Document:

<PAGE>

 [LOGO]  THE SCOTTISH OFFICE
--------------------------------------------------------------------------------
         Education and Industry Department

                                                  Investment Assistance Division
                                                  Meridian Court
                                                  5 Cadogan Street
                                                  Glasgow G2 6AT

                                                  Telephone 0141-242 5619
                                                  Fax 0141-242 5691

Mr M Moshayedi
Chief Executive Officer
Simple Technology Europe
3001 Daimler Street
Santa Ana
CALIFORNIA                                        Our ref: 0062/R/1
CA92705
USA                                               Date: 9 December 1996

Dear Mr Moshayedi

1.       I am pleased to tell you that the Secretary of State for Scotland ("the
Secretary of State") is prepared to pay Simple Technology (Company No 166801)
("the Company") a grant not exceeding L1,700,000 under Section 7 of the
Industrial Development Act 1982 to aid the project described in paragraph 2
("the Project") subject to the terms and conditions set out in this letter and
Schedules.

THE PROJECT

2.       The Project is to establish a European headquarters for the design
and manufacture of computer enhancements products including SIMMS,
fax/modems, removable hard drives, etc at 12 Redwood Crescent, Peel Park,
East Kilbride, G74 5PA ("the Premises") as described in the Company's
application for assistance dated 12 January 1996 as supplemented or varied by
subsequent correspondence and discussions with the Department. A summary of
the estimated capital expenditure on fixed assets for the Project is attached
to this letter as Schedule 2. The number of jobs at the Premises before the
Project was nil. The Project is expected to create 360 new permanent full-
time jobs to be carried out by persons directly employed by the Company ("the
Job Target") at the Premises. "Permanent full-time jobs" are referred to in
this letter as "jobs". A "full-time job" is one where the basic period for
which the employee is employed is 30 or more hours per week. Two part-time
employees each employed for a basic period of 15 or more hours per week count
as one full-time job. Jobs created by virtue of the Project but not created
by the Company, and self-employed, sub-contracted or temporary jobs
associated with the Project, whether at the Premises or elsewhere, do not
count towards the Job Target.

                                       1.
<PAGE>

3.       PRECONDITIONS

This offer of grant is conditional upon the Company satisfying the Secretary of
State that:

         (a)      The Company has entered into a minimum 10 year lease for the
         Premises at an annual rental of not less than L236,000;

         (b)      The audited accounts for Simple Technology Incorporated for
         the year to 31 December 1995 are consistent with the information
         provided in support of the Company's application for Regional Selective
         Assistance; and

         (c)      A parental guarantee has been provided in line with the
         recommended form of words supplied with this Offer Letter.

4.       THE GRANT AND WHEN TO CLAIM

(1)      The grant will be payable in instalments as set out below:

<TABLE>
<CAPTION>

                            Due Date                                            Payment
                            --------                                            -------
<S>                         <C>                                                 <C>
First Payment -             When the Company has defrayed (as defined           L250,000
First Tranche               below) L700,000 on the fixed assets for the
                            Project as specified in Schedule 2 and has
                            created at least 55 jobs as a result of
                            the Project.

Second Tranche              When the Company has so defrayed a total of         L500,000
                            L1,800,000 on such fixed assets and has
                            created at least 97 jobs as a result of the
                            Project and at least one year has elapsed
                            since the date of the First Payment.

Second Payment              When the Company has so defrayed a total of         L350,000
                            L2,000,000 on such fixed assets and has
                            created at least 171 jobs as a result of the
                            Project and at least one year has elapsed
                            since the date of the First Payment, second
                            tranche.

Third Payment               When the Company has so defrayed a total of         L350,000
                            L3,000,000 on such fixed assets for the
                            Project and has created at least 230 jobs as
                            a result of the Project and at least 2 years
                            have elapsed since the date of the First
                            Payment, second tranche.

                                       2.
<PAGE>

Fourth Payment               When the Company has so defrayed a total of        L250,000
                             L3,600,000 on such fixed assets for the
                             Project and the Job Target of at least 360
                             jobs as a result of the Project has been met
                             and the resulting production/output at the
                             Premises is to the satisfaction of the
                             Secretary of State, and at least 3 years
                             have elapsed since the date of the First
                             Payment, second tranche.

</TABLE>

(2)      In this letter and in the schedules, 'defrayed' means discharged by
payment or otherwise settled by the Company. All references to expenditures are
net of input Value Added Tax.

(3)       The Secretary of State may reduce the final payment of grant if the
total amount defrayed by the Company on fixed assets for the Project is less
than the estimated total in Schedule 2.

DATE BY WHICH THE FIRST INSTALMENT OF GRANT MUST BE CLAIMED

5.       The Company should inform the Secretary of State if at any time its
timetable for the Project is subject to significant change. The Secretary of
State reserves the right to withdraw this offer on the expiration of a period
of 2 years from the date on which it is first accepted by the Company unless,
within that period, the Company has submitted a claim and all necessary
documentation, for the first payment of grant.

6.       HOW TO CLAIM

For each instalment of grant, a claim must be made in writing to this Office.
Claims should be made by completion of a claim form which must be signed by a
Director or authorised signatory for the company. For guidance a claim form is
enclosed with this letter. Part 1 of Schedule 1 of this letter sets out the
information which must be included with each claim.

7.       LAST DATE FOR RECEIPT OF CLAIMS

All claims together with the information set out in Schedule 1 must be received
by the Secretary of State on or before 30 June 2001. The Secretary of State
shall be under no obligation to make any payment in respect of claims received
by him after that date.

8.       EXPENDITURE ELIGIBLE FOR REGIONAL SELECTIVE ASSISTANCE

The Secretary of State shall be entitled to withhold and/or require repayment of
part or all of the grant under this letter if any commitment or expenditure has
been incurred or defrayed on the Project before 16 February 1996 which has not
been disclosed by the Company to the Secretary of State before the date of this
letter so that they can be taken into account in making this offer. Expenditure
is 'incurred' when the Company has entered a commitment to discharge by payment
or otherwise settle that amount.

                                        3.
<PAGE>

9.       WITHHOLDING AND REPAYMENT OF GRANT

(1)      The Secretary of State shall be entitled to withhold any or all of the
payments and/or to require part or all of the grant already paid to be repaid if

         (a)      in his opinion:

                  (i)      there is unsatisfactory progress towards completion
                           of the Project; or

                  (ii)     there is unsatisfactory progress towards meeting the
                           Job Target; or

                  (iii)    the future of the Project is in jeopardy; or

                  (iv)     before completion of the Project there is a
                           substantial change in the nature or scale of the
                           Project;

         (b)      within the period beginning on the date of this letter and
         ending 3 years after the date of the final payment of grant any of the
         following events occur:

                  (i)      the Premises cease for a period of more than 6 months
                           to be used by the Company for the purposes of the
                           Project as specified in paragraph 2, or the Company
                           sells or leases the whole or part of the Premises;

                  (ii)     an asset provided for the Project ceases to be used
                           at the Premises by the Company for the purposes of
                           the Project for more than 6 months or is sold or
                           otherwise disposed of (other than by way of charge or
                           mortgage) or in the case of leased assets there is an
                           assignment, premature termination, or material
                           variation in the terms of the lease;

                  (iii)    the Company ceases to be a subsidiary of any company
                           of which it is a subsidiary at the date of this
                           letter or the Company becomes a subsidiary of any
                           company of which it is not a subsidiary at the date
                           of this letter. The word 'subsidiary' shall be
                           interpreted in accordance with the definition in
                           Section 736 of the Companies Act 1985 as substituted
                           by Section 144(l) of the Companies Act 1989;

                  (iv)     the Company is the subject of a proposal for a
                           voluntary arrangement or has a petition for an
                           Administration Order or a petition for a Winding-up
                           Order brought against it or passes a resolution for a
                           Winding-up or makes any composition, arrangement,
                           conveyance or assignment for the benefit of its
                           creditors or purports to do so, or a receiver or any
                           other person is appointed in respect of its
                           undertaking or of any or all of its property, or does
                           or suffers any act substantially equivalent to any of
                           the foregoing;

                  (v)      the Company fails to comply with any condition of
                           this letter;

                                       4.
<PAGE>

         (c)      the Company fails to maintain the number of new jobs created
         by the project at the level of the Job Target throughout the period of
         18 months beginning on the date of the final payment of grant.

(2)      The Company must notify the Secretary of State within 3 months of any
of the events listed at (a)(iii) to (c) above occurring.

(3)      The Secretary of State shall also be entitled to withhold and/or
require repayment of part or all of the grant under this letter if any
information provided in the application for grant or in a claim for payment or
in subsequent or supporting correspondence is found to be incorrect or
incomplete or if any statement made in the said application subsequently becomes
untrue, in every case to an extent which the Secretary of State considers to be
material.

10.      OTHER FINANCIAL ASSISTANCE FOR THE PROJECT

The Secretary of State shall be entitled to withhold and/or require repayment of
part or all of the grant under this letter if any financial assistance towards
the Project has been received or is, in the opinion of the Secretary of State,
likely to be received from any public authority in addition to any assistance
the availability and amount of which have been disclosed by the Company to the
Secretary of State before the date of this letter and the availability and
amount of which have been taken into account in making this offer.

'Public authority' includes any of the European Communities or their
institutions, any Government Department or local authority, or any body
wholly or partly supported by public funds or charitable contributions.

11.      Notwithstanding paragraph 9, the Secretary of State may:

         (a)      withhold payment of grant and/or reclaim any grant paid to the
         extent necessary to ensure that any assistance given under this offer
         letter taken together with any other assistance which, in the opinion
         of the Secretary of State, has been or is likely to be received towards
         the Project is within the aid limits laid down by the European
         Communities;

         (b)      withhold or reclaim grant if required to do so by a decision
         of the Commission of the European Communities.

12.      EUROPEAN COMMUNITY

The Secretary of State reserves the right to provide the European Commission
with information about this offer. The Secretary of State may apply for a
contribution from the. European Regional Development Fund towards the grant
offered by this letter; if he does so the Company must provide such further
information as the Secretary of State or the European Commission may require in
connection with such application.

                                       5.
<PAGE>

13.      LEASING

(1)      The Secretary of State may vary the amount of the grant and the payment
terms if the Company (other than as disclosed in the submissions referred to in
paragraph 2) leases or acquires under hire purchase or extended credit
arrangements any of the fixed assets to be provided for the Project as specified
in Schedule 2.

(2)      If any of the fixed assets to be provided for the Project are provided
under a lease which is made by a leasing company to the Company, and which is in
a form which has been previously approved in writing by the Secretary of State
for the purposes of this letter, and which is in accordance with all the
conditions under which such approval is given, then for the purposes of this
letter the capital cost to the leasing company of that equipment shall be
treated as having been defrayed (as defined in paragraph 4) by the Company on
the date on which the relevant lease is signed.

(3)      Notwithstanding sub-paragraph (2), no payment in respect of any
instalment of grant shall be made which would result in the total payments then
made under this letter exceeding the aggregate of:

         (a)      the amounts then defrayed by the Company on eligible costs for
         the Project which are not the subject of leasing or hire purchase
         agreements; and

         (b)      the actual amounts then paid by the Company in respect of
         deposits and/or instalments on assets for the Project which are the
         subject of leasing or hire purchase agreements.

14.      PUBLICITY

The Secretary of State shall have the right to publish the amount of grant
offered together with the name of the Company and a brief description of the
Project. Such information is normally published in the first quarter after the
first payment of grant is made.

15.      MONITORING OF THE PROJECT

The Secretary of State or his representative shall have the right at any time
and from time to time to inspect the Project and to require such further
information as he or they think fit.

16.      At 18 months and 36 months following the final payment of grant and at
such other times within the said 36 months as the Secretary of State may
require, the Company shall provide to the Secretary of State a written report as
specified in Schedule 1, Part II of this letter. The contents of the Company's
report provided at 18 months and 36 months after the final payment of grant
shall be confirmed by a report by an independent accountant. At his discretion,
the Secretary of State may also require a report from an independent accountant
confirming the contents of any other Company report.

                                       6.
<PAGE>

17.      AMENDMENTS TO THIS LETTER

No amendment or variation to the terms of this offer letter shall be effective
unless it is agreed in writing on behalf of the Secretary of State.

18.      HOW TO ACCEPT

This offer remains open for acceptance until 28 February, 1997. This offer can
only be accepted by a Director of the Company signing the acceptance at the foot
of the duplicate copy on behalf of the Company and returning the complete
document to the undersigned. If you wish to raise any points in connection with
this letter please contact me.

19.      Please acknowledge receipt of this letter.

Yours sincerely

/s/ Fred G Haw

FRED G HAW
Senior Monitoring Officer
The Scottish Office Education and Industry Department

Simple Technology Europe accepts the offer on the terms set out above and in the
accompanying Schedules.

Date:   1/14/97                       Signed: /s/ Manouch Moshayedi
                                      Print Name in Full:

                                      Manouch Moshayedi

                                      Director
                                      for and on behalf of:
                                      Simple Technology, Inc.

                                       7.
<PAGE>

                                   Schedule 1

                                     PART I

HOW TO CLAIM INSTALMENTS OF REGIONAL SELECTIVE ASSISTANCE

1.       Claims for each instalment of grant must be made in writing to this
office. Claims should be made by completion of a claim form. For guidance, a
claim form is attached.

2.       With each claim for payment the applicant must include:

         (a)      the latest audited accounts of the Company [and the Parent
         Company]. If these accounts cover a period ending more than 9 months
         before the date of the claim, unaudited or management accounts for a
         later period should also be submitted;

         (b)      A report by an independent accountant ("the Accountant"). The
         qualifications which the Accountant must have and the form of the
         report are set out in Part III of Schedule 1.

                                     PART II

THE COMPANY'S REPORT

The Company's reports under paragraph 15 of the offer letter must cover the
following (as appropriate):

         (a)      progress on the construction and adaptation of buildings and
          the installation of plant and machinery;

         (b)      whether there has been (or is likely to be) any change in the
          nature, scale or timing of the Project;

         (c)      whether there has been any change (or any change is likely to
         occur) in the ownership of or beneficial interests in the assets listed
         in Schedule 2.

         (d)      the total number of jobs at the Premises and the number of new
          jobs created as a result of the Project;

         (e)      details of any other financial assistance received by the
         Company towards the Project other than Regional Development Grant or
         grant the availability of which was disclosed to the Secretary of State
         before the date of the offer letter.

                                       1.
<PAGE>

                                    PART III

THE ACCOUNTANT'S REPORT

The Accountant's report shall be in the following form (amended as appropriate);

"Date

I/We have examined the enclosed claim submitted by [name] ("the Company").

I/We have also examined the records of the Company as necessary and have
obtained such explanations and carried out such tests as I/We consider
necessary.

I/We report that in my/our opinion subject to any reservations set out in my/our
accompanying letter [date]

         (i)      The claim for payment is in accordance with the Secretary of
         State for Scotland's offer letter dated (date] including the schedules
         thereto;

         (ii)     the Company had during the period from [date] to [date]
         defrayed (as defined in paragraph 4 of the offer letter) expenditure of
         L[amount] on fixed assets for the Project in accordance with the offer
         letter; this total excludes input Value Added Tax;

         (iii)    the Company had during the period from [date] to [date]
         created [number] permanent full time jobs and created [number] part
         time jobs at the Premises as a result of the Project in accordance with
         the offer letter;

         (iv)     the Company has maintained adequate records to enable me/us to
         report on this claim for payment of grant.

Name for enquiries:

THE INDEPENDENT ACCOUNTANT'S QUALIFICATIONS

(a)      (i)      All reports on grant claims from companies

         and

         (ii)     reports on grant claims from businesses that are not
                  incorporated under the Companies Acts and where the total of
                  the grant offer is over L25,000

must be made by an independent accountant eligible under the terms of Section 25
of the Companies Act 1989 for appointment as a company auditor. A person
eligible under Section 34(1) of the Companies Act 1989 for appointment as
auditor of an unquoted company (as defined in that Section) may only report on
grant claims made by such a company or from businesses that are not incorporated
under the Companies Acts.

                                       2.
<PAGE>

(b)      Reports on grant claims from businesses that are not incorporated under
the Companies Act and where the total grant offer is not more than L25,000 may
be made by (i) those qualified as defined in (a) above; or by (ii) members of
the following specified accountancy bodies:-

         The Institute of Chartered Accountants in England and Wales
         The Institute of Chartered Accountants of Scotland
         The Institute of Chartered Accountants of Ireland
         The Chartered Association of Certified Accountants
         The Chartered Institute of Management Accountants
         The Institute of Company Accountants
         The Association of International Accountants
         The Chartered Institute of Public Finance and Accountancy

In every case the accountant must be independent of the business claiming grant.

                                       3.
<PAGE>

                                   SCHEDULE 2

Summary of estimated project capital expenditure (deducting input Value Added
Tax.)

SIMPLE TECHNOLOGY EUROPE

<TABLE>
<CAPTION>

                                                             Year End December 31
                                                             --------------------
                               Total           1996           1997           1998           1999          2000
                               -----           ----           ----           ----           ----          ----
<S>                            <C>            <C>            <C>            <C>            <C>           <C>
                               L'000          L'000          L'000          L'000          L'000         L'000
Manufacture Equipment          1,400            400            200            200            400           200
Testing Equipment              1,220            120            500            200            200           200
Office Equipment                 980            230            150            200            200           200

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

                               3,600            750            850            600            800           600
                               -----           ----           ----           ----           ----          ----
                               -----           ----           ----           ----           ----          ----

</TABLE>

                                       4.

<PAGE>

[LOGO]   SCOTTISH EXECUTIVE
         -----------------------------------------------------------------------
Enterprise & Lifelong Learning Department       Investment Assistance Division
                                                Meridian Court
                                                5 Cadogan Street
                                                Glasgow G2 6AT
Manouch Moshayedi
Simple Technology Inc.                          Telephone: 0141-242 5437
3001 Daimler Street                             Fax: 0141-242 5691
Santa Ana
California
CA 92705                                        Our ref: R62/1
USA                                             Date: 1 December 1999

Dear Mr Moshayedi

REPAYMENT OF REGIONAL SELECTIVE ASSISTANCE

I now enclose for your attention the finalised agreement concerning the above.
The agreement should be signed by an Executive Director of Simple Technology
Inc. The signing of the document should also be witnessed and signed by the
witness. Details of the witness should be provided as follows: name, address and
occupation.

Once you have signed and witnessed the agreement please return it to me for
signature and I in turn will send a copy of the final document to you.

I am pleased that we have been able to resolve this matter amicably.

Yours sincerely

/s/ Gerry Rooney

GERRY ROONEY
Head of Monitoring

<PAGE>

AGREEMENT WITH SIMPLE TECHNOLOGY INC

It has been agreed between the Scottish Ministers as representing the Department
for Enterprise and Lifelong Learning and Manouch Moshayedi as representing
Simple Technology Inc that:-

         1.       Simple Technology Inc will repay to the Investment Assistance
         Division of the Enterprise and Lifelong Learning Department the sum of
         L62,500. The said sum will be repaid in 2 equal instalments. The first
         instalment to be repaid on receipt of the Department's invoice dated
         3 November 1999 and the second to be made 3 calendar months after the
         date of the first instalment invoice.

         2.       Said Agreement is conditional that 12 staff remain employed at
         a level which is satisfactory to the Scottish Ministers at 1 Young
         Place, Kelvin Industrial Estate, East Kilbride, G75 0TD in Sales and
         Marketing until 31 December 2001. Should Simple Technology Inc fail to
         maintain this level of staffing at 1 Young Place, Kelvin Industrial
         Estate, East Kilbride, G75 0TD the Scottish Ministers reserve the right
         to seek full recovery of the sums paid by way of Regional Selective
         Assistance.

         3.       Said Agreement is conditional upon the production of the fully
         audited and signed accounts of Simple Technology Europe and Simple
         Technology Limited for the year ended 31 December 1998.<PAGE>

                                                                 EXHIBIT 10.43

                            STOCK PURCHASE AGREEMENT

     THIS STOCK PURCHASE AGREEMENT is made as of the 16th day of July 2000, by
and between Liberate Technologies, a Delaware corporation (the "Company"), and
Cisco Systems, Inc., a California corporation (the "Investor").

     WHEREAS, the Investor has indicated a desire to purchase the number of
shares of the Company's common stock, par value $0.01 per share ("Common Stock")
obtained by dividing 100,000,000 by (95%) ninety-five percent of the average
closing price during the last ten (10) trading days preceding the trading date
immediately prior to the date of this Agreement (the "Shares").

     WHEREAS, the Company has indicated a desire to sell the Shares to the
Investor on the terms set forth herein.

     WHEREAS, the Company and the Investor have agreed that this Agreement shall
constitute the entire understanding and agreement between the parties with
regard to the subject matter hereof.

     NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

     1.   PURCHASE AND SALE OF STOCK.

          1.1. SALE AND ISSUANCE OF STOCK. Subject to the terms and conditions
of this Agreement, the Company agrees to sell to the Investor and the Investor
agrees to purchase from the Company a total of 3,963,780 Shares for an aggregate
purchase price of $100,000,000, or $25.22844 per share, in cash (the "Purchase
Price").

          1.2. ADJUSTMENT OF PURCHASE PRICE. The Purchase Price shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend, reorganization, recapitalization or other like change with respect to
the Common Stock occurring after the date hereof and prior to the Closing Date
and of any increase in the number of shares of the Common Stock, or securities
convertible into or exchangeable for shares of the Common Stock, outstanding
after the date hereof relative to such number as derived from Section 2.2
hereof, so that the Investor shall receive the number of shares of Common Stock
that the Investor would have received in respect of the Shares if the
transaction contemplated by this Agreement had been consummated as of the date
hereof, prior to such stock split, reverse split, stock dividend,
reorganization, recapitalization, like change or increase.

          1.3. THE CLOSING. The purchase and sale of the Shares (the "Closing")
shall be held at the offices of Brobeck, Phleger & Harrison LLP, 1633 Broadway,
New York, New York, as soon as practicable following satisfaction of the closing
conditions set forth in Section 5 hereof, or such later date as the Investor and
the Company may agree upon (the "Closing Date"). At the Closing, the Company
will deliver or cause to be delivered by its transfer agent a certificate
evidencing the Shares to the Investor, in the name of the Investor (or any
designee of the Investor) and such other documents and instruments necessary to
vest in the Investor good, marketable and record title to, and beneficial
ownership of, the Shares free and

<PAGE>

clear of all liens, together with evidence of payment of applicable transfer or
issuance taxes, if any.

     2.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investor that:

          2.1. ORGANIZATION, GOOD STANDING, POWER AND RIGHTS TO ACQUIRE STOCK.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to carry on its business as now conducted and as presently
proposed to be conducted. The Company is duly qualified to transact business and
is in good standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect on its business or properties. The Company
has delivered to the Investor a true and correct copy of the Sixth Amended and
Restated Certificate of Incorporation of the Company (the "Restated
Certificate") filed with the Delaware Secretary of State on August 2, 1999, and
the Amended and Restated Bylaws of the Company (the "Bylaws"), or other charter
documents, as applicable, of the Company, each as amended to date. The Company
is not in violation of any of the provisions of its charter or Bylaws. Except as
set forth in the Company SEC Documents (as defined in Section 2.9), as set forth
in Section 2.2 below and except for changes in the number of outstanding
employee stock options after June 30, 2000, there are no outstanding
subscriptions, options, warrants, puts, calls, rights, exchangeable or
convertible securities or other commitments or agreements of any character
relating to the issued or unissued capital stock or other securities obligating
the Company to issue, transfer, sell, purchase, redeem or otherwise acquire any
such securities. Except as disclosed in the Company SEC Documents and on
Schedule 2.1, the Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity.

          2.2. CAPITALIZATION. The authorized capital stock of the Company, as
of June 30, 2000 consists of:

               (a)  20,000,000 shares of Preferred Stock, none of which are
issued, outstanding or designated as any specific series. The rights,
privileges, preferences and restrictions of the Preferred Stock are as stated in
the Restated Certificate.

               (b)  200,000,000 shares of Common Stock, 98,282,558 shares of
which are issued and outstanding and none of which have been reserved solely for
issuance upon conversion of Preferred Stock. All of the outstanding shares of
Common Stock have been duly authorized, fully paid and are nonassessable and
issued in compliance with all applicable federal and state securities laws.

               (c)  The Company has reserved 19,608,261 shares of Common Stock
for issuance to officers, directors, employees and consultants of the Company
pursuant to its various option plans duly adopted by the Board of Directors and
approved by the Company's stockholders (the "Stock Plans"). Of such reserved
shares of Common Stock, options to purchase 17,003,189 shares have been granted
and are currently outstanding, and 2,605,072 shares of Common Stock remain
available for issuance to officers, directors, employees and

                                        2

<PAGE>

consultants pursuant to the Stock Plans. In addition, the Company has reserved
3,044,098 shares of Common Stock for purchase by its employees under its 1999
Employee Stock Purchase Plan described in the Company SEC Documents. In
addition, the Company has reserved 4,366,660 shares of Common Stock for issuance
pursuant to warrant agreements, of which 2,103,328 are currently outstanding.

               (d)  Except as set forth in this Agreement , Schedule 2.2 (d) and
the Stockholders Agreement dated August 11, 1997, as amended (the "Stockholders
Agreement"), there are no options, warrants, conversion privileges or other
rights presently outstanding to purchase or otherwise acquire any authorized but
unissued shares of capital stock or other securities of the Company. The Company
is not a party or subject to any agreement or understanding and, to the best of
the Company's knowledge, there is no agreement or understanding between any
person and/or entities that affects or relates to the voting or giving of
written consents with respect to any security or by a director of the Company,
except for the Voting Agreement dated May 12, 1999. Any outstanding capital
stock of the Company was issued in compliance with all federal and state
securities laws.

          2.3. AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all obligations of
the Company hereunder, and the authorization, issuance, sale and delivery of the
Shares has been taken, and this Agreement constitutes a valid and legally
binding obligation of the Company, enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies. No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality is required by or with respect
to the Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement, or the consummation of the transactions contemplated
hereby, except for (i) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws and the securities laws of any foreign country; (ii) such
filings, if any, as may be required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"); and (iii) such other consents, authorizations,
filings, approvals and registrations which, if not obtained or made, would not
have a material adverse effect on the Company and would not prevent, or
materially alter or delay any of the transactions contemplated by this
Agreement.

          2.4. VALID ISSUANCE OF SHARES. The Shares, when issued, sold and
delivered in accordance with the terms hereof for the consideration expressed
herein, will be duly and validly issued, fully paid and nonassessable and will
be free of restrictions on transfer other than restrictions on transfer under
this Agreement and under applicable state and federal securities laws. Subject
to the truth and accuracy of the Investor's representations set forth in Section
3 of this Agreement, the offer, sale and issuance of the Shares as contemplated
by this Agreement are exempt from the qualification and/or registration
requirements of any applicable state and federal securities laws, including
without limitation, the registration requirements of the Securities Act of 1933,
as amended (the "Act").

                                       3
<PAGE>

          2.5. TITLE TO PROPERTY AND ASSETS. The Company owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens that arise in the ordinary course of business and do
not materially impair the Company's ownership or use of such property or assets.
With respect to the property and assets it leases, the Company is in compliance
with such leases and, to the best of its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances.

          2.6. COMPLIANCE WITH OTHER DOCUMENTS. The execution and delivery of
this Agreement, consummation of the transactions contemplated hereby, and
compliance with the terms and provisions hereof will not conflict with or result
in a breach of the terms and conditions of, or constitute a default under the
Restated Certificate or Bylaws of the Company or of any contract or agreement to
which the Company is now a party, except where such conflict, breach or default
of any such contract or agreement, either individually or in the aggregate,
would not have a material adverse effect on the Company's business, financial
condition or results of operations and would not prevent, or materially alter or
delay any of the transactions contemplated by this Agreement.

          2.7. LITIGATION. Except as disclosed in the Company SEC Documents
filed from time to time with the U.S. Securities and Exchange Commission (the
"SEC"), there are no actions, proceedings or investigations pending against the
Company, that, either in any case or in the aggregate, would result in any
material adverse change in the business, financial condition, or results of
operations of the Company and would not prevent, or materially alter or delay
any of the transactions contemplated by this Agreement.

          2.8. INTELLECTUAL PROPERTY. Except as disclosed in the Company SEC
Documents, the Company owns or possesses sufficient legal title or rights to use
all patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, and proprietary rights and processes (collectively,
"Intellectual Property") necessary for its business as now conducted and as
proposed to be conducted without any conflict with, or infringement of, the
rights of others. Except as set forth in Schedule 2.8, the Company has not
received any communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the Intellectual
Property of any other person or entity. The Company is not aware that any of its
employees or officers is obligated under any contract (including licenses,
covenants, or commitments of any nature) or other agreement, or is subject to
any judgment, decree, or order of any court or administrative agency, that would
interfere with the use of such employee's best efforts to promote the interests
of the Company or that would conflict with the Company's business as proposed to
be conducted. The Company is not aware that any of its officers, employees or
consultants (i) disclosed or utilized or may be disclosing or utilizing any
trade secret or proprietary information of any third party; (ii) violated or may
be violating the terms of his employment, non-competition or non-disclosure
agreement with any party; or (iii) interfered or may be interfering in the
employment relationship with any third party and any of its present or former
employees. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business by the employees of the Company, nor the
conduct of the Company's business as proposed, will, to the best of the
Company's knowledge, conflict with or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, any contract,
covenant, or instrument under which any of such

                                       4
<PAGE>

employees is now obligated. The Company does not believe it is or will be
necessary to use any inventions of any of its employees made prior to their
employment by the Company.

          2.9. SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has made
available to the Investor a true and complete copy of each statement, report,
registration statement (with the prospectus in the form filed pursuant to Rule
424(b) of the Act), definitive proxy statement and other filings made with the
SEC by the Company since July 28, 1999 and, prior to the Closing, the Company
will have furnished to the Investor true and complete copies of any additional
documents filed with the SEC by the Company prior to the Closing (collectively,
the "Company SEC Documents"). The Company has timely filed all forms, statements
and documents required to be filed by it with the SEC and The Nasdaq National
Market since July 28, 1999. In addition, the Company has made available to the
Investor all exhibits to the Company SEC Documents filed prior to the date
hereof, and will promptly make available to the Investor all exhibits to any
additional Company SEC Documents filed prior to the Closing. All documents
required to be filed as exhibits to the Company SEC Documents have been so
filed, and all material contracts so filed as exhibits are in full force and
effect, except those which have expired in accordance with their terms, and
neither the Company nor any of its subsidiaries is in material default
thereunder. As of their respective filing dates, the Company SEC Documents
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the Act, and none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading, except to the extent corrected by a subsequently
filed Company SEC Document. The financial statements of the Company, including
the notes thereto, included in the Company SEC Documents (the "Company Financial
Statements") were complete and correct in all material respects as of their
respective dates, complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto as of their respective dates, and have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a basis consistent throughout the periods indicated and consistent
with each other (except as may be indicated in the notes thereto or, in the case
of unaudited statements included in Quarterly Reports on Form 10-Q, as permitted
by Form 10-Q of the SEC). The Company Financial Statements fairly present the
consolidated financial condition and operating results of the Company and its
subsidiaries at the dates and during the periods indicated therein (subject, in
the case of unaudited statements, to normal, recurring year-end adjustments).
There has been no material change in the Company accounting policies since
February 29, 2000.

          2.10. ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company
SEC Documents and the Company press release for the quarter ended May 31, 2000,
dated June 29, 2000 (the "Press Release") provided to the Investor, since the
date of such periodic reports and the Press Release, the Company has conducted
its business in the ordinary course consistent with past practice and there has
not occurred: (i) any change, event or condition (whether or not covered by
insurance) that has resulted in, or might reasonably be expected to result in, a
material adverse effect to the Company; (ii) any acquisition, sale or transfer
of any material asset of the Company or any of its subsidiaries other than in
the ordinary course of business and consistent with past practice; (iii) any
change in accounting methods or practices (including any change in depreciation
or amortization policies or rates) by the Company or any revaluation by

                                       5
<PAGE>

the Company of any of its or any of its subsidiaries' assets; (iv) any
declaration, setting aside, or payment of a dividend or other distribution with
respect to the shares of the Company, or any direct or indirect redemption,
purchase or other acquisition by the Company of any of its shares of capital
stock; (v) any material contract entered into by the Company or any of its
subsidiaries, other than in the ordinary course of business and as provided to
the Investor, or any material amendment or termination of, or default under, any
material contract to which the Company or any of its subsidiaries is a party or
by which it is bound; (vi) any amendment or change to the Restated Certificate
or Bylaws; or (vii) any development or event involving a prospective material
adverse change, in the condition (financial or other), business, properties or
results of operations of the Company taken as a whole.

          2.11. ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) required to be stated or disclosed which are not, other than (i)
those set forth or adequately provided for in the Company Financial Statements
or in the related Notes to Consolidated Financial Statements included in the
Company's Quarterly Report on Form 10-Q for the quarter ended February 29, 2000
(the "Company Balance Sheet") and the Press Release, (ii) those incurred in the
ordinary course of business and not required to be set forth in the Company
Balance Sheet under GAAP, (iii) those incurred in the ordinary course of
business since the date of the Company Balance Sheet and not reasonably likely
to have a material adverse effect on the Company; (iv) those incurred in
connection with the execution of this Agreement; and (v) those liabilities
disclosed in Schedule 2.11.

          2.12. BROKER'S OR FINDERS' FEE. The Company has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or investment bankers' fees or any similar charges in
connection with the transaction contemplated by this Agreement.

          2.13. INTERESTED PARTY TRANSACTIONS. Except as disclosed in Schedule
2.13 and in the Company SEC Documents and exhibits thereto, neither the Company
nor any of its subsidiaries is indebted to any director or officer of the
Company or any of its subsidiaries (except for amounts due as normal salaries
and bonuses and in reimbursement of ordinary expenses), and no such person is
indebted to the Company or any of its subsidiaries, and there are no other
transactions of the type required to be disclosed pursuant to Item 404 of
Regulation S-K under the Act and the 1934 Act.

     3.   REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor hereby
represents and warrants that:

          3.1. AUTHORIZATION. This Agreement constitutes the valid and legally
binding obligation of the Investor, enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and by general principles of equity.

          3.2. INVESTIGATION. The Investor acknowledges that it has had an
opportunity to discuss the business, affairs and current prospects of the
Company with the Company's chief executive officer. The Investor further
acknowledges having had access to

                                       6
<PAGE>

information about the Company that it has requested or considers necessary for
purposes of purchasing the Shares. The foregoing, however, does not limit or
modify the representations and warranties of the Company in Section 2 of this
Agreement or the right of the Investor to rely thereon.

          3.3. ACCREDITED INVESTOR. The Investor is an "Accredited Investor" as
such term is defined in Regulation D adopted by the SEC.

          3.4. PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
the Investor in reliance upon the Investor's representation to the Company,
which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Shares will be acquired for investment for the Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof other than in conformity with the Act and the
rules and regulations promulgated thereunder, and that the Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same, other than a transfer to a nominee holder or a
majority-owned affiliate.

          3.5. RESTRICTED SECURITIES. The Investor understands that the Shares
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances. In this connection, the Investor
represents that it is familiar with Rule 144 promulgated by the Commission, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act. For purposes of this Agreement, an affiliate of the Investor shall
be deemed to be an entity controlling, controlled by or under common control
with the Investor, where control is evidenced by the ownership of 100% of an
entity.

          3.6. AUTHORIZATIONS. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body that are required to be
obtained by the Investor in connection with the lawful issuance and sale of the
Shares pursuant to this Agreement have been duly obtained and shall be effective
on and as of the Closing, except for any filing and procedures applicable under
the HSR Act.

          3.7. BROKER'S OR FINDERS' FEE. The Investor has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or investment bankers' fees or any similar charges in
connection with the transaction contemplated by this Agreement.

          3.8. LEGENDS. It is understood that the certificates evidencing the
Shares may bear a legend in substantially the following form:

"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR

                                       7
<PAGE>

AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE ACT."

     4.   COVENANTS OF THE COMPANY AND THE INVESTOR.

          4.1  MARKET STAND-OFF. In connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Act, the Investor shall not Transfer or
offer to Transfer any shares of the Shares without the prior written consent of
the Company and its underwriters. Such restriction (the "Market Stand-Off")
shall be in effect for such period of time from and after the effective date of
the final prospectus for the offering as may be requested by the Company or such
underwriters; provided, however, that (i) such Market Stand-Off shall not exceed
ninety (90) days, and (ii) the Investor shall be subject to the Market Stand-Off
only if the officers and directors of the Company are also subject to similar
restrictions. In order to enforce the Market Stand-Off, the Company may impose
stop-transfer instructions with respect to the Shares until the end of the
applicable stand-off period. As used in this Agreement, the term "Transfer"
shall mean any sale, transfer, assignment, hypothecation, encumbrance or other
disposition, whether voluntary or involuntary, of shares of the Shares. In the
case of a hypothecation, the Transfer shall be deemed to occur both at the time
of the initial pledge and at any pledgee's sale or a sale by any secured
creditor or a retention by the secured creditor of the pledged shares of the
Shares in complete or partial satisfaction of the indebtedness for which the
shares of the Shares are security.

          4.2  PUBLICATIONS. Except as currently in use, the Company shall not
use the Investor's name or refer to the Investor directly or indirectly in
connection with the Investor's relationship with the Company in any
advertisement, news release or professional or trade publication, or in any
other manner, unless otherwise required by law or with the Investor's prior
written consent. Except as required by law, no press release, public statement,
advertisement or similar publicity from any party hereunder with respect to the
participation of the Investor in the transactions contemplated hereby (or any
other matter relating to the Company and the Investor or its affiliates) shall
be issued or made without the prior consent of the other party. If the Company
determines that it is required by law to file any document or material with the
Securities and Exchange Commission which contains a reference to the Investor,
it shall at a reasonable time before making any such filing, consult with the
Investor regarding such filing and seek confidential treatment for such portions
of the document or material as may be reasonably requested by the Investor. The
Company agrees any material breach of these provisions is a material breach of
this Agreement.

          4.3  LISTING OF ADDITIONAL SHARES. Promptly following the execution of
this Agreement, the Company shall file with The Nasdaq National Market a
Notification Form for Listing of Additional Shares.

     5.   CONDITIONS TO THE INVESTOR'S OBLIGATION AT CLOSING. The obligation of
the Investor to purchase the Shares at the Closing is subject to the fulfillment
to the Investor's satisfaction on or prior to the Closing of the following
conditions:

                                       8
<PAGE>

          5.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company in Section 2 hereof shall be true and correct
when made, and shall be true and correct as of the Closing with the same force
and effect as if they had been made on and as of such date, subject to changes
contemplated by this Agreement. The Chief Executive Officer of the Company shall
deliver at the Closing a certificate stating that the condition specified in the
preceding sentence has been fulfilled.

          5.2. COVENANTS. The Company shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing.

          5.3. SECURITIES LAWS. The offer and sale of the Shares to the Investor
pursuant to this Agreement shall be exempt from the registration requirements of
the Act and qualification requirements of all applicable state securities laws.

          5.4. AUTHORIZATIONS. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body that are required in connection
with the lawful issuance and sale of the Shares pursuant to this Agreement shall
have been duly obtained and shall be effective on and as of the Closing. All
waiting periods, if any, under the HSR Act applicable to the issuance of the
Shares hereunder shall have expired or have been terminated.

          5.5. ABSENCE OF GOVERNMENTAL OR OTHER OBJECTION. There shall be no
pending or threatened lawsuit challenging the transaction by any body or agency
of the federal, state or local government or by any third party, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Closing.

          5.6. OPINION OF COMPANY COUNSEL. The Investor shall have received from
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, counsel for the
Company, an opinion, dated as of the Closing, reasonably satisfactory to the
Investor.

          5.7. NO MATERIAL ADVERSE CHANGE. From the date hereof until the
Closing Date, there shall have occurred no material adverse effect on the
Company's business, financial condition or results of operations.

          5.8. DELIVERY OF SHARE CERTIFICATES. On the Closing Date, the Company
shall have delivered, or shall have caused to be delivered, to the Investor a
stock certificate representing the Shares being purchased by the Investor.

     6.   CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The obligation
of the Company to sell the Shares at the Closing is subject to the
fulfillment to the Company's satisfaction on or prior to the Closing of the
following conditions:

          6.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investor contained in Section 3 hereof shall be true as of the
Closing with the same force and effect as if they had been made on and as of
such date, subject to changes contemplated by this Agreement.

                                       9
<PAGE>

          6.2. SECURITIES LAWS. The offer and sale of the Shares to the Investor
pursuant to this Agreement shall be exempt from the registration requirements of
the Act and the qualification requirements of all applicable state securities
laws.

          6.3. AUTHORIZATIONS. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body that are required in connection
with the lawful issuance and sale of the Shares pursuant to this Agreement shall
have been duly obtained and shall be effective on and as of the Closing. All
waiting periods, if any, under the HSR Act applicable to the issuance of the
Shares hereunder shall have expired or have been terminated.

          6.4. ABSENCE OF GOVERNMENTAL OR OTHER OBJECTION. There shall be no
pending or threatened lawsuit challenging the transaction by any body or agency
of the federal, state or local government or by any third party, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Closing.

          6.5. PAYMENT OF PURCHASE PRICE. The Investor shall have delivered to
the Company the Purchase Price for the Shares as set forth in Section 1.1
hereof.

     7.   MISCELLANEOUS.

          7.1. GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California, without
regard to the conflict of law provisions thereof.

          7.2. SURVIVAL; ADDITIONAL SECURITIES. The representations and
warranties set forth in Sections 2 and 3 shall survive until the Closing. The
covenants and agreements set forth in Section 4 shall survive in accordance with
their terms. Any new, substituted or additional securities which are by reason
of any stock split, stock dividend, recapitalization or reorganization
distributed with respect to the Shares ("Share Distributions") shall be
immediately subject to the covenants and agreements set forth in Section 4 to
the same extent the Shares is at such time covered by such provisions.

          7.3. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the respective successors and assigns of the parties hereto. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. The Investor may assign its
rights hereunder to a nominee or to any majority-owned affiliate.
Notwithstanding anything to the contrary contained herein, the covenants set
forth in Section 4 shall not be binding upon any entity (other than an affiliate
of the Investor), which acquires any shares of the Shares or a Share
Distribution in a transaction permitted hereunder.

          7.4. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement between the parties with regard to the subject
matter hereof.

                                       10
<PAGE>

          7.5. NOTICES. Except as otherwise provided, all notices and other
communications required or permitted hereunder shall be in writing, shall be
effective when given, and shall in any event be deemed to be given upon receipt
or, if earlier, (i) five (5) days after deposit with the U.S. postal service or
other applicable postal service, if delivered by first class mail, postage
prepaid, (ii) upon delivery, if delivered by hand, (iii) one (1) business day
after the day of deposit with Federal Express or similar overnight courier,
freight prepaid, if delivered by overnight courier or (iv) one (1) business day
after the day of facsimile transmission, if delivered by facsimile transmission
with copy by first class mail, postage prepaid, and shall be addressed, (a) if
to the Investor, at the Investor's address set forth below, or at such other
address as the Investor shall have furnished to the Company in writing, or (b)
if to the Company, at its address as set forth below its signature, or at such
other address as the Company shall have furnished to the Investor in writing:

If to the Company:

             Liberate Technologies
             2 Circle Star Way
             San Carlos, California  94070
             Attn:  General Counsel
             Facsimile Number:  (650) 701-4999

             with a copy to:

             Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
             155 Constitution Drive
             Menlo Park, CA 94025
             Attn:  Brooks Stough
             Facsimile Number:  (650) 321-2800

If to the Investor:

             Cisco Systems, Inc.
             170 West Tasman Drive
             San Jose, California  95134-1706
             Attn:  Associate General Counsel, Van Dang
             Facsimile Number:  (408) 525-4757

       with a copy to:

             Brobeck, Phleger & Harrison LLP
             1633 Broadway
             New York, New York  10019
             Attn:  Eric Simonson
             Facsimile Number:  (212) 586-7878

          7.6. AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of the Agreement may be waived (either generally
or in

                                       11
<PAGE>

a particular instance and either retroactively or prospectively) only with
the written consent of the Company and the Investor.

          7.7. LEGAL FEES. In the event of any action at law, suit in equity or
arbitration proceeding in relation to this Agreement or the Shares or any Share
Distribution, the prevailing party shall be paid by the other party a reasonable
sum for the attorneys' fees and expenses incurred by such prevailing party.

          7.8. EXPENSES. Irrespective of whether the Closing is effected, the
Company and the Investor shall each bear their own legal and other expenses with
respect to the transaction, except that assuming a successful completion of the
transaction, the Company shall pay the actual legal fees and expenses of
Brobeck, Phleger & Harrison LLP up to $30,000 which shall be payable at Closing,
as a deduction to the Purchase Price otherwise payable by the Investor.

          7.9. TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.

          7.10. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.

          7.11. SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.

          7.12. CONFIDENTIALITY. The parties hereto agree that, except with the
prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish, or make accessible to anyone any
confidential information, knowledge, or data concerning or relating to the
business or financial affairs of such other party to which said party has been
or shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, or the performance of its obligations hereunder.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       12
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year hereinabove first written.

                                  LIBERATE TECHNOLOGIES

                                  By:
                                         -----------------------------------
                                         Mitchell E. Kertzman
                                         President and Chief Executive Officer

                                  Address:   2 Circle Star Way
                                             San Carlos, California  94070
                                             Attn:  General Counsel

                                  CISCO SYSTEMS, INC.

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

                                  Address:   170 West Tasman Drive
                                             San Jose, California  95134-1706

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