of SCO Common Stock subject to a SCO
       Option at the Effective Time (the "SCO Ratio") at an exercise price per
    share of Newco Common Stock equal to the exercise price per share of
       such assumed SCO Option immediately prior to the Effective Time divided
        by the SCO Ratio, rounded up to the nearest cent. Except as set forth in
       the preceding sentence, the term, exercisability, vesting schedule, and
       all other terms and conditions of the SCO Options will be unchanged and
   all references in any option agreement governing such option to SCO
        shall be deemed to refer to Newco, where appropriate; provided, however,
    that the outstanding SCO Options previously designated as "incentive
       stock options" under Section 422 of the Internal Revenue Code may, as a
    result of the foregoing adjustments, be converted into non-statutory
       stock options. Continuous service as an employee or consultant with SCO
   or any of the SCO Subsidiaries will be credited to the Optionee for
  purposes of determining the number of shares of Newco Common Stock
      vested and exercisable under the assumed SCO Option after the Closing.
       If the foregoing calculation results in a Newco Option, which is issued
      for a SCO Option, being exercisable for a fraction of a share of Newco
        Common Stock, then the number of shares of Newco Common Stock subject to
       such option will be rounded down to the nearest whole number of shares,
with no cash being payable for such resulting fractional share. 

     (b) Escrow.  As soon as practicable after the Effective Time, and
subject to and in accordance with the provisions of Section 10 and the
Escrow Agreement, a form of which is attached as Exhibit 1.3(b) (the  
     "Escrow Agreement"), Caldera shall deliver to the Escrow Agent on behalf of
SCO a certificate representing ten percent (10%) of the SCO Percentage
     Interest (the "Escrow Shares"). The Escrow Shares distributed to the Escrow
     Agent shall be held in escrow and shall be available to transfer to Caldera
for certain damages as provided in Section 10. To the extent not      
transferred to Caldera for such damages, the Escrow Shares shall be   
  released to SCO, all as provided in Section 10 and the Escrow Agreement.

 (c) Termination of Newco Options.  All shares of Common Stock
underlying Newco Options assumed pursuant to Section 1.3(a)(iii) which
terminate without being exercised by the Optionees shall be issued by 
Caldera to SCO on a quarterly basis.                                  

     1.4  Contribution and Transfer of Contributed Stock and Contributed Assets.

          (a) Contribution and Transfer.  Subject to the terms and conditions of
this Agreement and in consideration for the issuance by Newco of Newco
 Common Stock as provided above, the Contributing Companies shall at the
Effective Time, for good and valuable consideration, the receipt and  
sufficiency of which are hereby acknowledged on behalf of each of the 
 Contributing Companies, contribute and transfer and deliver to Newco or
 cause to be contributed, transferred and delivered to Newco, and at the
  Effective Time Newco shall accept the contribution and transfer from the

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Contributing Companies of all right, title and interest in and to the 
  Contributed Stock and Contributed Assets. Notwithstanding the preceding,
    the Contributed Assets and Contributed Companies which are located outside
     of the United States shall be purchased and sold by and among the Newco and
SCO entities located in such countries in exchange for stock or cash  
  consideration as the parties shall agree before the Effective Time. Such
   payment shall be included within and shall not change the total amount of
   The SCO Percentage Interest and the Cash Consideration. The parties shall
execute, or cause to be executed, Bills of Transfer relevant to their 
 particular jurisdiction reflecting the transfer of any such Contributed
  Assets which shall reflect the purchase price allocation as agreed. Such
amounts shall be reported as the purchase price for all foreign Tax   
    reporting purposes in each relevant jurisdiction and no party shall have a
position inconsistent therewith.                                      

(b) Excluded Assets.                                        

        (i) Excluded Assets.  SCO is not selling and Caldera shall not
    acquire from SCO any of the following assets or any interest therein
(collectively, the "Excluded Assets"):                          

           (A) any assets related solely to the SCO Retained Business;

             (B) any cash and cash equivalents and any accounts receivable
    (the "Cash Equivalents") of the Contributing Companies and the
Contributed Companies;                                    

(C) those assets set forth on Exhibit 1.4(b).   

          (ii) Net Cash Equivalents.  "Net Cash Equivalent" shall mean the
  net book value of any cash and cash equivalents held by any of the
        Contributed Companies, including but not limited to accounts receivable,
        accounts payable and third party debt obligations. To the extent the Net
     Cash Equivalents of any Contributed Company are or are expected to be
      positive as of the Effective Time, either SCO will withdraw that value
       from the Contributed Company at or before the Effective Time or Caldera
        will cause that value to be paid or credited to SCO at or promptly after
 the Effective Time. To the extent the Net Cash Equivalents of any
       Contributed Company are negative as of the Effective Time, SCO will pay
   or credit such amount to Caldera at or promptly after the Effective
        Time. The payment or credits will be treated as either a dividend by the
        Contributed Company or as an adjustment to the Cash Consideration as the
parties may agree.                                              

(c) Assumption and Exclusion of Liabilities.                

           (i) Assumed Liabilities.  As a result of the transfer to Newco of
   the Contributed Stock, Newco will as a matter of law own all of the
outstanding equity capital of the Contributed Companies, which  
   Contributed Companies and their respective Contributed Subsidiaries
    (collectively, the "Contributed Company Group") in turn shall remain
    liable for their respective Liabilities. In addition, subject to the
       terms and conditions of this Agreement, Newco (or a subsidiary of Newco
        designated by Newco and acceptable to SCO) shall, at the Effective Time,
     assume, and thereafter pay, perform and discharge when due those (and
  only those) Liabilities of the Contributing Companies and/or their
  direct and indirect subsidiaries (excluding the Liabilities of the
      Contributed Company Group, which are governed by the first sentence of
  this Section 1.4(c)(i)) that are expressly listed in the following
   subparagraphs of this Section 1.4(c)(i) (collectively, the "Assumed
    Liabilities") and no other Liabilities of the Contributing Companies
whatsoever:                                                     

           (A) all Liabilities of the Contributing Companies under all
Contributed Contracts;                                    

          (B) all Liabilities of the Contributing Companies that are
         included in the Closing Group Account or that are listed on Exhibit
1.4(c)(i)(B) attached hereto; and                         

        (C) those Tax liabilities for which Newco is responsible
pursuant to Section 12 below.                             

            (ii) Excluded Liabilities Not Assumed.  Except for the Liabilities
of the Contributed Company Group (which will remain the sole    
responsibility of the applicable member of the                  
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 Contributed Company Group) and except for the Assumed Liabilities
    expressly described above in Section 1.4(c), Newco shall not assume,
pay, perform or discharge, or otherwise have any obligation,    
      responsibility or liability whatsoever for, any and all Liabilities of
    SCO or its direct and indirect subsidiaries (whether now existing or
        hereafter arising), and said companies shall retain, and shall be solely
       responsible and liable for paying, performing and discharging when due,
all such Liabilities (collectively, the "Excluded Liabilities").

            (iii) Intercompany Accounts.  One or more Contributed Companies is
likely to owe intercompany debt to SCO. The amount of any such  
    intercompany debt remaining after payment by Newco to SCO of any Net
     Cash Equivalents will be treated as an Excluded Liability and will be
cancelled by SCO.                                               

     (d) Asset Contribution.  The SCO will, and will cause each of the
    other Contributing Companies to, take all actions and sign and deliver any
 and all instruments and documents (including Bills of Transfer for each
    relevant jurisdiction) reasonably necessary or appropriate to fully effect
   and perfect the transfer to Newco of any and all of the Contributed Stock
     and Contributed Assets held by either of them and any Contributed Contracts
to which they are a party.                                            

         (e) Unassignable Assets.  Notwithstanding any other provision of this
     Agreement or any of the Ancillary Agreements, to the extent that any of the
Contributed Assets are not assignable or otherwise transferable by the
    Contributing Companies to Newco without the consent, approval or waiver of
another party thereto or any third party (including any governmental  
agency), or if such assignment or transfer would constitute a breach  
  thereof or of any other material contract binding upon the transferor or
   any of its Affiliates, or a violation of any applicable law, then neither
     this Agreement nor such Ancillary Agreements shall constitute an assignment
 or transfer (or an attempted assignment or transfer) thereof until such
consent, approval or waiver of such party or parties has been duly    
obtained.                                                             

     With respect to each such Contributed Asset whose assignment or transfer to
Newco requires the consent, approval or waiver of another party thereto or any  
third party, Newco and SCO shall cooperate and use their mutual reasonable,     
commercial efforts to obtain such consent, approval or waiver of such other     
party or parties or such third party to such assignment or transfer as promptly 
as practicable prior to the Effective Time; and each agrees to supply relevant  
information to such party or parties or such third party in order to facilitate 
such objective. Notwithstanding the foregoing, nothing contained herein shall   
obligate Newco or any Contributing Company to expend or pay any amount to third 
parties to obtain any consents, approvals or waivers, or to make alternative    
arrangements available; provided that where the Contributing Companies are      
unable to effectively assign or otherwise transfer to Newco nor any Contributed 
Asset without constituting a breach due to such lack of third party consent, the
Contributing Companies shall make available to Newco the net economic benefits  
(such as inbound royalty payments, net of actual costs), if any, received by the
Contributing Companies from and after the Effective Time with respect to any    
such Contributed Asset.                                                         

     (f) No Fraudulent Conveyance.  The Contributing Companies are not
    entering into this Agreement or any Ancillary Agreement with the intent to
     defraud, delay or hinder their respective creditors and the consummation of
the transactions contemplated by this Agreement, and the Ancillary    
Agreements referenced in this Agreement will not have any such effect.
   Except for the Assumed Liabilities, the transfer of the Contributed Stock
   and Contributed Assets pursuant hereto will not give rise to any right of
   any creditor of the Contributing Companies to assert any claim whatsoever
     against Newco or any of the Contributed Stock and Contributed Assets in the
hands of Newco or any of Newco's respective successors and assigns    
    following the Effective Time which would have a Material Adverse Effect on
     Newco. SCO and its consolidated subsidiaries, taken as a group are Solvent,
   and will continue to be Solvent immediately following the transfer of the
Contributed Stock and Contributed Assets pursuant to this Agreement.  
Neither SCO nor any of its consolidated subsidiaries nor any of the   
    Contributed Stock and Contributed Assets is subject to, or the subject of,
any Insolvency Proceeding or Insolvency Action. No writ of attachment,
execution or similar process                                          
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  has been ordered, executed or filed against any of the Contributed Stock
   and Contributed Assets. There is not any reason to expect that any of the
     aforementioned actions, or any similar action, will take place or be taken,
and there are no grounds for any of the aforementioned actions or like
  action. The parties agree that the securities issued by Newco to SCO and
 the Optionees and the other obligations on Newco's part to be performed
   under the terms of this Agreement and the Ancillary Agreements constitute
full and fair equivalent consideration for the Contributed Stock and  
  Contributing Assets exchanged therefor and the covenants, agreements and
 performances of the Contributing Companies under this Agreement and the
Ancillary Agreements.                                                 

1.5  Closing Matters.  Unless this Agreement has been terminated as   
provided in Section 8 below, the closing of the transactions contemplated by    
this Agreement (the "Closing") (i) will take place at the offices of Brobeck,   
Phleger & Harrison LLP at Two Embarcadero Place, 2200 Geng Road, Palo Alto,     
California 94303 on a date (the "Closing Date") and at a time to be mutually    
agreed upon by the parties, which date shall be as soon as practicable after the
Caldera Stockholders Meeting and SCO Stockholders Meeting and, in any event, no 
later than the third business day after all conditions to Closing set forth     
herein shall have been satisfied or waived, unless another place, time and date 
is mutually selected by SCO and Caldera and (ii) will take place concurrently   
with the Effective Time.                                                        

 1.6  Dissenter's Rights.  It shall be the sole responsibility of SCO to
disclose any dissenter's rights which SCO stockholders have with respect to the 
SCO Transaction; these rights shall be disclosed to Caldera in writing no later 
than the date of filing the Proxy/Prospectus.                                   

 1.7  Newco Plans.  Newco shall assume, effective as of the Closing, the
Caldera Plans, Caldera Stock Purchase Plan and non-plan grants and awards, as   
amended through the Effective Time (collectively, the "Newco Plans"). Newco     
shall also reserve a sufficient number of shares of Newco Common Stock for      
issuance pursuant to the SCO Options assumed by Newco pursuant to Section       
1.3(a)(ii) herein.                                                              

 1.8  Registration on Form S-8.  Newco will cause the Newco Common Stock
issuable upon exercise of outstanding awards under the Newco Plans or upon      
exercise of the SCO Options assumed by Newco (collectively, the "Stock Rights") 
and the shares reserved for issuance pursuant to future awards under the Newco  
Plans to be registered on Form S-8 (the "Form S-8") promulgated by the SEC prior
to, but in no event later than, 10 days after the Effective Time and Newco will 
use its reasonable best efforts to maintain the effectiveness of such           
registration statement or registration statements for so long as any such Stock 
Rights shall remain outstanding.                                                

1.9  Effects of the Caldera Merger.  At the Effective Time: (a) the   
separate existence of Merger Sub will cease and Merger Sub will be merged with  
and into Caldera, with Caldera being the surviving corporation of the Merger    
(the "Caldera Surviving Corporation"), pursuant to the terms of this Agreement  
and the Certificate of Merger; (b) the Certificate of Incorporation of the      
Caldera Surviving Corporation shall be in the form attached as Exhibit A-1 to   
the Certificate of Merger; (c) the Bylaws of Caldera immediately prior to the   
Effective Time will be the Bylaws of the Caldera Surviving Corporation; (d) the 
directors and officers of Caldera immediately prior to the Effective Time will  
be the directors and officers of the Caldera Surviving Corporation; (e) each    
share of the Common Stock of Merger Sub outstanding immediately prior to the    
Effective Time will be converted into one share of Common Stock of the Caldera  
Surviving Corporation; (f) each share of Caldera Common Stock, each Caldera     
Option, and each Caldera Stock Purchase Plan Right outstanding immediately prior
to the Effective Time will be converted, as provided above in this Section      
1.2(b). The Merger will, from and after the Effective Time, have all of the     
effects provided by applicable law, including, without limitation, the Delaware 
Law.                                                                            

  1.10  Tax-Free Reorganization.  The parties adopt this Agreement (to the
extent it relates to the Merger) as a plan of reorganization and intend the     
Merger to be a tax-free reorganization under Section 368(a)(1)(A) of the        
Internal Revenue Code by virtue of the provisions of Section 368(a)(2)(E) of the
Internal Revenue Code. The Newco Common Stock issued in the Merger will be      
issued solely in exchange for the Caldera Common Stock, and no other transaction
other than the Merger represents,                                               

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provides for or is intended to be an adjustment to the consideration paid for   
the Caldera Common Stock. No consideration that could constitute "other         
property" within the meaning of Section 356(b) of the Internal Revenue Code is  
being transferred by Newco for the Caldera Common Stock in the Merger. The      
parties shall not take a position on any tax return inconsistent with this      
Section 1.10. In addition, Newco hereby represents, and will represent as of the
Effective Time, that it intends to continue Caldera's historic businesses or use
a significant portion of Caldera's business assets in a trade or business. None 
of the parties shall cause a transaction, without offsetting compensation to the
other party, that would result in income to SCO under the Subpart F provisions  
of the Internal Revenue Code.                                                   

   1.11  Tax-Free Section 351 Transaction.  The contribution and transfer of
the Contributed Stock and Contributed Assets to Newco in exchange for Newco     
Common Stock, together with the Merger, are intended to constitute an exchange  
within the meaning of Section 351 of the Internal Revenue Code. The Newco Common
Stock issued to SCO therein will be issued solely in exchange for the           
Contributed Stock and Contributed Assets transferred in the SCO Transaction and 
no consideration (other than the cash consideration) that could constitute other
property within the meaning of Internal Revenue Code Section 351(b) is being    
transferred by Newco to SCO. The parties shall not take a position on any tax   
return inconsistent with this Section 1.11.                                     

    1.12  HSR Filings.  Caldera, SCO and Newco will as promptly as practicable
prepare and file the applicable notices and forms (if any) required to be filed 
by them under the HSR Act or comparable laws of non-U.S. governmental entities, 
and comply promptly with any appropriate requests from the Federal Trade        
Commission, the United States Department of Justice or any other Governmental   
Antitrust Authority for additional information and documentary material. The    
parties hereto will not take any action that will have the effect of delaying,  
impairing or impeding the termination of any waiting period or the receipt of   
any required approvals of a Government Antitrust Authority. Without limiting the
generality of the parties' undertakings pursuant to this Section 1.12, the      
parties shall use their reasonable best efforts to prevent the entry in a       
judicial or administrative proceeding brought under any antitrust law by any    
Governmental Antitrust Authority or any other party of any permanent or         
preliminary injunction or other order that would make consummation of the SCO   
Transaction or the Merger in accordance with the terms of this Agreement        
unlawful under appropriate anti-trust laws or that would prevent or delay such  
consummation as a consequence of such laws. Each party hereto shall promptly    
inform the other of any material communication between such party and the       
Federal Trade Commission, the Department of Justice or any other Governmental   
Antitrust Authority regarding any of the transactions contemplated hereby. If   
any party or any Affiliate of such party receives a request for additional      
information or for documents or any material from any such Governmental         
Antitrust Authority with respect to the transactions contemplated hereby, then  
such party shall endeavor in good faith to make or cause to be made, as soon as 
reasonably practicable and after consultation with the other parties, an        
appropriate response in compliance with such request. Further, no written       
materials shall be submitted by any party to the Federal Trade Commission, the  
Department of Justice or any other Governmental Antitrust Authority in          
connection with HSR Act compliance or the merger control regulations of any     
other state or country, nor shall any oral communications be initiated with such
governmental entities by any party, without prior disclosure to and coordination
with the other parties and its counsel. Each party hereto will cooperate in     
connection with reaching any understandings, undertakings or agreements (oral or
written) involving the Federal Trade Commission, the Department of Justice or   
any other Governmental Antitrust Authority in connection with the transactions  
contemplated hereby.                                                            

1.13  Board of Directors and Officers of Newco; Newco Certificate of  
Incorporation and Bylaws.                                 

     (a) Board of Directors.  At the Effective Time, Newco will have a
     Board of Directors consisting of nine directors. At the Effective Time, the
     directors of Newco shall consist of the current Caldera directors plus Doug
  Michels and one other individual to be named by SCO, nominees of SCO. At
  the Effective Time, Ralph J. Yarro shall be the Chairman of the Board of
Newco.                                                                

        (b) Officers.  At the Effective Time, the officers of Newco shall be
as set forth on Exhibit 1.13(b).                                      

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    (c) Certificate of Incorporation and Bylaws.  Attached hereto as
Exhibits 1.13(c)A and 1.13(c)B are the respective forms of Amended and
   Restated Certificate of Incorporation and Bylaws of Newco to be in effect
at the Effective Time.                                                

     1.14  Registration on Form S-4.  The Newco Common Stock to be issued in the
Merger to Caldera stockholders and the Newco Common Stock to be issued in the   
SCO Transaction to SCO and pursuant to the assumption of SCO Options shall be   
registered under the Securities Act on Form S-4. As promptly as practicable     
after the date hereof, Newco, with the cooperation of Caldera and SCO, shall    
prepare and file with the SEC a Form S-4 registration statement (the "Form      
S-4"), together with the prospectus/joint proxy statement to be included therein
(the "Prospectus/Proxy Statement") and any other documents required by the      
Securities Act or the Exchange Act in connection with the Merger and the SCO    
Transaction.                                                                    

2. Representations and Warranties of SCO.                             

  Except as set forth in the respectively referenced provisions of the SCO
Disclosure Letter delivered by SCO on behalf of itself and any other            
Contributing Companies (collectively, "Representing SCO Entities") to Caldera   
concurrently herewith and certified by an officer of SCO, on behalf of all of   
the Representing SCO Entities, respectively, to be true, accurate and complete  
to the best of his/her knowledge (the "SCO Disclosure Letter"), SCO on behalf of
each and all of the Representing SCO Entities, hereby represents and warrants to
Caldera that as of the date hereof:                                             

     2.1  Organization; Good Standing; Qualification and Power.  The Contributed
Subsidiaries are all of the subsidiaries of the Contributed Companies or any of 
their direct or indirect subsidiaries. Each of the Contributed Companies, and   
the Contributed Subsidiaries and each of the Contributing Companies is a        
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation, has all requisite corporate power and     
authority to own, lease and operate any and all of the Group Assets held by such
company and for the Conduct of the Group Business as now being conducted by such
company, and is duly qualified and in good standing to do business in each      
jurisdiction in which the nature of its business or the ownership or leasing of 
its properties makes such qualification necessary, other than in such           
jurisdictions where the failure so to qualify would not have a Material Adverse 
Effect on the Group Business. SCO has delivered to Caldera or its counsel       
complete and correct copies of the charter documents of the Contributed         
Companies and the Contributed Subsidiaries. Except for the Contributed          
Subsidiaries, none of the Contributed Companies nor any of the Contributed      
Subsidiaries owns, directly or indirectly, any capital stock or other equity    
interest of any corporation or has any direct or indirect equity or ownership   
interest in any other business, whether organized as a corporation, partnership,
joint venture or otherwise.                                                     

2.2  Capital Structure.                                               

        (a) Stock and Options.  The authorized, issued and as of the date of
   July 28, 2000, the outstanding capital stock of the Contributed Companies
    and the Contributed Subsidiaries is set forth in Section 2.2(a) of the SCO
Disclosure Letter. Except as specified in Section 2.2(a) of the SCO   
Disclosure Letter, no shares of the capital stock of the Contributed  
     Companies or of any of the Contributed Subsidiaries are held by any of them
  in its treasury or reserved for issuance upon the exercise of options or
warrants. Except as specified in Section 2.2(a) of the SCO Disclosure 
Letter, all outstanding shares of the capital stock of the Contributed
Companies on July 28, 2000 are set forth in Section 2.2(a) of the SCO 
    Disclosure Letter and are validly issued, fully paid and nonassessable and
 free and clear of any Encumbrances and not subject to preemptive rights
   under any statute, pursuant to the Certificate of Incorporation or Bylaws
     or Memorandum and Articles of Incorporation (or similar governing documents
     in each relevant jurisdiction) of the Contributed Companies, or pursuant to
   any agreement or document to which any of them is a party or by which any
  of them is bound. All outstanding shares of the capital stock of each of
the Contributed Subsidiaries are validly issued, fully paid and       
nonassessable and are owned by a Contributed Company, or one of the   
Contributed Subsidiaries, free and clear of any Encumbrances. SCO has 

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provided Caldera with a correct and complete list of each of the SCO  
    Options as of July 28, 2000, including the name of the Optionees, the plan
    pursuant to which such SCO Options were issued (if applicable), the number
     of shares covered by such SCO Options, the per share exercise price of such
SCO Options, and the vesting schedule applicable to such SCO Options, 
  including the number of shares vested as of such date and will provide a
     final list of such information on the Closing Date. All the outstanding SCO
Options have been issued in compliance with all applicable federal and
   state securities laws. Doug Michels owns and has the right to vote shares
   representing approximately 10% of the capital stock of SCO as of the date
of this Agreement.                                                    

       (b) No Other Commitments.  Except as set forth in Section 2.2(b) of
  the SCO Disclosure Letter there are no options, warrants, calls, rights,
    commitments, conversion rights or agreements of any character to which the
Contributed Companies is a party or by which any of them is bound     
     obligating them to issue, deliver or sell, or cause to be issued, delivered
     or sold, any shares of its capital stock, or securities convertible into or
    exchangeable for shares of its capital stock, or obligating any of them to
grant, extend or enter into any such option, warrant, call, right,    
    commitment, conversion right or agreement. There is no voting trust, proxy
   or other agreement or understanding to which SCO or any of its respective
  direct or indirect subsidiaries is a party with respect to the voting of
the capital stock of any member of the Contributed Company Group. All 
    shares of capital stock of any member of the Contributed Company Group are
held free and clear of any Encumbrances.                              

       (c) Registration Rights.  Neither the Contributed Companies nor the
Contributing Companies is under any obligation to register under the  
Securities Act (or equivalent or similar legislation in each relevant 
jurisdiction) any of the presently outstanding securities of the      
   Contributed Companies or any securities of the Contributed Companies that
may be subsequently issued.                                           

        (d) Caldera Ownership.  Except as set forth in Section 2.2(d) of the
SCO Disclosure Letter, none of SCO or any of its direct or indirect   
     subsidiaries owns, or will own immediately prior to the Effective Time, any
Caldera Common Stock.                                                 

2.3  Authority.                                                       

        (a) Corporate Action.  Subject to approval of this Agreement and the
Ancillary Agreements by SCO's stockholders, SCO and each of the       
    Contributing Companies have all requisite corporate power and authority to
enter into this Agreement and the Ancillary Agreements, to perform its
  obligations hereunder and thereunder, and to consummate the transactions
   contemplated by this Agreement and the Ancillary Agreements. The Board of
 Directors of SCO has, as of the date of this Agreement, unanimously (i)
     approved and declared advisable this Agreement and the Ancillary Agreements
and has approved the SCO Transaction and the other transactions       
     contemplated hereby, (ii) determined that the SCO Transaction is consistent
    with and in furtherance of the long-term business strategy of SCO and fair
to, and in the best interests of, SCO and its stockholders and (iii)  
     determined to recommend that the stockholders of SCO adopt and approve this
 Agreement and approve the SCO Transaction. Prior to the Effective Time,
   this Agreement and the Ancillary Agreements will be approved by the Board
  of Directors of each of the other Contributing Companies. This Agreement
  has been and, prior to the Effective Time, the Ancillary Agreements will
   be, duly executed and delivered by the Contributing Company party to such
   agreement. Subject to receiving such stockholder approval, this Agreement
  is, or, in the case of each of the Ancillary Agreements will be, a valid
     and binding obligation of the Contributing Company party to such agreement,
   each enforceable against the Contributing Company party to such agreement
  in accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws and general principles of equity.   

        (b) No Conflict.  Neither the execution, delivery and performance of
 this Agreement and the Ancillary Agreements nor the consummation of the
transactions contemplated hereby or thereby, nor compliance with the  
    provisions hereof, will (i) conflict with, or result in any violations of,
or cause a default (with or without notice or lapse of time, or both) 
   under, or give rise to a right of termination, amendment, cancellation or
  acceleration of any obligation contained in, or the loss of any material

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     benefit under, or result in the creation of any Encumbrance upon any of the
   Group Assets or Contributed Stock under, any term, condition or provision
of (x) the Certificate of Incorporation or Bylaws or equivalent       
organizational documents of any of the Contributing Companies or the  
    Contributed Companies or any of the Contributed Subsidiaries or (y) any of
the Contributed Contracts or any other loan or credit agreement, note,
 bond, mortgage, indenture, lease or other material agreement, judgment,
  order, decree, statute, law, ordinance, rule or regulation applicable to
the Contributed Companies, the Contributed Companies' Property, the   
     Contributed Stock or the Contributed Assets, other than any such conflicts,
    violations, defaults, rights or Encumbrances which, individually or in the
    aggregate, would not have a Material Adverse Effect on the Group Business;
or (ii) require the affirmative vote of the holders of greater than a 
   majority of the issued and outstanding capital stock of any member of the
Contributing Companies or any member of the Contributed Company Group.

         (c) Governmental Consents.  Except (i) as set forth in Section 2.3(c)
     of the SCO Disclosure Letter; (ii) such filings, authorizations, orders and
    approvals as may be required under state takeover laws; (iii) such filings
    and notifications as may be necessary under the HSR Act; (iv) the filings,
   authorizations, orders, notifications, and approvals contemplated by this
   Agreement or the Ancillary Agreements; and (v) such other governmental or
    third party consents, filings, authorizations, orders and approvals which,
    if not obtained or made, would not have a Material Adverse Effect on Newco
or have a material adverse effect on the ability of the Contributing  
    Companies to consummate the transactions contemplated by this Agreement or
    the Ancillary Agreements, no consent, approval, order or authorization of,
 or registration, declaration or filing with, any governmental entity is
    required to be obtained by the Contributing Companies or any member of the
    Contributed Company Group in connection with the execution and delivery of
     this Agreement or the Ancillary Agreements by SCO or the performance of the
Contributing Companies and the Contributed Companies of the respective
obligations herein pertaining to such company.                        

2.4  SEC Documents.                                                   

         (a) SEC Reports.  SCO has delivered to Caldera or its counsel correct
and complete copies of the final version of each report, schedule,    
     registration statement and definitive proxy statement filed by SCO with the
SEC on or after July 1, 1995 with respect to the Group Business or the
  Group Assets (the "SCO SEC Documents"), which are the material documents
    (other than preliminary proxy material) that SCO was required to file with
    the SEC on or after July 1, 1995 with respect to the Group Business or the
    Group Assets. As of their respective dates or, in the case of registration
     statements, their effective dates, none of the SCO SEC Documents (including
    all exhibits and schedules thereto and documents incorporated by reference
  therein) contained any untrue statement of a material fact or omitted to
   state a material fact required to be stated therein or necessary in order
   to make the statements therein, in light of the circumstances under which
   they were made, not misleading as of such time of filing, and there is no
   requirement under the Securities Act or the Exchange Act, as the case may
   be, to have amended any such filing, except for such requirements as were
  fulfilled by the filing of such SCO SEC Documents, the SCO SEC Documents
 complied, when filed, in all material respects with the then applicable
     requirements of the Securities Act or the Exchange Act, as the case may be,
  and the rules and regulations promulgated by the SEC thereunder, and SCO
   has filed in all material respects all documents and agreements that were
required to be filed as exhibits to the SCO SEC Documents.            

          (b) SCO Financial Statements; Absence of Undisclosed Liabilities.  The
  audited consolidated financial statements dated as of and for the period
ending September 30, 1999 and the unaudited consolidated financial    
   statements dated as of and for the period ending June 30, 2000 of SCO and
     its consolidated subsidiaries (the "SCO Consolidated Financial Statements")
complied as to form in all material respects with the then applicable 
    accounting requirements and the published rules and regulations of the SEC
  with respect thereto, were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may have been 
indicated in the notes thereto)                                       

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  and fairly present (subject, in the case of the unaudited statements, to
   normal year-end audit adjustments) the consolidated financial position of
     SCO and its respective consolidated subsidiaries as at the respective dates
   thereof and the consolidated results of its operations and cash flows for
     the respective periods then ended. SCO has no liabilities or obligations of
any nature (matured or unmatured, fixed or contingent) which are,     
   individually or in the aggregate, of a nature required to be disclosed on
the face of a consolidated balance sheet for SCO and its consolidated 
subsidiaries prepared in accordance with GAAP and which would have a  
    Material Adverse Effect on the Group Business, except for such liabilities
or obligations as (i) were accrued or provided for in the consolidated
   balance sheet at June 30, 2000 included in the SCO Consolidated Financial
Statements as of the date thereof (the "SCO Consolidated Financial    
    Statements Balance Sheet Date") or (ii) are of a normally recurring nature
   and were incurred after the SCO Consolidated Financial Statements Balance
Sheet Date in the ordinary course of business consistent with past    
    practice. All liabilities and valuation accounts established and reflected
in the SCO Consolidated Financial Statements are, to SCO's Knowledge, 
   reasonably adequate. At the SCO Consolidated Financial Statements Balance
Sheet Date, there were no material loss contingencies arising from the
    conduct of the business of SCO and its consolidated subsidiaries which are
required to be provided for or disclosed, but are not provided for or 
disclosed, in the SCO Consolidated Financial Statements.              

(c) Group Financial Statements; Absence of Undisclosed      
   Liabilities.  Attached as Schedule 2.4(c)(1) to the SCO Disclosure Letter
   are the audited combined financial statements of the Group Business dated
   as of and for the period ended June 30, 2000 including a combined balance
    sheets as of June 30, 2000 (the "2000 Group Balance Sheet") and a combined
balance sheet for September 30, 1999 and 1998, together with combined 
     statements of operations, cash flows, and Group Business equity for the two
    years and nine months in the period ended September 30, 1999 (collectively
     the "Group Financial Statements"). The Group Financial Statements comply in
    all material respects with the then applicable accounting requirements and
    rules and regulations of the SEC with respect thereto, and present fairly,
in all material respects, the combined financial position of the Group
Business as of September 30, 1999 and June 30, 2000, and the combined 
    results of its operations and its cash flows for each of the two years and
nine months in the period ended September 30, 1999, in conformity with
  GAAP. The Contributed Company Group and the Contributing Companies (with
   respect to the Group Business) have no Liabilities of any nature (matured
 or unmatured, fixed or contingent) which (i) are related to or arose in
    connection with the Group Business; (ii) individually or in the aggregate,
    are of a nature required to be recorded on the face of or disclosed in the
notes to the Group Financial Statements; and (iii) are material to the
  Group Business taken as a whole, except for such Liabilities as (A) were
     accrued, provided for or disclosed in the Group Financial Statements or (B)
  are of a normally recurring nature and were incurred after June 30, 2000
(the "Group Financial Statements Balance Sheet Date"), in the ordinary
course of business consistent with past practice. All liabilities and 
valuation accounts established and reflected in the Group Financial   
Statements are, to SCO's Knowledge, reasonably adequate. To SCO's     
     Knowledge, at the Group Financial Statements Balance Sheet Date, there were
no material loss contingencies which are not properly provided for or 
disclosed in the Group Financial Statements.                          

    2.5  Disclosure; Information Supplied.  No representation or warranty made
by SCO in this Agreement, nor any final financial statement, certificate or     
exhibit prepared and furnished or to be prepared and furnished by it, or its    
representatives pursuant hereto or in connection with the transactions          
contemplated hereby, contains any untrue statement of a material fact, or omits 
to state a material fact necessary to make the statements or facts contained    
herein or therein, taken as a whole, not misleading in light of the             
circumstances under which they were furnished. None of the information supplied 
or to be supplied by SCO for inclusion or incorporation by reference in the Form
S-4 and Prospectus/Proxy Statement will, at the time the information is supplied
contain, after giving effect to any supplement or amendment thereto, any untrue 
statement of a material fact or omit to state any material fact required to be  
stated therein or necessary to make the statements therein in light of the      
circumstances under which they are made, not materially misleading.             

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   2.6  Compliance with Applicable Laws.  Except as disclosed in the SCO SEC
Documents filed prior to the date hereof, the Group Business is not being       
conducted and no Contributed Company is in violation of any law, ordinance,     
regulation, rule or order of any governmental entity where such violation would 
have a Material Adverse Effect on the Group Business. Except as disclosed in the
SCO SEC Documents filed prior to the date hereof, neither SCO, any Contributing 
Company, nor any member of the Contributed Company Group has been notified in   
writing by any governmental entity that any investigation or review with respect
to the Contributed Companies or any of the Contributed Subsidiaries, any of the 
Group Assets or the Group Business is pending or threatened, nor has any        
governmental entity notified any of them in writing of its intention to conduct 
the same. The Group Assets include all permits, licenses and franchises from    
governmental entities required for the Conduct of the Group Business, except for
those whose absence would not have a Material Adverse Effect on the Group       
Business and those which would terminate as a consequence of the SCO            
Transaction.                                                                    

2.7  Litigation.  Except as would not reasonably be expected to have a
Material Adverse Effect on the Group Business or as set forth in Section 2.7 of 
the SCO Disclosure Letter or as disclosed in the SCO SEC Documents, there is no 
suit, action, arbitration, demand, investigation, claim or proceeding pending   
or, to SCO's Knowledge, threatened against the Contributed Company Group, any of
the Contributing Companies or the Group Assets; nor is there any judgment,      
decree, injunction, ruling or order of any governmental entity, statutory body  
or arbitrator or settlement or compromise agreement outstanding against the     
Contributed Company Group or any of the Contributing Companies or the Group     
Assets. SCO has delivered or made available to Caldera or its counsel correct   
and complete copies of all material correspondence prepared by its counsel for  
SCO auditors in connection with the last two completed audits of SCO's Financial
Statements and the audit of the Group Financial Statements and any such         
correspondence since the date of the last such audit. No member of the          
Contributed Company Group and none of the Contributing Companies is a party to  
any decree, judgment, order or arbitration award (or agreement entered into in  
any administrative, judicial, investigative or arbitration proceeding with any  
governmental authority) with respect to the Group Assets, Employees, or Group   
Business that could reasonably be expected to have a Material Adverse Effect on 
the Group Business. Except for violations as would not have a Material Adverse  
Effect on the Group Business, none of the Contributing Companies nor any member 
of the Contributed Company Group is in violation of any decree, judgement, order
or arbitration award that names such company, or any of such companies, as a    
party or that otherwise, to SCO's Knowledge, involves such company or any of the
Group Assets, or in violation of any law, ordinance, statute, regulation or EU  
directive or decree, order, judgment or ruling of any governmental authority to 
which the Group Assets or the Contributed Stock are subject, including, without 
limitation, laws, rules and regulations relating to occupational health and     
safety, equal employment opportunities, fair employment practices, and sex,     
race, religious, disability and age discrimination. To SCO's Knowledge, there is
no claim, action, suit, arbitration, mediation, investigation or other          
proceeding of any nature pending or, threatened, at law or in equity, by way of 
arbitration or before any court, tribunal, governmental department, statutory   
body, commission, board or agency that: (i) may adversely affect, contest or    
challenge any party's authority, right or ability to perform its obligations    
under this Agreement or any of the Ancillary Agreements; (ii) challenges or     
contests the Contributing Companies' or the Contributed Companies' right, title 
or ownership of any of the Group Assets or the Contributed Stock or seeks to    
impose an Encumbrance (other than a Group Permitted Encumbrance) on, or a       
transfer of title or ownership of, any of the Group Assets or the Contributed   
Stock; (iii) asserts that any action taken by any employee, consultant or       
contractor of the Contributed Companies or Contributing Companies in connection 
with the Group Business infringes or misappropriates any Intellectual Property  
Rights of any third party; (iv) seeks to enjoin, prevent or hinder operation of 
the Group Business; (v) seeks to enjoin, prevent, or hinder the consummation of 
any of the transactions contemplated by this Agreement or any of the Ancillary  
Agreements; (vi) would impair or have an adverse affect on Newco's right or     
ability to use or exploit any of the Group Assets; (vii) involves or relates to 
any potentially material claim against Contributing Companies or the Group      
Assets by any creditor thereof; or (viii) involves any claim of fraudulent      
conveyance or any similar claim, except in cases (ii), (iii), (iv), (vi) and    
(vii) where such proceeding could not reasonably be expected to have a Material 
Adverse Effect on Newco.                                                        

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2.8  ERISA and Other Compliance.                                      

       (a) Section 2.8 of the SCO Disclosure Letter lists each employment,
  severance, compensation or other similar contract, arrangement or policy
and each plan or arrangement (written or oral, contractual or         
     discretionary) providing for insurance coverage (including any self-insured
  arrangements), workers' benefits, vacation benefits, severance benefits,
disability or permanent health insurance benefits, death benefits,    
  hospitalization or other medical benefits, retirement benefits, deferred
  compensation, profit-sharing, bonuses, commissions, stock options, stock
purchase, phantom stock, stock appreciation, save as you earn or other
    forms of incentive compensation or post-retirement insurance, compensation
 or benefits for employees, consultants or directors (other than workers
compensation, unemployment compensation and other government mandated 
    programs) which both (A) is entered into, maintained or contributed to, as
   the case may be, by any member of the Contributed Company Group or any of
  the Contributing Companies, and (B) covers any Employee (collectively as
the "Group Benefit Arrangements"). Each Group Benefit Arrangement     
maintained by any member of the Contributed Company Group has been    
maintained in compliance with its terms and with the requirements     
     prescribed by any and all statutes, orders, rules and regulations which are
 applicable to such Group Benefit Arrangement except as would not have a
  Material Adverse Effect on the Group Business. Section 2.8(a) of the SCO
    Disclosure Letter also identifies each "employee benefit plan," as defined
 in Section 3(3) of ERISA ("Employee Benefit Plan"), in which any of the
     Employees participate (collectively, the "Group Employee Plans"). Copies of
   all Group Benefit Arrangements have been made available to Caldera or its
counsel. All contributions or premiums currently due and payable with 
     respect to any of the Group Employee Plans have been made as required under
    ERISA or have been accrued on the 2000 Group Balance Sheet or will be made
     prior to the Effective Time. Any Contributed Company Employee Plan intended
   to be qualified under Section 401(a) of the Code has either obtained from
 the Internal Revenue Service a favorable determination letter as to its
qualified status under the Code, including all amendments to the Code 
effected by the Tax Reform Act of 1986, or has applied to the Internal
    Revenue Service for such a determination letter prior to the expiration of
the requisite period under applicable Treasury Regulations or Internal
 Revenue Service pronouncements in which to apply for such determination
letter and to make any amendments necessary to obtain a favorable     
   determination or has been established under a standardized prototype plan
   for which an Internal Revenue Service opinion letter has been obtained by
     the plan sponsor and is valid as to the adopting employer. Each Contributed
  Company has made available upon Newco's request the most recent Internal
     Revenue Service determination or opinion letter issued with respect to each
    such Contributed Company Employee Plan, and nothing has occurred since the
  issuance of each such letter which could reasonably be expected to cause
  the loss of the tax-qualified status of any Contributed Company Employee
Plan subject to Code Section 401(a).                                  

 (b) None of the Group Employee Plans maintained by any of the
   Contributing Companies or any member of the Contributed Company Group (i)
    is a multiemployer plan, within the meaning of Section 3(37) or 4001(a)(3)
of ERISA (a "Multiemployer Plan"), or a single employer pension plan, 
   within the meaning of Section 4001(a)(15) of ERISA, for which Newco could
   incur liability under Section 4063 or 4064 of ERISA (a "Multiple Employer
 Plan"), or (ii) provides or promises to provide retiree medical or life
    insurance benefits except in connection with (a) benefit coverage mandated
     by applicable law, including without limitation, coverage provided pursuant
     to Section 4980B of the Code; (b) death or disability benefits under any of
   the Group Benefit Arrangements; (c) benefits arising in connection with a
separation or severance program, plan or arrangement; and (d) life    
   insurance benefits for any employee who dies while in service with any of
    the Contributing Companies or any member of the Contributed Company Group.
     None of the Contributing Companies or any member of the Contributed Company
   Group has incurred or will incur prior to or as of the Effective Time any
 material liability under, arising out of or by operation of Title IV of
  ERISA (other than liability for premiums to the Pension Benefit Guaranty
 Corporation arising in the ordinary course), including any liability in
connection with (i) the termination or                                

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    reorganization of any employee pension benefit plan subject to Title IV of
ERISA or (ii) with withdrawal from any Multiemployer Plan or Multiple 
Employer Plan.                                                        

       (c) The appropriate Contributing Company or Contributed Company has
timely provided, or will have provided prior to the Effective Time, to
     Employees entitled thereto all required notices and made coverage available
     pursuant to Section 4980B of the Internal Revenue Code and the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), with 
     respect to any "qualifying event" (as defined in Section 4980B(f)(3) of the
     Internal Revenue Code). The appropriate Contributing Company or Contributed
Company will timely provide to Employees entitled thereto all required
notices and make coverage available pursuant to Internal Revenue Code 
    Section 4980B and COBRA with respect to any "qualifying event" (as defined
     in Section 4980B(f)(3) of the Internal Revenue Code) occurring prior to and
     including the Effective Time. No material Tax payable on account of Section
  4980B of the Internal Revenue Code has been incurred by the Contributing
   Companies or any of the Contributed Companies with respect to any current
Employees (or its beneficiaries).                                     

 (d) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or other
     service provider of the Contributed Companies or the Contributing Companies
   to severance benefits or any other payment or (ii) accelerate the time of
payment or vesting (including any SCO Option or unvested shares of SCO
     Common Stock), or increase the amount of compensation due any such employee
or other service provider. No payment or benefit payable or which may 
become payable by any of the Contributed Companies or by any of the   
   Contributing Companies with respect to any current or former employee, or
other current or former service provider shall constitute a "parachute
   payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code).
 Within five (5) business days following the date of this Agreement, SCO
   shall identity in Section 2.8 of the SCO Disclosure Letter all persons on
   the Section 11.1 Schedule who SCO reasonably believes are, as of the date
of this Agreement, "disqualified individuals" (within the meaning of  
   Section 280G of the Code and the regulations promulgated thereunder) with
    respect to the Contributing Companies or the Contributed Companies. Within
     five (5) business days prior to the expected Closing Date, SCO shall revise
Section 2.8 of the SCO Disclosure Letter to reflect any additional    
     information which SCO reasonably believes would impact the determination of
     persons who are of such date "disqualified individuals" (within the meaning
  of Section 280G of the Code and the regulations promulgated thereunder).

         (e) To SCO's Knowledge, no Employee who is a key developer of a Group
Product is subject to any agreement, obligation, order or other legal 
   hindrance that impedes or might impede such Employee from devoting his or
  her full business time to the affairs of Newco after the Effective Time.

       (f) None of the Contributed Companies are indebted to any executive
officer or director of any such Contributed Company, whether by loan, 
   advance or otherwise, other than for salaries accrued but not yet payable
    and reimbursable out-of-pocket expenses incurred in the ordinary course of
    business consistent with past practice and not yet payable, nor, except as
described in Section 2.8(f) to the SCO Disclosure Letter or except as 
    disclosed in the 2000 Group Balance Sheet or the SCO SEC Documents, is any
     officer, director, employee or shareholder so indebted to any of SCO or any
     of the Contributed Companies, nor does any Employee have any right to force
SCO or any Contributing Company to repurchase any stock.              

        (g) The Contributed Company Group and the Contributing Companies are
   in compliance in all material respects with all currently applicable laws
     and regulations, domestic or foreign, respecting employment, discrimination
in employment, terms and conditions of employment, wages, hours,      
    governmental and administrative contribution requirements and occupational
safety and health and employment practices, and is not engaged in any 
unfair labor practice with respect to the Employees in each of the    
countries where the Contributed Company Group and the Contributing    
Companies have employees. The Contributed Company Group and the       
Contributing Companies have withheld all amounts required by law or by
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  to Employees; and is not liable for any arrears of wages or any taxes or
any penalty for failure to comply with any of the foregoing. The      
  Contributing Company Group and the Contributing Companies are not liable
for any payment to any trust or other fund or to any governmental or  
administrative authority, with respect to unemployment compensation   
  benefits, social security or other benefits or obligations for Employees
  (other than routine payments to be made in the normal course of business
     and consistent with past practice). There are no pending claims against the
    Contributed Company Group and the Contributing Companies under any workers
compensation plan, policy, statute or regulation or any other plan or 
policy to which the Contributed Company Group and/or any Contributing 
     Company are parties or for long term disability. There are no controversies
   or disputes pending or, to the knowledge of the Contributed Company Group
     and the Contributing Companies, threatened, between the Contributed Company
     Group and the Contributing Companies and any of their respective employees,
  which controversies have or could reasonably be expected to result in an
  action, suit, proceeding, claim, arbitration or investigation before any
 agency, court or tribunal, foreign or domestic. None of the Contributed
  Company Group or the Contributing Companies is a party to any collective
     bargaining agreement or other labor union contract nor does the Contributed
Company Group and the Contributing Companies know of any activities or
 proceedings of any labor union to organize any such Employees. To SCO's
knowledge, no Employees of the Contributed Company Group and the      
Contributing Companies are in violation of any term of any employment 
contract, patent disclosure agreement, enforceable noncompetition     
 agreement, or any enforceable restrictive covenant to a former employer
     relating to the right of any such Employee to be employed by SCO because of
    the nature of the business conducted or presently proposed to be conducted
     by SCO or to the use of trade secrets or proprietary information of others.

          (h) Section 2.8(h) of the SCO Disclosure Letter lists, with respect to
any member of the Contributed Company Group or any of the Contributing
Companies, all employee benefit plans, programs or arrangements for   
  employees who work outside the United States ("Foreign Employee Plans").
Except as disclosed in Section 2.8(h) of the SCO Disclosure Letter, no
member of the Contributed Company Group or any of the Contributing    
     Companies maintains any Foreign Employee Plans other than those required by
  applicable law. SCO has furnished or made available to Caldera a copy of
 each of the Foreign Employee Plans. Each Foreign Employee Plan has been
     operated and administered in accordance with its terms and applicable laws,
rules and regulations.                                                

    2.9  Absence of Certain Changes or Events.  Except as disclosed in Section
2.9 of the SCO Disclosure Letter, since the Group Financial Statements Balance  
Sheet Date there has not occurred:                                              

        (a) any change or event which could reasonably be expected to have a
Material Adverse Effect on the Group Business;                        

        (b) any amendments or changes in the Certificate of Incorporation or
Bylaws (or similar or equivalent governing documents on each relevant 
jurisdiction) of any member of the Contributed Company Group;         

     (c) any damage, destruction or loss to or of the Group Assets not
 covered by insurance, which would have a Material Adverse Effect on the
Group Business;                                                       

        (d) any redemption, repurchase or other acquisition of shares of any
    member of the Contributed Company Group, or any declaration, setting aside
or payment of any dividend or other distribution by any Contributing  
    Company or any member of the Contributed Company Group to any entity other
   than a member of the Contributed Company Group (whether in cash, stock or
   property) of the Group Assets or any proceeds generated by the conduct of
the Group Business;                                                   

       (e) any material increase in or modification of the compensation or
     benefits payable, or to become payable, by the Contributed Companies to the
   Employees, except in the ordinary course of the business, consistent with
     past practice or except as necessary to respond to third party solicitation
of Employees,                                                         

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    (f) other than as required by applicable statute or governmental
   regulation, any material increase in or modification of any Group Benefit
    Arrangement (including, but not limited to, the granting of stock options,
   the acceleration of the vesting schedules in effect for outstanding stock
  options, restricted stock awards or stock appreciation rights) that will
become binding upon Newco upon consummation of the transactions       
 contemplated herein, for or with respect to any of the Employees, other
    than increases or modifications occurring after the date hereof, which are
authorized pursuant to Section 4.3 below;                             

 (g) any sale of a material amount of the Group Assets, or any
  acquisition by any member of the Contributed Company Group of a material
amount of assets;                                                     

        (h) any stock/share capital being allotted or issued or agreed to be
     allotted or issued or any alteration in any term of any outstanding capital
stock or rights to acquire capital stock, share or loan capital of any
 member of the Contributed Company Group, including, but not limited to,
   acceleration of the vesting or any change in the terms of any outstanding
stock options;                                                        

        (i) (A) any incurrence, assumption or guarantee by any member of the
    Contributed Company Group of any debt of any person, other than any member
     of the Contributed Company Group, for borrowed money in an amount exceeding
$250,000 in the aggregate; (B) issuance or sale by any member of the  
Contributed Company Group of any securities convertible into or       
    exchangeable for their respective debt securities; or (C) issuance or sale
   of options or other rights to acquire from SCO or the Contributed Company
Group, directly or indirectly, debt securities of any member of the   
Contributed Company Group, or any securities convertible into or      
exchangeable for any such debt securities;                            

        (j) any creation or assumption by a Contributing Company or a member
of the Contributed Company Group of any Encumbrance (other than Group 
Permitted Encumbrances) on any Group Asset in excess of $250,000      
individually or in the aggregate, other than to refinance a liability 
     reflected in the SCO Financial Statements or the Group Financial Statements
in the ordinary course of business;                                   

        (k) any making by any member of the Contributed Company Group of any
    loan, advance or capital contribution to or investment in any person other
    than to refinance a liability reflected in the SCO Financial Statements or
the Group Financial Statements and other than (i) loans, advances or  
     capital contributions made in the ordinary course of the business, and (ii)
other loans and advances, where the aggregate amount of any such items
outstanding at any time does not exceed $250,000;                     

       (l) any amendment of, relinquishment, termination or non-renewal by
the Contributing Companies or the Contributed Company Group of any    
Contributed Contract, other than in the ordinary course of business   
consistent with past practice;                                        

    (m) any transfer or grant of a right under Intellectual Property
Rights included in the Group Assets, except in the ordinary course of 
business, consistent with past practice,                              

          (n) any labor dispute with, or charge of unfair labor practice by, SCO
(relating to Employees) or any member of the Contributed Company Group
     (other than routine individual grievances), any activity or proceeding by a
labor union or representative thereof to organize any Employees or, to
     SCO's Knowledge, any campaign being conducted to solicit authorization from
Employees to be represented by such labor union, where such dispute,  
   practice, activity, proceeding, or campaign would have a Material Adverse
Effect on the Group Business;                                         

(o) any change in accounting methods;                       

       (p) any agreement by any member of the Contributed Company Group to
    take any of the actions described in the preceding clauses (a) through (o)
(other than the transactions contemplated by this Agreement or the    
Ancillary Agreements).                                                

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   2.10  Full Force and Effect.  Each of the Contributed Contracts and Group
Governmental Permits is in full force and effect and is not subject to any      
breach or default thereunder by any Contributing Company or any member of the   
Contributed Company Group or, to SCO's Knowledge, any other party thereto,      
except for those Contributed Contracts and Group Governmental Permits, the      
absence of which would not have a Material Adverse Effect on the Group Business.

    2.11  Agreements.  Section 2.11 of the SCO Disclosure Letter lists all the
contracts as of the date hereof of the type described below to which any member 
of the Contributed Company Group is a party and which is material to the Group  
Business (herein, the "Material Contributed Contracts") (and copies of all such 
Material Contributed Contracts have been identified to and made available for   
review by Caldera or its counsel):                                              

         (a) contract with or commitment to any labor union which would have a
Material Adverse Effect on the Group Business;                        

        (b) continuing contract for the future purchase, sale or manufacture
     of products, material, supplies, equipment or services requiring payment to
 or from any member of the Contributed Company Group or any Contributing
    Company, the non-continuance of which would have a Material Adverse Effect
  on the Group Business, or in which any member of the Contributed Company
 Group or any Contributing Company has granted or received manufacturing
rights, most favored nations pricing provisions or exclusive marketing
   rights relating to the Group Products, other than purchase contracts with
vendors who are not the top ten (10) vendors of any member of the     
    Contributed Company Group or of any Contributing Companies (as measured by
purchases from them in the most recently ended fiscal year);          

    (c) contract providing for the development of technology used or
     incorporated in any Group Products currently distributed in connection with
    the Group Business or which requires any member of the Contributed Company
 Group to perform specified development work for a third party, the non-
continuance of which would have a Material Adverse Effect on the Group
Business;                                                             

       (d) joint venture contract or agreement or other agreement which is
  reasonably expected to involve a sharing of profits or losses in any one
    year in excess of $100,000 individually or in the aggregate from any joint
     enterprise with any party (other than any member of the Contributed Company
Group);                                                               

          (e) indenture, mortgage, promissory note, loan agreement, guarantee or
 other agreement or commitment for the borrowing of money, for a line of
  credit or for a leasing transaction of a type required to be capitalized
  (other than those reflected in the SCO Financial Statements or the Group
    Financial Statements, or those pursuant to which payments by any member of
the Contributed Company Group will not exceed $50,000 individually or 
$250,000 in the aggregate);                                           

          (f) agreement or arrangement for the sale of any Group Assets having a
     value individually or in the aggregate exceeding $100,000 (other than those
entered into in the ordinary course of business consistent with past  
practice);                                                            

          (g) agreement which would restrict Newco from engaging in any material
aspect of the Group Business or from selling any of the material Group
    Products in any material geographic area (including any agreement pursuant
    to which any of them has granted exclusive rights in the Group Products to
a third party);                                                       

         (h) SCO IP Rights Agreement (as defined in Section 2.15 below), other
than agreements entered into with customers in the ordinary course of 
business; or                                                          

        (i) agreement between or among SCO and any member of the Contributed
Company Group regarding inter-company loans, revenue or cost or Tax   
sharing, ownership or license of SCO IP Rights for Group Products, or 
intercompany royalties or dividends.                                  

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   2.12  No Defaults.  Notwithstanding Section 1.4(c), there exists no event
(including closing of the transactions contemplated by this Agreement),         
condition or occurrence which, after notice or lapse of time, or both, would    
constitute a default by the Contributing Companies who are parties thereto under
any Contributed Contract in any manner which would have a Material Adverse      
Effect on the Group Business.                                                   

2.13  Certain Agreements.  Neither the execution and delivery of this 
Agreement or the Ancillary Agreements, nor the consummation of the transactions 
contemplated hereby and thereby, will, (i) result in any payment in an amount   
exceeding $50,000 individually or $250,000 in the aggregate (including, without 
limitation, severance, unemployment compensation, golden parachute, bonus or    
otherwise) becoming due by any member of the Contributed Company Group (or by   
any Contributing Company, with respect to the Group Business) or to any         
Employee(s) or other current or former service provider under any Group Benefit 
Arrangement or otherwise, (ii) increase any benefits otherwise payable by Newco 
under any Group Benefit Arrangement by more than $50,000 individually or        
$250,000 in the aggregate, or (iii) result in the acceleration of the time of   
payment or vesting of any such benefits.                                        

    2.14  Taxes.  SCO and each of its subsidiaries have properly completed and
timely filed, or caused to be properly completed and timely filed, all Tax      
returns required to be filed by them and have paid, or caused to be paid, all   
Taxes that are shown on such Tax returns as due and payable. All Taxes of SCO   
and its subsidiaries for all periods through June 30, 2000, have been fully paid
(except for Taxes that are adequately provided for or reflected in the SCO      
Consolidated Financial Statements). Since June 30, 2000, no material Tax        
liability has been assessed, or is, to SCO's Knowledge, proposed to be assessed,
incurred or accrued (other than liabilities for Taxes arising in the ordinary   
course of business) against SCO or any of its subsidiaries. To SCO's Knowledge, 
neither SCO nor any of its subsidiaries has received any notification that any  
material issues have been raised (or are currently pending) by the Internal     
Revenue Service or any other taxing authority, including, without limitation,   
any sales tax authority, in connection with any of the Tax returns referred to  
in the first sentence of this Section 2.14, and no unexpired waivers of statutes
of limitations have been given or requested with respect to Tax returns or Taxes
of SCO and its consolidated subsidiaries. No taxing authority is currently      
conducting an audit or investigation of any of the aforesaid Tax returns or to  
SCO's Knowledge is about to conduct such an audit or investigation with respect 
to such Tax returns. Any deficiencies asserted or assessments (including        
interest and penalties) made as a result of any examination by the Internal     
Revenue Service or by appropriate national, state, provincial or departmental   
authorities of the Tax returns with respect to SCO and any of its subsidiaries  
have been paid or adequately provided for in the SCO Consolidated Financial     
Statements, and, to SCO's Knowledge, no proposed (but unassessed) additional    
Taxes have been asserted and no Tax liens have been filed against SCO or any of 
its subsidiaries other than for Taxes not yet due and payable. Neither SCO nor  
any member of the Contributed Company Group (i) has made an election to be      
treated as a "consenting corporation" under Section 341(f) of the Internal      
Revenue Code or (ii) is a "personal holding company" within the meaning of      
Section 542 of the Internal Revenue Code;                                       

         (b) If any of the capital assets of the UK Contributed Companies were
     disposed of for a consideration equal to the book value of that asset in or
   adopted for the purposes of the SCO Consolidated Financial Statements, no
    liability to corporation tax on chargeable gains or balancing charge under
   the Capital Allowances Act 1990 would arise (for this purpose there shall
be disregarded any relief or allowance available to the UK Contributed
     Companies (other than amounts falling to be deducted from the consideration
    receivable under section 38 of the TCGA)). No chargeable gain or balancing
     charge would arise on the disposal by the Contributing Company of any asset
acquired since the SCO Consolidated Financial Statements Date for a   
     consideration equal to the consideration actually given for the acquisition
of such asset (disregarding any indexation relief);                   

(c) The UK Contributed Companies have not entered into any  
     transaction, contract or arrangement, whether verbal or written and whether
   made within or outside the UK, under which it has or may become liable to
pay or to account for stamp duty or stamp duty reserve tax and which  
liability remains unsatisfied;                                        

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         (d) The UK Contributed Companies have not entered into any indemnity,
     guarantee, covenant, charge or other agreement under which they have agreed
to, or can be procured to pay a sum equivalent to or by reference to  
 another person's liability to Tax, nor do any other circumstances exist
whereby the Contributed Companies would have to make such a payment;  

          (e) All reliefs assumed as an asset or otherwise taken into account in
   the SCO Consolidated Financial Statements are available to be utilized by
the UK Contributed Companies at Closing;                              

        (f) The UK Contributing Companies have never been members of a group
    of companies for UK tax purposes other than a group comprising only the UK
Contributing Companies;                                               

       (g) The provisions of Part XV of the UK Value Added Tax Regulations
1995 (capital goods scheme) do not apply to any of the UK Contributed 
Assets;                                                               

        (h) No election has been nor will before Closing be made pursuant to
     paragraph 2 of Schedule 10 to the Value Added Tax Act 1994 ("VATA 1994") in
relation to any of the UK Properties or any part of any of them;      

         (i) All UK value added tax payable upon the importation of goods, and
  all excise duties payable to HM Customs and Excise payable in respect of
the UK Contributed Assets have been paid in full, and none of the UK  
Contributed Assets is liable to confiscation, forfeiture or distress; 

     (j) All documents (other than those which have ceased to have any
     legal effect) to which the UK Contributed Companies or any member of the UK
    Contributed Companies group of companies is a party and which are material
 to the title of the UK Contributed Assets have been duly stamped and no
  such documents which are outside the UK would attract stamp duty if they
were bought into the UK;                                              

     (k) All National Insurance and sums payable by the UK Contributed
     Companies to the UK Inland Revenue under the PAYE system have been duly and
   properly paid. Proper records have been maintained in respect of all such
matters.                                                              

    (l) There is no unsatisfied liability to capital transfer tax or
inheritance tax attached or attributable to any of the UK Contributed 
Assets and none of the UK Contributed Assets are, or are likely to be,
subject to an Inland Revenue charge as mentioned in Section 237 of the
Inheritance Tax Act 1984; and                                         

      (m) No person is liable to capital transfer tax or inheritance tax
attributable to the value of any of the UK Contributed Assets in      
  consequence no person has the power under Section 212 of the Inheritance
    Tax Act 1984 to raise the amount of such tax by the sale or mortgage of or
by a charge on any of the UK Contributed Assets.                      

2.15  Intellectual Property.                                          

         (a) The Contributed Companies and, insofar as it relates to the Group
     Business, the Contributing Companies own, or have the right to use, sell or
    license such Intellectual Property Rights as are necessary or required for
    the Conduct of the Group Business (such Intellectual Property Rights being
hereinafter collectively referred to as the "SCO IP Rights") and such 
   ownership or rights to use, sell or license are reasonably sufficient for
  the Conduct of the Group Business, except for any failure to own or have
  the right to use, sell or license that would not have a Material Adverse
Effect on the Group Business.                                         

      (b) All SCO IP Rights are owned free and clear of any Encumbrances
(other than Group Permitted Encumbrances).                            

         (c) The execution, delivery and performance of this Agreement and the
    consummation of the transactions contemplated hereby will not constitute a
     material breach of any material instrument or material agreement in respect
of any SCO IP Rights licensed by or to any Contributing Company or    
  Contributed Company (the "SCO IP Rights Agreements"), will not cause the
forfeiture or termination                                             
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     or give rise to a right of forfeiture or termination of any SCO IP Right or
 materially impair the right of Newco to use, sell or license any SCO IP
     Right or portion thereof (except where such breach, forfeiture, termination
or impairment would not have a Material Adverse Effect on the Group   
Business).                                                            

         (d) There are no royalties, honoraria, fees or other payments payable
    by any member of the Contributed Company Group or any Contributing Company
   to any person by reason of the ownership, use, license, purchase, sale or
disposition or acquisition of any of the SCO IP Rights in an amount   
exceeding $100,000 in any one year.                                   

(e) To SCO's Knowledge, no third party is infringing or     
misappropriating any of the SCO IP Rights.                            

   (f) To SCO's Knowledge, (i) neither the manufacture, marketing,
    license, sale or intended use of any Group Product violates any license or
    agreement relating thereto or infringes any Intellectual Property Right of
     any other party, (ii) there is no pending or threatened claim or litigation
contesting the validity, ownership or right to use, sell, license or  
dispose of any SCO IP Right, and (iii) no third party has notified the
 Contributing Companies or the Contributed Company Group that any SCO IP
     Right, or the proposed use, sale, license or disposition thereof, conflicts
     or will conflict with the rights of any other party, nor is there any basis
  therefor, except for any violations, infringements, claims or litigation
that would not have a Material Adverse Effect on the Group Business.  

         (g) The Contributing Companies and the Contributed Company Group have
   taken reasonable and practicable steps designed to safeguard and maintain
the secrecy and confidentiality of, and its proprietary rights in, all
   material trade secrets or other confidential information constituting SCO
   IP Rights. To SCO's Knowledge, no current or prior officers, employees or
    consultants of the Contributing Companies or the Contributed Company Group
   claim an ownership interest in or have a lien on any SCO IP Rights or any
    form of compensation out of the ordinary course of business as a result of
     having been involved in the development of such property while so employed,
     or retained, or otherwise. To SCO's Knowledge, all development employees of
     the SCO IP Rights, and all other officers, employees and consultants of the
Contributed Company Group have executed and delivered an agreement    
   regarding the protection of proprietary information and the assignment to
his/her employer or principal of the SCO IP Rights arising from the   
services performed by such persons, except where this absence of such 
   agreement would not have a Material Adverse Effect on the Group Business.

        (h) Section 2.15(h) of the SCO Disclosure Letter lists each license,
sublicense, agreement or other permission pursuant to which SCO or the
Contributed Business Group is entitled to use third party IP Rights   
    (excluding shrink wrap licenses to commercially available software sold at
   retail) as of the date hereof, the absence of which would have a Material
   Adverse Effect on the Group Business that a third party owns and that SCO
   or the Contributed Business Group uses pursuant to a license, sublicense,
   agreement or other permission, and describes and identifies such license,
   sublicense, agreement or other permission (excluding shrink wrap licenses
to commercially available software sold at retail). Such license,     
sublicense, agreement or permission covering the item is legal, valid,
   binding, enforceable and in full force and effect and will continue to be
legal, valid, binding, enforceable and in full force and effect on    
identical terms to Newco's benefit immediately following the Effective
  Time, except where it would not have a Material Adverse Effect on Newco,
     and such license, sublicense, agreement or permission does not restrict the
   ability to market any material Group Product in any material jurisdiction
     or with respect to any material market or industry, and neither SCO nor the
Contributed Company Group is in breach or default of any such license,
     sublicense, agreement or permission in a manner which would have a Material
     Adverse Effect on the Group Business. No person other than the Contributing
Companies holds any license or other right to manufacture, modify, or 
create derivative works of any of the Group Products, other than OEM  
agreements that would not have a Material Adverse Effect on the Group 
Business. No person (other than Newco) will be or become entitled to  
receive a copy of source code of any software included among the Group

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    Assets as a result of this Agreement, any Ancillary Agreement or any other
agreement or transaction contemplated by this Agreement. Except as    
disclosed in Section 2.15(h) of the SCO Disclosure Letter, to SCO's   
     Knowledge, no person holds or has been granted access to any copy of source
     code of any software included among the Group Assets unless such person has
agreed in writing (i) to hold such source code in confidence and take 
    reasonable steps to preserve the secrecy of such source code, and (ii) not
     to use such source code for any purpose except (A) to support such person's
   internal use of such source code or (B) to modify such source code solely
    for the purpose of internally using such modifications. None of SCO or the
    Contributed Companies have knowingly taken or knowingly failed to take any
   action that, directly or indirectly, has caused any Intellectual Property
Rights in source code of material Group Products to enter the public  
     domain, such as would have a Material Adverse Effect on the Group Business.

 2.16  Fees and Expenses.  Except for the fees and expenses set forth in
SCO's engagement letter with Chase HQ, a copy of which has been provided to     
Caldera, no member of the Contributed Company Group and none of the Contributing
Companies has paid or become obligated to pay any fee or commission to any      
broker, finder or intermediary in connection with the transactions contemplated 
by this Agreement and the Ancillary Agreements.                                 

 2.17  Insurance.  The members of the Contributed Company Group maintain
fire and casualty, general liability, business interruption, directors and      
officers, product liability and sprinkler and water damage insurance that they  
believe to be reasonable for its respective businesses.                         

    2.18  Ownership of Property.  Except for Group Permitted Encumbrances, the
Contributed Company Group and the Contributing Companies own, or at the         
Effective Time will own, the Contributed Company Assets, free and clear of all  
Encumbrances. All real and personal property included in the Group Assets is in 
good working condition and suitable for its intended use, subject to ordinary   
wear and tear. To SCO's Knowledge, no member of the Contributed Company Group is
in violation in any material respect with any zoning, building or safety        
ordinance, regulation or requirement or other law or regulation applicable to   
the operation of its respective owned or leased properties.                     

2.19  Environmental Matters.                                          

(a) During the period that the Contributed Companies and the
     Contributing Companies (with respect to the Group Assets or any real estate
    leased thereunder) have leased or owned its respective properties or owned
     or operated its respective facilities, there have been, to SCO's Knowledge,
  no disposals, releases or threatened releases of Hazardous Materials on,
from, under or about such properties or facilities which would cause a
    Material Adverse Effect on Newco. To SCO's Knowledge there is no presence,
     disposals, releases or threatened releases of Hazardous Materials on, from,
under or about any of such properties or facilities, which may have   
occurred prior to said Member of the Contributed Company Group or the 
     Contributing Companies (with respect to the Group Assets or any real estate
 leased thereunder) having taken possession of any of such properties or
   facilities, where such Hazardous Materials would cause a Material Adverse
Effect on Newco.                                                      

         (b) None of the properties or facilities which are Group Assets is or
 has been the subject of an Environmental Violation, which would cause a
Material Adverse Effect on Newco. During the time that a Member of the
  Contributed Company Group or the Contributing Companies (with respect to
    the Group Assets or any real estate leased thereunder) owned or leased its
    respective properties and facilities, none of said companies and, to SCO's
Knowledge, no third party, used, generated, manufactured or stored on,
     under or about such properties or facilities or transported to or from such
  properties or facilities any Hazardous Materials (except those Hazardous
   Materials associated with general office use or janitorial supplies) in a
manner which would result in a Material Adverse Effect on Newco.      

        (c) During the time that any member of the Contributed Company Group
 and the Contributing Companies (with respect to the Group Assets or any
  real estate leased thereunder) owned or leased its respective properties
     and facilities, to SCO's Knowledge, there has been no litigation brought or
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    threatened against any such Company, or any settlement reached by any such
Company with, any party or parties concerning the presence, disposal, 
    release or threatened release of any Hazardous Materials on, from or under
any of such properties or facilities or relating to any alleged       
  Environmental Violation, except for litigation or settlement which would
not have a Material Adverse Effect on Newco.                          

  2.20  Interested Party Transactions.  Except as disclosed in the SCO SEC
Documents, no officer or director of a Contributing Company, or any "affiliate" 
or "associate" (as those terms are defined in Rule 405 promulgated under the    
Securities Act) of a Contributing Company has, either directly or indirectly, a 
material interest in: (i) any person or entity which purchases from or sells,   
licenses or furnishes to the Contributed Company Group in connection with the   
Group Business, any goods, property, technology or intellectual or other        
property rights or services; or (ii) any Contributed Contract; which, in the    
case of either subpart (i) or (ii) would have a Material Adverse Effect on the  
Group Business.                                                                 

   2.21  Fairness Opinion.  SCO's Board of Directors has received an opinion
dated as of the date hereof from Chase HQ to the effect that, as of the date    
hereof, the terms of the transactions contemplated by this Agreement and the    
Ancillary Agreements are fair to SCO from a financial point of view.            

    2.22  Title to and Condition and Sufficiency of Group Assets.  A member of
the Contributed Company Group and/or a Contributing Company owns or at the      
Closing will own the Group Assets and have good and marketable title thereto,   
free and clear of all Encumbrances whatsoever, other than the Group Permitted   
Encumbrances. The Group Assets transferred to Newco constitute all assets,      
properties, rights, contracts and Intellectual Property Rights that are         
necessary or required for the Conduct of the Group Business as currently        
conducted, without (i) the need to purchase, license or acquire any other       
material asset or property; (ii) violating any contractual rights of any third  
party; or (iii) infringing, misappropriating or misusing any software or        
Intellectual Property Rights of any third party, except for such assets,        
properties, rights, contracts, software and Intellectual Property Rights, the   
absence of which, individually or in the aggregate, would not have a Material   
Adverse Effect on the Group Business. Title to all Group Assets is freely       
transferable to and, with respect to the Contributed Assets and Contributed     
Stock, will be transferred to Newco free and clear of all Encumbrances, other   
than Group Permitted Encumbrances. Such transfer of the Contributed Assets and  
Contributed Stock can occur without obtaining the consent or approval of any    
person, except where the failure to transfer the Group Asset would not have a   
Material Adverse Effect on Newco. At the Closing, the Contributing Companies    
will contribute, transfer and deliver to Newco all right, title and interest in 
and to all Contributed Assets and Contributed Stock, free and clear of all      
Encumbrances, other than Group Permitted Encumbrances.                          

2.23  No Restrictive Agreements.  Other than this Agreement and the   
Ancillary Agreements, neither any Member of the Contributed Company Group nor   
SCO nor any of the Group Assets is bound, or materially and adversely affected  
by, any judgment, injunction, order, decree, contract, covenant or agreement    
(noncompete or otherwise) that restricts or prohibits (or purports to restrict  
or prohibit) the Conduct of the Group Business or from competing for the sale of
the Group Products anywhere in the world (including without limitation any      
contracts, covenants or agreements restricting the geographic area in which the 
Group Business may sell, license, market, distribute or support any Group       
Products) or restricting the markets, customers or industries that Newco may    
address after the Closing in the Conduct of the Group Business (collectively,   
"Group Restrictive Agreements"), in a manner, in any of the foregoing cases,    
which will have a Material Adverse Effect on Newco.                             

 2.24  Supplier and Customer Relationships.  To SCO's Knowledge, (i) the
Contributed Company Group has good commercial working relationships with the    
customers for the Group Business, and (ii) since January 1, 2000 no customer of,
or supplier to the Group Business has cancelled or otherwise terminated any     
material relationship concerning the Group Business with the Contributed Company
Group or SCO (with respect to the Group), or materially decreased or limited its
purchases or provision of materials supplied to the Group Business or under any 
Material Contributed Contract from the corresponding period in 1999, where any  
of the foregoing actions would cause a Material Adverse Effect                  

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on the Group Business, and to SCO's Knowledge, no such customer or supplier has 
threatened to take any such action.                                             

2.25  Product and Inventory Status.                                   

(a) Product Quality, Warranty Claims.  All Group Products   
  manufactured, sold, licensed, leased or delivered in connection with the
   Group Business conform in all material respects to applicable contractual
     commitments, express and implied warranties, and, to SCO's Knowledge, there
   is no material Liability (nor any basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim or 
 demand giving rise to any material Liability) for replacement or repair
thereof or other damages in connection therewith, except for such     
conformance as would not have a Material Adverse Effect on Newco.     

       (b) Inventory.  To SCO's Knowledge, its inventories recorded on the
   2000 Group Balance Sheet consist primarily of materials used in operating
    system software products, related supplies and packaging materials, all of
     which are merchantable, fit for the purpose for which they were procured or
  manufactured, and are in a condition and quantity usable in the ordinary
  course of business and to SCO's Knowledge, none of these inventories are
  obsolete, damaged or defective, except in each case where the failure of
these inventories to be so would not have a Material Adverse Effect on
  Newco or where a sufficient provision with respect to the possibility of
such failure is included in the 2000 Group Balance Sheet.             

2.26  Affirmative Vote.                                               

The affirmative vote of a majority of the votes that holders of the   
outstanding shares of SCO's common stock are entitled to vote with respect to   
the SCO Transaction is the only vote of the holders of any class or series of   
SCO's capital stock necessary to approve this Agreement and the transactions    
contemplated hereby.                                                            

2.27  State Takeover Statutes.                                        

To SCO's knowledge, no state takeover statute or similar statute or   
regulation applies to or purports to apply to the SCO Transaction, the          
Agreement, the Ancillary Agreements, or the transactions contemplated hereby and
thereby.                                                                        

 2.28  Competition and Fair Trading Laws.  No Contributed Company or, in
relation to the Group Business, Contributing Company is a party to (or concerned
in) any agreement, arrangement, concerted practice or course of conduct which:  
(i) is registrable under applicable laws in any relevant jurisdictions; or (ii) 
contravenes any such laws; or (iii) falls within Article 81 and/or Articles 82  
of the EC Treaty; or (iv) falls within Article 53 and/or Article 54 of the      
Agreement on the European Economic Area; or (v) contravenes, or is likely to    
contravene, the prohibitions of the Competition Act 1998; or (vi) otherwise     
infringes the competition legislation or practice of any other jurisdiction.    

No Contributed Company and, in relation to the Group Business, no     
Contributing Company has received or is likely to receive any process, notice or
other communication (formal or informal) by or on behalf of the Commission of   
the European Communities, the EFTA Surveillance Authority or any other authority
having jurisdiction in competition matters in relation to any aspect of the     
Group Business or any agreement, arrangement, concerted practice or course of   
conduct to which any of them is, or is alleged to be, a party in relation to the
Group Business.                                                                 

No Contributed Company and, in relation to the Group Business, no     
Contributing Company is subject to any order or judgment given by any court or  
governmental or regulatory authority, or party to any undertaking or assurance  
given to any such court or authority, in relation to competition matters which  
is still in force.                                                              

 2.29  Grants.  None of the Contributed Companies have taken any action,
agreed to take any action or failed to take any action as a result of which any 
investment or other grant paid for use in the                                   

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Contributed Companies is liable to be refunded in whole or in part (whether as a
result of the transaction contemplated by this Agreement or the Ancillary       
Agreements).                                                                    

3. Representations and Warranties of Caldera and Newco.               

Except as set forth in the respectively referenced provisions of the  
Caldera Disclosure Letter, delivered by Caldera on behalf of Caldera and each   
Caldera Subsidiary (collectively, the "Caldera Group"), to SCO concurrently     
herewith and certified by an officer of Caldera, on behalf of the Caldera Group,
respectively, to be true, accurate and complete to the best of his knowledge    
(the "Caldera Disclosure Letter"), Caldera, on behalf of the Caldera Group,     
hereby represents and warrants to SCO that as of the date hereof:               

 3.1  Organization; Good Standing; Qualification and Power.  The Caldera
Subsidiaries are all of the subsidiaries of Caldera or any of its direct or     
indirect subsidiaries. Caldera and each of the Caldera Subsidiaries is a        
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation, has all requisite corporate power and     
authority to own, lease and operate any and all of the Caldera Assets held by   
such company and for the Conduct of the Caldera Business as now being conducted,
and is duly qualified and in good standing to do business in each jurisdiction  
in which the nature of its business or the ownership or leasing of its          
properties makes such qualification necessary, other than in such jurisdictions 
where the failure so to qualify would not have a Material Adverse Effect on     
Caldera. Caldera has delivered to SCO or its counsel complete and correct copies
of the Certificate of Incorporation and Bylaws of Caldera as amended to the date
hereof and will deliver to SCO or its counsel prior to the Effective Time the   
equivalent charter documents of Caldera and each of its Subsidiaries as amended 
to the Closing. Except for the Caldera Subsidiaries, neither Caldera nor any of 
the Caldera Subsidiaries owns, directly or indirectly, any capital stock or     
other equity interest of any corporation or has any direct or indirect equity or
ownership interest in any other business, whether organized as a corporation,   
partnership, joint venture or otherwise.                                        

3.2  Capital Structure.                                               

        (a) Stock and Options.  The authorized and issued and as of the date
of July 28, 2000 the outstanding capital stock of Caldera, the Caldera
Subsidiaries and Newco is set forth in Section 3.2(a) of the Caldera  
 Disclosure Letter. Except as specified in Section 3.2(a) of the Caldera
   Disclosure Letter, no shares of the capital stock of Caldera or of any of
the Caldera Subsidiaries are held by any of them in its treasury or   
reserved for issuance upon the exercise of options or warrants. All   
     outstanding shares of the capital stock of Caldera on July 28, 2000 are set
  forth in Section 3.2(a) of the Caldera Disclosure Letter and are validly
     issued, fully paid and nonassessable free and clear of any Encumbrances and
   not subject to preemptive rights pursuant to any statute, pursuant to the
Certificate of Incorporation or Bylaws of Caldera, or pursuant to any 
  agreement or document to which any of them is a party or by which any of
   them is bound. All outstanding shares of the capital stock of each of the
   Caldera Subsidiaries are validly issued, fully paid and nonassessable and
     are owned by Caldera, or one of the Caldera Subsidiaries, free and clear of
 any Encumbrances. The Caldera Significant Stockholders who will execute
Voting Agreements collectively own and have the right to vote shares  
  representing approximately 70% of the capital stock of Caldera as of the
date of this Agreement.                                               

       (b) No Other Commitments.  Except as set forth in Section 3.2(b) of
the Caldera Disclosure Letter, there are no options, warrants, calls, 
  rights, commitments, conversion rights or agreements of any character to
     which Caldera or any of its respective direct and indirect subsidiaries, is
    a party or by which any of them is bound obligating them to issue, deliver
or sell, or cause to be issued, delivered or sold, any shares of its  
     capital stock, or securities convertible into or exchangeable for shares of
     its capital stock, or obligating any of them to grant, extend or enter into
any such option, warrant, call, right, commitment, conversion right or
agreement. There is no voting trust, proxy or other agreement or      
    understanding to which Caldera or any of its respective direct or indirect
    subsidiaries is a party with respect to the voting of the capital stock of
    any member of the Caldera Group. All shares of capital stock of any member
of the Caldera Group are held free and clear of any Encumbrances.     
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    (c) Registration Rights.  Except as disclosed in the Caldera SEC
    Documents, neither Caldera nor any of its respective subsidiaries is under
  any obligation to register under the Securities Act any of its presently
  outstanding securities or any securities that may be subsequently issued
which offering would have a Material Adverse Effect on Newco.         

3.3  Authority.                                                       

        (a) Corporate Action.  Subject to approval of this Agreement and the
Ancillary Agreements by the stockholders of Caldera, Caldera has all  
  requisite corporate power and authority to enter into this Agreement and
the Ancillary Agreements, to perform its obligations hereunder and    
thereunder, and to consummate the transactions contemplated by this   
     Agreement and the Ancillary Agreements. The Board of Directors of Newco and
    Caldera have, as of the date of this Agreement, unanimously (i) determined
that the Merger is consistent with and in furtherance of the long-term
    business strategy of Caldera and is fair to, and in the best interests of,
Caldera and its stockholders; (ii) has approved this Agreement, the   
Ancillary Agreements, the Merger, the SCO Transactions and other      
   transactions contemplated hereby and thereby; and (iii) has determined to
 recommend that the stockholders of Caldera approve the SCO Transaction.
This Agreement and the Voting Agreements have been, and prior to the  
   Effective Time, the other Ancillary Agreements will be, duly executed and
delivered by Newco and Caldera. Subject to receiving such stockholder 
    approval, this Agreement and the Voting Agreements are, and at the Closing
  the other Ancillary Agreements will be, valid and binding obligations of
     Newco and Caldera, enforceable against Newco and Caldera in accordance with
their respective terms, except as enforceability may be limited by    
bankruptcy and other similar laws and general principles of equity.   

        (b) No Conflict.  Neither the execution, delivery and performance of
 this Agreement and the Ancillary Agreements nor the consummation of the
transactions contemplated hereby or thereby nor compliance with the   
   provisions hereof will (i) conflict with, or result in any violations of,
or cause a default (with or without notice or lapse of time, or both) 
   under, or give rise to a right of termination, amendment, cancellation or
  acceleration of any obligation contained in, or the loss of any material
     benefit under, or result in the creation of any Encumbrance upon the any of
the Caldera Assets under, any term, condition or provision of (x) the 
Certificate of Incorporation or Bylaws of Caldera or the equivalent   
     organizational documents of any of the Caldera Subsidiaries or (y) any loan
or credit agreement, note, bond, mortgage, indenture, lease or other  
    material agreement, judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Caldera, Caldera's property or the Caldera
Assets, other than any such conflicts, violations, defaults, rights or
Encumbrances which, individually or in the aggregate, would not have a
     Material Adverse Effect on Caldera; or (ii) require the affirmative vote of
the holders of greater than a majority of the issued and outstanding  
capital stock of Caldera.                                             

         (c) Governmental Consents.  Except (i) as set forth in Section 3.3(c)
     of the Caldera Disclosure Letter; (ii) such filings, authorizations, orders
and approvals as may be required under state takeover laws; (iii) such
   filings and notifications as may be necessary under the HSR Act; (iv) the
    filings, authorizations, orders, notifications, and approvals contemplated
by this Agreement or the Ancillary Agreements; and (v) such other     
   governmental or third party consents, filings, authorizations, orders and
     approvals which, if not obtained or made, would not have a Material Adverse
     Effect on Newco or have a material adverse effect on the ability of Caldera
to consummate the transactions contemplated by this Agreement or the  
   Ancillary Agreements, no consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental entity is  
required to be obtained by the Caldera Group in connection with the   
 execution and delivery of this Agreement or the Ancillary Agreements by
Caldera, Newco, and the Merger Sub or the performance by them of its  
respective obligations hereunder or thereunder.                       

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3.4  SEC Documents.                                                   

         (a) SEC Reports.  Caldera has delivered to SCO or its counsel correct
and complete copies of the final version of each report, schedule,    
     registration statement and definitive proxy statement filed by Caldera with
     the SEC on or after March 20, 2000 (the "Caldera SEC Documents"), which are
   the material documents (other than preliminary material) that Caldera was
   required to file with the SEC on or after March 20, 2000 with respect, in
    whole or in part, to Caldera or the Caldera Assets. As of their respective
  dates or, in the case of registration statements, their effective dates,
 none of the Caldera SEC Documents (including all exhibits and schedules
thereto and documents incorporated by reference therein) contained any
 untrue statement of a material fact or omitted to state a material fact
    required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
 misleading, and there is no requirement under the Securities Act or the
Exchange Act, as the case may be, to have amended any such filing. The
   Caldera SEC Documents complied, when filed, in all material respects with
     the then applicable requirements of the Securities Act or the Exchange Act,
  as the case may be, and the rules and regulations promulgated by the SEC
thereunder. Caldera has filed all documents and agreements that were  
required to be filed as exhibits to the Caldera SEC Documents.        

(b) Caldera Financial Statements; Absence of Undisclosed    
  Liabilities.  The audited consolidated financial statements, dated as of
    and for the period ended, October 31, 1999, and the unaudited consolidated
     financial statements, dated as of and for the period ending April 30, 2000,
of Caldera and its consolidated subsidiaries ("Caldera Financial      
 Statements") complied as to form in all material respects with the then
    applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, were prepared in accordance with GAAP
  applied on a consistent basis during the periods involved (except as may
   have been indicated in the notes thereto) and fairly present (subject, in
     the case of the unaudited statements, to normal year-end audit adjustments)
the consolidated financial position of the Caldera Group as at the    
     respective dates thereof and the consolidated results of its operations and
cash flows for the respective periods then ended. Caldera has no      
  liabilities or obligations of any nature (matured or unmatured, fixed or
contingent) which are, individually or in the aggregate, of a nature  
  required to be disclosed on the face of a consolidated balance sheet for
    Caldera and its consolidated subsidiaries prepared in accordance with GAAP
     and which are material to the Caldera Business, except for such liabilities
     or obligations as (i) were accrued or were provided for in the consolidated
balance sheet dated April 30, 2000 included in the Caldera Financial  
Statements as of the date thereof (the "Caldera Financial Statements  
  Balance Sheet Date") or (ii) are of a normally recurring nature and were
   incurred after the Caldera Financial Statements Balance Sheet Date in the
    ordinary course of business consistent with past practice. All liabilities
   and valuation accounts established and reflected in the Caldera Financial
   Statements are to Caldera's Knowledge reasonably adequate. At the Caldera
Financial Statements Balance Sheet Date, there were no material loss  
contingencies which are not adequately provided for in the Caldera    
Financial Statements.                                                 

    3.5  Disclosure; Information Supplied.  No representation or warranty made
by Caldera in this Agreement, nor any financial statement, certificate or       
exhibit prepared and furnished or to be prepared and furnished by Caldera or its
respective representatives pursuant hereto or in connection with the            
transactions contemplated hereby, when taken together, contains any untrue      
statement of a material fact, or omits to state a material fact necessary to    
make the statements or facts contained herein or therein, taken as a whole not  
misleading in light of the circumstances under which they were furnished. None  
of the information supplied or to be supplied by Caldera for inclusion or       
incorporation by reference in the Form S-4 and Prospectus/Proxy Statement will, 
at the time the information is supplied contain, after giving effect to any     
supplement or amendment thereto, no untrue statement of a material fact or omit 
to state any material fact required to be stated therein or necessary to make   
the statements therein, in light of the circumstances under which they are made,
not materially misleading. The Prospectus/Proxy Statement will in all material  
respects comply as to form with the provisions of the Exchange Act and the rules
and regulations promulgated by the SEC thereunder.                              
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  3.6  Vote Required.  The affirmative vote of a majority of the shares of
Caldera Common Stock that cast votes regarding the Merger and the SCO           
Transaction in person or by proxy at the Caldera Stockholders Meeting is the    
only vote of the holders of any class or series of Caldera's capital stock      
necessary to approve this Agreement and the transactions contemplated hereby.   

  3.7  Litigation.  Except as disclosed in the Caldera SEC Documents filed
prior to the date hereof, or as would not reasonably be expected to have a      
Material Adverse Effect on Caldera, there is no suit, action, arbitration,      
demand, claim or proceeding pending or, to Caldera's Knowledge, threatened      
against Caldera or the Caldera Assets; nor is there any judgment, decree,       
injunction, ruling or order of any governmental entity or arbitrator or         
settlement agreement outstanding against Caldera or any of the Caldera Assets.  
Caldera has delivered or made available to SCO or its counsel correct and       
complete copies of all material correspondence prepared by its counsel for      
Caldera's auditors in connection with the last two completed audits of Caldera's
financial statements and any such correspondence since the date of the last such
audit. No member of the Caldera Group is a party to any decree, order or        
arbitration award (or agreement entered into in any administrative, judicial or 
arbitration proceeding with any governmental authority) with respect to the     
Caldera Assets, Caldera Employees, or the Caldera Business that could reasonably
be expected to have a Material Adverse Effect on Caldera. Except for violations 
as would not have a Material Adverse Effect on Caldera, none of the members of  
the Caldera Group is in violation of any decree, order or arbitration award that
names such company, or any of such companies, as a party or that otherwise, to  
Caldera's Knowledge, involves such company or any of such company's assets, or  
of any law, ordinance, statute, or governmental authority to which the Caldera  
Assets are subject, including, without limitation, laws, rules and regulations  
relating to occupational health and safety, equal employment opportunities, fair
employment practices, and sex, race, religious and age discrimination. There is 
no claim, action, suit, arbitration, mediation, investigation or other          
proceeding of any nature pending or, to Caldera's Knowledge, threatened, at law 
or in equity, by way of arbitration or before any court, governmental           
department, commission, board or agency that: (i) may adversely affect, contest 
or challenge any party's authority, right or ability to perform its obligations 
under this Agreement or any of the Ancillary Agreements; (ii) challenges or     
contests Caldera's right, title or ownership of any of the Caldera Assets or    
seeks to impose an Encumbrance (other than a Caldera Permitted Encumbrance) on, 
or a transfer of title or ownership of, any of the Caldera Assets; (iii) asserts
that any action taken by any employee, consultant or contractor of Caldera in   
connection with the Group Business infringes or misappropriates any Intellectual
Property Rights of any third party; (iv) seeks to enjoin, prevent or hinder     
operation of the Caldera Business or the consummation of any of the transactions
contemplated by this Agreement or any of the Ancillary Agreements; (v) would    
impair or have an adverse affect on Newco's right or ability to use or exploit  
any of the Caldera Assets; or (vi) involves or relates to any potentially       
material claim against Caldera by any creditor of Caldera or involves any claim 
of fraudulent conveyance or any similar claim, except in cases (ii), (iii) and  
(v) where such proceeding could not reasonably be expected to have a Material   
Adverse Effect on Newco.                                                        

     3.8  Valid Issuance.  The Newco Common Stock that is being issued hereunder
in connection with the SCO Transaction, when issued and delivered in accordance 
with the terms of this Agreement for the consideration expressed herein, will be
duly authorized and validly issued, fully paid, and nonassessable.              

    3.9  Absence of Certain Changes or Events.  Except as disclosed on Section
3.9 of the Caldera Disclosure Letter, since the Caldera Financial Statements    
Balance Sheet Date there has not occurred:                                      

        (a) any change or event which could reasonably be expected to have a
 Material Adverse Effect on Caldera; provided, however, that in no event
will a change in the trading price of Caldera Common Stock be deemed a
Material Adverse Effect on Caldera;                                   

        (b) any amendments or changes in the Certificate of Incorporation or
     Bylaws (or equivalent governing documents in each relevant jurisdiction) of
any member of the Caldera Group;                                      

        (c) any damage, destruction to or loss of Caldera assets not covered
by insurance, which would have a Material Adverse Effect on Caldera;  

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        (d) any redemption, repurchase or other acquisition of shares of any
member of the Caldera Group (other than pursuant to arrangements with 
 terminated employees or consultants in the ordinary course of business,
consistent with past practice), or any declaration, setting aside or  
  payment of any dividend or other distribution (whether in cash, stock or
  property) with respect to the capital stock of any member of the Caldera
Group or, with respect to dividends or other distributions of cash or 
property arising from the Caldera Business;                           

       (e) any material increase in or modification of the compensation or
    benefits payable or to become payable by Caldera to the Caldera employees,
except in the ordinary course of the business, consistent with past   
    practice and except as necessary to respond to third party solicitation of
Caldera employees;                                                    

    (f) other than as required by applicable statute or governmental
   regulation, any material increase in or modification of any Caldera Group
   Benefit Arrangement (including, but not limited to, the granting of stock
options, the acceleration of the vesting schedule in effect for any   
  outstanding stock options, restricted stock awards or stock appreciation
rights) that will become binding upon Newco upon consummation of the  
     transactions contemplated herein, for or with respect to any of the Caldera
Employees, other than (i) in the ordinary course of the business,     
     consistent with past practice, or to respond to third party solicitation of
  Caldera Employees, and (ii) if occurring after the date hereof, which is
authorized pursuant to Section 5.3 below;                             

   (g) any sale of a material amount of the Caldera Assets, or any
acquisition by any member of the Caldera Group of a material amount of
    assets, other than in the ordinary course of the business, consistent with
past practice;                                                        

      (h) any alteration in any term of any outstanding capital stock or
rights to acquire capital stock of any member of the Caldera Group,   
     including, but not limited to, acceleration of the vesting or any change in
the terms of any outstanding stock options;                           

      (i) other than in the ordinary course of business, consistent with
     past practice, (A) any incurrence, assumption or guarantee by any member of
   the Caldera Group of any debt of any person, other than any member of the
  Caldera Group, for borrowed money in an amount exceeding $250,000 in the
   aggregate; (B) issuance or sale by any member of the Caldera Group of any
securities convertible into or exchangeable for its respective debt   
   securities; or (C) issuance or sale of options or other rights to acquire
from the Caldera Group, directly or indirectly, debt securities of any
member of the Caldera Group, or any securities convertible into or    
exchangeable for any such debt securities;                            

        (j) any creation or assumption by any member of the Caldera Group of
    any Encumbrance (other than Caldera Permitted Encumbrances) on any Caldera
     Asset in excess of $250,000 individually or in the aggregate, other than to
    refinance a liability reflected in the Caldera Financial Statements in the
ordinary course of business;                                          

          (k) any making by any member of the Caldera Group of any loan, advance
or capital contribution to or investment in any person other than to  
 refinance a liability reflected in the Caldera Financial Statements and
other than (i) loans, advances or capital contributions made in the   
   ordinary course of the business, and (ii) other loans and advances, where
 the aggregate amount of all such items outstanding at any time does not
exceed $250,000;                                                      

       (l) any amendment of, relinquishment, termination or non-renewal by
    Caldera of any of the Caldera Contracts, other than in the ordinary course
of business consistent with past practice;                            

     (m) any transfer or grant of a right under the Caldera IP Rights,
     other than those transferred or granted in the ordinary course of business,
consistent with past practice;                                        

          (n) any labor dispute with, or charge of unfair labor practice by, any
     member of the Caldera Group (other than routine individual grievances), any
activity or proceeding by a labor union or representative thereof to  
 organize any Caldera employees or, to Caldera's Knowledge, any campaign
being conducted to solicit authorization from Caldera employees to be 
represented by such labor                                             
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union, where such dispute, practice, activity, proceeding, or campaign
would have a Material Adverse Effect on Caldera;                      

(o) any change to accounting methods; or                    

       (p) any agreement by any member of the Caldera Group to take any of
    the actions described in the preceding clauses (a) through (o) (other than
the transactions contemplated by this Agreement or the Ancillary      
Agreements).                                                          

     3.10  Taxes.  The Caldera Group has properly completed and filed, or caused
to be properly completed and filed, all Tax returns required to be filed by the 
Caldera Group and has paid, or caused to be paid, all Taxes that are shown on   
such Tax returns as due and payable. All Taxes of the Caldera Group for all     
periods through June 30, 2000, have been fully paid (except for Taxes that are  
adequately provided for or reflected in the Caldera Financial Statements). Since
June 30, 2000, no material Tax liability has been assessed, or is, to Caldera's 
Knowledge, proposed to be assessed, incurred or accrued (other than liabilities 
for Taxes arising in the ordinary course of business) against any member of the 
Caldera Group. To Caldera's Knowledge, no member of the Caldera Group has       
received notification that any material issues have been raised (or are         
currently pending) by the Internal Revenue Service or any other taxing          
authority, including, without limitation, any sales tax authority, in connection
with any of the Tax returns referred to in the first sentence of this Section   
3.10, and no unexpired waivers of statutes of limitations have been given or    
requested with respect to Tax returns or Taxes of any member of the Caldera     
Group. No taxing authority is currently conducting an audit or investigation of 
any of the aforesaid Tax returns or, to Caldera's Knowledge, is about to conduct
such an audit with respect to such Tax returns. Any deficiencies asserted or    
assessments (including interest and penalties) made as a result of any          
examination by the Internal Revenue Service or by appropriate national, state or
departmental authorities of the Tax returns with respect to SCO and any of its  
subsidiaries have been paid or adequately provided for in the Caldera Financial 
Statements, and to Caldera's Knowledge no proposed (but unassessed) additional  
Taxes have been asserted and no Tax liens have been filed against Caldera or any
of the Caldera Assets other than for Taxes not yet due and payable. Neither     
Caldera, nor any member of the Caldera Group (i) has made an election to be     
treated as a "consenting corporation" under Section 341(f) of the Internal      
Revenue Code or (ii) is a "personal holding company" within the meaning of      
Section 542 of the Internal Revenue Code.                                       

3.11  Intellectual Property.                                          

   (a) Caldera owns, or has the right to use, sell or license such
   Intellectual Property Rights as are necessary or required for the Conduct
of the Caldera Business (such Intellectual Property Rights being      
   hereinafter collectively referred to as the "Caldera IP Rights") and such
   ownership or rights to use, sell or license are reasonably sufficient for
    the Conduct of the Caldera Business, except for any failure to own or have
  the right to use, sell or license that would not have a Material Adverse
Effect on Caldera.                                                    

(b) All Caldera IP Rights are owned free and clear of any   
Encumbrances.                                                         

       (c) To Caldera's Knowledge, (i) neither the manufacture, marketing,
    license, sale or intended use of any product currently licensed or sold by
   Caldera or any of the Caldera Subsidiaries or currently under development
by Caldera or any of the Caldera Subsidiaries violates any license or 
    agreement relating thereto or infringes any Intellectual Property Right of
     any other party, (ii) there is no pending or threatened claim or litigation
contesting the validity, ownership or right to use, sell, license or  
dispose of any Caldera IP Right and (iii) no third party has notified 
 Caldera that any Caldera IP Right or the proposed use, sale, license or
disposition thereof, conflicts or will conflict with the rights of any
 other party, nor is there any basis therefor except for any violations,
    infringements, claims or litigation that would not have a Material Adverse
Effect on Caldera.                                                    

 3.12  Fees and Expenses.  Except for the fees and expenses set forth in
Caldera's engagement letter with Broadview, a copy of which has been provided to
SCO, neither Caldera, Newco nor any of the                                      
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Caldera Subsidiaries has paid or become obligated to pay any fee or commission  
to any broker, finder or intermediary in connection with the transactions       
contemplated by this Agreement and the Ancillary Agreements.                    

3.13  Environmental Matters.                                          

         (a) During the period that Caldera has leased or owned its respective
     properties or owned or operated its respective facilities, there have been,
  to Caldera's Knowledge, no disposals, releases or threatened releases of
    Hazardous Materials on, from, under or about such properties or facilities
which would cause a Material Adverse Effect on Newco. To Caldera's    
    Knowledge there is no presence, disposals, releases or threatened releases
   of Hazardous Materials on, from, under or about any of such properties or
facilities, which may have occurred prior to Caldera having taken     
 possession of any of such properties or facilities where such Hazardous
Materials would cause a Material Adverse Effect on Newco.             

          (b) None of the properties or facilities of Caldera is or has been the
  subject of an Environmental Damage, which would cause a Material Adverse
Effect on Newco. During the time that Caldera has owned or leased its 
 respective properties and facilities, none of Caldera nor, to Caldera's
     Knowledge, any third party, has used, generated, manufactured or stored on,
     under or about such properties or facilities or transported to or from such
  properties or facilities any Hazardous Materials (except those Hazardous
   Materials associated with general office use or janitorial supplies) in a
manner which would result in a Material Adverse Effect on Newco.      

        (c) During the time that any members of the Caldera Group have owned
     or leased its respective properties and facilities, to Caldera's Knowledge,
    there has been no litigation brought or threatened against any of them by,
or any settlement reached by any of them with, any party or parties   
 concerning the presence, disposal, release or threatened release of any
    Hazardous Materials on, from or under any of such properties or facilities
   or relating to any alleged Environmental Violation, except for litigation
or settlement which would not have a Material Adverse Effect on Newco.

3.14  Fairness Opinion.  Caldera's Board of Directors has received an 
opinion dated as of the date hereof from Broadview to the effect that, as of the
date hereof, the Caldera Ratio is fair to Caldera from a financial point of     
view.                                                                           

3.15  Tax Representations.  Caldera, Newco and the Caldera Significant
Stockholders are aware of no plan or intention by Caldera or Newco or any       
corporation related to Caldera immediately after the Effective Time to          
repurchase any Newco capital stock issued pursuant to this Agreement from any   
person or entity that is or will become a Newco stockholder by reason of the    
transactions contemplated by this Agreement. Caldera has not redeemed any shares
of its capital stock or paid any extraordinary dividend in contemplation of the 
Merger.                                                                         

4. SCO Covenants.                                                     

4.1  Advice of Changes.                                               

   During the period from the date hereof until the earlier of the Effective
Time or the termination of this Agreement in accordance with its terms, SCO will
promptly advise Caldera in writing, (i) of any event occurring subsequent to the
date hereof that would reasonably be likely to render any representation or     
warranty contained in Section 2 of this Agreement, if made on or as of the date 
of such event or the Effective Time, untrue or inaccurate, (ii) of any event    
that would reasonably be likely to have a Material Adverse Effect on the Group  
Business, and (iii) of any material breach by SCO of any covenant or agreement  
contained in this Agreement; provided, however, that the delivery of, or failure
to deliver, any notice pursuant to this Section 4.1 shall not limit or otherwise
affect the remedies available hereunder. Prior to the Effective Date, the SCO   
Board of Directors shall take all requisite action under each of the SCO stock  
plans to preclude the accelerated vesting of any outstanding SCO Options or     
unvested shares of SCO Common Stock for all Designated Employees; provided,     
however that such actions shall not be                                          

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required with respect to SCO Options granted to Employees whose options are     
subject to acceleration pursuant to existing severance or change of control     
agreements.                                                                     

     4.2  Maintenance of Business.  During the period from the date hereof until
the earlier of the Effective Time or the termination of this Agreement in       
accordance with its terms, the Contributed Company Group and the Contributing   
Companies will use reasonable efforts to carry on and preserve the Group        
Business and relationships with customers, suppliers, employees and others      
related to Group Business in substantially the same manner as it has prior to   
the date hereof.                                                                

     4.3  Conduct of Business.  During the period from the date hereof until the
earlier of the Effective Time or the termination of this Agreement in accordance
with its terms, the Contributed Company Group and SCO will continue to conduct  
the Group Business and maintain business relationships related to the Group     
Business in the ordinary and usual course consistent with past practice and,    
except as otherwise disclosed herein or in the SCO Disclosure Letter, they will 
not, without the prior written consent of Caldera, which consent shall not be   
unreasonably withheld, take any of the following actions where it would cause a 
Material Adverse Effect on the Group Business:                                  

         (a) cause any of the Contributed Companies to borrow any money except
for amounts that are not in the aggregate material to the financial   
condition of the Group Business, taken as a whole;                    

(b) cause any of the Group Assets to become subject to any  
Encumbrance, except for Group Permitted Encumbrances;                 

         (c) dispose of any of Group Assets except immaterial amounts of Group
   Assets in the ordinary course of business, consistent with past practice;

        (d) grant any exclusive license to any of the SCO IP Rights or grant
any other license to SCO IP Rights except in the ordinary course of   
business, consistent with past practice;                              

     (e) materially amend or terminate any of the Material Contributed
Contracts;                                                            

       (f) cause any of the Contributed Companies to declare, set aside or
    pay any cash or stock dividend or other distribution in respect of capital
stock, or redeem or otherwise acquire any of its capital stock;       

          (g) permit any of the Contributed Companies to issue or allot or agree
to issue or allot capital stock, shares or loan capital;              

         (h) cause any of the Contributed Companies to make any loans or grant
    any guarantees, except (A) advances that are not material in amount or (B)
loans pursuant to any Section 401(a) Plan;                            

  (i) waive or release any material claim against a third party;

   (j) cause any member of the Contributed Company Group to merge,
   consolidate or reorganize with or acquire any entity that is not a member
     of the Contributed Company Group, except as set forth in the SCO Disclosure
  Letter and except as otherwise set forth in the last sentence of Section
4.14(a) or Section 1.4(a) hereof;                                     

       (k) amend the Certificate of Incorporation or Bylaws (or equivalent
governing documents in each relevant jurisdiction) of any of the      
Contributed Companies;                                                

(l) implement any layoffs or reductions in the work force;  

     (m) fail to pay or withhold any material Tax related to the Group
Business when due to be paid or withheld;                             

(n) change accounting methods;                              

         (o) agree to take, or permit any of its subsidiaries to take or agree
 to take, or enter into negotiations with respect to, any of the actions
described in the preceding clauses in this Section 4.3.               

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 Notwithstanding the foregoing, nothing in this Section 4.3 hereof shall
restrict or limit the conduct of any business of SCO or its direct or indirect  
subsidiaries other than the Group Business and other than with respect to the   
Group Assets and nothing herein shall restrict or limit the conduct of any      
business of the Contributed Company Group or with respect to the Group Assets   
other than as set forth in this Section 4.3.                                    

   4.4  SCO Corporate Approvals.  SCO will call the SCO Stockholders Meeting
to be held within 40 days after the Form S-4 shall have been declared effective 
by the SEC, to submit the SCO Transaction and related matters for the           
consideration and approval of the SCO stockholders. Subject to Section 8.1(i)   
and (j), the Prospectus/Proxy Statement will include a statement to the effect  
that SCO's Board of Directors is recommending that SCO stockholders vote in     
favor of the SCO Transaction. The Board of Directors of SCO shall submit this   
Agreement and the SCO Transaction to SCO's stockholders whether or not at any   
time subsequent to the date hereof such Board determines that it can no longer  
make such recommendation. Such meeting will be called, held and conducted, and  
any proxies will be solicited, in compliance with applicable law. SCO agrees to 
vote in favor of the contribution to Newco of the Contributed Stock and         
Contributing Assets at each meeting of stockholders, or written consent in lieu 
thereof, of the Contributing Companies. Without limiting the foregoing, SCO     
shall vote in favor of the SCO Transaction at each and every stockholders       
meeting, or with respect to any written consent in lieu thereof, at which any   
proposal regarding any such transactions, including the contribution and        
transfer of the Contributed Stock and Contributed Assets, is considered. The    
Boards of Directors of each the Contributing Companies (including SCO) and the  
Contributed Company Group have approved the SCO Transaction and this Agreement. 

4.5  Letter of SCO's Accountants.  SCO shall use its reasonable best  
efforts to cause to be delivered to Caldera a letter of PriceWaterhouseCoopers  
LLP, dated a date within two business days before the date on which the Form S-4
shall become effective and addressed to Caldera, in form and substance          
reasonably satisfactory to Caldera and customary in scope and substance for     
letters delivered by independent public accountants in connection with          
registration statements similar to the Form S-4.                                

  4.6  Prospectus/Proxy Statement.  SCO will mail to its stockholders in a
timely manner, for the purpose of considering and voting upon the SCO           
Transaction at the SCO Stockholders Meeting, the Prospectus/Proxy Statement.    
SCO, Caldera and Newco will prepare and file the Prospectus/Proxy Statement with
the SEC as promptly as practicable, and each will use its respective best       
reasonable efforts to cause the Form S-4 to become effective as soon after such 
filing as practicable. In this regard, SCO, Caldera and Newco will advise each  
other promptly as to the time at which the Form S-4 becomes effective and of the
issuance by the SEC of any stop order suspending the effectiveness of the Form  
S-4 or the initiation of any proceedings for such purpose and each will use its 
respective reasonable best efforts to prevent the issuance of any stop order and
to obtain as soon as possible the lifting thereof, if issued. Until the         
Effective Time, SCO will advise Caldera and Newco promptly of any requirement of
the SEC for any amendment or supplement of the Form S-4 or for additional       
information, and will not at any time file any amendment of or supplement to the
prospectus contained therein (or to the prospectus filed pursuant to Rule 424(b)
of the SEC) (the "Prospectus") which shall not have been previously submitted to
Caldera in reasonable time prior to the proposed filing thereof or to which     
Caldera shall reasonably object or which is not in compliance in all material   
respects with the Securities Act and the rules and regulations issued by the SEC
thereunder. None of the information relating to SCO (or, to SCO's Knowledge, any
other person, contained in any document, certificate or other writing furnished 
or to be furnished by SCO) included in (i) the Prospectus/Proxy Statement at the
time the Prospectus/Proxy Statement is mailed, at the time of the SCO           
Stockholders Meeting or at the Effective Time, as then amended or supplemented, 
or (ii) the Form S-4 at the time the Form S-4 becomes effective or at the       
Effective Time, as then amended or supplemented, will contain any untrue        
statement of a material fact or will omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the  
circumstances in which they were made, not misleading or necessary to correct   
any statement which has become false or misleading in any earlier communication.
From and after the date the Form S-4 becomes effective and until the Effective  
Time, if any event known to SCO occurs as a result of which the                 

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Prospectus/Proxy Statement or Form S-4 would include an untrue statement of a   
material fact or omit to state a material fact required to be stated therein or 
necessary to make the statements therein not misleading, or if it is necessary  
at any time to amend the Form S-4 or the Prospectus/Proxy Statement to comply   
with the Securities Act, SCO will promptly notify Caldera and Newco and an      
amended or supplemented Form S-4 or Prospectus/Proxy Statement will be prepared 
by SCO, Caldera and Newco which will correct such statement or omission and will
use its reasonable best efforts to cause any such amendment to become effective 
as promptly as possible. The Prospectus/Proxy Statement, as it relates to SCO   
and information relating to the Group Business, will comply as to form in all   
material respects with the requirements of the Exchange Act and the rules and   
regulations thereunder in effect at the time the Prospectus/Proxy Statement is  
mailed.                                                                         

     4.7  Regulatory Approvals.  As promptly as reasonably practicable, SCO will
itself, and will cause each member of the Contributed Company Group, to execute 
and file, or join in the execution and filing, of any application or other      
document that may be necessary in order to obtain the authorization, approval or
consent of any governmental body, federal, state, provincial, local or foreign, 
which may be reasonably required, or which Caldera or Newco may reasonably      
request, in connection with the consummation of the transactions contemplated by
this Agreement. SCO will itself, and will cause each member of the Contributed  
Company Group, to use its reasonable efforts to promptly obtain all such        
authorizations, approvals and consents and will cooperate fully with the other  
parties in promptly seeking to obtain such authorizations, approvals and        
consents.                                                                       

     4.8  Necessary Consents.  SCO will itself, and will cause each Contributing
Company and each member of the Contributed Company Group to, use its reasonable 
efforts to obtain the consents required in connection with the Material         
Contributed Contracts, and to take such other actions as may be necessary or    
appropriate for the consummation of the transactions contemplated hereby and to 
allow Newco to Conduct the Group Business after the Effective Time.             

     4.9  Access to Information.  From the date hereof until the Effective Time,
SCO will itself, and will cause the Contributed Company Group, to allow Caldera 
and its agents reasonable access to the files, books, records, technology and   
offices of SCO and the Contributed Company Group reasonably requested by        
Caldera, but only to the extent necessary and relating to the Group Business,   
including, without limitation, any and all information relating to Contributed  
Company Group's Taxes, commitments, contracts, leases, licenses and real,       
personal, intellectual and intangible property and financial condition. SCO     
shall use its reasonable efforts to cause its accountants to cooperate with     
Caldera and its agents in making available to Caldera all financial information 
reasonably requested, including, without limitation, the right to examine all   
working papers pertaining to all Tax returns and financial statements prepared  
or audited by such accountants. No information or knowledge obtained by any     
party hereto in any investigation pursuant to this Section 4.9 will affect or be
deemed to modify any representation or warranty contained herein or the         
conditions to the obligations of the parties to consummate the Merger and the   
SCO Transaction. All information obtained by Caldera and its agents pursuant to 
this Section 4.9 shall be kept confidential in accordance with the              
confidentiality agreement, between Caldera and SCO (the "Nondisclosure          
Agreement").                                                                    

4.10  Satisfaction of Conditions Precedent.  SCO will itself, and will
cause the Contributing Companies and the Contributed Company Group, to use      
reasonable efforts to satisfy or cause to be satisfied all the conditions       
precedent that are set forth in Section 8 and to cause the Merger, the SCO      
Transaction and the other transactions contemplated by this Agreement to be     
consummated. Without limiting the foregoing, in connection with the agreements  
to be reached by the parties subsequent to the date hereof and prior to the     
Effective Time, the parties agree to negotiate in good faith to reach agreement 
on all matters to be included in such agreements promptly after the signing of  
this Agreement.                                                                 

     4.11  Voting Agreement.  SCO will use its reasonable best efforts to obtain
Voting Agreements in the form attached as Exhibit 4.11A (the "Voting            
Agreement"), executed by the SCO affiliates listed on Exhibit 4.11B.            

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     4.12  Sales Representative and Support Agreement.  The Sales Representative
and Support Agreement in the form attached as Exhibit 4.12 (the "Sales          
Representative and Support Agreement") shall be executed as of the Effective    
Time.                                                                           

4.13  Stockholders Agreement.  The Stockholders Agreement in the form 
attached as Exhibit 4.13 (the "Stockholders Agreement") shall be executed as of 
the Effective Time.                                                             

4.14  No Other Negotiations.                                          

     (a) SCO shall, and shall cause each Contributing Company and each
member of the Contributed Company Group and their respective officers,
directors or employees and any investment bankers, attorneys or other 
    advisors and representatives retained by any of them to, cease any and all
existing activities, discussions and negotiations with any parties    
conducted heretofore with respect to any SCO Alternative Proposal (as 
 defined below). From and after the date hereof until the earlier of the
    Effective Time or the termination of this Agreement in accordance with its
  terms, SCO shall not authorize or permit any Contributing Company or any
member of the Contributed Company Group (or any of their respective   
  officers, directors or employees or any investment bankers, attorneys or
 other advisors or representatives retained by any of them), directly or
     indirectly, (i) to solicit, initiate or encourage the submission of any SCO
Alternative Proposal, (ii) to engage in discussions or negotiations   
   regarding, provide non-public information with respect to, or to take any
other action intended, designed or reasonably likely to facilitate any
     inquiries or the making of any proposal or offer that constitutes, or would
   reasonably be expected to lead to, any SCO Alternative Proposal, (iii) to
enter into any letter of intent, agreement in principle, agreement    
     involving a business combination or other similar agreement with any person
    with respect to any SCO Alternative Proposal, or (iv) to make or authorize
any statement, recommendation or solicitation in support of any SCO   
Alternative Proposal. For purposes of this Agreement, "SCO Alternative
Proposal" means any proposal or offer from any person or "group" (as  
defined under Section 13(d) of the Exchange Act and the rules and     
regulations thereunder) for any direct or indirect (a) acquisition,   
purchase, sale or other disposition of a material amount of the Group 
    Assets (other than in the ordinary course and disposal of worn or obsolete
  items consistent with past practice), (b) acquisition, purchase, sale or
     other disposition of any of the outstanding voting securities of any member
  of the Contributed Company Group (other than pursuant to the exercise of
outstanding stock options), or (c) merger, consolidation, business    
combination, sale of any of the assets, recapitalization, liquidation,
    dissolution or similar transaction involving any member of the Contributed
    Company Group, other than the transactions contemplated by this Agreement.
 Notwithstanding the foregoing or any other provision of this Agreement,
 other than actions relating to the Contributed Company Group, the Group
     Assets or the Group Business, SCO shall not be restricted or limited in any
    way from entering into discussions, negotiations or agreements of any kind
or from taking any other actions of any kind, including, without      
   limitation, transactions relating to the sale of any of its or its direct
or indirect subsidiaries (other than any member(s) of the Contributed 
  Company Group), equity securities (other than the Contributed Stock), or
  assets (other than Group Assets), or the merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar    
transaction involving the Retained SCO Business.                      

        (b) Notwithstanding Section 4.14(a), prior to obtaining the approval
     of the stockholders of SCO of this Agreement and the SCO Transaction by the
   requisite vote under applicable law (the "SCO Stockholder Approval"), SCO
may in response to an unsolicited bona fide SCO Alternative Proposal, 
   participate in discussions or negotiations with, furnish information to a
     third party making such proposal (provided that SCO shall have entered into
a confidentiality agreement with such third party with terms no less  
   favorable than in the letter with Caldera), make or authorize a statement
or recommendation in support of such proposal, if all of the following
events shall have occurred: (i) such third party has made a bona fide 
    written offer or proposal to the Board of Directors of SCO to consummate a
SCO Alternative Proposal which offer or proposal identifies a price or
     range of values to be paid for the outstanding securities or assets of SCO,
the Contributing Companies or the Contributed Company Group, (ii) if  
consummated, based on the written advice of investment bankers        
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     of nationally recognized reputation, such Board of Directors has determined
   that it is financially more favorable to the stockholders of SCO than the
    terms of the transactions contemplated by this Agreement, (iii) such Board
    of Directors has determined, after consultation with investment bankers of
nationally recognized reputation, that such third party is financially
capable of consummating such SCO Alternative Proposal (if the SCO     
Alternative Proposal is for cash); (iv) such Board of Directors has   
    determined, after consultation with outside legal counsel, that failure to
 take such action would be inconsistent with the fiduciary duties of the
Board of Directors to SCO stockholders under applicable law; and (v)  
    Caldera shall have been notified by SCO in writing of such SCO Alternative
  Proposal, including its principal financial and other material terms and
   conditions, including the identity of the person making such proposal (it
   being understood that any amendment to the price exchange ratio, identity
    or principal financial or other material terms shall require an additional
notice).                                                              

         (c) In addition to the obligations set forth in Section 4.14(a), SCO,
   as promptly as practicable, shall advise Caldera orally and in writing of
    any request for non-public information which SCO reasonably believes could
     lead to a SCO Alternative Proposal, or of any SCO Alternative Proposal, the
 principal financial and other material terms and conditions of such SCO
Alternative Proposal, and the identity of the person making any such  
    request or SCO Alternative Proposal. SCO will keep Caldera informed in all
     material respects of the status and details (including material amendments)
of any such SCO Alternative Proposal.                                 

4.15  Books and Records.  If, in order to properly prepare documents  
required to be filed with governmental authorities (including taxing            
authorities) or its financial statements, it is necessary that any party hereto 
be furnished with additional information relating to the Group Assets or any    
member of the Contributed Company Group, and such information is in the         
possession of a Contributing Company, then SCO, for itself and the other        
Contributing Companies, agree to use its good faith efforts to promptly furnish 
such information to the party needing such information. This Section 4.15 shall 
survive Closing for two years except for records relating to preparation or     
audit of tax returns, for which this Section 4.15 will survive until the        
expiration of the applicable Tax statute of limitations.                        

4.16  [Intentionally Omitted.].                                       

   4.17  Modification of Joint Contributed Agreements and Shared Contributed
Assets.  SCO will provide to Caldera a list of the Contributed Contracts and the
contracts to which the Contributed Companies are a party which create rights or 
obligations of both the Group Business and the SCO Retained Business (the "Joint
Contributed Agreements"). As soon as feasible after the date hereof, SCO and    
Caldera will negotiate to agree upon a mutually acceptable arrangement between  
SCO and Newco and, if required, other parties with respect to the treatment of  
such contracts. SCO will provide a list of the Contributed Assets which would be
impracticable to operate separately by either SCO or Caldera (the "Shared       
Contributed Assets"). As soon as feasible after the date hereof, SCO and Caldera
will negotiate to agree upon a mutually acceptable arrangement, which shall     
allocate costs in proportion to the benefits received, between SCO and Newco    
with respect to such Shared Contributed Contracts.                              

     4.18  Key Employee Employment Agreements.  SCO will use its best efforts to
cause (without having to incur any cost) each of the Key Employees listed on    
Exhibit 4.18A to execute employment agreements which reflect the terms set forth
in the Key Employee Term Sheet, a form of which is attached hereto as Exhibit   
4.18B.                                                                          

 4.19  SCO IP Rights.  As soon as feasible after the date hereof SCO and
Caldera shall confirm whether the Intellectual Property Rights and Intangible   
Assets required for the production, development, marketing and support of the   
Group Products are included in the Intellectual Property Rights included in the 
Group Assets duly transferred to Newco pursuant hereto. If additional items not 
so transferred are discovered, then the Group Assets shall be expanded to       
include, and there shall be duly assigned to Newco by the appropriate           
Contributing Company, all such additional Intellectual Property Rights and      
Intangible Assets required for the production of the Group Products. If the     
Intellectual Property Rights and Intangible Assets included or added to the     
Group Assets are also required for the production of the                        

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products produced by SCO and its subsidiaries (other than the Group Products)   
then Newco (or its subsidiary, which receives said Intellectual Property Rights 
and Intangible Assets constituting Group Assets) shall provide SCO, or its      
designated subsidiary, with a fully paid, non-exclusive, perpetual, irrevocable 
license to use such Intellectual Property Rights and Intangible Assets for the  
purpose of producing such other products. SCO agrees that if Caldera determines,
in its sole judgment to register the copyrights assigned to it pursuant to the  
Copyright Assignments, then SCO shall take all reasonable actions to assist     
Caldera to register such copyrights.                                            

4.20  Directors' and Officers' Liability Insurance.  SCO shall use its
commercially reasonable efforts to maintain directors' and officers' liability  
insurance as SCO shall have in effect from time to time, covering the acts or   
omissions on or before the Effective Time of those Employees who are or have    
been directors and officers of SCO or its subsidiaries and who become employees 
of Newco as of the Effective Time. SCO will not voluntarily seek to increase the
deductible nor decrease the limits under such insurance, provided however such  
action shall be governed by the insurance marketplace on commercially reasonable
and available terms, and SCO will endeavor to give written notice to Caldera    
prior to any cancellation or non-renewal of the SCO coverage.                   

 4.21  Closing Group Account.  SCO shall deliver to Newco the assets and
liabilities section of a balance sheet of the Group Business as of the Closing  
Date (the "Closing Group Account") within thirty days following the Closing     
Date. Newco shall cooperate by providing access to data and personnel, as       
reasonably required by SCO to prepare the Closing Group Account. The Closing    
Group Account shall be prepared in the same manner as the 2000 Group Balance    
Sheet and in compliance with the representations and warranties contained in    
Section 2.4(c) hereof.                                                          

    4.22  SCO Retained Business.  SCO shall use its reasonable best efforts to
transfer or sell all of the Excluded Assets from the Contributed Companies prior
to the Effective Time or as soon as practicable thereafter; provided, however,  
that to the extent that any Excluded Assets pursuant to Section 1.4(b)(ii) are  
included as assets on the Closing Group Account, Caldera shall pay to SCO an    
amount, in cash, equal to amount of such assets or transfer the assets after the
Effective Time, as the parties may agree.                                       

  4.23  Taking of Necessary Action; Further Action.  If, at any time after
the Closing Date, any further action is necessary or desirable to carry out the 
purposes of this Agreement and to vest Caldera with full right, title and       
possession to the Contributed Assets and Contributed Companies, the officers and
directors of SCO are fully authorized in the name SCO or otherwise to take, and 
will take, all such lawful and necessary and/or desirable action.               

  4.24  Accounting Treatments.  SCO and Caldera shall use their reasonable
best efforts to gain favorable accounting treatment for the Sales Representative
and Support Agreement, including, if necessary, revising the terms of such      
agreement set forth in Exhibit 4.12.                                            

5.  Caldera and Newco Covenants.                                      

5.1  Advice of Changes.                                               

       (a) During the period from the date hereof until the earlier of the
    Effective Time or the termination of this Agreement in accordance with its
terms, Caldera will promptly advise SCO in writing (i) of any event   
    occurring subsequent to the date hereof that would reasonably be likely to
render any representation or warranty of Caldera or Newco contained in
    Section 3 of this Agreement, if made on or as of the date of such event or
the Effective Time, untrue or inaccurate, (ii) of any event that would
reasonably be likely to have a Material Adverse Effect on Caldera, and
(iii) of any material breach by Caldera or Newco of any covenant or   
     agreement contained in this Agreement; provided, however, that the delivery
     of, or failure to deliver, any notice pursuant to this Section 5.1(a) shall
not limit or otherwise affect the remedies available hereunder.       

         (b) Ten days prior to the Effective Time, Caldera will deliver to SCO
     a certificate from Caldera's transfer agent indicating the number of shares
of Common Stock outstanding at the end of business on the eleventh day
 preceding the Effective Time and a certificate from Caldera's Secretary

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indicating the number of shares of Caldera Common Stock issuable upon 
    exercise or conversion of any outstanding options, warrants or convertible
 debentures outstanding on such date. Caldera will deliver to SCO by the
fifteenth business day after the Effective Time a certificate from    
  Caldera's transfer agent indicating the number of shares of Common Stock
  outstanding at the end of business on the day of the Closing (calculated
 without regard to the shares of Common Stock issued with respect to the
First SCO Certificate) and a certificate from Caldera's Secretary     
indicating the number of shares of Caldera Common Stock issuable upon 
     exercise or conversion of any outstanding options at the end of business on
the day of the Closing.                                               

     5.2  Maintenance of Business.  During the period from the date hereof until
the earlier of the Effective Time or the termination of this Agreement in       
accordance with its terms, Caldera will use its best efforts to carry on and    
preserve its business and its relationships with customers, suppliers, employees
and others in substantially the same manner as it has prior to the date hereof. 

     5.3  Conduct of Business.  During the period from the date hereof until the
earlier of the Effective Time or the termination of this Agreement in accordance
with its terms, Caldera will continue to conduct its business and maintain its  
business relationships in the ordinary and usual course and consistent with past
practice and, except as otherwise disclosed herein or in the Caldera Disclosure 
Letter, it will not, without the prior written consent of SCO, which consent    
shall not be unreasonably withheld or delayed, take any of the following actions
where it would cause a Material Adverse Effect on Caldera:                      

   (a) borrow any money except for (A) amounts that are not in the
aggregate material to the financial condition of Caldera and its      
subsidiaries, taken as a whole or (B) pursuant to existing credit     
facilities;                                                           

         (b) cause any of the material Caldera Assets to become subject to any
Encumbrance, except for Caldera Permitted Encumbrances and except for 
 Caldera Encumbrances arising under credit facilities existing as of the
date hereof;                                                          

          (c) dispose of any of Caldera Assets which are material to the Caldera
Business;                                                             

        (d) issue capital stock representing more than a 10% interest in the
total outstanding securities of Caldera;                              

     (e) merge, consolidate or reorganize with, or acquire any entity,
   except for transactions in which the aggregate consideration is below $15
million;                                                              

          (f) amend the Certificate of Incorporation or Bylaws of Caldera or any
of its subsidiaries or as otherwise expressly contemplated by this    
Agreement);                                                           

       (g) agree to take, or permit any Caldera entity to take or agree to
take, or enter into negotiations with respect to, any of the actions  
described in the preceding clauses in this Section 5.3(g).            

   Notwithstanding the foregoing, nothing in this Section 5.3 shall restrict
or limit the conduct of any business of Caldera or its direct or indirect       
subsidiaries or the use or disposition of the Caldera Assets, other than as set 
forth in this Section 5.3.                                                      

5.4  Stockholder Approval.  Caldera will call the Caldera Stockholders
Meeting, to be held within 40 days after the Form S-4 shall have been declared  
effective by the SEC, to submit the Merger, the SCO Transaction and any related 
matters for the consideration and approval of the Caldera stockholders. The     
Prospectus/Proxy Statement will include a statement to the effect that Caldera's
Board of Directors is recommending that Caldera stockholders vote in favor of   
the Merger and the SCO Transaction. Such meeting will be called, held and       
conducted, and any proxies will be solicited, in compliance with applicable law.

 5.5  Letter of Caldera's Accountants.  Caldera shall use its reasonable
best efforts to cause to be delivered to SCO a letter of Arthur Andersen LLP,   
dated a date within two business days before the date                           
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on which the Form S-4 shall become effective and addressed to each of the       
Contributing Companies, in form and substance reasonably satisfactory to SCO and
customary in scope and substance for letters delivered by independent public    
accountants in connection with registration statements similar to the Form S-4. 

    5.6  Prospectus/Proxy Statement.  Caldera will mail to its stockholders in
a timely manner, for the purpose of considering and voting upon the Merger and  
the SCO Transaction at the Caldera Stockholders Meeting, the Prospectus/Proxy   
Statement. SCO, Caldera and Newco will prepare and file the Prospectus/ Proxy   
Statement with the SEC as promptly as practicable, and each will use its        
respective best reasonable efforts to cause the Form S-4 to become effective as 
soon after such filing as practicable. In this regard, SCO, Caldera and Newco   
will advise each other promptly as to the time at which the Form S-4 becomes    
effective and of the issuance by the SEC of any stop order suspending the       
effectiveness of the Form S-4 or the initiation of any proceedings for such     
purpose and each will use its respective reasonable best efforts to prevent the 
issuance of any stop order and to obtain as soon as possible the lifting        
thereof, if issued. Until the Effective Time, Caldera and Newco will advise SCO 
promptly of any requirement of the SEC for any amendment or supplement of the   
Form S-4 or for additional information, and will not at any time file any       
amendment of or supplement to the prospectus contained therein (or to the       
prospectus filled pursuant to Rule 424(b) of the SEC) which shall not have been 
previously submitted to SCO in reasonable time prior to the proposed filing     
thereof or to which SCO shall reasonably object or which is not in compliance in
all material respects with the Securities Act and the rules and regulations     
issued by the SEC thereunder. None of the information relating to Caldera or    
Newco (or, to Caldera's or Newco's knowledge, any other person, contained in any
document, certificate or other writing furnished or to be furnished by Caldera) 
included in (i) the Prospectus/Proxy Statement by Newco and/or Caldera at the   
time the Prospectus/ Proxy Statement is mailed, at the time of the Caldera      
Stockholders Meeting to vote on the Merger and the SCO Transaction or at the    
Effective Time, as then amended or supplemented, or (ii) the Form S-4 at the    
time the Form S-4 becomes effective, as then amended or supplemented, will      
contain any untrue statement of a material fact or will omit to state any       
material fact required to be stated therein or necessary to make the statements 
therein, in light of the circumstances in which they were made, not misleading  
or necessary to correct any statement which has become false or misleading in   
any earlier communication with respect to the solicitation of proxies for the   
Caldera Stockholder Meeting. From and after the date the Form S-4 becomes       
effective and until the Effective Time, if any event known to Caldera or Newco  
occurs as a result of which the Prospectus/Proxy Statement or Form S-4 would    
include an untrue statement of a material fact or omit to state a material fact 
required to be stated therein or necessary to make the statements therein not   
misleading, or if it is necessary at any time to amend the Form S-4 or the      
Prospectus/Proxy Statement to comply with the Securities Act, Caldera and Newco 
will promptly notify SCO and SCO, Caldera and Newco will prepare an amended or  
supplemented Form S-4 or Prospectus/Proxy Statement which will correct such     
statement or omission and will use its reasonable best efforts to cause any such
amendment to become effective as promptly as possible. The Prospectus/ Proxy    
Statement, as it relates to Caldera and Newco, will comply as to form in all    
material respects with the requirements of the Exchange Act and the rules and   
regulations thereunder in effect at the time the Prospectus/Proxy Statement is  
mailed.                                                                         

  5.7  State Securities Law Compliance.  Caldera and Newco shall use their
respective reasonable best efforts to qualify the Newco Options to be granted   
upon cancellation of the Cancelled SCO Options to be assumed by Caldera pursuant
hereto under the state securities or "blue sky" laws of every jurisdiction of   
the United States in which (a) the records of Caldera or SCO as of the Effective
Time, indicate that a holder of such options resides and (b) a Nasdaq Stock     
Market or other exemption from the qualification requirements under such laws is
unavailable.                                                                    

    5.8  Regulatory Approvals.  As promptly as reasonably practicable, Caldera
and Newco will execute and file, or join in the execution and filing, of any    
application or other document that may be necessary in order to obtain the      
authorization, approval or consent of any governmental body, federal, state,    
provincial, local or foreign which may be reasonably required, or which SCO may 
reasonably request, in connection with the consummation of the transactions     
contemplated by this Agreement. Caldera and Newco will each                     

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use its respective reasonable efforts to promptly obtain all such               
authorizations, approvals and consents and will cooperate fully with the other  
parties in promptly seeking to obtain all such authorizations, approvals, and   
consents.                                                                       

  5.9  Necessary Consents.  Caldera and Newco will each use its respective
reasonable efforts to obtain the written consents under the Material Caldera    
Contracts and to take such other actions as may be necessary or appropriate to  
allow the consummation of the transactions contemplated hereby and to allow     
Caldera and Newco to carry on Caldera's business and the Group Business after   
the Effective Time.                                                             

5.10  Access to Information.  From the date hereof until the Effective
Time, Caldera and Newco will allow the Contributing Companies and its agents    
reasonable access to the files, books, records, technology and offices of       
Caldera or Newco reasonably requested by the Contributing Companies including,  
without limitation, any and all information relating to Taxes, commitments,     
contracts, leases, licenses and real, personal, intellectual and intangible     
property and financial condition. Caldera will use its reasonable efforts to    
cause its accountants to cooperate with the Contributing Companies and its      
agents in making available to such parties all financial information reasonably 
requested, including, without limitation, the right to examine all working      
papers pertaining to all Tax returns and financial statements prepared or       
audited by such accountants. No information or knowledge obtained by any party  
hereto in any investigation pursuant to this Section will affect or be deemed to
modify any representation or warranty contained herein or the conditions to the 
obligations of the parties to consummate the Merger and the SCO Transaction. All
information obtained by the Contributing Companies or its agents pursuant to    
this Section shall be kept confidential in accordance with the Nondisclosure    
Agreement.                                                                      

5.11  Books and Records.  If, in order properly to prepare documents  
required to be filed with governmental authorities (including taxing            
authorities) or its financial statements, it is necessary that any party hereto 
be furnished with additional information relating to the Group Assets, and such 
information is in the possession of Newco or Caldera, then Caldera and Newco on 
behalf of themselves and each member of the Caldera Group (including the        
Contributed Companies) agree to use its good faith efforts to promptly furnish  
such information to the party needing such information. This Section 5.11 shall 
survive Closing for two years except for records relating to preparation of and 
audit of tax returns, for which this Section 5.11 will survive until the        
expiration of the applicable Tax statute of limitations.                        

  5.12  Satisfaction of Conditions Precedent.  Caldera and Newco will each
use their respective reasonable best efforts to satisfy or cause to be satisfied
all the conditions precedent that are set forth in Section 7 and to cause the   
Merger, the SCO Transaction and the other transactions contemplated by this     
Agreement to be consummated. Without limiting the foregoing, in connection with 
the agreements to be reached by the parties subsequent to the date hereof and   
prior to the Effective Time, the parties agree to negotiate in good faith to    
reach agreement on all matters to be included in such agreements promptly after 
the signing of this Agreement.                                                  

  5.13  Voting Agreement.  Caldera will use its reasonable best efforts to
obtain Voting Agreements in the form attached as Exhibit 4.11A executed by the  
Caldera affiliates listed on Exhibit 5.13B.                                     

     5.14  Sales Representative and Support Agreement.  The Sales Representative
and Support Agreement shall be executed as of the Effective Time.               

     5.15  Stockholders Agreement.  The Stockholders Agreement shall be executed
as of the Effective Time.                                                       

5.16  Caldera Employee Plans.                                         

         (a) Newco will adopt the employee benefit plans maintained by Caldera
   (the "Caldera Employee Plans") and will use reasonable efforts to provide
    the Caldera Employee Plans to the transferring Employees as is provided to
   Caldera's employees who are similarly situated as soon as practicable. To
   the extent that Newco does not have Caldera Employee Plans in effect in a
jurisdiction where there are transferring Employees, Newco shall adopt
    plans providing comparable benefits to the Caldera Employee Plans for said
transferring Employees. From and after the Effective                  

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     Time Newco shall provide all transferring Employees with the opportunity to
  participate in any employee stock option or other incentive compensation
plan of Newco and its affiliates on substantially the same terms and  
    subject to substantially the same conditions as are available to similarly
situated employees of Caldera or Newco. Prior to the Effective Time,  
Caldera, Newco and SCO shall mutually agree upon an integration plan  
   relating to the Merger and the SCO Transaction which shall include, among
other things, provisions relating to compensation and other equity    
   incentives for Employees. In addition, at the Effective Time, Newco shall
    use its best efforts to enter into employment agreements which reflect the
terms set forth in the Key Employee Term Sheets (the form of which is 
     attached hereto as Exhibit 4.18B) with the Key Employees who are identified
on Exhibit 4.18A attached hereto.                                     

        (b) Waiting Periods, Premiums and Deductibles.  Newco shall take all
   steps necessary to cause each Caldera Employee Plan to waive any "waiting
  period" or other requirement with respect to duration of employment with
  Newco which would prevent a transferring Employee or beneficiary thereof
     who is otherwise eligible to participate in such Caldera Employee Plan from
participating in such Caldera Employee Plan immediately following the 
Effective Time. Newco shall credit each transferring Employee with all
deductible payments and co-payments paid by such transferring Employee
under any Group Employee Plan prior to the Effective Time during the  
    current plan year for purposes of determining the extent to which any such
     transferring Employee has satisfied any deductible or maximum out-of-pocket
limitation under any Caldera Employee Plan for such plan year.        

 (c) Recognition of Prior Service.  Newco shall take all steps
necessary to cause each Caldera Employee Plan to recognize each       
     transferring Employee's length of service under comparable employee benefit
     plans maintained by SCO for purposes of eligibility, participation, vesting
   and benefit accrual in such Caldera Employee Plan as if such transferring
Employee had been employed by Newco for such period.                  

        (d) Waiver of Restrictions.  Newco shall take all steps necessary to
cause each Caldera Employee Plan which is an "employee welfare benefit
    plan" under Section 3(1) of ERISA to waive any restrictions or limitations
  with respect to "pre-existing conditions" or prior medical history which
would apply to transferring Employee or beneficiary thereof who is    
otherwise eligible to participate in such Caldera Employee Plan from  
participating in such Caldera Employee Plan without restriction or    
limitation.                                                           

5.17  Indemnification and Insurance -- Caldera.                       

        (a) The Certificate of Incorporation and Bylaws of Newco and Caldera
     shall contain the provisions with respect to indemnification and limitation
of liability for monetary damages set forth in the Certificate of     
Incorporation and Bylaws of Caldera on the date hereof.               

         (b) From and after the Effective Time, Newco and Caldera shall honor,
    in all respects, all of the indemnity agreements entered into prior to the
     date hereof by Caldera, with its respective officers and directors, whether
or not such persons continue in their positions with Newco or Caldera 
    following the Effective Time. Following the Effective Time, Caldera's form
of indemnification agreement shall be adopted as the form of          
   indemnification agreement for Newco and the Caldera Surviving Corporation
shall be afforded the opportunity to enter into such indemnification  
    agreement, and shall be covered by such directors' and officers' liability
insurance policies as Newco shall have in effect from time to time.   

     (c) After the Effective Time, Newco and Caldera will, jointly and
    severally, to the fullest extent permitted under applicable law, indemnify
   and hold harmless, each present and former director or officer of Caldera
or any of its subsidiaries (collectively, the "Indemnified Parties")  
against any costs or expenses (including attorneys' fees), judgments, 
    fines, losses, claims, damages, liabilities and amounts paid in settlement
  in connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal administrative or investigative, to the extent
arising out of or pertaining to any                                   
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action or omission in his or her capacity as a director or officer of 
  Caldera arising out of or pertaining to the transactions contemplated by
    this Agreement or the transactions contemplated hereby for a period of six
 years after the date of this Agreement. In the event of any such claim,
    action, suit, proceeding or investigation (whether arising before or after
the Effective Time), (a) any counsel retained for the defense of the  
Indemnified Parties for any period after the Effective Time will be   
     reasonably satisfactory to the Indemnified Parties, (b) after the Effective
  Time, Caldera will pay the reasonable fees and expenses of such counsel,
promptly after statements therefor are received, and (c) Caldera will 
cooperate in the defense of any such matter; provided, however, that  
    Caldera will not be liable for any settlement effected without its written
  consent (which consent will not be unreasonably withheld); and provided,
  further, that, in the event that any claim or claims for indemnification
are asserted or made within such six-year period, all rights to       
    indemnification in respect of any such claim or claims will continue until
  the disposition of any and all such claims. The Indemnified Parties as a
   group may be defended by only one law firm (in addition to local counsel)
with respect to any single action, unless there is, under applicable  
standards of professional conduct, a conflict on any significant issue
between the positions of any two or more Indemnified Parties.         

        (d) For the entire period from and after the Effective Time until at
   least six years after the Effective Time, Newco will cause Caldera to use
  its commercially reasonable efforts to maintain in effect directors' and
officers' liability insurance covering those persons who are currently
     covered by Caldera's directors' and officers' liability insurance policy (a
     copy of which has been heretofore delivered or made available to SCO) of at
least the same coverage and amounts, containing terms that are no less
     advantageous with respect to claims arising at or before the Effective Time
   than Caldera's policies in effect immediately prior to the Effective Time
     to those applicable to the then current directors and officers of Newco and
Caldera; provided, however, that in no event shall Newco or Caldera be
   required to expend in excess of 150% of the annual premium currently paid
by Caldera for such coverage in which event Newco shall purchase such 
coverage as is available for such 150% of such annual premium.        

      (e) Newco and Caldera shall pay all expenses, including attorneys'
fees, that may be incurred by any Indemnified Parties in enforcing the
indemnity and other obligations provided for in this Section 5.17.    

         (f) In the event Newco or Caldera or any of its respective successors
    or assigns (a) consolidates with or merges into any other person or entity
    and shall not be the continuing or surviving corporation or entity of such
   consolidation or merger, or (b) transfers or conveys all or a substantial
   portion of its properties or assets to any person or entity, then, and in
    each such case, to the extent necessary to effectuate the purposes of this
     Section 5.17, proper provision shall be made so that the successors and the
assigns of Newco and Caldera assume the obligations set forth in this 
Section 5.17.                                                         

       (g) The provisions of this Section 5.17 shall survive the Effective
  Time and are intended to be for the benefit of, and shall be enforceable
  by, each officer and director of Caldera SCO and the Contributed Company
    Group described in Sections 5.17 and his or her heirs and representatives.

5.18  Indemnification and Insurance -- Employees.                     

          (a) The Certificate of Incorporation and Bylaws of Newco shall contain
    the provisions with respect to indemnification and limitation of liability
for monetary damages set forth in the Certificate of Incorporation and
Bylaws of Caldera as of the date hereof which provisions shall not be 
    amended, repealed or otherwise modified for a period of ten years from the
Effective Time in any manner that would adversely affect the rights   
thereunder of individuals who at the Effective Time were directors,   
   officers, employees or agents of (i) the Contributed Companies or (ii) of
    SCO (A) to the extent involved in the Group Business and (B) provided they
    become Employees, officers or directors of Newco ("Group Persons"), unless
such modification is required by law.                                 

    (b) From and after the Effective Time, Newco shall honor, in all
  respects, all of the indemnity agreements entered into prior to the date
hereof by SCO or any member of the Contributed Company                
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   Group with any Group Persons, whether or not such persons continue in its
    positions with Newco following the Effective Time. Following the Effective
   Time, Caldera's form of indemnification agreement shall be adopted as the
     form of indemnification agreement for Newco and all continuing officers and
 directors of Newco shall be afforded the opportunity to enter into such
indemnification agreement, and shall be covered by such directors' and
   officers' liability insurance policies as Newco shall have in effect from
time to time.                                                         

       (c) After the Effective Time, Newco will, jointly and severally, to
the fullest extent permitted under applicable law, indemnify and hold 
     harmless, subject to Section 5.18(g), each of the Group Persons against any
  costs or expenses (including attorneys' fees), judgments, fines, losses,
   claims, damages, liabilities and amounts paid in settlement in connection
   with any claim, action, suit, proceeding or investigation, whether civil,
   criminal administrative or investigative, to the extent arising out of or
   pertaining to any action or omission in his or her capacity as a director
 or officer of SCO or any of the Contributed Companies arising out of or
    pertaining to the transactions contemplated by this Agreement for a period
 of six years after the Closing Date. Notwithstanding the foregoing, the
 parties agree that claims against the Group Persons shall first be made
against any directors' and officers' liability insurance, if any, then
maintained by SCO or any of the Contributed Companies that provides   
  coverage for such Group Persons. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the
Effective Time), (a) any counsel retained for the defense of the Group
Persons for any period after the Effective Time will be reasonably    
satisfactory to the Group Persons, (b) after the Effective Time, Newco
   will, subject to Section 5.18(g), pay the reasonable fees and expenses of
such counsel, promptly after statements therefor are received, and (c)
    Newco will cooperate in the defense of any such matter; provided, however,
that Newco will not be liable for any settlement effected without its 
written consent (which consent will not be unreasonably withheld); and
provided, further, that, in the event that any claim or claims for    
indemnification are asserted or made within such six-year period, all 
rights to indemnification in respect of any such claim or claims will 
continue until the disposition of any and all such claims. The Group  
 Persons as a group may be defended by only one law firm (in addition to
 local counsel) with respect to any single action unless there is, under
     applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Group Persons.         

         (d) Newco shall pay all expenses, including attorneys' fees, that may
be incurred by any Group Persons in enforcing the indemnity and other 
obligations provided for its benefit in this Section 5.18.            

         (e) In the event Newco or any of its respective successors or assigns
   (i) consolidates with or merges into any other person or entity and shall
not be the continuing or surviving corporation or entity of such      
    consolidation or merger, or (ii) transfers or conveys all or a substantial
   portion of its properties or assets to any person or entity, then, and in
    each such case, to the extent necessary to effectuate the purposes of this
    Section 5.18 proper provision shall be made so that the successors and the
 assigns of Newco assume the obligations set forth in this Section 5.18.

       (f) The provisions of this Section 5.18 shall survive the Effective
  Time and are intended to be for the benefit of, and shall be enforceable
 by, each of the Group Persons and his or her heirs and representatives.

 (g) Notwithstanding any provision of this Section 5.18 to the
  contrary, Newco shall not assume and shall have no Liability relating to
    claims made by SCO optionees arising out of the repurchase, sale, exchange
    or cancellation of SCO capital stock or options in connection with the SCO
Transaction (other than its obligations under Section 1.3(a)(ii)) or  
    specifically relating to matters arising out of the SCO Retained Business.

5.19  Distribution to SCO Shareholders.                               

Caldera and Newco acknowledge that SCO may wish to distribute to the  
shareholders of SCO all or part of its Newco Common Stock. Six (6) months from  
the Closing Date, SCO shall be entitled to make such a distribution; provided,  
however, that after such six (6) month period, SCO will not distribute to its   
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shareholders more than 25% of the shares of Newco Common Stock acquired by SCO  
pursuant to this agreement during a six (6) month period. Newco will facilitate 
such distribution by using its reasonable best efforts to take such actions as  
may be required under the federal securities laws and regulations in order for  
such shares of Newco Common Stock being distributed to the SCO Shareholders to  
be registered with the Securities and Exchange Commission. At the time of such  
registrations, Newco and SCO will enter into an agreement containing customary  
indemnification provisions which shall be substantially equivalent to the       
indemnification provisions in the promissory note issued by SCO to Caldera as of
the date hereof.                                                                

6. Conditions Precedent to Obligations of SCO.                        

   The obligations of SCO and the other Contributing Companies hereunder are
subject to the fulfillment or satisfaction on or before the Closing of each of  
the following conditions (any one or more of which may be waived by SCO on      
behalf of all said entities, but only in a writing signed by SCO):              

   6.1  Accuracy of Representations and Warranties.  The representations and
warranties of Caldera and Newco contained in this Agreement (i) shall have been 
true and correct as of the date of this Agreement and (ii) on and as of the     
Closing Date with the same force and effect as if they had been made on the     
Closing Date, except (A) in each case and in the aggregate does not constitute a
Material Adverse Effect on Caldera and (B) for those representations and        
warranties that address matters only as of a particular date (which shall remain
true and correct as of such particular date), and SCO shall receive a           
certificate to such effect executed on behalf of Caldera and Newco by a duly    
authorized officer of Caldera and of Newco.                                     

     6.2  Covenants.  Caldera and Newco shall have performed and complied in all
material respects with all of its respective covenants in this Agreement        
required to be complied with prior to the Effective Time; and SCO shall receive 
a certificate to such effect executed by a duly authorized officer of Caldera   
and of Newco at the Effective Time.                                             

     6.3  Compliance with Law.  There shall be no order, decree or ruling by any
governmental agency which would prohibit or render illegal the transactions     
contemplated by this Agreement.                                                 

6.4  Form S-4.  The Form S-4 shall have become effective under the    
Securities Act and shall not be the subject of any stop-order and the           
Prospectus/Proxy Statement shall on the Effective Time not be subject to any    
proceedings commenced seeking a stop-order or overtly threatened by the SEC.    

    6.5  Opinion of Caldera and Newco's Counsel.  SCO shall have received from
Brobeck, Phleger & Harrison LLP, counsel to Caldera and Newco, an opinion in the
form of Exhibit 6.5 attached hereto, with such assumptions and qualifications as
are customary for such opinions.                                                

6.6  Stockholder Approval.  The principal terms of this Agreement, the
Merger and the SCO Transaction shall have been approved and adopted by the      
Caldera stockholders and the principal terms of this Agreement and the SCO      
Transaction shall have been approved and adopted by the SCO stockholders, in    
accordance with California law and its Articles of Incorporation and Bylaws.    

     6.7  Tax Opinion.  SCO shall have received an opinion in form and substance
satisfactory to SCO, from its counsel, to the effect that the SCO Transaction   
will be treated as a transfer of property to Newco by the Contributing Companies
governed by Section 351 of the Internal Revenue Code. In rendering such opinion,
counsel shall be entitled to rely on representations of the parties and of      
Caldera stockholders as reasonably requested by counsel in connection with such 
tax opinion, and the opinion may contain such assumptions and qualifications as 
are customary for such opinions. The parties agree to cooperate with counsel by 
providing the representations referred to above and Caldera shall use its best  
efforts to obtain the requested stockholder representations.                    

    6.8  Designees to the Board of Directors of Newco.  The Board of Directors
of Newco shall have taken appropriate action to elect Doug Michels and another  
individual designated by SCO to the Board of Directors of Newco, effective upon 
the Effective Time.                                                             

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     6.9  Nasdaq Listing.  The Newco Common Stock to be issued in the Merger and
in the SCO Transaction shall have been approved for quotation on the Nasdaq     
Stock Market, subject to notice of issuance.                                    

    6.10  HSR Act.  All waiting periods (and any extensions thereof) under the
HSR Act applicable to transactions contemplated hereby shall have expired or    
shall have been terminated.                                                     

6.11  Ancillary Agreements.  Caldera and Newco shall have executed and
delivered counterparts of each of the Ancillary Agreements to which they are a  
party.                                                                          

   6.12  Delivery of Newco Shares.  Newco shall have delivered the First SCO
Certificate to SCO.                                                             

7. Conditions Precedent to Obligations of Caldera and Newco.          

   The obligations of Caldera, Merger Sub and Newco hereunder are subject to
the fulfillment or satisfaction on or before the Closing of each of the         
following conditions (any one or more of which may be waived by Caldera on      
behalf of all such parties, but only in a writing signed by Caldera):           

   7.1  Accuracy of Representations and Warranties.  The representations and
warranties of SCO contained in this Agreement (i) shall have been true and      
correct as of the date of this Agreement and (ii) shall be true and correct as  
of the Closing Date with the same force and effect as if they had been made on  
the Closing Date, except (A) in each case and in the aggregate as does not      
constitute a Material Adverse Effect on the Group Business and (B) for those    
representations and warranties that address matters only as of a particular date
(which shall remain true and correct as of such particular date), and Caldera   
shall receive a certificate to such effect executed on behalf of SCO by a duly  
authorized officer of SCO.                                                      

  7.2  Covenants.  SCO and the Contributing Companies shall have performed
and complied in all material respects with all of its respective covenants in   
this Agreement required to be complied with prior to the Effective Time; and    
Caldera shall receive a certificate to such effect signed on behalf of SCO by a 
duly authorized officer of SCO.                                                 

     7.3  Compliance with Law.  There shall be no order, decree or ruling by any
court or governmental agency which would prohibit or render illegal the         
transactions contemplated by this Agreement.                                    

   7.4  Consents.  There shall have been obtained on or before the Effective
Time all permits, consents and authorizations as set forth on Section 7.4 of the
SCO Disclosure Letter, where the failure to obtain same has resulted, or        
reasonably would be expected to result, in a Material Adverse Effect on the     
Group Business.                                                                 

7.5  Form S-4.  The Form S-4 shall have become effective under the    
Securities Act and shall not be the subject of any stop-order or proceedings    
seeking a stop-order and the Prospectus/Proxy Statement shall at the Effective  
Time not be subject to any proceedings seeking a stop-order commenced or overtly
threatened by the SEC.                                                          

  7.6  Opinion of Counsel to SCO.  Caldera shall have received from Wilson
Sonsini Goodrich & Rosati, Professional Corporation, counsel to SCO and the     
Contributing Companies, an opinion in the form of Exhibit 7.6 attached hereto,  
with such assumptions and qualifications as are customary for such opinions.    

    7.7  Caldera Stockholder Approval.  The principal terms of this Agreement,
the Merger and the SCO Transaction shall have been approved and adopted by the  
Caldera stockholders and the principal terms of this Agreement and the SCO      
Transaction (including the contribution and transfer of the Contributed Assets) 
shall have been approved and adopted by the SCO Stockholders each in accordance 
with Delaware Law and their respective Certificates of Incorporation and Bylaws.

     7.8  Tax Opinion.  Caldera and Newco shall have received an opinion in form
and substance satisfactory to them from their counsel, to the effect that the   
Merger will be treated for federal income tax purposes as a tax-free            
reorganization within the meaning of Section 368 of the Internal Revenue Code.  
In                                                                              

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rendering such opinion, counsel shall be entitled to rely on representations of 
the parties and of Caldera stockholders as reasonably requested by counsel in   
connection with such tax opinion, and the opinion may contain such assumptions  
and qualifications as are customary for such opinions. The parties agree to     
cooperate with counsel by providing the representations referred to above and   
Caldera shall use its best efforts to obtain the requested stockholder          
representations.                                                                

   7.9  HSR Act.  All waiting periods (and any extensions thereof) under the
HSR Act applicable to the transactions contemplated hereby shall have expired or
shall have been terminated.                                                     

     7.10  Ancillary Agreements.  The Contributing Companies shall have executed
and delivered counterparts of each of the Ancillary Agreements to which they are
a party.                                                                        

 7.11  Key Employee Term Sheets.  Each of the Key Employees set forth on
Exhibit 4.18A shall have executed their respective Key Employee Term Sheet.     

8. Termination of Agreement.                                          

  8.1  Termination.  This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the Merger by the       
stockholders of Caldera or SCO:                                                 

(a) by mutual written agreement of SCO and Caldera;         

          (b) by SCO, if there has been a material breach by Caldera or Newco of
   any representation or warranty set forth in this Agreement on the part of
    Caldera or Newco, and, as a result of such breach the conditions set forth
 in Section 6.1 would not then be satisfied and such breach is not cured
  within thirty (30) days after notice thereof from SCO to Caldera (except
that no cure period shall be provided for a breach by Caldera or Newco
which by its nature cannot be cured);                                 

          (c) by SCO, if there has been a material breach by Caldera or Newco of
  any covenant or agreement set forth in this Agreement to be performed by
Caldera or Newco or a material breach by the Caldera Significant      
     Stockholders of any covenant or agreement set forth in the Voting Agreement
 and as a result of such breach, the conditions set forth in Section 6.2
     would not then be satisfied and such breach is not cured within thirty (30)
    days after written notice thereof from SCO to Caldera (except that no cure
period shall be provided for a breach by Caldera or Newco which by its
nature cannot be cured);                                              

     (d) by Caldera, if there has been a material breach by SCO of any
    representation or warranty set forth in this Agreement on its part, and as
   a result of such breach the conditions set forth in Section 7.1 would not
then be satisfied and such breach is not cured within thirty (30) days
after written notice thereof from Caldera to SCO (except that no cure 
    period shall be provided for a breach by SCO which by its nature cannot be
cured);                                                               

     (e) by Caldera, if there has been a material breach by SCO of any
   covenant or agreement set forth in this Agreement to be performed by SCO,
 and as a result of such breach, the conditions set forth in Section 7.2
     would not then be satisfied and such breach is not cured within thirty (30)
    days after written notice thereof from Caldera to SCO (except that no cure
 period shall be provided for a breach by SCO or SCO which by its nature
cannot be cured);                                                     

          (f) by Caldera or SCO, if the Merger and the SCO Transaction shall not
    have been consummated on or before the Final Date for any reason, provided
     that, the right to terminate this Agreement under this Section 8.1(f) shall
  not be available to any party whose wrongful action or failure to act or
   whose breach of this Agreement or any Ancillary Document, is the cause of
such non-consummation;                                                

          (g) by Caldera or SCO, if a permanent injunction or other order by any
     federal or state court would make illegal or otherwise restrain or prohibit
   the consummation of the Merger and/or the SCO Transaction shall have been
issued and shall have become final and nonappealable;                 

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        (h) by Caldera or SCO, if the stockholders of SCO do not approve the
SCO Transaction at a duly convened SCO Stockholders Meeting or any    
     adjournment thereof by reason of the failure to obtain the required vote (a
  "SCO Stockholder Rejection"); provided, that the right to terminate this
     Agreement under this Subsection (h) shall not be available to SCO where the
  failure to obtain SCO stockholder approval shall have been caused by any
breach of this Agreement or any Ancillary Document by SCO;            

   (i) by Caldera, if (a) the Board of Directors of SCO shall have
    withdrawn (or modified in a manner adverse to the SCO Stockholder Approval
    or the consummation of the SCO Transaction) its approval or recommendation
of the SCO Transaction or this Agreement, (b) SCO shall have failed to
   include in the Proxy Statement/Prospectus the recommendation of the Board
 of Directors of SCO in favor of approval of the SCO Transaction or this
     Agreement, (c) the Board of Directors of SCO shall have recommended any SCO
  Alternative Proposal, which meets the criteria of 4.14(b)(i)-(v), or (d)
the Board of Directors of SCO shall have resolved to do any of the    
foregoing (collectively, a "Change in SCO Board Recommendation");     

  (j) by Caldera or SCO at any time prior to the SCO Stockholder
Approval, if the Board of Directors of SCO shall have recommended or  
   accepted a SCO Alternative Proposal provided that SCO is not in breach of
Section 4.14;                                                         

        (k) by Caldera or SCO, if the stockholders of Caldera do not approve
    the SCO Transaction at a duly convened Caldera Stockholders Meeting or any
   adjournment thereof by reason of the failure to obtain the required vote;
    provided, that the right to terminate this Agreement under this Subsection
   (k) shall not be available to Caldera where the failure to obtain Caldera
     Stockholder Approval shall have been caused by any breach of this Agreement
or any Ancillary Document by Caldera; or                              

   (l) by SCO, if (a) the Board of Directors of Caldera shall have
withdrawn (or modified in a manner adverse to the Caldera Stockholder 
     Approval) its approval or recommendation of the SCO Transaction, the Merger
  or this Agreement, (b) Caldera shall have failed to include in the Proxy
Statement/Prospectus the recommendation of the Board of Directors of  
 Caldera in favor of approval of the SCO Transaction, the Merger or this
    Agreement, (c) the Board of Directors of SCO shall have resolved to do any
of the foregoing.                                                     

 As used herein, the "Final Date" shall be February 28, 2001; and except
that if a temporary, preliminary or permanent injunction or other order by any  
Federal or state court which would prohibit or otherwise restrain consummation  
of the Merger and/or the SCO Transaction shall have been issued and shall remain
in effect on February 28, 2001, and such injunction shall not have become final 
and non-appealable, either party, by giving the other written notice thereof on 
or prior to February 28, 2001, may extend the time for consummation of the      
Merger and/or the SCO Transaction up to and including the earlier of the date   
such injunction shall become final and non-appealable or March 31, 2001, so long
as such party shall, at its own expense, use its reasonable best efforts to have
such injunction dissolved.                                                      

8.2  Notice of Termination.  Any termination of this Agreement under  
Section 8.1 above will be effected by the delivery of notice of the terminating 
party to the other party hereto of such termination, specifying the grounds     
therefore.                                                                      

   8.3  Liability.  If this Agreement is terminated pursuant to Section 8.1,
the parties shall have no further obligation or liability to each other except  
that the parties will remain liable for: (i) the payment of the Termination Fee,
if any, payable under Section 8.4 below; (ii) damages resulting from their      
intentional fraud or willful breach of this Agreement (which will not be limited
by Section 8.4); and (iii) obligations under the parties' nondisclosure         
agreement. Sections 13.1 -- 13.13 of this Agreement will survive any termination
of this Agreement.                                                              

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8.4  Termination Fee.                                                 

(a) Termination Fee.                                        

            (i) If this Agreement is terminated by Caldera pursuant to Section
   8.1(i), then SCO shall promptly pay to Caldera (by wire transfer or
     cashier's check) a nonrefundable fee equal to 3 1/2% of the number of
 shares of Newco Common Stock equal to the SCO Percentage Interest
       multiplied by the average closing price of the Caldera Common Stock for
     the ten (10) days following the public announcement of this Agreement
       (the "Termination Fee") within two (2) business days following delivery
of the notice of termination by Caldera pursuant to Section 8.2;

         (ii) If this Agreement is terminated by SCO pursuant to Section
   8.1(l), then Caldera shall promptly pay to SCO (by wire transfer or
 cashier's check) the Termination Fee within two (2) business days
  following delivery of the notice of termination by SCO pursuant to
Section 8.2; and                                                

     (iii) If (A) this Agreement is terminated by SCO or Caldera
    pursuant to Section 8.1(h) after a SCO Alternative Proposal has been
  publicly disclosed or by Caldera pursuant to Section 8.1(c) as the
    result of a breach by SCO of Section 4.14 and (B) within 6 months of
     termination of this Agreement SCO shall enter into an agreement for a
       SCO Alternative Proposal which is subsequently consummated or within 12
  months of termination of this Agreement SCO shall consummate a SCO
        Alternative Proposal, then SCO shall pay to Caldera (by wire transfer or
      cashier's check) the Termination Fee within two (2) business days upon
the consummation of such SCO Alternative Proposal.              

         (b) SCO and Caldera acknowledge that the agreements contained in this
   Section 8.4 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, neither SCO nor Caldera
     would enter into this Agreement; accordingly, if either Caldera or SCO fail
   to timely pay the amounts due pursuant to this Section 8.4, and, in order
     to obtain such payment, the other party commences a suit which results in a
 judgment against SCO or Caldera, as the case may be for the amounts set
   forth in this Section 8.4 and such judgment is not set aside or reversed,
such party shall pay the other party's reasonable costs and expenses  
(including attorneys' fees and expenses) in connection with such suit,
    together with interest on the amounts set forth in this Section 8.4 at the
     prime rate as published in The Wall Street Journal on the date such payment
was required to be made.                                              

9. Survival of Representations.                                       

   9.1  Survival of Representations.  Except as otherwise expressly provided
herein, all representations, warranties and covenants of the parties contained  
in this Agreement will remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the parties to this Agreement,     
until the second anniversary of the Effective Time, whereupon such              
representations, warranties and covenants will expire (except for covenants and 
other provisions hereof that by its express terms survive for a longer period); 
provided however that all representations and warranties and covenants relating 
to Tax matters shall survive for the period of the applicable statute of        
limitations.                                                                    

10. Escrow and Indemnification.                                       

     10.1  Escrow Fund.  In accordance with Section 1.3(b) hereof, Caldera shall
deliver to the Escrow Agent Shares of Newco Common Stock equal to an aggregate  
of ten percent (10%) of the SCO Percentage Interest (the "Escrow Fund"). The    
Escrow Fund shall be held by the Escrow Agent for a period of one year from the 
Effective Time pursuant to the terms set forth in the Escrow Agreement. The     
Escrow Fund shall be available to compensate Caldera Surviving Corporation and  
Newco pursuant to the Indemnification obligations of SCO.                       

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     10.2  Indemnification by SCO.  SCO agrees, notwithstanding any provision of
Section 1.4 hereof to the contrary, to indemnify Newco and Caldera against, and 
to hold Newco and Caldera harmless from, all Loss arising out of any of the     
following (even if included in the Assumed Liabilities as otherwise being or    
allegedly being a Liability of one of the Contributed Companies or of the       
Contributed Subsidiaries):                                                      

     (a) any of the Excluded Liabilities, except as may be provided in
Section 12;                                                           

    (b) any demand, claim, debt, suit, cause of action, arbitration,
investigation or other proceeding made or asserted by any Contributing
Company or any stockholder, creditor, or Affiliate of any Contributing
 Company or by any receiver or trustee in bankruptcy of any Contributing
  Company of the property or assets of any Contributing Company, asserting
    that the transfer of the Contributed Stock and Contributed Assets to Newco
 hereunder constitutes a fraudulent conveyance, fraudulent transfer or a
  preference under any applicable foreign, state or federal law, including
    but not limited to the United States Bankruptcy Code, or any breach by any
     Contributing Company of its representations and covenants in Section 1.4(e)
     hereof or any Liabilities related to non-compliance with bulk transfer laws
in connection with the SCO Transaction;                               

(c) the SCO Retained Business;                              

          (d) any material Liability omitted from the Group Financial Statements
that was required by GAAP to be included or reflected therein         
(collectively, the "Omitted Balance Sheet Liabilities");              

         (e) any claim or cause of action brought by any SCO employee relating
  in any way to the terms and conditions of the employee's employment with
 SCO or the termination thereof, which arises prior to the Closing Date,
regardless of when such claim or cause of action may be discovered or 
brought;                                                              

     (f) any breach of the representations and warranties in Section 2
hereof.                                                               

10.3  Notwithstanding Section 10.2, all liabilities for Taxes shall be
subject only to the separate tax indemnification provisions of Section 12.      

 10.4  Limitations on Indemnification.  SCO shall not have any liability
under this Section 10 unless the aggregate amount of Loss attributable exceeds  
$1,000,000, and, in such event, SCO shall be required to pay the entire amount  
of such Loss from the first dollar thereof. SCO shall not have liability for any
Loss in excess of the amount determined by multiplying (i) the number of shares 
of Newco Common Stock equal to ten percent (10%) of the SCO Percentage Interest 
by (ii) the Caldera Closing Price, except that as such Losses relate to the SCO 
IP Rights, SCO shall not have liability for any Loss in excess of the amount    
determined by multiplying (i) the number of Shares of Newco Common Stock equal  
to fifty percent (50%) of the SCO Percentage Interest by (ii) the Caldera       
Closing Price. Notwithstanding the preceding sentence, there shall be no        
limitations on liability pursuant to this Section 10 relating to intentional    
fraud or misrepresentation by SCO.                                              

10.5  Indemnification Procedures.                                     

   (a) Claim Procedure.  If Caldera or Newco has or claims to have
incurred or suffered Losses for which it is or may be entitled to     
   indemnification, compensation or reimbursement under this Section 10 (the
     "Indemnitee"), such Indemnitee may, on or prior to the first anniversary of
    the Effective Time, deliver a claim notice (a "Claim Notice") to SCO. Each
Claim Notice shall (i) state that such Indemnitee believes that it is 
entitled to indemnification, compensation or reimbursement under this 
Section 10, (ii) contain a brief description of the circumstances     
    supporting such Indemnitee's belief that such Indemnitee is so entitled to
indemnification, compensation or reimbursement and (iii) contain a    
 non-binding, preliminary estimate of the amount of Loss such Indemnitee
claims to have so incurred or suffered (the "Claimed Amount").        

        (b) Response Notice.  Within twenty (20) business days after receipt
   by SCO of a Claim Notice, SCO may deliver to the Indemnitee who delivered
   the Claim Notice a written response (the "Response Notice") in which SCO:
  (i) agrees that the full Claimed Amount is to be paid to the Indemnitee;
   (ii) agrees that a part, but not all, of the Claimed Amount is to be paid
to the                                                                
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    Indemnitee; or (iii) indicates that no part of the Claimed Amount is to be
  paid to the Indemnitee. Any part of the Claimed Amount that SCO does not
    agree should be paid to the Indemnitee shall be the "Contested Amount." If
a Response Notice is not delivered to Caldera within such twenty (20) 
    business day period, then SCO shall be deemed to have agreed that the full
Claimed Amount is to be paid to the Indemnitee.                       

     (c) Payment of Claimed Amount.  If SCO delivers a Response Notice
agreeing that some or all of the Claimed Amount is to be paid to the  
 Indemnitee (the "Agreed Amount"), SCO shall pay the Indemnitee in cash,
    within twenty (20) business days from the date of the Response Notice, any
  portion of the Agreed Amount that is not satisfied by delivery of Escrow
     Shares pursuant to the terms of the Escrow Agreement. Such payment shall be
     deemed to be made in full satisfaction of the claim described in such Claim
     Notice, provided, however, that if such claim involves ongoing Losses, then
  such payment shall be deemed to be made in full satisfaction only of the
Losses incurred as of the date specified in such Claim Notice.        

      (d) Settlement.  If SCO delivers a Response Notice indicating that
   there is a Contested Amount, SCO and the Indemnitee shall attempt in good
     faith for a period of thirty (30) days from the date of the Response Notice
   to resolve the dispute related to the Contested Amount. If the Indemnitee
   and SCO resolve such dispute, such resolution shall be binding on SCO and
  all of the Indemnitees and a settlement agreement shall be signed by the
Indemnitee and SCO containing the terms of such resolution.           

(e) Third Party Claims.                                     

 (i) Within fifteen (15) days after receipt of notice of
     commencement of any action by any third party evidenced by service of
        process or other legal pleading, or with reasonable promptness after the
      assertion in writing of any claim by a third party, Caldera shall give
      SCO written notice thereof together with a copy of such claim, process
      or other legal pleading, and SCO shall have the right to undertake the
      defense, thereof through a legal representative of SCO's own choosing.

           (ii) In the event that SCO, by the thirtieth day after receipt of
        notice of any such claim (or, if earlier, by the tenth day preceding the
   day on which an answer or other pleading must be served in order to
 prevent judgment by default in favor of the person asserting such
  claim), does not elect to defend against such claim, Caldera (upon
    further notice to SCO) will have the right to undertake the defense,
       compromise or settlement of such claim on behalf of and for the account
    and risk of SCO subject to the right of SCO to assume the defense of
such claims at any time prior to settlement, compromise or final
   determination thereof. The reasonable costs of defense of any third
      party action or claim by Caldera shall be paid from the Escrow Shares.

           (iii) Notwithstanding Sections 11.5(e)(i) and (ii), Caldera shall
  have the right to retain control of the defense of any third party
        action or claim described in Section 11.5(e)(i) which involves potential
   Losses in excess of the value of the Escrow Shares remaining in the
   Escrow Account or could reasonably be expected to materially affect
      Caldera's on-going operations. In such event, SCO shall have the right
       to be present at the negotiation, defense and settlement of such action
      or claim. Caldera shall not agree to any settlement of any such action
    or claim without the consent of SCO, which shall not be unreasonably
withheld.                                                       

         (f) Satisfaction.  In the event SCO incurs liability for Losses which
    is not satisfied by delivery of shares from the Escrow Fund, SCO may elect
to pay the amount due either in cash or by delivering shares of Newco 
  Common Stock. For this purpose, the Newco Common Stock will be valued at
the average closing price of the Caldera Common Stock for the ten days
    following the public announcement of this Agreement, as adjusted for stock
splits, stock dividends, changes in the Caldera Ratio and other       
recapitalizations.                                                    

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11. Employee Matters.                                                 

11.1  Right to Offer Employment.                                      

         (a) Employees.  Schedule 11.1 of the SCO Disclosure Letter contains a
preliminary list (the "Preliminary List") of each Contributed Company 
    employee or consultant and each other employee or consultant of SCO or the
    Group Business who works in, or provides services in connection with or is
assigned to the Group Business or any of the Group Assets (each a     
"Potential Employee"). Within five (5) days after the date hereof, SCO
    shall deliver to Newco a final list of the Potential Employees (the "Final
    List"), which list shall identify those Potential Employees who are active
employees of the Group Business as of that date, including those on   
     vacation, sick leave, maternity or parental leave, disability leave, family
   leave or personal leave of absence, who work full or part time, and which
shall separately identify those employees who are on a workers'       
     compensation-related or disability leave or long-term sick leave. The Final
 List shall contain, with respect to each Potential Employee, a true and
    accurate list of all locations at which Potential Employees are working as
     of such date, together with the date of hire, location of employment, years
   of employment or service, current annual base salary or base wage, and of
     all other compensation arrangements for such Potential Employees, including
  bonuses, commissions or other compensation arrangements or benefit plans
    whether oral or written, contractual or discretionary. Within sixteen (16)
     days of receipt of the Final List, Caldera shall deliver to SCO a list that
    identifies: (i) those Potential Employees of the Group Business to whom it
   shall make offers of employment and (ii) those Potential Employees of the
   Contributed Companies that it expects to retain, each pursuant to Section
11.1(e) (the "Designated Employees"). For purposes of this Agreement, 
"Employees" means only those Designated Employees given offers of     
   employment or retained by Newco pursuant to Section 11.1(e). For a period
    of two years from the Closing Date, neither Newco, any of its subsidiaries
  nor their employees (including former employees of SCO) may employ, make
     offers of employment to or otherwise solicit any employees of SCO as of the
date hereof who are not Designated Employees.                         

        (b) The parties acknowledge and agree that in those jurisdictions in
which the EC Directive 77/187 (the Acquired Rights Directive) (the    
"Employment Regulations") apply, the contracts of employment of the   
    Designated Employees designated as "Employees" pursuant to Section 11.1(e)
will have effect from the Effective Time (which shall be the "time of 
    transfer" for the purposes of the Employment Regulations) as if originally
     made between Newco and each such Employee. If any contract of employment is
    not disclosed by SCO in the Final List or any other contract of employment
   of any employee other than an Employee is in effect as if originally made
between Newco and the employee concerned as a result of the Employment
Regulations: (i) Newco may, upon becoming aware of any such contract, 
terminate it forthwith; and (ii) SCO and each Group Business shall    
  indemnify and hold harmless Newco against any costs, claims, liabilities
     and expenses of any nature (including legal expenses on an indemnity basis)
     arising out of such termination and against sums payable to or on behalf of
    such employee in respect of his employment whether arising before or after
the Closing.                                                          

    (c) Newco shall credit Employees with their then current accrued
  vacation with SCO or the Contributed Companies. All other emoluments and
outgoings (including and without limitation, wages, salaries, bonuses,
commissions, withholding taxes, social security contributions, pension
   contributions) and other costs and expenses of, and all other obligations
  in respect of, the Employees in respect of the period to, and including,
     the Closing shall be discharged by SCO and any relevant Group Business. SCO
    and each Group Business shall indemnify and keep indemnified Newco against
   all liabilities arising from any failure by SCO and any Group Business so
to discharge.                                                         

     (d) SCO and each Group Business shall indemnify and hold harmless
    Newco from and against all losses, costs, claims, demands, actions, fines,
     penalties, awards, liabilities and expenses (including legal expenses on an
     indemnity basis) (i) which are attributable to any act, omission, breach or
     default by SCO or any Group Business prior to the Closing in respect of any
  of the obligations of SCO or any Group Business (in either case, whether
arising under common law, statute, custom or                          

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  otherwise) to or in relation to any of its employees or former employees
    (including but not limited to any liability arising out of the termination
   or dismissal of any Potential Employee or former employee and which Newco
    may incur or suffer as a result of succeeding to SCO or any Group Business
   as the employer of any Potential Employee); or (ii) in connection or as a
   result of any claim or demand by a Potential Employee on the grounds that
     the Potential Employee has suffered any loss, harm or damage in relation to
pension rights caused by the transactions set forth in this Agreement 
(including without limitation the calculation of any transfer value of
accrued rights on transfer) to the Potential Employees; or (iii) in   
  connection or as a result of any claim or demand by a Potential Employee
that the identity of Newco is to the Potential Employee's detriment,  
   whether or not such claim or claims arises or arise prior to, on or after
the Closing.                                                          

     (e) Offers of Employment.  Effective at the Effective Time, Newco
     shall offer to employ any of the Designated Employees of the Group Business
   (other than Designated Employees of the Contributed Companies) subject to
     Newco's standard terms, conditions and policies of employment and the terms
of this Agreement, and shall offer such Designated Employees as it    
    determines, in its sole discretion, to hire (i) salary consistent with the
   salary earned by such Potential Employees prior to the Effective Time but
   only to the extent such salary is not in excess of industry norms (taking
into account the geographic location of the Employees); and (ii)      
  participation in incentive compensation arrangements consistent with the
   incentive compensation arrangements of employees of Caldera in comparable
    positions. This Section 11.1(b) shall not be construed to create any third
    party beneficiary rights or any other rights of any kind in any Designated
 Employee and no Designated Employee shall have any cause of action as a
     third party beneficiary. Such offers of employment that will be extended by
  Newco to Employees will be on the same basis of time commitment (full or
     part time) as such Employee was employed immediately prior to the Effective
Time. In addition, SCO shall cause the termination of any Potential   
 Employees of the Contributed Companies who are not Designated Employees
 prior to the Effective Time. Unless the parties otherwise agree, on the
     date of the Closing, SCO shall notify each Employee who accepts an offer of
employment extended by Newco as of the Effective Time, in a writing   
    reasonably satisfactory to Newco, that such Employee's employment with SCO
 or any of its direct or indirect subsidiaries is then terminated. For a
period of two years from the Closing Date, neither SCO nor any of its 
     subsidiaries nor any of its employees may employ, make offers of employment
to or otherwise solicit any of the employees of Newco or any of its   
subsidiaries as of the date hereof or any of the Designated Employees.

      (f) Severance.  SCO shall be responsible for any and all severance
 that may become due as a result of the transaction contemplated by this
Agreement for all employees except for those Employees hired by Newco 
  pursuant to Section 11.1(b); provided, however, that if Caldera does not
     make a reasonable offer of employment to a Designated Employee then Caldera
 shall be responsible for any and all severance that may become due as a
result of the transaction or the termination of such employee.        

11.2  Termination of Employment.                                      

        (a) SCO agrees to comply with the provisions of the WARN Act and any
    other federal, state, provincial or local or foreign statute or regulation
or EU Directive regulation regarding termination of employment, plant 
closing or layoffs and to perform all obligations required of SCO with
 respect to the cessation of any operations of the Group Business or any
other business of SCO or its subsidiaries, or the termination,        
     re-assignment, re-location or change in position as terms and conditions of
    employment of any Employee (or other employee of them) who does not accept
Newco's offer of employment.                                          

       (b) In the United States, SCO shall (i) provide continuation health
  care coverage to all employees of the Group Business and their qualified
     beneficiaries who incur a qualifying event prior to the Effective Time, who
  are not given offers of employment by Newco or who do not accept Newco's
offer of employment pursuant to Section 11.1(b) in accordance with the
  continuation health care coverage requirements of COBRA and (ii) provide
COBRA continuation coverage to any former                             
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  employee of the Contributed Company Group who was previously employed in
     the Group Business (collectively, the "Former Employees") and its qualified
  beneficiaries to whom, at the Effective Time, such continuation coverage
   was being provided or to whom SCO was under an obligation to provide such
    continuation coverage at the election of such Former Employee or qualified
beneficiary.                                                          

  11.3  Cooperation.  SCO, Caldera and Newco agree, for themselves and its
affected subsidiaries, to cooperate fully with respect to the actions which are 
necessary or reasonably desirable to accomplish the transactions contemplated   
hereunder, including, without limitation, the provision of records and          
information as each may reasonably request and in order to meet the notification
and consultation requirements of the Acquired Rights Directive in accordance    
with the relevant regulations or laws adopting such directive in all relevant   
jurisdictions, or any other similar notification and consultation obligation the
making of all appropriate filings under ERISA and the Internal Revenue Code.    

12. Tax Matters.                                                      

  12.1  Transaction Taxes; Representation; Transaction Tax Indemnity.  SCO
and Caldera shall bear equally any and all sales, use, excise, value added,     
registration, stamp, property, documentary, transfer, withholding and similar   
taxes, levies and duties (including all real estate transfer taxes, but not any 
real estate transfer taxes that would be triggered as a result of a change in   
control of a corporation) incurred, or that may be payable to any taxing        
authority, with respect to the sale, transfer, or delivery of the Contributed   
Stock and Assets and the assumption of the Assumed Liabilities, including any   
such taxes, levies and duties imposed in connection with such transactions      
(collectively, "Transaction Taxes"); provided, however, that Caldera shall not  
be responsible for any Transaction Taxes in excess of $300,000. Newco and SCO   
agree to cooperate in minimizing the amount of any Transaction Taxes and in the 
filing of all necessary documentation and all Tax returns, reports and forms    
("Returns") with respect to all Transaction Taxes, including any available      
pre-sale filing procedures.                                                     

    Notwithstanding any other provision of this Agreement, the Unixware source
code, object code and related documentation ("Unixware Software") or other      
software shall remain the property of SCO until (i) expeditiously delivered to  
Newco at SCO's facility in Murray Hill, New Jersey, (ii) transferred by remote  
telecommunication from SCO's place of business, to or through Newco's computer  
with no tangible personal property transferred to Newco, such as storage media, 
except for user manuals, or (iii) installed by SCO on Newco's computer without  
the transfer of title or possession of storage media or any tangible personal   
property other than user manuals. Newco agrees that it will not transfer the    
Unixware Software or other software on tangible media into California.          

    12.2  Treatment of Indemnity Payments.  All payments made by SCO or Newco,
as the case may be, to or for the benefit of the other party pursuant to any    
indemnification obligations under this Agreement shall, to the extent           
appropriate under applicable Tax law, be treated for Tax purposes as adjustments
to the value of the Contributed Stock and Contributed Assets.                   

12.3  Indemnity for Taxes.                                            

         (a) Except as otherwise provided in this Section 12.3, from and after
the Closing, SCO shall timely pay and indemnify and save Newco and its
   Affiliates and Caldera harmless from any liability for, or arising out of
   or based upon, or relating to any Tax (including, without limitation, any
obligation to contribute to the payment of a Tax determined on a      
 consolidated basis or otherwise with respect to a group of corporations
   that includes or included SCO) (i) of SCO or any member of the affiliated
    group of corporation (as defined in Section 1504 of the Code or otherwise)
    of which SCO is a member (other than any member of the Contributed Company
    Group or with respect to any Tax relating to the income, business, assets,
    property or operations of the Group Business) for any taxable period; (ii)
 relating to the income, business, assets, property or operations of the
    Group Business or of the Contributed Company Group to the extent that such
liability for Tax is not reflected in the SCO Disclosure Letter or the
Group Financial Statements and is either (A) in respect of any taxable
 period that ends prior to the Closing Date or in respect of any taxable
    period that includes, but does not end on the Closing Date, the portion of
such period ending on the Closing Date or (B) with                    
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   respect to an excess loss account in the stock of any Contributed Company
     or from a deferred intercompany transaction (including any such transaction
    resulting from a distribution or deemed distribution of Newco Common Stock
   by any Contributing Company) entered into on or prior to the Closing Date
     and is triggered as a result of the Contributed Company Group ceasing to be
affiliated with SCO; (iii) under Subpart F of the Code attributable to
     transactions undertaken by SCO or any of its affiliates before or after the
Effective Time; or (iv) as a result of a breach of any representation,
warranty, covenant or agreement made herein by SCO.                   

       (b) Notwithstanding anything contained in this Section 12.3(b), SCO
   shall not be obligated to indemnify Newco for any Tax (including, without
     limitation, any obligation to contribute to the payment of a Tax determined
on a consolidated basis with respect to a group of corporations that  
includes or included SCO) by reason of an election or deemed election 
    (including any protective election) with respect to transactions described
    in this Agreement made or filed post-Closing by Newco or any member of the
Contributed Companies under Section 338 of the Internal Revenue Code. 
   Further, no Section 338 election shall be made with respect to any of the
transactions described in this Agreement.                             

        (c) Except to the extent otherwise provided in this Section 12.3(c),
Newco shall timely pay and indemnify and save SCO and its Affiliates  
harmless from any liability for, or arising out of or based upon or   
relating to any Tax (including, without limitation, any obligation to 
    contribute to the payment of a Tax determined on a consolidated basis with
respect to a group of corporations that includes or included SCO) (i) 
 relating to the income, business, assets, property or operations of the
     Group Business by Newco and its Affiliates or any member of the Contributed
     Company Group in respect of all taxable periods beginning after the Closing
    Date, or, in the case of any taxable period that includes but does not end
on the Closing Date, the portion of such period commencing on the day 
  following the Closing Date; (ii) to the extent such liability for Tax is
  reflected in the Group Financial Statements or the SCO Disclosure Letter
 and such liability is for Tax relating to the income, business, assets,
property or operations of the Group Business or of any member of the  
   Contributed Company Group; (iii) under Subpart F of the Code attributable
   to transactions undertaken by Newco or Caldera or any of their Affiliates
after the Effective Time; or (iv) as a result of a breach of any      
representation, warranty, covenant or agreement made herein by Newco, 
Caldera or Merger Sub.                                                

         (d) If, as a result of any action, suit, investigation, audit, claim,
 assessment or amended Tax Return, there is any change after the Closing
    Date in an item of income, gain, loss, deduction or credit that results in
an increase in a Tax liability for which SCO would otherwise be liable
    pursuant to paragraph (a) of this Section 12.3, and such change results in
a decrease in the Tax liability of Newco or any Affiliate or successor
    thereof for any taxable year or period beginning after the Closing Date or
 for the portion of any Straddle Period beginning after the Closing Date
   (assuming for purposes of this sentence that Newco and its Affiliates are
   liable for income tax at the highest applicable corporate federal, state,
local and/or foreign rates), SCO shall not be liable pursuant to such 
     paragraph (a) with respect to such increase to the extent of such decrease.
If, as a result of any action, suit, investigation, audit, claim,     
 assessment or amended Tax Return, there is any change after the Closing
    Date in an increase in an item of income, gain, loss, deduction, or credit
that results in an increase in a Tax liability for which Newco would  
 otherwise be liable pursuant to paragraph (c) of this Section 12.3, and
such change results in a decrease in the Tax liability of SCO or any  
   Affiliate or successor thereof (other than Newco) for any taxable year or
period ending on or before the Closing Date or for the portion of any 
Straddle Period ending on the Closing date (other than by reason of a 
   carryback of losses or deductions), Newco shall not be liable pursuant to
such paragraph (c) with respect to such increase to the extent of such
decrease.                                                             

       (e) For purposes of this Section 12.3, it shall be assumed that SCO
and its Affiliates are liable for income tax at the highest applicable
    corporate federal, state, local and/or foreign rates, without reduction on
account of net operating losses or other tax attributes.              

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12.4  Other Tax Matters.                                              

      (a) SCO, Newco and Caldera will cooperate fully with each other in
connection with the preparation of all returns and reports of Taxes,  
     information returns, and all audit examinations of, or claims or assertions
against, any member of the Contributed Company Group, in each case    
     including but not limited to the furnishing or making available of records,
    books of account or other materials and appropriate personnel necessary or
    helpful to the defense against the assertions of any taxing authority. SCO
shall, within ninety days after the Effective Time, deliver to Newco a
     schedule listing the tax basis of each of the Contributed Stock and Assets,
along with copies of supporting calculations, information and records.

      (b) Except as provided in Section 12.4(c), in the event and to the
  extent that SCO or any member of an affiliated group of corporations (as
     defined in Section 1504 of the Internal Revenue Code or otherwise) of which
  SCO is a member (other than any member of the Contributed Company Group)
     receives a refund or credit of Taxes for any taxable period that ends prior
   to the Effective Time or in respect of any period that includes, but does
  not end on, the Effective Time, the portion of such period ending on the
Effective Time (the "Pre-Closing Period") which is attributable to the
   carry back of losses, credits or similar items from any Tax return of any
     member of the Contributed Company Group, and in any case, in respect of any
  taxable period that begins after the Effective Time or in respect of any
   period that includes, but does not end on the Effective Time, the portion
of such period commencing on the day following the Effective Time (the
   "Post-Closing Period"), SCO shall pay to Newco, net of any additional Tax
     payable by SCO or its Affiliates by reason of such carryback, the amount of
such refund or credit (including any interest received thereon) or Tax
reduction. In the event that any refund or credit of Taxes or Tax     
reductions for which a payment has been made pursuant to this Section 
  12.4(b) subsequently is reduced or disallowed, the Contributed Companies
    and Newco shall indemnify and hold harmless SCO and its Affiliates for any
     Tax liability, including interest and penalties, assessed by reason of such
reduction or disallowance.                                            

          (c) In the event that an indemnified party receives a refund or credit
  relating to Taxes for which the other party is required to indemnify the
    first party pursuant to Section 12.3 of this Agreement (including, but not
limited to VAT refunds), such indemnified party agrees to pay to the  
indemnifying party the amount of such refund or credit (including any 
     interest received thereon). In the event that any refund or credit of Taxes
for which a payment has been made pursuant to this Section 12.4(c)    
subsequently is reduced or disallowed, the indemnifying party shall   
  indemnify and hold harmless the indemnified party for any Tax liability,
   including interest and penalties, assessed by reason of such reduction or
disallowance.                                                         

  (d) If any claim for Tax relating to the Group Business or the
    Contributed Company Group is asserted against SCO or any Affiliate for any
Pre-Closing Period, SCO shall promptly notify Newco in writing of such
    fact. SCO and its duly appointed representatives shall have the sole right
    to negotiate, resolve, settle or contest any such claim for Tax; provided,
    however, that they shall deal fairly and in good faith with respect to any
claim for Tax which would require a payment by Newco to SCO or its    
     Affiliates under Section 12.3(c) or this Section 12.4 and provided further,
  that with respect to any claim which would require a payment by Newco or
     have a Material Adverse Effect on the Group Business, no settlement will be
    agreed to without Newco's prior written consent. Such consent shall not be
    unreasonably withheld. Newco shall bear the legal and accounting costs and
expenses incurred in contesting a matter for which it has withheld its
     consent. If any claim for Tax relating to the Contributed Company Group for
any Post-Closing Period comes to the attention of SCO, SCO will notify
   Newco promptly of such claims and will cooperate fully with Newco and the
 Contributed Company Group in the resolution of such claim. A failure to
     promptly notify pursuant to this Section 12.4(d) shall not preclude another
party's indemnification obligation.                                   

   (e) SCO shall prepare any Tax returns (including any amendments
  thereto) of the members of the Contributed Company Group for all taxable
periods that end, with respect to the Contributed                     

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    Company Group, on or before the Effective Time (including any short period
    ending on the Effective Time) and which are due either before or after the
  Effective Time and shall deliver to Newco for signing by the appropriate
     party and filing, any Tax returns of the members of the Contributed Company
  Group (including any amendments thereto) with respect to any such period
     that have not been filed prior to the Effective Time. SCO shall deliver any
  such tax return or the portion thereof relating to the Group Business to
    Newco at least fifteen days prior to the date such tax return is due to be
     filed (taking into account any applicable extensions). SCO shall report for
  federal income tax purposes the operations of the Group Business and the
Contributed Company Group for any short period ending on the Effective
Time, and shall be responsible for the filing of, the consolidated tax
  returns of SCO's consolidated group which will include the income of the
     Group Business and the Contributed Company Group through the Effective Time
     and Newco will pay to SCO any amounts relating to such tax returns required
by Section 12.3(c) prior to the filing of such tax returns. In order  
 appropriately to apportion any taxes relating to a period that includes
(but that would not, but for this Section 12.4(e) end on the Effective
    Time), the parties hereto will, to the extent permitted by applicable law,
elect with the relevant taxing authority to treat for all purposes the
 Effective Time as the last day of a taxable period of any member of the
     Contributed Company Group. SCO shall, in respect of such returns, and Newco
and the Contributed Company Group for returns with respect to the     
 Post-Closing Period shall determine the income, gain, expenses, losses,
  deductions and credits of the Group Business and the Contributed Company
    Group in a manner (i) consistent with prior practice and actual operations
   in a manner that apportions such income, gain, expenses, loss, deductions
    and credits equitably from period to period and (ii) consistent with prior
years.                                                                

          (f) The provisions of this Section 12 with respect to the consolidated
 groups or consolidated returns that include SCO or its Affiliates other
 than a Contributed Company shall apply mutatis mutandis with respect to
combined or unitary groups or returns thereof.                        

          (g) Newco and SCO shall make (or indemnify the payor against) payments
   of estimated taxes (including amounts due with extensions) for which they
are responsible under this Agreement in a timely manner. A payment or 
   indemnity obligation under this Section 12 which is not made or satisfied
   when due shall accrue interest at the rate applicable to late payments of
the pertinent Tax. Notwithstanding anything in this Section 12 to the 
   contrary, a party shall not have to bear the cost of a Tax liability more
  than once (e.g., a payment of an estimated tax shall be credited against
any payment due when the return is filed).                            

(h) Except as provided in paragraph 12.4(e), for purposes of
   allocating a Tax for which a party is otherwise responsible under Section
     12.3 or this Section 12.4, the portion of those Taxes that are attributable
     to the operations of the Group Business or of any member of the Contributed
    Company Group for a relevant period (the "Interim Period") shall be (i) in
  the case of a Tax that is not based on a net income, the total amount of
   such Tax for the Interim Period in question multiplied by a fraction, the
numerator of which is the number of days in the Interim Period and the
   denominator of which is the total number of days in such period, and (ii)
     in the case of a Tax that is based on net income, the Tax that is due shall
be an amount as equitably determined by the parties based upon a      
hypothetical closing of the books.                                    

(i) If Newco, a Contributed Company or any of its respective
Affiliates receive any notice of the assertion of any Tax liability   
    relating to a member of the Contributed Company Group for which SCO may be
     liable under this Agreement, Newco shall give prompt written notice thereof
to SCO.                                                               

   (j) After the Closing, Newco and the Contributed Companies will
 provide reasonable access to all relevant Newco and Contributed Company
     Group books, records, agreements and memoranda, and provide such assistance
    to SCO as SCO and its Affiliates shall reasonably request, with respect to
    any federal, foreign, state, provincial or local Tax matters pertaining to
the members of the Contributed Company Group for taxable periods or   
     transactions on or prior to the Effective Time. Newco will notify SCO prior
 to disposition of such Tax records, if such disposition will take place
   within ten years after the Effective Time. After the Closing, the parties
will provide reasonable access to all relevant                        

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  SCO and Contributed Companies' books, records, agreements, memoranda and
    tax returns, and provide copies of such information and such assistance to
the other party as it shall reasonably request, with respect to any   
    federal, foreign, state, provincial or local Tax matters pertaining to the
     Contributed Assets and the Contributed Company Group for taxable periods or
transactions on or prior to the Effective Time.                       

       (k) Notwithstanding anything in this Agreement to the contrary, SCO
   and Newco covenant and agree (unless there has been a final determination
as defined in Section 1313(a) of the Code or any other event which    
conclusively establishes a contrary position) for all Tax purposes,   
including all Tax Returns and any Tax examinations, proceedings or    
     controversies, to (and to cause any Affiliate or successor to its assets or
    businesses to) take each of the positions set forth below (and not to take
   any position inconsistent therewith) and to use good faith and reasonable
best efforts to defend such positions:                                

      (i) The Merger (A) will qualify as a tax-free reorganization
        described in Section 368(a) of the Code and (B) when taken together with
        the SCO Transaction, will qualify as a tax free transfer of the stock of
Caldera to Newco governed by Section 351(a) of the Code.        

             (ii) The SCO Transaction will, when taken together with the Merger,
        qualify as a transfer of the Contributed Stock and Contributed Assets to
Newco governed by Section 351 of the Code.                      

         (l) SCO and Newco agree to report to the other any communication from
  or with the Internal Revenue Service or any other Taxing Authority which
    relates in any way to the characterization of the transactions governed by
     this Agreement. Each of SCO and Newco will file with its Federal income tax
    return for the taxable year in which the Merger and SCO Transaction occurs
     (which tax return shall be timely filed) the information required by Treas.
     Reg. sec. 1.351-3 and 1.368-3 and to provide each other upon request with a
    statement to the effect that such party has complied with this requirement
    after filing. SCO, the Contributed Companies, and Newco also will maintain
   such permanent records as are required by Treas. Reg. sec. 1.351-3(c) and
1.368-3.                                                              

        (m) Neither Caldera nor Newco has any plan or intention to terminate
the existence of Newco; to dispose of the assets contributed to Newco,
except in the ordinary course of business or in a contribution to the 
     capital of a wholly-owned subsidiary of Newco; to reacquire any stock to be
   issued in the transactions contemplated by this Agreement; or to take any
    other action that would reasonably be expected to cause the Merger and the
    SCO Transaction not to be treated as a tax-free exchange under Section 351
  of the Code. Neither Caldera nor Newco knows of any plan or intention of
   any Caldera Significant Stockholder to dispose of any Newco shares issued
     in the transactions contemplated by this Agreement. SCO knows of no plan or
   intention to terminate the existence of Newco or to dispose of the assets
 contributed to Newco, except in the ordinary course of business or in a
    contribution to the capital of a wholly-owned subsidiary of Newco. SCO has
no plan or intention to dispose of any Newco shares issued in the     
  transactions contemplated by this Agreement, except for distributions of
   Newco stock to SCO's shareholders, or to take any other action that would
   reasonably be expected to cause the merger and the SCO Transaction not to
be treated as an exchange under Section 351 of the Code.              

12.5  Tax Representations.  Newco, Caldera and the Caldera Significant
Stockholder covenant and represent that Caldera, Newco and the Caldera          
Significant Stockholder shall make such representations and covenants as their  
respective counsel shall reasonably request prior to the closing for purposes of
establishing the qualification under Section 351 of the SCO Transaction and the 
qualification of the Merger as a Section 368 transaction. Any such              
representations shall be considered to be part of this Section 12.5(a).         

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13. Miscellaneous.                                                    

13.1  Governing Law; Venue.                                           

  (a) Governing Law.  The internal laws of the State of New York
    (irrespective of its choice of law principles) will govern the validity of
  this Agreement, the construction of its terms and the interpretation and
     enforcement of the rights and duties of the parties hereto, except that the
  fiduciary duties of the directors and managers of parties hereto and its
Affiliates shall be governed by the law of the jurisdiction of such   
company's formation.                                                  

(b) Venue.  The parties agree that any dispute regarding the
    interpretation or validity of, or otherwise arising out of this Agreement,
shall be subject to the exclusive jurisdiction of the California State
Courts in and for Santa Clara County, California or, in the event of  
 federal jurisdiction, the United States District Court for the Northern
    District of California sitting in Santa Clara County, California, and each
  party hereby agrees to submit to the personal and exclusive jurisdiction
and venue of such courts and not to seek the transfer of any case or  
proceeding out of such courts.                                        

     13.2  Assignment; Binding upon Successors and Assigns.  None of the parties
hereto may assign any of its rights or obligations hereunder without the prior  
written consent of the other parties hereto; provided, however, that the sale or
other transfer of the stock of any Contributing Company shall not be deemed an  
assignment provided that this Agreement remains enforceable against the         
Contributing Company after such stock sale or transfer. Subject to the preceding
sentence, this Agreement will be binding upon and inure to the benefit of the   
parties hereto and its respective successors and permitted assigns.             

     13.3  Severability.  If any provision of this Agreement, or the application
thereof, will for any reason and to any extent be invalid or unenforceable, the 
remainder of this Agreement and application of such provision to other persons  
or circumstances will be interpreted so as reasonably to effect the intent of   
the parties hereto. The parties further agree to replace such void or           
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the greatest extent possible, the economic, business and  
other purposes of the void or unenforceable provision.                          

13.4  Counterparts.  This Agreement may be executed in any number of  
counterparts, each of which will be an original as regards any party whose      
signature appears thereon and all of which together will constitute one and the 
same instrument. This Agreement will become binding when one or more            
counterparts hereof, individually or taken together, will bear the signatures of
all the parties reflected hereon as signatories.                                

 13.5  Other Remedies.  Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with 
and not exclusive of any other remedy conferred hereby or by law on such party, 
and the exercise of any one remedy will not preclude the exercise of any other. 
The parties agree that specific performance is an appropriate remedy for a      
breach of its respective obligations under this Agreement.                      

   13.6  Amendment and Waivers.  Any term or provision of this Agreement may
be amended by the parties hereto at anytime by execution of an instrument in    
writing signed on behalf of each of SCO and Caldera. At any time prior to the   
Closing, the observance of any term of this Agreement may be waived (either     
generally or in a particular instance and either retroactively or prospectively)
only by a writing signed by the party or parties to be bound thereby. The waiver
by a party of any breach hereof or default in the performance hereof will not be
deemed to constitute a waiver of any other default or any succeeding breach or  
default. Delay in exercising any right under this Agreement shall not constitute
a waiver of such right. This Agreement may be amended by the parties hereto at  
any time before or after approval of such party's stockholders, but, after such 
approval, no amendment will be made which by applicable law requires the further
approval of a party's stockholders without obtaining such further approval.     

 13.7  Expenses.  Except as herein expressly provided to the contrary in
this Agreement or the Ancillary Agreements, each party will bear its respective 
fees and expenses incurred with respect to the negotiation, preparation and     
performance of this Agreement and the transactions contemplated hereby.         

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    13.8  Attorneys' Fees.  Should suit be brought to enforce or interpret any
part of this Agreement, the prevailing party will be entitled to recover, as an 
element of the costs of suit and not as damages, reasonable attorneys' fees to  
be fixed by the court (including, without limitation, costs, expenses and fees  
on any appeal). The prevailing party will be entitled to recover its costs of   
suit, regardless of whether such suit proceeds to final judgment.               

13.9  Notices.  All notices and other communications pursuant to this 
Agreement shall be in writing and deemed to be sufficient if contained in a     
written instrument and shall be deemed given if delivered personally,           
telecopied, sent by nationally-recognized overnight courier or mailed by        
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following address (or at such other address for a party as shall 
be specified by like notice):                                                   

If to SCO to:                     The SCO, Inc.               
                 425 Encinal
                            Santa Cruz, California

                                        Attention: Chief Executive Officer
                                   and Law and Corporate Affairs
                                Telecopier: (831) 427-5454

      With a copy to:                   Wilson, Sonsini, Goodrich & Rosati
                        650 Page Mill Road
                                 Palo Alto, California 94304
                                Attention: Michael Danaher
                                Telecopier: (650) 493-6811

And if to Caldera or Newco to:    Caldera Systems, Inc.       
                            240 West Center Street
                      Orem, Utah 84057
                                        Attention: Chief Executive Officer
                                Telecopier: (801) 765-1313

   With a copy to:                   Brobeck, Phleger & Harrison LLP
                                          370 Interlocken Boulevard, Suite 500
                                Broomfield, Colorado 80021
                                   Attention: John E. Hayes, III
                                Telecopier: (303) 410-2199

All such notices and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of a telecopy, when the party receiving such copy shall have        
confirmed receipt of the communication, (c) in the case of delivery by          
nationally-recognized overnight courier, on the business day following dispatch,
and (d) in the case of mailing, on the third business day following such        
mailing.                                                                        

  13.10  Construction of Agreement.  This Agreement has been negotiated by
the respective parties hereto and its attorneys and the language hereof will not
be construed for or against either party. A reference to a Section or an exhibit
will mean a Section in, or exhibit to, this Agreement unless otherwise          
explicitly set forth. The titles and headings herein are for reference purposes 
only and will not in any manner limit the construction of this Agreement which  
will be considered as a whole.                                                  

13.11  No Joint Venture.  Nothing contained in this Agreement will be 
deemed or construed as creating a joint venture or partnership between any of   
the parties hereto. No party is by virtue of this Agreement authorized as an    
agent, employee or legal representative of any other party. No party will have  
the power to control the activities and operations of any other and its status  
is, and at all times, will continue to be, that of independent contractors with 
respect to each other. No party will have any power or authority to bind or     
commit any other. No party will hold itself out as having any authority or      
relationship in contravention of this Section.                                  

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   13.12  Further Assurances.  Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements 
and to give such further written assurances as may be reasonably requested by   
any other party to evidence and reflect the transactions described herein and   
contemplated hereby and to carry into effect the intents and purposes of this   
Agreement and the Ancillary Agreements.                                         

  13.13  Absence of Third Party Beneficiary Rights.  Except as provided in
Sections 5.17 and 5.18, no provisions of this Agreement are intended, nor will  
be interpreted, to provide or create any third party beneficiary rights of any  
kind in any holder of the stock of Caldera, Newco, any Contributing Company or a
member of the Contributed Company Group or any Employee, client, customer,      
Affiliate, stockholder, partner or any party hereto or any other person or      
entity, and, except as so provided, all provisions hereof will be personal      
solely between the parties to this Agreement and no other person or entity shall
have any cause of action as a third party beneficiary of this Agreement.        

    13.14  Public Announcement.  Upon execution of this Agreement, Caldera and
SCO promptly will issue a joint press release approved by both parties          
announcing the Merger and the SCO Transaction. Thereafter, Caldera or SCO may   
issue such press releases, and make such other disclosures regarding the Merger 
and the SCO Transaction, as they may each determine (after consultation with    
legal counsel) to be required under applicable securities laws or the rules of  
the Nasdaq Stock Market; Caldera and SCO shall confer with the other party prior
to any press release or disclosure relating to the Merger or SCO Transaction.   

 13.15  Certain Defined Terms.  As used in this Agreement, the following
terms shall have the following meanings.                                        

"2000 Group Balance Sheet" is defined in Section 2.4(c).              

 "Affiliate" means, with respect to a specified person, any other person
that directly or indirectly controls, is controlled by, or is under common      
control with, such specified person or which hold at least a 10% ownership      
interest in said person.                                                        

"Agreed Amount" is defined in Section 10.5(c).                        

    "Ancillary Agreements" means, collectively, the Stockholder Agreement, the
Escrow Agreement, the Bills of Transfer, the Sales Representative and Support   
Agreement, the agreements relating to the Patent Assignment, the Copyright      
Assignment and the Trademark Assignment, the Web-Top Sublicense and the Voting  
Agreements.                                                                     

"Assumed Liabilities" is defined in Section 1.4(c)(i).                

     "Bills of Transfer" means each of the Bills of Transfer for each respective
jurisdiction for the Contributed Assets and Contributed Companies (or other     
documents of transfer) to be executed and delivered by the holders of such      
Contributed Assets and Newco or its subsidiaries at the Effective Time in the   
forms reasonably acceptable to SCO and Newco.                                   

"CERCLA" is the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Sec. 9601 et seq., as amended.                 

"Certificate of Merger" is defined in Recital A.                      

"Claim Notice" is defined in Section 10.5(a).                         

"Claimed Amount" is defined in Section 10.5(a).                       

"Closing" has the meaning specified for such term in Section 1.5.     

"Closing Date" is defined in Section 1.5.                             

"Closing Group Account" is defined in Section 4.21.                   

"COBRA" is defined in Section 2.8(c).                                 

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    "Conduct of the Group Business" means the conduct in all material respects
of the Group Business as conducted on the date hereof and at Closing.           

"Contested Amount" is defined in Section 10.5(b).                     

"Contributed Assets" shall mean those assets, including real property 
assets, that are owned, leased or licensed by the Contributing Companies that   
are (a) listed on Exhibit 13.15A attached hereto, (b) Intellectual Property     
Rights used in the production, development, support or marketing of the Group   
Products, or (c) used in the Group Business, and (d) all Contributed Contracts  
to which any of the Contributing Companies is a party, but in all cases         
excluding the Excluded Assets.                                                  

   "Contributed Companies" means The Santa Cruz Operation Limited; The Santa
Cruz Operation (France) SARL; The Santa Cruz Operation (Deutschland) GmbH; The  
Santa Cruz Operation (Italia) Srl; The Santa Cruz Operation Pty. Limited; SCO   
Canada, Co.; The Santa Cruz Operation de Mexico, S. De R.L. De C. V.; The Santa 
Cruz Operation (Asia) Ltd.; SCO Foreign Sales Corporation; SCO, Kabushiki       
Kaisha; The Santa Cruz Operation Latin America, Inc.; Nihon SCO Limited; SCO do 
Brazil Limitada; SCO Software (China) Company, Ltd.; and Unix System            
Technologies China Company, Ltd. (USTC).                                        

"Contributed Company Group" has the meaning in Section 1.4(c)(i).     

"Contributed Company Property" shall mean all of the assets, real,    
personal, tangible and intangible, owned, leased, licensed or otherwise held by 
any member of the Contributed Company Group.                                    

  "Contributed Contracts" means all agreements, contracts, understandings,
arrangements, commitments, mortgages, indentures, leases, licenses, permits,    
franchises, instruments, notes, bonds, indemnities, guarantees, loan agreements,
credit agreements, representations, warranties, deeds, assignments, powers of   
attorney, certificates, purchase orders, work orders, insurance policies,       
benefit plans, covenants, assurances or undertakings of any nature which are    
used in the Group Business including but not limited to those listed on Exhibit 
13.15B attached hereto subject in the case of Joint Contributed Agreements to   
the provisions of Section 4.17, excluding the Excluded Assets.                  

"Contributed Stock" means all of the capital stock of the Contributed 
Companies.                                                                      

     "Contributed Subsidiaries" means the direct or indirect subsidiaries of the
Contributed Companies identified in Exhibit 13.15C attached hereto.             

  "Contributing Companies" means SCO and any subsidiary of SCO (other than
the Contributed Companies) which may own any interest in the Contributed Stock  
and Assets to be conveyed to Newco or that is liable for any Assumed Liability  
to be assumed by Newco under the term of this Agreement.                        

  "Copyright Assignment" means a form of assignment mutually acceptable to
Caldera and SCO assigning all copyrights included in the Contributed Assets.    

    "Caldera Assets" are the tangible and intangible, real and personal assets
owned, leased or licensed by Caldera.                                           

"Caldera Balance Sheet" is defined in Section 3.14.                   

 "Caldera Business" is the business of Caldera as carried on immediately
prior to the SCO Transaction, including without limitation Caldera's business of
developing, manufacturing, marketing, licensing, distributing, using, operating,
installing, servicing, supporting, maintaining, repairing or otherwise using or 
commercially exploiting all or any aspect of any or all of the Caldera Products 
or Caldera Assets.                                                              

     "Caldera Closing Price" means the average closing price that Caldera Common
Stock for the five day period ending on the trading day prior to the Closing.   

"Caldera Common Stock" is defined in Section 1.2(a).                  

"Caldera Contracts" means all agreements, contracts, understandings,  
arrangements, commitments, mortgages, indentures, leases, licenses, permits,    
franchises, instruments, notes, bonds, indemnities,                             
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guarantees, loan agreements, credit agreements, representations, warranties,    
deeds, assignments, powers of attorney, certificates, purchase orders, work     
orders, insurance policies, benefit plans, covenants, assurances or undertakings
of any nature to which Caldera or the Caldera Subsidiaries are a party.         

"Caldera Disclosure Letter" is defined in the preamble of Section 3.  

"Caldera Employees" are the employees of Caldera.                     

"Caldera Employee Plans" is defined in Section 5.16(a).               

"Caldera Financial Statements" is defined in Section 3.4(b).          

 "Caldera Financial Statements Balance Sheet Date" is defined in Section
3.4(b).                                                                         

"Caldera Group" is defined in the Preamble of Section 3.              

"Caldera IP Rights" is defined in Section 3.15(a).                    

"Caldera IP Rights Agreements" is defined in Section 3.15(c).         

 "Caldera's Knowledge" or "Known to Caldera." A particular fact or other
matter shall be deemed to be within "Caldera's Knowledge" or "Known to Caldera" 
if any officer of Caldera has current actual knowledge of such fact or other    
matter.                                                                         

"Caldera Options" is defined in Section 1.2(b)(i).                    

"Caldera Percentage Interest" means 72% of the fully diluted equity   
interest in Newco (taking into account all options, warrants and convertible    
debentures on an as-converted basis).                                           

   "Caldera Permitted Encumbrance" means Encumbrances (a) as disclosed as an
Encumbrance in the Caldera Disclosure Schedule (b) Encumbrances for liabilities 
reflected in the Caldera Financial Statements, (c) liens for current taxes not  
yet delinquent, (d) liens imposed by law and incurred in the ordinary course of 
business to carriers, warehousemen, laborers, material men and the like not yet 
due, (e) immaterial imperfections of title set forth in the Caldera Disclosure  
Letter (f) Encumbrances which are not material in amount or which will not      
materially interfere with the use of the Caldera Assets for the Conduct of the  
Caldera Business.                                                               

"Caldera Plans" is defined in Section 1.2(b)(i).                      

   "Caldera Products" means the operating system software and other products
marketed or sold by Caldera and all of software products currently under        
development by or for Caldera or for use or sale or license by Caldera (in each 
case together with all of the software, products, and other items listed on     
Caldera's products price list) and all derivative works, upgrades,              
modifications, enhancements and configurations of any of the foregoing and all  
software and components included in any configuration of any of the foregoing,  
and all development tools, utilities and diagnostics used to develop any of the 
foregoing in each case (whether or not ever commercially offered or             
price-listed, and whether or not in development).                               

"Caldera Ratio" is defined in Section 1.2(a).                         

"Caldera Restrictive Agreements" is defined in Section 3.23.          

"Caldera SEC Documents" is defined in Section 3.4(a).                 

    "Caldera Significant Stockholder" means Ray Noorda, The Canopy Group, Inc.
And MTI Technology Corporation.                                                 

"Caldera Stock Purchase Plan" is defined in Section 1.2(b)(ii).       

"Caldera Stock Purchase Plan Rights" is defined in Section 1.2(b)(ii).

"Caldera Stockholder Approval" is defined in Section 5.20(b).         

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"Caldera Subsidiary" shall mean any direct or indirect subsidiary of  
Caldera listed on Exhibit 13.15G attached hereto.                               

"Caldera Surviving Corporation" is defined in Section 1.9.            

 "Delaware Law" means the Delaware General Corporation Law, as in effect
from time to time.                                                              

    "Disposal," "release," and "threatened release" shall have the definitions
assigned thereto by the CERCLA.                                                 

"Dollars" or "$" means U.S. dollars.                                  

"Effective Time" shall mean the effective time and date that the      
Certificate of Merger is deemed filed with the Secretary of State of the State  
of Delaware in accordance with the relevant provisions of the Delaware Law.     

"Employee" and "Employees" is defined in Section 11.1(a).             

"Employee Benefit Plan" is defined in Section 2.8(a).                 

"Encumbrance" means any pledge, lien, collateral assignment, security 
interest, mortgage, deed of trust, title retention, conditional sale or other   
security arrangement, or any charge, adverse claim of title, ownership or use,  
or any other encumbrance of any kind.                                           

 "Environmental Damage" means any actual or alleged Liability (including
without limitation Liability for investigatory costs, cleanup costs,            
governmental response costs, natural resources damages, property damages,       
personal injuries or penalties) arising out of, based on or relating to (i) the 
presence, discharge, emission or release into the environment of any Hazardous  
Substance or (ii) facts or circumstances forming the basis of any violation, or 
alleged violation, of any Environmental Law.                                    

"Environmental Laws" means all federal, state, provincial, local and  
international laws and regulations relating to pollution, the protection of     
human health or the environment (including without limitation ambient air,      
surface water, ground water, land surface or subsurface strata), including      
without limitation laws and regulations relating to emissions, discharges,      
releases or threatened releases of Hazardous Substances, or otherwise relating  
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.                                  

"ERISA" means the Employee Retirement Income Security Act of 1974, as 
amended, and the rulings and regulations promulgated thereunder.                

"Escrow Agreement" is defined in Section 1.3(b).                      

"Escrow Shares" is defined in Section 1.3(b).                         

"Exchange Act" is the Security Exchange Act of 1934, as amended.      

"Excluded Assets" is defined in Section 1.4(b).                       

"Excluded Liabilities" is defined in Section 1.4(c)(ii).              

"Final Date" is defined in the last paragraph of Section 8.1.         

"Final List" is defined in Section 12.1(a).                           

"First SCO Certificate" is defined in Section 1.3(a)(i).              

"Foreign Employee Plans" is defined in Section 2.8(h).                

"Form S-4" is defined in Section 1.14.                                

"Form S-8" is defined in Section 1.7.                                 

"Former Employees" is defined in Section 11.2(b).                     

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 "GAAP" means United States generally accepted accounting principles and
practices as in effect from time to time and applied consistently throughout the
periods involved.                                                               

"Governmental Antitrust Authority" means any federal, state, local or 
non-U.S. governmental or quasi-governmental authority charged with the          
administration or enforcement of antitrust, competition or merger control laws  
or regulations.                                                                 

     "Governmental Permits" means all municipal, state, local, federal and other
governmental franchises, permits, licenses, agreements, waivers and             
authorizations from, issued or granted by, any jurisdiction.                    

"Group Assets" shall mean the Contributed Assets and all Contributed  
Company Property, considered collectively.                                      

"Group Benefit Arrangements" is defined in Section 2.8(a).            

"Group Business" means the business of SCO and its direct and indirect
subsidiaries with respect to (i) the Group Products, as reflected in the 2000   
Group Balance Sheet, including without limitation the business of developing,   
manufacturing, marketing, licensing, distributing, using, operating, installing,
servicing, supporting, maintaining, repairing or otherwise using or commercially
exploiting all or any aspect of any or all of the Group Products or of any      
Intangible Assets or Intellectual Property Rights related to any of the Group   
Products, and (ii) the professional services division, but excluding the SCO    
Retained Business.                                                              

"Group Employee Plans" is defined in Section 2.8(a).                  

"Group Financial Statements" has the meaning given in Section 2.4(c). 

"Group Financial Statements Balance Sheet Date" is defined in Section 
2.4(c).                                                                         

    "Group Governmental Permits" means those Governmental Permits required for
the Conduct of the Group Business (including without limitation the manufacture 
or sale of the Group Products) that are held by any member of the Contributed   
Company Group or held, in whole or in part, primarily by a Contributing Company 
and required for the Conduct of the Group Business, or necessary for the use or 
operation of any of the Group Assets (including without limitation the Real     
Property Assets) or the manufacture or sale of any of the Group Products, to the
extent legally transferable in accordance with this Agreement.                  

 "Group Permitted Encumbrance" means Encumbrances (a) as disclosed as an
encumbrance in Exhibit 13.15E attached hereto (b) Encumbrances for Liabilities  
reflected in the Group Financial Statements, (c) liens for taxes not yet        
delinquent, (d) liens imposed by law and incurred in the ordinary course of     
business to carriers, warehousemen, laborers, material men and the like not yet 
due and payable, (e) immaterial imperfections of title set forth in the SCO     
Disclosure Letter (f) Encumbrances which are not material in amount or which    
will not materially interfere with the use of the Group Assets for the Conduct  
of the Group Business.                                                          

"Group Persons" is defined in Section 5.18(a).                        

 "Group Products" means the operating system software and other products
listed in the Group product list attached hereto as Exhibit 13.15D marketed or  
sold by any member of the Contributed Company Group or the Contributing         
Companies and all software under development for or licensed by the Group       
Business (together with all derivative works, upgrades, modifications,          
enhancements and configurations of any of the foregoing now existing or under   
development and all software and components included in any configuration of any
of the foregoing, and all development and QA tools, utilities and diagnostics   
used to develop any of the foregoing, in each case whether or not ever          
commercially offered or price-listed, and whether or not in development).       

"Group Restrictive Agreements" is defined in Section 2.23.            

"Hazardous Materials" means: (i) any pollutant, contaminant, toxic,   
hazardous or noxious substance or waste which is regulated by the laws of any   
state, local, provincial, federal or other governmental                         
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authority or jurisdiction, and includes but is not limited to (a) any oil or    
petroleum compounds, flammable substances, explosives, radioactive materials, or
any other materials or pollutants which pose a hazard to persons or cause any   
real property to be in violation of any Environmental Laws, (b) to the extent so
regulated, asbestos or any asbestos-containing material of any kind or          
character, (c) polychlorinated biphenyls, as regulated by the Toxic Substances  
Control Act, 15 U.S.C. sec. 2601 et seq., (or equivalent or similar legislation 
in other relevant jurisdictions) (d) any material or substances designated as   
"hazardous substances" pursuant to (1) Section 311 of the Clean Water Act, 33   
U.S.C. sec. 1251 et seq., (or equivalent or similar legislation in other        
relevant jurisdictions) or (2) Section 101 of CERCLA, (or equivalent or similar 
legislation in other relevant jurisdictions) (e) "chemical substance," "new     
chemical substance," or "hazardous chemical substance or mixture" pursuant to   
Sections 3, 6 and 7 of the Toxic Substances Control Act, 15 U.S.C. sec. 2601 et 
seq., (or equivalent or similar legislation in other relevant jurisdictions) and
(f) any "hazardous waste" pursuant to Section 1004 of the Resource Conservation 
and Recovery Act, 42 U.S.C. sec. 6901 et seq. (or equivalent or similar         
legislation in other relevant jurisdictions)                                    

   "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.               

"Indemnified Parties" is defined in Section 5.17(c).                  

"Indemnitee" is defined in Section 10.5(a).                           

"Insolvency Action" means, with respect to a person, any or all of the
following: (i) the voluntary or involuntary filing, with respect to such person,
of a petition for relief, or any other effort to seek relief, under any         
Insolvency Proceeding; (ii) such person or any of its assets otherwise becoming 
the subject of an Insolvency Proceeding; (iii) the formal or informal           
dissolution, liquidation or winding up of such person, or any efforts to        
initiate or carry out such dissolution, liquidation or winding up; (iv) the     
appointment of (or efforts or attempts to appoint) a receiver, liquidator,      
sequestrator, trustee, custodian or other similar officer with respect to such  
person or any part of its assets or properties; or (v) any composition of the   
indebtedness of such person or any assignment for the benefit of such person's  
creditors.                                                                      

   "Insolvency Proceeding" means any or all of the following actions, events
or proceedings: (i) any voluntary or involuntary case, contested matter or other
proceeding under the United States Bankruptcy Code, as amended, and any         
successor law or laws thereto; or (ii) any case, action or other proceeding     
under any bankruptcy, insolvency, debt reorganization or similar law (whether   
now or hereafter in effect) of any state, country or other jurisdiction.        

    "Intangible Assets" means, collectively, all intangible assets, properties
and rights required for the development of the Group Products, constituting     
software (in both source code and binary code form), technology, works of       
authorship, manuals, logbooks, notebooks, user's guides, programmers' notes,    
documentation, know-how, trade secrets and training materials (for both training
of customers and of service personnel).                                         

  "Intellectual Property Rights" means, collectively, all of the following
worldwide intangible legal rights including those existing or acquired by       
ownership, license or other legal operation, whether or not filed, perfected,   
registered or recorded and whether now or hereafter existing, filed, issued or  
acquired: (i) patents, patent applications, and patent rights, including any and
all continuations, continuations-in-part, divisions, reissues, reexaminations or
extensions thereof; (ii) inventions (whether patentable or not in any country), 
invention disclosures, industrial designs, improvements, trade secrets,         
proprietary information, know-how, technology and technical data; (iii) rights  
associated with works of authorship (including without limitation audiovisual   
works), including without limitation copyrights, copyright applications and     
copyright registrations, moral rights, database rights, mask work rights, mask  
work applications and mask work registrations; (iv) rights in trade secrets     
(including without limitation rights in industrial property, customer, vendor   
and prospect lists and all associated information or databases and other        
confidential or proprietary information), and all rights relating to the        
protection of the same including without limitation                             

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rights under nondisclosure agreements; (v) any other proprietary rights in      
technology, including software, all source and object code, algorithms,         
architecture, structure, display screens, layouts, inventions, development tools
and all documentation and media constituting, describing or relating to the     
above, including, without limitation, manuals, memoranda, records, business     
information, or trade marks, trade dress or names, anywhere in the world; (vi)  
any rights analogous to those set forth in the preceding clauses and any other  
proprietary rights relating to intangible property, including without limitation
brand names, trademarks, service marks, domain names, trademark and service mark
registrations and applications therefor, trade names, rights in trade dress and 
packaging and all goodwill associated with the same; and (vii) all rights to sue
or make any claims for any past, present or future infringement,                
misappropriation or unauthorized use of any of the foregoing rights and the     
right to all income, royalties, damages and other payments that are now or may  
hereafter become due or payable with respect to any of the foregoing rights,    
including without limitation damages for past, present or future infringement,  
misappropriation or unauthorized use thereof; and (viii) rights under license   
agreements for the foregoing.                                                   

  "Intercompany Accounts" means the net amounts payable by or owing to the
Group Business as of the Effective Time as a consequence of the Conduct of the  
Group Business, in the ordinary course, (i) pursuant any general services       
agreement between the Contributed Company Group, on the one hand, and SCO and   
its direct or indirect subsidiaries (other than the Contributed Company Group)  
on the other hand, or (ii) as a consequence of reimbursements by SCO of amounts 
paid by it for the Conduct of the Business in the ordinary course; provided,    
however that in no event shall the Group Business be responsible for amounts    
attributable to the SCO Retained Business.                                      

"Interim Period" is defined in Section 12.5(h).                       

"Internal Revenue Code" means the Internal Revenue Code of 1986, as   
amended, and the rulings and regulations promulgated thereunder.                

"Joint Contributed Agreements" is defined in Section 4.17.            

"Key Employees" means those individuals identified in Exhibit 4.18A   
attached hereto.                                                                

   "Key Employee Term Sheets" means the Key Employee Term Sheets in the form
attached hereto as Exhibit 4.18B.                                               

"Liabilities" (or when used with reference to a single item described 
below, "Liability") means debts, liabilities and obligations (whether pecuniary 
or not, including without limitation obligations to perform or forbear from     
performing acts or services), fines or penalties, whether accrued or fixed,     
absolute or contingent, matured or unmatured, determined or determinable, known 
or unknown, including without limitation those arising under any law, action or 
governmental order, liabilities for Taxes and those arising under any contract, 
agreement, arrangement, commitment or undertaking of any kind whatsoever        
(whether written or oral, express or implied), including, without limitation,   
those arising under any Contributed Contract.                                   

"Loss" means and includes any and all Liability, loss, damage, claim, 
expense, cost, fine, fee, penalty, obligation, or injury, including, without    
limitation, those resulting from any and all claims, actions, suits, demands,   
assessments, investigations, judgments, orders, awards, arbitrations,           
settlements or other proceedings, together with reasonable costs and expenses,  
including the reasonable attorneys' and experts' fees, court costs, arbitration 
costs, filing fees and other legal costs and expenses relating thereto, together
with interest accrued on each of the foregoing amounts from the date the same   
was incurred at the lower of (i) the prime rate as published by The Wall Street 
Journal or (ii) the highest rate of interest permitted under applicable law;    
provided, however, that in determining the amount of any Loss, there shall be   
deducted any Tax overlaps attributable to the events giving rise to the Loss.   

"Material Adverse Effect on Caldera" means any event, change or effect
would have a material adverse effect on the business, tangible and intangible   
assets, financial condition, and results of operations of Caldera and the       
Caldera Subsidiaries, Caldera together with the Caldera Subsidiaries, as a      
whole, or prevent in any material respect the performance by Caldera and its    
subsidiaries of the actions anticipated                                         

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by this Agreement and the Ancillary Agreements to be taken by them on or before 
the Closing; provided however that none of the following shall be deemed to be a
Material Adverse Effect on Caldera: (i) changes in market price or trading      
volume of Caldera common stock or (b) changes attributable to the public        
announcement or pendency of the transactions contemplated hereby.               

    "Material Adverse Effect on Newco" means any event, change or effect would
have a material adverse effect on the business, tangible and intangible assets, 
financial condition, and future operations of Newco and its subsidiaries, Newco 
together with its subsidiaries as a whole, after the Effective Time or prevent  
in any material respect Newco from taking the actions anticipated by this       
Agreement and the Ancillary Agreements to be taken by Newco and its subsidiaries
on and after the Effective Time.                                                

    "Material Adverse Effect on the Group Business" means any event, change or
effect which would have a material adverse effect on the business, tangible and 
intangible assets, financial condition, and results of operations of the Group  
Business, taking such Group Business as a whole, or prevent in any material     
respect the performance by SCO and its subsidiaries of the actions anticipated  
by this Agreement and the Ancillary Agreements to be taken by them on or before 
the Closing; provided however that none of the following shall be deemed to be a
Material Adverse Effect on the Group Business: (i) changes in market price or   
trading volume of SCO common stock or (b) changes attributable to the public    
announcement or pendency of the transactions contemplated hereby.               

"Material Contributed Contracts" is defined in the Preamble of Section
2.11.                                                                           

"Material Caldera Contracts" is defined in Section 3.11.              

"Merger" is defined in Recital A.                                     

"Merger Sub" is defined in Recital A.                                 

"Multiemployer Plan" is defined in Section 2.8(b).                    

"Multiple Employer Plan" is defined in Section 2.8(b).                

"Newco" means Caldera International Inc., a Delaware corporation.     

"Newco Common Stock" is defined in Recital A.                         

"Newco Offer" is defined in Recital A.                                

"Newco Options" is defined in Recital A.                              

"Newco Plans" is defined in Section 1.6.                              

"Newco Rights Agreement" is defined in Section 1.12.                  

"Nondisclosure Agreement" is defined in Section 4.9.                  

"Omitted Balance Sheet Liabilities" is defined in Section 10.1(e).    

"Optionees" is defined in Recital A.                                  

"Patent Assignment" is defined in Section 7.15.                       

"Person" means any individual, partnership, limited liability company,
firm, corporation, association, trust, unincorporated organization or other     
entity, as well as any syndicate or group that would be deemed to be a person   
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.      

"Post-Closing Period" is defined in Section 12.5(b).                  

"Potential Employee" is defined in Section 11.1.                      

"Pre-Closing Period" is defined in Section 12.5(b).                   

"Preliminary List" is defined in Section 11.1(a).                     

"Prospectus" is defined in Section 5.6.                               
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"Prospectus/Proxy Statement" is defined in Section 1.14.              

     "Real Property Assets" shall mean all real property assets required for the
Conduct of the Group Business.                                                  

"Representing SCO Entities" is defined in the Preamble of Section 2.  

"Response Notice" is defined in Section 10.5(b).                      

"Returns" is defined in Section 12.1.                                 

"SEC" is the Securities and Exchange Commission.                      

"Securities Act" is the Securities Act of 1933, as amended.           

"Shared Contributed Contracts" is defined in Section 4.17.            

     "Solvent" shall mean, with respect to any person on a particular date, that
on such date (a) the fair value of the property of such person is greater than  
the total amount of liabilities, including contingent liabilities, of such      
person; (b) the present fair salable value of the assets of such person is not  
less than the amount that will be required to pay the probable liability of such
person on its debts as they become absolute and matured; (c) such person does   
not intend to, and does not believe that it will, incur debts or liabilities    
beyond such person's ability to pay as such debts and liabilities mature; and   
(d) such person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such person's property would     
constitute an unreasonably small capital. The amount of contingent liabilities  
(such as litigation, guarantees and pension plan liabilities) at any time shall 
be computed as the amount that, in light of all the facts and circumstances     
existing at the time, represents the amount that can reasonably be expected to  
become an actual or matured liability.                                          

"Stock Rights" is defined in Section 1.7.                             

"Stockholder Agreement" is defined in Section 4.18.                   

"SCO" means The SCO, Inc., a Delaware corporation.                    

"SCO Alternative Proposal" is defined in Section 4.14(a).             

     "SCO Closing Price" means the average closing price of SCO Common Stock for
the five day period ending on the trading day prior to the Closing.             

"SCO Consolidated Financial Statements" is defined in Section 2.4(b). 

     "SCO Consolidated Financial Statements Balance Sheet" is defined in Section
2.4(b).                                                                         

"SCO Disclosure Letter" is defined in Section 2.                      

"SCO IP Rights" is defined in Section 2.15(a).                        

"SCO IP Rights Agreements" is defined in Section 2.15(c).             

"SCO's Knowledge" or "Known to SCO." A particular fact or other matter
shall be deemed to be within "SCO's Knowledge" or "Known to SCO" if any         
executive officer of SCO or a Contributed Company or any executive officer of   
SCO responsible for the Group Business has current actual knowledge of such fact
or other matter after reasonable investigation.                                 

"SCO Options" is defined in Section 1.3(ii).                          

"SCO Per Share Value" is defined in Section 1.3(a)(ii).               

  "SCO Percentage Interest" means a fully diluted equity interest in Newco
(taking into account all options, warrants and convertible debentures on an     
as-converted basis) equal to 100% less the Caldera Percentage Interest.         

"SCO Ratio" is defined in Section 1.3(a)(ii).                         

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    "SCO Retained Business" means the business of SCO that does not constitute
the Group Business consisting of the Tarantella business.                       

"SCO SEC Documents is defined in Section 2.4(a).                      

"SCO Stockholder Rejection" is defined in Section 8.1(h).             

 "SCO Transaction" shall have the meaning described in Recital A hereto.

  "Tax" or "Taxes" means all taxes of any kind whatsoever (whether payable
directly or by withholding), including without limitation franchise, income,    
gross receipts, personal property, real property, ad valorem, value added,      
sales, use, documentary, stamp, intangible personal property, withholding or    
other taxes, together with any interest and penalties, additions to tax or      
additional amounts with respect thereto imposed by any taxing authority.        

"Termination Fee" is defined in Section 8.4(a)(i).                    

"Threshold Amount" is defined in Section 10.1(e).                     

"Trademark Assignment" is defined in Section 7.15.                    

"Transaction Taxes" is defined in Section 12.1.                       

"UK" means the United Kingdom of Great Britain and Northern Ireland.  

"Unforeseen Tax Liabilities" is defined in Section 10.1(e).           

"Voting Agreement" is defined in Section 5.15.                        

  "WebTop Sublicense" means a mutually agreeable license agreement between
SCO and Caldera providing for the license of the WebTop Product from Caldera to 
SCO.                                                                            

     13.16  Entire Agreement.  This Agreement and the exhibits hereto constitute
the entire understanding and agreement of the parties hereto with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements or 
understandings, inducements or conditions, express or implied, written or oral, 
between the parties with respect hereto other than the Nondisclosure Agreement, 
which shall remain in full force and effect. The express terms hereof control   
and supersede any course of performance or usage of the trade inconsistent with 
any of the terms hereof.                                                        

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 IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Reorganization as of the date first above written.                      

                                      THE SANTA CRUZ OPERATION, INC.
                                a California corporation

                               By: /s/ DOUGLAS MICHELS
                                              ----------------------------------
                               Douglas Michels
                                             President and Chief Executive
                       Officer

                             CALDERA SYSTEMS, INC.
                              a Delaware corporation

                           By: /s/ RANSOM LOVE
                                              ----------------------------------
                           Ransom Love
                                             President and Chief Executive
                       Officer

                                  CALDERA INTERNATIONAL INC.
                              a Delaware corporation

                           By: /s/ RANSOM LOVE
                                              ----------------------------------
                           Ransom Love
                                             President and Chief Executive
                       Officer

[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
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AMENDMENT TO
AGREEMENT AND PLAN OF REORGANIZATION

   THIS AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION (this "Amendment")
is entered into as of September 13, 2000, by and among Caldera Systems, Inc., a 
Delaware corporation including for all purposes Caldera Surviving Corporation,  
("Caldera"), Caldera International, Inc., a Delaware corporation ("Newco") and  
The Santa Cruz Operation, Inc., a California corporation ("SCO").               

RECITALS

    A. On August 1, 2000, Caldera, Newco and SCO entered into an Agreement and
Plan of Reorganization (the "Agreement") which all parties to the Agreement wish
to amend pursuant to the terms and conditions of this Amendment.                

     B. All terms not otherwise defined herein shall have the meanings set forth
in Section 13.15 of the Agreement.                                              

     NOW, THEREFORE, the parties hereby agree to amend the Agreement as follows:

1. Section 1.3(a)(i) and (iii) of the Agreement are amended in their  
entirety as follows:                                                            

1.3 SCO Transaction.                                                  

(a) Issuance of Newco Common Stock.                                   

         (i) Consideration. Issue to SCO that number of issued, fully paid and
nonassessable shares of Newco Common Stock equal to The SCO Percentage
     Interest, less (a) the number of shares of Newco Common Stock issuable upon
   exercise of the Replacement Options pursuant to Section 1.3(a)(iii) below
    multiplied by .75, (b) the number of shares of Newco Common Stock issuable
upon exercise of the SCO Options assumed by Newco pursuant to Section 
     1.3(a)(iii) below multiplied by .75 and (c) the Escrow Shares issued to SCO
and placed directly into escrow by Caldera pursuant to Section 1.3(b) 
     below, with such number of shares to be appropriately adjusted in the event
  of any Caldera stock split, stock combination, reclassification or other
similar capital change (the "First SCO Certificate") and pay SCO cash 
consideration equal to seven million dollars ($7,000,000) (the "Cash  
  Consideration"), by wire transfer of immediately available funds or upon
the cancellation of SCO's outstanding indebtedness to Caldera.        

          (iii) Assumption or Replacement of SCO Options. Prior to the Effective
Time, each employee or consultant of SCO who is offered and accepts   
employment or a consulting position with New Caldera and who has then 
 outstanding options to purchase shares of SCO Common Stock held by such
  Optionee (collectively, the "SCO Options")(consisting of all outstanding
options granted under the stock option plans of SCO or the SCO        
  Subsidiaries, and any individual non-plan options held by the Optionees)
     shall elect one of the following alternatives with respect to each grant of
options held by such employee or consultant:                          

            (A) Each of the then outstanding SCO Options held by such employee
      or consultant may be cancelled and replaced with an option to purchase
       one share of Newco Common Stock for each two shares of SCO Common Stock
      ("Replacement Options") subject to an SCO Option at the Effective Time
        with an exercise price per share of Newco Common Stock equal to the fair
        market value of Newco Common Stock immediately after the Effective Time,
     rounded up to the nearest cent. The vesting schedule of employees and
     consultants electing this alternative shall be determined as follows:
     (i) the number of vested shares of common stock under the Replacement
   Option grant will equal the number of vested shares of common stock
  subject to the cancelled SCO option grant immediately prior to the
 Effective Time multiplied by 0.25 and (ii) the remaining unvested
       Replacement Options will vest over a period of months determined by the

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      following equation: 48 months less the product of the number of months
vested under the SCO option grant multiplied by 0.5; or         

            (B) Each of the then outstanding SCO Options held by such employee
     or consultant may be assumed by Newco and converted into an option to
   purchase one share of Newco Common Stock for each two shares of SCO
     Common Stock subject to an SCO Option at the Effective Time (the "SCO
     Ratio") at an exercise price per share of Newco Common Stock equal to
   the exercise price per share of such assumed SCO Option immediately
       prior to the Effective Time divided by the SCO Ratio, rounded up to the
      nearest cent. Except as set forth in the preceding sentence, the term,
       exercisability, vesting schedule, and all other terms and conditions of
  the SCO Options will be unchanged and all references in any option
  agreement governing such option to SCO shall be deemed to refer to
     Newco, where appropriate; provided, however, that the outstanding SCO
        Options previously designated as "incentive stock options" under Section
  422 of the Internal Revenue Code may, as a result of the foregoing
      adjustments, be converted into non-statutory stock options. Continuous
service as an employee or consultant with SCO or any of the SCO 
Subsidiaries will be credited to the Optionee for purposes of   
 determining the number of shares of Newco Common Stock vested and
  exercisable under the assumed SCO Option after the Closing. If the
       foregoing calculation results in a Newco Option, which is issued for an
       SCO Option, being exercisable for a fraction of a share of Newco Common
      Stock, then the number of shares of Newco Common Stock subject to such
       option will be rounded down to the nearest whole number of shares, with
no cash being payable for such resulting fractional share.      

2. Section 1.3(c) of the Agreement is hereby deleted in its entirety. 

3. Section 13.15 of the Agreement is hereby amended as follows:       

   (a) The following definition is hereby amended in its entirety:
"Caldera Percentage Interest" means 72% of the fully diluted equity   
interest in Newco (taking into account all options, warrants and      
    convertible debentures on an as-converted basis except for any Replacement
 Options issued or SCO Options assumed pursuant to Section 1.3(a)(iii)).

 (b) The following definition is hereby added in its entirety:
"Replacement Options" is defined in Section 1.3(a)(iii)(A).           

        (c) The following definition is hereby amended in its entirety: "SCO
Ratio" is defined in Section 1.3(a)(iii)(B).                          

4. All references to the form of Sales Representative and Support     
Agreement, attached as Exhibit 4.12 of the Agreement shall hereby be replaced by
references to the form of Sales Representative and Support Agreement attached   
hereto as Exhibit 4.12A (the "Sales Representative Agreement") and the form of  
Open Server Research and Development Agreement attached hereto as Exhibit 4.12B 
(the "Open Server Agreement"). The Sales Representative Agreement and Open      
Server Agreement shall be executed at the Effective Time.                       

[SIGNATURE PAGE TO FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Agreement and Plan of Reorganization as of the date first above written.        

                                      THE SANTA CRUZ OPERATION, INC.
                                a California corporation

                               By: /s/ DOUGLAS MICHELS
                                              ----------------------------------
                               Douglas Michels
                                             President and Chief Executive
                       Officer

                             CALDERA SYSTEMS, INC.
                              a Delaware corporation

                           By: /s/ RANSOM LOVE
                                              ----------------------------------
                           Ransom Love
                                       Chief Executive Officer

                                   CALDERA INTERNATIONAL, INC.
                              a Delaware corporation

                           By: /s/ RANSOM LOVE
                                              ----------------------------------
                           Ransom Love
                                       Chief Executive Officer

[SIGNATURE PAGE TO AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION] 
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SECOND AMENDMENT TO 
AGREEMENT AND PLAN OF REORGANIZATION

     THIS SECOND AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION (this "Second
Amendment") is entered into as of December 12, 2000, by and among Caldera       
Systems, Inc., a Delaware corporation including for all purposes Caldera        
Surviving Corporation, ("Caldera"), Caldera International, Inc., a Delaware     
corporation ("Newco") and The Santa Cruz Operation, Inc., a California          
corporation ("SCO").                                                            

RECITALS

    A. On August 1, 2000, Caldera, Newco and SCO entered into an Agreement and
Plan of Reorganization (the "Agreement") which all parties to the Agreement wish
to amend pursuant to the terms and conditions of this Amendment.                

     B. All terms not otherwise defined herein shall have the meanings set forth
in Section 13.15 of the Agreement.                                              

     NOW, THEREFORE, the parties hereby agree to amend the Agreement as follows:

  1. Section 1.3(a)(iii)(A) of the Agreement is amended in its entirety as
follows:                                                                        

         (A) Each of the then outstanding SCO Options held by such employee or
 consultant may be cancelled and replaced with an option to purchase one
share of Newco Common Stock for each two shares of SCO Common Stock   
     ("Replacement Options") subject to an SCO Option at the Effective Time with
    an exercise price per share of Newco Common Stock equal to the fair market
value of Newco Common Stock immediately prior to the Effective Time,  
rounded up to the nearest cent. The vesting schedule of employees and 
 consultants electing the Replacement Option alternative will remain the
same.                                                                 

2. Section 1.15 is hereby added to the Agreement as follows:          

   1.15  Transition Cost Sharing.  Caldera and SCO agree to share transition
costs relating to the SCO Transaction from the date of the Agreement to the     
Closing Date as set forth in the Transition Costs Memorandum attached hereto as 
Exhibit 1.15.                                                                   

[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Agreement and Plan of Reorganization as of the date first above written.        

                                      THE SANTA CRUZ OPERATION, INC.
                                a California corporation

                               By: /s/ DOUGLAS MICHELS
                                              ----------------------------------
                               Douglas Michels
                                             President and Chief Executive
                       Officer

                             CALDERA SYSTEMS, INC.
                              a Delaware corporation

                           By: /s/ RANSOM LOVE
                                              ----------------------------------
                           Ransom Love
                                       Chief Executive Officer

                                   CALDERA INTERNATIONAL, INC.
                              a Delaware corporation

                           By: /s/ RANSOM LOVE
                                              ----------------------------------
                           Ransom Love
                                       Chief Executive Officer

[SIGNATURE PAGE TO AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION]           
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                                                                    EXHIBIT 1.15

TRANSITION COSTS MEMORANDUM 

     The purpose of this Memorandum is to memorialize the agreement of The Santa
Cruz Operation ("SCO") and Caldera Systems, Inc. ("Caldera") with respect to the
sharing of transition costs relating to the planned acquisition by Caldera of   
the SCO Server and Professional Services Divisions ("Acquisition").             

  1. Background.  The parties understand that, even if the Acquisition had
not occurred, SCO would have undergone a reduction in its workforce. The parties
further understand that, if SCO had restructured to remain a standalone company,
it would have terminated 150 more employees than it did in anticipation of the  
Acquisition, at an estimated cost to SCO of approximately $3,200,000.           

 The carrying costs for these additional 150 employees are approximately
$4,200,000 per quarter. As SCO would have terminated them in August, they will  
have been on the SCO payroll an additional four months as of December 31, 2000, 
at a total cost to SCO of approximately $5,600,000.                             

   In addition, stay-on bonuses of $600,000 have been promised to transition
employees, resulting in a total cost to SCO of $6,200,000.                      

   Therefore, the net incremental cost being borne by SCO as a result of the
Acquisition is approximately $3 million ($6,200,000 that SCO bore minus the     
$3,200,000 that SCO saved by not terminating the 150 employees in August).      

     2. Agreement to Share Transition Costs.  After some discussion, the parties
have agreed to split the net incremental costs on a 50:50 basis. Caldera,       
therefore, agrees to pay SCO the sum of $1,500,000, which is intended to        
reimburse SCO for a 50 percent portion of the costs from August 2000 through    
December 2000.                                                                  

3. One-Time-Only Basis.  The parties agree that this cost sharing     
arrangement is being done on a one-time-only basis and that Caldera is not      
agreeing to pay or share transition or termination costs that SCO may incur     
hereafter, regardless of how long it takes to obtain SEC and shareholder        
approval and to consummate the Acquisition.                                     

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THIRD AMENDMENT TO
AGREEMENT AND PLAN OF REORGANIZATION

THIS THIRD AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION (this    
"Amendment") is entered into as of February 9, 2001, by and among Caldera       
Systems, Inc., a Delaware corporation including for all purposes Caldera        
Surviving Corporation, ("Caldera"), Caldera International, Inc., a Delaware     
corporation ("Newco") and The Santa Cruz Operation, Inc., a California          
corporation ("SCO").                                                            

RECITALS

    A. On August 1, 2000, Caldera, Newco and SCO entered into an Agreement and
Plan of Reorganization, which was amended on September 13, 2000 and December 12,
2000 (as amended, the "Agreement") which all parties to the Agreement wish to   
further amend pursuant to the terms and conditions of this Amendment.           

     B. All terms not otherwise defined herein shall have the meanings set forth
in Section 13.15 of the Agreement.                                              

     NOW, THEREFORE, the parties hereby agree to amend the Agreement as follows:

   1. The introductory sentence of Section 1.3(a) of the Agreement is hereby
replaced with the following text:                                               

          (a) Issuance of Newco Common Stock.  At the times set forth below, and
subject to the terms and conditions of this Agreement, Newco will, in 
  consideration for the contribution and transfer of the Contributed Stock
    and Contributed Assets to Newco as contemplated by this Agreement, perform
the following:                                                        

     2. Section 1.3(a)(i) of the Agreement is hereby replaced with the following
text:                                                                           

(i) Consideration.                                          

             (A) At the Effective Time, Newco shall (i) issue to SCO that number
    of issued, fully paid and nonassessable shares of Newco Common Stock
      equal to the sum of 16 million shares less the Escrow Shares issued to
  SCO and placed directly into escrow by Caldera pursuant to Section
  1.3(b) below (but not less any shares issuable pursuant to options
      granted or assumed pursuant to 1.3(a)(iii)), with the number of shares
     to be appropriately adjusted in the event of any Caldera stock split,
        stock combination, reclassification or other similar capital change (the
  "First SCO Certificate"), (ii) pay SCO cash consideration equal to
      twenty-three million dollars ($23,000,000) (the "Cash Consideration"),
        by the combination of a wire transfer of immediately available funds and
      the cancellation of SCO's then outstanding indebtedness to Caldera and
       (iii) issue to SCO a non-interest bearing, secured promissory note (the
      "Secured Note") in the amount of $8 million (subject to certain rights
       of setoff as provided therein), secured by the assets of the OpenServer
Business, and in the form attached as Exhibit 1.3(a)(1).        

            (B) During the three year period (the "Earn-out Period") beginning
        with the first, full Caldera Fiscal Quarter following the Effective Time
        (provided that if the Effective Time falls within the first five days of
     any Caldera Fiscal Quarter, then the Earn-out Period shall begin with
   such Caldera Fiscal Quarter), SCO shall be entitled to receive from
Newco on each Earn-out Payment Date 45% of the amount by which  
     OpenServer Revenue for the prior four full Caldera Fiscal Quarters is
     higher than the cumulative Earn-out Thresholds for such periods (such
    amount, an "Earn-out Amount"). Notwithstanding the intention of this
   provision that the parties shall share in the future revenue of the
OpenServer Business as operated by Newco, such operation of the 
        OpenServer Business shall be in Newco's sole discretion, and Newco shall
     be under no obligation to provide any minimum level of support to the
OpenServer Business.                                            

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 3. Section 1.3(b) is hereby replaced in its entirety with the following
text:                                                                           

     (b) Escrow.  As soon as practicable after the Effective Time, and
subject to and in accordance with the provisions of Section 10 and the
Escrow Agreement, a form of which is attached as Exhibit 1.3(b) (the  
     "Escrow Agreement"), Caldera shall deliver to the Escrow Agent on behalf of
     SCO a certificate representing one million six hundred thousand (1,600,000)
shares of Newco Common Stock (the "Escrow Shares"). The Escrow Shares 
distributed to the Escrow Agent shall be held in escrow and shall be  
     available to transfer to Caldera for certain damages as provided in Section
   10. To the extent not transferred to Caldera for such damages, the Escrow
Shares shall be released to SCO, all as provided in Section 10 and the
Escrow Agreement.                                                     

     4. Section 1.4(b)(i)(B) is hereby amended by adding the following phrase to
the end of such section:                                                        

", except for rights associated with the Commit Transaction 
Receivables"                                                          

    5. Section 1.4(b)(i) is hereby amended by adding the following sentence to
the end of such section:                                                        

       Notwithstanding Sections 1.4(b)(i)(A)-(C), Newco's continued use of
 certain Excluded Assets as part of UnixWare and OpenServer, and sale of
   certain unbundled and bundled products including certain Excluded Assets,
is set forth in Exhibit 1.4(b)(i).                                    

6. A new Section 1.4(c)(i)(D) is hereby added to the Reorganization   
Agreement:                                                                      

   (D) all Liabilities relating to Commit Transaction Receivables.

   7. Section 4.2 of the Agreement is hereby amended by adding to the end of
such section the following:                                                     

       "Without limiting the foregoing, SCO shall be required to budget at
     least (and shall not be required to budget more than) $21.4 million for the
     maintenance of the Group Business during the three month period ended March
  31, 2001, of which amount, $1.9 million shall be applied specifically to
     SCO's professional services line of business. If the Effective Time has not
   occurred prior to March 31, 2001, then SCO shall be required to budget an
   amount for the three month period ended June 30, 2001 to be agreed by the
parties at such time and which shall be commensurate with historical  
expenses to revenue ratios.                                           

8. Sections 4.12, 4.24 and 5.14 are hereby deleted in their entirety. 
Exhibit 4.12 is also deleted in its entirety.                                   

9. A new Section 5.20 shall be added as follows:                      

       5.20  Reimbursement for Pre-paid Commissions and Royalties.  During
the period beginning on the Effective Time and ending on the one year 
anniversary of the Effective Time, Newco shall, on a quarterly basis, 
     reimburse SCO for any sales commissions or royalties previously paid by SCO
   that relate to Commit Transaction Receivables that are actually collected
by Newco during such period.                                          

10. All references in Section 8.1 to "February 28, 2001" are hereby   
replaced with "May 31, 2001," and the reference to "March 31, 2001" in such     
section is hereby replaced with "June 30, 2001".                                

     11. Section 8.4(a)(i) is hereby replaced in its entirety with the following
text:                                                                           

      (i) If this Agreement is terminated by Caldera pursuant to Section
8.1(i), then SCO shall promptly pay to Caldera (by wire transfer or   
   cashier's check) a nonrefundable fee equal to five hundred sixty thousand
 (560,000) multiplied by the average closing price of the Caldera Common
Stock for the ten (10) days following the public announcement of this 
  Agreement (the "Termination Fee") within two (2) business days following
   delivery of the notice of termination by Caldera pursuant to Section 8.2;

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12. Section 10.1 is hereby replaced in its entirety with the following
text:                                                                           

         Escrow Fund.  In accordance with Section 1.3(b) hereof, Caldera shall
  deliver to the Escrow Agent one million six hundred thousand (1,600,000)
    shares of Newco Common Stock (the "Escrow Fund"). The Escrow Fund shall be
   held by the Escrow Agent for a period of one year from the Effective Time
  pursuant to the terms set forth in the Escrow Agreement. The Escrow Fund
  shall be available to compensate Caldera Surviving Corporation and Newco
pursuant to the Indemnification obligations of SCO.                   

13. Section 10.4 is hereby replaced in its entirety with the following
text:                                                                           

     Limitations on Indemnification.  SCO shall not have any liability
under this Section 10 unless the aggregate amount of Loss attributable
  exceeds $1,000,000, and, in such event, SCO shall be required to pay the
 entire amount of such Loss from the first dollar thereof. SCO shall not
have liability for any Loss in excess of the amount determined by     
  multiplying (i) one million six hundred thousand (1,600,000) by (ii) the
Caldera Closing Price, except that as such Losses relate to the SCO IP
   Rights, SCO shall not have liability for any Loss in excess of the amount
     determined by multiplying (i) eight million (8,000,000) by (ii) the Caldera
  Closing Price. Notwithstanding the preceding sentence, there shall be no
limitations on liability pursuant to this Section 10 relating to      
intentional fraud or misrepresentation by SCO.                        

    14. Current Exhibit 1.4(b) of the Agreement is hereby amended and replaced
in its entirety with Attachment A.                                              

 15. Current Exhibit 13.15A of the Agreement, the Contributed Assets, is
hereby amended to have added to it the contents of Attachment B to this         
Amendment.                                                                      

    16. Current Exhibit 13.15B of the Agreement, the Contributed Contracts, is
hereby amended to have added to it the contents of Attachment C to this         
Amendment.                                                                      

    17. Current Exhibit 13.15D of the Agreement, the Group Products, is hereby
amended to have added to it the contents of Attachment D to this Amendment.     

     18. Current Exhibit 13.15E of the Agreement, the Permitted Encumbrances, is
hereby amended to have added to it the contents of Attachment E to this         
Amendment.                                                                      

   19. The definition for "Contributed Assets" contained in Section 13.15 is
hereby replaced in its entirety with the following text:                        

    "Contributed Assets" shall mean (i) those assets, including real
 property assets, that are owned, leased or licensed by the Contributing
Companies that are (A) listed on Exhibit 13.15A attached hereto, (B)  
   Intellectual Property Rights used in the production, development, support
    or marketing of the Group Products or (C) used in the Group Business, (ii)
   all Commit Transaction Receivables and (iii) all Contributed Contracts to
which any of the Contributing Companies is a party, but in all cases  
excluding the Excluded Assets.                                        

20. The following definitions are hereby added to Section 13.15:      

        "Caldera Fiscal Quarter" shall mean any three-month period ending on
    any of the following days of the year: October 31, January 31, April 30 or
July 31.                                                              

        "Commit Transaction Receivables" shall mean that portion of accounts
   receivable arising from transactions involving Group Products for which a
     contractual right to payment or true up is not yet due SCO at the Effective
Time. By way of example, and to the parties current knowledge, Exhibit
    13.15F reflects the Commit Transaction Receivables that would exist if the
Effective Time were as of the date hereof.                            

"Earn-out Amount" is defined in Section 1.3(a)(1)(B).       

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    "Earn-out Payment Date" means the 45th day following each of the
   fourth, the eighth and the twelfth full Caldera Fiscal Quarters following
the Effective Time.                                                   

"Earn-out Period" is defined in Section 1.3(a)(1)(B).       

       "Earn-out Threshold," with respect to any particular Caldera Fiscal
Quarter, shall be as set forth on Exhibit 13.15G.                     

      "OpenServer Business" means the business of SCO and its direct and
  indirect subsidiaries with respect to the OpenServer Products, including
  without limitation the business of developing, manufacturing, marketing,
licensing, distributing, using, operating, installing, servicing,     
supporting, maintaining, repairing or otherwise using or commercially 
    exploiting the OpenServer Products; provided, however, that the OpenServer
Business shall in no way include any other line of business of Newco, 
     notwithstanding that such other line of business may incorporate OpenServer
kernel or library code that implements less than 15% of the OpenServer
Application Binary Interfaces.                                        

"OpenServer Products" means all software, development tools,
compilers, libraries, driver kits, utilities, and the operating system
    software and other products in whole or in part based on or developed from
    or for the AT&T Unix System V version 3.2 kernel and any successor to that
kernel, including the kernel, the code base, the application program  
  interfaces, the application binary interfaces, derivative works thereof,
     and those products offered under the names or marks "Appliance Server," SCO
  Admin, SCO OpenServer Enterprise System, SCO OpenServer Host System, SCO
     OpenServer Internet FastStart System, or SCO OpenServer Desktop System, SCO
Virtual Disk Manager, SCO Doctor, SCO ARCserve/Open, SCO Merge, SCO   
OpenServer SMP(TM) Licenses, SCO PPP from Morning Star, SCO Internet  
     Security Package, SCO Internet to NetWare Gateway, and Interscan VirusWall,
 and all successors, upgrades, enhancements, releases, new versions, and
 updates to any of the above that have been developed or acquired by the
Contributing Companies as of the Effective Time.                      

          "OpenServer Revenue" shall mean all revenue relating to the OpenServer
Business, less product returns and provisions for bad debt.           

"Secured Note" is defined in Section 1.3(a)(1)(A).          

   21. The definitions for "Caldera Percentage Interest" and "SCO Percentage
Interest" found in Section 13.15 are deleted in their entirety.                 

[SIGNATURE PAGE TO FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Agreement and Plan of Reorganization as of the date first above written.        

                                      THE SANTA CRUZ OPERATION, INC.
                                a California corporation

                               By: /s/ DOUGLAS MICHELS
                                              ----------------------------------
                               Douglas Michels
                                             President and Chief Executive
                       Officer

                             CALDERA SYSTEMS, INC.
                              a Delaware corporation

                           By: /s/ RANSOM LOVE
                                              ----------------------------------
                           Ransom Love
                                       Chief Executive Officer

                                   CALDERA INTERNATIONAL, INC.
                              a Delaware corporation

                           By: /s/ RANSOM LOVE
                                              ----------------------------------
                           Ransom Love
                                       Chief Executive Officer

[SIGNATURE PAGE TO AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION] 
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EXHIBIT 1.4(b)(i)(D)

    Certain Excluded Assets owned by SCO have been bundled into OpenServer and
UnixWare and are listed as follows:                                             

- Webtop                                                              

- Vision FS                                                           

- Term Lite                                                           

- Xdesktop                                                            

- Panorama                                                            

- Tarantella (all versions)                                           

1. PAID-UP LICENSE TO XDESKTOP AND PANORAMA                                     

SCO hereby grants Caldera International, Inc. ("Caldera") a perpetual,
irrevocable, worldwide, non-exclusive, fully paid-up and royalty free license to
use, modify and sublicense the object code and source code of the current       
versions of Xdesktop and Panorama as part of OpenServer and UnixWare. However,  
SCO is not obligated to provide any future updates to either Xdesktop or        
Panorama nor provide any ongoing support for either product.                    

2. GRACE PERIOD FOR REMOVAL OF TECHNOLOGY                                       

    Within 60 days from the Effective Time or the shipping of a new release of
UnixWare7 or OpenServer, whichever is sooner ("Grace Period"), Caldera will     
remove or disable Webtop, VisionFS and Term Lite from UnixWare7 and OpenServer  
products. SCO shall commence engineering work to remove Webtop, VisionFS and    
Term Lite between now and the Effective Time and both parties agree to use their
best efforts to complete this work as quickly as possible. During this Grace    
Period, SCO grants Caldera a non-exclusive, royalty-free license to use and     
sublicense Webtop, VisionsFS and Term Lite as bundled with UnixWare7 and        
OpenServer. Following the expiration of the Grace Period, Caldera shall pay SCO 
a royalty for VisionFS and Webtop in accordance with Section 3.2 of this        
Exhibit.                                                                        

3. ROYALTIES DUE TO SCO FOR FUTURE SHIPMENTS                                    

3.1 UNBUNDLED PRODUCT SALES                                                 

   Caldera may sell both VisionFS and Tarantella Express as unbundled add on
products with OpenServer and UnixWare. For sales of VisionFS, where such sale is
an unbundled add on, Caldera shall pay to SCO a royalty of 40% of net revenues  
received from the sale of Vision FS or 20% of the then-current SCO list price   
for Vision FS, whichever is higher. Caldera may purchase and resell Tarantella  
products using SCO's then-current distribution agreement. Caldera may also sell 
Webtop, Vision FS, Term Lite, Xdesktop and Panorama with the OpenServer and     
UnixWare packaging under the terms of that certain OEM Distribution Agreement,  
dated June 27, 2000, between Caldera Systems and SCO, as may be amended from    
time to time.                                                                   

3.2  BUNDLED PRODUCT/TECHNOLOGY SALES                                       

    Following the expiration of the Grace Period, when Caldera sells Vision FS
or Tarantella Express bundled (not separately priced) with OpenServer or        
UnixWare, Caldera shall pay to SCO a royalty of 20% of the then-current SCO list
price for the unbundled SCO product. When Caldera sells any version of UnixWare 
with Webtop bundled, the royalty due for Webtop shipments will be $100 per      
bundled unit sold. SCO shall not be obligated to provide support with respect to
Vision FS, Tarantella Express or Webtop products; provided, however, that SCO   
shall, at the Effective Time, provide to Caldera licenses to the source code of 
such products for support purposes only, each in substantially the form attached
hereto.                                                                         

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                                                                      APPENDIX B

                                                                February 5, 2001

                                                                    CONFIDENTIAL

Board of Directors                                                              
Caldera Systems, Inc.                                                           
240 West Center Street                                                          
Orem, UT 84057                                                                  

Dear Members of the Board:                                                      

We understand that Caldera Systems, Inc. ("Caldera"), Caldera         
International, Inc. ("Newco") and The Santa Cruz Operation, Inc. ("SCO") propose
to enter into an Agreement and Plan of Reorganization (as amended, the          
"Agreement") pursuant to which (i) a newly-formed, wholly-owned subsidiary of   
Newco will be merged with and into Caldera (the "Merger"), with each share of   
Caldera common stock ("Caldera Common Stock") being converted into one share    
(the "Caldera Ratio") of Newco common stock ("Newco Common Stock") and (ii) SCO 
and certain of its subsidiaries will contribute certain of their assets and     
liabilities and all of the capital stock of the Contributed Companies (as       
defined in the Agreement) to Newco in exchange for (A) sixteen million shares of
Newco common stock, (B) twenty-three million dollars by the combination of cash 
and the cancellation of SCO's outstanding indebtedness to Caldera, (C) an eight 
million dollar non-interest bearing note secured by the assets of the OpenServer
Business (as defined in the Agreement), and (D) the right to receive certain    
"Earn-Out Amounts" during the three year period beginning with the first, full  
Caldera Fiscal Quarter (as defined in the Agreement) following the effective    
time of the Merger, based on the achievement by the OpenServer Business of      
certain financial milestones. The transaction described in (ii) above is        
referred to herein as the "SCO Transaction." It is intended that the merger and 
exchange referred to above qualify as a reorganization and tax-free exchange    
under the provisions of Section 368(a) and Section 351(a) of the Internal       
Revenue Code, as applicable. The terms and conditions of the above-described    
Merger and SCO Transaction (the "Transaction") are more fully detailed in the   
Agreement.                                                                      

 You have requested our opinion as to whether the Caldera Ratio is fair,
from a financial point of view, to holders of Caldera Common Stock.             

   Broadview International LLC ("Broadview") focuses on providing merger and
acquisition advisory services to information technology ("IT"), communications  
and media companies. In this capacity, we are continually engaged in valuing    
such businesses, and we maintain an extensive database of IT, communications and
media mergers and acquisitions for comparative purposes. We are currently acting
as financial advisor to Caldera's Board of Directors and will receive a fee from
Caldera upon the successful conclusion of the Transaction.                      

In rendering our opinion, we have, among other things:                

         (1) reviewed the terms of a draft of the Third Amendment To Agreement
And Plan Of Reorganization dated February 3, 2001 furnished to us by  
 Caldera's counsel on February 3, 2001 and the terms of a draft Form S-4
     dated December 18, 2000 furnished to us by Caldera's counsel on January 29,
2001. For the purposes of this opinion, we have assumed, with your    
     permission, that the Agreement attached to the draft S-4 and the amendments
to the Agreement furnished to us and/or attached to the draft S-4, are
 identical in all material respects to the Agreement and amendments that
     have been/will be executed except that we have assumed with your permission
     that the Group Business (as defined in the Agreement) includes, among other
 things, the professional services business of SCO and its subsidiaries;

       (2) reviewed the balance sheet relating to the Group Business as of
     September 30, 2000 from the draft S-4 provided to us by Caldera counsel and
assumed, with Caldera management permission,                          

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Caldera Systems, Inc. Board of Directors                        February 5, 2001
Page  2                                                                         

     that there are no substantial changes to the balance sheet liabilities as a
     result of the inclusion of the OpenServer Business in the definition of the
Group Business as part of the Third Amendment;                        

          (3) reviewed annual financial projections through October 31, 2002 for
     Newco assuming completion of the Transaction prepared and provided to us by
Caldera management;                                                   

     (4) reviewed certain internal financial and operating information
   concerning the Group Business (without giving effect to the Transaction),
   including income statement projections through September 30, 2002 jointly
prepared and provided to us by Caldera and SCO managements;           

      (5) participated in discussions with SCO management concerning the
    operations, business strategy, financial performance and prospects for the
Group Business;                                                       

         (6) discussed with SCO management its view of the strategic rationale
for the Transaction;                                                  

          (7) compared certain aspects of the financial performance of the Group
Business with public companies we deemed comparable;                  

(8) analyzed available information, both public and private,
  concerning other mergers and acquisitions we believe to be comparable in
whole or in part to the SCO Transaction;                              

        (9) reviewed (i) Caldera's annual report on Form 10-K, including the
    audited financial statements of Caldera for its fiscal years ended October
 31, 1998, 1999, and 2000 included therein, and (II) Caldera's financial
     press release dated December 6, 2000 for the period ended October 31, 2000,
including the unaudited financial statements included therein;        

      (10) reviewed certain internal financial and operating information
  concerning Caldera (without giving effect to the Transaction), including
quarterly projections through October 31, 2002, relating to Caldera,  
prepared and furnished to us by Caldera management;                   

       (11) participated in discussions with Caldera management concerning
the operations, business strategy, current financial performance and  
prospects for Caldera;                                                

    (12) discussed with Caldera management its view of the strategic
rationale for the Transaction;                                        

         (13) reviewed the recent reported closing prices and trading activity
for Caldera Common Stock;                                             

         (14) compared certain aspects of the financial performance of Caldera
with public companies we deemed comparable;                           

          (15) reviewed recent equity research analyst reports covering Caldera;

         (16) analyzed the anticipated effect of the Transaction on the future
financial performance of Newco;                                       

    (17) participated in discussions related to the Transaction with
Caldera, SCO and their respective advisors; and                       

          (18) conducted other financial studies, analyses and investigations as
we deemed appropriate for purposes of this opinion.                   

     In rendering our opinion, we have relied, without independent verification,
on the accuracy and completeness of all the financial and other information     
(including without limitation the representations and warranties contained in   
the Agreement) that was publicly available or furnished to us by Caldera or SCO.
With respect to the financial projections examined by us, we have assumed that  
they were reasonably prepared and reflected the best available estimates and    
good faith judgments of (i) management of Caldera as to the future performance  
of Caldera and Newco and (ii) management of Caldera and SCO as to the future    
performance of the Group Business.                                              

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Caldera Systems, Inc. Board of Directors                        February 5, 2001
Page  3                                                                         

 Based upon and subject to the foregoing, we are of the opinion that the
Caldera Ratio is fair, from a financial point of view, to holders of Caldera    
Common Stock.                                                                   

    For purposes of this opinion, we have assumed that neither Caldera nor SCO
is currently involved in any material transaction other than the Transaction,   
other publicly announced transactions, other preliminary discussed transactions 
confidentially disclosed to us, and those activities undertaken in the ordinary 
course of conducting their respective businesses. Our opinion is necessarily    
based upon market, economic, financial and other conditions as they exist and   
can be evaluated as of the date of this opinion, and any change in such         
conditions would require a reevaluation of this opinion. We express no opinion  
as to the price at which Caldera Common Stock or Newco Common Stock will trade  
at any time in the future.                                                      

    This opinion speaks only as of the date hereof. It is understood that this
opinion is for the information of the Board of Directors of Caldera in          
connection with its consideration of the Agreement and does not constitute a    
recommendation to any Caldera stockholder as to how such stockholder should vote
on the Agreement. This opinion may not be published or referred to, in whole or 
part, without our prior written permission, which shall not be unreasonably     
withheld. Broadview hereby consents to references to and the inclusion of this  
opinion in its entirety in the Prospectus/Proxy Statement to be distributed to  
Caldera stockholders in connection with the Transaction.                        

                  Sincerely,

                                   Broadview International LLC

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                                                                      APPENDIX C

                             [JPMORGAN HNQ LOGO]
                                                    TELEPHONE: 416
                                              271-3440

                                                           CHASE SECURITIES INC.
                                                     ONE BUSH STREET
                                                       SAN FRANCISCO, CA
                                           94104

February 8, 2001                                                                

The Board of Directors                                                          
The Santa Cruz Operation, Inc.                                                  
400 Encinal Street                                                              
Santa Cruz, CA 95060                                                            

Ladies and Gentlemen:                                                           

   You have requested our opinion as to the fairness, from a financial point
of view, to the stockholders of The Santa Cruz Operation, Inc., a California    
corporation ("SCO" or the "Company") of the consideration to be received by the 
Company in connection with the Proposed Transaction (as defined herein below)   
pursuant to the proposed Agreement and Plan of Reorganization dated as of August
1, 2000, as amended by Amendment No. 1 thereto dated as of September 13, 2000   
and as further amended by Amendment No. 2 thereto dated as of December 12, 2000 
and Amendment No. 3 dated as of February 8, 2001, among Caldera Systems, Inc., a
Delaware corporation ("Caldera"), Caldera Holding, Inc., a Delaware corporation 
("Newco") and the Company (as amended, the "Agreement") (i) a newly formed      
wholly owned subsidiary of Newco will be merged with and into Caldera, with     
Caldera being the surviving corporation in such merger (the "Merger"), and all  
outstanding Caldera securities will be converted, on a share-for-share basis,   
into Newco securities having identical rights, preferences and privileges as    
such Caldera securities had immediately prior to the Merger, and with Newco     
assuming any and all outstanding options and other rights to purchase shares of 
capital stock of Caldera (ii) the Company and certain of its subsidiaries will  
contribute (the "Contribution") to Newco (x) all of the capital stock of certain
subsidiaries of the Company (the "Contributed Companies") and (y) certain assets
of the Contributed Companies set forth in the Agreement in consideration for (1)
the issuance by Newco to the Company of that number of fully paid and           
nonassessable shares of Newco Common Stock equal to the sum of 16 million shares
less certain shares to be issued to the Company and placed directly into escrow 
by Caldera as provided by the Agreement, with the number of shares to be        
appropriately adjusted in the event of any Caldera stock split, stock           
combination, reclassification or other similar capital change, (2) the payment  
to the Company of cash consideration equal to twenty-three million dollars      
($23,000,000), in the form of the combination of a wire transfer of immediately 
available funds and the cancellation of the Company's then outstanding          
indebtedness to Caldera, (3) the issuance to the Company of a                   
non-interest-bearing promissory note in the amount of up to eight million       
dollars ($8,000,000), secured by the assets of the Company's OpenServer         
business, (4) the Company's right to receive from Newco on certain dates over   
the twelve quarters following the closing of the Proposed Transaction, 45% of   
the amount by which OpenServer revenue exceeds quarterly revenue targets and (5)
the transfer to                                                                 

[CHASE FOOT LOGO] 

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The Santa Cruz Operation, Inc. Board of Directors               February 8, 2001
Page  2                                                                         

Caldera of certain contingent accounts receivable, estimated to be approximately
four million dollars ($4,000,000), which may become payable to the Company from 
and after the closing date of the Proposed Transactions as a result of the      
occurrence of certain events specified in certain contracts between the Company 
and third parties; and (iii) Newco will assume all options to acquire capital   
stock of the Company held by employees of the Company who are hired or retained 
by Caldera (the transactions described in clauses (i), (ii) and (iii) being     
referred to herein as the "Proposed Transaction").                              

  In arriving at our opinion, we have reviewed (i) the Agreement; (ii) the
publicly available consolidated financial statements of Caldera for recent years
and interim periods to date and certain other relevant financial and operating  
data of Caldera (including its capital structure) made available to us from     
published sources; (iii) certain publicly available projected financial and     
operating information relating to Caldera; (iv) publicly available terms of     
certain transactions involving companies comparable to the Company and the      
consideration received for such companies; (v) the internal unaudited financial 
statements of the Contributed Companies for recent years and interim periods to 
date and certain other relevant financial data of the Contributed Companies made
available to us from the internal records of the Company; (vi) certain internal 
projected financial and operating information relating to the Contributed       
Companies prepared by the senior management of the Company; (vii) certain       
internal projected financial and operating information relating to Caldera      
prepared by the senior management of Caldera; (viii) certain internal           
projections of potential synergies relating to the Proposed Transaction prepared
by the senior management of Caldera; (ix) the recent reported prices and trading
activity for the common stock of Caldera; (x) compared the recent reported      
prices and trading activity for the common stock of Caldera and certain         
financial information for Caldera and the Contributed Companies with similar    
information for certain other companies engaged in businesses we consider       
comparable; and (xi) the terms of other business combinations that we deemed    
relevant.                                                                       

In addition, we have held discussions with certain members of the     
management of the Company and Caldera with respect to certain aspects of the    
Proposed Transaction, and the past and current business operations of the       
Company and Caldera, the financial condition and future prospects and operations
of the Company and Caldera, the effects of the Proposed Transaction on the      
financial condition and future prospects of the Company and Caldera, and certain
other matters we believed necessary or appropriate to our inquiry. We have      
reviewed such other financial studies and analyses and considered such other    
information as we deemed appropriate for the purposes of this opinion.          

     In giving our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was publicly
available or was furnished to us by the Company and Caldera or the Contributed  
Companies or otherwise reviewed by us, and we have not assumed any              
responsibility or liability therefore. We have not conducted any valuation or   
appraisal of any assets or liabilities, nor have any such valuations or         
appraisals been provided to us. In relying on financial analyses and forecasts  
provided to us, we have assumed that they have been reasonably prepared based on
assumptions reflecting the best currently available estimates and judgments by  
management as to the expected future results of operations and financial        
condition of the company or business to which such analyses or forecasts relate.
We have also assumed that the Merger will have the tax consequences described in
discussions with, and materials furnished to us by, representatives of the      
Company and Caldera, and that the other transactions contemplated by the        
Agreement will be consummated as described in the Agreement. We have relied as  
to all legal matters relevant to rendering our opinion upon the advice of       
counsel to the Company and Caldera, as applicable.                              

     Our opinion is necessarily based upon market, economic, financial and other
conditions as they exist and can be evaluated as of the date of this letter and 
any change in such conditions would require a reevaluation of this opinion. We  
express no opinion as to the price at which Newco common stock will trade       
subsequent to the Effective Time (as defined in the Agreement). In rendering    
this opinion, we have                                                           

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The Santa Cruz Operation, Inc. Board of Directors               February 8, 2001
Page  3                                                                         

assumed that the proposed merger will be consummated substantially on the terms 
discussed in the Agreement, without any waiver of any material terms or         
conditions by any party thereto.                                                

     Although we advised the Company with respect to the Transaction pursuant to
the original Agreement, we were not requested to and did not provide advice     
concerning the structure, the specific amount and type of the consideration, or 
any other aspects of the Transaction pursuant to Amendment 1, Amendment 2 and   
Amendment 3 to the Agreement. We did not participate in negotiations with       
respect to the terms of such Amendment 1, Amendment 2 and Amendment 3.          
Consequently, we have assumed that such terms are the most beneficial terms from
the Company's perspective that could under the circumstances be negotiated among
the parties.                                                                    

We have acted as financial advisor to the Company with respect to the 
Proposed Transaction and will receive a fee from the Company for the delivery of
this opinion. We will also receive an additional fee if the Proposed Transaction
is consummated. In the past, we have provided investment banking and other      
financial advisory services to SCO and have received fees for rendering these   
services. In the ordinary course of business, J.P. Morgan H&Q and its affiliates
act as a market maker and broker in the publicly traded securities of SCO and   
receives customary compensation in connection therewith, and also provides      
research coverage for SCO. In the ordinary course of business, J.P. Morgan H&Q  
and its affiliates actively trade in the equity and derivative securities of SCO
for its own account and for the accounts of its customers and, accordingly, may 
at any time hold a long or short position in such securities. J.P. Morgan H&Q   
and its affiliates may in the future provide additional investment banking or   
other financial advisory services to SCO. In the ordinary course of their       
businesses, J.P. Morgan H&Q and its affiliates may actively trade the equity    
securities of Caldera for their own account or for the accounts of customers    
and, accordingly, they may at any time hold long or short positions in such     
securities.                                                                     

  Based upon and subject to the foregoing and after considering such other
matters as we deem relevant, we are of the opinion that, as of the date hereof, 
the consideration to be received by the Company in the Proposed Transaction is  
fair to the stockholders of the Company from a financial point of view. We      
express no opinion, however, as to the adequacy of any consideration received in
the Proposed Transaction by Caldera or any of its affiliates.                   

This letter is provided to the Board of Directors of the Company in   
connection with and for the purposes of its evaluation of the Proposed          
Transaction. This opinion does not constitute a recommendation to any           
stockholder of the Company as to how such stockholder should vote with respect  
to the Proposed Transaction. This opinion may not be disclosed, referred to, or 
communicated (in whole or in part) to any third party for any purpose whatsoever
except with our prior written consent in each instance. This opinion may be     
reproduced in full in any proxy or information statement mailed to stockholders 
of the Company but may not otherwise be disclosed publicly in any manner without
our prior written approval and must be treated as confidential.                 

                         Very truly yours,

                             CHASE SECURITIES INC.

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                                                                      APPENDIX D

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF CALDERA INTERNATIONAL, INC.

(Pursuant to Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware)

  Caldera International, Inc. (the "Corporation"), a corporation organized
and existing under the General Corporation Law of the State of Delaware (the    
"General Corporation Law"),                                                     

DOES HEREBY CERTIFY:                                                  

FIRST:  That the Corporation filed its original Certificate of        
Incorporation with the Secretary of State of Delaware on July 28, 2000, under   
the name Caldera Holdings, Inc. The Corporation filed a Certificate of Amendment
with the Secretary of State of Delaware on September 12, 2000, changing its     
corporate name to "Caldera, Inc." The Corporation filed a Certificate of        
Amendment with the Secretary of State of Delaware on September 26, 2000.        

    SECOND:  That the Board of Directors duly adopted resolutions proposing to
amend and restate the Certificate of Incorporation of the Corporation, declaring
said amendment and restatement to be advisable and in the best interests of the 
Corporation and its stockholders, and authorizing the appropriate officers of   
the Corporation to solicit the consent of the stockholders of the issued and    
outstanding Common Stock, $0.001 par value, and Preferred Stock, $0.001 par     
value, voting as a single class and as separate classes, all in accordance with 
the applicable provisions of Sections 228, 242 and 245 of the General           
Corporation Law of the State of Delaware;                                       

THIRD:  That the resolution setting forth the proposed amendment and  
restatement is as follows:                                                      

  "RESOLVED, that the Amended and Restated Certificate of Incorporation of
the Corporation be amended and restated in its entirety as follows:             

ARTICLE I 

NAME

The name of the Corporation is "Caldera International, Inc."          

ARTICLE II

REGISTERED OFFICE 

 The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,   
County of New Castle, and the name of the registered agent at such address is   
The Corporation Trust Company.                                                  

ARTICLE III 

POWERS/TERM 

   The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law. The 
Corporation is to have perpetual existence.                                     

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ARTICLE IV

CAPITAL STOCK 

     A. Classes of Stock.  The Corporation is authorized to issue two classes of
stock to be designated, respectively, "Common Stock" and "Preferred Stock." The 
total number of shares which the Corporation is authorized to issue is          
200,000,000 shares. 175,000,000 shares, par value $0.001 per share, shall be    
Common Stock and 25,000,000 shares, par value $0.001 per share, shall be        
Preferred Stock. The consideration for the issuance of the shares shall be paid 
to or received by the Corporation in full before their issuance and shall not be
less than the par value per share. The number of authorized shares of Common    
Stock may be increased or decreased (but not below the number of shares there of
then outstanding) by the affirmative vote of the holders of a majority of the   
stock of the Corporation entitled to vote, irrespective of the provisions of    
Section 242(b)(2) of the General Corporation Law of Delaware.                   

B. Common Stock.                                                      

       (1) General.  All shares of Common Stock will be identical and will
    entitle the holders thereof to the same rights, powers and privileges. The
rights, powers and privileges of the holders of the Common Stock are  
   subject to and qualified by the rights of holders of any then outstanding
Preferred Stock.                                                      

          (2) Dividends.  Dividends may be declared and paid on the Common Stock
    from funds lawfully available therefor as and when determined by the Board
  of Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.                                          

    (3) Dissolution, Liquidation or Winding Up.  In the event of any
   dissolution, liquidation or winding up of the affairs of the Corporation,
whether voluntary or involuntary, each issued and outstanding share of
   Common Stock shall entitle the holder thereof to receive an equal portion
of the net assets of the Corporation available for distribution to the
 holders of Common Stock, subject to any preferential rights of any then
outstanding Preferred Stock.                                          

   (4) Voting Rights.  Except as otherwise required by law or this
  Amended and Restated Certificate of Incorporation, each holder of Common
    Stock shall have one vote in respect of each share of stock held of record
by such holder on the books of the Corporation for the election of    
 directors and on all matters submitted to a vote of stockholders of the
Corporation. Except as otherwise required by law or provided herein,  
     holders of Preferred Stock shall vote together with holders of Common Stock
    as a single class, subject to any special or preferential voting rights of
    any then outstanding Preferred Stock. There shall be no cumulative voting.

(5) Redemption.  The Common Stock is not redeemable.        

C. Preferred Stock.  The Board of Directors is authorized, subject to 
limitations prescribed by law, by the rules of a national securities exchange,  
if applicable, and by the provisions of this ARTICLE IV, to provide for the     
issuance of the shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time 
to time the number of shares to be included in each such series, and to fix the 
designation, powers, preferences, and rights of the shares of each such series  
and the qualifications, limitations or restrictions thereof.                    

   The authority of the Board with respect to each series shall include, but
not be limited to, determination of the following:                              

         (1) The number of shares constituting that series and the distinctive
designation of that series;                                           

         (2) The dividend rate on the shares of that series, whether dividends
     shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that 
series;                                                               

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        (3) Whether that series shall have voting rights, in addition to the
     voting rights provided by law, and, if so, the terms of such voting rights;

         (4) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for  
    adjustment of the conversion rate in such events as the Board of Directors
shall determine;                                                      

          (5) Whether or not the shares of that series shall be redeemable, and,
   if so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable, and the amount per
    share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;                         

        (6) Whether that series shall have a sinking fund for the redemption
   or purchase of shares of that series, and, if so, the terms and amount of
such sinking fund;                                                    

         (7) The rights of the shares of that series in the event of voluntary
   or involuntary liquidation, dissolution or winding up of the Corporation,
   and the relative rights or priority, if any, of payment of shares of that
series; and                                                           

      (8) Any other relative rights, preferences and limitations of that
series.                                                               

Dividends on outstanding shares of Preferred Stock shall be paid or   
declared and set apart for payment before any dividends shall be paid or        
declared and set apart for payment on the Common Stock with respect to the same 
dividend period.                                                                

     If upon any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, the assets available for distribution to holders of shares  
of Preferred Stock of all series shall be insufficient to pay such holders the  
full preferential amount to which they are entitled, then such assets shall be  
distributed ratably among the shares of all series of Preferred Stock in        
accordance with the respective preferential amounts (including unpaid cumulative
dividends, if any) payable with respect thereto.                                

D. Preemptive Rights.  No holder of any of the shares of any class or 
series of stock or of options, warrants or other rights to purchase shares of   
any class or series of stock or of other securities of the Corporation shall    
have any preemptive right to purchase or subscribe for any unissued stock of any
class or series, or any unissued bonds, certificates of indebtedness, debentures
or other securities convertible into or exchangeable for stock of any class or  
series or carrying any right to purchase stock of any class or series; but any  
such unissued stock, bonds, certificates or indebtedness, debentures or other   
securities convertible into or exchangeable for stock or carrying any right to  
purchase stock may be issued pursuant to resolution of the Board of Directors of
the Corporation to such persons, firms, corporations or associations, whether or
not holders thereof, and upon such terms as may be deemed advisable by the Board
of Directors in the exercise of its sole discretion.                            

ARTICLE V 

DIRECTORS 

A. Number.  The number of directors of the Corporation shall be such  
number, not less than five (5) nor more than fifteen (15) (exclusive of         
directors, if any, to be elected by holders of preferred stock of the           
Corporation, voting separately as a class), as shall be set forth from time to  
time in the Bylaws. Vacancies in the Board of Directors of the Corporation,     
however caused, and newly created directorships shall be filled by a vote of a  
majority of the directors then in office, whether or not a quorum, and any      
director so chosen shall hold office for a term expiring at the annual meeting  
of stockholders at which the term of the class to which the director has been   
chosen expires and when the director's successor is elected and qualified.      

B. Removal of Directors.  Notwithstanding any other provisions of this
Certificate or the Bylaws of the Corporation, any director or the entire Board  
of Directors of the Corporation may be removed, at any                          

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time, but only for cause and only by the affirmative vote of the holders of not 
less than a majority of the outstanding shares of capital stock of the          
Corporation entitled to vote generally in the election of directors (considered 
for this purpose as one class) cast at a meeting of the stockholders called for 
that purpose. Notwithstanding the foregoing, whenever the holders of any one or 
more series of preferred stock of the Corporation shall have the right, voting  
separately as a class, to elect one or more directors of the Corporation, the   
preceding provisions of this ARTICLE V shall not apply with respect to the      
director or directors elected by such holders of Preferred Stock.               

ARTICLE VI

STOCKHOLDER MEETINGS

Meetings of stockholders may be held within or without the State of   
Delaware, as the Bylaws may provide. The books of the Corporation may be kept   
(subject to any provision contained in the statutes) outside the State of       
Delaware at such place or places as may be designated from time to time by the  
Board of Directors or in the Bylaws of the Corporation. The stockholders of the 
Corporation may not take any action by written consent in lieu of a meeting.    

ARTICLE VII 

LIMITATION OF DIRECTORS' LIABILITY

     Except to the extent that the General Corporation Law of Delaware prohibits
the elimination or limitation of liability of directors for breaches of         
fiduciary duty, no director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, notwithstanding any provision of law imposing such          
liability. If the General Corporation Law is amended after approval by the      
stockholders of this ARTICLE VII to authorize corporate action further          
eliminating or limiting the personal liability of directors, then the liability 
of a director of the Corporation shall be eliminated or limited to the fullest  
extent permitted by the General Corporation Law of the State of Delaware, as so 
amended. No amendment to or repeal of this provision shall apply to or have any 
effect on the liability or alleged liability of any director of the Corporation 
for or with respect to any acts or omissions of such director occurring prior to
such amendment.                                                                 

ARTICLE VIII

INDEMNIFICATION 

    The Corporation may, to the fullest extent permitted by Section 145 of the
General Corporation Law of Delaware, as amended from time to time, indemnify    
each person who was or is a party or is threatened to be made a party to any    
threatened, pending or completed action, suit or proceeding, whether civil,     
criminal, administrative or investigative, by reason of the fact that he is or  
was, or has agreed to become, a director or officer of the Corporation, or is or
was serving, or has agreed to serve, at the request of the Corporation, as a    
director, officer or trustee of, or in a similar capacity with, another         
corporation, partnership, joint venture, trust or other enterprise (including   
any employee benefit plan) (all such persons being referred to hereafter as an  
"Indemnitee"), or by reason of any action alleged to have been taken or omitted 
in such capacity, against all expenses (including attorneys' fees), judgments,  
fines and amounts paid in settlement actually and reasonably incurred by him or 
on his behalf in connection with such action, suit or proceeding and any appeal 
therefrom.                                                                      

Indemnification may include payment by the Corporation of expenses in 
defending an action or proceeding in advance of the final disposition of such   
action or proceeding upon receipt of an undertaking by the Indemnitee to repay  
such payment if it is ultimately determined that such person is not entitled to 
indemnification under this ARTICLE VIII, which undertaking may be accepted      
without reference to the financial ability of such person to make such          
repayment.                                                                      

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     The Corporation shall not indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person      
unless the initiation thereof was approved by the Board of Directors of the     
Corporation.                                                                    

   The indemnification rights provided in this ARTICLE VIII (i) shall not be
deemed exclusive of any other rights to which Indemnitees may be entitled under 
any law, agreement or vote of stockholders or disinterested directors or        
otherwise, and (ii) shall inure to the benefit of the heirs, executors and      
administrators of such persons. The Corporation may, to the extent authorized   
from time to time by its Board of Directors, grant indemnification rights to    
other employees or agents of the Corporation or other persons serving the       
Corporation and such rights may be equivalent to, or greater or less than, those
set forth in this ARTICLE VIII.                                                 

ARTICLE IX

AMENDMENT OF BYLAWS 

     In furtherance of and not in limitation of powers conferred by statute, the
Board of Directors of the Corporation is expressly authorized to adopt, repeal, 
alter, amend and rescind the Bylaws of the Corporation by vote of a majority of 
the Board of Directors. In addition, the Bylaws may be amended by the           
affirmative vote of the holders of at least two-thirds of the outstanding shares
of voting stock of the Corporation entitled to vote at an election of directors.

ARTICLE X 

AMENDMENT OF CERTIFICATE

  The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,  
in the manner now or hereafter prescribed by statute and this Amended and       
Restated Certificate of Incorporation, and all rights conferred upon            
stockholders herein are granted subject to this reservation. Notwithstanding the
foregoing, the provisions set forth in ARTICLES V, VI, VII, VIII, IX and this   
ARTICLE X may not be repealed, altered, amended or rescinded in any respect     
unless the same is approved by the affirmative vote of the holders of not less  
than two-thirds of the outstanding shares of capital stock of the Corporation   
entitled to vote generally in the election of directors (considered for this    
purpose as a single class) cast at a meeting of the stockholders called for that
purpose (provided that notice of such proposed repeal, alteration, amendment or 
rescission is included in the notice of such meeting)."                         

FOURTH: That said amendments were duly adopted in accordance with the 
provisions of Section 242 and 245 of the General Corporation Law.               

    IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation
has been signed by the Chief Executive Officer and the Secretary of the         
Corporation this           day of           2000.                               

                                            ------------------------------------
                                            Ransom H. Love
                                           Chief Executive Officer

                                            ------------------------------------
                                            Alan J. Hansen
                                           Secretary

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                                                                      APPENDIX E

AMENDED AND RESTATED
BYLAWS
OF
CALDERA INTERNATIONAL, INC. 

ARTICLE I 

OFFICES 

     Section 1.  The registered office shall be in the City of New Castle, State
of Delaware.                                                                    

     Section 2.  The corporation may also have offices at such other places both
within and without the State of Delaware as the Board of Directors may from time
to time determine or the business of the corporation may require.               

ARTICLE II

MEETINGS OF STOCKHOLDERS

    Section 1.  All meetings of the stockholders for the election of directors
shall be held at such place as may be fixed from time to time by the Board of   
Directors, or at such other place either within or without the State of Delaware
as shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting. Meetings of stockholders for any other purpose may be
held at such time and place, within or without the State of Delaware, as shall  
be stated in the notice of the meeting or in a duly executed waiver of notice   
thereof.                                                                        

    Section 2.  Annual meetings of stockholders shall be held at such date and
time as shall be designated from time to time by the Board of Directors and     
stated in the notice of the meeting. At each annual meeting, the stockholders   
shall elect directors to succeed those directors whose terms expire in that year
and shall transact such other business as may properly be brought before the    
meeting.                                                                        

  Section 3.  Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at  
such meeting not less than ten (10) nor more than sixty (60) days before the    
date of the meeting.                                                            

Section 4.  The officer who has charge of the stock ledger of the     
corporation shall prepare and make available, at least ten days before every    
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each    
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose  
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the      
meeting is to be held, which place shall be specified in the notice of the      
meeting, or, if not so specified, at the place where the meeting is to be held. 
The list shall also be produced and kept at the time and place of the meeting   
during the whole time thereof, and may be inspected by any stockholder who is   
present.                                                                        

Section 5.  Special meetings of the stockholders, for any purpose or  
purposes, may only be called by the Chairman of the Board or a majority of the  
Board.                                                                          

     Section 6.  Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not fewer than ten (10) nor more than sixty (60) days before the 
date of the meeting, to each stockholder entitled to vote at such meeting.      

Section 7.  Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.                          

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   Section 8.  The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall  
constitute a quorum at all meetings of the stockholders for the transaction of  
business except as otherwise provided by statute or by the certificate of       
incorporation. If, however, such quorum shall not be present or represented at  
any meeting of the stockholders, either the Chairman of the Board, or the       
stockholders entitled to vote thereat, present in person or represented by      
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or      
represented. At such adjourned meeting at which a quorum shall be present or    
represented any business may be transacted that might have been transacted at   
the meeting as originally notified. If the adjournment is for more than thirty  
(30) days, or if after the adjournment a new record date is fixed for the       
adjourned meeting, a notice of the adjourned meeting shall be given to each     
stockholder of record entitled to vote at the meeting.                          

Section 9.  When a quorum is present at any meeting, the vote of the  
holders of a majority of the stock having voting power present in person or     
represented by proxy shall decide any question brought before such meeting,     
unless the question is one upon which by express provision of applicable statute
or of the certificate of incorporation, a different vote is required, in which  
case such express provision shall govern and control the decision of such       
question.                                                                       

    Section 10.  Unless otherwise provided in the certificate of incorporation
each stockholder shall at every meeting of the stockholders be entitled to one  
vote in person or by proxy for each share of the capital stock having voting    
power held by such stockholder, but no proxy shall be voted on after three (3)  
years from its date, unless the proxy provides for a longer period.             

 Section 11.  Nominations for election to the Board of Directors must be
made by the Board of Directors or by a committee appointed by the Board of      
Directors for such purpose or by any stockholder of any outstanding class of    
capital stock of the corporation entitled to vote for the election of directors.
Nominations by stockholders must be preceded by notification in writing received
by the secretary of the corporation not less than one-hundred twenty (120) days 
prior to any meeting of stockholders called for the election of directors. Such 
notification shall contain the written consent of each proposed nominee to serve
as a director if so elected and the following information as to each proposed   
nominee and as to each person, acting alone or in conjunction with one or more  
other persons as a partnership, limited partnership, syndicate or other group,  
who participates or is expected to participate in making such nomination or in  
organizing, directing or financing such nomination or solicitation of proxies to
vote for the nominee:                                                           

       (a) the name, age, residence, address, and business address of each
proposed nominee and of each such person;                             

          (b) the principal occupation or employment, the name, type of business
and address of the corporation or other organization in which such    
    employment is carried on of each proposed nominee and of each such person;

         (c) the amount of stock of the corporation owned beneficially, either
    directly or indirectly, by each proposed nominee and each such person; and

          (d) a description of any arrangement or understanding of each proposed
nominee and of each such person with each other or any other person   
regarding future employment or any future transaction to which the    
corporation will or may be a party.                                   

    The presiding officer of the meeting shall have the authority to
determine and declare to the meeting that a nomination not preceded by
notification made in accordance with the foregoing procedure shall be 
disregarded.                                                          

   Section 12.  At any meeting of the stockholders, only such business shall
be conducted as shall have been brought before the meeting (a) pursuant to the  
corporation's notice of meeting, (b) by or at the direction of the Board of     
Directors or (c) by any stockholder of the corporation who is a stockholder of  
record at the time of giving of the notice provided for in this Bylaw, who shall
be entitled to vote at such meeting and who complies with the notice procedures 
set forth in this Bylaw.                                                        
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 For business to be properly brought before any meeting by a stockholder
pursuant to clause (c) above of this Section 12, the stockholder must have given
timely notice thereof in writing to the secretary of the corporation. To be     
timely, a stockholder's notice must be delivered to or mailed and received at   
the principal executive offices of the corporation not less than one hundred    
twenty (120) days prior to the date of the meeting. A stockholder's notice to   
the secretary shall set forth as to each matter the stockholder proposes to     
bring before the meeting (a) a brief description of the business desired to be  
brought before the meeting and the reasons for conducting such business at the  
meeting, (b) the name and address, as they appear on the corporation's books, of
the stockholder proposing such business, and the name and address of the        
beneficial owner, if any, on whose behalf the proposal is made, (c) the class   
and number of shares of the corporation which are owned beneficially and of     
record by such stockholder of record and by the beneficial owner, if any, on    
whose behalf of the proposal is made and (d) any material interest of such      
stockholder of record and the beneficial owner, if any, on whose behalf the     
proposal is made in such business.                                              

     Notwithstanding anything in these Bylaws to the contrary, no business shall
be conducted at a meeting except in accordance with the procedures set forth in 
this Section 12. The presiding officer of the meeting shall, if the facts       
warrant, determine and declare to the meeting that business was not properly    
brought before the meeting and in accordance with the procedures prescribed by  
this Section 12, and if such person should so determine, such person shall so   
declare to the meeting and any such business not properly brought before the    
meeting shall not be transacted. Notwithstanding the foregoing provisions of    
this Section 12, a stockholder shall also comply with all applicable            
requirements of the Securities Exchange Act of 1934, as amended, and the rules  
and regulations thereunder with respect to the matters set forth in this Section
12.                                                                             

     Section 13.  Effective upon the closing of the corporation's initial public
offering of securities pursuant to a registration statement filed under the     
Securities Act of 1933, as amended, the stockholders of the Corporation may not 
take action by written consent without a meeting but must take any such actions 
at a duly called annual or special meeting in accordance with these Bylaws and  
the Certificate of Incorporation.                                               

ARTICLE III 

DIRECTORS 

Section 1.  The number of directors of this corporation that shall    
constitute the whole board shall be determined by resolution of the Board of    
Directors; provided, however, that no decrease in the number of directors shall 
have the effect of shortening the term of an incumbent director.                

  Section 2.  Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of   
the directors then in office, even if less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next election 
of the class for which such directors were chosen and until their successors are
duly elected and qualified or until earlier resignation or removal. If there are
no directors in office, then an election of directors may be held in the manner 
provided by statute.                                                            

  Section 3.  The business of the corporation shall be managed by or under
the direction of its Board of Directors which may exercise all such powers of   
the corporation and do all such lawful acts and things as are not by statute or 
by the certificate of incorporation or by these bylaws directed or required to  
be exercised or done by the stockholders.                                       

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MEETINGS OF THE BOARD OF DIRECTORS

  Section 4.  The Board of Directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.       

Section 5.  The first meeting of each newly elected Board of Directors
shall be held at such time and place as shall be fixed by the vote of the       
stockholders at the annual meeting and no notice of such meeting shall be       
necessary to the newly elected directors in order legally to constitute the     
meeting, provided a quorum shall be present. In the event of the failure of the 
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and    
place so fixed by the stockholders, the meeting may be held at such time and    
place as shall be specified in a notice given as hereinafter provided for       
special meetings of the Board of Directors, or as shall be specified in a       
written waiver signed by all of the directors.                                  

    Section 6.  Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined  
by the board.                                                                   

    Section 7.  Special meetings of the board may be called by the Chairman of
the Board or the president on twelve (12) hours' notice to each director by     
phone, fax or electronic mail; special meetings shall be called by the Chairman 
of the Board, the president or secretary in like manner and on like notice on   
the written request of a majority of the Board unless the Board consists of only
one director, in which case special meetings shall be called by the Chairman of 
the Board, the president or secretary in like manner and on like notice on the  
written request of the sole director.                                           

    Section 8.  At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors, except as may be otherwise specifically provided by  
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may     
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.                                   

     Section 9.  Unless otherwise restricted by the certificate of incorporation
or these bylaws, any action required or permitted to be taken at any meeting of 
the Board of Directors or of any committee thereof may be taken without a       
meeting, if all members of the board or committee, as the case may be, consent  
thereto in writing, and the writing or writings are filed with the minutes of   
proceedings of the board or committee.                                          

Section 10.  Unless otherwise restricted by the certificate of        
incorporation or these bylaws, members of the Board of Directors, or any        
committee designated by the Board of Directors, may participate in a meeting of 
the Board of Directors, or any committee, by means of conference telephone or   
similar communications equipment by means of which all persons participating in 
the meeting can hear each other, and such participation in a meeting shall      
constitute presence in person at the meeting.                                   

COMMITTEES OF DIRECTORS 

     Section 11.  The Board of Directors may, by resolution passed by a majority
of the whole board, designate one (1) or more committees, each committee to     
consist of one (1) or more of the directors of the corporation. The board may   
designate one (1) or more directors as alternate members of any committee, who  
may replace any absent or disqualified member at any meeting of the committee.  

   In the absence of disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,     
whether or not he or they constitute a quorum, may unanimously appoint another  
member of the Board of Directors to act at the meeting in the place of any such 
absent or disqualified member.                                                  

   Any such committee, to the extent provided in the resolution of the Board
of Directors, shall have and may exercise all the powers and authority of the   
Board of Directors in the management of the                                     

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business and affairs of the corporation, and may authorize the seal of the      
corporation to be affixed to all papers that may require it; but no such        
committee shall have the power or authority in reference to amending the        
certificate of incorporation, adopting an agreement of merger or consolidation, 
recommending to the stockholders the sale, lease or exchange of all or          
substantially all of the corporation's property and assets, recommending to the 
stockholders a dissolution of the corporation or a revocation of a dissolution, 
or amending the bylaws of the corporation; and, unless the resolution or the    
certificate of incorporation expressly so provide, no such committee shall have 
the power or authority to declare a dividend or to authorize the issuance of    
stock. Such committee or committees shall have such name or names as may be     
determined from time to time by resolution adopted by the Board of Directors.   

    Section 12.  Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.                        

COMPENSATION OF DIRECTORS 

Section 13.  Unless otherwise restricted by the certificate of        
incorporation or these bylaws, the Board of Directors shall have the authority  
to fix the compensation of directors. The directors may be paid their expenses, 
if any, of attendance at each meeting of the Board of Directors and may be paid 
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members  
of special or standing committees may be allowed like compensation for attending
committee meetings.                                                             

ARTICLE IV

NOTICES 

Section 1.  Whenever, under the provisions of the statutes or of the  
certificate of incorporation or of these bylaws, notice is required to be given 
to any director or stockholder, it shall not be construed to mean personal      
notice (except as provided in Section 7 of Article III of these Bylaws), but    
such notice may be given in writing, by mail, addressed to such director or     
stockholder, at his address as it appears on the records of the corporation,    
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to      
directors may also be given by telephone, telegram or facsimile.                

Section 2.  Whenever any notice is required to be given under the     
provisions of the statutes or of the certificate of incorporation or of these   
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed   
equivalent thereto.                                                             

ARTICLE V 

OFFICERS

     Section 1.  The officers of the corporation shall be chosen by the Board of
Directors and shall be a president, a chief financial officer and a secretary.  
The Board of Directors may elect from among its members a Chairman of the Board.
The Board of Directors may also choose one or more vice-presidents, assistant   
secretaries and assistant treasurers. Any number of offices may be held by the  
same person, unless the certificate of incorporation or these bylaws otherwise  
provide.                                                                        

   Section 2.  The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a president, a chief financial officer, and
a secretary and may choose vice presidents.                                     

Section 3.  The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms   
and shall exercise such powers and perform such duties as shall be determined   
from time to time by the board.                                                 

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    Section 4.  The salaries of all officers of the corporation shall be fixed
by the Board of Directors or any committee established by the Board of Directors
for such purpose. The salaries of agents of the corporation shall, unless fixed 
by the Board of Directors, be fixed by the president or any vice-president of   
the corporation.                                                                

   Section 5.  The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the Board
of Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the corporation  
shall be filled by the Board of Directors.                                      

THE CHAIRMAN OF THE BOARD 

Section 6.  The Chairman of the Board, if any, shall preside at all   
meetings of the Board of Directors and of the stockholders at which he/she shall
be present. He/she shall have and may exercise such powers as are, from time to 
time, assigned to him/her by the Board and as may be provided by law.           

 Section 7.  In the absence of the Chairman of the Board, the president,
shall preside at all meetings of the Board of Directors and of the stockholders 
at which he shall be present. He shall have and may exercise such powers as are,
from time to time, assigned to him by the Board and as may be provided by law.  

THE PRESIDENT AND VICE-PRESIDENTS 

Section 8.  The president shall be the chief executive officer of the 
corporation and in the absence of the Chairman of the Board, he/she shall       
preside at all meetings of the stockholders and the Board of Directors; he/she  
shall have general and active management of the business of the corporation and 
shall see that all orders and resolutions of the Board of Directors are carried 
into effect.                                                                    

Section 9.  The president or any vice president shall execute bonds,  
mortgages and other contracts requiring a seal, under the seal of the           
corporation, except where required or permitted by law to be otherwise signed   
and executed and except where the signing and execution thereof shall be        
expressly delegated by the Board of Directors to some other officer or agent of 
the corporation.                                                                

Section 10.  In the absence of the president or in the event of his   
inability or refusal to act, the vice-president, if any, (or in the event there 
be more than one vice-president, the vice-presidents in the order designated by 
the directors, or in the absence of any designation, then in the order of their 
election) shall perform the duties of the president, and when so acting, shall  
have all the powers of and be subject to all the restrictions upon the          
president. The vice-presidents shall perform such other duties and have such    
other powers as the Board of Directors may from time to time prescribe.         

THE SECRETARY AND ASSISTANT SECRETARY 

Section 11.  The secretary shall attend all meetings of the Board of  
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the Board of Directors in a book to be   
kept for that purpose and shall perform like duties for the standing committees 
when required. He/she shall give, or cause to be given, notice of all meetings  
of the stockholders and special meetings of the Board of Directors, and shall   
perform such other duties as may be prescribed by the Board of Directors or     
president, under whose supervision he/she shall be. He/she shall have custody of
the corporate seal of the corporation and he/she, or an assistant secretary,    
shall have authority to affix the same to any instrument requiring it and when  
so affixed, it may be attested by his signature or by the signature of such     
assistant secretary. The Board of Directors may give general authority to any   
other officer to affix the seal of the corporation and to attest the affixing by
his signature.                                                                  

 Section 12.  The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the Board of Directors (or if  
there be no such determination, then in the order of                            

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their election) shall, in the absence of the secretary or in the event of his   
inability or refusal to act, perform the duties and exercise the powers of the  
secretary and shall perform such other duties and have such other powers as the 
board of directors may from time to time prescribe.                             

THE CHIEF FINANCIAL OFFICER 

Section 13.  The chief financial officer shall be the chief financial 
officer of the corporation, shall have the custody of the corporate funds and   
securities and shall keep full and accurate accounts of receipts and            
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in  
such depositories as may be designated by the Board of Directors.               

   Section 14.  He/she shall disburse the funds of the corporation as may be
ordered by the Board of Directors, taking proper vouchers for such              
disbursements, and shall render to the president and the Board of Directors, at 
its regular meetings, or when the Board of Directors so requires, an account of 
all his transactions as Chief Financial Officer and of the financial condition  
of the corporation.                                                             

   Section 15.  If required by the Board of Directors, he/she shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for  
the faithful performance of the duties of his/her office and for the restoration
to the corporation, in case of his/her death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of        
whatever kind in his possession or under his/her control belonging to the       
corporation.                                                                    

Section 16.  The treasurer or an assistant treasurer, in the order    
determined by the Board of Directors (or if there be no such determination, then
in the order of their election) shall, in the absence of the Chief Financial    
Officer or in the event of his inability or refusal to act, perform the duties  
and exercise the powers of the Chief Financial Officer and shall perform such   
other duties and have such other powers as the Board of Directors may from time 
to time prescribe.                                                              

ARTICLE VI

CERTIFICATE OF STOCK

   Section 1.  Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the        
Chairman of the Board of Directors, or the president or a vice-president and the
treasurer or an assistant treasurer, or the secretary or an assistant secretary 
of the corporation, certifying the number of shares owned by him/her in the     
corporation.                                                                    

     Certificates may be issued for partly paid shares and in such case upon the
face or back of the certificates issued to represent any such partly paid       
shares, the total amount of the consideration to be paid therefor, and the      
amount paid thereon shall be specified.                                         

If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,           
preferences and relative, participating, optional or other special rights of    
each class of stock or series thereof and the qualification, limitations or     
restrictions of such preferences and/or rights shall be set forth in full or    
summarized on the face or back of the certificate that the corporation shall    
issue to represent such class or series of stock, provided that, except as      
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back  
of the certificate that the corporation shall issue to represent such class or  
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and      
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such   
preferences and/or rights.                                                      

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   Any of or all the signatures on the certificate may be facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile      
signature has been placed upon a certificate shall have ceased to be such       
officer, transfer agent or registrar before such certificate is issued, it may  
be issued by the corporation with the same effect as if he/she were such        
officer, transfer agent or registrar at the date of issue.                      

LOST CERTIFICATES 

Section 2.  The Board of Directors may direct a new certificate or    
certificates to be issued in place of any certificate or certificates           
theretofore issued by the corporation alleged to have been lost, stolen or      
destroyed, upon the making of an affidavit of that fact by the person claiming  
the certificate of stock to be lost, stolen or destroyed. When authorizing such 
issue of a new certificate or certificates, the Board of Directors may, in its  
discretion and as a condition precedent to the issuance thereof, require the    
owner of such lost, stolen or destroyed certificate or certificates, or his/her 
legal representative, to advertise the same in such manner as it shall require  
and/or to give the corporation a bond in such sum as it may direct as indemnity 
against any claim that may be made against the corporation with respect to the  
certificate alleged to have been lost, stolen or destroyed.                     

TRANSFER OF STOCK 

    Section 3.  Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper  
evidence of succession, assignation or authority to transfer, it shall be the   
duty of the corporation to issue a new certificate to the person entitled       
thereto, cancel the old certificate and record the transaction upon its books.  

FIXING RECORD DATE

  Section 4.  In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any          
adjournment thereof, or to express consent to corporate action in writing       
without a meeting, or entitled to receive payment of any dividend or other      
distribution or allotment of any rights, or entitled to exercise any rights in  
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date, 
which shall not be more than sixty (60) nor less than ten (10) days before the  
date of such meeting, nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a   
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.                                                                        

REGISTERED STOCKHOLDERS 

  Section 5.  The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive     
dividends, and to vote as such owner, and to hold liable for calls and          
assessments a person registered on its books as the owner of shares and shall   
not be bound to recognize any equitable or other claim to or interest in such   
share or shares on the part of any other person, whether or not it shall have   
express or other notice thereof, except as otherwise provided by the laws of    
Delaware.                                                                       

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ARTICLE VII 

GENERAL PROVISIONS

DIVIDENDS 

     Section 1.  Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by  
the Board of Directors at any regular or special meeting, pursuant to law.      
Dividends may be paid in cash, in property, or in shares of the capital stock,  
subject to the provisions of the certificate of incorporation.                  

   Section 2.  Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the    
directors from time to time, in their absolute discretion, think proper as a    
reserve or reserves to meet contingencies, or for equalizing dividends, or for  
repairing or maintaining any property of the corporation, or for such other     
purposes as the directors shall think conducive to the interest of the          
corporation, and the directors may modify or abolish any such reserve in the    
manner in which it was created.                                                 

CHECKS

  Section 3.  All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as  
the Board of Directors may from time to time designate.                         

FISCAL YEAR 

     Section 4.  The fiscal year of the corporation shall be fixed by resolution
of the Board of Directors.                                                      

SEAL

Section 5.  The Board of Directors may adopt a corporate seal having  
inscribed thereon the name of the corporation, the year of its organization and 
the words "Corporate Seal, Delaware." The seal may be used by causing it or a   
facsimile thereof to be impressed or affixed or reproduced or otherwise.        

INDEMNIFICATION 

   Section 6.  The corporation shall, to the fullest extent authorized under
the laws of the State of Delaware, as those laws may be amended and supplemented
from time to time, indemnify any director made, or threatened to be made, a     
party to an action or proceeding, whether criminal, civil, administrative or    
investigative, by reason of being a director of the corporation or a predecessor
corporation or, at the corporation's request, a director or officer of another  
corporation, provided, however, that the corporation shall indemnify any such   
agent in connection with a proceeding initiated by such agent only if such      
proceeding was authorized by the Board of Directors of the corporation. The     
indemnification provided for in this Section 6 shall: (i) not be deemed         
exclusive of any other rights to which those indemnified may be entitled under  
any bylaw, agreement or vote of stockholders or disinterested directors or      
otherwise, both as to action in their official capacities and as to action in   
another capacity while holding such office, (ii) continue as to a person who has
ceased to be a director, and (iii) inure to the benefit of the heirs, executors 
and administrators of such a person. The corporation's obligation to provide    
indemnification under this Section 6 shall be offset to the extent of any other 
source of indemnification or any otherwise applicable insurance coverage under a
policy maintained by the corporation or any other person.                       

    Expenses incurred by a director of the corporation in defending a civil or
criminal action, suit or proceeding by reason of the fact that he is or was a   
director of the corporation (or was serving at the corporation's request as a   
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advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director to repay such amount if it   
shall ultimately be determined that he is not entitled to be indemnified by the 
corporation as authorized by relevant sections of the General Corporation Law of
Delaware. Notwithstanding the foregoing, the corporation shall not be required  
to advance such expenses to an agent who is a party to an action, suit or       
proceeding brought by the corporation and approved by a majority of the Board of
Directors of the corporation which alleges willful misappropriation of corporate
assets by such agent, disclosure of confidential information in violation of    
such agent's fiduciary or contractual obligations to the corporation or any     
other willful and deliberate breach in bad faith of such agent's duty to the    
corporation or its stockholders.                                                

     The foregoing provisions of this Section 6 shall be deemed to be a contract
between the corporation and each director who serves in such capacity at any    
time while this bylaw is in effect, and any repeal or modification thereof shall
not affect any rights or obligations then existing with respect to any state of 
facts then or theretofore existing or any action, suit or proceeding theretofore
or thereafter brought based in whole or in part upon any such state of facts.   

    The Board of Directors in its discretion shall have power on behalf of the
corporation to indemnify any person, other than a director, made a party to any 
action, suit or proceeding by reason of the fact that he, his testator or       
intestate, is or was an officer or employee of the corporation.                 

   To assure indemnification under this Section 6 of all directors, officers
and employees who are determined by the corporation or otherwise to be or to    
have been "fiduciaries" of any employee benefit plan of the corporation which   
may exist from time to time, Section 145 of the General Corporation Law of      
Delaware shall, for the purposes of this Section 6, be interpreted as follows:  
an "other enterprise" shall be deemed to include such an employee benefit plan, 
including without limitation, any plan of the corporation which is governed by  
the Act of Congress entitled "Employee Retirement Income Security Act of 1974," 
as amended from time to time; the corporation shall be deemed to have requested 
a person to serve an employee benefit plan where the performance by such person 
of his duties to the corporation also imposes duties on, or otherwise involves  
services by, such person to the plan or participants or beneficiaries of the    
plan; excise taxes assessed on a person with respect to an employee benefit plan
pursuant to such Act of Congress shall be deemed "fines."                       

ARTICLE VIII

AMENDMENTS

    Section 1.  These bylaws may be altered, amended or repealed or new bylaws
may be adopted by the affirmative vote of holders of at least 66 2/3% vote of   
the outstanding voting stock of the corporation. These bylaws may also be       
altered, amended or repealed or new bylaws may be adopted by the Board of       
Directors, when such power is conferred upon the Board of Directors by the      
certificate of incorporation. The foregoing may occur at any regular meeting of 
the stockholders or of the Board of Directors or at any special meeting of the  
stockholders or of the Board of Directors if notice of such alteration,         
amendment, repeal or adoption of new bylaws be contained in the notice of such  
special meeting. If the power to adopt, amend or repeal bylaws is conferred upon
the Board of Directors by the certificate of incorporation it shall not divest  
or limit the power of the stockholders to adopt, amend or repeal bylaws.        

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                                                                      APPENDIX F

CALDERA SYSTEMS, INC

1999 OMNIBUS STOCK INCENTIVE PLAN 

1. ESTABLISHMENT AND PURPOSE.                                                   

There is hereby adopted the Caldera Systems, Inc. 1999 Omnibus Stock  
Incentive Plan (the "Plan"). The Plan shall be the successor to the Caldera     
Systems, Inc. 1998 Stock Option Plan (the "Predecessor Plan"). Upon adoption of 
the Plan by the Board of Directors and approval of the Plan by the stockholders 
of Caldera Systems, Inc. (the "Company"), no further awards shall be made under 
the Predecessor Plan. If the Plan is not approved by the stockholders of the    
Company, the Predecessor Plan shall remain in full force and effect. The Plan is
intended to promote the interests of the Company and the stockholders of the    
Company by providing officers, other employees of the Company, directors who are
not employees of the Company, and other persons who are expected to make a      
long-term contribution to the success of the Company with appropriate incentives
and rewards to encourage them to enter into and continue in the employ of the   
Company and/or to acquire a proprietary interest in the long-term success of the
Company, thereby aligning their interest more closely to the interest of        
stockholders.                                                                   

2. DEFINITIONS.                                                                 

     As used in the Plan, the following definitions apply to the terms indicated
below:                                                                          

      (a) "Award Agreement" shall mean the written agreement between the
Company and a Participant evidencing an Incentive Award.              

     (b) "Board of Directors" shall mean the Board of Directors of the
Company.                                                              

  (c) "Cause," when used in connection with the termination of a
 Participant's employment by the Company, shall mean (i) the willful and
  continued failure by the Participant substantially to perform his duties
    and obligations to the Company (other than any such failure resulting from
his incapacity due to physical or mental illness) or (ii) the willful 
    engaging by the Participant in misconduct which is materially injurious to
    the Company. For purposes of this Section 2(c), no act, or failure to act,
on a Participant's part shall be considered "willful" unless done, or 
    omitted to be done, by the Participant in bad faith and without reasonable
     belief that his action or omission was in the best interest of the Company.
  The Committee shall determine whether a termination of employment is for
Cause.                                                                

        (d) "Change in Control" shall mean any of the following occurrences:

            (i) any "person," as such term is used in Sections 13(d) and
       14(d) of the Exchange Act (other than the Company, any trustee or
          other fiduciary holding securities under an employee benefit plan of
          the Company or any corporation owned, directly or indirectly, by the
          stockholders of the Company in substantially the same proportions as
 their ownership of stock of the Company), is or becomes the
           "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
           directly or indirectly, of securities of the Company representing 50%
or more of the combined voting power of the Company's then
outstanding securities;                                   

             (ii) during any period of not more than two consecutive years
   (not including any period prior to the adoption of the Plan),
          individuals who at the beginning of such period constitute the Board
         of Directors and any new director (other than a director designated
       by a person who has entered into an agreement with the Company to
         effect a transaction described in clause (i), (iii) or (iv) of this
         Section) whose election by the Board of Directors or nomination for
          election was approved by a vote of at least two-thirds ( 2/3) of the
     directors then still in office who either were directors at the
beginning of the period or whose election                 

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          or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;         

         (iii) the stockholders of the Company approve a merger or
         consolidation of the Company with any other corporation, other than
    (A) a merger or consolidation which would result in the voting
     securities of the Company outstanding immediately prior thereto
          continuing to represent (either by remaining outstanding or by being
         converted into voting securities of the surviving entity) more than
      50% of the combined voting power of the voting securities of the
         Company or such surviving entity outstanding immediately after such
          merger or consolidation or (B) a merger or consolidation effected to
          implement a recapitalization of the Company (or similar transaction)
           in which no "person" (as herein above defined) acquires more than 50%
    of the combined voting power of the Company's then outstanding
securities; or                                            

               (iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
   disposition by the Company of all or substantially all of the
Company's assets.                                         

       (e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.                                                    

         (f) "Committee" shall mean the Compensation Committee of the Board of
    Directors. The Committee shall consist of two or more persons each of whom
   is an "outside director" within the meaning of Section 162(m) of the Code
  and a "Non-Employee Director" within the meaning of Rule 16b-3 under the
Exchange Act (or who satisfies any other criteria for administering   
   employee benefit plans as may be specified by the Securities and Exchange
    Commission in order for transactions under such plan to be exempt from the
provisions of Section 16(b) of the Exchange Act).                     

        (g) "Company" shall mean, Caldera Systems, Inc., a Utah corporation.

         (h) "Common Stock" shall mean the common stock of the Company, no par
value per share.                                                      

          (i) "Disability" shall mean: (1) any physical or mental condition that
  would qualify a Participant for a disability benefit under the long-term
  disability plan maintained by the Company or a Subsidiary of the Company
     and applicable to such Participant; or (2) when used in connection with the
    exercise of an Incentive Stock Option following termination of employment,
disability within the meaning of Section 22(e)(3) of the Code.        

    (j) "Effective Date" shall mean the date upon which this Plan is
adopted by the Board of Directors.                                    

         (k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.                                            

         (l) "Executive Officer" shall have the meaning set forth in Rule 3b-7
promulgated under the Exchange Act.                                   

      (m) "Exercise Date" shall mean the date on which a Participant may
exercise an Incentive Award.                                          

       (n) "Fair Market Value" of a share of Common Stock, as of a date of
   determination, shall mean (i) the closing sales price per share of Common
Stock on the national securities exchange on which such stock is      
     principally traded for the last preceding date on which there was a sale of
    such stock on such exchange, or (ii) if the shares of Common Stock are not
  listed or admitted to trading on any such exchange, the closing price as
  reported by the Nasdaq Stock Market for the last preceding date on which
    there was a sale of such stock on such exchange, or (iii) if the shares of
     Common Stock are not then listed on the Nasdaq Stock Market, the average of
     the highest reported bid and lowest reported asked prices for the shares of
     Common Stock as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System for the last preceding date on       
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    which there was a sale of such stock in such market, or (iv) if the shares
  of Common Stock are not then listed on a national securities exchange or
traded in an over-the-counter market, such value as determined by the 
Committee in good faith.                                              

       (o) "Incentive Award" shall mean an Option, Tandem SAR, Stand-Alone
 SAR, Restricted Stock grant, Phantom Stock grant or Stock Bonus granted
pursuant to the terms of the Plan.                                    

(p) "Incentive Stock Option" shall mean an Option that is an
 "incentive stock option" within the meaning of Section 422 of the Code.

      (q) "Issue Date" shall mean the date established by the Company on
    which certificates representing shares of Restricted Stock shall be issued
by the Company pursuant to the terms of Section 10(e)of the Plan.     

        (r) "Non-Qualified Stock Option" shall mean an Option that is not an
Incentive Stock Option.                                               

        (s) "Option" shall mean an option to purchase shares of Common Stock
granted pursuant to Section 7 of the Plan.                            

(t) "Participant" shall mean an employee of the Company or a
     subsidiary of the Company to whom an Incentive Award is granted pursuant to
the Plan, and, upon his death, his successors, heirs, executors and   
administrators, as the case may be.                                   

         (u) "Phantom Stock" shall mean the right, granted pursuant to Section
11 of the Plan, to receive in cash the Fair Market Value of a share of
Common Stock.                                                         

    (v) "Plan" shall mean this 1999 Omnibus Stock Incentive Plan, as
amended from time to time.                                            

       (w) "Reference Value" shall mean, with respect to Stand-Alone SARs,
     the greater of the Fair Market Value or the value given by the Compensation
Committee.                                                            

      (x) "Restricted Stock" shall mean a share of Common Stock which is
    granted pursuant to the terms of Section 10 hereof and which is subject to
the restrictions set forth in Section 10 of the Plan.                 

         (y) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange
Act.                                                                  

      (z) "Section 162(m)" shall mean Section 162(m) of the Code and the
regulations promulgated thereunder.                                   

   (aa) "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.                                            

        (ab) "Stand-Alone SAR" shall mean a stock appreciation right granted
pursuant to Section 9 of the Plan which is not related to any Option. 

     (ac) "Stock Bonus" shall mean a bonus payable in shares of Common
Stock granted pursuant to Section 12 of the Plan.                     

      (ad) "Subsidiary" shall mean a "subsidiary corporation" within the
meaning of Section 424(f) of the Code.                                

   (ae) "Tandem SAR" shall mean a stock appreciation right granted
pursuant to Section 8 of the Plan which is related to an Option.      

        (af) "Vesting Date" shall mean the date established by the Committee
on which a share of Restricted Stock or Phantom Stock may vest.       

3. STOCK SUBJECT TO THE PLAN.                                                   

 (a) Shares Available for Awards. The maximum number of shares of Common
Stock reserved for issuance under the Plan shall be 3,705,238 shares (subject to
adjustment as provided herein), which shall include 2,705,238 shares authorized 
but unissued under the Predecessor Plan. The total number of shares reserved for
issuance hereunder may be authorized but unissued Common Stock or authorized and
issued                                                                          

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Common Stock held in the Company's treasury or acquired by the Company for the  
purposes of the Plan. The Committee may direct that any stock certificate       
evidencing shares issued pursuant to the Plan shall bear a legend setting forth 
such restrictions on transferability as may apply to such shares pursuant to the
Plan. The grant of a Tandem SAR shall not reduce the number of shares of Common 
Stock with respect to which Incentive Awards may be granted pursuant to the     
Plan. Upon the exercise of any Tandem SAR, the related Option shall be canceled 
to the extent of the number of shares of Common Stock as to which the Tandem SAR
is exercised and, notwithstanding the foregoing, such number of shares shall no 
longer be available for Incentive Awards under the Plan.                        

(b) Individual Limitation. The total number of shares of Common Stock 
subject to Incentive Awards (including Incentive Awards payable in cash but     
denominated as shares of Common Stock, i.e., Stand-Alone SARs and Phantom       
Stock), awarded to any employee during any tax year of the Company, shall not   
exceed 200,000 shares. Determinations under the preceding sentence shall be made
in a manner that is consistent with Section 162(m) of the Code.                 

(c) Adjustment for Change in Capitalization. In the event that the    
Committee shall determine that any dividend or other distribution (whether in   
the form of cash, Common Stock, or other property), recapitalization, stock     
split, reverse stock split, reorganization, merger, consolidation, spin-off,    
combination, repurchase, or share exchange, or other similar corporate          
transaction or event, affects the Common Stock such that an adjustment is       
appropriate in order to prevent dilution or enlargement of the rights of        
Participants under the Plan, then the Committee shall make such equitable       
changes or adjustments as it deems necessary or appropriate to any or all of (i)
the number and kind of shares of stock which may thereafter be issued in        
connection with Incentive Awards, (ii) the number and kind of shares of stock   
issued or issuable in respect of outstanding Incentive Awards, and (iii) the    
exercise price, grant price, or purchase price relating to any Incentive Award; 
provided that, with respect to Incentive Stock Options, such adjustment shall be
made in accordance with Section 424 of the Code.                                

(d) Re-Use of Shares. The following shares of Common Stock shall again
become available for Incentive Awards: any shares subject to an Incentive Award 
that remain unissued upon the cancellation, surrender, exchange or termination  
of such award for any reason whatsoever; any shares of Restricted Stock         
forfeited; and any shares in respect of which a stock appreciation right is     
settled for cash.                                                               

4. ADMINISTRATION OF THE PLAN.                                                  

   The Plan shall be administered by the Committee. The Committee shall have
the authority in its sole discretion, subject to and not inconsistent with the  
express provisions of the Plan, to administer the Plan and to exercise all the  
powers and authorities either specifically granted to it under the Plan or      
necessary or advisable in the administration of the Plan, including, without    
limitation, the authority to grant Incentive Awards; to determine the persons to
whom and the time or times at which Incentive Awards shall be granted; to       
determine the type and number of Incentive Awards to be granted, the number of  
shares of Stock to which an Award may relate and the terms, conditions,         
restrictions and performance criteria relating to any Incentive Award; to       
determine whether, to what extent, and under what circumstances an Incentive    
Award may be settled, canceled, forfeited, exchanged, or surrendered; to subject
shares of Stock to which an Award may relate to rights of repurchase or rights  
of refusal in favor of the Company under the circumstances and upon the terms   
set forth in an Award Agreement; to make adjustments in the performance goals in
recognition of unusual or non-recurring events affecting the Company or the     
financial statements of the Company (to the extent in accordance with Section   
162(m) of the Code, if applicable), or in response to changes in applicable     
laws, regulations, or accounting principles; to construe and interpret the Plan 
and any Incentive Award; to prescribe, amend and rescind rules and regulations  
relating to the Plan; to determine the terms and provisions of Award Agreements;
and to make all other determinations deemed necessary or advisable for the      
administration of the Plan.                                                     

 The Committee may, in its absolute discretion, without amendment to the
Plan, (i) accelerate the date on which any Tandem SAR or Stand-Alone SAR or     
Incentive Award relating to Phantom Stock granted under the Plan becomes        
exercisable, waive or amend the operation of Plan provisions respecting         

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exercise after termination of employment or otherwise adjust any of the terms of
such Option or Stand-Alone SAR, and (ii) accelerate the Exercise Date or Issue  
Date, or waive any condition imposed hereunder, with respect to any share of    
Restricted Stock or Phantom Stock or otherwise adjust any of the terms          
applicable to such share.                                                       

No member of the Committee shall be liable for any action, omission or
determination relating to the Plan, and the Company shall indemnify and hold    
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or             
interpretation of the Plan has been delegated against any cost or expense       
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, if, in either case, such action, omission or
determination was taken or made by such member, director or employee in good    
faith and in a manner such member, director or employee reasonably believed to  
be in or not opposed to the best interests of the Company.                      

5. ELIGIBILITY.                                                                 

   The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be such employees of the Company or its Subsidiaries (including  
officers of the Company or its Subsidiaries, whether or not they are directors  
of the Company or its Subsidiaries) as the Committee shall select from time to  
time. Directors and others who are not employees or officers of the Company,    
including persons who may be expected to make a contribution to the Company's   
future success, shall also be eligible to receive Incentive Awards under the    
Plan.                                                                           

6. AWARDS UNDER THE PLAN; AWARD AGREEMENT.                                      

   The Committee may grant Options, Tandem SARs, Stand-Alone SARs, shares of
Restricted Stock, shares of Phantom Stock and Stock Bonuses, in such amounts and
with such terms and conditions as the Committee shall determine, subject to the 
provisions of the Plan.                                                         

    Each Incentive Award granted under the Plan (except an unconditional Stock
Bonus) shall be evidenced by an Award Agreement which shall contain such        
provisions as the Committee may in its sole discretion deem necessary or        
desirable. By accepting an Incentive Award, a Participant thereby agrees that   
the award shall be subject to all of the terms and provisions of the Plan and   
the applicable Award Agreement.                                                 

7. OPTIONS.                                                                     

   (a) Identification of Options. Each Option shall be clearly identified in
the applicable Award Agreement as either an Incentive Stock Option or a         
Non-Qualified Stock Option.                                                     

  (b) Exercise Price. Each Award Agreement with respect to an Option shall
set forth the amount (the "option exercise price") payable by the grantee to the
Company upon exercise of the Option. The option exercise price per share shall  
be determined by the Committee but shall in no event be less than the Fair      
Market Value of a share of Common Stock on the date the Option is granted.      

(c) Term and Exercise of Options.                                     

          (1) Unless the applicable Award Agreement provides otherwise, an
    Option shall become cumulatively exercisable as to 25 percent of the
     shares covered thereby on each of the first, second, third and fourth
     anniversaries of the date of grant. The Committee shall determine the
    expiration date of each Option; provided, however, that no Incentive
      Stock Option shall be exercisable more than 10 years after the date of
   grant. Unless the applicable Award Agreement provides otherwise, no
      Option shall be exercisable prior to the first anniversary of the date
of grant.                                                       

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             (2) An Option may be exercised for all or any portion of the shares
       as to which it is exercisable, provided, that no partial exercise of an
        Option shall be for an aggregate exercise price of less than $1,000. The
partial exercise of an Option shall not cause the expiration,   
termination or cancellation of the remaining portion thereof.   

      (3) An Option shall be exercised by delivering notice to the
      Company's principal office, to the attention of its Secretary, no less
      than one business day in advance of the effective date of the proposed
        exercise. Such notice shall specify the number of shares of Common Stock
     with respect to which the Option is being exercised and the effective
       date of the proposed exercise and shall be signed by the Participant or
      other person then having the right to exercise the Option. Such notice
  may be withdrawn at any time prior to the close of business on the
     business day immediately preceding the effective date of the proposed
        exercise. Payment for shares of Common Stock purchased upon the exercise
        of an Option shall be made on the effective date of such exercise by one
  or a combination of the following means: (i) in cash, by certified
  check, bank cashier's check or wire transfer; (ii) by delivering a
        properly executed exercise notice to the Company together with a copy of
       irrevocable instructions to a broker to deliver promptly to the Company
 the amount of sale or loan proceeds to pay the full amount of the
       Purchase Price, (iii) by delivering shares of Common Stock owned by the
       Participant with appropriate stock powers, (iv) by electing to have the
        Company retain shares of Common Stock which would otherwise be issued on
   the exercise of the Option, or (v) any combination of the foregoing
       forms. In determining the number of shares of Common Stock necessary to
       be delivered to or retained by the Company, such shares shall be valued
at their Fair Market Value as of the exercise date.             

        (4) Certificates for shares of Common Stock purchased upon the
       exercise of an Option shall be issued in the name of the Participant or
  other person entitled to receive such shares, and delivered to the
     Participant or such other person as soon as practicable following the
effective date on which the Option is exercised.                

(d) Limitations on Incentive Stock Options.                           

             (1) To the extent that the aggregate Fair Market Value of shares of
Common Stock with respect to which Incentive Stock Options are  
        exercisable for the first time by a Participant during any calendar year
     under the Plan and any other stock option plan of the Company (or any
      Subsidiary of the Company) shall exceed $100,000, or such higher value
        as may be permitted under Section 422 of the Code, such Options shall be
       treated as Non-Qualified Stock Options. Such Fair Market Value shall be
      determined as of the date on which each such Incentive Stock Option is
granted.                                                        

           (2) No Incentive Stock Option may be granted to an individual if,
    at the time of the grant, such individual owns stock possessing more
     than ten percent of the total combined voting power of all classes of
    stock of the Company unless (i) the exercise price per share of such
       Incentive Stock Option is at least 110 percent of the Fair Market Value
     of a share of Common Stock at the time such Incentive Stock Option is
     granted and (ii) such Incentive Stock Option is not exercisable after
      the expiration of five years from the date such Incentive Stock Option
is granted.                                                     

(e) Effect of Termination of Employment.                              

          (1) Unless the applicable Award Agreement provides otherwise, in
    the event that the employment of a Participant with the Company or a
   Subsidiary of the Company shall terminate for any reason other than
       death, Disability or Cause, (i) Options granted to such Participant, to
     the extent that they are exercisable at the time of such termination,
      shall remain exercisable until the date that is ninety (90) days after
   such termination, on which date they shall expire, and (ii) Options
granted to such Participant, to the extent that they were not   
      exercisable at the time of such termination, shall expire at the close
of business on the date of such termination. Notwithstanding the
     foregoing, no Option shall be exercisable after the expiration of its
term.                                                           

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          (2) Unless the applicable Award Agreement provides otherwise, in
    the event that the employment of a Participant with the Company or a
      Subsidiary of the Company shall terminate on account of the Disability
       or death of the Participant (i) Options granted to such Participant, to
      the extent that they were exercisable at the time of such termination,
shall remain exercisable until the first anniversary of such    
      termination, on which date they shall expire, and (ii) Options granted
        to such Participant, to the extent that they were not exercisable at the
      time of such termination, shall expire at the close of business on the
        date of such termination. Notwithstanding the foregoing, no Option shall
be exercisable after the expiration of its term.                

            (3) If a Participant's employment with the Company or a Subsidiary
       of the Company is terminated for Cause, all outstanding options granted
       to such Participant shall expire at the commencement of business on the
date of such termination.                                       

(f) Effect of Change in Control.                                      

    Upon the occurrence of a Change in Control, (i) Options granted to a
      Participant, to the extent that they were exercisable at the time of a
  Change in Control, shall remain exercisable until their expiration
      notwithstanding the provisions of Section 7(e)(1) and (2) of the Plan,
     and (ii) Options granted to such Participant, to the extent they were
       not exercisable at the time of a Change in Control, shall expire at the
        close of business on the date of such Change in Control. Notwithstanding
     the foregoing, no Option shall be exercisable after the expiration of
its term.                                                       

8. TANDEM SARS.                                                                 

     The Committee may grant in connection with any Option granted hereunder one
or more Tandem SARs relating to a number of shares of Common Stock less than or 
equal to the number of shares of Common Stock subject to the related Option. A  
Tandem SAR may be granted at the same time as, or, in the case of a             
Non-Qualified Stock Option, subsequent to the time that, its related Option is  
granted.                                                                        

     (a) Benefit Upon Exercise. The exercise of a Tandem SAR with respect to any
number of shares of Common Stock shall entitle the Participant to a cash        
payment, for each such share, equal to the excess of (i) the Fair Market Value  
of a share of Common Stock on the exercise date over (ii) the option exercise   
price per share of the related Option. Such payment shall be made as soon as    
practicable after the effective date of such exercise.                          

(b) Term and Exercise of Tandem SAR.                                  

        (1) A Tandem SAR shall be exercisable only if and to the extent that
its related Option is exercisable.                                    

          (2) The exercise of a Tandem SAR with respect to a number of shares of
  Common Stock shall cause the immediate and automatic cancellation of its
   related Option with respect to an equal number of shares. The exercise of
an Option, or the cancellation, termination or expiration of an Option
    (other than pursuant to this Section 8(b)(2)), with respect to a number of
     shares of Common Stock shall cause the automatic and immediate cancellation
of any related Tandem SARs to the extent that the number of shares of 
  Common Stock remaining subject to such Option is less than the number of
shares then subject to such Tandem SAR.                               

Such Tandem SARs shall be canceled in the order in which they become  
exercisable.                                                          

          (3) A Tandem SAR may be exercised for all or any portion of the shares
  as to which the related Option is exercisable; provided, that no partial
   exercise of a Tandem SAR shall be for less than a number of shares having
an aggregate option exercise price of less than $1,000. The partial   
 exercise of a Tandem SAR shall not cause the expiration, termination or
cancellation of the remaining portion thereof.                        

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        (4) No Tandem SAR shall be assignable or transferable otherwise than
    together with its related Option, and any such transfer or assignment will
be subject to the provisions of Section 20 of the Plan.               

     (5) A Tandem SAR shall be exercisable by delivering notice to the
     Company's principal office, to the attention of its Secretary, no less than
     one business day in advance of the effective date of the proposed exercise.
     Such notice shall specify the number of shares of Common Stock with respect
  to which the Tandem SAR is being exercised and the effective date of the
  proposed exercise and shall be signed by the Participant or other person
 then having the right to exercise the Option to which the Tandem SAR is
 related. Such notice may be withdrawn at any time prior to the close of
  business on the business day immediately preceding the effective date of
the proposed exercise.                                                

9. STAND-ALONE SARS.                                                            

(a) Benefit Upon Exercise.                                            

      The exercise of a Stand-Alone SAR with respect to any number of shares
    of Common Stock shall entitle the Participant to a cash payment, for
      each such share, equal to the excess of (i) the Fair Market Value of a
        share of Common Stock on the exercise date over (ii) the Reference Value
of the Stand-Alone SAR. Such payments shall be made as soon as  
practicable after the effective date of such exercise.          

(b) Term and Exercise of Stand-Alone SARs.                            

         (1) Unless the applicable Award Agreement provides otherwise, a
      Stand-Alone SAR shall become cumulatively exercisable as to 25 percent
     of the shares covered thereby on each of the first, second, third and
        fourth anniversaries of the date of grant. The Committee shall determine
        the expiration date of each Stand-Alone SAR. Unless the applicable Award
     Agreement provides otherwise, no Stand-Alone SAR shall be exercisable
prior to the first anniversary of the date of grant.            

          (2) A Stand-Alone SAR may be exercised for all or any portion of
   the shares as to which it is exercisable; provided, that no partial
       exercise of a Stand-Alone SAR shall be for an aggregate Reference Value
        of less than $1,000. The partial exercise of a Stand-Alone SAR shall not
  cause the expiration, termination or cancellation of the remaining
portion thereof.                                                

          (3) A Stand-Alone SAR shall be exercised by delivering notice to
     the Company's principal office, to the attention of its Secretary, no
  less than one business day in advance of the effective date of the
    proposed exercise. Such notice shall specify the number of shares of
Common Stock with respect to which the Stand-Alone SAR is being 
        exercised, and the effective date of the proposed exercise, and shall be
      signed by the Participant. The Participant may withdraw such notice at
       any time prior to the close of business on the business day immediately
preceding the effective date of the proposed exercise.          

(c) Effect of Termination of Employment. The provisions set forth in  
Section 7(e) with respect to the exercise of Options following termination of   
employment shall apply as well to the exercise of Stand-Alone SARs.             

(d) Effect of Change in Control. Upon the occurrence of a Change in   
Control, (i) Stand-Alone SARs granted under the Plan, to the extent exercisable 
at the time of a Change of Control, shall remain exercisable until their        
expiration notwithstanding the provisions of Section 7(e) of the Plan which are 
incorporated into this Section 9, and (ii) Stand-Alone SARs not exercisable at  
the time of a Change in Control shall expire at the close of business on the    
date of such Change in Control.                                                 

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10. RESTRICTED STOCK.                                                           

(a) Issue Date and Vesting Date. At the time of the grant of shares of
Restricted Stock, the Committee shall establish an Issue Date or Issue Dates and
a Vesting Date or Vesting Dates with respect to such shares. The Committee may  
divide such shares into classes and assign a different Issue Date and/or Vesting
Date for each class. If the grantee is employed by the Company or a Subsidiary  
of the Company on an Issue Date (which may be the date of grant), the specified 
number of shares of Restricted Stock shall be issued in accordance with the     
provisions of Section 10(e) of the Plan. Provided that all conditions to the    
vesting of a share of Restricted Stock imposed pursuant to Section 10(b) of the 
plan are satisfied, and except as provided in Section 10(g) of the Plan, upon   
the occurrence of the Vesting Date with respect to a share of Restricted Stock, 
such share shall vest and the restrictions of Section 10(c) of the Plan shall   
lapse.                                                                          

     (b) Conditions to Vesting. At the time of the grant of shares of Restricted
Stock, the Committee may impose such restrictions or conditions to the vesting  
of such shares as it, in its absolute discretion, deems appropriate.            

  (c) Restrictions on Transfer Prior to Vesting. Prior to the vesting of a
share of Restricted Stock, no transfer of a Participant's rights with respect to
such share, whether voluntary or involuntary, by operation of law or otherwise, 
shall be permitted. Immediately upon any attempt to transfer such rights, such  
share, and all of the rights related thereto, shall be forfeited by the         
Participant.                                                                    

(d) Dividends on Restricted Stock. The Committee in its discretion may
require that any dividends paid on shares of Restricted Stock shall be held in  
escrow until all restrictions on such shares have lapsed.                       

(e) Issuance of Certificates.                                         

          (1) Reasonably promptly after the Issue Date with respect to shares of
     Restricted Stock, the Company shall cause to be issued a stock certificate,
     registered in the name of the Participant to whom such shares were granted,
   evidencing such shares; provided, that the Company shall not cause such a
  stock certificate to be issued unless it has received a stock power duly
    endorsed in blank with respect to such shares. Each such stock certificate
  shall bear the following legend: The transferability of this certificate
     and the shares of stock represented hereby are subject to the restrictions,
terms and conditions (including forfeiture provisions and restrictions
 against transfer) contained in the 1999 Omnibus Stock Incentive Plan of
Caldera Systems, Inc. and an Award Agreement entered into between the 
  registered owner of such shares and Caldera Systems, Inc. A copy of such
Plan and Award Agreement is on file in the office of the Secretary of 
Caldera Systems, Inc., 240 West Center Street, Orem, Utah 84057. Such 
     legend shall not be removed until such shares vest pursuant to the terms of
the applicable Award Agreement.                                       

        (2) Each certificate issued pursuant to this Section 10(e), together
    with the stock powers relating to the shares of Restricted Stock evidenced
by such certificate, shall be held by the Company unless the Committee
determines otherwise.                                                 

(f) Consequences of Vesting. Upon the vesting of a share of Restricted
Stock pursuant to the terms of the applicable Award Agreement, the restrictions 
of Section 10(c) of the Plan shall lapse, except as otherwise provided in the   
Award Agreement. Reasonably promptly after a share of Restricted Stock vests,   
the Company shall cause to be delivered to the Participant to whom such shares  
were granted, a certificate evidencing such share, free of the legend set forth 
in Section 10(e) of the Plan.                                                   

(g) Effect of Termination of Employment.                              

         (1) Subject to such other provision as the Committee may set forth in
    the applicable Award Agreement, and to the Committee's amendment authority
    pursuant to Section 4 of the Plan, upon the termination of a Participant's
   employment by the Company or any Subsidiary of the Company for any reason
other than Cause, any and all shares to which restrictions on         
     transferability apply shall be immediately forfeited by the Participant and
transferred to the Company, provided that if the                      

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  Committee, in its sole discretion and within thirty (30) days after such
termination of employment notifies the Participant in writing of its  
     decision not to terminate the Participant's rights in such shares, then the
   Participant shall continue to be the owner of such shares subject to such
   continuing restrictions as the Committee may prescribe in such notice. If
   shares of Restricted Stock are forfeited in accordance with the provision
  of this Section 10, the Company shall also have the right to require the
    return of all dividends paid on such shares, whether by termination of any
escrow arrangement under which such dividends are held or otherwise.  

         (2) In the event of the termination of a Participant's employment for
 Cause, all shares of Restricted Stock granted to such Participant which
 have not vested as of the date of such termination shall immediately be
   returned to the Company, together with any dividends paid on such shares.

(h) Effect of Change in Control. Upon the occurrence of a Change in   
Control, all restrictions on outstanding vested shares shall immediately lapse  
and all outstanding shares of Restricted Stock which have not theretofore vested
shall immediately expire and be cancelled.                                      

   (i) Special Provisions Regarding Restricted Stock Awards. Notwithstanding
anything to the contrary contained herein, Restricted Stock granted pursuant to 
this Section 10 shall be based on the attainment by the Company (or a Subsidiary
or division of the Company if applicable) of performance goals pre-established  
by the Committee, based on one or more of the following criteria: (i) the       
attainment of a specified percentage return on total stockholder equity of the  
Company; (ii) the attainment of a specified percentage increase in earnings per 
share of Common Stock; (iii) the attainment of a specified percentage increase  
in net income of the Company; and (iv) the attainment of a specified percentage 
increase in profit before taxation of the Company (or a Subsidiary or division  
of the Company if applicable). Attainment of any such performance criteria shall
be determined in accordance with generally accepted accounting principles as in 
effect from time to time. Such shares of Restricted Stock shall be released from
restrictions only after the attainment of such performance measures have been   
certified by the Committee.                                                     

11. PHANTOM STOCK.                                                              

    (a) Vesting Date. At the time of the grant of shares of Phantom Stock, the
Committee shall establish a Vesting Date or Vesting Dates with respect to such  
shares. The Committee may divide such shares into classes and assign a different
Vesting Date for each class. Provided that all conditions to the vesting of a   
share of Phantom Stock imposed pursuant to Section 11(c) of the Plan are        
satisfied, and except as provided in Section 11(d) of the Plan, upon the        
occurrence of the Vesting Date with respect to a share of Phantom Stock, such   
share shall vest.                                                               

     (b) Benefit Upon Vesting. Upon the vesting of a share of Phantom Stock, the
Participant shall be entitled to receive in cash, within 30 days of the date on 
which such share vests, an amount equal to the sum of (i) the Fair Market Value 
of a share of Common Stock on the date on which such share of Phantom Stock     
vests and (ii) the aggregate amount of cash dividends paid with respect to a    
share of Common Stock during the period commencing on the date on which the     
share of Phantom Stock was granted and terminating on the date on which such    
share vests.                                                                    

  (c) Conditions to Vesting. At the time of the grant of shares of Phantom
Stock, the Committee may impose such restrictions or conditions to the vesting  
of such shares as it, in its absolute discretion, deems appropriate.            

(d) Effect of Termination of Employment.                              

          (1) Subject to such other provisions as the Committee may set forth in
    the applicable Award Agreement, and to the Committee's amendment authority
  pursuant to Section 4 of the Plan, shares of Phantom Stock that have not
vested, together with any dividends credited on such shares, shall be 
   forfeited upon the Participant's termination of employment for any reason
other than Cause.                                                     

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         (2) In the event of the termination of a Participant's employment for
   Cause, all shares of Phantom Stock granted to such Participant which have
not vested as of the date of such termination shall immediately be    
forfeited, together with any dividends credited on such shares.       

(e) Effect of Change in Control. Upon the occurrence of a Change in   
Control, all outstanding shares of Phantom Stock which have not theretofore     
vested shall immediately expire and be cancelled.                               

(f) Special Provisions Regarding Phantom Stock Awards. Notwithstanding
anything to the contrary contained herein, Phantom Stock granted pursuant to    
this Section 11 to Executive Officers shall be based on the attainment by the   
Company (or a Subsidiary or division of the Company if applicable) of           
performance goals pre-established by the Committee, based on one or more of the 
following criteria: (i) the attainment of a specified percentage return on total
stockholder equity of the Company; (ii) the attainment of a specified percentage
increase in earnings per share of Common Stock from continuing operations; (iii)
the attainment of a specified percentage increase in net income of the Company; 
and (iv) the attainment of a specified percentage increase in profit before     
taxation of the Company (or a Subsidiary or division of the Company if          
applicable). Attainment of any such performance criteria shall be determined in 
accordance with generally accepted accounting principles as in effect from time 
to time. No cash payment in respect of any Phantom Stock award will be paid to  
an Executive Officer until the attainment of the respective performance measures
have been certified by the Committee.                                           

12. STOCK BONUSES.                                                              

     In the event that the Committee grants a Stock Bonus, a certificate for the
shares of Common Stock comprising such Stock Bonus shall be issued in the name  
of the Participant to whom such grant was made and delivered to such Participant
as soon as practicable after the date on which such Stock Bonus is payable.     

13. RIGHTS AS A STOCKHOLDER.                                                    

     No person shall have any rights as a stockholder with respect to any shares
of Common Stock covered by or relating to any Incentive Award until the date of 
issuance of a stock certificate with respect to such shares. Except as otherwise
expressly provided in Section 3(c) of the Plan, no adjustment to any Incentive  
Award shall be made for dividends or other rights for which the record date     
occurs prior to the date such stock certificate is issued.                      

14. NO SPECIAL EMPLOYMENT RIGHTS; NO RIGHT TO INCENTIVE AWARD.                  

    Nothing contained in the Plan or any Award Agreement shall confer upon any
Participant any right with respect to the continuation of employment by the     
Company or any Subsidiary of the Company or interfere in any way with the right 
of the Company or any Subsidiary of the Company, subject to the terms of any    
separate employment agreement to the contrary, at any time to terminate such    
employment or to increase or decrease the compensation of the Participant. No   
person shall have any claim or right to receive an Incentive Award hereunder.   
The Committee's granting of an Incentive Award to a Participant at any time     
shall neither require the Committee to grant any other Incentive Award to such  
Participant or other person at any time or preclude the Committee from making   
subsequent grants to such Participant or any other person.                      

15. SECURITIES MATTERS.                                                         

 (a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any interests in the Plan or any shares of    
Common Stock to be issued hereunder or to effect similar compliance under any   
state laws. Notwithstanding anything herein to the contrary, the Company shall  
not be obligated to cause to be issued or delivered any certificates evidencing 
shares of Common Stock pursuant to the Plan unless and until the Company is     
advised by its counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authority and  
the                                                                             

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requirements of any securities exchange on which shares of Common Stock are     
traded. The Committee may require, as a condition of the issuance and delivery  
of certificates evidencing shares of Common Stock pursuant to the terms hereof  
and of the applicable Award Agreement, that the recipient of such shares make   
such covenants, agreements and representations, and that such certificates bear 
such legends, as the Committee, in its sole discretion, deems necessary or      
desirable.                                                                      

     (b) The transfer of any shares of Common Stock hereunder shall be effective
only at such time as counsel to the Company shall have determined that the      
issuance and delivery of such shares is in compliance with all applicable laws, 
regulations of governmental authority and the requirements of any securities    
exchange on which shares of Common Stock are traded. The Committee may, in its  
sole discretion, defer the effectiveness of any transfer of shares of Common    
Stock hereunder in order to allow the issuance of such shares to be made        
pursuant to registration or an exemption from registration or other methods for 
compliance available under federal or state securities laws. The Committee shall
inform the Participant in writing of its decision to defer the effectiveness of 
a transfer. During the period of such deferral in connection with the exercise  
of an Option, the Participant may, by written notice, withdraw such exercise and
obtain the refund of any amount paid with respect thereto.                      

16. WITHHOLDING TAXES.                                                          

 Whenever cash is to be paid pursuant to an Incentive Award, the Company
shall have the right to deduct therefrom an amount sufficient to satisfy any    
federal, state and local withholding tax requirements related thereto. Whenever 
shares of Common Stock are to be delivered pursuant to an Incentive Award, the  
Company shall have the right to require the Participant to remit to the Company 
in cash an amount sufficient to satisfy any federal, state and local withholding
tax requirements related thereto. With the approval of the Committee, a         
Participant may satisfy the foregoing requirement by electing to have the       
Company withhold from delivery shares of Common Stock having a fair market value
equal to the amount of tax to be withheld. Such shares shall be valued at their 
Fair Market Value on the date on which the amount of tax to be withheld is      
determined (the "Tax Date"). Fractional share amounts shall be settled in cash. 
Such a withholding election may be made with respect to all or any portion of   
the shares to be delivered pursuant to an Incentive Award.                      

17. NOTIFICATION OF ELECTION UNDER SECTION 83(B) OF THE CODE.                   

   If any Participant shall, in connection with the acquisition of shares of
Common Stock under the Plan, make the election permitted under Section 83(b) of 
the Code (i.e., an election to include in gross income in the year of transfer  
the amounts specified in Section 83(b)), such Participant shall notify the      
Company of such election within 10 days of filing notice of the election with   
the Internal Revenue Service, in addition to any filing and a notification      
required pursuant to regulation issued under the authority of Code Section      
83(b).                                                                          

18. NOTIFICATION UPON DISQUALIFYING DISPOSITION UNDER SECTION 421(B) OF THE     
CODE.                                                                           

Each Award Agreement with respect to an Incentive Stock Option shall  
require the Participant to notify the Company of any disposition of shares of   
Common Stock issued pursuant to the exercise of such Option under the           
circumstances described in Section 421(b) of the Code (relating to certain      
disqualifying dispositions), within 10 days of such disposition.                

19. AMENDMENT OR TERMINATION OF THE PLAN.                                       

   The Board of Directors may, at any time, suspend or terminate the Plan or
revise or amend it in any respect whatsoever; provided, however, that           
stockholder approval shall be required if and to the extent the Board of        
Directors determines that such approval is appropriate for purposes of          
satisfying Section 162(m) or 422 of the Code or to the extent such approval is  
required by the rules of any stock exchange on which the Common Stock is listed.
Nothing herein shall restrict the Committee's ability to exercise its           
discretionary authority pursuant to Section 4 of the Plan, which discretion may 
be exercised without                                                            

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amendment to the Plan. No action hereunder may, without the consent of a        
Participant, reduce the Participant's rights under any outstanding Incentive    
Award.                                                                          

20. TRANSFERS UPON DEATH; NON-ASSIGNABILITY.                                    

  Upon the death of a Participant, outstanding Incentive Awards granted to
such Participant may be exercised only by the executor or administrator of the  
Participant's estate or by a person who shall have acquired the right to such   
exercise by will or by the laws of descent and distribution. No transfer of an  
Incentive Award by will or the laws of descent and distribution shall be        
effective to bind the Company unless the Committee shall have been furnished    
with (a) written notice thereof and with a copy of the will and/or such evidence
as the Committee may deem necessary to establish the validity of the transfer   
and (b) an agreement by the transferee to comply with all the terms and         
conditions of the Incentive Award that are or would have been applicable to the 
Participant and to be bound by the acknowledgments made by the Participant in   
connection with the grant of the Incentive Award.                               

 During a Participant's lifetime, the Committee may permit the transfer,
assignment or other encumbrance of an outstanding Option or outstanding shares  
of Restricted Stock unless such Option is an Incentive Stock Option and the     
Committee and the Participant intend that it shall retain such status.          
Notwithstanding the foregoing, subject to any conditions as the Committee may   
prescribe, a Participant may, upon providing written notice to the Secretary of 
the Company, elect to transfer any or all Options granted to such Participant   
pursuant to the Plan to members of his or her immediate family, including, but  
not limited to, children, grandchildren and spouse or to trusts for the benefit 
of such immediate family members or to partnerships in which such family members
are the only partners; provided, however, that no such transfer by any          
Participant may be made in exchange for consideration.                          

21. EXPENSES AND RECEIPTS.                                                      

The expenses of the Plan shall be paid by the Company. Any proceeds   
received by the Company in connection with any Incentive Award will be used for 
general corporate purposes.                                                     

22. FAILURE TO COMPLY.                                                          

   In addition to the remedies of the Company elsewhere provided for herein,
failure by a Participant (or beneficiary or transferee) to comply with any of   
the terms and conditions of the Plan or the applicable Award Agreement, unless  
such failure is remedied by such Participant (or beneficiary or transferee)     
within ten days after notice of such failure by the Committee, shall be grounds 
for the cancellation and forfeiture of such Incentive Award, in whole or in     
part, as the Committee, in its absolute discretion, may determine.              

23. EFFECTIVE DATE AND TERM OF PLAN.                                            

The Plan became effective on the Effective Date, but the Plan (and any
grants of Incentive Awards made prior to stockholder approval of the Plan) shall
be subject to the requisite approval of the stockholders of the Company. In the 
absence of such approval, such Incentive Awards shall be null and void. Unless  
earlier terminated by the Board of Directors, the right to grant Incentive      
Awards under the Plan will terminate on the tenth anniversary of the Effective  
Date. Incentive Awards outstanding at Plan termination will remain in effect    
according to their terms and the provisions of the Plan.                        

24. APPLICABLE LAW.                                                             

     Except to the extent preempted by any applicable federal law, the Plan will
be construed and administered in accordance with the laws of the State of Utah, 
without reference to the principles of conflicts of law.                        

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25. PARTICIPANT RIGHTS.                                                         

     No Participant shall have any claim to be granted any Incentive Award under
the Plan, and there is no obligation for uniformity of treatment for            
Participants. Except as provided specifically herein, a Participant or a        
transferee of an Incentive Award shall have no rights as a stockholder with     
respect to any shares covered by any award until the date of the issuance of a  
Common Stock certificate to him for such shares.                                

26. UNFUNDED STATUS OF AWARDS.                                                  

 The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a           
Participant pursuant to an Incentive Award, nothing contained in the Plan or any
Award Agreement shall give any such Participant any rights that are greater than
those of a general creditor of the Company.                                     

27. NO FRACTIONAL SHARES.                                                       

    No fractional shares of Common Stock shall be issued or delivered pursuant
to the Plan. The Committee shall determine whether cash, other Incentive Awards,
or other property shall be issued or paid in lieu of such fractional shares or  
whether such fractional shares or any rights thereto shall be forfeited or      
otherwise eliminated.                                                           

28. BENEFICIARY.                                                                

A Participant may file with the Committee a written designation of a  
beneficiary on such form as may be prescribed by the Committee and may, from    
time to time, amend or revoke such designation. If no designated beneficiary    
survives the Participant, the executor or administrator of the Participant's    
estate shall be deemed to be the Participant's beneficiary.                     

29. INTERPRETATION.                                                             

 The Plan is designed and intended to comply with Rule 16b-3 promulgated
under the Exchange Act and, with Section 162(m) of the Code, and all provisions 
hereof shall be construed in a manner to so comply.                             

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                                                                      APPENDIX G

AMENDMENT NO. 1 
TO
1999 OMNIBUS STOCK INCENTIVE PLAN 

This Amendment No. 1 to the 1999 Omnibus Stock Incentive Plan (this   
"Amendment") is executed by the undersigned, by and on behalf of Caldera        
Systems, Inc., a Delaware corporation (the "Company").                          

BACKGROUND

 A. The Company has adopted the Caldera Systems, Inc. 1999 Omnibus Stock
Incentive Plan (the "1999 Plan") pursuant to which the Company may grant Options
and other Incentive Awards to employees, directors and certain consultants of   
the Company and its subsidiaries. Capitalized terms used in this Amendment but  
not defined herein have the meaning set forth in the 1999 Plan.                 

B. The Company desires to amend the 1999 Plan in order to increase the
number of shares of Common Stock reserved for issuance under the 1999 Plan.     

AMENDMENT 

NOW, THEREFORE, the 1999 Plan is hereby amended as follows:           

      1. INCREASE IN NUMBER OF SHARES SUBJECT TO THE PLAN AND INDIVIDUAL
LIMITATION.                                                           

       The first sentence of Section 3(a) of the Plan is hereby deleted in
its entirety, and the following is hereby inserted in its stead:      

            Subject to adjustment under Section 3(c) below, the maximum number
    of shares of Common Stock that may be issued under the Plan shall be
4,105,238 shares.                                               

        2. RATIFICATION. Except as specifically modified hereby, the Plan is
hereby ratified and reaffirmed by the Company.                        

   The undersigned, who is the duly elected Secretary of the Company, hereby
certifies that (i) the Board of Directors of the Company approved this Amendment
on March 10, 2000, and (ii) that the shareholders of the Company approved this  
Amendment on March 22, 2000, at which time this Amendment became effective.     

                              CALDERA SYSTEMS, INC.,
                              a Delaware corporation

                                 By:      /s/ RICHARD RIFE
                                              ----------------------------------
                                             Secretary

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                                                                      APPENDIX H

AMENDMENT NO. 2 
TO
1999 OMNIBUS STOCK INCENTIVE PLAN 

This Amendment No. 2 to the 1999 Omnibus Stock Incentive Plan (this   
"Amendment") is executed by the undersigned, by and on behalf of Caldera        
Systems, Inc., a Delaware corporation (the "Company").                          

BACKGROUND

The Company has adopted the Caldera Systems, Inc. 1999 Omnibus Stock  
Incentive Plan (the "1999 Plan"). The Company desires to amend the 1999 Plan in 
order to increase the number of shares of Common Stock reserved for issuance    
under the 1999 Plan. Capitalized terms used in this Amendment but not defined   
herein have the meaning set forth in the 1999 Plan.                             

AMENDMENT 

  Effective as of July 14 2000, the Board of Directors unanimously adopted
the Amendment in the form given below, subject to approval of the Amendment by  
the Company's Stockholders.                                                     

NOW, THEREFORE, the 1999 Plan is hereby amended as follows:           

      1. Increase in Number of Shares Subject to the Plan and Individual
Limitation. The first sentence of Section 3(a) of the Plan is hereby  
deleted in its entirety, and the following is inserted in its stead:  

            Subject to adjustment under Section 3(c) below, the maximum number
    of shares of Common Stock that may be issued under the Plan shall be
 6,405,238 shares, increased as of November 1 each year, beginning
        November 1, 2000, by three percent (3%) of the total number of shares of
Common Stock that are issued and outstanding on the immediately 
 preceding October 31st. Notwithstanding the foregoing, subject to
        adjustment under Section 3(c) below the number of shares of Common Stock
     that may be issued upon the exercise of Incentive Stock Options under
   the Plan shall in no event exceed 6,405,238 shares, increased as of
       November 1 each year, beginning November 1, 2000 and continuing through
November 1, 2008, by 100,000 shares per year                    

        2. Ratification. Except as specifically modified hereby, the Plan is
hereby ratified and reaffirmed by the Company.                        

        3. Effectiveness. No shares of Common Stock shall be issued or other
   Incentive Awards shall be permitted to be exercised in reliance upon this
  Amendment unless and until the shareholders have approved this Amendment
and any waiting periods required by governing laws or regulations have
passed..                                                              

   The undersigned, Richard Rife, Secretary, hereby certifies that the Board
of Directors of the Company adopted the foregoing Amendment as stated in        
Background above.                                                               

Executed as of the 14th day of July 2000.                             

                              CALDERA SYSTEMS, INC.,
                              a Delaware corporation

                                 By:      /s/ RICHARD RIFE
                                              ----------------------------------
                                             Secretary

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                                                                      APPENDIX I

AMENDMENT NO. 3 
TO
1999 OMNIBUS STOCK INCENTIVE PLAN 

This Amendment No. 3 to the 1999 Omnibus Stock Incentive Plan (this   
"Amendment") is executed by the undersigned, by and on behalf of Caldera        
Systems, Inc., a Delaware corporation (the "Company").                          

BACKGROUND

 A. The Company has adopted the Caldera Systems, Inc. 1999 Omnibus Stock
Incentive Plan (the "1999 Plan") pursuant to which the Company may grant Options
and other Incentive Awards to employees, directors and certain consultants of   
the Company and its subsidiaries. Capitalized terms used in this Amendment but  
not defined herein have the meaning set forth in the 1999 Plan.                 

 B. The Company desires to amend the 1999 Plan in order to incorporate a
formula award program pursuant to which directors of the Company will           
automatically be granted 100,000 Non-Qualified Stock Options (vesting 50% on the
first anniversary of the date of grant and 50% on the second anniversary of the 
date of grant) every two years.                                                 

AMENDMENT 

NOW, THEREFORE, the 1999 Plan is hereby amended as follows:           

          1. Director Formula Award Program. A new Section 30 is hereby added to
the 1999 Plan, the content of which is as follows:                    

SECTION 30. FORMULA AWARDS.                           

         30.1  General. The provisions of this Section 30 are applicable
 only to Options granted to directors of the Company ("Directors")
pursuant to 30.2 below.                                         

30.2  Grants.                                         

           (a) Initial Bi-Annual Grant. Subject to the limitations set
       forth in Section 30.8 and prior approval of this Amendment by the
        shareholders of the Company, Options to purchase 100,000 shares of
           Common Stock shall automatically be granted to each individual who is
        elected to serve or continues to serve as a Director following the
           date of the regularly scheduled annual meeting of shareholders of the
       Company (an "Annual Meeting") during the 2002 calendar year. Such
         Options shall be granted as of the date of such Annual Meeting, and
         the option exercise price for such Options shall be the Fair Market
         Value of a share of Common Stock on the date of grant. Such Options
      shall be exercisable 50% on the first anniversary of the date of
      grant and 50% on the second anniversary of the date of grant. No
           Options shall be granted under this provision if an Annual Meeting is
not held during the 2002 calendar year.                   

               (b) Subsequent Bi-Annual Grants. Subject to the limitations set
       forth in Section 30.8 and prior approval of this Amendment by the
        shareholders of the Company, as of the date of each Annual Meeting
    held during any even-numbered calendar year beginning in 2004,
Options to purchase 100,000 shares of Common Stock shall  
         automatically be granted to each individual who is elected to serve
        or continues to serve as a Director following such Annual Meeting.
         The option exercise price for such Options shall be the Fair Market
         Value of a share of Common Stock on the date of grant. Such Options
          shall become exercisable 50% on the first anniversary of the date of
grant and 50% on the second anniversary of the            

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           date of grant. No Options shall be granted under this provision if an
          Annual Meeting is not held during the respective even numbered year.

          (c) New Directors. Subject to the limitations set forth in
           Section 30.8 and prior approval of this Amendment by the shareholders
         of the Company, persons who are first elected or appointed to serve
    as a Director after the effective date of this Amendment shall
        automatically be granted Options to purchase a number of shares of
Common Stock determined using the following formula:      

                                                                [Download Table]
                                     
                     Months X 100,000
Number of Options =  ----------------
                            24       

             Months -- the number of full calendar months between the date
       the Director's service as a Director commences and March 1 of the
next even numbered year.                                  

               Such Options shall be granted as of the date of commencement of
         the Director's service as a director, and the option exercise price
          for such Options shall be the Fair Market Value of a share of Common
           Stock on the date of grant. Any such Options shall become exercisable
          50% on the first anniversary of the date of date of grant and 50% on
the second anniversary of the date of grant.              

            (d) Top-Up Grant for Existing Directors. This subsection (d)
  applies to any directors whose Options are scheduled to vest
       completely prior to March 1, 2002. Subject to the limitations set
        forth in Section 30.8 and prior approval of this Section 30 by the
         shareholders of the Company, each such director shall automatically
       be granted Options to purchase a number of shares of Common Stock
          using the formula stated in subsection (c) above. Such Options shall
       be granted as of the first day of the month following the date on
      which the director's Options are schedule to fully vest, and the
           option exercise price for such Options shall be the Fair Market Value
       of a share of Common Stock on the date of grant. Any such options
          shall become exercisable 50% on the first anniversary of the date of
   grant and 50% on the second anniversary of the date of grant.

           30.3  Option Agreement. Each Option granted under this Section 30
       shall be evidenced by an Award Agreement duly executed on behalf of the
       Company and by the Director to whom such Option is granted and dated as
       of the applicable date of grant. All Options granted under this Section
30 shall be Non-Qualified Stock Options unless, with respect to 
Directors who are also employees of the Company, the Committee  
        determines, in its discretion before the date of grant, that some or all
such Options shall be Incentive Stock Options.                  

          30.5  Method of Exercise And Payment. The method of exercise and
    payment of the exercise price for Options granted under this Section
shall be as set forth in Section 7(c)(2)(3), and (4).           

           30.6  Term of Formula Awards. Each Formula Award shall expire ten
  (10) years from its date of grant, but shall be subject to earlier
       termination as provided in Section 7(f) and Section 7(e), provided that
     references to termination of "employment" shall be deemed to refer to
termination of "service as a director."                         

           30.7  Limitation as to Directorship. Neither this Section 30, nor
       the granting of a Formula Award, nor any other action taken pursuant to
    this Section 30, shall constitute or be evidence of any agreement or
 understanding, express or implied, that a Director has a right to
       continue as a Director for any period of time or at any particular rate
   of compensation. No Director shall have any right to be granted any
     Option under this Section 30 until such Option is deemed to have been
      granted under this Section 30, and the Board of Directors may amend or
eliminate this Section 30 at any time for any reason.           

            30.8  Termination of Formula Awards. Notwithstanding any provision
       to the contrary, no Option shall be granted pursuant to Section 30.2 on
a date when the number of shares of                             

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      Common Stock authorized for issuance pursuant to the Plan is less than
     the sum of (a) all shares of Common Stock issued upon the exercise of
    all Options granted under the Plan to date, (b) all shares of Common
    Stock subject to outstanding, unexpired Options, and (c) all Options
        that would, but for the effect of this provision, be granted pursuant to
  Section 30 on that date. In the event Options are not granted as a
result of the application of this Section 30.8, no Options shall
        thereafter be granted pursuant to this Section 30 until the shareholders
        of the Company approve an amendment to the Plan increasing the number of
shares of Common Stock available hereunder.                     

     30.9  Other Plan Provisions. All provisions of the Plan not
   inconsistent with this Section 30 shall apply to Options granted to
       Directors under this Section 30. In the event of any conflict between a
        provision of this Section 30 and a provision in any other Section of the
       Plan, such provision of this Section 30 shall be deemed to control with
respect to Options granted under this Section 30.               

        2. Ratification. Except as specifically modified hereby, the Plan is
hereby ratified and reaffirmed by the Company.                        

         3. Effectiveness. This Amendment shall be effective on the date it is
approved by the shareholders of the Company.                          

   The undersigned, who is the duly elected Secretary of the Company, hereby
certifies that, following approval of this Amendment by the Board of Directors  
of the Company, the shareholders approved this amendment at a duly convened     
meeting of the shareholders on             , 2000.                              

                              CALDERA SYSTEMS, INC.,
                              a Delaware Corporation

           By:
                                              ----------------------------------
                                              Richard C. Rife,
                                             its Corporate Secretary

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                                                                      APPENDIX J

AMENDMENT NO. 4 
TO
1999 OMNIBUS STOCK INCENTIVE PLAN 

This Amendment No. 4 to the 1999 Omnibus Stock Incentive Plan (this   
"Amendment") is executed by the undersigned, by and on behalf of Caldera        
Systems, Inc., a Delaware corporation (the "Company").                          

BACKGROUND

 A. The Company has adopted the Caldera Systems, Inc. 1999 Omnibus Stock
Incentive Plan (the "1999 Plan") pursuant to which the Company may grant Options
and other Incentive Awards to employees, directors and certain consultants of   
the Company and its subsidiaries. Capitalized terms used in this Amendment but  
not defined herein have the meaning set forth in the 1999 Plan.                 

B. The Company desires to amend the 1999 Plan in order to make certain
changes and administrative clarifications to the 1999 Plan.                     

AMENDMENT 

NOW, THEREFORE, the 1999 Plan is hereby amended as follows:           

     1. Allow Grant of Non-Qualified Options with Exercise Price Below
 FMV. The second sentence of Section 7(b) of the 1999 Plan is amended to
read as follows:                                                      

           The Option exercise price per share shall be set by the Committee
in its discretion on a case by case basis, but in the case of an
        Incentive Stock Option shall not be less than the Fair Market Value of a
share of Common Stock on the date of grant.                     

   2. Allow Exercise of Non-Qualified Options Up to 120 Days After
   Termination of Service. Clause (i) of Section 7(e)(1) of the 1999 Plan is
amended to read as follows:                                           

         (i) Options granted to such Participant, to the extent they are
     exercisable at the time of such termination, shall remain exercisable
until the date which is 90 days (or 120 days in the case of a   
   "Non-Qualified Stock Option")after the date of such termination, on
which date they shall expire, and ...                           

    3. Allow Exercise of Options Up to 30 Days After Termination for
Cause. Section 7(e)(3) of the 1999 Plan is amended to read as follows:

        (3) Unless an applicable Award Agreement issued after the date
 hereof provides otherwise, if a Participant's employment with the
       Company or a Subsidiary of the Company is terminated for Cause, Options
    granted to the Participant, to the extent they are then exercisable,
      shall remain exercisable for 30 days following the date of termination
   of employment, on which date they shall expire. Notwithstanding the
       foregoing, no Option shall be exercisable after expiration of its term.

        4. Allow Cash Out, Conversion or Other Disposition of Vested Options
and SARS Upon Change in Control.                                      

           (a) Section 7(f) of the 1999 Plan is amended to add the following
sentences at the end thereof:                                   

            Any vested, exercisable Options outstanding at the time of a
        Change in Control shall be cashed out, converted to options of the
    acquiring entity, assumed by the acquiring entity or otherwise
    disposed of in the manner provided in any shareholder-approved
         agreement or plan governing or providing for such Change in Control
("Change in Control Agreement");                          
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provided that any such cash-out, conversion, assumption or
           disposition of the Options shall not deprive the Option holder of the
         inherent value of his Options, measured solely by the excess of the
         Fair Market Value of the underlying Option shares immediately prior
          to the Change in Control over the Option exercise price, without the
        holder's consent. In the absence of such governing provisions in a
           Change in Control Agreement, the Committee in its sole discretion may
          on a case by case basis require any vested, exercisable Options that
      remain outstanding upon a Change in Control to be cashed out and
       terminated in exchange for a lump sum cash payment, shares of the
          acquiring entity or a combination thereof equal in value to the fair
         market value of the Option, measured in the manner described above,
        immediately prior to the Change in Control. Any non-vested Options
    shall terminate upon a Change in Control unless: (i) otherwise
           provided in the Change in Control Agreement or in a written agreement
  , such as a severance agreement, between the Company and the
         Participant; or (ii) the Committee in its sole discretion on a case
by case basis elects in writing to waive termination      

           (b) Section 9(d) of the 1999 Plan is amended to add the following
sentence at the end thereof:                                    

               Any vested, exercisable Non-Tandem SARs shall, upon a Change in
         Control, be cashed out, converted, assumed or otherwise disposed of
  in the same manner as applies to Options under Section 7(f).

      5. Provide Flexibility to Grant Restricted Stock and Phantom Stock
Without Performance Guidelines.                                       

           (a) Section 10(i) of the 1999 Plan is amended to read as follows:

           The Committee may designate on a case-by-case basis whether
   Restricted Stock Awards are intended to be "performance based
           compensation" within the meaning of Code Section 162(m). The grant of
        Restricted Stock so designated shall be based on the attainment by
the Company (or a Subsidiary or division of the Company if
        applicable) of performance goals pre-established by the Committee,
           based on one or more of the following criteria: (i) the attainment of
      a specified percentage return on total stockholder equity of the
        Company; (ii) the attainment of a specified percentage increase in
   earnings per share of Common Stock; (iii) the attainment of a
          specified percentage increase in net income of the Company; and (iv)
        the attainment of a specified percentage increase in profit before
         taxation of the Company (or a Subsidiary or division of the Company
          if applicable). Attainment of any such performance criteria shall be
 determined in accordance with generally accepted accounting
     principles as in effect from time to time. Such shares shall be
  released from restrictions only after the attainment of such
performance measures have been certified by the Committee.

           (b) Section 11(f) of the 1999 Plan is amended to read as follows:

           The Committee may designate on a case by case basis whether
Phantom Stock Awards are intended to be "performance based
           compensation" within the meaning of Code Section 162(m). The grant of
         Phantom Stock so designated shall be based on the attainment by the
           Company (or a Subsidiary or division of the Company if applicable) of
         performance goals pre-established by the Committee, based on one or
       more of the following criteria: (i) the attainment of a specified
        percentage return on total stockholder equity of the Company; (ii)
       the attainment of a specified percentage increase in earnings per
           share of Common Stock; (iii) the attainment of a specified percentage
         increase in net income of the Company; and (iv) the attainment of a
    specified percentage increase in profit before taxation of the
         Company (or a Subsidiary or division of the Company if applicable).
        Attainment of any such performance criteria shall be determined in
           accordance with generally accepted accounting principles as in effect
from time to time. Such shares shall be released from     

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         restrictions only after the attainment of such performance measures
have been certified by the Committee.                     

6. Technical Amendments.                                              

          (a) The definition of "Participant" in Section 2(t) is hereby deleted,
and the following is inserted in its stead:                           

           "Participant" means any person who is both eligible to receive an
       Incentive Award pursuant to the Plan (as set forth in Section 5) and to
      whom an Incentive Award is granted pursuant to the Plan, and, upon his
or her death, his or her successors, heirs, executors and       
administrators, as the case may be.                             

          (b) Section 5 of the 1999 Plan is hereby deleted, and the following is
inserted in its stead:                                                

      5. Eligibility. The persons who shall be eligible to receive
Incentive Awards pursuant to the Plan shall be all employees and
    directors of the Company and its Subsidiaries and such other persons
        whom the Committee determines are expected to make a contribution to the
        Company. The Committee may grant Incentive Awards to any, all or none of
        such eligible persons at any time, from time to time, during the term of
the Plan.                                                       

       (c) Section 7(c) of the 1999 Plan is amended as follows: The phrase
     "Unless the applicable Award Agreement provides otherwise," which currently
exists at the beginning of subsection (1), is moved to appear at the  
  beginning of Section 7(c), prior to subsection (1), so that it qualifies
all four of the subsections of Section 7(c).                          

         (d) A new Section 31 is hereby added to the 1999 Plan, the content of
which is as follows:                                                  

           Any reference to "termination of employment," or words of similar
     import, in the Plan shall be deemed, (i) when applied to non-employee
        Directors, to mean "termination of service as a director," and (ii) when
    applied to employee-Directors, to mean "termination of service as an
      employee and a director." Reference to "termination of employment," or
    words of similar import, in the Plan shall not be deemed to apply to
persons who were not employees or a director of the Company or a
Subsidiary of the Company.                                      

     7. Ratification. Except as specifically modified hereby, the Plan is hereby
ratified and reaffirmed by the Company.                                         

   The undersigned, who is the duly elected Secretary of the Company, hereby
certifies that the Board of Directors of the Company approved this Amendment on 
July 14, 2000, at which time this Amendment became effective.                   

                              CALDERA SYSTEMS, INC.,
                              a Delaware Corporation

                                   By:     /s/ RICHARD C. RIFE
                                              ----------------------------------
                                              Richard C. Rife,
                                             its Corporate Secretary

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                                                                      APPENDIX K

AMENDMENT NO. 5 
TO
1999 OMNIBUS STOCK INCENTIVE PLAN 

This Amendment No. 5 to the 1999 Omnibus Stock Incentive Plan (this   
"Amendment") is executed by the undersigned, by and on behalf of Caldera        
Systems, Inc., a Delaware corporation (the "Company").                          

BACKGROUND

The Company has adopted the Caldera Systems, Inc. 1999 Omnibus Stock  
Incentive Plan (the "1999 Plan"). The Company desires to amend the 1999 Plan to 
increase the number of shares of Common Stock reserved for issuance under the   
1999 Plan. Capitalized terms used in this Amendment but not defined herein have 
the meaning set forth in the 1999 Plan.                                         

AMENDMENT 

NOW, THEREFORE, the 1999 Plan is hereby amended as follows:           

1. Increase is Number of Shares Subject to the 1999 Plan and
     Individual Limitation.  The first sentence of Section 3(a) of the 1999 Plan
is hereby deleted in its entirety and the following is inserted in its
stead:                                                                

      "Subject to adjustment under Section 3(c) below, the maximum number of
 shares of Common Stock that may be issued under the Plan shall be
  10,905,238 shares, increased as of November 1 each year, beginning
        November 1, 2000, by three percent (3%) of the total number of shares of
Common Stock that are issued and outstanding on the immediately 
preceding October 31st.                                         

      2. Ratification.  Except as specifically modified hereby, the 1999
Plan is hereby ratified and affirmed by the Company.                  

         3. Effectiveness.  No shares of Common Stock shall be issued or other
   Incentive Awards shall be permitted to be exercised in reliance upon this
  Amendment unless and until the stockholders have approved this Amendment
and any waiting periods required by governing laws or regulations have
passed.                                                               

The undersigned, who is the duly elected Secretary of the Board of    
Directors of the Company, hereby certifies that the Board of Directors of the   
Company approved this Amendment on February 23, 2001, at which time this        
Amendment became effective.                                                     

                                         Caldera Systems, Inc., a Delaware
                   corporation

                                   By:     /s/ RICHARD C. RIFE
                                              ----------------------------------
                               Richard C. Rife
                                         Secretary to the Board of
                         Directors

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                                                                      APPENDIX L

CALDERA SYSTEMS, INC. 
EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF              , 2000) 

I. PURPOSE OF THE PLAN                                                          

   This Employee Stock Purchase Plan is intended to promote the interests of
Caldera Systems, Inc., a Delaware corporation, by providing eligible employees  
with the opportunity to acquire a proprietary interest in the Corporation       
through participation in a payroll-deduction based employee stock purchase plan 
designed to qualify under Section 423 of the Code.                              

    Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix.                                                          

II. ADMINISTRATION OF THE PLAN                                                  

    The Plan Administrator shall have full authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for           
administering the Plan as it may deem necessary in order to comply with the     
requirements of Section 423 of the Code. Decisions of the Plan Administrator    
shall be final and binding on all parties having an interest in the Plan.       

III. STOCK SUBJECT TO PLAN                                                      

   A. The stock purchasable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares of Common Stock purchased 
on the open market. The maximum number of shares of Common Stock which may be   
issued in the aggregate under the Plan shall not exceed two million (2,000,000) 
shares. Such share reserve includes (i) the 500,000 shares initially reserved   
for issuance under the Plan plus (ii) the one million five hundred thousand     
(1,500,000)-share increase authorized by the Board on October 2, 2000 and       
subject to stockholder approval at the Special Meeting to be held on            
, 2000.                                           

  B. The number of shares of Common Stock available for issuance under the
Plan shall automatically increase on the first trading day of each calendar year
during the term of the Plan, beginning with the 2001 calendar year, by an amount
equal to one percent (1%) of the shares of Common Stock outstanding on the last 
trading day of the immediately preceding calendar year, but in no event shall   
such annual increase exceed Seven Hundred Fifty Thousand (750,000) shares.      

 C. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of     
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be    
made to (i) the maximum number and class of securities issuable under the Plan, 
(ii) the maximum number and class of securities purchasable per Participant on  
any one Purchase Date, (iii) the maximum number and class of securities         
purchasable in total by all Participants on any one Purchase Date, (iv) the     
maximum number and class of securities and the price per share in effect under  
each outstanding purchase right in order to prevent the dilution or enlargement 
of benefits thereunder.                                                         

IV. OFFERING PERIODS                                                            

A. Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive offering periods until such time as (i) the      
maximum number of shares of Common Stock available for issuance under the Plan  
shall have been purchased or (ii) the Plan shall have been sooner terminated.   

B. Each offering period shall be of such duration (not to exceed      
twenty-four (24) months) as determined by the Plan Administrator prior to the   
start date of such offering period. However, the initial                        

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offering period commenced at the Effective Time (March 20, 2000) and will       
terminate on the last business day in April 2002. Subsequent offering periods   
shall commence as designated by the Plan Administrator.                         

C. Each offering period shall be comprised of a series of one or more 
successive Purchase Intervals. Purchase Intervals shall run from the first      
business day in May each year to the last business day in October of the same   
year and from the first business day in November each year to the last business 
day in April of the following year. However, the first Purchase Interval in     
effect under the initial offering period commenced at the Effective Time and    
will terminate on the last business day in October 2000.                        

   D. Should the Fair Market Value per share of Common Stock on any Purchase
Date within an offering period be less than the Fair Market Value per share of  
Common Stock on the start date of that offering period, then that offering      
period shall automatically terminate immediately after the purchase of shares of
Common Stock on such Purchase Date, and a new offering period shall commence on 
the next business day following such Purchase Date. The new offering period     
shall have a duration of twenty-four (24) months, unless a shorter duration is  
established by the Plan Administrator within five (5) business days following   
the start date of that offering period.                                         

V. ELIGIBILITY                                                                  

A. Each individual who is an Eligible Employee on the start date of an
offering period under the Plan may enter that offering period on such start date
or on any subsequent Semi-Annual Entry Date within that offering period,        
provided he or she remains an Eligible Employee.                                

   B. Each individual who first becomes an Eligible Employee after the start
date of an offering period may enter that offering period on any subsequent     
Semi-Annual Entry Date within that offering period on which he or she is an     
Eligible Employee.                                                              

     C. The date an individual enters an offering period shall be designated his
or her Entry Date for purposes of that offering period.                         

D. To participate in the Plan for a particular offering period, the   
Eligible Employee must complete the enrollment forms prescribed by the Plan     
Administrator (including a stock purchase agreement and a payroll deduction     
authorization) and file such forms with the Plan Administrator (or its          
designate) on or before his or her scheduled Entry Date.                        

VI. PAYROLL DEDUCTIONS                                                          

A. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock during an offering period may be any multiple  
of one percent (1%) of the Cash Earnings paid to the Participant during each    
Purchase Interval within that offering period, up to a maximum of ten percent   
(10%). The deduction rate so authorized shall continue in effect throughout the 
offering period, except to the extent such rate is changed in accordance with   
the following guidelines:                                                       

    (i) The Participant may, at any time during the offering period,
    reduce his or her rate of payroll deduction to become effective as soon as
     possible after filing the appropriate form with the Plan Administrator. The
   Participant may not, however, effect more than one (1) such reduction per
Purchase Interval.                                                    

  (ii) The Participant may, prior to the commencement of any new
   Purchase Interval within the offering period, increase the rate of his or
her payroll deduction by filing the appropriate form with the Plan    
 Administrator. The new rate (which may not exceed the ten percent (10%)
 maximum) shall become effective on the start date of the first Purchase
Interval following the filing of such form.                           

B. Payroll deductions shall begin on the first pay day following the  
Participant's Entry Date into the offering period and shall (unless sooner      
terminated by the Participant) continue through the pay day ending with or      
immediately prior to the last day of that offering period. The amounts so       
collected shall be                                                              

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credited to the Participant's book account under the Plan, but no interest shall
be paid on the balance from time to time outstanding in such account. The       
amounts collected from the Participant shall not be required to be held in any  
segregated account or trust fund and may be commingled with the general assets  
of the Corporation and used for general corporate purposes.                     

     C. Payroll deductions shall automatically cease upon the termination of the
Participant's purchase right in accordance with the provisions of the Plan.     

D. The Participant's acquisition of Common Stock under the Plan on any
Purchase Date shall neither limit nor require the Participant's acquisition of  
Common Stock on any subsequent Purchase Date, whether within the same or a      
different offering period.                                                      

VII. PURCHASE RIGHTS                                                            

A. Grant of Purchase Right.  A Participant shall be granted a separate
purchase right for each offering period in which he or she participates. The    
purchase right shall be granted on the Participant's Entry Date into the        
offering period and shall provide the Participant with the right to purchase    
shares of Common Stock, in a series of successive installments over the         
remainder of such offering period, upon the terms set forth below. The          
Participant shall execute a stock purchase agreement embodying such terms and   
such other provisions (not inconsistent with the Plan) as the Plan Administrator
may deem advisable.                                                             

   Under no circumstances shall purchase rights be granted under the Plan to
any Eligible Employee if such individual would, immediately after the grant, own
(within the meaning of Code Section 424(d)) or hold outstanding options or other
rights to purchase, stock possessing five percent (5%) or more of the total     
combined voting power or value of all classes of stock of the Corporation or any
Corporate Affiliate.                                                            

B. Exercise of the Purchase Right.  Each purchase right shall be      
automatically exercised in installments on each successive Purchase Date within 
the offering period, and shares of Common Stock shall accordingly be purchased  
on behalf of each Participant (other than Participants whose payroll deductions 
have previously been refunded pursuant to the Termination of Purchase Right     
provisions below) on each such Purchase Date. The purchase shall be effected by 
applying the Participant's payroll deductions for the Purchase Interval ending  
on such Purchase Date to the purchase of whole shares of Common Stock at the    
purchase price in effect for the Participant for that Purchase Date.            

     C. Purchase Price.  The purchase price per share at which Common Stock will
be purchased on the Participant's behalf on each Purchase Date within the       
offering period shall be equal to eighty-five percent (85%) of the lower of (i) 
the Fair Market Value per share of Common Stock on the Participant's Entry Date 
into that offering period or (ii) the Fair Market Value per share of Common     
Stock on that Purchase Date.                                                    

D. Number of Purchasable Shares.  The number of shares of Common Stock
purchasable by a Participant on each Purchase Date during the offering period   
shall be the number of whole shares obtained by dividing the amount collected   
from the Participant through payroll deductions during the Purchase Interval    
ending with that Purchase Date by the purchase price in effect for the          
Participant for that Purchase Date. However, the maximum number of shares of    
Common Stock purchasable per Participant on any one Purchase Date shall not     
exceed Seven Hundred Fifty (750) shares, subject to periodic adjustments in the 
event of certain changes in the Corporation's capitalization. In addition, the  
maximum number of shares of Common Stock purchasable in total by all            
Participants on any one Purchase Date under the Plan shall not exceed One       
Hundred Twenty-Five Thousand (125,000) shares, subject to periodic adjustments  
in the event of certain changes in the corporation's capitalization. However,   
the Plan Administrator shall have the discretionary authority, exercisable prior
to the start of any offering period under the Plan, to increase or decrease the 
limitations to be in effect for the number of shares purchasable per Participant
and in total by all Participants on each Purchase Date during that offering     
period.                                                                         

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  E. Excess Payroll Deductions.  Any payroll deductions not applied to the
purchase of shares of Common Stock on any Purchase Date because they are not    
sufficient to purchase a whole share of Common Stock shall be held for the      
purchase of Common Stock on the next Purchase Date. However, any payroll        
deductions not applied to the purchase of Common Stock by reason of the         
limitation on the maximum number of shares purchasable on the Purchase Date     
shall be promptly refunded.                                                     

  F. Termination of Purchase Right.  The following provisions shall govern
the termination of outstanding purchase rights:                                 

  (i) A Participant may, at any time prior to the next scheduled
Purchase Date in the offering period, terminate his or her outstanding
   purchase right by filing the appropriate form with the Plan Administrator
  (or its designate), and no further payroll deductions shall be collected
 from the Participant with respect to the terminated purchase right. Any
 payroll deductions collected during the Purchase Interval in which such
 termination occurs shall, at the Participant's election, be immediately
   refunded or held for the purchase of shares on the next Purchase Date. If
 no such election is made at the time such purchase right is terminated,
    then the payroll deductions collected with respect to the terminated right
shall be refunded as soon as possible.                                

         (ii) The termination of such purchase right shall be irrevocable, and
   the Participant may not subsequently rejoin the offering period for which
     the terminated purchase right was granted. In order to resume participation
  in any subsequent offering period, such individual must re-enroll in the
   Plan (by making a timely filing of the prescribed enrollment forms) on or
before his or her scheduled Entry Date into that offering period.     

         (iii) Should the Participant cease to remain an Eligible Employee for
   any reason (including death, disability or change in status) while his or
her purchase right remains outstanding, then that purchase right shall
    immediately terminate, and all of the Participant's payroll deductions for
  the Purchase Interval in which the purchase right so terminates shall be
  immediately refunded. However, should the Participant cease to remain in
   active service by reason of an approved unpaid leave of absence, then the
  Participant shall have the right, exercisable up until the last business
     day of the Purchase Interval in which such leave commences, to (a) withdraw
    all the payroll deductions collected to date on his or her behalf for that
     Purchase Interval or (b) have such funds held for the purchase of shares on
his or her behalf on the next scheduled Purchase Date. In no event,   
however, shall any further payroll deductions be collected on the     
  Participant's behalf during such leave. Upon the Participant's return to
  active service (x) within ninety (90) days following the commencement of
  such leave or (y) prior to the expiration of any longer period for which
     such Participant's right to reemployment with the Corporation is guaranteed
     by either statute or contract, his or her payroll deductions under the Plan
shall automatically resume at the rate in effect at the time the leave
   began, unless the Participant withdraws from the Plan prior to his or her
     return. An individual who returns to active employment following a leave of
 absence which exceeds in duration the applicable (x) or (y) time period
 will be treated as a new Employee for purposes of the Plan and must, in
     order to resume participation in the Plan, re-enroll in the Plan (by making
     a timely filing of the prescribed enrollment forms) on or before his or her
scheduled Entry Date into the offering period.                        

    G. Change of Control.  Each outstanding purchase right shall automatically
be exercised, immediately prior to the effective date of any Change of Control, 
by applying the payroll deductions of each Participant for the Purchase Interval
in which such Change of Control occurs to the purchase of whole shares of Common
Stock at a purchase price per share equal to eighty-five percent (85%) of the   
lower of (i) the Fair Market Value per share of Common Stock on the             
Participant's Entry Date into the offering period in which such Change of       
Control occurs or (ii) the Fair Market Value per share of Common Stock          
immediately prior to the effective date of such Change of Control. However, the 
applicable limitation on the number of shares of Common Stock purchasable per   
Participant shall continue to apply to any such purchase, but not the limitation
on the number of shares of Common Stock purchasable in total by all Participants
on any one Purchase Date.                                                       

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The Corporation shall use its best efforts to provide at least ten    
(10)-days prior written notice of the occurrence of any Change of Control, and  
Participants shall, following the receipt of such notice, have the right to     
terminate their outstanding purchase rights prior to the effective date of the  
Change of Control.                                                              

H. Proration of Purchase Rights.  Should the total number of shares of
Common Stock to be purchased pursuant to outstanding purchase rights on any     
particular date exceed the number of shares then available for issuance under   
the Plan, the Plan Administrator shall make a pro-rata allocation of the        
available shares on a uniform and nondiscriminatory basis, and the payroll      
deductions of each Participant, to the extent in excess of the aggregate        
purchase price payable for the Common Stock pro-rated to such individual, shall 
be refunded.                                                                    

I. Assignability.  The purchase right shall be exercisable only by the
Participant and shall not be assignable or transferable by the Participant.     

     J. Stockholder Rights.  A Participant shall have no stockholder rights with
respect to the shares subject to his or her outstanding purchase right until the
shares are purchased on the Participant's behalf in accordance with the         
provisions of the Plan and the Participant has become a holder of record of the 
purchased shares.                                                               

VIII. ACCRUAL LIMITATIONS                                                       

A. No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the  
extent such accrual, when aggregated with (i) rights to purchase Common Stock   
accrued under any other purchase right granted under this Plan and (ii) similar 
rights accrued under other employee stock purchase plans (within the meaning of 
Code Section 423) of the Corporation or any Corporate Affiliate, would otherwise
permit such Participant to purchase more than Twenty-Five Thousand Dollars      
($25,000) worth of stock of the Corporation or any Corporate Affiliate          
(determined on the basis of the Fair Market Value per share on the date or dates
such rights are granted) for each calendar year such rights are at any time     
outstanding.                                                                    

     B. For purposes of applying such accrual limitations to the purchase rights
granted under the Plan, the following provisions shall be in effect:            

         (i) The right to acquire Common Stock under each outstanding purchase
    right shall accrue in a series of installments on each successive Purchase
  Date during the offering period on which such right remains outstanding.

        (ii) No right to acquire Common Stock under any outstanding purchase
     right shall accrue to the extent the Participant has already accrued in the
    same calendar year the right to acquire Common Stock under one (1) or more
other purchase rights at a rate equal to Twenty-Five Thousand Dollars 
     ($25,000) worth of Common Stock (determined on the basis of the Fair Market
    Value per share on the date or dates of grant) for each calendar year such
rights were at any time outstanding.                                  

C. If by reason of such accrual limitations, any purchase right of a  
Participant does not accrue for a particular Purchase Interval, then the payroll
deductions which the Participant made during that Purchase Interval with respect
to such purchase right shall be promptly refunded.                              

D. In the event there is any conflict between the provisions of this  
Article and one or more provisions of the Plan or any instrument issued         
thereunder, the provisions of this Article shall be controlling.                

IX. EFFECTIVE DATE AND TERM OF THE PLAN                                         

A. The Plan was adopted by the Board on February 15, 2000 and became  
effective at the Effective Time, provided no purchase rights granted under the  
Plan shall be exercised, and no shares of Common Stock shall be issued          
hereunder, until (i) the Plan shall have been approved by the stockholders of   
the Corporation and (ii) the Corporation shall have complied with all applicable
requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8                                     

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registration statement filed with the Securities and Exchange Commission), all  
applicable listing requirements of any stock exchange (or the Nasdaq National   
Market, if applicable) on which the Common Stock is listed for trading and all  
other applicable requirements established by law or regulation. In the event    
such stockholder approval is not obtained, or such compliance is not effected,  
within twelve (12) months after the date on which the Plan is adopted by the    
Board, the Plan shall terminate and have no further force or effect, and all    
sums collected from Participants during the initial offering period hereunder   
shall be refunded.                                                              

     B. Unless sooner terminated by the Board, the Plan shall terminate upon the
earliest of (i) the last business day in April 2010, (ii) the date on which all 
shares available for issuance under the Plan shall have been sold pursuant to   
purchase rights exercised under the Plan or (iii) the date on which all purchase
rights are exercised in connection with a Corporate Transaction. No further     
purchase rights shall be granted or exercised, and no further payroll deductions
shall be collected, under the Plan following such termination.                  

X. AMENDMENT/TERMINATION OF THE PLAN                                            

     A. The Board may alter, amend, suspend or terminate the Plan at any time to
become effective immediately following the close of any Purchase Interval.      
However, the Plan may be amended or terminated immediately upon Board action, if
and to the extent necessary to assure that the Corporation will not recognize,  
for financial reporting purposes, any compensation expense in connection with   
the shares of Common Stock offered for purchase under the Plan, should the      
financial accounting rules applicable to the Plan at the Effective Time be      
subsequently revised so as to require the Corporation to recognize compensation 
expense in the absence of such amendment or termination.                        

B. In no event may the Board effect any of the following amendments or
revisions to the Plan without the approval of the Corporation's stockholders:   
(i) increase the number of shares of Common Stock issuable under the Plan,      
except for permissible adjustments in the event of certain changes in the       
Corporation's capitalization, (ii) alter the purchase price formula so as to    
reduce the purchase price payable for the shares of Common Stock purchasable    
under the Plan or (iii) modify eligibility requirements for participation in the
Plan.                                                                           

XI. GENERAL PROVISIONS                                                          

A. Nothing in the Plan shall confer upon the Participant any right to 
continue in the employ of the Corporation or any Corporate Affiliate for any    
period of specific duration or interfere with or otherwise restrict in any way  
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to   
terminate such person's employment at any time for any reason, with or without  
cause.                                                                          

    B. All costs and expenses incurred in the administration of the Plan shall
be paid by the Corporation; however, each Plan Participant shall bear all costs 
and expenses incurred by such individual in the sale or other disposition of any
shares purchased under the Plan.                                                

     C. The provisions of the Plan shall be governed by the laws of the State of
Colorado without regard to that State's conflict-of-laws rules.                 

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                                                                      SCHEDULE A

CORPORATIONS PARTICIPATING IN 
EMPLOYEE STOCK PURCHASE PLAN
AS OF THE EFFECTIVE TIME

CALDERA SYSTEMS, INC. 
CALDERA INTERNATIONAL, INC. 

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                                                                        APPENDIX

The following definitions shall be in effect under the Plan:          

A. Board shall mean the Corporation's Board of Directors.             

     B. Cash Earnings shall mean the (i) base salary payable to a Participant by
one or more Participating Corporations during such individual's period of       
participation in one or more offering periods under the Plan plus (ii) all      
overtime payments, bonuses, commissions, current profit-sharing distributions   
and other incentive-type payments. Such Cash Earnings shall be calculated before
deduction of (A) any income or employment tax withholdings or (B) any pre-tax   
contributions made by the Participant to any Code Section 401(k) salary deferral
plan or any Code Section 125 cafeteria benefit program now or hereafter         
established by the Corporation or any Corporate Affiliate. However, Cash        
Earnings shall not include any contributions (other than Code Section 401(k) or 
Code Section 125 contributions) made by the Corporation or any Corporate        
Affiliate on the Participant's behalf to any employee benefit or welfare plan   
now or hereafter established (other than Code Section 401(k) or Code Section 125
contributions deducted from such Cash Earnings).                                

  C. Change of Control shall mean a change of ownership of the Corporation
pursuant to any of the following transactions:                                  

          (i) a merger or consolidation in which securities possessing more than
     fifty percent (50%) of the total combined voting power of the Corporation's
 outstanding securities are transferred to a person or persons different
from the persons holding those securities immediately prior to such   
transaction, or                                                       

        (ii) the sale, transfer or other disposition of all or substantially
     all of the assets of the Corporation in complete liquidation or dissolution
of the Corporation, or                                                

         (iii) the acquisition, directly or indirectly, by a person or related
   group of persons (other than the Corporation or a person that directly or
   indirectly controls, is controlled by or is under common control with the
   Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of
     the 1934 Act) of securities possessing more than fifty percent (50%) of the
 total combined voting power of the Corporation's outstanding securities
   pursuant to a tender or exchange offer made directly to the Corporation's
stockholders.                                                         

D. Code shall mean the Internal Revenue Code of 1986, as amended.     

E. Common Stock shall mean the Corporation's common stock.            

   F. Corporate Affiliate shall mean any parent or subsidiary corporation of
the Corporation (as determined in accordance with Code Section 424), whether now
existing or subsequently established.                                           

  G. Corporation shall mean Caldera Systems, Inc., a Delaware corporation,
and any corporate successor to all or substantially all of the assets or voting 
stock of Caldera Systems, Inc. which shall by appropriate action adopt the Plan.

H. Effective Time shall mean March 20, 2000, the date on which the    
Underwriting Agreement was executed. Any Corporate Affiliate which becomes a    
Participating Corporation after such Effective Time shall designate a subsequent
Effective Time with respect to its employee-Participants.                       

I. Eligible Employee shall mean any person who is employed by a       
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section       
3401(a).                                                                        

J. Entry Date shall mean the date an Eligible Employee first commences
participation in the offering period in effect under the Plan. The earliest     
Entry Date under the Plan shall be the Effective Time.                          

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   K. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:                      

        (i) If the Common Stock is at the time traded on the Nasdaq National
   Market, then the Fair Market Value shall be the closing selling price per
     share of Common Stock on the date in question, as such price is reported by
the National Association of Securities Dealers on the Nasdaq National 
 Market and published in The Wall Street Journal. If there is no closing
   selling price for the Common Stock on the date in question, then the Fair
    Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.                                      

         (ii) If the Common Stock is at the time listed on any Stock Exchange,
    then the Fair Market Value shall be the closing selling price per share of
  Common Stock on the date in question on the Stock Exchange determined by
  the Plan Administrator to be the primary market for the Common Stock, as
  such price is officially quoted in the composite tape of transactions on
such exchange and published in The Wall Street Journal. If there is no
  closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last  
preceding date for which such quotation exists.                       

         (iii) For purposes of the initial offering period which begins at the
  Effective Time, the Fair Market Value shall be deemed to be equal to the
 price per share at which the Common Stock is sold in the initial public
offering pursuant to the Underwriting Agreement.                      

L. 1933 Act shall mean the Securities Act of 1933, as amended.        

M. Participant shall mean any Eligible Employee of a Participating    
Corporation who is actively participating in the Plan.                          

    N. Participating Corporation shall mean the Corporation and such Corporate
Affiliate or Affiliates as may be authorized from time to time by the Board to  
extend the benefits of the Plan to their Eligible Employees. The Participating  
Corporations in the Plan are listed in attached Schedule A.                     

   O. Plan shall mean the Corporation's Employee Stock Purchase Plan, as set
forth in this document.                                                         

 P. Plan Administrator shall mean the committee of two (2) or more Board
members appointed by the Board to administer the Plan.                          

Q. Purchase Date shall mean the last business day of each Purchase    
Interval. The initial Purchase Date shall be October 31, 2000.                  

     R. Purchase Interval shall mean each successive six (6)-month period within
the offering period at the end of which there shall be purchased shares of      
Common Stock on behalf of each Participant.                                     

S. Semi-Annual Entry Date shall mean the first business day in May and
November each year on which an Eligible Employee may first enter an offering    
period.                                                                         

    T. Stock Exchange shall mean either the American Stock Exchange or the New
York Stock Exchange.                                                            

    U. Underwriting Agreement shall mean the agreement between the Corporation
and the underwriter or underwriters managing the Corporation's initial public   
offering of its Common Stock.                                                   

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                                                                      APPENDIX M

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF CALDERA SYSTEMS, INC.

(PURSUANT TO SECTIONS 228, 242 AND 245 OF THE GENERAL CORPORATION LAW OF THE
STATE OF DELAWARE)

Caldera Systems, Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the        
"General Corporation Law"),                                                     

DOES HEREBY CERTIFY:                                                  

     FIRST: That the Corporation filed its original Certificate of Incorporation
with the Secretary of State of Delaware on March 6, 2000, under the name Caldera
Systems, Inc.                                                                   

   SECOND: That the Board of Directors duly adopted resolutions proposing to
amend and restate the Certificate of Incorporation of the Corporation, declaring
said amendment and restatement to be advisable and in the best interests of the 
Corporation and its stockholders, and authorizing the appropriate officers of   
the Corporation to solicit the consent of the stockholders of the issued and    
outstanding Common Stock, $0.001 par value, and Preferred Stock, $0.001 par     
value, voting as a single class and as separate classes, all in accordance with 
the applicable provisions of Sections 228, 242 and 245 of the General           
Corporation Law of the State of Delaware;                                       

THIRD: That the resolution setting forth the proposed amendment and   
restatement is as follows:                                                      

  "RESOLVED, that the Amended and Restated Certificate of Incorporation of
the Corporation be amended and restated in its entirety as follows:             

ARTICLE I 

NAME

The name of the Corporation is Caldera Systems, Inc.                  

ARTICLE II

REGISTERED OFFICE 

 The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,   
County of New Castle, and the name of the registered agent at such address is   
The Corporation Trust Company.                                                  

ARTICLE III 

POWERS/TERM 

   The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law. The 
Corporation is to have perpetual existence.                                     

ARTICLE IV
CAPITAL STOCK 

    A. Classes of Stock. The Corporation is authorized to issue two classes of
stock to be designated, respectively, "Common Stock" and "Preferred Stock." The 
total number of shares which the Corporation is authorized to issue is two      
hundred million (200,000,000) shares. one hundred seventy-five million          

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(175,000,000) shares, par value $0.001 per share, shall be Common Stock and     
twenty-five million (25,000,000) shares, par value $0.001 per share, shall be   
Preferred Stock. The consideration for the issuance of the shares shall be paid 
to or received by the Corporation in full before their issuance and shall not be
less than the par value per share. The number of authorized shares of Common    
Stock may be increased or decreased (but not below the number of shares there of
then outstanding) by the affirmative vote of the holders of a majority of the   
stock of the Corporation entitled to vote, irrespective of the provisions of    
Section 242(b)(2) of the General Corporation Law of Delaware.                   

B. Common Stock.                                                      

      (1) General. All shares of Common Stock will be identical and will
    entitle the holders thereof to the same rights, powers and privileges. The
rights, powers and privileges of the holders of the Common Stock are  
   subject to and qualified by the rights of holders of any then outstanding
Preferred Stock.                                                      

         (2) Dividends. Dividends may be declared and paid on the Common Stock
    from funds lawfully available therefor as and when determined by the Board
  of Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.                                          

   (3) Dissolution, Liquidation or Winding Up. In the event of any
   dissolution, liquidation or winding up of the affairs of the Corporation,
whether voluntary or involuntary, each issued and outstanding share of
   Common Stock shall entitle the holder thereof to receive an equal portion
of the net assets of the Corporation available for distribution to the
 holders of Common Stock, subject to any preferential rights of any then
outstanding Preferred Stock.                                          

          (4) Voting Rights. Except as otherwise required by law or this Amended
and Restated Certificate of Incorporation, each holder of Common Stock
 shall have one vote in respect of each share of stock held of record by
   such holder on the books of the Corporation for the election of directors
    and on all matters submitted to a vote of stockholders of the Corporation.
Except as otherwise required by law or provided herein, holders of    
Preferred Stock shall vote together with holders of Common Stock as a 
   single class, subject to any special or preferential voting rights of any
then outstanding Preferred Stock. There shall be no cumulative voting.

(5) Redemption. The Common Stock is not redeemable.         

C. Preferred Stock. The Board of Directors is authorized, subject to  
limitations prescribed by law, by the rules of a national securities exchange,  
if applicable, and by the provisions of this ARTICLE IV, to provide for the     
issuance of the shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time 
to time the number of shares to be included in each such series, and to fix the 
designation, powers, preferences, and rights of the shares of each such series  
and the qualifications, limitations or restrictions thereof.                    

   The authority of the Board with respect to each series shall include, but
not be limited to, determination of the following:                              

         (1) The number of shares constituting that series and the distinctive
designation of that series;                                           

         (2) The dividend rate on the shares of that series, whether dividends
     shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that 
series;                                                               

        (3) Whether that series shall have voting rights, in addition to the
     voting rights provided by law, and, if so, the terms of such voting rights;

         (4) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for  
    adjustment of the conversion rate in such events as the Board of Directors
shall determine;                                                      

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          (5) Whether or not the shares of that series shall be redeemable, and,
   if so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable, and the amount per
    share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;                         

        (6) Whether that series shall have a sinking fund for the redemption
   or purchase of shares of that series, and, if so, the terms and amount of
such sinking fund;                                                    

         (7) The rights of the shares of that series in the event of voluntary
   or involuntary liquidation, dissolution or winding up of the Corporation,
   and the relative rights or priority, if any, of payment of shares of that
series; and                                                           

      (8) Any other relative rights, preferences and limitations of that
series.                                                               

Dividends on outstanding shares of Preferred Stock shall be paid or   
declared and set apart for payment before any dividends shall be paid or        
declared and set apart for payment on the Common Stock with respect to the same 
dividend period.                                                                

     If upon any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, the assets available for distribution to holders of shares  
of Preferred Stock of all series shall be insufficient to pay such holders the  
full preferential amount to which they are entitled, then such assets shall be  
distributed ratably among the shares of all series of Preferred Stock in        
accordance with the respective preferential amounts (including unpaid cumulative
dividends, if any) payable with respect thereto.                                

     D. Preemptive Rights. No holder of any of the shares of any class or series
of stock or of options, warrants or other rights to purchase shares of any class
or series of stock or of other securities of the Corporation shall have any     
preemptive right to purchase or subscribe for any unissued stock of any class or
series, or any unissued bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of any class or series or 
carrying any right to purchase stock of any class or series; but any such       
unissued stock, bonds, certificates or indebtedness, debentures or other        
securities convertible into or exchangeable for stock or carrying any right to  
purchase stock may be issued pursuant to resolution of the Board of Directors of
the Corporation to such persons, firms, corporations or associations, whether or
not holders thereof, and upon such terms as may be deemed advisable by the Board
of Directors in the exercise of its sole discretion.                            

ARTICLE V 

DIRECTORS 

     A. Number. The number of directors of the Corporation shall be such number,
not less than five (5) nor more than fifteen (15) (exclusive of directors, if   
any, to be elected by holders of preferred stock of the Corporation, voting     
separately as a class), as shall be set forth from time to time in the bylaws.  
Vacancies in the Board of Directors of the Corporation, however caused, and     
newly created directorships shall be filled by a vote of a majority of the      
directors then in office, whether or not a quorum, and any director so chosen   
shall hold office for a term expiring at the annual meeting of stockholders at  
which the term of the class to which the director has been chosen expires and   
when the director's successor is elected and qualified.                         

B. Removal of Directors. Notwithstanding any other provisions of this 
Certificate or the bylaws of the Corporation, any director or the entire Board  
of Directors of the Corporation may be removed, at any time, but only for cause 
and only by the affirmative vote of the holders of not less than a majority of  
the outstanding shares of capital stock of the Corporation entitled to vote     
generally in the election of directors (considered for this purpose as one      
class) cast at a meeting of the stockholders called for that purpose.           
Notwithstanding the foregoing, whenever the holders of any one or more series of
preferred stock of the Corporation shall have the right, voting separately as a 
class, to elect one or more directors of the                                    

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Corporation, the preceding provisions of this ARTICLE V shall not apply with    
respect to the director or directors elected by such holders of preferred stock.

ARTICLE VI

STOCKHOLDER MEETINGS

Meetings of stockholders may be held within or without the State of   
Delaware, as the Bylaws may provide. The books of the Corporation may be        
kept(subject to any provision contained in the statutes) outside the State of   
Delaware at such place or places as may be designated from time to time by the  
Board of Directors or in the Bylaws of the Corporation. The stockholders of the 
Corporation may not take any action by written consent in lieu of a meeting.    

ARTICLE VII 

LIMITATION OF DIRECTORS' LIABILITY

     Except to the extent that the General Corporation Law of Delaware prohibits
the elimination or limitation of liability of directors for breaches of         
fiduciary duty, no director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, notwithstanding any provision of law imposing such          
liability. If the General Corporation Law is amended after approval by the      
stockholders of this ARTICLE VII to authorize corporate action further          
eliminating or limiting the personal liability of directors, then the liability 
of a director of the Corporation shall be eliminated or limited to the fullest  
extent permitted by the General Corporation Law of the State of Delaware, as so 
amended. No amendment to or repeal of this provision shall apply to or have any 
effect on the liability or alleged liability of any director of the Corporation 
for or with respect to any acts or omissions of such director occurring prior to
such amendment.                                                                 

ARTICLE VIII

INDEMNIFICATION 

    The Corporation may, to the fullest extent permitted by Section 145 of the
General Corporation Law of Delaware, as amended from time to time, indemnify    
each person who was or is a party or is threatened to be made a party to any    
threatened, pending or completed action, suit or proceeding, whether civil,     
criminal, administrative or investigative, by reason of the fact that he is or  
was, or has agreed to become, a director or officer of the Corporation, or is or
was serving, or has agreed to serve, at the request of the Corporation, as a    
director, officer or trustee of, or in a similar capacity with, another         
corporation, partnership, joint venture, trust or other enterprise (including   
any employee benefit plan) (all such persons being referred to hereafter as an  
"Indemnitee"), or by reason of any action alleged to have been taken or omitted 
in such capacity, against all expenses (including attorneys' fees), judgments,  
fines and amounts paid in settlement actually and reasonably incurred by him or 
on his behalf in connection with such action, suit or proceeding and any appeal 
therefrom.                                                                      

Indemnification may include payment by the Corporation of expenses in 
defending an action or proceeding in advance of the final disposition of such   
action or proceeding upon receipt of an undertaking by the Indemnitee to repay  
such payment if it is ultimately determined that such person is not entitled to 
indemnification under this ARTICLE VIII, which undertaking may be accepted      
without reference to the financial ability of such person to make such          
repayment.                                                                      

     The Corporation shall not indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person      
unless the initiation thereof was approved by the Board of Directors of the     
Corporation.                                                                    

   The indemnification rights provided in this ARTICLE VIII (i) shall not be
deemed exclusive of any other rights to which Indemnitees may be entitled under 
any law, agreement or vote of stockholders or                                   
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disinterested directors or otherwise, and (ii) shall inure to the benefit of the
heirs, executors and administrators of such persons. The Corporation may, to the
extent authorized from time to time by its Board of Directors, grant            
indemnification rights to other employees or agents of the Corporation or other 
persons serving the Corporation and such rights may be equivalent to, or greater
or less than, those set forth in this ARTICLE VIII.                             

ARTICLE IX

AMENDMENT OF BYLAWS 

     In furtherance of and not in limitation of powers conferred by statute, the
Board of Directors of the Corporation is expressly authorized to adopt, repeal, 
alter, amend and rescind the bylaws of the Corporation by vote of a majority of 
the Board of Directors. In addition, the bylaws may be amended by the           
affirmative vote of the holders of at least two-thirds of the outstanding shares
of voting stock of the Corporation entitled to vote at an election of directors.

ARTICLE X 

AMENDMENT OF CERTIFICATE

  The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,  
in the manner now or hereafter prescribed by statute and this Amended and       
Restated Certificate of Incorporation, and all rights conferred upon            
stockholders herein are granted subject to this reservation. Notwithstanding the
foregoing, the provisions set forth in ARTICLES V, VI, VII, VIII, IX and this   
ARTICLE X may not be repealed, altered, amended or rescinded in any respect     
unless the same is approved by the affirmative vote of the holders of not less  
than two-thirds of the outstanding shares of capital stock of the Corporation   
entitled to vote generally in the election of directors (considered for this    
purpose as a single class) cast at a meeting of the stockholders called for that
purpose (provided that notice of such proposed repeal, alteration, amendment or 
rescission is included in the notice of such meeting)."                         

FOURTH: That said amendments were duly adopted in accordance with the 
provisions of Section 242 and 245 of the General Corporation Law.               

    IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation
has been signed by the President and the Secretary of the Corporation as of this
day of           2000.                                      

                                            ------------------------------------
                      Ransom H. Love
                               Chief Executive Officer

                                            ------------------------------------
                      Alan J. Hansen
                 Secretary

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                                                                      APPENDIX N

NOTICE OF ELECTION
TO ASSUME OR REPLACE OPTIONS

CALDERA INTERNATIONAL                                                           

Date                                                                            

Name                                                                            
Address                                                                         

Dear Sir or Madam:                                                              

   Please review the following grant(s) to determine whether or not you wish
to elect the assumption or replacement alternative as described in the joint    
proxy statement/prospectus. Please read pages 80 through 83 of the joint proxy  
statement/prospectus for a thorough explanation. You will need to make this     
election on a grant by grant basis. You must select to either assume or replace 
each grant by placing a check in the corresponding box. Please complete this    
form and return it to SCO no later than April 23, 2001. We must receive the     
original signed copy. Should you have any questions, please contact Kimberly    
Steele at (801) 765-4999 or Steve Brown at (831) 427-7223.                      

I hereby elect to have my SCO stock options assumed or replaced as    
indicated below, and understand that surrendered SCO stock options will be      
cancelled, in exchange for new options to purchase shares of Caldera            
International common stock pursuant to the terms set forth in the joint proxy   
statement/prospectus in the amounts set forth below:                            

                                                        [Enlarge/Download Table]

                                   GRANT     GRANT     GRANT     GRANT     SHARES    SHARES      SHARES      SHARES 
       ASSUME          REPLACE     NUMBER     DATE      TYPE     PRICE    GRANTED   EXERCISED  EXERCISABLE  UNVESTED
---------------------  --------   --------  --------  --------  --------  --------  ---------  -----------  --------
                                                                                                                    
         [ ]             [ ]                                                                                        
                                  --------  --------  --------  --------  --------  --------    --------    --------
         [ ]             [ ]                                                                                        
                                  --------  --------  --------  --------  --------  --------    --------    --------
         [ ]             [ ]                                                                                        
                                  --------  --------  --------  --------  --------  --------    --------    --------
         [ ]             [ ]                                                                                        
                                  --------  --------  --------  --------  --------  --------    --------    --------
         [ ]             [ ]                                                                                        
                                  --------  --------  --------  --------  --------  --------    --------    --------


                         SHARES                                                                                     
       ASSUME          OUTSTANDING                                                                                  
---------------------  -----------                                                                                  
                                                                                                                    
         [ ]                                                                                                        
                        --------                                                                                    
         [ ]                                                                                                        
                        --------                                                                                    
         [ ]                                                                                                        
                        --------                                                                                    
         [ ]                                                                                                        
                        --------                                                                                    
         [ ]                                                                                                        
                        --------                                                                                    

     I acknowledge receipt of Caldera's joint proxy statement/prospectus and the
enclosures referenced therein and contained therewith (the "exchange offer      
material"). By signing this notice, I agree to be bound by all of the terms and 
conditions of the exchange offer as described in Caldera's letter and the       
exchange offer material.                                                        

Signature                                                                       

X                                                                               
------------------------------------                                        Date
------------------------------------                                            

     THIS NOTICE MUST BE RECEIVED BY SCO NO LATER THAN APRIL 23, 2001.

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                                                                      APPENDIX O

CHAPTER 13 OF THE CALIFORNIA CORPORATIONS CODE
CHAPTER 13. 
DISSENTERS' RIGHTS

sec.1300.  RIGHTS TO REQUIRE PURCHASE -- "DISSENTING SHARES" AND "DISSENTING    
SHAREHOLDER" DEFINED.                                     

(a) If the approval of the outstanding shares (Section 152) of a      
corporation is required for a reorganization under subdivisions (a) and (b) or  
subdivision (e) or (f) of Section 1201, each shareholder of the corporation     
entitled to vote on the transaction and each shareholder of a subsidiary        
corporation is a short-form merger may, by complying with this chapter, require 
the corporation in which the shareholder holds shares to purchase for cash at   
their fair market value the shares owned by the shareholder which are dissenting
shares as defined in subdivision (b). The fair market value shall be determined 
as of the day before the first announcement of the terms of the proposed        
reorganization or short-form merger, excluding any appreciation or depreciation 
in consequence of the proposed action, but adjusted for any stock split, reverse
stock split, or share dividend which becomes effective thereafter.              

  (b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:                                       

 (1) Which were not immediately prior to the reorganization or
 short-form merger either (A) listed on any national securities exchange
certified by the Commissioner of Corporations under subdivision (o) of
  Section 25100 or (B) listed on the National Market Systems of the NASDAQ
 Stock Market, and the notice of meeting of shareholders to act upon the
  reorganization summarizes this section and Sections 1301, 1302, 1303 and
   1304; provided, however, that this provision does not apply to any shares
   with respect to which there exists any restriction on transfer imposed by
  the corporation or by any law or regulation; and provided, further, that
this provision does not apply to any class of shares described in     
    subparagraph (A) or (B) if demands for payment are filed with respect to 5
percent or more of the outstanding shares of that class.              

   (2) Which were outstanding on the date for the determination of
    shareholders entitled to vote on the reorganization and (A) were not voted
    in favor or the reorganization or, (B) if described in subparagraph (A) or
  (B) of paragraph (1) (without regard to the provisos in that paragraph),
    were voted against the reorganization, or which were held of record on the
     effective date of a short-form merger; provided, however, that subparagraph
(A) rather than subparagraph (B) of this paragraph applies in any case
  where the approval required by Section 1201 is sought by written consent
rather than at a meeting.                                             

          (3) Which the dissenting shareholder has demanded that the corporation
purchase at their fair market value, in accordance with Section 1301. 

          (4) Which the dissenting shareholder has submitted for endorsement, in
accordance with Section 1302.                                         

(c) As used in this chapter, "dissenting shareholder" means the       
recordholder of dissenting shares and includes a transferee of record.          

sec.1301.  DEMAND FOR PURCHASE.                                                 

    (a) If, in the case of a reorganization, any shareholders of a corporation
have a right under Section 1300, subject to compliance with paragraphs (3) and  
(4) of subdivision (b) thereof, to require the corporation to purchase their    
shares for cash, such corporation shall mail to each such shareholder a notice  
of the approval of the reorganization by its outstanding shares (Section 152)   
within 10 days after the date of such approval, accompanied by a copy of Section
1300, 1302, 1303, 1304 and this section, a statement                            

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of the price determined by the corporation to represent the fair market value of
the dissenting shares, and a brief description of the procedure to be followed  
if the shareholder desires to exercise the shareholder's right under such       
sections. The statement of price constitutes an offer by the corporation to     
purchase at the price stated any dissenting shares as defined in subdivision (b)
of Section 1300, unless they lose their status as dissenting shares under       
Section 1309.                                                                   

    (b) Any shareholder who has a right to require the corporation to purchase
the shareholder's shares for cash under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, and who desires the          
corporation to purchase such shares shall make written demand upon the          
corporation for the purchase of such shares and payment to the shareholder in   
cash of their fair market value. The demand is not effective for any purpose    
unless it is received by the corporation or any transfer agent thereof (1) in   
the case of shares described in clause (i) or (ii) of paragraph (1) of          
subdivision (b) of Section 1300 (without regard to the provisos in that         
paragraph), not later than the date of the shareholders' meeting to vote upon   
the reorganization, or (2) in any other case within 30 days after the date on   
which the notice of the approval by the outstanding shares pursuant to          
subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was   
mailed to the shareholder.                                                      

(c) The demand shall state the number and class of the shares held of 
record by the shareholder which the shareholder demands that the corporation    
purchase and shall contain a statement of what such shareholder claims to be the
fair market value of those shares as of the day before the announcement of the  
proposed reorganization of short-form merger. The statement of fair market value
constitutes an offer by the shareholder to sell the shares at such price.       

sec.1302.  ENDORSEMENT OF SHARES.                                               

Within 30 days after the date on which notice of the approval by the  
outstanding shares or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder, the shareholder shall submit to the corporation at   
its principal office or at the office of any transfer agent thereof, (a) if the 
shares are certificated securities, the shareholder's certificates representing 
any shares which the shareholder demands that the corporation purchase, to be   
stamped or endorsed with a statement that the shares are dissenting shares or to
be exchanged for certificates of appropriate denomination so stamped or endorsed
or (b) if the shares are uncertificated securities, written notice of the number
of shares which the shareholder demands that the corporation purchase. Upon     
subsequent transfers of the dissenting shares on the books of the corporation   
the new certificates, initial transaction statement, and other written          
statements issued therefor shall bear a like statement, together with the name  
of the original dissenting holder of the shares.                                

sec.1303.  AGREED PRICE -- TIME FOR PAYMENT.                                    

(a) If the corporation and the shareholder agree that the shares are  
dissenting shares and agree upon the price of the shares, the dissenting        
shareholder is entitled to the agreed price with interest thereon at the legal  
rate on judgments from the date of the agreement. Any agreements fixing the fair
market value of any dissenting shares as between the corporation and the holders
thereof shall be filed with the secretary of the corporation.                   

   (b) Subject to the provisions of Section 1306; payment of the fair market
value of dissenting shares shall be made within 30 days after the amount thereof
has been agreed or within 30 days after any statutory or contractual conditions 
to the reorganization are satisfied, whichever is later, and in the case of     
certificated securities, subject to surrender of the certificates therefor,     
unless provided otherwise by agreement.                                         

sec.1304.  DISSENTERS ACTIONS TO ENFORCE PAYMENT.                               

     (a) If the corporation denies that the shares are dissenting shares, or the
corporation and the shareholder fail to agree upon the fair market values of the
shares, then the shareholder demanding purchase of such shares as dissenting    
shares or any interested corporation, within six months after the date on which 
notice of the approval by the outstanding shares (Section 152) or notice        
pursuant to                                                                     
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subdivision (i) of Section 1110 was mailed to the shareholder, but not          
thereafter, may file a complaint in the superior court of the proper county     
praying the court to determine whether the shares are dissenting shares or the  
fair market value of the dissenting shares or both or may intervene in any      
action pending on such a complaint.                                             

     (b) Two or more dissenting shareholders may join as plaintiff, or be joined
as defendants in any such action and two or more such actions may be            
consolidated.                                                                   

  (c) On the trial of the action, the court shall determine the issues. If
the status of the shares as dissenting shares is in issue, the court shall first
determine that issue. If the fair market value of the dissenting shares is in   
issue, the court shall determine, or shall appoint one or more impartial        
appraisers to determine, the fair market value of the shares.                   

sec.1305.  APPRAISERS REPORT -- PAYMENT  --  COSTS.                             

  (a) If the court appoints an appraiser or appraisers, they shall proceed
forthwith to determine the fair market value per share. Within the time fixed by
the court, the appraisers, or a majority of them, shall make and file a report  
in the office of the clerk of the court. Thereupon, on the motion of any party, 
the report shall be submitted to the court and considered on such evidence as   
the court considers relevant. If the court finds the report reasonable, the     
court may confirm it.                                                           

(b) If a majority of the appraisers appointed fail to make and file a 
report within 10 days from the date of their appointment or within such further 
time as may be allowed by the court or the report is not confirmed by the court,
the court shall determine the fair market value of the dissenting shares.       

   (c) Subject to the provisions of Section 1306, judgment shall be rendered
against the corporation for payment of an amount equal to the fair market value 
of each dissenting share multiplied by the number of dissenting shares which any
dissenting shareholder who is a party, or who has intervened, is entitled to    
require the corporation to purchase, with interest thereon at the legal rate    
from the date on which judgment was entered.                                    

(d) Any such judgment shall be payable forthwith with respect to      
uncertificated securities and, with respect to certificated securities, only    
upon the endorsement and delivery to the corporation of the certificates for the
shares described in the judgment. Any party may appeal from the judgment.       

(e) The costs of the action, including reasonable compensation to the 
appraisers to be fixed by the court, shall be assessed or apportioned as the    
court considers equitable, but, if the appraisal exceeds the price offered by   
the corporation, the corporation shall pay the costs (including in the          
discretion of the court attorneys' fees, fees of expert witnesses and interest  
at the legal rate on judgments from the date of compliance with Sections 1300,  
1301 and 1302 if the value awarded by the court for the shares is more than 125 
percent of the price offered by the corporation under subdivision (a) of Section
1301).                                                                          

sec.1306.  DISSENTING SHAREHOLDERS STATUS AS CREDITORS.                         

   To the extent that the provisions of Chapter 5 prevent the payment to any
holders of dissenting shares of their fair market value, they shall become      
creditors of the corporation for the amount thereof together with interest at   
the legal rate on judgments until the date of payment, but subordinate to all   
other creditors in any liquidation proceeding, such debt to be payable when     
permissible under the provisions of Chapter 5.                                  

sec.1307.  DIVIDENDS PAID AS CREDIT AGAINST PAYMENT.                            

 Cash dividends declared and paid by the corporation upon the dissenting
shares after the date of approval of the reorganization by the outstanding      
shares (Section 152) and prior to payment for the shares by the corporation     
shall be credited against the total amount to be paid by the corporation        
therefor.                                                                       

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sec.1308.  CONTINUING RIGHTS AND PRIVILEGES OF DISSENTING SHAREHOLDERS.         

   Except as expressly limited in this chapter, holders of dissenting shares
continue to have all the rights and privileges incident to their shares, until  
the fair market value of their shares is agreed upon or determined. A dissenting
shareholder may not withdraw a demand for payment unless the corporation        
consents thereto.                                                               

sec.1309.  TERMINATING OF DISSENTING SHAREHOLDER STATUS.                        

  Dissenting shares lose their status as dissenting shares and the holders
thereof cease to be dissenting shareholders and cease to be entitled to require 
the corporation to purchase their shares upon the happening of any of the       
following:                                                                      

  (a) The corporation abandons the reorganization. Upon abandonment of the
reorganization, the corporation shall pay on demand to any dissenting           
shareholder who has initiated proceedings in good faith under this chapter all  
necessary expenses incurred in such proceedings and reasonable attorneys' fees. 

     (b) The shares are transferred prior to their submission for endorsement in
accordance with Section 1302 or are surrendered for conversion into shares of   
another class in accordance with the articles.                                  

  (c) The dissenting shareholder and the corporation do not agree upon the
status of the shares as dissenting shares or upon the purchase price of the     
shares, and neither files a complaint or intervenes in a pending action as      
provided in Section 1304, within six months after the date on which notice of   
the approval by the outstanding shares or notice pursuant to subdivision (i) of 
Section 1110 was mailed to the shareholder.                                     

(d) The dissenting shareholder, with the consent of the corporation,  
withdraws the shareholder's demand for purchase of the dissenting shares.       

sec.1310.  SUSPENSION OF PROCEEDINGS FOR PAYMENT PENDING LITIGATION.            

  If litigation is instituted to test the sufficiency or regularity of the
votes of the shareholders in authorizing a reorganization, any proceeding under 
Sections 1304 and 1305 shall be suspended until final determination of such     
litigation.                                                                     

sec.1311.  EXEMPT SHARES.                                                       

This chapter, EXCEPT SECTION 1312, does not apply to classes of shares
whose terms and provisions specifically set forth the amount to be paid in      
respect to such shares in the event of a reorganization or merger.              

sec.1312.  ATTACKING VALIDITY OF REORGANIZATION OR MERGER.                      

   (a) No shareholder of a corporation who has a right under this chapter to
demand payment of cash for the shares held by the shareholder shall have any    
right at law or in equity to attack the validity of the reorganization or       
short-form merger, or to have the reorganization or short-form merger set aside 
or rescinded, except in an action to test whether the number of shares required 
to authorize or approve the reorganization have been legally voted in favor     
thereof; but any holder of shares of a class whose terms and provisions         
specifically set forth the amount to be paid in respect to them in the event of 
a reorganization or short-form merger is entitled to payment in accordance with 
those terms and provisions or, if the principal terms of the reorganization are 
approved pursuant to subdivision (b) of Section 1202, is entitled to payment in 
accordance with the terms and provisions of the approved reorganization.        

(b) If one of the parties to a reorganization or short-form merger is 
directly or indirectly controlled by, or under common control with, another     
party to the reorganization or short-form merger, subdivision (a) shall not     
apply to any shareholder of such party who has not demanded payment of cash for 
such shareholder's shares pursuant to this chapter; but if the shareholder      
institutes any action to attack the validity of the reorganization or short-form
merger or to have the reorganization or short-form merger                       
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set aside or rescinded, the shareholder shall not thereafter have any right to  
demand payment of cash for the shareholder's shares pursuant to this chapter.   
The court in any action attacking the validity of the reorganization or         
short-form merger or to have the reorganization or short-form merger set aside  
or rescinded shall not restrain or enjoin the consummation of the transaction   
except upon 10 days, prior notice to the corporation and upon a determination by
the court that clearly no other remedy will adequately protect the complaining  
shareholder or the class of shareholders of which such shareholder is a member. 

(c) If one of the parties to a reorganization or short-form merger is 
directly or indirectly controlled by, or under common control with, another     
party to the reorganization or short-form merger, in any action to attack the   
validity of the reorganization or short-form merger or to have the              
reorganization or short-form merger set aside or rescinded, (1) a party to a    
reorganization or short-form merger which controls another party to the         
reorganization or short-form merger shall have the burden of proving that the   
transaction is just and reasonable as to the shareholders of the controlled     
party, and (2) a person who controls two or more parties to a reorganization    
shall have the burden of proving that the transaction is just and reasonable as 
to the shareholders of any party so controlled.                                 

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                                                                      APPENDIX P

AUDIT COMMITTEE CHARTER 

I. PURPOSE                                                                      

The primary function of the Audit Committee is to assist the Board of 
Directors in fulfilling its oversight responsibilities by reviewing the         
financial information which will be provided to the shareholders and others, the
systems of internal controls which management and the Board of Directors have   
established, and the Corporation's audit and financial reporting process.       

 The independent accountants' ultimate responsibility is to the Board of
Directors and the Audit Committee, as representatives of the shareholders. These
representatives have the ultimate authority to select, evaluate, and, where     
appropriate, replace the independent accountants.                               

The Audit Committee will primarily fulfill these responsibilities by  
carrying out the activities enumerated in Section IV of this Charter.           

II. COMPOSITION                                                                 

The Audit Committee shall be comprised of three or more independent   
directors.                                                                      

  All members of the Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Committee shall
have accounting or related financial management expertise.                      

III. MEETINGS                                                                   

     The Committee shall meet on a regular basis and shall hold special meetings
as circumstances require.                                                       

IV. RESPONSIBILITIES AND DUTIES                                                 

To fulfill its responsibilities and duties the Audit Committee shall: 

   1. Review this Charter at least annually and recommend any changes to the
Board.                                                          

2. Review the organization's annual financial statements and any other
relevant reports or other financial information.                

     3. Review the regular internal financial reports prepared by management and
any internal auditing department.                               

 4. Recommend to the Board of Directors the selection of the independent
     accountants and approve the fees and other compensation to be paid to
    the independent accountants. On an annual basis, the Committee shall
  obtain a formal written statement from the independent accountants
delineating all relationships between the accountants and the   
        Corporation consistent with Independence Standards Board Standard 1, and
shall review and discuss with the accountants all significant   
        relationships the accountants have with the Corporation to determine the
accountants' independence.                                      

  5. Review the performance of the independent accountants and approve any
    proposed discharge of the independent accountants when circumstances
warrant.                                                        

 6. Following completion of the annual audit, review separately with the
      independent accountants, the internal auditing department, if any, and
        management any significant difficulties encountered during the course of
the audit.                                                      

7. Perform any other activities consistent with this Charter, the     
      Corporation's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.                                 

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[CALDERA LOGO]

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PART II 

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS                              

    The Registrant's restated certificate of incorporation in effect as of the
date hereof (the "Certificate") provides that, except to the extent prohibited  
by the Delaware General Corporation Law, as amended (the "DGCL"), the           
registrant's directors shall not be personally liable to the registrant or its  
stockholders for monetary damages for any breach of fiduciary duty as directors 
of the Registrant. Under the DGCL, the directors have a fiduciary duty to the   
Registrant which is not eliminated by this provision of the Certificate and, in 
appropriate circumstances, equitable remedies such as injunctive or other forms 
of non-monetary relief will remain available. In addition, each director will   
continue to be subject to liability under the DGCL for breach of the director's 
duty of loyalty to the Registrant, for acts or omissions which are found by a   
court of competent jurisdiction to be not in good faith or involving intentional
misconduct, for knowing violations of law, for actions leading to improper      
personal benefit to the director, and for payment of dividends or approval of   
stock repurchases or redemptions that are prohibited by DGCL. This provision    
also does not affect the directors' responsibilities under any other laws, such 
as the Federal securities laws or state or Federal environmental laws.          

   Section 145 of the DGCL empowers a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising out of 
their capacity or status as directors and officers, provided that this provision
shall not eliminate or limit the liability of a director: (i) for any breach of 
the director's duty of loyalty to the corporation or its stockholders, (ii) for 
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) arising under Section 174 of the DGCL, or (iv)  
for any transaction form which the director derived an improper personal        
benefit. The DGCL provides further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to which the directors and    
officers may be entitled under the corporation's bylaws, any agreement, a vote  
of stockholders or otherwise. The Certificate eliminates the personal liability 
of directors to the fullest extent permitted by Section 102(b)(7) of the DGCL   
and provides that the Registrant shall fully indemnify any person who was or is 
a party or is threatened to be made a party to any threatened, pending or       
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that such person is or was a director or   
officer of the Registrant, or is or was serving at the request of the Registrant
as a director or officer of another corporation, partnership, joint venture,    
trust, employee benefit plan or other enterprise, against expenses (including   
attorney's fees), judgments, fines and amounts paid in settlement actually and  
reasonably incurred by such person in connection with such action, suit or      
proceeding.                                                                     

Article VII Section 6 of the Registrant's amended and restated bylaws 
provides that the registrant shall indemnify its directors and officers to the  
fullest extent not prohibited by the DGCL. The rights to indemnify thereunder   
continue as to a person who has ceased to be a director, officer, employee or   
agent and inure to the benefit of the heirs, executors and administrators of the
person. In addition, expenses incurred by a director or officer in defending any
civil or criminal action, suite or proceeding by reason of the fact that he or  
she is or was a director or officer of the Registrant (or was serving at the    
Registrant's request as a director or officer of another corporation) shall be  
paid by the registrant in advance of the final disposition of such action, suit 
or proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the Registrant as authorized by the        
relevant sections of the DGCL.                                                  

Caldera has entered into indemnification agreements with each of its  
outside directors. Generally, the indemnification agreements attempt to provide 
the maximum protection permitted by Delaware law as it may be amended from time 
to time. Moreover, the indemnification agreements provide for certain additional
indemnification. Under such additional indemnification provisions, however, an  
individual will not receive indemnification for judgments, settlements or       
expenses if he or she is found liable to Caldera (except to the extent the court
determines he or she is fairly and reasonable entitled to indemnity for         

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expenses), for settlements not approved by Caldera. The indemnification         
agreements provide for Caldera to advance to the individual any and all         
reasonable expenses (including legal fees and expenses) incurred in             
investigating or defending any such action, suit or proceeding. Upon the closing
of the combination, the Registrant will assume the indemnification agreements of
Caldera and will enter into similar indemnification agreements with             
newly-appointed outside directors.                                              

  Caldera has an insurance policy covering its directors and officers with
respect to certain liabilities, including liabilities arising under the         
Securities Act or otherwise. Upon the closing of the combination, the Registrant
will assume this insurance policy.                                              

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.                            

(a) Exhibits.                                                               

The following exhibits are filed herewith or incorporated by reference
herein:                                                                         

                                                                [Download Table]

EXHIBIT                                                                      
  NO.                                    DESCRIPTION                         
-------                                  -----------                         
                                                                             
   2.1           Agreement and Plan of Reorganization by and among Caldera   
                 Systems, Inc., Caldera International, Inc. ("registrant")   
                 and The Santa Cruz Operation, Inc., including Amendment No. 
                 1, Amendment No. 2 and Amendment No. 3 to the Agreement and 
                 Plan of Reorganization (included as Appendix A to the       
                 prospectus).                                                
   3.1           Form of Caldera International, Inc.'s Amended and Restated  
                 Certificate of Incorporation to be in effect upon the       
                 closing of the combination (included as Appendix D to the   
                 prospectus).                                                
   3.2           Form of Caldera International, Inc.'s Amended and Restated  
                 Bylaws to be in effect upon the closing of the combination  
                 (included as Appendix E to the prospectus).                 
 **4.1           Form of certificate of common stock.                        
 **5.1           Opinion of Brobeck Phleger & Harrison, LLP.                 
 **8.1           Tax Opinion of Wilson Sonsini Goodrich & Rosati,            
                 Professional Corporation.                                   
 **8.2           Tax Opinion of Brobeck Phleger & Harrison, LLP.             
  10.1           Conversion Agreement, dated December 30, 1999, between      
                 Caldera, The Canopy Group, Inc. and MTI Technology          
                 Corporation (incorporated by reference to Exhibit 10.1 to   
                 Caldera's Registration Statement on Form S-1 (File No.      
                 333-94351)).                                                
  10.2           Form of Series B Preferred Stock Purchase Agreement between 
                 the Registrant and the Series B investors (incorporated by  
                 reference to Exhibit 10.2 to Caldera's Registration         
                 Statement on Form S-1 (File No. 333-94351)).                
  10.3           Caldera 1988 Stock Option Plan (incorporated by reference to
                 Exhibit 10.3 to Caldera's Registration Statement on Form S-1
                 (File No. 333-94351)).                                      
  10.4           Caldera 1999 Omnibus Stock Incentive Plan (Included as      
                 Appendix F to the prospectus).                              
  10.5           Amendment No. 1 to Caldera Systems, Inc. 1999 Omnibus Stock 
                 Incentive Plan (included as Appendix G to the prospectus).  
  10.6           Amendment No. 2 to Caldera Systems, Inc. 1999 Omnibus Stock 
                 Incentive Plan (included as Appendix H to the prospectus).  
  10.7           Amendment No. 3 to Caldera Systems, Inc. 1999 Omnibus Stock 
                 Incentive Plan (included as Appendix I to the prospectus).  
  10.8           Amendment No. 4 to Caldera Systems, Inc. 1999 Omnibus Stock 
                 Incentive Plan (included as Appendix J to the prospectus).  
  10.9           Amendment No. 5 to Caldera Systems, Inc. 1999 Omnibus Stock 
                 Incentive Plan (included as Appendix K to the prospectus).  
  10.10          Caldera 2000 Employee Stock Purchase Plan, as amended       
                 (included as Appendix L to the prospectus).                 

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                                                                [Download Table]

EXHIBIT                                                                      
  NO.                                    DESCRIPTION                         
-------                                  -----------                         
                                                                             
  10.11          Secured Convertible Promissory Note, dated September 1,     
                 1998, by Caldera in favor of The Canopy Group, Inc.         
                 (incorporated by reference to Exhibit 10.6 to Caldera's     
                 Registration Statement on Form S-1 (File No. 333-94351)).   
  10.12          Security Agreement, dated September 1, 1998, between the    
                 Registrant and The Canopy Group, Inc. (incorporated by      
                 reference to Exhibit 10.7 to the Registrant's Registration  
                 Statement on Form S-1 (File No. 333-94351)).                
  10.13          Asset Purchase and Sale Agreement, dated September 1, 1998, 
                 between Caldera, Inc., a Utah corporation and Caldera       
                 (incorporated by reference to Exhibit 10.8 to Caldera's     
                 Registration Statement on Form S-1 (File No. 333-94351)).   
  10.14          Amended and Restated Asset Purchase Agreement, dated as of  
                 September 1, 1998, between Caldera, Inc., a Utah            
                 corporation, and Caldera (incorporated by reference to      
                 Exhibit 10.9 to Caldera's Registration Statement on Form S-1
                 (File No. 333-94351)).                                      
  10.15          Stock Purchase Agreement, dated January 27, 1999, by and    
                 among Caldera, the Canopy Group, Inc. and MTI Technology    
                 Corporation (incorporated by reference to Exhibit 10.10 to  
                 Caldera's Registration Statement on Form S-1 (File No.      
                 333-94351)).                                                
  10.16          Stock Purchase Agreement, dated January 6, 2000, between    
                 Caldera and Lineo, Inc. (incorporated by reference to       
                 Exhibit 10.11 to Caldera's Registration Statement on Form   
                 S-1 (File No. 333-94351)).                                  
  10.17          Form of Second Amended and Restated Investors Rights        
                 Agreement by and among Caldera and the holders of the Series
                 A and Series B convertible preferred stock named therein    
                 (incorporated by reference to Exhibit 10.12 to Caldera's    
                 Registration Statement on Form S-1 (File No. 333-94351)).   
  10.18          GNU General Public License (incorporated by reference to    
                 Exhibit 10.14 to the Registrant's Registration Statement on 
                 Form S-1 (File No. 333-94351)).                             
 +10.19          Computer Software Distribution Agreement, dated December 14,
                 1998, between Caldera and Navarre Corporation (incorporated 
                 by reference to Exhibit 10.15 to Caldera's Registration     
                 Statement on Form S-1 (File No. 333-94351)).                
 +10.20          OEM Reciprocal License Agreement, dated January 6, 2000,    
                 between Caldera and Evergreen Internet, Inc. (incorporated  
                 by reference to Exhibit 10.16 to Caldera's Registration     
                 Statement on Form S-1 (File No. 333-94351)).                
 +10.21          Sun Community Source License version 2.3 dated January 7,   
                 2000, between Caldera and Sun Microsystems, Inc.            
                 (incorporated by reference to Exhibit 10.17 to Caldera's    
                 Registration Statement on Form S-1 (File No. 333-94351)).   
 +10.22          Sun Community Source License version 2.7, dated January 7,  
                 2000, between Caldera and Sun Microsystems, Inc.            
                 (incorporated by reference to Exhibit 10.18 to Caldera's    
                 Registration Statement on Form S-1 (File No. 333-94351)).   
  10.23          Lease Agreement, dated September 1, 1998, between Caldera   
                 and Caldera, Inc., a Utah corporation (incorporated by      
                 reference to Exhibit 10.19 to Caldera's Registration        
                 Statement on Form S-1 (File No. 333-94351)).                
  10.24          Assignment and Extension of Lease, dated October 6, 1999, be
                 Caldera and Voxel, Inc. (incorporated by reference to       
                 Exhibit 10.20 to Caldera's Registration Statement of Form   
                 S-1 (file No. 333-94351)).                                  
  10.25          Secured Promissory Note, dated December 29, 1999, by Caldera
                 in favor of The Canopy Group (incorporated by reference to  
                 Exhibit 10.22 to Caldera's Statement on Form S-1 (File No.  
                 333-94351)).                                                
  10.26          Assignment of Lease, dated January 21, 2000, between Caldera
                 and Nextpage L.C. (incorporated by reference to Exhibit     
                 10.23 to Caldera's Registration Statement on Form S-1 (File 
                 No. 333-94351)).                                            

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                                                                [Download Table]

EXHIBIT                                                                      
  NO.                                    DESCRIPTION                         
-------                                  -----------                         
                                                                             
  10.27          Form of Indemnification Agreement by and between Caldera and
                 its executive officers and directors (incorporated by       
                 reference to Exhibit 10.24 to Caldera's Registration        
                 Statement on Form S-1 (File No. 333-94351)).                
  10.28          Distribution Agreement, dated February 8, 2000, between     
                 Caldera and Frank Kasper & Associates, Inc. (incorporated by
                 reference to Exhibit 10.1 to Caldera's quarterly report on  
                 Form 10-Q for the quarter ended April 30, 2000).            
  10.29          Second Amendment to Lease Agreement, dated April 5, 2000,   
                 between Caldera and EsNet Properties, L.C. (incorporated by 
                 reference to Exhibit 10.2 to Caldera's quarterly report on  
                 Form 10-Q for the quarter ended April 30, 2000).            
  10.30          Lease Agreement, dated October 9, 1997, between Caldera,    
                 Inc., a Utah corporation, and EsNet Properties, L.C.        
                 (incorporated by reference to Exhibit 10.3 to Caldera's     
                 quarterly report on Form 10-Q for the quarter ended April   
                 30, 2000).                                                  
  10.31          Master Lease, dated March 30, 2000, between Caldera and     
                 106th South Business Park, L.C. (incorporated by reference  
                 to Exhibit 10.4 to Caldera's quarterly report on Form 10-Q  
                 for the quarter ended April 20, 2000).                      
**10.32          Form of Senior Executive Severance Agreement.               
**10.33          Form of Voting Agreement between the Registrant and Doug    
                 Michels.                                                    
**10.34          Form of Voting Agreement between The Santa Cruz Operation,  
                 Inc. and The Canopy Group, Inc. and MTI Technology          
                 Corporation.                                                
**10.35          Form of Stockholder Agreement, among the Registrant,        
                 Caldera, The Santa Cruz Operation, Inc., MTI Technology     
                 Corporation and The Canopy Group, Inc.                      
**10.36          Form of Sales Representative and Support Agreement, between 
                 the Registrant and The Santa Cruz Operation, Inc.           
**10.37          Form of Open Server Research & Development Agreement between
                 the registrant and The Santa Cruz Operation, Inc.           
**10.38          OEM Distribution Agreement, dated June 27, 2000, between    
                 Caldera and The Santa Cruz Operation, Inc.                  
**10.39          Agreement for Linux Professional Consulting Services between
                 The Santa Cruz Operation, Inc. and Caldera Systems, Inc.    
**10.40          Strategic Business Agreement between The Santa Cruz         
                 Operation, Inc. and Caldera Systems, Inc.                   
**10.41          Stock Purchase and Sale Agreement between The Canopy Group, 
                 Inc., Caldera Systems, Inc. and Metrowerks Holding, Inc.    
**10.42          Stockholder Agreement between Lineo, Inc., Bryan Sparks, Dry
                 Canyon Holding Company LLC and Metrowerks Holdings, Inc.    
**10.43          Warrant Purchase Agreement between Lineo, Inc. and          
                 Metrowerks Holdings, Inc.                                   
**10.44          Form of Secured Convertible Promissory Note issued by The   
                 Santa Cruz Operation, Inc. to Caldera Systems, Inc.         
**10.45          Form of Security Agreement between The Santa Cruz Operation,
                 Inc., as debtor, and Caldera Systems, Inc., as secured      
                 party.                                                      
**10.46          Form of Intercreditor Agreement among The Canopy Group,     
                 Inc., The Santa Cruz Operation, Inc. and Caldera Systems,   
                 Inc.                                                        
**10.47          Form of Loan Agreement between The Canopy Group, Inc. and   
                 The Santa Cruz Operation, Inc.                              
**10.48          Form of Security Agreement between The Canopy Group, Inc.   
                 and The Santa Cruz Operation, Inc.                          
**10.49          Form of Secured Convertible Promissory Note issued by The   
                 Santa Cruz Operation, Inc. to The Canopy Group, Inc.        

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EXHIBIT                                                                      
  NO.                                    DESCRIPTION                         
-------                                  -----------                         
                                                                             
**10.50          Form of Secured Promissory Note to be issued by Caldera     
                 International, Inc. to The Santa Cruz Operation, Inc. upon  
                 completion of the combination.                              
**10.51          Form of Security Agreement to be entered into between       
                 Caldera International, Inc., as debtor, and The Santa Cruz  
                 Operation, Inc., as secured party, upon completion of the   
                 combination.                                                
**21.1           Subsidiaries of the Registrant.                             
  23.1           Consent of Arthur Andersen LLP, Independent Public          
                 Accountants of Caldera and the Registrant.                  
  23.1.2         Consent of Arthur Andersen LLP, Independent Public          
                 Accountants of Ebiz Enterprises, Inc.                       
  23.2           Consent of PricewaterhouseCoopers LLP, Independent          
                 Accountants of The Santa Cruz Operation, Inc.               
  23.2.2         Consent of PricewaterhouseCoopers LLP, Independent          
                 Accountants of The Santa Cruz Operation, Inc. regarding the 
                 financial statements of The Server and Professional Services
                 Groups.                                                     
  23.4           Consent of Wilson Sonsini Goodrich & Rosati, Professional   
                 Corporation (included in Exhibit 8.1).                      
  23.5           Consent of Brobeck, Phleger & Harrison LLP (included in     
                 Exhibits 5.1 and 8.2).                                      
  99.1           Form of Proxy Card of Caldera Systems, Inc.                 
  99.2           Form of Proxy Card of The Santa Cruz Operation, Inc.        

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

** Filed Previously                                                             

+  Confidential treatment was granted by the SEC for certain provisions. Omitted
material for which confidential treatment has been granted has been filed 
separately with the SEC.                                                  

(b) Financial Statement Schedules.                                          

Schedule II -- Valuation and Qualifying Accounts                      

Schedules not listed above have been omitted because the information  
required to be set forth therein is not applicable or is shown in the financial 
statements or the notes thereto.                                                

ITEM 22. UNDERTAKINGS                                                           

The undersigned Registrant hereby undertakes:                         

     (1) To file, during any period in which offers or sales are being
made, a post effective amendment to this registration statement:      

           (i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;                             

             (ii) To reflect in the prospectus any facts or events arising after
    the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the 
      aggregate, represent a fundamental change in the information set forth
 in the registration statement. Notwithstanding the foregoing, any
  increase or decrease in volume of securities offered (if the total
  dollar value of securities offered would not exceed that which was
       registered) and any deviation from the low or high end of the estimated
       maximum offering range may be reflected in the form of prospectus filed
      with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes
   in volume and price represent no more than 20 percent change in the
 maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;

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            (iii) To include any material information with respect to the plan
      of distribution not previously disclosed in the registration statement
or any material change to such information in the registration  
statement;                                                      

    (2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post effective amendment
shall be deemed to be a new registration statement relating to the    
 securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof;    

          (3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the     
termination of the offering;                                          

  (4) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the   
   prospectus pursuant to Items 4, 10(b), 11, or 13 of this form, within one
business day of receipt of such request, and to send the incorporated 
    documents by first class mail or other equally prompt means. This includes
   information contained in documents filed subsequent to the effective date
of the registration statement through the date of responding to the   
request;                                                              

          (5) The undersigned Registrant hereby undertakes to supply by means of
  a post-effective amendment all information concerning a transaction, and
  the company being acquired involved therein, that was not the subject of
and included in the registration statement when it became effective;  

        (6) that prior to any public reoffering of the securities registered
    hereunder through use of a prospectus which is a part of this registration
     statement, by any person or party who is deemed to be an underwriter within
    the meaning of Rule 145(c), the Registrant undertakes that such reoffering
prospectus will contain the information called for by the applicable  
    registration form with respect to reofferings by persons who may be deemed
    underwriters, in addition to the information called for by the other items
of the applicable form; and                                           

         (7) that every prospectus (i) that is filed pursuant to paragraph (1)
  immediately preceding, or (ii) that purports to meet the requirements of
  section 10(a)(3) of the Securities Act and is used in connection with an
   offering of securities subject to Rule 415, will be filed as a part of an
 amendment to the registration statement and will not be used until such
     amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, as amended, each such post-effective
  amendment shall be deemed to be a new registration statement relating to
     the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.    

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling    
persons of the registrant pursuant to the foregoing provisions, DGCL or         
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as        
expressed in the Securities Act and is, therefor, unenforceable. In the event   
that a claim for indemnification against such liabilities (other than the       
payment by the Registrant of expenses incurred or paid by a director, officer,  
or controlling person of the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling      
person in connection with the securities being registered hereunder, the        
Registrant will, unless in the opinion of its counsel the question has been     
settled by controlling precedent, submit to a court of appropriate jurisdiction 
the question of whether such indemnification by it is against public policy as  
expressed in the Securities Act and will be governed by the final adjudication  
of such issue.                                                                  

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SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this registration statement to be signed on its      
behalf by the undersigned, thereunto duly authorized, in the City of Orem, State
of Utah, on the 26th day of March 2001.                                         

                                   CALDERA INTERNATIONAL, INC.

                                  By:     /s/ RANSOM H. LOVE
                                              ----------------------------------
                                              Ransom H. Love
                                             Chief Executive Officer

 Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the     
capacities and on the date indicated.                                           

                                                        [Enlarge/Download Table]

                      SIGNATURE                                      TITLE                      DATE     
                      ---------                                      -----                      ----     
                                                                                                         

                 /s/ RANSOM H. LOVE                    Director, Chief Executive Officer   March 26, 2001
-----------------------------------------------------                                                    
                   Ransom H. Love                                                                        

                 /s/ ROBERT K. BENCH                   Chief Financial Officer (Principal  March 26, 2001
-----------------------------------------------------    Accounting Officer)                             
                   Robert K. Bench                                                                       

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE 

To Caldera Systems, Inc.:                                                       

     We have audited in accordance with auditing standards generally accepted in
the United States, the consolidated financial statements of Caldera Systems,    
Inc, the carved-out portion of Caldera, Inc. and their subsidiary included in   
this registration statement and have issued our report thereon dated December 5,
2000. Our audit was made for the purpose of forming an opinion on the basic     
financial statements taken as a whole. Schedule II -- Valuation and Qualifying  
Accounts is the responsibility of the Company's management and is presented for 
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to 
the auditing procedures applied in the audit of the basic financial statements  
and, in our opinion, fairly states in all material respects the financial data  
required to be set forth therein in relation to the basic financial statements  
taken as a whole.                                                               

ARTHUR ANDERSEN LLP                                                             

Salt Lake City, Utah                                                            
December 5, 2000                                                                

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CALDERA SYSTEMS, INC., THE CARVED-OUT 
PORTION OF CALDERA, INC. AND THEIR SUBSIDIARY 

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED OCTOBER 31, 1998, 1999 AND 2000 

                                                        [Enlarge/Download Table]

                                             BALANCE AT   CHARGED TO                 BALANCE AT 
                                              BEGINNING   COSTS AND                    END OF   
                DESCRIPTION                   OF PERIOD    EXPENSES   DEDUCTIONS       PERIOD   
                -----------                  -----------  ----------  ----------     -----------
                                                                                                
Allowance for doubtful accounts:                                                                
  Year ended October 31, 1998............... $   112,000  $  265,000  $(362,000)(a)  $    15,000
  Year ended October 31, 1999...............      15,000     222,000   (147,000)(a)       90,000
  Year ended October 31, 2000...............      90,000     325,000   (103,000)         312,000
Inventory reserves:                                                                             
  Year ended October 31, 1998...............     157,000      28,000   (122,000)(b)       63,000
  Year ended October 31, 1999...............      63,000     356,000    (65,000)(b)      354,000
  Year ended October 31, 2000...............     354,000      43,000   (113,000)         284,000
Allowance for sales returns:                                                                    
  Year ended October 31, 1998...............     100,000      97,000   (143,000)(c)       54,000
  Year ended October 31, 1999...............      54,000     350,000   (235,000)(c)      169,000
  Year ended October 31, 2000...............     169,000     680,000   (485,000)         364,000
Deferred tax assets valuation allowance:                                                        
  Year ended October 31, 1998...............          --     422,000  7,156,000(d)     7,578,000
  Year ended October 31, 1999...............   7,578,000   3,316,000         --       10,894,000
  Year ended October 31, 2000...............  10,894,000   4,363,000         --       15,257,000

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

(a) Represents write-offs of uncollectable accounts receivable                  

(b) Represents inventory destroyed or scrapped                                  

(c) Represents product returns                                                  

(d) Represents allowance recorded in connection with the purchase of assets from
Caldera, Inc.                                                           

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EXHIBIT INDEX 

                                                                [Download Table]

EXHIBIT                                                                      
  NO.                                    DESCRIPTION                         
-------                                  -----------                         
                                                                             
   2.1           Agreement and Plan of Reorganization by and among Caldera   
                 Systems, Inc., Caldera International, Inc. ("registrant")   
                 and The Santa Cruz Operation, Inc., including Amendment No. 
                 1, Amendment No. 2 and Amendment No. 3 to the Agreement and 
                 Plan of Reorganization (included as Appendix A to the       
                 prospectus).                                                
   3.1           Form of Caldera International, Inc.'s Amended and Restated  
                 Certificate of Incorporation to be in effect upon the       
                 closing of the combination (included as Appendix D to the   
                 prospectus).                                                
   3.2           Form of Caldera International, Inc.'s Amended and Restated  
                 Bylaws to be in effect upon the closing of the combination  
                 (included as Appendix E to the prospectus).                 
 **4.1           Form of certificate of common stock.                        
 **5.1           Opinion of Brobeck Phleger & Harrison, LLP.                 
 **8.1           Tax Opinion of Wilson Sonsini Goodrich & Rosati,            
                 Professional Corporation.                                   
 **8.2           Tax Opinion of Brobeck Phleger & Harrison, LLP.             
  10.1           Conversion Agreement, dated December 30, 1999, between      
                 Caldera, The Canopy Group, Inc. and MTI Technology          
                 Corporation (incorporated by reference to Exhibit 10.1 to   
                 Caldera's Registration Statement on Form S-1 (File No.      
                 333-94351)).                                                
  10.2           Form of Series B Preferred Stock Purchase Agreement between 
                 the Registrant and the Series B investors (incorporated by  
                 reference to Exhibit 10.2 to Caldera's Registration         
                 Statement on Form S-1 (File No. 333-94351)).                
  10.3           Caldera 1988 Stock Option Plan (incorporated by reference to
                 Exhibit 10.3 to Caldera's Registration Statement on Form S-1
                 (File No. 333-94351)).                                      
  10.4           Caldera 1999 Omnibus Stock Incentive Plan (Included as      
                 Appendix F to the prospectus).                              
  10.5           Amendment No. 1 to Caldera Systems, Inc. 1999 Omnibus Stock 
                 Incentive Plan (included as Appendix G to the prospectus).  
  10.6           Amendment No. 2 to Caldera Systems, Inc. 1999 Omnibus Stock 
                 Incentive Plan (included as Appendix H to the prospectus).  
  10.7           Amendment No. 3 to Caldera Systems, Inc. 1999 Omnibus Stock 
                 Incentive Plan (included as Appendix I to the prospectus).  
  10.8           Amendment No. 4 to Caldera Systems, Inc. 1999 Omnibus Stock 
                 Incentive Plan (included as Appendix J to the prospectus).  
  10.9           Amendment No. 5 to Caldera Systems, Inc. 1999 Omnibus Stock 
                 Incentive Plan (included as Appendix K to the prospectus).  
  10.10          Caldera 2000 Employee Stock Purchase Plan, as amended       
                 (included as Appendix L to the prospectus).                 
  10.11          Secured Convertible Promissory Note, dated September 1,     
                 1998, by Caldera in favor of The Canopy Group, Inc.         
                 (incorporated by reference to Exhibit 10.6 to Caldera's     
                 Registration Statement on Form S-1 (File No. 333-94351)).   
  10.12          Security Agreement, dated September 1, 1998, between the    
                 Registrant and The Canopy Group, Inc. (incorporated by      
                 reference to Exhibit 10.7 to the Registrant's Registration  
                 Statement on Form S-1 (File No. 333-94351)).                
  10.13          Asset Purchase and Sale Agreement, dated September 1, 1998, 
                 between Caldera, Inc., a Utah corporation and Caldera       
                 (incorporated by reference to Exhibit 10.8 to Caldera's     
                 Registration Statement on Form S-1 (File No. 333-94351)).   

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EXHIBIT                                                                      
  NO.                                    DESCRIPTION                         
-------                                  -----------                         
                                                                             
  10.14          Amended and Restated Asset Purchase Agreement, dated as of  
                 September 1, 1998, between Caldera, Inc., a Utah            
                 corporation, and Caldera (incorporated by reference to      
                 Exhibit 10.9 to Caldera's Registration Statement on Form S-1
                 (File No. 333-94351)).                                      
  10.15          Stock Purchase Agreement, dated January 27, 1999, by and    
                 among Caldera, the Canopy Group, Inc. and MTI Technology    
                 Corporation (incorporated by reference to Exhibit 10.10 to  
                 Caldera's Registration Statement on Form S-1 (File No.      
                 333-94351)).                                                
  10.16          Stock Purchase Agreement, dated January 6, 2000, between    
                 Caldera and Lineo, Inc. (incorporated by reference to       
                 Exhibit 10.11 to Caldera's Registration Statement on Form   
                 S-1 (File No. 333-94351)).                                  
  10.17          Form of Second Amended and Restated Investors Rights        
                 Agreement by and among Caldera and the holders of the Series
                 A and Series B convertible preferred stock named therein    
                 (incorporated by reference to Exhibit 10.12 to Caldera's    
                 Registration Statement on Form S-1 (File No. 333-94351)).   
  10.18          GNU General Public License (incorporated by reference to    
                 Exhibit 10.14 to the Registrant's Registration Statement on 
                 Form S-1 (File No. 333-94351)).                             
 +10.19          Computer Software Distribution Agreement, dated December 14,
                 1998, between Caldera and Navarre Corporation (incorporated 
                 by reference to Exhibit 10.15 to Caldera's Registration     
                 Statement on Form S-1 (File No. 333-94351)).                
 +10.20          OEM Reciprocal License Agreement, dated January 6, 2000,    
                 between Caldera and Evergreen Internet, Inc. (incorporated  
                 by reference to Exhibit 10.16 to Caldera's Registration     
                 Statement on Form S-1 (File No. 333-94351)).                
 +10.21          Sun Community Source License version 2.3 dated January 7,   
                 2000, between Caldera and Sun Microsystems, Inc.            
                 (incorporated by reference to Exhibit 10.17 to Caldera's    
                 Registration Statement on Form S-1 (File No. 333-94351)).   
 +10.22          Sun Community Source License version 2.7, dated January 7,  
                 2000, between Caldera and Sun Microsystems, Inc.            
                 (incorporated by reference to Exhibit 10.18 to Caldera's    
                 Registration Statement on Form S-1 (File No. 333-94351)).   
  10.23          Lease Agreement, dated September 1, 1998, between Caldera   
                 and Caldera, Inc., a Utah corporation (incorporated by      
                 reference to Exhibit 10.19 to Caldera's Registration        
                 Statement on Form S-1 (File No. 333-94351)).                
  10.24          Assignment and Extension of Lease, dated October 6, 1999, be
                 Caldera and Voxel, Inc. (incorporated by reference to       
                 Exhibit 10.20 to Caldera's Registration Statement of Form   
                 S-1 (file No. 333-94351)).                                  
  10.25          Secured Promissory Note, dated December 29, 1999, by Caldera
                 in favor of The Canopy Group (incorporated by reference to  
                 Exhibit 10.22 to Caldera's Statement on Form S-1 (File No.  
                 333-94351)).                                                
  10.26          Assignment of Lease, dated January 21, 2000, between Caldera
                 and Nextpage L.C. (incorporated by reference to Exhibit     
                 10.23 to Caldera's Registration Statement on Form S-1 (File 
                 No. 333-94351)).                                            
  10.27          Form of Indemnification Agreement by and between Caldera and
                 its executive officers and directors (incorporated by       
                 reference to Exhibit 10.24 to Caldera's Registration        
                 Statement on Form S-1 (File No. 333-94351)).                
  10.28          Distribution Agreement, dated February 8, 2000, between     
                 Caldera and Frank Kasper & Associates, Inc. (incorporated by
                 reference to Exhibit 10.1 to Caldera's quarterly report on  
                 Form 10-Q for the quarter ended April 30, 2000).            

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EXHIBIT                                                                      
  NO.                                    DESCRIPTION                         
-------                                  -----------                         
                                                                             
  10.29          Second Amendment to Lease Agreement, dated April 5, 2000,   
                 between Caldera and EsNet Properties, L.C. (incorporated by 
                 reference to Exhibit 10.2 to Caldera's quarterly report on  
                 Form 10-Q for the quarter ended April 30, 2000).            
  10.30          Lease Agreement, dated October 9, 1997, between Caldera,    
                 Inc., a Utah corporation, and EsNet Properties, L.C.        
                 (incorporated by reference to Exhibit 10.3 to Caldera's     
                 quarterly report on Form 10-Q for the quarter ended April   
                 30, 2000).                                                  
  10.31          Master Lease, dated March 30, 2000, between Caldera and     
                 106th South Business Park, L.C. (incorporated by reference  
                 to Exhibit 10.4 to Caldera's quarterly report on Form 10-Q  
                 for the quarter ended April 20, 2000).                      
**10.32          Form of Senior Executive Severance Agreement.               
**10.33          Form of Voting Agreement between the Registrant and Doug    
                 Michels.                                                    
**10.34          Form of Voting Agreement between The Santa Cruz Operation,  
                 Inc. and The Canopy Group, Inc. and MTI Technology          
                 Corporation.                                                
**10.35          Form of Stockholder Agreement, among the Registrant,        
                 Caldera, The Santa Cruz Operation, Inc., MTI Technology     
                 Corporation and The Canopy Group, Inc.                      
**10.36          Form of Sales Representative and Support Agreement, between 
                 the Registrant and The Santa Cruz Operation, Inc.           
**10.37          Form of Open Server Research & Development Agreement between
                 the registrant and The Santa Cruz Operation, Inc.           
**10.38          OEM Distribution Agreement, dated June 27, 2000, between    
                 Caldera and The Santa Cruz Operation, Inc.                  
**10.39          Agreement for Linux Professional Consulting Services between
                 The Santa Cruz Operation, Inc. and Caldera Systems, Inc.    
**10.40          Strategic Business Agreement between The Santa Cruz         
                 Operation, Inc. and Caldera Systems, Inc.                   
**10.41          Stock Purchase and Sale Agreement between The Canopy Group, 
                 Inc., Caldera Systems, Inc. and Metrowerks Holding, Inc.    
**10.42          Stockholder Agreement between Lineo, Inc., Bryan Sparks, Dry
                 Canyon Holding Company LLC and Metrowerks Holdings, Inc.    
**10.43          Warrant Purchase Agreement between Lineo, Inc. and          
                 Metrowerks Holdings, Inc.                                   
**10.44          Form of Secured Convertible Promissory Note issued by The   
                 Santa Cruz Operation, Inc. to Caldera Systems, Inc.         
**10.45          Form of Security Agreement between The Santa Cruz Operation,
                 Inc., as debtor, and Caldera Systems, Inc., as secured      
                 party.                                                      
**10.46          Form of Intercreditor Agreement among The Canopy Group,     
                 Inc., The Santa Cruz Operation, Inc. and Caldera Systems,   
                 Inc.                                                        
**10.47          Form of Loan Agreement between The Canopy Group, Inc. and   
                 The Santa Cruz Operation, Inc.                              
**10.48          Form of Security Agreement between The Canopy Group, Inc.   
                 and The Santa Cruz Operation, Inc.                          
**10.49          Form of Secured Convertible Promissory Note issued by The   
                 Santa Cruz Operation, Inc. to The Canopy Group, Inc.        
**10.50          Form of Secured Promissory Note to be issued by Caldera     
                 International, Inc. to The Santa Cruz Operation, Inc. upon  
                 completion of the combination.                              
**10.51          Form of Security Agreement to be entered into between       
                 Caldera International, Inc., as debtor, and The Santa Cruz  
                 Operation, Inc., as secured party, upon completion of the   
                 combination.                                                

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EXHIBIT                                                                      
  NO.                                    DESCRIPTION                         
-------                                  -----------                         
                                                                             
**21.1           Subsidiaries of the Registrant.                             
  23.1           Consent of Arthur Andersen LLP, Independent Public          
                 Accountants of Caldera and the Registrant.                  
  23.1.2         Consent of Arthur Andersen LLP, Independent Public          
                 Accountants of Ebiz Enterprises, Inc.                       
  23.2           Consent of PricewaterhouseCoopers LLP, Independent          
                 Accountants of The Santa Cruz Operation, Inc.               
  23.2.2         Consent of PricewaterhouseCoopers LLP, Independent          
                 Accountants of The Santa Cruz Operation, Inc. regarding the 
                 financial statements of The Server and Professional Services
                 Groups.                                                     
  23.4           Consent of Wilson Sonsini Goodrich & Rosati, Professional   
                 Corporation (included in Exhibit 8.1).                      
  23.5           Consent of Brobeck, Phleger & Harrison LLP (included in     
                 Exhibits 5.1 and 8.2).                                      
  99.1           Form of Proxy Card of Caldera Systems, Inc.                 
  99.2           Form of Proxy Card of The Santa Cruz Operation, Inc.        

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

** Filed Previously                                                             

+  Confidential treatment was granted by the SEC for certain provisions. Omitted
material for which confidential treatment has been granted has been filed 
separately with the SEC.