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                                             February 28, 2000


Mr. Coleman Sisson
[CONFIDENTIAL DATA]


                   HOUSING SUPPLEMENT AND LOAN ARRANGEMENT

Dear Coleman:

          This letter confirms our agreement to make certain financial
accommodations available to you in connection with your purchase of a new
home in Northern California (the "New Residence"), which will modify the
terms of your employment letter dated November 5, 1999 (the "Employment
Agreement").  We have agreed as follows:

   (1)    We agree to accelerate the payment of a prorata portion (calculated
          through May 31, 2000) of your guaranteed $125,000 target annual
          bonus, provided that you agree to repay to Liberate such
          accelerated payments if you voluntarily terminate your employment
          prior to the first anniversary of your hire date or you are
          terminated for "Cause" (as defined in the Employment Agreement)
          before such date.

  (2)     Liberate will pay you a supplemental monthly housing expense
          allowance equal to the difference between your monthly mortgage
          payment (currently estimated to be roughly $9,000 per month) for
          your new residence less the amount of your current monthly mortgage
          payment on your residence in Washington (the "Monthly Supplement"),
          plus a "grossed up" amount to cover taxes on the Monthly
          Supplement based on the maximum applicable federal and state
          income tax rates (the "Grossed-up Amount").  Liberate will be
          responsible for paying all FICA, SDI, FUTA, SUTA and other
          applicable withholding amounts in connection with the foregoing
          payments.  Liberate will make these payments to you commencing for
          the month in which you begin mortgage payments on the New
          Residence, and such payments will continue until you notify
          Liberate that you no longer need the Monthly Supplement, but in no
          event beyond

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          January 2001.  The Grossed-up Amount will be treated as an
          interest-free advance to you, which will be repayable by you to
          Liberate on or before April 16, 2001.

  (3)     If you terminate your employment with us, all advanced amounts set
          forth above will become immediately due and payable by you to
          Liberate, and Liberate will have the option to terminate the
          payment of the Monthly Supplement (together with the Grossed-up
          Amount) to you.

     In all other respects, the terms of the Employment Agreement are
unchanged and remain in full force and effect.

     You are a very critical and important member of Liberate's executive
team, and we are pleased to be able to offer the foregoing financial
arrangement to you.  Please confirm your understanding of the foregoing
arrangement to Liberate by signing below.


                                       Sincerely,



                                       Mitchell E. Kertzman,
                                       President and Chief Executive Officer


Acknowledged and agreed:


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Coleman Sisson