QUOKKA SPORTS INC, S-1/A, 1999-05-28

QUOKKA SPORTS INC
S-1/A, 1999-05-28
MISCELLANEOUS AMUSEMENT & RECREATION

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1999

REGISTRATION NO. 333-76981

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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QUOKKA SPORTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 7999 94-3250045
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

525 BRANNAN STREET, GROUND FLOOR
SAN FRANCISCO, CA 94107
(415) 908-3800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

ALAN RAMADAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
525 BRANNAN STREET, GROUND FLOOR
SAN FRANCISCO, CA 94107
(415) 908-3800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

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

COPIES TO:

<TABLE>
<S> <C>
KENNETH L. GUERNSEY DAVID C. DRUMMOND
ISOBEL A. JONES BRYAN D. KURTZ
STEVE R. DAETZ WILSON SONSINI GOODRICH & ROSATI
DAVID J. PAUL PROFESSIONAL CORPORATION
COOLEY GODWARD LLP 650 PAGE MILL ROAD
ONE MARITIME PLAZA, 20TH FLOOR PALO ALTO, CA 94304
SAN FRANCISCO, CALIFORNIA 94111 (650) 493-9300
(415) 693-2000
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, 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(c)
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. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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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 SEC, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.

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<PAGE> 2

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED MAY 28, 1999

PROSPECTUS

SHARES
[QUOKKASPORTS LOGO]
COMMON STOCK
-----------------------

Quokka Sports, Inc. is offering shares. This is our
initial public offering, and no public market currently exists for our stock. We
anticipate that the initial public offering price will be between $ and
$ per share. We have filed an application for the common stock to be
quoted on the Nasdaq National Market under the symbol "QKKA."

INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN
THE "RISK FACTORS" SECTION BEGINNING ON PAGE 8 OF THIS PROSPECTUS.
-----------------------

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Initial public offering price.............................. $ $
Underwriting discount...................................... $ $
Proceeds, before expenses, to Quokka....................... $ $
</TABLE>

The underwriters may also purchase up to an additional
shares from Quokka within 30 days from the date of this prospectus to cover
over-allotments.

Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities, or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.

The underwriters expect that the shares of common stock will be ready
for delivery in New York, New York on or about , 1999.

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

MERRILL LYNCH & CO.
LEHMAN BROTHERS

BANCBOSTON ROBERTSON STEPHENS

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The date of this prospectus is , 1999
<PAGE> 3
(INSIDE FRONT COVER)

[Picture of the primary Quokka web page. Quokka logo is centered on the page and
a portion of the Quokka event calender is located at the bottom of the page.]
<PAGE> 4
(INSIDE FRONT COVER GATE FOLD)

[COLOR CODED WORLD MAP ENTITLED "QUOKKA GLOBAL EVENT NETWORK" IDENTIFYING
LOCATIONS OF THE FOLLOWING SPORTING EVENTS COVERED BY QUOKKA: CART, Around
Alone, 500 Grand Prix, Marathon Des Sables, First Ascent, Great Trango Tower,
Olympic Games, Whitbread and America's Cup.]

The following descriptions accompany the identified events:

CART:

- DESCRIPTION: Champ car racers chase millions of dollars at speeds
approaching 200 mph.

- DISTANCE: VARIES

- MODE: 2.65 LITER V-8 CHAMP CAR

AROUND ALONE:

- DESCRIPTION: The ultimate sailing challenge: one person, on a boat,
around the world, alone.

- DISTANCE: 27,000 NAUTICAL MILES IN 4 LEGS

- MODE: 40-60 FT. MONOHULL SAILING YACHT

500 GRAND PRIX:

- DESCRIPTION: Riders defy asphalt and gravity in championship motorcycle
racing.

- DISTANCE: VARIES

- MODE: 500, 250 & 125 CC MOTORCYCLES

MARATHON DES SABLES:

- DESCRIPTION: Runners struggled against sand, wind, and themselves in
Morocco's scorching Sahara.

- DISTANCE: 140 MILES IN 6 STAGES

- MODE: FEET

FIRST ASCENT:

- DESCRIPTION: Seven world-class climbers probe China's Karakoram range.

- DISTANCE: 3,000 MILES IN 4 LEGS

- MODE: TRUCK, CAMEL, FEET

GREAT TRANGO TOWER:

- DESCRIPTION: Three top climbers attempt to find a new route up one of
the tallest rock faces in the world.

- DISTANCE: 6,018 VERTICAL FEET

- MODE: FEET, GEAR, ROPE

OLYMPIC GAMES:

- DESCRIPTION: Athletes from all over the world compete for gold and glory
in 35 different sports.

- DISTANCE: VARIES

- MODE: FEET, BICYCLE, SKIS, LUGE, ETC.

WHITBREAD:

- DESCRIPTION: Nine boats battled in a 32,000 nautical-mile around-the-
world race.

- DISTANCE: 32,000 NAUTICAL MILES IN 9 LEGS

- MODE: W60 SAILBOAT

AMERICA'S CUP:

- DESCRIPTION: Sailors push the limits of technology and teamwork in
pursuit of one of sport's oldest trophies.

- DISTANCE: 18.5 NAUTICAL MILES PER RACE

- MODE: IACC CLASS YACHT

<PAGE> 5

You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.

No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.

Unless otherwise indicated, all information in this prospectus (1) assumes
the automatic conversion of our outstanding preferred stock into common stock on
a one-for-one basis upon closing of the offering, (2) assumes the underwriters'
option to purchase additional shares in the offering will not be exercised and
(3) assumes the exercise of warrants to purchase 508,848 shares.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 5
Risk Factors................................................ 8
Use of Proceeds............................................. 22
Dividend Policy............................................. 22
Capitalization.............................................. 23
Dilution.................................................... 24
Selected Consolidated Financial Data........................ 25
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 26
Business.................................................... 32
Management.................................................. 54
Certain Transactions........................................ 66
Principal Stockholders...................................... 69
Description of Capital Stock................................ 72
Shares Eligible for Future Sale............................. 77
Underwriting................................................ 78
Legal Matters............................................... 80
Experts..................................................... 80
Change in Principal Accountants............................. 80
Additional Information...................................... 80
Index to Consolidated Financial Statements.................. F-1
</TABLE>

Quokka Sports(R) and Quokka Sports Immersion(TM) are trademarks of Quokka.
This prospectus also includes trade dress, trade names and trademarks of other
companies. All other brand names or trademarks appearing in this prospectus are
the property of their respective holders.

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<PAGE> 6

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding our company and the common stock being sold in this
offering and our financial statements and notes to those statements appearing
elsewhere in this prospectus. References in this prospectus to "Quokka," "Quokka
Sports," "our company," "we," "our," and "us" refer to Quokka Sports, Inc.

QUOKKA SPORTS, INC.

Quokka Sports has pioneered a distinctive new style of global sports
entertainment programming that uses the digital information sharing and
communications power of the Internet. Our programming is designed to provide a
compelling sports entertainment experience by allowing viewers to choose from a
variety of perspectives, information and action sequences. Our coverage of
sporting events incorporates, where available, video, text, audio, images,
athlete vital signs, locational and directional data, environmental data,
e-mails, results and timing data collected at the sports venue and from other
sources. We call these materials used in our programming "digital media assets."
Our programming can be accessed over the Internet at www.quokka.com and may be
delivered to viewers over other interactive systems that transmit digitized
data, such as cable and satellite systems, in the future. We believe new
interactive technologies provide exciting opportunities for making
information-intensive programming also entertaining. With distinctive content
designed to build on this opportunity, we believe we are positioned to become a
leading provider of digital sports entertainment addressing the entertainment
passions of a global community of sports enthusiasts.

We are creating an interactive digital sports network that offers a variety
of sports entertainment programming. To deliver our sports entertainment
programming over the Internet and other interactive systems, we have developed
and continue to enhance proprietary technology that we call our Quokka Sports
Platform. In developing our programming calendar, we currently target sports
events that are generally long in duration and rich in the materials or digital
media assets we seek to incorporate in our programming. We also usually target
sports events that have a global audience and involve continuous action with
multiple simultaneous activities. We have selected the Olympics, motor racing,
sailing and adventure sports as the first four channels of our network.

We generate revenues primarily through the sale of sponsorships. Sponsors
pay us for the right to be named as the exclusive sponsor of our network within
a particular industry category. Sponsors also secure the opportunity to embed
and promote their products in our digital programming. Our sponsors in the
technology and communication industries also have the opportunity to showcase
the technological capabilities of their products and services in the production
of our distinctive programming. Additionally, we believe we deliver a global
audience that has demographic qualities desired by sponsors and advertisers.

Our first digital sports program was the 1997-98 Whitbread Round The World
Race, a 32,000 nautical mile, around-the-world sailing race featuring an
international field of competitors. Our coverage attracted more than 1.8 million
unique users from 177 countries, more than half of whom accessed our Whitbread
Web site from outside the United States. "Unique user" is an industry term used
to describe an individual who has accessed a particular Internet site once or
more. According to a Quokka-conducted survey, visitors to the Whitbread site
were primarily between 25 and 34 years old and had an average annual household
income of $75,000. Additionally, according to this survey, 64% of the visitors
to the Whitbread site were college educated and 63% held professional, executive
or technical positions. Based on these demographic characteristics, we believe
the visitors to the Whitbread site represented an attractive, targeted audience
for sponsors and advertisers. These users spent an average of approximately 9.9
minutes per visit at the site. This compares favorably to an average of 5.8
minutes per visit at other leading sports-related Web sites, according to our
estimates based on Media Metrix statistics. We generated $9.4 million of
revenues from sponsorships related to the Whitbread race.

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<PAGE> 7

through 2003. Additionally, in March 1999, we acquired digital rights to cover
FIM 500cc Road Racing World Championship motorcycle races through 2003. In May
1999, we acquired digital rights to cover the America's Cup Match yacht race in
2000. Our rights to cover each of these events, including the Olympics, are
subject to limitations as described in the "Business" section of this
prospectus. We began coverage of the nine-month Around Alone sailing race in
September 1998. We covered the 14th Marathon des Sables desert footrace and are
also covering a variety of Quokka-originated, adventure sports events as part of
our adventure sports channel.

As of March 31, 1999, we had an accumulated deficit of $23.9 million.

In August 1996, we adopted our current business model and incorporated in
Delaware under the name Quokka Productions, Inc. Shortly thereafter, in
September 1996, we changed our name to Quokka Sports, Inc. Prior to August 1996,
we operated as an Australian software development and consulting company, Ozware
Developments Unit Trust, an Australian unit trust. Our main offices are located
at 525 Brannan Street, San Francisco, California 94107, and our phone number is
(415) 908-3800. Our primary Web site is located at www.quokka.com. Information
contained on our Web site does not constitute part of this prospectus.

RECENT DEVELOPMENTS

In May 1999, we completed the private sale of 3,966,667 shares of our
Series D preferred stock for $35.7 million to the following strategic and
financial investors:

<TABLE>
<S> <C>
- - Liberty QS, Inc. - MeriTech Capital Partners L.P.
- - Hearst Communications, Inc. - Pivotal Partners, L.P.
- - Comcast Interactive Investments, Inc. - Crossover Fund II, L.P.
- - AtHome Corporation
</TABLE>

We intend to work closely with our strategic investors to develop new
channels of distribution, digital sports entertainment programming and related
products.

THE OFFERING

Common stock offered by Quokka...... shares

Common stock to be outstanding after
the offering........................ shares

Use of proceeds..................... For general corporate purposes,
including working capital, expansion of
operations, capital contributions to
our joint ventures and capital
expenditures.

Proposed Nasdaq National Market
symbol.............................. QKKA

The information above is based on shares outstanding as of March 31, 1999,
gives effect to the sale in May 1999 of 3,966,667 shares of Series D preferred
stock and includes 508,848 shares issuable upon the exercise of warrants
outstanding as of March 31, 1999 at a weighted average per share price of $1.06,
which will expire if not exercised prior to the closing of this offering. The
number of shares of common stock to be outstanding after the offering excludes:
(a) 2,391,750 shares issuable upon the exercise of warrants outstanding as of
March 31, 1999 at a weighted average per share price of $5.33; (b) 7,145,025
shares issuable upon the exercise of options outstanding as of March 31, 1999 at
a weighted average per share price of $4.35; (c) 6,460,401 additional shares
reserved for issuance under Quokka's 1997 Equity Incentive Plan; (d) 450,000
shares reserved for issuance under Quokka's 1999 Non-Employee Director's Stock
Option Plan; and (e) 1,000,000 shares reserved for issuance under Quokka's 1999
Employee Stock Purchase Plan. Under the terms of the Series D financing
agreements, Quokka may issue up to an additional 755,556 shares of Series D
preferred stock. See "Capitalization," and "Description of Capital Stock," for
additional information relating to our capital structure. Also see
"Management -- Employee Benefit Plans" for a description of the benefit plans
referred to above.

6
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
MARCH 31, 1999
--------------------------
ACTUAL AS ADJUSTED
----------- -----------
(UNAUDITED)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 15,263
Working capital........................................... 13,953
Total assets.............................................. 22,853
Debt and leases, long-term portion........................ 699
Accumulated deficit....................................... (23,894)
Total stockholders' equity................................ 18,612
</TABLE>

In the table above, the as adjusted amounts reflect the proceeds from the
sale of the shares offered by Quokka at an assumed public
offering price of $ , after deducting the estimated underwriting discount
and offering expenses.

7
<PAGE> 9

RISK FACTORS

You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial also could harm our business.
If any of the following risks actually occur, our business could suffer and the
trading price of our common stock could decline.

This prospectus contains forward-looking statements. The outcome of the
events described in these forward-looking statements is subject to risks and you
should not put undue reliance on these forward-looking statements. When used in
this prospectus, the words "intend," "anticipate," "believe," "estimate," "plan"
and "expect" and similar expressions as they relate to us are included to
identify forward-looking statements. Our actual results could differ materially
from those discussed in the forward-looking statements contained in this
prospectus. This section and the sections entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business"
contain a discussion of some of the factors that could contribute to those
differences.

RISKS RELATED TO OUR OPERATIONS

WE HAVE A HISTORY OF OPERATING LOSSES, EXPECT TO INCUR LOSSES FOR AT LEAST THE
NEXT EIGHT QUARTERS AND MAY BE UNABLE TO ACHIEVE OR SUSTAIN PROFITABILITY OR
GENERATE POSITIVE CASH FLOW

We expect to incur losses for at least the next eight quarters, largely due
to substantial planned increases in marketing expenses and expenses associated
with our digital sports entertainment programming. We may be unable to generate
sufficient revenues or control operating expenses to achieve or sustain
profitability or generate positive cash flow. We adopted our current business
model in August 1996 and began generating revenues in connection with this model
during the first quarter of 1997. As of March 31, 1999, we had an accumulated
deficit of $23.9 million. Our net operating losses were $4.9 million for 1997,
$9.5 million for 1998 and $7.8 million for the three months ended March 31,
1999. Cash used in operating activities was $3.9 million for 1997, $10.9 million
for 1998 and $6.4 million for the three months ended March 31, 1999.

WE HAVE A LIMITED OPERATING HISTORY UPON WHICH YOU CAN EVALUATE OUR BUSINESS AND
PROSPECTS

Our limited operating history makes it difficult to evaluate our business
and prospects. As a digital sports entertainment company in an early stage of
development, we face significant risks, uncertainties, expenses and
difficulties. In order to succeed, we must do most, if not all, of the
following:

- develop programming to attract and retain our audience;

- secure and retain additional sponsors and advertisers;

- acquire rights on commercially feasible terms to cover additional
sporting events;

- develop, enhance and carefully manage our brand;

- deliver multiple programming events simultaneously to one or more global
distribution networks;

- promote our name in the sports and media markets;

- respond appropriately to competitive developments;

- develop and implement a successful electronic commerce strategy;

- develop a successful line of product merchandise;

- secure additional distribution systems for our content;

- continue to develop and improve our know-how, to enhance our Web sites to
meet the needs of a changing market and to adapt to changing technology;

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<PAGE> 10

- successfully execute our business and marketing strategies; and

- attract, integrate, retain and motivate qualified personnel.

Our business operations and revenues will suffer if we are unable to accomplish
these things.

OUR QUARTERLY OPERATING RESULTS ARE EXPECTED TO FLUCTUATE AND OUR FAILURE TO
MEET EARNINGS ESTIMATES COULD CAUSE OUR STOCK PRICE TO SUFFER

Our quarterly operating results have varied in the past, and we expect them
to fluctuate in future periods. For example, our revenues for the three months
ended March 31, 1999 were $900,000 compared to revenues of $4.9 million for the
three months ended March 31, 1998. These fluctuations depend on a number of
factors described below and elsewhere in this "Risk Factors" section of the
prospectus, many of which are outside our control. We may be unable to predict
our future revenues accurately or adjust spending in a timely manner to
compensate for any unexpected revenue shortfall. Any significant shortfall of
revenues would have a negative impact on our results of operations. For these
and other reasons, we may not meet the earnings estimates of securities analysts
or investors and our stock price could suffer. Our revenues in any quarter
depend on the sports programming we offer, the sponsorship arrangements we have
in place at that time and finalize during the quarter and, to a lesser extent,
the advertising and electronic commerce transactions we execute. We expect that
our electronic commerce revenues will be higher leading up to and during our
major sports programming. It is likely that sponsorship deals will have a long
sales cycle and may be unevenly distributed across fiscal quarters. We expect
our expenses to increase over time for production and other operational costs.
The timing of these expenses, as well as our obligations under existing and
future contracts, could fluctuate from quarter to quarter and intensify leading
up to and during significant sporting events such as the Olympic Games.

WE NEED TO ACQUIRE RIGHTS TO KEY SPORTING EVENTS TO DEVELOP MORE PROGRAMMING AND
GROW OUR BUSINESS, BUT THE COST AND COMPETITION FOR THESE RIGHTS COULD PREVENT
US FROM DOING SO

We need to acquire rights to key sporting events to succeed. If we are
unable to acquire these rights, our ability to broaden our programming and grow
our business will be limited. Our limited operating history makes it difficult
to assess our ability to acquire rights in the future. Holders of rights may not
be willing to enter into strategic relationships with us or sell rights to us at
prices we can afford, or at all. We expect the cost of acquiring rights to
increase significantly as competition for these rights increases. We may not be
successful in acquiring the rights we need, especially if third parties, such as
traditional media companies, which have significantly greater resources,
experience and bargaining leverage than we do, compete for those rights.

OUR LIMITED EXPERIENCE DEVELOPING AND COORDINATING A COMPREHENSIVE PROGRAMMING
SCHEDULE COULD RESULT IN DELAYS OR SETBACKS THAT REDUCE THE APPEAL OF OUR WEB
SITES

We have limited experience developing and coordinating a comprehensive
programming schedule and may experience delays or setbacks that reduce the
appeal of our Web sites. The programming we have developed required
significantly fewer resources and technical skills than the major sports
programming we are scheduled to produce, including the Olympic Games and
coverage of motor sports. Our programming may not keep pace with technological
developments, evolving industry standards or competing programming alternatives.
We have not developed multiple large-scale programming events simultaneously and
may lack the financial and technical resources to develop content for multiple
simultaneous sporting events. Even if the resources are available, we may be
unable to coordinate a comprehensive programming schedule. To be successful, we
will need to staff and operate 24-hour production facilities that are capable of
collecting, repackaging and distributing digital coverage to a global audience.

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<PAGE> 11

IF OUR AUDIENCE DOES NOT LIKE OUR WEB SITES OR THE INTERACTIVE NATURE OF OUR
PROGRAMMING WE MAY NOT BE ABLE TO ATTRACT AND RETAIN SPONSORS

It is difficult to predict whether our audience will like the layout and
design of our Web sites or adapt to the interactive nature of our programming.
If our layout and design are not user-friendly in the eyes of a wide and diverse
audience, we will not be successful in attracting repeat users and our revenue
could decline. Additionally, the nature of our programming requires our audience
to actively navigate through multiple pages to experience the depth of coverage.
Sports fans who are accustomed to passive listening or viewing sports coverage
provided by traditional media may not be willing to participate in the
interactive nature of sports entertainment on our Web sites. Our audience could
reduce its viewing of our existing programming due to dissatisfaction with our
programming or greater satisfaction with programming developed by one or more of
our competitors. Additionally, the number of sporting events covered on various
media may saturate the market and reduce the likelihood a sports fan would
select our Web site. If the size of our audience or the duration of visits to
our sites decreases or fails to grow as expected, we may be unable to achieve
the audience exposure we have committed and will commit to provide to our
sponsors, which could result in lost sponsorship revenues. For example,
sponsorship revenues could be affected if audience interest in the Olympic Games
is reduced as a result of recent scandals involving the International Olympic
Committee.

OUR SPONSORSHIP MODEL IS UNPROVEN AND WE DEPEND ON OUR ABILITY TO MAINTAIN OUR
EXISTING SPONSORS AND SECURE ADDITIONAL SPONSORSHIPS

Our revenues and results of operations will suffer if we are unable to
maintain our existing sponsors and secure additional sponsors. Our revenue model
is primarily based on securing long-term digital entertainment sponsorships that
provide each sponsor with the right to be named as the exclusive sponsor of our
network within a particular industry category. We have limited experience with
this sponsorship model and to date have entered into digital entertainment
sponsorships only with Compaq Computer Corporation and Computer Associates
International, Inc. Prospective sponsors may not be interested in entering into
these digital entertainment sponsorships at the rates we set, if at all.

Additionally, our sponsorship agreements typically require the delivery of
a specified number of brand impressions, which refers to the number of times the
sponsor's brand appears on a user's screen while the user is connected to our
Web sites. Our fulfillment of these commitments assumes that we will be able to
deliver these brand impressions on sports programming that we acquire or create.
Owners of rights to sporting events often have pre-arranged sponsor lists they
require us to honor. Pre-existing sponsorship relationships may prevent us from
meeting the minimum commitments we have to our exclusive digital entertainment
sponsors and could cause us to allocate impressions to our sponsors that were
otherwise available for additional revenue generating purposes. These
pre-existing sponsorship relationships could also negatively affect our business
by limiting our ability to attract new sponsors. We might acquire or create
additional programming that would allow us to provide our sponsors with
sufficient brand impressions for which we would incur additional expenses.

WE DEPEND ON A SMALL NUMBER OF SPONSORS, THE LOSS OF WHICH COULD HARM OUR
REVENUES

To date, we have depended on a limited number of sponsors for a majority of
our revenues. In 1998, two sponsors accounted for 68% of our revenues.

We anticipate that our results of operations will depend to a significant
extent upon revenues from a small number of digital entertainment sponsors. The
loss of one or more digital entertainment sponsors could negatively affect our
business. Although we seek to enter into multi-year agreements with our digital
entertainment sponsors, we cannot guarantee that these sponsors will maintain
their association with us.

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<PAGE> 12

A DISASTER OR MALFUNCTION THAT DISABLES OUR COMPUTER SYSTEMS COULD HARM OUR WEB
SITES AND REDUCE THE APPEAL OF OUR PROGRAMMING

Substantially all of our communications hardware and computer hardware
operations are located in our facilities in San Francisco, California and at
Frontier GlobalCenter in Sunnyvale, California, where our Web sites are hosted.
Our operations depend on our ability to protect these systems against damage
from fire, earthquakes, power loss, telecommunications failures, break-ins and
similar events. Additionally, computer viruses, electronic break-ins or other
similar disruptive problems could harm our Web sites. A disaster or malfunction
that disables either our San Francisco production facility or our Sunnyvale
hosting services could cause an interruption in the production and distribution
of our programming, limit the quantity or timeliness of updates to our
productions or limit the speed at which our audience can access our content. Any
of these occurrences could reduce the appeal of our programming. Our insurance
policies may not adequately compensate us for any losses that may occur due to
any failures or interruptions in our systems. We do not presently have a formal
disaster recovery plan.

Our Web sites have experienced significant increases in traffic during
coverage of some sporting events. As we deliver additional programming, we
expect our audience base to increase significantly. This will require our Web
sites to accommodate a high volume of traffic and deliver frequently updated
information. Failure of our systems to accommodate higher volumes of traffic
could reduce the performance and appeal of our Web sites and harm our results of
operations. Our Web sites in the past have experienced slower response times or
other problems for a variety of reasons, including delays or malfunctions as a
result of third-party distributors on which we rely.

OUR BRAND MAY NOT ACHIEVE THE BROAD RECOGNITION NECESSARY TO SUCCEED

We believe that broad recognition and a favorable audience perception of
the Quokka brand will be essential to our success. If our brand does not achieve
favorable broad recognition, our success will be limited. We intend to build
traffic and brand recognition by aggressively marketing www.quokka.com as the
first interactive network that offers sports programming that brings the
audience closer to the athlete's perspective. We plan to market www.quokka.com
through an extensive traditional media campaign employing advertising on
television, printed publications, outdoor signage and radio. We also plan to
conduct a simultaneous online advertising campaign and to seek exposure through
our co-branded initiatives. These initiatives will involve significant expense,
and we may lack the resources necessary to accomplish these initiatives. Even if
the resources are available, we cannot be certain that our brand enhancement
strategy will deliver the brand recognition and favorable audience perception
that we seek. If our strategy is unsuccessful, these expenses may never be
recovered and we may be unable to increase future revenues. Even if we achieve
greater recognition of our brand, competitors with greater resources or a more
recognizable brand could reduce our market share of the emerging digital sports
entertainment market.

THE LOSS OF ANY STRATEGIC RELATIONSHIPS WITH MEDIA ENTITIES AND SPORTS GOVERNING
BODIES COULD NEGATIVELY IMPACT THE BREADTH OF OUR SPORTS PROGRAMMING AND OUR
ABILITY TO ACQUIRE ADDITIONAL RIGHTS TO COVER SPORTS OR SECURE SPONSORSHIPS

We depend on agreements with certain established media entities and sports
governing bodies, such as NBC Olympics, Inc. and Championship Auto Racing Teams,
Inc. The loss of any of these strategic relationships could impact the breadth
of our sports programming and affect our ability to acquire additional rights or
secure sponsorships. Our agreements with these parties enable development of
certain Olympic and motor sports programming. Additionally, these strategic
relationships, among others, provide us with credibility in the marketplace to
negotiate sponsorships and acquire rights to cover additional sports. While
these strategic relationships are grounded in contractual agreements, these
parties can terminate the agreements for various reasons, including contractual
breaches and a change in control of our company. For example, NBC Olympics, Inc.
can terminate its strategic relationship with us if a competitor of NBC acquires
us. We cannot guarantee that our strategic partners will perform their
contractual obligations. Even if the contracts run for the full term, we may not
be able to renew the

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agreements on comparable terms, if at all. For a more detailed discussion of the
terms of some of our strategic relationships, see "Business -- Joint Ventures
and Rights Agreements".

FAILURE BY THIRD PARTIES ON WHOM WE DEPEND FOR INTERNET ACCESS, DELIVERY OF OUR
PROGRAMMING AND GENERATION OF MULTIPLE REVENUE STREAMS COULD HARM OUR OPERATIONS
AND REVENUES

Our audience depends on Internet service providers, online service
providers and other Web site operators for access to our Web sites. Many of them
have experienced significant outages in the past, and could experience outages,
delays and other difficulties due to system failures unrelated to our systems.
Access by our audience outside the United States could also be delayed or
interrupted due to the uncertainty of the telecommunications infrastructure in
foreign countries.

We depend on various domestic and international third parties for software,
systems and delivery of much of our programming. Many of these third parties
have limited operating histories, early generation technology and are themselves
dependent on reliable delivery from others. Any delays or malfunctions in the
distribution of our content would limit our ability to deliver our programming.
We also depend on Frontier GlobalCenter in Sunnyvale, California, which hosts
our Web sites. If the Frontier GlobalCenter hosting facility is disabled or
malfunctions, access to our Web sites would be limited or eliminated.

Our plans to generate multiple revenue streams also depend on third
parties. In particular, we depend on encryption technology provided by others to
enable secure electronic commerce transactions. In addition, our ability to
obtain sponsorship and advertising interest will depend on whether third parties
we hire can generate meaningful and accurate data to measure the demographics of
our audience and the delivery of advertisements on our Web sites. Companies may
choose not to advertise on our Web sites or may pay less if they do not perceive
these measurements made by third parties to be reliable.

OUR SPONSORSHIP MODEL COULD PREVENT US FROM ACQUIRING CRITICAL TECHNOLOGY, WHICH
COULD AFFECT THE QUALITY OF OUR PROGRAMMING

A significant feature of our sponsorship model is the exclusive right to be
the sole sponsor of a sponsorship category, such as computing, database
software, digital distribution, consumer electronics or wireless communications.
While we expect this exclusivity feature to be central to our marketing strategy
for securing and retaining these sponsorships, it may bind us to undesirable
sponsorship arrangements and limit our ability to acquire technology we may
otherwise want or need. Exclusive sponsors acquire multi-year rights to a
sponsorship category and sometimes provide us with equipment or technical
expertise to enable us to develop and distribute our programming. We are limited
in our ability to terminate an existing sponsor relationship if a sponsor fails
to provide us with necessary equipment and expertise, or is otherwise less
desirable than a prospective sponsor in the same sponsorship category. An
existing sponsor also may prevent us from acquiring desirable technology from
competitors of the sponsor, which could harm our programming.

OUR PROGRAMMING AND OPERATIONS WILL SUFFER IF WE ARE UNABLE TO ADAPT IN A TIMELY
MANNER TO TECHNOLOGICAL DEVELOPMENTS, EVOLVING INDUSTRY STANDARDS, CHANGING
MARKET CONDITIONS OR CUSTOMER REQUIREMENTS

The market for digital sports programming is characterized by rapid
technological change. To be successful, we must adapt to this rapidly changing
market by continually improving the features we offer and developing new
features. Our programming and operations will suffer if we are unable to adapt
in a timely manner in response to technological developments, evolving industry
standards, changing market conditions or customer requirements. We may not
maintain our competitive position in the digital sports entertainment market for
a number of reasons, including the following:

- our technology infrastructure may not provide high-quality, reliable
programming or adequately scale to support multiple simultaneous events;

- we may be unable to afford substantial expenditures to adapt our service
to changing technologies;

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- we may be unable to license leading technologies or develop new
proprietary technologies; and

- we may fail to use new technologies effectively or adapt to technological
changes.

OUR BUSINESS IS SUBJECT TO MANY RISKS ASSOCIATED WITH WORLDWIDE SPORTS EVENT
COVERAGE AND OTHER INTERNATIONAL ACTIVITIES, WHICH COULD PREVENT OR DELAY OUR
COVERAGE OR CAUSE US TO INCUR ADDITIONAL EXPENSES

Our coverage of adventure sports is not limited geographically and is
therefore subject to many risks associated with worldwide sports event coverage
and other international activities that could prevent or delay our coverage. We
have developed, and expect to continue to develop, programming covering sporting
events throughout the world and across the oceans. For example, our coverage of
yachting races and of adventure sports, such as mountaineering in the Karakoram
range in China and treks across deserts in Morocco, require us to traverse
international borders. Coverage of these events requires that we deploy
production staff to locations throughout the world. Additionally, we expect to
maintain offices in several foreign countries, including Great Britain,
Switzerland and Australia. As a result, we are subject to numerous risks
associated with doing business internationally, including the following:

- regulatory requirements, including export requirements, tariffs and other
barriers, health and safety requirements and labor and immigration laws;

- difficulties in staffing and managing foreign operations;

- differences in reliability of telecommunications infrastructure and
Internet access;

- varying technological standards and capabilities;

- differences in standards of protection for intellectual property;

- political instability;

- hostile action against event participants or our employees;

- currency fluctuations;

- potentially adverse tax consequences; and

- restrictions against the repatriation of earnings from a foreign country.

Additionally, regional events that we choose to cover may fail to attract a
global audience. In that case, we would incur the significant expenses inherent
in the coverage of an international event without achieving the audience
exposure we have committed or may commit to provide to our sponsors.

WE ARE GROWING RAPIDLY AND MAY BE UNABLE TO EFFECTIVELY MANAGE OUR GROWTH

We are experiencing a period of significant expansion. We had 40 employees
at December 31, 1997, compared to 118 employees at December 31, 1998 and 186
employees at March 31, 1999. This growth is placing, and we expect any further
growth to continue to place, a significant strain on our management, operational
and financial resources. This will require us to implement additional management
information systems and to develop additional operating, administrative,
financial and accounting systems and controls. If we are unable to develop these
systems and manage our growth effectively, our business will not operate
efficiently and our results of operations could be negatively affected.

Many of our senior management have only recently joined us. Eight of our
thirteen most senior officers have worked for us for less than one year. These
individuals have not previously worked together and are becoming integrated as a
management team. Our operations and personnel relations will suffer if our
senior management is unable to successfully manage our growth.

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IF WE FAIL TO ATTRACT AND RETAIN KEY PERSONNEL WE WILL BE UNABLE TO EXECUTE OUR
BUSINESS STRATEGY

Our success will depend on the continued services of our senior management
and other key personnel, as well as our ability to attract, train, retain and
motivate other highly skilled technical, managerial, marketing and customer
service personnel. The loss of the services of any of our executive officers,
particularly Alan Ramadan, our president and chief executive officer, or other
key employees could prevent us from executing our business strategy. Competition
for these personnel is intense, and we may not be able to successfully attract,
integrate or retain sufficiently qualified personnel. Our anticipated
programming schedule in the near future will require that we attract and retain
personnel who are skilled in production, computer and other technical fields.
Skilled technical personnel are in high demand and have multiple employment
opportunities, especially in the San Francisco Bay Area, where our headquarters
are located. As a matter of practice, we do not generally enter into employment
agreements with our employees.

ACCEPTANCE OF PROPERTY OR SERVICES AS PAYMENT MAY PROVIDE LESS WORKING CAPITAL
FLEXIBILITY THAN A CASH PAYMENT WOULD PROVIDE

We have received property or services, including computer equipment,
Internet access, digital cameras and telecommunications equipment and services
as payment for our sponsorships. While these property and services allow us to
develop and distribute our programming content, they do not provide us with the
same working capital flexibility that a cash payment would provide. We expect to
reduce the amount of property and services accepted as payment in future
periods, but may not be successful in doing so.

WE MAY BE SUBJECT TO NEGATIVE PUBLICITY AND LIABILITY FOR ATHLETES OR OUR
EMPLOYEES ASSOCIATED WITH OUR EVENTS, WHICH WOULD DISRUPT OUR PROGRAMMING AND
REDUCE SPONSORSHIPS AND PARTICIPATION IN FUTURE EVENTS

Many of our events, including sailing and mountain climbing, involve
significant risks to athletes and our employees that participate in or document
the events. Additionally, many of our events take place in regions of the world
where there may be increased danger of external threats such as terrorism. We
will experience adverse publicity, and may be subject to liability claims by
athletes, employees or their relatives, for injuries or deaths that occur as a
result of our events. Any incidents like this during our events could disrupt
our programming and reduce sponsorships and athlete and employee participation
in future events. Liability claims, regardless of merit, could require us to
expend significant resources. Additionally, while we obtain insurance coverage
with respect to each event based on the risks and exposure we face in that
event, our insurance coverage may be inadequate to protect us against any
claims.

WE MAY BE UNABLE TO ADEQUATELY PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY
RIGHTS, AND OUR EFFORTS TO DO SO COULD BE TIME-CONSUMING AND EXPENSIVE AND COULD
DIVERT MANAGEMENT ATTENTION FROM EXECUTING OUR BUSINESS STRATEGY

We regard the protection of our copyrights, service marks, trademarks,
trade dress and trade secrets as critical to our success. We rely on a
combination of copyright, trademark, service mark, patent and trade secret laws
and contractual restrictions to protect our proprietary rights in products and
services. While we actively protect and enforce our intellectual property
rights, we may be unable to prevent others from misappropriating our technology
and may be subject to claims of infringement by others. The enforcement of our
intellectual property rights could be time-consuming, result in costly
litigation and the diversion of technical and management personnel. We have
entered into confidentiality and invention assignment agreements with our
employees and contractors and nondisclosure agreements with parties with which
we conduct significant business to limit access to and disclosure of our
proprietary information. These contractual arrangements and the other measures
taken by us to protect our intellectual property may not prevent
misappropriation of our technology or deter independent third-party development
of similar technologies. In addition, we may need to engage in litigation to
enforce our intellectual property rights in the future or to determine the
validity and scope of the proprietary rights of others. This litigation could
result in substantial costs and diversion of management and other resources.

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We pursue the registration of our trademarks and service marks in the
United States and internationally. We have also filed four patent applications
in the United States Patent and Trademark Office. Effective trademark, service
mark, copyright, patent and trade secret protection may not be available in
every country in which our programming is accessible online. We have licensed in
the past, and expect to license in the future, some of our proprietary rights,
including trademarks or copyrighted material, to third parties. These licensees
may take actions that might adversely affect the value of our proprietary rights
or reputation. We also rely on off-the-shelf technologies that we license from
third parties. "Off-the-shelf" technology refers to generally commercially
available software that is not customized for a particular user. These
third-party licenses may not continue to be available to us on commercially
reasonable terms or at all. The inability to use licensed technology important
to our business could require us to obtain substitute technology of lower
quality or performance standards or at greater cost. In the future, we may seek
to license additional technology or content to enhance our current programming
or to introduce new content. We cannot be certain that any such licenses will be
available on commercially reasonable terms or at all. The loss of or inability
to obtain or maintain any of these technology licenses could result in delays in
providing our programming until equivalent technology, if available, is
identified, licensed and integrated.

Because we license some data and content from third parties, we must rely
upon these third parties for information as to the origin and ownership of the
licensed content and our exposure to copyright infringement actions may
increase. We generally obtain representations as to the origins and ownership of
licensed content and obtain indemnification to cover any breach of any
representations. However, we cannot be certain that these representations are
accurate or that any indemnification amounts will be sufficient to provide
adequate compensation for any breach of representations.

We cannot guarantee that infringement or other claims will not be asserted
or prosecuted against us in the future whether resulting from our internally
developed intellectual property or licenses or content from third parties. Any
future assertions or prosecutions could be time-consuming, result in costly
litigation and diversion of technical and management personnel or require us to
introduce new content or trademarks, develop non-infringing technology or enter
into royalty or licensing agreements. These royalty or licensing agreements, if
required, may not be available on acceptable terms, if at all. Our ability to
execute on our business strategy will suffer if a successful claim of
infringement is brought against us and we are unable to introduce new content or
trademarks, develop non-infringing technology or license the infringed or
similar technology on a timely basis.

PROBLEMS RELATED TO THE YEAR 2000 ISSUE COULD ADVERSELY AFFECT OUR BUSINESS

Computer systems, software packages and microprocessor dependent equipment
may cease to function or generate erroneous data when the year 2000 arrives. To
correctly identify the year 2000, a four-digit date code field will be required
to be what is commonly termed "year 2000 compliant." If systems material to our
business are not year 2000 compliant or if third parties fail to make their
systems year 2000 compliant in a timely manner, the year 2000 issue could affect
our operations. Our operations and programming may suffer if the systems we
depend on are not year 2000 compliant. The potential areas of exposure include
electronic data exchange systems operated by third parties with which we
transact business and computers, software, telephone systems and other equipment
used internally. While we have established a year 2000 compliance program, this
program may not uncover all year 2000 problems.

WE MAY BE SUBJECT TO LIABILITY FOR PUBLISHING OR DISTRIBUTING CONTENT, AND OUR
INSURANCE COVERAGE MAY BE INADEQUATE TO PROTECT US FROM THIS LIABILITY

We may be subject to claims relating to content associated with us,
including content that may appear on our Web sites or be obtained through other
distribution channels. Although we carry general liability insurance, our
insurance may not cover potential claims of this type or may not be adequate to
cover all costs incurred in defense of potential claims or to indemnify us for
all liability that may be imposed. These claims could take the form of lawsuits
for defamation, negligence, copyright or trademark infringement or

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other theories based on the nature and content of such materials. In addition,
we could be subject to liability with respect to content that may be accessible
through our Web sites or third-party Web sites accessed from our sites.

OUR COMPETITIVE POSITION IN THE DIGITAL SPORTS ENTERTAINMENT INDUSTRY COULD
DECLINE IF WE ARE UNABLE TO ACQUIRE BUSINESSES OR TECHNOLOGY THAT ARE STRATEGIC
FOR OUR SUCCESS OR IF WE FAIL TO SUCCESSFULLY INTEGRATE ANY ACQUISITIONS WITH
OUR CURRENT BUSINESS

If appropriate opportunities arise, we intend to acquire businesses,
technologies, services or products that we believe are strategic for our
success. The digital sports entertainment industry is new, highly competitive
and rapidly changing. We believe these industry dynamics could result in a high
level of acquisition activity as companies seek to gain competitive advantage.
While we currently do not have any understandings, commitments or agreements
with respect to any material acquisition, competitive forces could require us to
acquire companies or technology. Our competitive position in the industry could
decline if we are unable to acquire businesses or technology that are strategic
for our success or if we fail to successfully integrate any acquisitions with
our current business. We may be unable to identify, negotiate or finance future
acquisitions successfully, or to integrate successfully any acquisitions with
our current business. The process of integrating an acquired business,
technology, service or product into our business and operations may result in
unforeseen operating difficulties and expenditures, including the allocation of
significant management time and company resources that would otherwise be
available for ongoing development of our business. Moreover, the anticipated
benefits of any acquisition may not be realized.

RISKS RELATED TO THE INTERNET AND DIGITAL SPORTS ENTERTAINMENT INDUSTRIES

OUR BUSINESS DEPENDS ON THE DEVELOPMENT AND GROWTH OF THE INTERNET AND COULD BE
AFFECTED BY DELAYS IN THE DEVELOPMENT OF NEW METHODS FOR ACCESSING OR
DISTRIBUTING OUR PROGRAMMING

Our success will depend on the continued development and growth of the
Internet. Our programming will suffer if the necessary infrastructure, standards
or protocols or complementary products, services or facilities for the Internet
are not developed in a timely manner. While Internet technologies have been
evolving rapidly in recent years, future growth may not continue at comparable
rates. As the Internet continues to experience increased numbers of users and
increased frequency of use, the Internet infrastructure may be unable to support
the demands of a global audience or the bandwidth requirements of consumers. The
Internet has experienced a variety of outages and other delays as a result of
damage to portions of its infrastructure, and it could face outages and delays
in the future. This might include outages and delays resulting from the year
2000 problem. These outages and delays could adversely affect the level of
Internet usage as well as the level of traffic on our Web sites. In addition,
the Internet could lose its viability due to delays in the development or
adoption of new standards and protocols to handle increased levels of activity
or due to regulation by governments, businesses or other organizations.

Our programming is designed to operate on today's Internet platform as well
as future broadband systems. These systems are expected to enable increased
bandwidth for content and provide faster access for consumers. Delays in the
development of broadband systems could harm our ability to distribute our
programming through subscription services and pay-per-view events, which could
adversely affect our ability to generate revenues from these types of
programming.

THE ONLINE DIGITAL SPORTS ENTERTAINMENT INDUSTRY IS INTENSELY COMPETITIVE, AND
WE MAY BE UNABLE TO COMPETE SUCCESSFULLY AGAINST CURRENT AND FUTURE COMPETITORS

The market for Internet services and products is relatively new, intensely
competitive and rapidly changing. Since the Internet's commercialization in the
early 1990's, the number of Web sites on the Internet competing for consumers'
attention and spending has proliferated. We expect that competition will
continue to intensify. We may be unable to compete successfully against current
and future competitors.

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Many of our current and potential competitors have significantly longer
operating histories, greater financial, technical and marketing resources,
greater name recognition and larger user or membership bases than us and,
therefore may have a significantly greater ability to attract advertisers and
users. In addition, many of these competitors may be able to respond more
quickly to new or emerging technologies and changes in Internet user
requirements and to devote greater resources to the development, promotion and
sale of their services. Our current or potential competitors may develop
products and services comparable or superior to those developed by us. Increased
competition could result in price reductions, reduced margins or loss of market
share, any of which would harm our business. In addition, as we expand
internationally, we may face new competition.

We compete, directly and indirectly, for sponsors, rights and the attention
of sports viewers with the following categories of companies:

- Web sites targeted to sports enthusiasts generally, such as
www.cbs.sportsline.com, www.cnnsi.com and www.espnsportszone.com, many of
which have been established by traditional media companies, and Web sites
targeted to enthusiasts of particular sports, such as
www.majorleaguebaseball.com, www.nascar.com, www.nba.com, www.nfl.com and
www.nhl.com;

- publishers and distributors of traditional media targeted to sports
enthusiasts, such as the ESPN networks, the FoxSports network and Sports
Illustrated;

- online services such as America Online and the Microsoft Network, which
provide access to sports-related content and services;

- vendors of sports information, merchandise, products and services
distributed through other means, including retail stores, mail, facsimile
and private bulletin board services; and

- Web search and retrieval services, such as Excite, Infoseek, Lycos and
Yahoo! and other high-traffic Web sites, such as those operated by cYnet
and Netscape.

We expect that the number of our direct and indirect competitors will
increase in the future. We anticipate that, as the Internet and other
interactive distribution systems converge with traditional television
broadcasting and cable, significant competition may come from the cable arena,
including such sports-oriented cable networks as the ESPN networks.

OUR REVENUES DEPEND ON ADOPTION OF THE INTERNET AS AN ATTRACTIVE MEDIUM FOR
SPONSORS AND ADVERTISERS

Our ability to generate sponsorship and advertising revenues will depend on
many factors, including the following:

- the development of the Internet as an attractive medium for sponsors and
advertisers;

- the level of use of the Internet by consumers and the amount of traffic
on our Web sites; and

- our ability to achieve and measure demographic characteristics that are
attractive to sponsors and advertisers.

Market acceptance of the Internet as a medium for sponsorship and
advertising is highly uncertain. Most potential sponsors and advertisers have
only limited experience with the Internet as an advertising medium and have not
devoted a significant portion of their advertising expenditures to
Internet-based campaigns. Even if sponsors and advertisers are persuaded to
allocate portions of their budgets to Internet-based advertising, they may not
find the medium to be effective for promoting their products and services
relative to traditional print and broadcast media. Additionally, no standards
are widely accepted to measure the effectiveness of the Internet as a medium for
targeting consumers with particular demographics and influencing consumer
behavior. If these standards do not develop, existing sponsors or advertisers
may not continue their current level of Internet-based sponsorships or
advertising, and sponsors or advertisers who are not currently buying
sponsorships or advertising on the Internet may be reluctant to do so.

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REVENUES FROM SUBSCRIPTION SERVICES MAY FAIL TO DEVELOP, WHICH WOULD HARM OUR
RESULTS OF OPERATIONS

While we intend to generate revenues through subscription services that
provide access to premium content and pay-per-view events, we have no experience
in doing so and our failure to generate revenues from these sources would harm
our results of operations. While subscription services are a viable business
alternative to cover sporting events on television, subscription services for
our programming may not develop for a variety of reasons. These include:

- our failure to develop and implement a successful strategy for
subscription services;

- delays in the development of broadband systems that enable increased
bandwidth for content and provide faster access for consumers;

- consumers' unwillingness to pay for the programming offered through
subscription services;

- prohibitive costs of producing higher quality programming for
subscription services; and

- security concerns in transmitting payment information for the
subscription services.

CHANGES IN REGULATION OF THE INTERNET COULD LIMIT OUR BUSINESS PROSPECTS

We are subject to the same federal, state and local laws as other
businesses on the Internet. Today there are relatively few laws directed towards
online services. However, due to the increasing popularity and use of the
Internet and other online services, it is possible that a number of laws and
regulations may be adopted with respect to the Internet or other online
services. Changes in regulation of the Internet could affect our results of
operations. These laws and regulations could cover issues such as user privacy,
freedom of expression, pricing, fraud, content and quality of products and
services, taxation, advertising, intellectual property rights and information
security. Applicability to the Internet of existing laws governing issues such
as property ownership, copyrights and other intellectual property issues,
taxation, libel, obscenity and personal privacy is uncertain. The vast majority
of these laws were adopted prior to the advent of the Internet and related
technologies and, as a result, do not contemplate or address the unique issues
of the Internet and related technologies. Those laws that do reference the
Internet, such as the recently passed Digital Millenium Copyright Act, have not
yet been interpreted by the courts and their applicability and reach are
therefore uncertain.

Several states have also proposed legislation that would limit the uses of
personal user information gathered online or require online services to
establish privacy policies. The Federal Trade Commission has also initiated
action against at least one online service regarding the manner in which
personal information is collected from users and provided to third parties.
While we do not sell information about users on our sites, we have historically
collected demographic data about our users to assist us in marketing our
sponsorship arrangements. Changes to existing laws or the passage of new laws
intended to address these issues, including some recently proposed changes,
could directly affect the way we do business or could create uncertainty in the
marketplace.

In addition to government regulation of the Internet, businesses and other
organizations may restrict access to the Internet at work. Many users access the
Internet through computer terminals at work, either because they do not have
access at home or because the networks at work provide faster and more reliable
access. Access at work may increase if employers upgrade their technology more
quickly than individual consumers in response to the development of broadband
solutions. In response to Internet use by employees or consultants at work,
employers may impose regulations limiting or eliminating Internet or broadband
access on their equipment. To the extent that many of our users access our Web
sites at work, our audience could diminish if businesses and other organizations
restrict Internet access at work.

OUR INTERNET ACTIVITIES MAY BECOME SUBJECT TO ADDITIONAL TAXES, WHICH COULD
AFFECT OUR RESULTS OF OPERATIONS

Tax authorities in a number of states are currently reviewing the
appropriate tax treatment of companies engaged in electronic commerce.
Therefore, our products and services may become subject to

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additional sales and income taxes. If consumers of our products and services are
required to pay additional sales or other taxes, they could reduce their
purchases, which would negatively affect our results of operations. As our
content is available over the Internet in multiple states and foreign countries,
these jurisdictions may claim that we are required to qualify to do business as
a foreign corporation. We are qualified to do business in six states in the
United States, and qualifying in additional states could subject us to
additional taxes. Additionally, failure by us to comply with foreign laws or to
qualify as a foreign corporation in a jurisdiction where we are required to do
so could subject us to taxes and penalties for the failure to qualify and could
result in the inability to enforce contracts in such jurisdictions.

WE HAVE LIMITED EXPERIENCE GENERATING REVENUES FROM ELECTRONIC COMMERCE, AND WE
MAY NOT BE ABLE TO DO SO IF WE ARE UNABLE TO DEVELOP AND IMPLEMENT A SUCCESSFUL
ELECTRONIC COMMERCE STRATEGY, DEVELOP A SUCCESSFUL LINE OF PRODUCT MERCHANDISE,
OVERCOME INTERNET SECURITY CONCERNS OR RESPOND TO COMPETITIVE PRICING

A key component of our business model includes selling products associated
with our sports entertainment programming. We have limited experience generating
revenues from electronic commerce. If we are unable to develop and implement a
successful electronic commerce strategy, develop a successful line of product
merchandise that appeals to a broad audience, overcome Internet security
concerns or respond to competitive pricing, we may be unable to generate
revenues from electronic commerce.

The need to securely transmit confidential information over the Internet
has been a significant barrier to electronic commerce and communications over
the Internet. Any compromise of security could deter people from using the
Internet and our Web sites to conduct transactions that involve transmitting
confidential information. We may need to expend significant resources to protect
against security breaches or to address problems caused by such breaches. Even
if we are able to overcome Internet security concerns, individuals may not buy
our products, resulting in revenues from electronic commerce that fall short of
the cost of our electronic commerce strategy. Many Internet companies engaged in
electronic commerce are losing money. Additionally, many of our current and
potential competitors may have significantly greater resources and more
favorable cost structures than we do and may be able to price comparable
products at levels we are unable to match without incurring unacceptable
operating losses.

RISKS RELATED TO THIS OFFERING

OUR COMMON STOCK PRICE IS LIKELY TO BE VOLATILE, WHICH COULD HURT INVESTORS AND
EXPOSE US TO LITIGATION

The stock markets in general, and the Nasdaq National Market and the market
for Internet-related and technology companies in particular, have experienced
extreme price and volume fluctuations in recent months. These fluctuations often
have been unrelated or disproportionate to the operating performance of these
companies. These broad market and industry factors could harm the market price
of our common stock, regardless of our performance. Market fluctuations, as well
as general political and economic conditions such as a recession or interest or
currency rate fluctuations, also could harm the market price of our common
stock.

The trading prices of many technology company stocks, particularly Internet
company stocks, have recently been at or near historical highs, reflecting
valuations substantially above historical levels. Our stock price could be
subject to wide fluctuations in response to a variety of factors, including
factors that may be beyond our control. These include:

- actual or anticipated variations in our quarterly operating results;

- announcements of technological innovations or new sports entertainment
programming by us or our competitors;

- changes in financial estimates by securities analysts;

- conditions or trends in the Internet and online entertainment industries;

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- changes in the market valuations of other Internet companies;

- announcements by us or our competitors of significant acquisitions,
strategic partnerships, joint ventures or capital commitments;

- additions or departures of key personnel; and

- sales of substantial amounts of our common stock or other securities in
the open market.

Volatility in the market price of our common stock could result in
securities class action litigation. This type of litigation could result in
substantial costs and a diversion of management's attention and resources.

OUR MANAGEMENT HAS BROAD DISCRETION TO DETERMINE HOW TO USE THE FUNDS RAISED IN
THIS OFFERING AND MAY USE THEM IN WAYS THAT STOCKHOLDERS MAY NOT DEEM DESIRABLE

We plan to use the net proceeds of this offering for general corporate
purposes, including working capital associated with the expansion of our network
production operations and our marketing campaigns. In addition, we may use a
portion of the net proceeds for the license or acquisition of additional
programming rights, creation of programming associated with these rights,
meeting our capital contribution obligations under our joint venture
arrangements, establishing additional joint ventures as well as capital
equipment purchases associated with both the production of our programming and
general business services. Our management will have significant discretion as to
the use of the net proceeds of this offering. This could result in the proceeds
being applied to uses stockholders may not deem desirable. In addition, we
cannot be certain that the proceeds invested will yield a significant return, if
any.

WE WILL NEED TO RAISE ADDITIONAL CAPITAL, WHICH MAY NOT BE AVAILABLE ON
FAVORABLE TERMS AND COULD RESULT IN ADDITIONAL DILUTION

We currently anticipate that the net proceeds of this offering, together
with our available funds, will be sufficient to meet our anticipated needs for
working capital, capital expenditures and business expansion through at least
the next 12 months. Thereafter, we will need to raise additional capital.
Additional financing may not be available on favorable terms or at all. If
adequate funds are not available or are not available on acceptable terms, we
may not be able to fund our expansion, take advantage of unanticipated
opportunities or respond to competitive pressures. We may seek to raise
additional capital sooner than the next 12 months to fund unanticipated
opportunities or respond to competitive pressures. If additional funds are
raised through the issuance of equity or convertible debt securities, the
percentage ownership of our stockholders will be reduced and the securities
issued may have rights, preferences and privileges senior to those of our common
stock.

SALES OF OUR SHARES AFTER THIS OFFERING COULD NEGATIVELY AFFECT THE MARKET PRICE
OF OUR STOCK, IMPAIR OUR ABILITY TO RAISE CAPITAL THROUGH THE SALE OF ADDITIONAL
EQUITY SECURITIES AND RESULT IN FURTHER DILUTION

Sales of a substantial number of shares in the public market after this
offering could negatively affect the market price of our common stock and could
impair our ability to raise capital through the sale of additional equity
securities. Immediately following this offering, and based upon the number of
shares outstanding as of May 27, 1999, we will have shares of common
stock outstanding assuming no exercise of the underwriters' over-allotment
option and no exercise of outstanding options or certain warrants after May 27,
1999. Of these shares, all the shares sold in this offering will be freely
tradable without restrictions or further registration under the Securities Act
of 1933. The remaining 38,183,396 shares of common stock will be "restricted
securities" as defined by Rule 144 adopted under the Securities Act of 1933.
These shares may be sold in the public market only if registered or if they
qualify for an exemption from registration under Rule 144 or Rule 701 adopted
under the Securities Act of 1933. We can not predict the effect that future
sales made under Rule 144, Rule 701 or otherwise will have on the market price
of our common stock.

20
<PAGE> 22

In addition, following closing of this offering we intend to register
shares of common stock issuable upon the exercise of stock options granted under
our stock option plans. After the effective date of such registration, shares
issued upon the exercise of stock options generally will be available for sale
in the public market. Our executive officers and directors and certain
stockholders beneficially owning in the aggregate 38,141,909 shares of common
stock have agreed, subject to certain limited exceptions, not to offer, sell,
contract to sell, grant any option to purchase or otherwise dispose of any
shares of common stock, without the prior written consent of Merrill Lynch,
Pierce, Fenner & Smith Incorporated for a period of 180 days after the first day
any of the common stock to be sold in this offering is released by the
underwriters for sale to the public. Any shares subject to these lock-up
agreements may be released at any time by Merrill Lynch, Pierce, Fenner & Smith
Incorporated, with or without notice. The holders of approximately 37,863,097
shares of common stock are entitled to certain registration rights with respect
to such shares. The holders of warrants to purchase approximately 2,553,288
shares of common stock are also entitled to certain registration rights with
respect to such shares.

OUR EXISTING STOCKHOLDERS HAVE SIGNIFICANT CONTROL OF OUR MANAGEMENT AND
AFFAIRS, WHICH THEY COULD EXERCISE AGAINST YOUR BEST INTEREST

Upon completion of this offering, our executive officers, directors and
their affiliates will, in the aggregate, own approximately % of our
outstanding common stock, % if the underwriters' over-allotment option is
exercised in full. As a result, these persons, acting together, will have the
ability to control all matters submitted to our stockholders for approval and to
control our management and affairs. This concentration of ownership may delay or
prevent a change in control or discourage a potential acquirer from making a
tender offer or otherwise attempting to obtain control of our company, which
could decrease the market price of our common stock. Matters that would require
stockholder approval include the following:

- election and removal of directors;

- merger or consolidation of our company; and

- sale of all or substantially all of our assets.

SOME ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY
DELAY OR PREVENT A TAKEOVER OF OUR COMPANY

Some provisions of our charter documents and Delaware law may make it more
difficult for a third party to acquire control of us, even if a change in
control would be beneficial to our stockholders. Our board of directors can
issue up to 10,000,000 shares of preferred stock without stockholder approval.
The issuance of preferred stock could make it more difficult for a third party
to acquire our company. These provisions could diminish the opportunities for a
stockholder to participate in tender offers, including tender offers at a price
above the then-current market value of our common stock. Additionally, certain
of our material agreements, including our agreement with NBC Olympics, Inc.,
allow the other party to terminate the agreement if a change in control occurs.
This could also have the effect of deterring a change in control.

In addition, our charter documents provide that special meetings of
stockholders may be called only by the chairman of the board of directors, our
chief executive officer, a majority of the board of directors and holders of 50%
of the outstanding capital stock. Our charter documents also provide for a
classified board of directors, require advance notice of stockholder proposals
and nominations and do not provide for cumulative voting in the election of
directors. These provisions may make it more difficult for stockholders to
replace current members of our board of directors and may make the acquisition
of our company by a third party more difficult.

21
<PAGE> 23

USE OF PROCEEDS

We estimate that the net proceeds from the sale of the
shares of common stock in this offering will be approximately $
($ if the underwriter's over-allotment option is exercised in
full), assuming an initial public offering price of $ per share
and after deducting underwriting discounts and commissions and estimated
offering expenses of $ . The principal purposes of this offering
are to obtain additional working capital.

We currently expect to use the net proceeds of this offering for general
corporate purposes, including working capital associated with the expansion of
our network production operations and our marketing campaigns. In addition, we
may use a portion of the net proceeds for the license or acquisition of
additional programming rights, creation of programming associated with these
rights, meeting our capital contribution obligations under our joint venture
arrangements, establishing additional joint ventures as well as capital
equipment purchases associated with both the production of our programming and
general business services.

As of the date of this prospectus, we cannot specify with certainty the
particular uses for the net proceeds to be received upon completion of this
offering. Accordingly, our management will have broad discretion in the
application of the net proceeds. Pending such uses, the net proceeds will be
primarily invested in short-term, interest bearing obligations, investment grade
instruments, certificates of deposit or direct or guaranteed obligations of the
United States. For a discussion of the risks associated with management's
discretion in the application of the net proceeds, see "Risk Factors -- Our
management has broad discretion to determine how to use the funds raised in this
offering and may use them in ways that stockholders may not deem desirable."

DIVIDEND POLICY

We have not declared or paid any cash dividends on our capital stock and do
not anticipate paying any cash dividends in the foreseeable future. In addition,
the terms of our subordinated debt and equipment lease lines prohibit the
payment of cash dividends on our stock.

22
<PAGE> 24

CAPITALIZATION

The following table sets forth our capitalization as of March 31, 1999: (1)
on an actual basis; (2) on a pro forma basis to reflect the conversion of all
outstanding shares of preferred stock into common stock upon the closing of this
offering; and (3) on a pro forma as adjusted basis to reflect this conversion
and the application of the net proceeds from the sale of the shares
offered hereby, after deducting the estimated underwriting discount and
estimated offering expenses.

<TABLE>
<CAPTION>
MARCH 31, 1999
----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt and lease obligations, net of current
portion................................................... $ 699 $ 699 699
Stockholders' equity(1):
Preferred stock, $0.0001 par value; actual -- 27,600,000
shares authorized, 23,736,016 shares issued and
outstanding; pro forma -- 27,600,000 shares authorized,
no shares issued and outstanding; pro forma as
adjusted -- shares authorized, no shares
issued and outstanding................................. 2 0 --
Common stock:
Voting stock, $0.0001 par value; actual -- 45,400,000
shares authorized, 9,589,342 shares issued and
outstanding; pro forma -- 45,400,000 shares
authorized, 34,134,206 shares issued and outstanding;
pro forma as adjusted -- shares authorized,
shares issued and outstanding.............. 1 3
Non-voting stock, $0.0001 par value; actual -- 300,000
shares authorized, 300,000 shares issued and
outstanding; pro forma -- 300,000 shares authorized,
no shares issued and outstanding; pro forma as
adjusted -- 300,000 shares authorized, no shares
issued and outstanding............................... -- -- --
Additional paid-in capital................................ 41,087 42,167
Stock warrants............................................ 1,416 875
Accumulated deficit....................................... (23,894) (23,894)
-------- --------
Total stockholders' equity........................ 18,612 19,151
-------- --------
Total capitalization.............................. $ 19,311 $ 19,850
======== ========
</TABLE>

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

(1) The share numbers in this table are based on shares outstanding as of March
31, 1999. These numbers include 508,848 shares issuable upon the exercise of
warrants outstanding as of March 31, 1999 at a weighted average per share
price of $1.06, which will expire if not exercised prior to the closing of
this offering, and exclude:

- 2,391,750 shares issuable upon the exercise of warrants outstanding as of
March 31, 1999 at a weighted average per share price of $5.33;

- 7,145,025 shares issuable upon the exercise of options outstanding as of
March 31, 1999 at a weighted average per share price of $4.35;

- 6,460,401 additional shares reserved for issuance under Quokka's 1997
Equity Incentive Plan;

- 450,000 shares reserved for issuance under Quokka's 1999 Non-Employee
Director's Stock Option Plan; and

- 1,000,000 shares reserved for issuance under Quokka's 1999 Employee Stock
Purchase Plan;

- 3,966,667 shares of Series D Preferred Stock issued in May 1999.

See "Capitalization," and "Description of Capital Stock" for information
relating to our capital structure. Also see "Management -- Employee Benefit
Plans" for a description of the benefit plans referred to above.

23
<PAGE> 25

DILUTION

The pro forma net tangible book value of Quokka as of March 31, 1999 was
$19.2 million, or $0.56 per share of common stock. "Pro forma net tangible book
value per share" is determined by dividing the pro forma number of outstanding
shares of common stock (assuming the conversion of all outstanding shares of
preferred stock into shares of common stock and the exercise of certain
warrants) into the net tangible book value of Quokka (total tangible assets less
total liabilities). After giving effect to the receipt of the estimated net
proceeds from the sale by Quokka of the shares of common stock offered
hereby (after deducting the underwriting discount and estimated offering
expenses), the pro forma net tangible book value of Quokka as of December 31,
1998 would have been approximately $ million, or $ per share. This
represents an immediate increase in pro forma net tangible book value of $
per share to existing stockholders and an immediate dilution of $ per share
to new investors purchasing shares at the initial public offering price. The
following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.............
Pro forma net tangible book value per share as of March
31, 1999............................................... $0.56
Increase per share attributable to new investors..........
-----
Pro forma net tangible book value per share after the
offering..................................................
-----
Dilution per share to new investors......................... $
=====
</TABLE>

The following table summarizes as of March 31, 1999, on the pro forma basis
described above, the number of shares of common stock purchased from Quokka, the
total consideration paid to Quokka and the average price per share paid by
existing stockholders and by investors purchasing shares of common stock in this
offering (before deducting the underwriting discount and estimated offering
expenses):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders........ 34,134,206 $43,913,263 $1.29
New stockholders.............
---------- --- ----------- ---
Total.............. 100% $ 100%
========== === =========== ===
</TABLE>

The foregoing discussion and tables assume no exercise of any stock options
outstanding as of March 31, 1999. As of March 31, 1999, there were options
outstanding to purchase a total of 7,145,025 shares with a weighted average
exercise price of $4.35 per share. Additionally, the foregoing discussion and
tables assume no exercise of warrants outstanding as of March 31, 1999 to
purchase a total of 2,391,750 shares at a weighted average exercise price of
$5.33 per share. However, the discussion and tables assume the exercise of
certain warrants outstanding as of March 31, 1999 to purchase a total of 508,848
shares at a weighted average exercise price of $1.06 per share, which will
expire if not exercised prior to the closing of this offering. Additionally, the
foregoing discussion and tables exclude 3,966,667 shares of Series D preferred
stock issued in May 1999. To the extent that any of these warrants or options
are exercised, other than the warrants which we have assumed will be exercised,
there will be further dilution to new public investors. See "Capitalization" for
information relating to our capital structure and "Management -- Employee
Benefit Plans" for a description of the benefit plans under which the options
referred to above were granted.

24
<PAGE> 26

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read in
conjunction with, and are qualified by reference to, the Consolidated Financial
Statements and Notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing elsewhere in this
prospectus. The consolidated statement of operations data is qualified by
reference to (1) the audited consolidated statement of operations for each of
the three one-year periods ended December 31, 1996, 1997 and 1998, (2) the
unaudited consolidated statement of operations for each of the two one-year
periods ended December 31, 1994 and 1995 and (3) the unaudited consolidated
statement of operations for each of the two three-month periods ended March 31,
1998 and 1999. The consolidated balance sheet data is qualified by reference to
(1) the audited consolidated balance sheet data as of December 31, 1996, 1997
and 1998 and (2) the unaudited consolidated balance sheet data as of December
31, 1994 and 1995, and as of March 31, 1999, not included in this prospectus.
Note 1 of Notes to Consolidated Financial Statements contains a description of
the method used to compute the pro forma basic and diluted net income per share.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------------- -------------------------
1994 1995 1996 1997 1998 1998 1999
----------- ----------- --------- --------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues...................... $ 399 $ 82 $ 39 $ 4,000 $ 8,635 $ 4,867 $ 897
Production costs.............. 25 21 611 5,130 7,779 3,431 2,718
Research and engineering...... 41 18 423 1,030 4,480 585 2,132
Sales and marketing........... -- 5 53 816 2,519 358 1,390
General and administration.... 245 56 508 1,827 3,185 871 1,792
Depreciation and
amortization................ -- -- -- 68 530 44 430
--------- --------- --------- --------- ---------- ---------- ----------
Total costs and
expenses............. 311 100 1,595 8,871 18,493 5,289 8,462
Income/(loss) from
operations......... 88 (18) (1,556) (4,871) (9,858) (422) (7,565)
Equity and losses of
associated venture.......... -- -- -- -- -- -- 452
Interest (income)/expense,
net......................... (2) (12) 4 71 (320) (32) (169)
--------- --------- --------- --------- ---------- ---------- ----------
Net income/(loss)....... $ 90 $ (6) $ (1,560) $ (4,942) $ (9,538) $ (390) $ (7,848)
========= ========= ========= ========= ========== ========== ==========
Historical basic and diluted
net income/(loss) per
share(1).................... $ 0.02 $ 0.00 $ (0.41) $ (0.73) $ (0.99) $ (0.04) $ (0.80)
Shares used in computing
historical basic and diluted
net income/(loss) per
share....................... 3,800,000 3,800,000 3,800,000 6,791,534 9,654,835 9,651,566 9,756,059
Pro forma net loss per
share -- basic and
diluted..................... $ (0.40) $ (0.23)
Shares used in computing pro
forma net loss per
share -- basic and
diluted..................... 23,914,934 34,000,923
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------- MARCH 31,
1994 1995 1996 1997 1998 1999
--------- --------- --------- --------- ---------- ---------
(UNAUDITED)
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET
DATA:
Cash and cash equivalents..... $ 72 $ 0 $ 65 $ 4,027 $ 23,994 $ 15,263
Working capital............... 1 (8) (1,566) 1,444 23,218 13,953
Total assets.................. 117 0 113 4,651 28,212 22,853
Debt and leases, long-term
portion..................... 0 0 0 83 501 699
Accumulated deficit........... 0 (8) (1,566) (6,508) (16,046) (23,894)
Total stockholders' equity.... 1 (8) (1,566) 1,663 25,453 18,612
</TABLE>

25
<PAGE> 27

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the related notes included elsewhere in this prospectus. This
discussion contains certain forward-looking statements that involve risks and
uncertainties. When used in this prospectus, the words "intend," "anticipate,"
"believe," "estimate," "plan" and "expect" and similar expressions as they
relate to us are included to identify forward-looking statements. Our actual
results could differ materially from the results discussed in the
forward-looking statements as a result of certain of the risk factors set forth
below and elsewhere in this prospectus.

OVERVIEW

Quokka Sports has pioneered a distinctive new style of global sports
entertainment programming that uses the digital information sharing and
communications power of the Internet. Our programming can be accessed over the
Internet at www.quokka.com. Our programming is designed to provide a compelling
sports entertainment experience by allowing viewers to choose from a variety of
perspectives, information and action sequences. We believe new interactive
technologies provide exciting opportunities for making information-intensive
programming also entertaining. With distinctive content designed to build on
this opportunity, we believe we are positioned to become a leading provider of
digital sports entertainment addressing the entertainment passions of a global
community of sports enthusiasts.

In August 1996, we adopted our current business model. The primary focus of
our operating activities since August 1996 has been to develop our digital
sports entertainment network. Our network development activities have included
studio services to strategic partners, including the International Olympic
Committee, Sydney Organizing Committee for the Olympic Games, News America
Digital Publishing and others. Studio services represent consulting and Web
design services.

We generate revenues from digital entertainment sponsorships, studio
services, advertising and electronic commerce. During 1998, 81% of our revenues
came from digital entertainment sponsorships, 18% of our revenue came from
studio services, 1% of our revenues came from advertising and less than 1% of
our revenues came from electronic commerce. We derive the majority of our
revenues from the sale of sponsorship packages to corporations. In the past, we
have accepted property and services as payment for sponsorships, including
Internet access, computer equipment, digital cameras, hosting services, and
telecommunications equipment and services. Property and services received as
payment are valued at fair market value based on the amounts normally charged to
third parties for similar property and services. We intend to reduce the amount
of property and services accepted for payment in future periods, although we may
not be successful in this regard.

Prior to 1999, our sponsorships were primarily short-term and associated
with two individual events, the Whitbread and Around Alone races. Our sponsors
typically pay fees or provide in-kind services, which we recognize as revenue
ratably over the duration of the event based upon the actual number of
impressions generated to date as compared to an estimated total number of
impressions for the entire event. Sponsors may require that we guarantee a
minimum number of impressions over the term of the event. In these instances, we
will defer a portion of the sponsorship revenues until the minimum number of
impressions has been achieved. We will also defer a portion of the revenues
until other contractual obligations have been satisfied and collection of the
related receivable is probable.

In 1999, we began to configure our sponsorships as multi-year, multi-event
and multi-benefit sponsorships. These new sponsorships, which we call digital
entertainment sponsorships, may include a variety of benefits such as category
exclusivity, embedded product placement in our programming, traditional sports
sponsorship benefits and sales and marketing assistance. We plan to sell digital
entertainment sponsorships to technology and communications companies as well as
consumer retail goods and services companies. These multi-year sponsorship
agreements are expected to provide for periodic sponsorship fees that we intend
to recognize ratably as revenues over the corresponding period during the

26
<PAGE> 28

term of the contract, provided that no significant obligations remain and
collection of the resulting receivable is probable.

As a direct result of having only one live program at a time, revenues from
sponsorships, advertising and electronic commerce have varied on both a
quarterly and annual basis during our short operating history. Revenues may
fluctuate from period to period in the future depending upon our ability to
attract digital entertainment sponsorships, the number of live events that are
being produced and distributed simultaneously during any one period, our ability
to maintain a continuous programming calendar, our ability to attract a
worldwide audience for our sporting events, our ability to acquire long-term
digital and other intellectual property rights to global sporting events and our
ability to develop and produce sports programming which will attract a global
audience.

We also generate revenues by providing studio services that could lead to
digital sports entertainment programming opportunities. These revenues are
recognized in the period the service is provided. We intend to continue to offer
studio services; however, we expect studio services to decline substantially as
a percentage of overall revenues in future periods.

We have incurred significant net losses and negative cash flows from
operations, and as of March 31, 1999, we had an accumulated deficit of $23.9
million. This accumulated deficit resulted from the production costs of our
network programming, the costs of developing new and enhancing existing tools
and techniques that enhance our Quokka Sports Platform technology, the costs of
expanding our sales and business development efforts and other costs related to
ongoing research and design. Due to the planned expansion of our digital sports
entertainment programming, we expect to incur significant operating losses for
the foreseeable future. Although we have experienced revenue growth in recent
periods, this growth may not be sustainable and, therefore, these recent periods
should not be considered indicative of future performance. We may never achieve
significant revenues or profitability; or if we achieve significant revenues,
they may not be sustained.

RESULTS OF OPERATIONS

Years Ended December 31, 1996, 1997 and 1998

Revenues. Revenues increased from $39,000 in 1996 to $4.0 million in
1997 to $8.6 million in 1998. In 1997, we generated revenues from the sale of
sponsorships for the first time. Revenues increased from 1996 to 1997 primarily
as a result of 1997 sponsorship sales totaling $2.7 million. The increase in
revenues from 1997 to 1998 is primarily attributable to a $4.3 million increase
in sponsorship revenues. Included in total sponsorship revenues for 1996, 1997
and 1998 were revenues relating to products and services accepted as payment of
$0, $1.7 million and $4.4 million. Products and services accepted as payment
have included Internet access, computer hardware and software, digital cameras,
hosting services, telecommunications equipment and other products & services
required to operate our events. These products and services are recorded as
revenues and are also reflected as production costs in the consolidated
statements of operations for all periods presented. The balance of the increase
in revenues was primarily attributable to increases in revenues from studio
services from $39,000 in 1996 to $1.2 million in 1997 to $1.6 million in 1998.

Production Costs. Total production costs increased from $611,000 in
1996 to $5.1 million in 1997 to $7.8 million in 1998. Production costs include
costs of personnel and consultants, computer hardware and software, travel,
satellite transmission costs, field gear, cameras, satellite phones, marketing
and an allocation of general and administrative expenses. The $4.5 million
increase in production costs from 1996 to 1997 is due to the launch of our first
digital sports entertainment program, the Whitbread race, during 1997. The $2.7
million increase from 1997 to 1998 is attributable to an increase in the number
of months of live programming.

Research and Engineering. Research and engineering expenses increased
from $423,000 in 1996 to $1.0 million in 1997 to $4.5 million in 1998. Research
and engineering expenses include personnel cost, costs associated with network
operations and expenses incurred to improve and develop our Quokka Sports

27
<PAGE> 29

Platform and broadband applications. The increase in research and engineering
expenses from year to year is attributable to an increase in the number of
development projects. Research and engineering costs are expensed as incurred.

During 1998, we entered into a software license and development agreement.
In connection with this agreement, we issued warrants to purchase 635,650 shares
of our preferred stock and recognized a non-cash charge of $853,000 during 1998.

Sales and Marketing. Sales and marketing expenses increased from
$53,000 in 1996 to $816,000 in 1997 to $2.5 million in 1998. Sales and marketing
expenses include personnel costs, consultants and advertising. These expenses
increased primarily due to increases in the number of sales and marketing
personnel and consultants. During 1998, we spent $554,000 for advertising and we
expect to significantly increase our advertising expenses in future periods as
we build the Quokka brand and awareness of our programming.

Depreciation and Amortization. Depreciation and amortization expenses
increased from $0 in 1996 to $68,000 in 1997 to $530,000 in 1998. Depreciation
and amortization expenses consist of depreciation of computers,
telecommunications equipment, software, and furniture and fixtures associated
with our operational infrastructure. Amortization expense relates to leasehold
improvements of our facilities in San Francisco. The increase in depreciation
and amortization expenses was primarily due to increased facilities, equipment
and related costs associated with an increase in personnel in all areas.

General and Administrative. General and administrative expenses
increased from $508,000 in 1996 to $1.8 million in 1997 to $3.2 million in 1998.
General and administrative expenses include management, business and legal
affairs, finance and accounting, facilities, management information systems and
human resources. The increase in general and administrative expenses is due to
increased personnel in all areas to support and grow our business including
increased facilities and related costs.

Interest Income and Expense, Net. Net interest expense was $4,000 in
1996 and $71,000 in 1997. Net interest income was $320,000 in 1998. Interest
expense incurred during these periods relate to our financing obligations for
various equipment purchases. Interest income recorded during these periods
includes interest income earned on cash and cash equivalents. The increase from
1997 to 1998 was primarily due to a higher investment balance throughout 1998
due to the issuance of preferred stock. Interest income in 1998 was partially
offset by increased interest expense due to borrowings under a line of credit.

Net Losses. Based upon the foregoing information, we had net losses of
$1.6 million for the year ended December 31, 1996, $4.9 million for the year
ended December 31, 1997 and $9.5 million for the year ended December 31, 1998.

Three Months Ended March 31, 1998 and 1999

Revenues. Revenues declined from $4.9 million for the three months
ended March 31, 1998 to $897,000 for the three months ended March 31, 1999.
Revenues for the first quarter of 1998 were primarily derived from sponsorship
revenues associated with our coverage of the Whitbread Round The World Race, our
sole event during the period. Revenues for the first quarter of 1999 were
primarily derived from sponsorship revenues associated with our coverage of the
Around Alone race, our sole event during the period. The Whitbread is a better
known event than Around Alone and, accordingly, attracted larger sponsorship
revenues.

Production Costs. Production costs decreased from $3.4 million for the
three months ended March 31, 1998 to $2.7 million for the three months ended
March 31, 1999. The $713,000 decrease reflects significantly lower costs
associated with our coverage of the Around Alone race as compared to the
Whitbread race. Production costs for each event we cover vary based on the
specific attributes of each event, operating efficiencies gained from our
previous experience with similar events and the depth and breadth of our event
coverage. A combination of these factors resulted in production costs for the
Around Alone race that were less than those for the Whitbread race. Decreased
Around Alone production costs were partially offset by increased expenses
related to the production activities for upcoming events.

28
<PAGE> 30

Research and Engineering. Research and engineering expenses increased
from $586,000 for the three months ended March 31, 1998 to $2.1 million for the
three months ended March 31, 1999. This increase represents the cost of
additional personnel and related expenses associated with our continuing
development of our Quokka Sports Platform, broadband applications and network
operations.

Sales and Marketing. Sales and marketing expenses increased from
$358,000 for the three months ended March 31, 1998 to $1.4 million for the three
months ended March 31, 1999. The $1.0 million increase is attributable to
increases in the number of sales and marketing personnel and expenses related to
creating a brand, developing audience awareness of our programming and launching
www.quokka.com.

General and Administrative. General and administrative expenses
increased from $870,000 for the three months ended March 31, 1998 to $1.8
million for the three months ended March 31, 1999. This increase was
attributable to increased personnel and related facilities and other third-party
expenses associated with building our operational infrastructure. During the
first quarter of 1999, we leased additional office space in San Francisco and
new office space in London.

Depreciation and Amortization. Depreciation and amortization expenses
increased from $44,000 for the three months ended March 31, 1998 to $430,000 for
the three months ended March 31, 1999. The $386,000 increase was primarily due
to increased facilities, equipment and related costs associated with an increase
in personnel in all areas.

Interest Income and Expense, Net. Net interest income was $32,000 for
the three months ended March 31, 1998 and $169,000 for the three months ended
March 31, 1999. The $137,000 net increase reflects a higher investment balance
during the three months ended March 31, 1999 due to the issuance of preferred
stock during prior periods.

Equity and Losses of Associated Venture. We incurred net losses of
$452,000 in our joint venture with Forsythe Racing, Inc. for the period from the
inception of CART Digital Media Enterprises, LLC in January 1999 through March
31, 1999. We have accounted for our 50% interest in this joint venture under the
equity method of accounting. Expenses incurred during the period related
primarily to pre-production expenses for CART programming.

Net Losses. Based upon the foregoing information, we had net losses of
$390,000 for the three months ended March 31, 1998 and $7.8 million for the
three months ended March 31, 1999.

LIQUIDITY AND CAPITAL RESOURCES

Since August 1996, we have financed our operations primarily through
private sales of our equity securities. Total net proceeds from sales of our
equity securities since August 1996 were $41.1 million through March 31, 1999.
In May 1999, we completed an additional private sale of our equity securities.
The gross proceeds from this transaction were $35.7 million.

In addition to funding ongoing operations and capital expenditures, our
principal commitments consist of various obligations under operating and capital
leases. On July 24, 1997, we entered into a capital lease for the use of certain
computer and telecommunications equipment with a purchase price of approximately
$120,000. This capital lease requires monthly payments of $4,200 through
November 2000. On October 7, 1998, we entered into a financing arrangement with
a bank to borrow $750,000 for the purchase of equipment. Our obligations under
this financing arrangement are secured by the underlying equipment. Terms of
this agreement require monthly repayment over 36 months commencing November 25,
1998 in the amount of approximately $21,000 per month plus interest at a rate
equal to 0.75% over the prime rate quoted by the bank. At March 31, 1999, the
prime rate quoted by the bank was 7.75% and accordingly the interest rate was
8.50%. Total rent expense for outstanding leases is approximately $90,000 per
month.

In February 1999, we established NBC/Quokka Ventures, LLC, a joint venture
with NBC Olympics, Inc. The terms of the operating agreement for the venture
require us to make quarterly capital contributions and contribute $15 million in
cash to be used by the venture, plus any additional cash

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required by the venture as determined by the board of directors of the venture.
We plan to fund the venture with our current cash and cash equivalent balances
and the net proceeds from this offering. This venture has been consolidated in
our financial statements.

In February 1999, we entered into a subordinated debt agreement. The terms
of this agreement call for maximum borrowings of $10 million. Repayment is due
in 36 monthly installments commencing in February 2000 and is subject to
acceleration under certain conditions including the completion of an initial
public offering. No amounts were outstanding on this facility as of March 31,
1999. In connection with this agreement, we issued warrants for the purchase of
215,384 shares of preferred stock. The imputed value of these warrants is
$552,000 and has been treated as a loan commitment fee. This fee is being
amortized over the term of the six-month draw down period as no further services
are required to earn the warrants and they are fully vested, and $140,000 of
this amount was amortized in the three months ended March 31, 1999.

In March 1999, we established CART Digital Media Enterprises, LLC, a joint
venture with Forsythe Racing, Inc. The terms of the venture agreement require
the two parties to make equal capital contributions on a quarterly basis. This
joint venture has been accounted for under the equity method in our financial
statements.

At March 31, 1999, we had $15.3 million in cash and cash equivalents. Net
cash used in operating activities was $3.8 million and $10.9 million for 1997
and 1998. Net cash used in operating activities was $1.3 million and $6.4
million for the three months ended March 31, 1998 and 1999. Net cash used in
operating activities resulted from our net operating losses, adjusted for
certain non-cash items including compensation expense related to the issuance of
warrants to attract key vendors and business partners. Non-cash charges relating
to the issuance of these warrants were $62,000 and $450,000 for 1997 and 1998
and $382,000 and $569,000 for the three months ended March 31, 1998 and 1999.
Non-cash charges relating to depreciation expense were $68,000 and $530,000 for
1997 and 1998 and $44,000 and $430,000 for the three months ended March 31, 1998
and 1999.

Net cash used in investing activities was $295,000 and $2.7 million for
1997 and 1998. Net cash used in investing activities was $246,000 and $2.6
million for the three months ended March 31, 1998 and 1999. Net cash used in
investing activities resulted primarily from capital expenditures relating to
purchases of computer equipment.

Net cash provided by financing activities was $8.1 million and $33.5
million for 1997 and 1998. Net cash used in financing activities for the three
months ended March 31, 1998 was $11,000 and net cash provided by financing
activities for the three months ended March 31, 1999 was $279,000. Net cash
provided by financing activities for these periods included the issuance of
preferred stock, common stock and warrants.

No provision for federal or state income taxes has been recorded as we
incurred net operating losses for the three months ended March 31, 1998 and 1999
and for 1996, 1997 and 1998. However, we have paid state franchise taxes during
1997 and 1998 as well as foreign corporation taxes during 1998. At December 31,
1998, we had approximately $12.0 million of federal net operating loss
carryforwards available to offset future taxable income; these carryforwards
expire in years 2011 through 2017. In addition, we have carryforwards of
approximately $10.0 million as of December 31, 1998 for California franchise tax
purposes, commencing in 2001. As a result of various equity transactions during
1996 and 1997, we believe our company has undergone an "ownership change" as
defined by Section 382 of the Internal Revenue Code. Accordingly, the use of a
portion of the net operating loss carryforward may be limited. Due to this
limitation, and the uncertainty regarding the ultimate use of the net operating
loss carryforward, we have not recorded any tax benefit for losses and have
recorded a valuation allowance for the entire amount of the net deferred tax
asset. In addition, certain events, including any sales by us of shares of our
stock, including sales pursuant to this offering, and/or transfers of a
substantial number of shares of common stock by the current stockholders, may
partially restrict our ability to use our net operating loss carryforwards.

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We believe that the net proceeds from this offering, combined with current
cash and cash equivalent balances will be sufficient to fund our operating
requirements for working capital and capital expenditures for at least the next
twelve months. Thereafter, we will need to raise additional funds. To the extent
that we encounter unanticipated opportunities, we may seek to raise additional
funds sooner, in which case we may sell additional equity or debt securities or
borrow funds from banks. No assurances can be given that our efforts to raise
these funds will be successful. In the event we are unable to raise these funds,
our operations would suffer. Sales of additional equity or convertible debt
securities would result in additional dilution of our stockholders. For a
discussion of the risks associated with raising additional capital, see "Risk
Factors -- We will need to raise additional capital, which may not be available
on favorable terms and could result in additional dilution."

YEAR 2000 IMPLICATIONS

Many currently installed computer systems and software products are coded
to accept only two-digit entries in the date code field and cannot distinguish
21st century dates from 20th century dates. These date code fields will need to
distinguish 21st century dates from 20th century dates and, as a result, many
companies' software and computer systems may need to be upgraded or replaced to
comply with year 2000 requirements.

We are in the process of assessing the year 2000 issue and expect to
complete our assessment by July 1999. We are conducting a three-phase process of
identifying both information technology and non-information technology systems
that are not year 2000 compliant, determining their significance to operations,
and developing plans to resolve issues where necessary. We have not incurred
material costs to date in this process and we do not believe that the cost of
additional actions will have a material effect on our operations.

Although we currently believe that our systems and products are year 2000
compliant in all material respects, these systems and products may contain
undetected errors or defects with year 2000 date functions that may result in
material costs. Further, although we are not aware of any material operational
issues or costs associated with preparing our internal systems for the year
2000, we may experience serious unanticipated negative consequences, such as
significant downtime for one or more programming events, or material costs
caused by undetected errors or defects in the technology used in our internal
systems.

We use third-party equipment, software and content, including
non-information technology systems such as security systems, building equipment
and non-IT systems embedded microcontrollers that may not be year 2000
compliant. We have communicated with all of our hardware and software
developers, suppliers and other third parties to determine whether these third
parties are adequately addressing the year 2000 issue and whether any of their
non-IT systems have material year 2000 compliance problems. Based on the written
representations of these third parties, we believe that the third-party hardware
and software that we use is compliant or is expected to be compliant prior to
the year 2000. Failure of third-party equipment, software or content to operate
properly with regard to the year 2000 and thereafter could cause us to incur
unanticipated expenses to remedy any problems, which could have a material
adverse effect on our business, results of operations and financial condition.
We are in the process of developing a contingency plan to address situations
that may result if we, or third parties that we rely upon, are unable to achieve
year 2000 readiness.

We do not currently have any information about the year 2000 status of our
sponsors. Failure of our sponsors' equipment or software due to year 2000
problems may result in reduced funds available for sponsorship activities.
Further, the purchasing patterns of sports viewers may be affected by year 2000
issues as companies expend significant resources to correct their current
systems for year 2000 compliance. Finally, we are subject to external forces
that might generally affect industry and commerce, such as utility or
transportation company year 2000 compliance failures and related service
interruptions. The occurrence of any year 2000 compliance failures that affect
our sponsors, our audience or industry and commerce generally could have a
material adverse effect on our business, results of operations and financial
condition.

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BUSINESS

The following description of our business should be read in conjunction
with the information included elsewhere in this prospectus. The description
contains certain forward-looking statements that involve risks and
uncertainties. When used in this prospectus, the words "intend," "anticipate,"
"believe," "estimate," "plan" and "expect" and similar expressions as they
relate to us are included to identify forward-looking statements. Our actual
results could differ materially from the results discussed in the
forward-looking statements as a result of certain of the risk factors set forth
below and elsewhere in this prospectus.

OVERVIEW

Quokka Sports has pioneered a distinctive new style of global sports
entertainment programming that uses the digital information sharing and
communications power of the Internet. Our programming is designed to provide a
compelling sports entertainment experience by allowing viewers to choose from a
variety of perspectives, information and action sequences. Our coverage of
sporting events incorporates a wide range of materials or digital media assets,
which might include: video, text, audio, images, athlete vital signs, locational
and directional data, environmental data, e-mails, results and timing. Our
programming can be accessed over the Internet at www.quokka.com and may be
delivered to viewers over other interactive systems that transmit digitized
data, such as cable and satellite systems, in the future. We believe new
interactive technologies provide exciting opportunities for making
information-intensive programming also entertaining. With distinctive content
designed to build on this opportunity, we believe we are positioned to become a
leading provider of digital sports entertainment addressing the entertainment
passions of a global community of sports enthusiasts.

We are creating an interactive digital sports network that offers a variety
of sports entertainment programming. In developing our programming calendar, we
currently target sports events that are generally long in duration and rich in
the types of materials or digital media assets we seek to incorporate in our
program. We also currently target sports events that have a global audience and
involve continuous action with multiple simultaneous activities and have a
global audience that is attractive to sponsors and advertisers. We have selected
the Olympics, motor racing, sailing and adventure sports as the first four
channels of our network.

In February 1999, we established a joint venture with NBC Olympics, Inc. to
develop interactive digital coverage of the Olympics through August 2004. In
March 1999, through a joint venture with Forsythe Racing, Inc., we acquired
digital rights to cover the Championship Auto Racing Teams events through 2003.
Additionally, in March 1999, we acquired digital rights to cover FIM 500cc Road
Racing World Championship motorcycle races through 2003. In May 1999, we
acquired digital rights to cover the America's Cup Match yacht race in 2000. We
covered the 7th Whitbread Round The World Race from September 1997 to May 1998
and began coverage of the nine-month Around Alone sailing race in September
1998. We covered the 14th Marathon des Sables desert footrace and are also
covering a variety of Quokka-created adventure sports events as part of our
adventure sports channel. We plan to add programming to each of our four
existing channels and may create additional channels in the future.

INDUSTRY BACKGROUND

The Evolution of the Internet as a Powerful New Medium

The Internet has quickly become a global medium for worldwide
communication, instant access to information and electronic commerce.
International Data Corporation estimates that the number of Web users worldwide
will increase from approximately 142 million at the end of 1998 to more than 502
million by the end of 2003 and that more than 56% of Web users in 1998 accessed
the Internet from outside the United States. We believe such rapid growth is
attributable mainly to the increasing number of personal computers in homes and
offices, the decreasing cost of personal computers, technological innovations
providing easier, faster and cheaper access to the Internet and the
proliferation of content and services available on the Internet.

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The technological advances associated with the Internet and other emerging
interactive systems that transmit digitized data, such as cable and satellite
systems, provide advertisers with a level of targetability, interactivity and
measurability not available in traditional media. Accordingly, Forrester
Research estimates that the amount of Web advertising worldwide will grow from
$1.5 billion in 1998 to over $15.3 billion by the year 2003. Additionally, as
online merchants take advantage of these technological improvements to deliver a
guided selling experience, integrating intelligent product recommendations,
real-time customer services and simplified buying procedures, more consumers are
expected to engage in electronic commerce. International Data Corporation
estimates that the number of consumers making purchases on the Internet will
grow from 30.8 million in 1998 to 182.6 million in 2003 and that the total value
of consumer goods and services purchased over the Internet will increase from
$14.9 billion to $177.7 billion over the same five-year period. The combination
of the growth in online advertising and electronic commerce enhances the
Internet's value as a commerce medium. There can be no assurance that the
current growth of the Internet and Internet-related business will result in a
corresponding growth in our business.

As new interactive systems, including cable and satellite, continue to
become more widely adopted, we believe the Internet will continue to transform
from an information-based medium to one that enables dynamic entertainment-based
content. These new systems are capable of transmitting digitized material at
faster rates and consequently can transmit large amounts of this material, such
as video clips, within a relatively short time frame. These systems are often
referred to as "broadband" systems. Technology companies are developing these
broadband systems to accommodate the larger amounts of digitized data that must
be transmitted quickly to provide faster access, portability of media over
multiple delivery devices and new interactive opportunities. According to
Forrester Research, broadband access provides consumers with high-speed,
always-on connections and multiple services like telephone and Internet on a
single line at a price to performance ratio that is 5 to 25 times better than
conventional Internet dial-up connections. As a result, Forrester Research
estimates that approximately 15.8 million households in the United States will
have high-speed personal computer connections to the Internet by 2002.

The Global Sports Industry

Participatory and spectator sports are among the leading passions in
developed nations around the globe as evidenced by the popularity of sports
media and the amount of money consumers spend on sports events, products and
related services. The ESPN Chilton Sports Poll estimates that 86.6% of the
general population 12 years of age or older in the United States are sports
fans. Further, according to Nielsen Media Research, sports television
programming in the United States consistently draws large audiences, with sports
broadcasts comprising seven of the top ten most widely viewed telecasts during
the 1997-98 television season.

The business opportunities associated with sports are large and diverse.
Today, sporting events generate revenues from the sale of broadcast rights,
sponsorships, advertising, merchandising, publishing and venue access, and these
revenue opportunities continue to evolve. The Georgia Institute of Technology
estimated that revenue streams derived from spectator sports, sporting goods and
sporting publications in the United States in 1995 exceeded $130 billion.
Sponsorships frequently integrate the sponsoring company's products, logos and
trademarks with the sporting event. Based on research conducted by Sponsorship
Research International, an independent research organization that measures
global sponsorship opportunities, we estimate that in 1998 $13.2 billion was
invested globally in sports through the sponsorship of events, federations,
teams, individuals and stadiums.

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Sponsorship Research International has identified the following events as
some of the leading global sports sponsorship opportunities:

<TABLE>
<CAPTION>
NUMBER OF CUMULATIVE GLOBAL
SPORTING EVENT DURATION COUNTRIES TELEVISION AUDIENCE
- -------------- ---------- --------- -------------------
<S> <C> <C> <C>
World Cup Soccer (1994)........................ 52 games 188 32.1 billion
Olympics: Summer (1996)........................ 16 days 214 20.0 billion
Olympics: Winter (1994)........................ 16 days 100 10.7 billion
European Championship Soccer (1996)............ 31 games 192 6.7 billion
Formula 1 Grand Prix Season (1997)............. 17 races 133 5.4 billion
World Championship Athletics (1997)............ 9 days 154 3.8 billion
World Cup Rugby (1995)......................... 32 matches 100 2.7 billion
Whitbread Round The World Race (1993-94)....... 9 months 177 2.6 billion
Wimbledon Tennis Tournament (1996)............. 15 days 167 1.6 billion
CART World Series (1997)....................... 17 races 182 1.2 billion
Super Bowl (1996).............................. 1 game 187 0.1 billion
</TABLE>

In the table above, information for each event is as of the year indicated
and is the most recently available data from Sponsorship Research International.
Additionally, in applying the method used to determine the cumulative global
television audience a person who watches multiple games or multiple days of
coverage of an event would be counted multiple times. For example, a person who
watches 15 World Cup Soccer matches would be counted 15 times.

Advertising and merchandise sales also generate substantial revenues in the
sports industry. Paul Kagan Associates, Inc. estimates that advertisers in the
United States will increase their sports-related television advertising from
$4.8 billion in 1998 to $6.6 billion in 2003. The Sporting Goods Manufacturers
Association estimates that expenditures by sports fans in the United States on
sports-related goods and services reached $45.6 billion in 1998.

The growth of the Internet presents a unique means of reaching
geographically dispersed sports audiences. Because of the low incremental cost
of distributing information and entertainment over the Internet, producing
global sporting events for a geographically dispersed fan base is now
economically feasible. Additionally, as the Internet has evolved, sports fans
have increasingly turned to the Internet for sports information, making
sports-related Web sites some of the most popular online destinations. Based on
a poll of computer owners in the United States, the ESPN Chilton Sports Poll
estimates that 36 million people in the United States accessed sports
information on the Internet in 1998, an increase of 40% over 1997. In addition,
using Media Metrix data, we estimate that sports fans spend approximately 20%
more time per usage session on sports-related Web sites than the average user
does at the average Web site and revisit these sports-related Web sites
approximately 33% more often. Cyberdialogue/findsvp also found that on average,
sports fans spend more time per week online, have higher household incomes and
make more online purchases than the average online adult.

Limitations of Current Sports Coverage

Because of the tremendous popularity of sports worldwide, numerous
traditional and online information sources such as newspapers, magazines,
broadcasters and specialized sports-related Web sites have attempted to address
sports fans' demand for up-to-date information and entertaining coverage of
their favorite events. Although print media, such as newspapers and magazines,
are adequate for communicating basic information such as scores and statistics
or reporting on the outcome of an event, their content cannot be enhanced with
video animation or audio stimulation. Further, although these media have the
ability to produce in-depth analysis of athletes and events, the content cannot
be changed until a new edition is published and the timeliness of this content
is often limited because of inherent delays in production and distribution.

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Although radio and television broadcasters are able to provide real-time
coverage in an entertaining fashion, all viewers and listeners of a given
program receive a single presentation of the content. Broadcast coverage is
generally regional in nature, leaving significant global audiences untapped as
broadcasters seek to meet the demands of the largest audiences in their specific
coverage regions. Additionally, broadcast media are constrained by the limited
ability of the audience to interact with the programming on a real-time basis
and the relatively small number of available frequencies or channels. Further,
because traditional broadcast media are unlikely to devote all 24 hours of
programming available on a channel to coverage of a single event and because
traditional broadcast media do not have the technological capabilities to allow
viewers to choose from a variety of perspectives, information and action
sequences, we believe they are not well suited to cover sporting events with
long durations, large or discontinuous venues, multiple simultaneous activities
and continuous action for a global audience. For example, traditional
broadcasters were limited in their ability to provide continuous coverage of the
action during the Whitbread Round The World Race, which was primarily conducted
across the most remote sections of the world's oceans for approximately nine
months.

While Web sites that include sports information as part of their offerings
have proliferated, we believe these sites are typically more informational than
engaging. In general, these sites deploy traditional styles of sports coverage
by providing access to the same type of content available through traditional
media channels, except on a real-time and interactive basis. We believe that
because these sites use traditional styles of presenting content they fail to
take full advantage of the opportunities presented by new interactive
technologies to produce engaging sports entertainment programming.

THE QUOKKA SOLUTION

We have pioneered a unique new style of global sports entertainment
programming that uses the digital information sharing and communications power
of the Internet. By leveraging our rights to digital media assets such as
locational and directional data, environmental data, e-mails, video, text,
audio, images, results and timing, we believe we are able to capitalize on the
advantages of interactive systems to provide our global audience with a
compelling sports entertainment experience. Through our distinctive approach to
covering sports we intend to capitalize on the market opportunities created by
the emergence of the Internet as a communications and commerce medium, the
worldwide popularity of sports and the appealing demographics of sports fans.
Further, because we use the Internet to distribute our programming to
geographically dispersed audiences, we are able to reach significant global
markets on a cost-effective basis. The primary advantages of our solution are as
follows:

Brings the Sports Fan Closer to the Event Through Distinctive Programming

Our programming is designed to emulate the experience of being at the
sports venue by removing barriers between the athlete and the audience and
enabling fans to experience the sport from the athlete's perspective. We call
our distinctive approach to covering sports Quokka Sports Immersion. As
performance data about the athletes and their equipment are captured during
competitions, we create graphic visualizations, simulations and extensive
performance analyses. These visualizations, simulations and analyses, together
with e-mail from the athletes themselves, audio, video and other material, tell
the story behind a given athletic endeavor to fans who want to look deeper into
the action. For example, when covering the Whitbread and Around Alone races, we
presented the data that drove each skipper's tactical decisions, including each
boat's position as well as forecasts of wind speed, currents and water
temperature. Additionally, our programming includes virtual competitions that
parallel the actual event, allowing fans to compare their performance directly
against that of the competitors. The Quokka Sports Immersion experience is
controlled by each user in an interactive environment that traditional media
does not provide, enabling our audience to become actively involved in the
sports entertainment experience.

Establishes a Network Offering Distinctive Sports Programming and Content

We are creating an interactive digital sports network that offers a broad
range of engaging sports entertainment programming. Our programming can be
accessed over the Internet at www.quokka.com and
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related event Web sites and may be available through other interactive systems,
such as cable and satellite systems, in the future. Our selection of sports
events is central to the experience we create for our audience. In developing
our programming calendar, we are currently targeting sports events that are
particularly well-suited to our distinctive style of coverage, such as the
Olympics, motor racing, sailing and adventure sports. These sporting events
typically have long durations, large or discontinuous venues, multiple
simultaneous activities or continuous action. We believe that Quokka Sports
Immersion has the potential to change the way sports such as these are
experienced.

Provides Attractive Opportunities for Sponsors and Advertisers

We provide our sponsors with value beyond a simple media buy over the
Internet. Sponsors secure exclusivity within a particular industry category and
the opportunity to embed and promote their products in our digital programming.
Our technology and communication sponsors also have the opportunity to showcase
their technological capabilities using our Quokka Sports Immersion programming.
Additionally, we believe we deliver a global audience of loyal users with
demographics desired by sponsors and advertisers. For example, our first digital
sports program, the 1997-98 Whitbread Round The World Race, attracted more than
1.8 million unique users from 177 countries, more than half of whom accessed the
site outside the United States. According to statistics audited by Internet
Profiles Corporation, these users spent an average of approximately 9.9 minutes
per visit at the site. This compares favorably to an average of 5.8 minutes per
visit at other leading sports-related Web sites, according to our estimates
based on Media Metrix statistics. According to a Quokka-conducted survey,
visitors to the Whitbread site were primarily between 25 and 34 years old and
had an average annual household income of $75,000. Additionally, according to
this survey, 64% of the visitors to the Whitbread site were college educated and
63% held professional, executive or technical positions. Based on these
demographic characteristics, we believe the visitors to the Whitbread site
represented an attractive, targeted audience for sponsors and advertisers.

STRATEGY

Our objective is to be the leading branded interactive network for digital
sports entertainment. Our strategy includes the following key elements:

Establish Key Relationships Centered Around Global Sporting Events

We intend to establish additional key relationships to complement our
existing relationships with global sports organizations and their media partners
in order to expand our programming. Through relationships with a variety of
sports leaders, including NBC Olympics, Inc. and Forsythe Racing, Inc., we and
our joint ventures have secured rights to provide digital coverage of major
sports events such as the Olympics and CART auto racing. We intend to expand our
programming schedule as we establish additional relationships. We also expect to
capitalize on the exposure we receive from our coverage of our existing events
to gain access to digital rights to additional sporting events in the future. As
we seek to expand our programming, we will target events that attract a global
audience and are well-suited to our distinctive style of programming.

Build Brand Recognition

We intend to build traffic and brand recognition by aggressively marketing
www.quokka.com as the first interactive network that emulates the experience of
being at the sports venue. We believe building brand awareness of www.quokka.com
and the Quokka Sports Immersion experience will lead users to associate our
style of programming with a distinctive experience that inspires lengthy repeat
visits and strong audience loyalty. We plan to market www.quokka.com through an
extensive traditional media campaign employing advertising through television,
print publications, outdoor signage and radio. We also plan to conduct a
simultaneous online advertising campaign and to gain increased exposure through
our co-branded initiatives. For example, we expect to receive significant
exposure on the CART Radio Network during its broadcast of CART FedEx
Championship Series races.

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Establish Global Communities by Bringing Together Geographically Dispersed
Audiences

We intend to use the global nature of the Internet to provide our sports
programming to large, geographically dispersed audiences. Through our
programming, we plan to create global online communities of viewers with similar
interests that come together to experience international sporting events that
take place continents or oceans away. For example, we plan to establish
membership-based online communities centered around each of our major channels.
These communities will provide geographically dispersed sports fans with the
opportunity to participate in virtual competitions, chat rooms and electronic
commerce. We believe these online communities will inspire sports enthusiasts to
visit our network repeatedly and will help establish www.quokka.com as the
leading destination site for global sports enthusiasts.

Generate Multiple Revenue Opportunities

We intend to leverage our distinctive programming, dispersed global
communities and interactive content library to create multiple revenue streams.
In addition to generating revenue by selling digital entertainment sponsorships
and advertising, we intend to offer subscription services that provide access to
premium content and pay-per-view events. We are also pursuing electronic
commerce opportunities to sell merchandise targeted to the audience of each
sporting event we cover as well as certain derivative products generated from
our content, such as books, games and screen savers. We also plan to expand our
library of archived content from our sports programming that we believe may
generate additional revenues through syndication.

Enhance Our Innovative Approach to Sports Programming

We plan to continue using leading-edge digital technology to create
entertaining sports experiences for our audience. To improve and expand our
programming, we intend to continue developing our technological expertise and
our content library as well as our strategic relationships with leading
technology companies. We believe that our innovative approach to sports
programming positions us to become the leading interactive sports network and
gives us a competitive advantage in the emerging digital broadcast industry. We
intend to leverage the experience we gain from covering each event across all of
our programming to enhance the overall experience for our audiences and
encourage them to visit our network for longer periods of time.

Capitalize on Evolving Broadband Opportunities

We plan to capitalize on opportunities created by the evolution of
broadband technologies. We intend to build our programming on a component by
component basis. We expect that this programming structure will enable us to
optimize the richness of our programming for the bandwidth available across a
range of interactive systems, including the Internet, cable modems, satellite
systems and other emerging broadband technologies. We believe this approach will
enable users to enjoy our programming at all connection speeds.

OUR SPORTS ENTERTAINMENT PROGRAMMING

Our selection of sporting events is the foundation for the experience we
create for our audience. In developing our programming calendar, we currently
target sporting events that are generally long in duration, have a global
audience and involve continuous action and multiple simultaneous activities.
Additionally, these events are generally rich in the materials or digital media
assets we seek to incorporate in our programming. We believe that as we expand
our programming and develop new methods of providing our distinctive sports
coverage, we will be able to enhance the overall experience for our future
audiences and encourage them to visit our network for longer periods of time. In
developing our distinctive coverage of each event, we strive to create an
experience through which our audience can connect with our content as a member
of a community with shared interests. Our goal is to enable our audience to

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understand the event with the intensity of participating athletes, get to know
the athletes so the audience will empathize with them and interact with the
experience we create.

Whitbread Round The World Race: Our Inaugural Event

Our digital coverage of the 7th Whitbread Round The World Race, a 32,000
nautical mile around-the-world sailing competition, provides an excellent
example of the programming that we are able to create by using Quokka Sports
Immersion. We chose this event as the first test of our programming approach
because we believed it exemplified the type of global, long-duration,
large-venue, continuous and multi-focus sporting event that traditional media
has failed to cover adequately and because it fit well with our distinctive
style of programming. By exploiting the new technological opportunities afforded
by the Internet, we created interactive coverage not possible through
traditional media. Team profiles and ongoing stories, such as accounts of the
drama that unfolded when a contender collided with an iceberg in the Southern
Ocean, made the athletes more than simply names on a screen but people to be
cheered on, empathized with and cared about. The Whitbread site attracted more
than 1.8 million unique users from 177 countries during the nine-month race,
with over half the audience coming from outside the United States.

When the ten Whitbread yachts left Southampton, England on September 21,
1997 to begin their nine-month race, we had each boat fully equipped to transmit
digital assets. Satellite transceivers on each boat sent digital video, still
images, audio clips, e-mails and locational and directional data to our
production studios in San Francisco. We then combined that data with wind,
weather and water current information forecasts to create our distinctive
coverage for the www.whitbread.org site. The site presented the drama
surrounding each boat's voyage, using the crew's own words and pictures. In
addition, the site gave fans the ability to follow the race action on our
proprietary Quokka Race Viewer, a fully interactive navigation quality map that
gave fans a bird's eye view of each boat's location, maneuvers and tactical
challenges 24 hours a day, seven days a week, allowing fans to drill down deeply
into the event and understand it from the sailor's perspective.

The locational and directional data provided by the boats as well as the
wind, weather and water current forecasts also fed our proprietary Virtual Race
game engine, allowing fans to sail their own virtual yachts, competing against
other virtual racers and comparing their progress against the actual
competitors. More than 11,000 virtual boats raced side-by-side with the real
boats on our Quokka Race Viewer, bringing virtual competitors into the heart of
the action. With access to the same information on wind speed, current and
weather as the actual competitors, the virtual racers could make real-time
strategy and tactics decisions regarding sail selection and course headings in
an effort to complete the course first.

Current and Upcoming Programming

We have selected the Olympics, motor racing, sailing and adventure sports
as the first four channels of our network, and we plan to develop additional
channels in the future. The calendar below identifies our and our joint
ventures' programming, including pre- and post-event coverage.

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[GRAPH OF PROGRAMMING CALENDAR DEPICTING APPROXIMATE START AND END DATES OF THE
FOLLOWING EVENTS: (1) OLYMPICS (OLYMPICS); (2) CART (MOTOR RACING); (3) FIM
GRAND PRIX MOTORCYCLES (MOTOR RACING); (4) AROUND ALONE (SAILING); (5) AMERICA'S
CUP; (6) FIRST ASCENT (ADVENTURE); (7) MARATHON DES SABLES (ADVENTURE) AND (8)
GREAT TRANGO TOWER (ADVENTURE).]

Olympics

The International Olympic Committee expects more than 10,000 athletes from
an estimated 200 countries to compete in the 2000 Olympic Games in Sydney,
Australia. According to the International Olympic Committee, the 1996 Olympic
Games in Atlanta generated a cumulative television audience in the United States
of 2.3 billion. Additionally, the International Olympic Committee estimates that
Olympic marketing, which is composed of broadcast rights fees, sponsorships,
supplierships, license fees, ticket revenue and related merchandise sales, is
projected to exceed $3.5 billion for the 1997-2000 Olympic quadrennium.

Our joint venture with NBC Olympics, Inc. has the rights to provide
interactive digital coverage in the United States of the Summer Games in Sydney
in 2000, the Winter Games in Salt Lake City in 2002, the Summer Games in Athens
in 2004 and certain related pre-Games and United States Olympic qualifying
events. Additionally, the joint venture has secured rights to incorporate
limited highlights of NBC video into its digital interactive coverage for a
United States audience. See "-- Joint Ventures and Rights Agreements" for a
discussion of the rights held by the joint venture.

The joint venture is scheduled to launch its Web site in August 1999 in
advance of the 2000 Olympic Games. The site will build awareness for broadcast
and digital interactive coverage of the Games by covering pre-Olympic events,
such as the United States Gymnastics Championship and United States Olympic Team
Trials. In addition, covering the pre-Olympic events also has certain production
advantages. For example, the events will enable us to tune our production
infrastructure in advance of the 2000 Olympic Games. Likewise, in covering
pre-Olympic events, the joint venture will collect numerous digital assets, such
as athletes' backgrounds, that can also be used in the digital coverage of the
Olympic Games.

The joint venture is currently preparing for its coverage of the 2000
Olympic Games in Sydney and the United States trials leading up to these Games.
These development and pre-production activities include hiring key personnel,
integrating the respective expertise of NBC and Quokka, selecting the emphasis
for the coverage, gathering background information on athletes, building
templates for the joint venture's coverage and establishing the infrastructure
necessary to create the coverage and support anticipated visits to the joint
venture's Web site.

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Motor Racing

Motor racing attracts a global audience with races held around the world.
Based on information compiled by Sponsorship Research International across 14
countries including the United States, the United Kingdom, Brazil and Russia, we
estimate that there were approximately 340 million people who watched televised
motor racing events and approximately 350 million people who watched televised
motor cycling events in 1998. Additionally, we believe that auto racing is one
of the most popular spectator sports in North America. According to the 1998
Goodyear Racing Attendance Report, race attendance for the 12 North American
racing series that the Goodyear Rubber & Tire Company monitored in 1998 was
approximately 17.1 million people.

We believe motor racing is well-suited to our distinctive style of
programming due to its continuous, multi-focus action. Although it is exciting
to follow the current leader, motor races are often won or lost by action
occurring elsewhere in the race. A contender threatening to overtake the lead
may lose critical time during an inefficient pit-stop or a dark-horse may
suddenly pull into the lead because of a particularly adept cornering maneuver.
Additionally, motor racing fans tend to be interested in following one or two of
their favorite racers, who, unless in the lead, may rarely be shown on-air by
traditional broadcasters.

Our coverage of a motor racing event will generally include:

- a proprietary Quokka Race Viewer providing an up-to-the-minute lap
position graphic, lap time and time-behind-leader updates;

- track audio feeds;

- graphical representations of the course;

- a chronicle allowing fans to follow their favorite drivers and teams;

- in-depth profiles on drivers, teams and manufacturers with interactive
photo galleries;

- interactive global event map and detailed race schedules, including
United States and foreign television coverage schedules;

- a virtual competition, where fans play the role of team owners; and

- community and electronic commerce areas.

CART. We have acquired, through a joint venture with Forsythe Racing,
Inc., the exclusive worldwide interactive media rights for all Championship Auto
Racing Team (otherwise known as CART) events through December 31, 2003. CART
competitors drive open-wheel champ cars with engines generating 900 or more
horsepower at speeds up to 200 miles per hour. In 1999, the CART FedEx
Championship Series consists of 20 races held on large and small oval tracks,
permanent road courses and temporary street circuits in Japan, Brazil, Canada,
the United States and Australia. See "-- Joint Ventures and Rights Agreements"
for a discussion of the rights held by the joint venture.

In Motegi, Japan, the joint venture's digital coverage of CART captured the
drama that sometimes occurs in motor racing. Near the end of the race, live
in-car audio feeds from drivers Adrian Fernandez and Greg Moore gave our
audience a unique insight into the closing laps of Fernandez's victory at
Motegi. Fernandez and his crew gambled on having enough gas to complete the race
and stayed out of the pit, knowing that the entire race could be lost by running
out of gas on the last lap. Meanwhile, Moore spun with less than two laps to go,
bringing out a caution flag that enabled Fernandez to conserve fuel and win the
race. With live in-car audio feeds from both these drivers, our digital coverage
brought our audience inside the drama as it was developing.

We plan to provide coverage of the annual CART FedEx Championship Series
racing season, which runs from February to November, and to extend the coverage
to include pre-and post-season developments. We may elect to cover additional
CART events in the future.

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FIM Motorcycle Racing. We have acquired the exclusive, worldwide
interactive media rights for all Federation Internacionale de Motocyclisme
(otherwise known as FIM) 500cc Road Racing World Championship Grand Prix and
related 250cc and 125cc motorcycle events from January 1, 2000 through December
31, 2003. Racing prototype motorcycles, competitors in FIM Grand Prix races
compete at speeds in excess of 170 miles per hour on fixed course tracks. Races
are held throughout the world several times a month during the racing season.
The season runs from mid-April through October, with 16 races held in such
varied locations as Brazil, Germany, South Africa, Italy, Holland, Spain, Japan
and Malaysia. Beginning in 2000, we plan to provide coverage of the annual FIM
Grand Prix motorcycle racing season and to extend this coverage to include pre-
and post-season developments. See "-- Joint Ventures and Rights Agreements" for
a discussion of the rights we acquired from FIM.

Sailing

Sailing attracts a significant worldwide audience, with events like the
Whitbread Round The World Race generating a cumulative global television
audience of approximately 2.6 billion according to Sponsorship Research
International. Based on information compiled by Sponsorship Research
International across 14 countries including the United States, the United
Kingdom, Brazil and Russia, we estimate that approximately 270 million people
watched televised sailing events in 1998. As evidenced by our successful
coverage of the Whitbread race, sailing is well-suited to our distinctive style
of programming.

Our coverage of a sailing event will generally include:

- a proprietary Quokka Race Viewer depicting each boat's position as well
as wind, water current and other weather data on navigation-quality
charts 24 hours a day, seven days a week;

- substantial coverage by the competitors themselves through e-mail, moving
video, still video and audio transmissions;

- a chronicle allowing fans to follow their favorite skippers and crews;

- behind-the-scenes, in-depth coverage of the crews and boats, with
interactive photo galleries;

- a virtual competition, where fans can race head-to-head against other
virtual competitors and compare their progress against the actual
competitors, and where both actual and virtual boats are tracked on our
proprietary Quokka Race Viewer; and

- community and electronic commerce areas.

Around Alone. We have acquired the exclusive, worldwide interactive
media rights for the Around Alone race through December 31, 2001 with the option
to extend the term for two additional four-year periods.

Held every four years, the Around Alone race is a 27,000 nautical mile solo
sailing race around the world through some of the earth's most treacherous
waters. The race challenges the nautical skills, endurance, resourcefulness,
innovation and fortitude of competitors who circumnavigate the globe making only
four stops. Sixteen competitors entered the 5th Around Alone race that began in
September 1998 and will end in May 1999. This year's race had stops in Cape
Town, South Africa; Auckland, New Zealand; Punta del Este, Uruguay; and
Charleston, South Carolina. Our coverage of the 5th Around Alone race began in
September 1998, and by mid-April 1999, we had attracted more than 300,000 unique
users.

Because we had equipped the boats with instruments to capture real-time
information about the competitors, we were able to provide live coverage of
significant events during the race -- events that previously would have been
covered only after the sailors had reached port and the action had long-since
passed. For example, fans were able to follow the exciting rescue of Isabelle
Autissier whose boat capsized in the middle of the Southern Ocean. With
Autissier too far from land for any national rescue services to reach her, a
fellow competitor undertook the rescue effort. Our audience tracked Giovanni
Soldini as he turned back and began a 24-hour, 200-mile battle against
gale-force winds and 30-foot waves to search for and eventually rescue
Autissier. Additionally, the race garnered significant media attention in the
United

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States when traditional media companies became aware of the story we were
covering live. Traditional media, including the New York Times, National Public
Radio and Dateline NBC, picked up the story of Viktor Yazykov, a Russian
competitor who performed surgery on his own arm in the middle of the Atlantic
Ocean by following a doctor's e-mail instructions. We posted the e-mails as they
were received and were the first media company with pictures of Yazykov during
and following the surgery. We supplied video clips, still photographs and other
assets to traditional media companies seeking to cover the story.

America's Cup 2000. We have acquired the exclusive, worldwide interactive
media rights for the America's Cup 2000 Match yacht race to be held in February
and March 2000 in Auckland, New Zealand. Held approximately every four years,
the America's Cup race is the most widely followed sailing event in the world.
Sailors first competed for the America's Cup in 1851, making it one of the
oldest international sporting trophies in continuous competition. Syndicates
from approximately ten countries will compete in a challenger elimination series
in the fall of 1999, with the winner facing the host and defending New Zealand
team in a best five-of-nine series. See "-- Joint Ventures and Rights
Agreements" for a discussion of our rights relating to coverage of the America's
Cup Match.

Adventure Sports

Adventure sports such as climbing expeditions, wilderness challenges and
similar events are particularly well-suited to our style of programming. By
collecting digital media assets from these remote events, we are able to create
entertainment experiences that help to transform these events into spectator
sports. As an emerging category of spectator sports there are few established
branded adventure sports events. Accordingly, our programming for adventure
sports will cover Quokka-originated events as well as currently existing events
such as the Marathon des Sables.

Our coverage of an adventure sports event will generally include:

- graphical displays depicting the athletes' positions, whether climbing up
a mountain or running across a desert, on a 24 hours a day, seven days a
week basis;

- vital signs, such as heart-rates, from selected athletes;

- substantial coverage by the competitors themselves through e-mail, video,
still images and audio transmissions;

- a chronicle allowing fans to follow their favorite adventure athletes and
teams;

- behind-the-scenes coverage of the rigors and challenges presented by the
event as well as the event location; and

- community and electronic commerce areas.

Marathon des Sables. We provided exclusive interactive coverage of the
14th Marathon des Sables in April 1999. The Marathon des Sables is a grueling
seven-day footrace that stretches approximately 140 miles through Morocco's
Sahara Desert. During the 14th race, rest stations were available to the
athletes at predetermined locations that ranged from six to 44 miles apart. Each
of the 590 competitors had to carry his or her own backpack containing food,
sleeping gear and anti-venom kits. Water was provided, but was typically limited
to a ration of nine liters a day.

First Ascent: The Expedition to China's Karakoram Range. From mid-April
through June 1999, we are providing coverage of a crew of seven climbers
traveling by truck and camel across the ancient Silk Route from Beijing to
Kashgar. This 3,000 mile Quokka-originated expedition will be heading to the
mountains in the Karakoram range in the Chinese Himalayas and is scheduled to
include several first ascents by our company-selected team of world-class
climbers. The team will also be searching for a route up Hidden Peak, the
world's 11th tallest mountain. If a route is found, we plan to schedule an
attempt to scale Hidden Peak in 2000.

Great Trango Tower. We have acquired the exclusive, worldwide interactive
media rights to cover a June 1999 climbing expedition by the North Face Climbing
Team on the unclimbed northwest face of

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Great Trango Tower in Pakistan. The northwest face of the Great Trango Tower
looms a vertical mile above the base camp and rises to a peak of approximately
20,500 feet. With live images, audio, video and electronic mail from the
climbing team, our audience will be brought closer to the climbing experience.

AUDIENCE GENERATION

We are planning to employ a variety of methods to promote www.quokka.com
and to build and retain our audience.

Building Our Audience

We plan to build our audience by:

- launching an aggressive media campaign, utilizing print, outdoor signage,
radio, television and Internet advertisements to build our brand and
promote awareness of www.quokka.com and our programming offerings;

- capitalizing on exposure to a national audience through guaranteed
promotion by NBC of the Web site being developed by the joint venture we
formed with NBC Olympics, Inc.;

- expanding our programming offerings;

- capitalizing on our association with, and promotion of our coverage
provided by, governing bodies and rights holders of the sports events we
cover; and

- exploiting appropriate syndication opportunities by distributing portions
of our programming to other Internet sites and traditional media
companies in exchange for advertisements or other promotional
consideration designed to direct audience to www.quokka.com.

Retaining Our Audience

We plan to retain our audience by:

- continuing to deliver immersive and engaging content;

- maximizing audience loyalty through community-building activities such as
virtual competitions, chat rooms, online forums and online transactions;
and

- migrating our audience to different channels on our network.

We believe an important metric for measuring the quality of our audience is
the duration of an average visit to our Web sites. Based on Media Metrix data,
we estimate that users spend an average of approximately 5.8 minutes per visit
on other leading sports-related Web sites. To date, our event programming has
generated average visit durations significantly greater than this 5.8-minute
average.

<TABLE>
<CAPTION>
AVERAGE
EVENT CHANNEL VISIT DURATION
- ----- ------- --------------
<S> <C> <C>
Whitbread Round The World Race.......... Sailing 9.9 minutes
Around Alone race....................... Sailing 14.8 minutes
CART auto races......................... Motor Sports 12.8 minutes
Marathon des Sables..................... Adventure 19.8 minutes
</TABLE>

Our internal statistics presented in the above table regarding our coverage
of the Whitbread and Around Alone races have been audited by Internet Profiles
Corporation. Our internal statistics regarding our coverage of the Marathon des
Sables and CART races are based on unaudited reports from Internet Profiles
Corporation. The Around Alone race and CART race coverage is ongoing and final
results may differ.

Marketing and Advertising

As of March 31, 1999, we had 15 full-time employees on our marketing team.
In addition to being responsible for brand marketing, program marketing,
audience research and the coordination of our

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external public relations efforts, members of our marketing team also serve as
product managers for our media and derivative products. In 1998, we spent
$554,000 on advertising. In 1999, we expect to raise our advertising
expenditures and launch an aggressive media campaign. We also plan to increase
our marketing staff to support our brand building, electronic commerce and
derivative product strategies.

LEVERAGING OUR AUDIENCE AND CONTENT: GENERATING MULTIPLE REVENUE STREAMS

We plan to leverage our diverse, global audience and suite of content
offerings to create multiple revenue streams. We believe we can generate revenue
from a variety of sources, including sponsors, advertising, electronic commerce,
derivative product sales, subscription and pay-per-view opportunities and studio
services.

Digital Entertainment Sponsorships

We plan to offer multi-year digital entertainment sponsorships to
technology, communications, consumer retail and consumer services companies. We
currently sell sponsorships to certain companies whose products can be
integrated into our technical infrastructure. These companies will form the
Quokka Performance Team. In early 1999, we entered into three-year digital
entertainment sponsorships with Compaq Computer Corporation and Computer
Associates International, Inc. Compaq acquired exclusive sponsorship of our
programming in the Computing category while Computer Associates acquired
exclusive sponsorship of our programming in the Database and Enterprise System
Management Software category. Compaq has the right to terminate its sponsorship
agreement on an annual basis if it is dissatisfied with our performance, while
Computer Associates has the right to terminate its sponsorship agreement at the
end of the second year of the agreement.

Although the benefits associated with Team membership are and will continue
to be custom-designed and consequently may vary from agreement to agreement,
members of the Quokka Performance Team will receive benefits such as the
following:

- exclusive exposure in their category as part of our digital media
coverage, including embedded product placement in our programming that
identifies the sponsor as an enabler of the Quokka Sports Immersion
experience;

- traditional sports sponsorship benefits in connection with Quokka-owned
events, including venue signage, licenses to use event designations in
their own marketing efforts and access to hospitality suites; and

- sales and marketing assistance, including targeted lead generation, trade
show presence, in-store demonstrations using our digital content and
sales presentations demonstrating the Team member's contribution to the
Quokka Sports Immersion experience.

In addition to the Quokka Performance Team, we plan to create additional
"Teams" with similar custom-designed sponsor benefits in order to build
sponsorship revenues. For example, consumer retail goods and services companies
could become part of an Athlete's Team, covering equipment, sports clothing and
similar items of interest to athletes of all abilities. We developed our Team
model for digital entertainment sponsorships as we identified the various ways
we provided value to sponsors of our early Web sites, such as Tandem (which has
since been acquired by Compaq Computer Corporation), which accounted for
approximately 52% of our revenues in 1998, and CompuServe, which accounted for
approximately 16% of our revenues in 1998. We plan to continually evolve our
Team model in order to better meet sponsors' needs.

Because sponsorship is already part of the sports industry, many sports
governing bodies or other rights holders for the events we cover will have
pre-existing sponsorship relationships. We believe these pre-existing
sponsorships will provide us with ready-made sales opportunities. In some
circumstances, however, pre-existing sponsorships associated with specific
events may limit the pool of prospective companies we can approach regarding
sponsorship sales in connection with these events.

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Advertising Opportunities

We plan to generate additional revenues from banner advertisements that are
prominently displayed throughout our digital sports entertainment network. In
selling banner advertisements, we plan to target companies seeking to reach a
global sports audience. Our experience with the Whitbread race demonstrated that
our distinctive coverage can attract a significant loyal and global audience
representing a demographic base sought by Internet advertisers and sponsors from
the consumer-products industry. We believe that by delivering an audience that
returns to our site frequently and stays for an extended period of time, we can
provide additional value to our sponsors and advertisers and generate
advertising revenues on a per user basis in excess of that currently achieved
elsewhere in the Internet industry.

Electronic Commerce Opportunities

We plan to develop electronic commerce opportunities on our Web sites to
generate additional revenues, as well as enhance our user experience. As
electronic commerce continues to grow, we expect that sports fans will
increasingly seek sports merchandise, event gear and other equipment over the
Internet and other digital distribution systems. We believe audiences of each of
our channels provide a receptive market for goods relating to sailing, motor
sports, the Olympics and adventure sports as well as general sports merchandise.
In the future, we plan to offer event-branded gear, event-related gear, Quokka-
branded products and our derivative products. In addition, we hope to offer
products produced by our digital entertainment sponsors that we use in creating
and producing the Quokka Sports Immersion experience. We will seek to make the
electronic shopping experience as immersive as possible so that it complements
the overall look and feel of our digital media programming. Additionally, by
providing access to high-quality sporting and events-related products through
our site or other digital distribution systems, we believe that we will be
expanding the overall Quokka experience for our audience.

Derivative Products: Leveraging Digital Assets

We plan to repurpose our digital content for distribution through
derivative products, such as books, magazines, other publications, videos and
screen savers. We believe that our audience will be a receptive market for such
derivative products and that such products will also appeal to people who are
not yet part of our audience. One of our initial derivative products is a book
containing page views from the Whitbread race that tells the inside story of the
race from beginning to end and maps each competitor's progress throughout the
race. Additionally, we believe that derivative products will provide additional
value to our digital entertainment sponsors and can be used to gather important
information regarding our audience. For example, we created a screen saver that
embedded our sponsors' logos within digital media from the Whitbread
competition. Approximately 40,000 users downloaded the screen saver for free in
exchange for providing valuable, in-depth demographic information.

Subscription and Pay-Per-View Opportunities

As broadband interactive systems, such as cable and satellite systems,
proliferate and users are able to access greater volumes of streaming video and
audio in interactive settings, we believe we may be able to distribute our
distinctive sports content through subscription services and that certain sports
events or coverage depths may be appropriate for distribution on a pay-per-view
basis.

Studio Services

We believe our studio services, which have included designing the official
Web site for the International Olympic Committee, have provided opportunities to
build strategic relationships with key players in the sports and sports media
industries. Our studio services have been primarily strategic in nature, and we
believe that revenues from studio services are likely to decrease as a
percentage of total revenues in the future.

International Olympic Committee. We produced www.olympic.org, the
official site of the International Olympic Committee and have advised the
International Olympic Committee on interactive
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rights and branding on the Internet. Creation of the www.olympic.org site was a
multi-phase project aimed at establishing a significant online presence for the
Olympic movement. This Olympic site provides a store of information on Olympic
history, tradition and current events. Our work for the International Olympic
Committee accounted for more than 12% of our revenues in 1998.

Our Sales Team

As of March 31, 1999, our sales team consisted of thirteen full-time
employees, twelve of whom focus on selling sponsorships. Because of the
strategic and customized nature of our sponsorship sales, we plan to add
additional members to our sponsorship sales force. In connection with NBC/Quokka
Ventures' coverage of the Olympics, Quokka and NBC Olympics, Inc. will jointly
sell sponsorships for the joint venture's Olympic Web site. Additionally, we
plan to expand our sales force significantly in order to grow advertising sales
and develop our media and derivative products sales. We may also use third party
vendors to sell banner ads on our site.

THE QUOKKA SPORTS PLATFORM

The Quokka Sports Platform is a set of processes and facilitating
technologies that enables us to collect digital assets from sports events and
produce and deliver our distinctive programming. We believe this set of
processes and technologies provides a robust and efficient method that
facilitates real-time production of our sports entertainment programming and
maximizes the long-term value of the digital assets that Quokka collects and
produces. Our current programming is produced using the Quokka Sports Platform,
which is continuously being enhanced and improved to accommodate our expanding
requirements.

At the highest level, the Quokka Sports Platform is organized into six
segments:

[GRAPHIC TITLED "QUOKKA SPORTS PLATFORM" AND DEPICTING
DATA FLOW THROUGH THE FOLLOWING SIX STAGES OF THE QUOKKA SPORTS
PLATFORM: (1) COLLECTION; (2) TRANSMISSION; (3) PRODUCTION;
(4) DISTRIBUTION; (5) DELIVERY; AND (6) CLIENT.]

[LOGO]

Collection. Collection is the process of capturing data at event
venues. Collection is the point at which the Quokka Sports Platform begins and
the raw data from venues become digital media assets, the fundamental building
blocks of the Quokka Sports Platform. Digital media assets consist of individual

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units of digital content, such as photographic images, video streams or e-mails
from an athlete as well as information about the assets, such as author or
physical storage location.

Devices capturing wide-ranging data are already a part of many sports. For
example, a world-class yacht is equipped with over 40 sensors that track
multiple variables such as rig tension, rudder position and wind speed. Over 80
attributes of a CART car's performance are measured, including fuel level,
engine temperature and engine RPMs. Athletes use this feedback to hone their
skills and track their performance. We seek access to relevant portions of this
data either directly by connecting to the sensors monitoring the actual
information or indirectly through our contractual relationships with the
governing body of an event, such as CART. We also seek access to data by
securing voluntary cooperation from athletes.

Remote Production and Transmission. Collected digital media assets are
prepared for transmission and then transmitted to our production studio. In our
remote production process, we define event-specific data tags that indicate the
type of data included in a transmission in much the same way desktop icons
indicate whether a file is a word processing document or electronic spreadsheet.
Remote production teams also control which assets are captured, formatted and
transmitted from the event and manage physical resources necessary to accomplish
this task. Tagged data is then transmitted to our production studio over
Internet Protocol networks, using satellite data communications, high-bandwidth
wide-area networks or other communications technologies.

Production. Transmissions are stored at our production studio in San
Francisco on receipt. Our event producers, directors and their multi-disciplined
teams use these transmitted digital assets to create multiple visual and audio
presentations. Aided by automation technologies, digital media assets received
from the sports venue are combined with previously stored assets or original
material created by our staff of designers, writers, audio specialists and
photographers. In advance of each event, these teams have developed
story-telling templates that enable the action to be experienced from the
athlete's perspective and drive the audience to explore the site further.

Distribution and Delivery. Distribution is the process of transporting
our content from our production studio through high-speed interactive systems to
entities that provide delivery, while delivery is the process of ultimately
reaching the end user. We currently distribute our Quokka Sports Immersion
programming through www.quokka.com over the Internet. Accordingly, delivery is
accomplished primarily through Internet service providers who provide end-users
with access to the Internet through their computers. We are also designing our
programming to exploit the technological opportunities presented by other
interactive systems, such as DSL, cable modem and satellite. If we ultimately
employ these distribution methods, our future delivery partners are likely to
include the providers of DSL service, interactive cable services, or satellite
providers. End-users accessing our programming through these systems in the
future may use computers or ultimately other interactive viewing devices such as
interactive televisions. We have also distributed our content to traditional
broadcast and print media. We believe these traditional media may serve as
additional distribution outlets for our rich digital programming.

JOINT VENTURES AND RIGHTS AGREEMENTS

We plan to secure rights to cover sporting events through a variety of
methods, including direct acquisition and the formation of joint ventures with
rights holders or other entities having established relationships with rights
holders. We have experience with both methods. To date, we have acquired the
rights to events such as FIM Motorcycle racing directly from the rights holders
and we have entered into a joint venture with NBC Olympics, Inc. in connection
with the Olympic Games and a joint venture with Forsythe Racing, Inc. in
connection with CART.

Joint Venture with NBC. In February 1999, we formed NBC/Quokka
Ventures, LLC with NBC Olympics, Inc., a wholly-owned subsidiary of National
Broadcasting Company, Inc. In connection with the formation of the joint
venture, we contracted with the joint venture to provide the services necessary
for the joint venture to provide interactive digital coverage. Consequently, we
expect that the joint venture's interactive digital coverage of the Olympics on
its Web site will showcase Quokka's distinctive style of programming and will
complement NBC's television coverage.
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NBC Olympics, Inc. granted the joint venture the following interactive
media rights, subject to limitations, in connection with the Olympic Games and
certain United States qualifying events through 2004:

- United States interactive rights to incorporate limited highlights of NBC
video into its coverage for a audience;

- an exclusive license to produce the official NBC interactive media
coverage of the Games;

- a license to incorporate still photographs and sequential still
photographs taken from all video produced from the Games by NBC Olympics
into the joint venture's coverage;

- a license to incorporate into the joint venture's coverage historical
Games footage, non-competition video and all research and other
materials, whether text, audio, video, still footage, written or fixed in
any other medium relating to the Games produced by NBC Olympics;

- the right to distribute the joint venture's coverage in interactive media
throughout the United States; and

- a license to use the composite NBC/Olympic logo on the joint venture's
Web site in connection with the production, operation, promotion,
marketing and distribution of the joint venture's coverage of the Games.

In order to protect its broadcast rights and brand, however, NBC Olympics,
Inc. can restrict the joint venture's use of any of the foregoing interactive
media rights if:

- NBC lacks the ability to grant such rights to the joint venture as a
result of contractual limitations or restrictions imposed by, or
conflicts with any legal rights held by the International Olympic
Committee or any other person or entity possessing intellectual property
or other rights in the still photographs, sequential still photographs or
video, whether Games, non-competition or historical;

- a use conflicts with NBC's current sponsors or advertisers or the
sponsors or advertisers of the International Olympic Committee, United
States Olympic Committee, Sydney Organizing Committee of the Olympic
Games, Salt Lake Olympic Organizing Committee or the 2004 Games
Organizing Committee;

- the digital assets are involved in any transaction by us or the joint
venture with any NBC Competitor, as defined below;

- a use competes with NBC's broadcast, cable or direct broadcast satellite
coverage of the Games; or

- a use violates NBC's, NBC Sports', the International Olympic Committee's,
the United States Olympic Committee's or other Olympic organizations'
editorial policies and practices.

NBC/Quokka Ventures, LLC is owned 51% by us and 49% by NBC Olympics, Inc.,
and management is vested in a board of directors, three of whom are currently
appointed by us and two of whom are currently appointed by NBC Olympics, Inc.
The terms of the operating agreement for the venture require us to make
quarterly capital contributions and contribute $15 million in cash to be used by
the venture, plus any additional cash required by the venture as determined by
the board of directors of the venture.

NBC Olympics, Inc. has the right to terminate the joint venture in the
event an NBC Competitor:

- merges or otherwise consolidates with us in a transaction where we are
not the surviving entity;

- becomes the beneficial owner of 15% or more of our outstanding equity
securities;

- becomes entitled to elect, appoint or replace a member or members of our
board of directors unless NBC Olympics, Inc. is also granted the same
right; or

- acquires all or substantially all of our assets.

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For these purposes, an "NBC Competitor" includes any media company that is
significantly engaged in any of the primary businesses of NBC Olympics, Inc.,
National Broadcasting Company, Inc. or its subsidiaries or any
telecommunications, Internet or similar company that is significantly engaged in
any of the primary businesses of NBC Olympics, Inc., National Broadcasting
Company, Inc., its subsidiaries or Snap! LLC or successor entities. However, an
NBC Competitor shall not include any entity identified by Quokka in writing to
NBC Olympics, Inc. that NBC Olympics, Inc. does not designate as an NBC
Competitor in writing to Quokka within 30 days of our written notice.

Joint Venture with Forsythe Racing, Inc. In January 1999, we
established CART Digital Media Enterprises, LLC a joint venture with Forsythe
Racing, Inc. Forsythe owns two of the teams that compete as part of the
Championship Auto Racing Teams circuit and brings to the joint venture racing
expertise as well as long-standing relationships with suppliers, teams and event
promoters in the auto racing world.

CART Digital Media Enterprises, LLC is owned 50% by us and 50% by Forsythe
Racing, Inc., and management is vested in a board of managers, two of whom are
appointed by us and two of whom are appointed by Forsythe Racing, Inc. The terms
of the venture agreement require the two parties to make equal capital
contributions on a quarterly basis. We expect to make capital contributions of
approximately $3 million in 1999 in order to meet the venture's needs for
operating capital.

In March 1999, the joint venture secured the exclusive worldwide
interactive media rights for all CART events through December 31, 2003 with a
right of first negotiation beyond that date. In connection with this digital
coverage, the joint venture also secured exclusive worldwide rights to:

- use CART's marks in its digital coverage as well as in connection with
any derivative products;

- use data and content from the events;

- syndicate content; and

- sell commercial partnerships, advertising, official merchandise,
electronic commerce products and services, official photographs and
derivative products.

The right to sell advertising and commercial partnerships is subject to
obligations to honor category exclusivity rights of current CART sponsors or to
first negotiate with those sponsors and the right to sell derivative products
and syndicate content is subject to CART's reasonable approval. The right to
sell official merchandise, official photographs and other electronic commerce
products and services is subject to receiving approval of other third parties.

CART has the ability to terminate the agreement if:

- the joint venture materially breaches any term of the agreement,
including failure to pay amounts owing under the agreement, subject to
notice and an opportunity to cure;

- the joint venture fails to maintain state of the art quality and
technological enhancements, subject to notice and an opportunity to cure;

- the Web site fails to achieve certain minimum levels of traffic, subject
to notice and an opportunity to cure;

- if the joint venture or we provide similar services to an open wheel
professional auto racing sanctioning body, league or series currently
domiciled in the United States that promotes products or services
competitive with those of CART; or

- if more than 49% of the ownership or beneficial interest in the joint
venture or in Quokka is transferred, sold or assigned to an entity whose
products or services are competitive to or in conflict with those of
CART.

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FIM Motorcycle Racing

We have acquired from Dorna Promocion del Deporte, S.A. the exclusive,
worldwide interactive media rights for all FIM Road Racing World Championship
Grand Prix events from January 1, 2000 through December 31, 2003. In connection
with our coverage rights, we have secured the exclusive worldwide rights to:

- use FIM Motorcycling World Championships' trademarks as part of our
coverage as well as in connection with any derivative products;

- use data and content from the events;

- syndicate content; and

- sell sponsorships, advertising, official merchandise, electronic commerce
products and services and derivative products.

Our right to sell advertising and sponsorships is subject to obligations to
honor category exclusivity rights of current FIM Motorcycling World
Championships sponsors or to first negotiate with those sponsors and our right
to sell derivative products is subject to Dorna's reasonable approval. Our right
to syndicate content is subject to a restriction that certain assets may not be
syndicated alone without Dorna's consent. Our right to sell official merchandise
and other electronic commerce products and services is subject to receiving
approval of certain other third parties. Dorna has the ability to terminate the
agreement if we fail to pay the required rights fee.

Around Alone

We have acquired from Great Adventures, Ltd. the exclusive, worldwide
interactive media rights for the Around Alone race through December 31, 2001
with the option to extend the term for two additional four-year periods. In
connection with our coverage rights, we also have secured worldwide rights to:

- use Around Alone's trademarks in our coverage as well as in connection
with any derivative products;

- use data and content from the events; and

- sell sponsorships, advertising, official merchandise, certain electronic
commerce products and services, official photographs, video and audio and
derivative products.

Our right to sell advertising and sponsorships is subject to certain obligations
to approach current Around Alone sponsors. Our right to sell official
merchandise, official photographs, video and audio and certain electronic
commerce products and services is subject to receiving approval of certain other
third parties. Great Adventures has the ability to terminate the agreement if we
fail to pay any revenue sharing earned.

America's Cup 2000.

We have acquired the exclusive, worldwide interactive media rights for the
America's Cup 2000 Match yacht race to be held in February and March 2000 in
Auckland, New Zealand. In connection with our coverage rights, we also have
secured rights to:

- create and host the exclusive official America's Cup 2000 and Team New
Zealand Web sites;

- use trademarks and logos of America's Cup 2000 and Team New Zealand on
the Web sites we develop;

- collect and distribute data and content from the race; and

- sell and retain the revenues from sponsorship, advertising and commercial
arrangements to sell official merchandise.

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In selling advertising and sponsorships, we are required to avoid conflicts
with existing sponsors of America's Cup 2000 or Team New Zealand. The agreement
can be terminated if we materially breach its terms, which could include our
failure to pay amounts we owe under the agreement.

COMPETITION

We believe that our programming does not compete directly with traditional
media, primarily because traditional media frequently do not provide substantial
coverage of the sports that we cover and because we believe our programming can
substantially enhance coverage provided by traditional media.

We expect that the number of our direct and indirect competitors will
increase in the future. We anticipate that, as the Internet and other
interactive systems, such as cable and satellite systems, converge with
traditional television broadcasting and traditional cable networks, significant
competition may come from the cable arena, including such sports-oriented cable
networks as the ESPN networks.

We believe that the principal competitive factors in attracting and
retaining audience are the ability to offer compelling and entertaining sports
programming, the depth, breadth and timeliness of coverage and brand
recognition. We believe that the principal competitive factors in securing and
retaining long-term digital rights to cover sporting events include the ability
to do the following:

- offer high-quality coverage;

- establish and maintain relationships with rights holders;

- deliver an attractive audience demographics;

- maintain credibility as a leading and enduring company; and

- pay substantial rights fees.

We may be unable to compete successfully with respect to one or all of these
factors. To review the risks we face from competitors, see "Risk Factors -- The
online digital entertainment market is intensely competitive and we may be
unable to compete successfully against current and future competitors."

INFRASTRUCTURE, OPERATIONS AND TECHNOLOGY

The www.quokka.com site is hosted at Frontier GlobalCenter in Sunnyvale,
California. All of our network operations are controlled from our headquarters
in San Francisco, California. We provide multiple Web servers that run the
Microsoft Internet Information Server on the Microsoft Windows NT Server
operating system and Compaq server hardware. Internet access is maintained
through Frontier GlobalCenter.

The network infrastructure is composed of Cisco Systems, Inc. products in
redundant configurations. The computer and networking equipment used to operate
our Web sites is configured with multiple power supplies. Frontier GlobalCenter
provides a generator with up to two weeks of backup power.

Our operations depend upon our ability to protect systems against damage
from fire, earthquakes, power loss, telecommunications failure, break-ins,
computer viruses, hacker attacks and other events beyond our control. A disaster
or malfunction that disables either our San Francisco production facility or
Frontier Global Center could interrupt our programming completely, limit the
quantity or timeliness of updates to our productions or limit the speed at which
our audience can access our content. Although we do not currently have a
documented disaster recovery plan, we intend to create one.

The market for digital media is characterized by rapid growth, rapidly
changing technology, evolving industry standards and frequent announcements of
new developments. To be successful, we must adapt to
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our rapidly changing environment by continually improving the performance,
features and reliability of our services as well as adapting to new
technologies. We may also incur substantial costs if we need to modify our
programming or distribution processes to adapt to these changes. Our business
could be adversely affected if we incur significant costs without adequate
results or cannot adapt to these changes.

INTELLECTUAL PROPERTY

We also cannot guarantee that infringement or other claims will not be
asserted or prosecuted against us in the future whether resulting from our
internally developed intellectual property or licenses or content from third
parties. For a description of our intellectual property practices and potential
risks, see "Risk Factors -- We may be unable to adequately protect or enforce
our intellectual property rights and our efforts to do so could be
time-consuming, expensive and divert management attention from executing our
business strategy."

GOVERNMENT REGULATION

We are qualified to do business in six states in the United States, and
failure by us to comply with foreign laws or to qualify as a foreign corporation
in a jurisdiction where we are required to do so could subject us to taxes and
penalties for the failure to qualify and could result in the inability to
enforce contracts in such jurisdictions. Any such new legislation or regulation,
or the application of laws or regulations from jurisdictions whose laws do not
currently apply to our business, could have a negative effect on our business.

EMPLOYEES

As of March 31, 1999, we had 186 employees, including 84 in production and
programming, 41 in engineering, software development and network operations, 15
in marketing, 13 in sales and 33 in administration, which includes rights
acquisition and other business services. We consider our relations with our
employees to be good. We believe that our future success will depend in part on
our continued ability to attract, integrate, retain and motivate highly
qualified technical and managerial personnel and upon the continued service of
our senior management and key creative personnel, none of whom is bound by an
employment agreement. Our growth has required us to continually hire, train and
manage new employees at a rapid rate, although competition for qualified
personnel in our industry and geographical location is intense. There can be no
assurance that we will be successful in attracting, integrating, retaining and
motivating a sufficient number of qualified personnel to conduct our business in
the future.

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FACILITIES

Our principal administrative, marketing, production and research and
engineering facilities are located in approximately 19,000 square feet of office
space in San Francisco, California under a lease that expires in March 2002. We
have entered into three additional office leases in San Francisco, California
covering an aggregate of approximately 60,000 square feet at three additional
sites to accommodate additional personnel. We have a 168 square-foot office in
Troy, Michigan for local sales activities. Finally, we have entered into a
long-term lease covering approximately 5,000 square feet of office space in
London, England which will serve as the center for our international operations
and have sub-leased approximately 400 square feet of office space near Lausanne,
Switzerland. We are actively seeking additional space.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information regarding our directors,
executive officers and certain other key employees as of March 31, 1999:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Alan S. Ramadan................... 41 President, Chief Executive Officer and Director
Richard H. Williams(1)............ 55 Chairman of the Board of Directors
John Bertrand A.M................. 52 Vice Chairman of the Board of Directors
Alvaro J. Saralegui............... 42 Chief Operating Officer
Les Schmidt....................... 44 Executive Vice President, Chief Financial Officer and
Secretary
Michael W. Gough.................. 43 Chief Creative Officer and Executive Producer
L. Steve Nelson................... 40 Senior Vice President, Olympics
Thomas P. Newell.................. 41 Senior Vice President, Business and Legal Affairs
David A. Riemer................... 41 Senior Vice President, Marketing
Mark J. Ellis..................... 40 Vice President, Sales
Marc P. Erzberger................. 31 Vice President, Motor Racing and General Manager
G. Michael Novelly................ 34 Vice President Finance and Controller
M. Elizabeth Sandell.............. 43 Vice President, Organizational Design and Development
Gerardo Seeliger.................. 52 General Manager, Europe
Brian J. Terkelsen................ 35 Vice President, Programming and Production
Walter W. Bregman(1)(2)........... 65 Director
Roel Pieper....................... 43 Director
James G. Shennan, Jr.(1)(2)(3).... 57 Director
Barry M. Weinman(2)(3)............ 60 Director
</TABLE>

- ---------------
(1) Member of the Nominating Committee.

(2) Member of the Compensation Committee.

(3) Member of the Audit Committee.

Alan S. Ramadan has served as our President and Chief Executive Officer
and as a director since August 1996, when we incorporated in Delaware under the
name Quokka Productions, Inc. Additionally, Mr. Ramadan served as Managing
Director of our Company from 1990 to August 1996, during which period we were
known as Ozware Developments Unit Trust and operated in Australia. In January
1993, Mr. Ramadan joined Fluid Thinking, Pty. Ltd. in Melbourne, Australia as
that company's Chief Executive Officer until June 1995. As Chief Executive
Officer of Fluid Thinking, Pty. Ltd., Mr. Ramadan was responsible for drawing
together a team of specialists that, together with the Technology Foundation,
developed key technology used by oneAustralia in the America's Cup challenge.
Mr. Ramadan also founded Best Knowledge Systems, a consulting company, and
worked as a research scientist at BHP Steel and as a computer scientist at
Monash University in Melbourne, Australia. Mr. Ramadan holds a B.Sc. in Computer
Science and Applied Mathematics from Monash University and is a 1995 graduate of
the Stanford Business School's Executive Program for Growing Companies.

Richard H. Williams has served as a director since August 1996, when we
incorporated in Delaware under the name Quokka Productions, Inc. Since April
1997, Mr. Williams has served as our Chairman of the Board. From December 1993
to February 1996, Mr. Williams was President and Chief Executive Officer of
Illustra Information Technologies, Inc. In February 1996, Illustra Information
Technologies, Inc. was acquired by Informix Software, Inc., where Mr. Williams
served as Senior Vice President until August 1996. From October 1991 to May
1992, Mr. Williams was Executive Vice

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President of Sales for Novell, Inc., and General Manager of that company's
Digital Research Systems Group. Prior to that time, Mr. Williams served as
President and Chief Executive Officer of Digital Research, Inc. Before joining
Digital Research, Inc., Mr. Williams was employed by IBM for twenty two years,
where he served as Vice President of Plans, Controls and Product Management for
the General Products Division from May 1984 to December 1986. Mr. Williams holds
a B.S. in Mathematics from the University of North Dakota and conducted graduate
studies at the University of Minnesota in numerical analysis and statistics.

John Bertrand A.M. has served as a director since August 1996 when we
incorporated in Delaware under the name Quokka Productions, Inc. Since April
1997, Mr. Bertrand has served as our Vice Chairman of the Board. From September
1992 to June 1995, Mr. Bertrand was the Chairman of the Board of Fluid Thinking,
Pty. Ltd. and the skipper of oneAustralia, the 1995 America's Cup Challenge team
that received technological support from Fluid Thinking, Pty. Ltd. From
September 1995 to October 1998, Mr. Bertrand was Chairman of the Australian
Government's Industry Research and Development Board. From June 1993 to the
present, Mr. Bertrand has been the Chairman of the Southern Cross Foundation, an
Australian scholarship foundation for engineering and applied science students.
Mr. Bertrand holds a B.S. in Mechanical Engineering from Monash University and a
M.S. in Naval Architecture from M.I.T. During his twenty-nine year international
sailing career, from 1970 to the present, Mr. Bertrand has represented Australia
in five America's Cups and two Olympic Games. Mr. Bertrand won the America's Cup
for Australia in September 1983 and is a life member of the Australia's Sports
Hall of Fame as well as the International America's Cup Hall of Fame.

Alvaro J. Saralegui joined Quokka in April 1999 as our Chief Operating
Officer. From March 1998 to April 1999, Mr. Saralegui was employed by the People
Magazine Group where he initially served as Vice President of People Weekly
until he was promoted to Group Publisher in January 1999. From September 1983 to
March 1998, Mr. Saralegui was employed at Sports Illustrated, Inc, where he
served as General Manager from November 1992 to March 1998. During his fifteen
years at Sports Illustrated, Inc., Mr. Saralegui also served as that company's
Business manager, Director of Marketing and Sales Development and Advertising
Sales Director. Mr. Saralegui holds a B.A. in History and Economics from
Dartmouth and an M.B.A. from Columbia University.

Les Schmidt joined Quokka in February 1998 as our Senior Vice President,
Quokka Productions, Chief Financial Officer and Secretary and was promoted to
Executive Vice President, Chief Financial Officer and Secretary in February
1999. From September 1996 to June 1997, Mr. Schmidt served as the Chief
Executive Officer of MECON, a healthcare benchmarking company. Mr. Schmidt
joined The Learning Company in 1987 and served as that company's Chief Financial
Officer until September 1994 when he was promoted to Chief Operating Officer. He
served as Chief Operating Officer of The Learning Company and its successor, The
Learning Company, Inc., a publicly traded developer and publisher of
educational, foreign language and home office productivity software, until
September 1996. Prior to that, Mr. Schmidt served as the Controller for Applied
ImmuneSciences, Inc., a venture-backed biotech start-up. Before joining Applied
ImmuneSciences, Inc., Mr. Schmidt was employed by Coopers & Lybrand, an
accounting firm, during which time he became a CPA. Mr. Schmidt holds a B.A. in
Political Economics from Antioch College and a M.S. in Taxation from Golden Gate
University.

Michael W. Gough joined Quokka in July 1997 as our Vice President,
Design and Creative Director and was promoted to Chief Creative Officer and
Executive Producer in September 1998. In August 1995, Mr. Gough co-founded
Construct Internet Design, a digital media design firm, where he served as
Creative Director until July 1997. Prior to that, Mr. Gough co-founded Jones,
Partners: Architecture, a design-focused architecture firm, where he served as
Managing Partner from December 1994 to August 1995. Earlier in his career, Mr.
Gough was an architect for Holt Hinshaw Pfau Jones and, before that, an
architect for the San Jose Redevelopment Agency. Mr. Gough studied Architecture
at California Polytechnic State University.

L. Steve Nelson joined Quokka in December 1996 as our Senior Vice
President. In February 1999, Mr. Nelson became the Senior Vice President,
Olympics. From December 1995 to December 1996,

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Mr. Nelson served as Vice President, America's Marketing and Sales for Informix
Software, Inc. While at Informix Software, Inc., Mr. Nelson oversaw industry
sales and marketing for telecommunications, media, financial services, retail
and manufacturing. From October 1994 to December 1996, Mr. Nelson served as Vice
President of Software Marketing for IBM. During his fourteen years at IBM, Mr.
Nelson also served as that company's Director of Marketing and General Manager
of Product Marketing. Mr. Nelson holds a B.S. in Business from Wake Forest
University where he was on the Varsity Golf Team.

Thomas P. Newell joined Quokka in March 1998 as Vice President of
Business Affairs and was promoted to Senior Vice President, Business and Legal
Affairs in October 1998. From May 1994 to August 1997, Mr. Newell served as
Executive Vice President and General Counsel for GGP Productions, LP, an
independent sports television production, syndication and sports marketing
company. There, he handled the company's financial and business operations for
three and a half years until its sale to International Management Group, a
Cleveland-based sports marketing and television company. From April 1992 to
April 1994, Mr. Newell served as Vice President, Business Affairs and Operations
of CBS Enterprises for CBS, Inc. During his seven years at CBS, Inc., Mr. Newell
also served as Litigation Counsel, then as Broadcast Counsel and as Director of
Business Affairs of CBS Sports, in which capacity he conducted negotiations that
resulted in CBS Sports' opportunity to cover the 1992 Olympic Winter Games.
Prior to that, Tom worked as a civil litigator for five years at O'Melveny &
Myers, a national law firm. Mr. Newell holds a B.A. from Stanford University and
a J.D. from USC Law School.

David A. Riemer joined Quokka in November 1998 as our Senior Vice
President, Marketing. Prior to joining us, Mr. Riemer spent 13 years at J.
Walter Thompson, where he served as President, JWT/West from May 1997 to
September 1998. While serving as President, JWT/West, Mr. Riemer oversaw the
JWT/Digital Unit and developed an agency specialization in telecommunications,
technology, retail and service marketing. Over the course of his career, Mr.
Riemer has written two musical comedies, two books and directed various
theatrical productions. Mr. Riemer holds a B.A. in Urban Studies and History
from Brown University and an M.B.A. from Columbia University.

Mark J. Ellis joined Quokka in May 1999 as our Vice President, Sales.
From March 1998 to April 1999, Mr. Ellis served as a Vice President/Publisher
for Time Inc. New Media. From November 1997 to March 1998, Mr. Ellis served as
the Publishing Director for Sports Illustrated Presents. From July 1991 to
November 1997, Mr. Ellis served as the Detroit Advertising Director for Sports
Illustrated. Mr. Ellis holds a B.A. in Marketing from the University of Notre
Dame and an M.B.A. from the University of Detroit.

Marc P. Erzberger joined Quokka in August 1998 as our Vice President,
Motor Racing. From June 1991 to June 1998, Mr. Erzberger served as a consultant
for the Boston Consulting Group in London where he worked extensively in the
financial services and consumer/retail sectors. Mr. Erzberger worked on issues
of strategy and implementation in several product areas, including household
products, spirits and beverages, food, automotive and credit cards. Mr.
Erzberger holds a B.Sc. in Mathematics and Management from the University of
London, King's College, and an M.B.A. from the Harvard Graduate School of
Business Administration. Mr. Erzberger is an avid sportsman, having represented
Switzerland in the windsurfing event at the 1984 Olympic Games in Los Angeles.

G. Michael Novelly joined Quokka in August 1998 as our Controller and
was promoted to Vice President, Finance and Controller in January 1999. From
March 1995 to August 1998, Mr. Novelly served as the Senior Vice President and
Chief Financial Officer of PolyGram Television, a division of the publicly
traded global music and entertainment group, PolyGram, N.V. During his years at
PolyGram, Mr. Novelly oversaw all financial and administrative aspects of the
Company's film production, acquisition and worldwide distribution of its library
of over 10,000 hours of filmed entertainment programming. Before joining
PolyGram Television, Mr. Novelly was employed by KPMG Peat Marwick LLP, an
accounting firm, where he provided auditing and consulting services to film
production and distribution companies, including Metro-Goldwyn-Mayer Inc,
Ticketmaster Corporation and Gramercy Pictures. Mr. Novelly is a CPA and holds a
B.S. in Accounting and Finance from the University of Colorado at Boulder.

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M. Elizabeth Sandell joined Quokka in July 1998 as our Vice President,
Organizational Design & Development. From December 1996 to June 1998, Ms.
Sandell served as Vice President, Human Resources for NetChannel Inc., a
multi-media, internet service provider. In 1993, Ms. Sandell founded The Sandell
Group, a consulting firm for technology companies, where she has served as that
company's Principal from November 1993 to the present. Prior to that time, Ms.
Sandell served as Western Region Director of Human Resources for Service America
Corporation, where she was responsible for 4500 employees throughout 10 states
and Canada. Ms. Sandell began her career in Human Resources with Marriott
Corporation, holding a variety of corporate personnel management positions in
the Hotel and Lodging Division. She holds a B.A. in Psychology from Agnes Scott
College and a Masters of Divinity with emphasis in cross-cultural communication
from Alliance Theological Seminary.

Gerardo Seeliger joined Quokka in August 1998 as an advisor and was
promoted to General Manager, Europe, in April 1999. Mr. Seeliger co-founded
Seeliger & Conde, one of Spain's largest executive search firms, and served as
that company's Managing Partner from April 1990 to April 1999. Prior to that
time, Mr. Seeliger served as the General Manager of Sardan AG, the holding
company for Adidas Group, Switzerland. Before that, Mr. Seeliger served as a
Managing Director for Russell Reynolds Associates, an executive recruitment
firm, and as a General Manager for Bankers Trust, Co. Mr. Seeliger has held
several positions within the International Sailing Federation, including
Chairman, Marketing. Mr. Seeliger holds a degree in Economics and Science from
the University of Freiburg, Germany.

Brian J. Terkelsen joined Quokka in June 1998 as our Vice President,
Programming and Production. In January 1993, Mr. Terkelsen co-founded
Eco-Challenge Lifestyles, Inc., an adventure racing company, where he served as
Chief Operating Officer from that company's inception to January 1998. During
that period, Mr. Terkelsen also served as Executive Producer for several
adventure racing television productions, including productions for MTV and The
Discovery Channel. From May 1985 to June 1992, Mr. Terkelsen was employed as an
investment banker for Barclay's Bank and Bankers Trust, Co. Mr. Terkelsen holds
a B.S. in Business Administration, Finance from Bryant College.

Walter W. Bregman became a director of Quokka in October 1997. From
January 1988 to the present, Mr. Bregman has served as Chairman and Joint Chief
Executive Officer of S&B Enterprises, a marketing and consulting company. In
1985, Mr. Bregman co-founded Cormorant Beach Club in St. Croix USVI and served
as its Chief Executive Officer and Manager from 1985 to 1987. Prior to that
time, Mr. Bregman was President of International Playtex, Inc. a manufacturer of
intimate apparel, toiletries, pantyhose and baby nursers. Before joining
International Playtex, Inc., Mr. Bregman served as Vice President of Marketing
and Advertising for E&J Gallo Winery and as President of NCK, Inc., a worldwide
advertising agency. Mr. Bregman also serves on the boards of directors for
Symantec, Inc. and Sento, Inc. Mr. Bregman holds an A.B. in English Literature
from Harvard College.

Roel Pieper became a director of Quokka in December 1997. From May 1998
to May 1999, Mr. Pieper has served as a director and an Executive Vice President
of Royal Philips Electronics N.V. From August 1997 to March 1998, Mr. Pieper
served as Senior Vice President, Worldwide Sales and Marketing, of Compaq
Computer Corporation. From January 1996 to August 1997, Mr. Pieper served as the
President and Chief Executive Officer of Tandem Computers, Inc., where he helped
reposition the company for its eventual merger with Compaq Computer Corporation.
From September 1993 to December 1995, Mr. Pieper also served as the President
and Chief Executive officers of Ub Networks, Inc., a wholly-owned subsidiary of
Tandem Computers, Inc., until that subsidiary merged with Compaq Computer
Corporation. From December 1990 to August 1993, Mr. Pieper was the President and
Chief Executive Officer of AT&T's UNIX System Laboratories. Prior to that time,
Mr. Pieper spent ten years in the employ of Software AG, where he was eventually
promoted to the position of Chief Technology Officer. Mr. Pieper also serves on
the boards of directors of Computer Associates, Inc., Veritas Software, Inc.,
General Magic, Inc. and Lincoln Financial Group. Mr. Pieper holds a Doctoral
Degree in Mathematics and Computer Science from Delft Technical University and
is Crown Fellow of the Aspen Institute in the United States.

James G. Shennan, Jr., became a director of Quokka in December 1997.
From June 1989 to the present, Mr. Shennan has been a General Partner of Trinity
Ventures, a venture capital firm. Mr. Shennan

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<PAGE> 59

has over 25 years experience in consumer products and services marketing. Mr.
Shennan also serves on the boards of directors of the Starbucks Coffee Company
and P. F. Chang's China Bistro, Inc., as well as several private consumer and
e-commerce companies in which Trinity Ventures is an investor. Mr. Shennan holds
a B.A. in International Politics from Princeton University and an M.B.A. from
the Stanford Graduate School of Business.

Barry M. Weinman became a director of Quokka in November 1997. From May
1993 to the present, Mr. Weinman has been a General Partner at Media Technology
Ventures/AVI Management and has been making high tech venture capital
investments in Silicon Valley since 1980. AVI Management and its new media fund,
Media Technology Ventures, had approximately $300 million under management as of
March 31, 1999. Mr. Weinman is also on the boards of directors of Women.com
Networks (Women's Wire), Be, Inc., InfoGear, Inc. and TalkCity, Inc. Mr. Weinman
holds a B.S. in Industrial Engineering from Clarkson College of Technology and
an M.A. in International Relations from the London School of
Economics/University of Southern California.

BOARD COMPOSITION

Upon the completion of this offering, Quokka will have authorized seven
directors. In accordance with the terms of our certificate of incorporation and
bylaws, each of which will become effective upon the completion of this
offering, the board of directors will be divided into three classes, Class I,
Class II and Class III, with each class serving staggered three-year terms. Upon
the completion of this offering, the members of the classes will be divided as
follows:

- Class I: Messrs. Bertrand, Pieper and Ramadan;

- Class II: Messrs. Bregman and Shennan; and

- Class III: Messrs. Weinman and Williams.

The Class I directors will stand for re-election or election at the 1999
annual meeting of stockholders. The Class II directors will stand for
re-election or election at the 2000 annual meeting of stockholders and the Class
III directors will stand for re-election or election at the 2001 annual meeting
of stockholders. At each annual meeting of stockholders after the initial
classification, the successors to directors whose terms will then expire will be
elected to serve from the time of election and qualification until the third
annual meeting following the election or special meeting held in lieu thereof.

Our certificate of incorporation provides that the authorized number of
directors may be changed only by resolution of the board of directors. Any
additional directorships resulting from an increase in the number of directors
will be distributed between the three classes so that, as nearly as possible,
each class will consist of one-third of the directors. This classification of
the board of directors may have the effect of delaying or preventing changes in
the control or management of Quokka. Notwithstanding the foregoing, if Quokka is
subject to Section 2115 of the California General Corporation Law, all directors
shall be designated of the same class, and such directors shall be elected by
cumulative voting if any stockholder requests cumulative voting. See
"Description of Capital Stock -- Section 2115" for additional information
relating to the effect of Section 2115 on Quokka.

Directors of Quokka may be removed for cause by the affirmative vote of the
holders of a majority of our voting stock and such directors may be removed
without cause by the affirmative vote of the holders of at least two-thirds of
our voting stock. Notwithstanding the foregoing, if Quokka is subject to Section
2115 of the California General Corporation Law, unless every director is
removed, no single director may be removed without cause when the votes cast
against such director's removal would be sufficient to elect that director if
voted cumulatively. See "Description of Capital Stock -- Section 2115" for
additional information relating to the effect of Section 2115 on Quokka.

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<PAGE> 60

BOARD COMMITTEES

The Audit Committee of the board of directors consists of Messrs. Shennan
and Weinman. The Audit Committee reviews our financial statements and accounting
practices, makes recommendations to the board of directors regarding the
selection of independent auditors and reviews the results and scope of the audit
and other services provided by our independent auditors. The Compensation
Committee of the board of directors consists of Messrs. Bregman, Shennan and
Weinman. The Compensation Committee makes recommendations to the board of
directors concerning salaries and incentive compensation for our officers and
employees and administers our employee benefit plans. The Nominating Committee
of the board of directors consists of Messrs. Bregman, Shennan and Williams. The
Nominating Committee makes recommendations to the board of directors concerning
the nomination of new directors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the members of the Compensation Committee of the board of directors
is an officer or employee of Quokka. None of our executive officers serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving on our board of directors or
Compensation Committee.

DIRECTOR COMPENSATION

Except for Mr. Bregman, we have not provided cash compensation to
non-employee directors for their services as directors. Following the completion
of this offering, all directors will be eligible to participate in our 1999
Equity Incentive Plan, employee directors will be eligible to participate in our
1999 Employee Stock Purchase Plan and non-employee directors will be eligible to
participate in our 1999 Non-Employee Directors' Stock Option Plan. See
"-- Employee Benefit Plans" for additional information relating to these plans.

In October 1997, we entered into an agreement with Mr. Bregman, under which
Mr. Bregman had been paid, as of March 31, 1999, an aggregate of $43,000. Prior
to the completion of this offering, Mr. Bregman was compensated under the
agreement at a rate of $2,000 for every board meeting attended and $500 for
every committee meeting attended, if the committee meeting was held in
conjunction with a board meeting. For each committee meeting not held in
conjunction with a board meeting, Mr. Bregman received $1,500. Additionally,
under the agreement, Mr. Bregman received an initial option grant as well as
option grants in the amount of 16,000 shares each year. As of March 31, 1999,
Mr. Bregman had been granted an aggregate of 112,000 shares of our stock outside
of the 1997 Equity Incentive Plan with a weighted average exercise price of
$0.80 per share.

EXECUTIVE COMPENSATION

The following table shows compensation earned during fiscal 1998 by
Quokka's chief executive officer and our only other executive officer who earned
more than $100,000 in 1998. These people are referred to as the named executive
officers. Titles shown in the table are titles held as of March 31, 1999. The
information in the table includes salaries, bonuses, stock options granted and
other miscellaneous compensation. We have not granted stock appreciation rights
or restricted stock awards and provide no long-term compensation benefits other
than stock options.

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<PAGE> 61

SUMMARY COMPENSATION TABLE(1)(2)

<TABLE>
<CAPTION>
LONG-TERM AND
ANNUAL COMPENSATION FOR 1998 OTHER COMPENSATION
------------------------------- --------------------
OTHER ANNUAL NUMBER OF SECURITIES
NAME AND PRINCIPAL POSITIONS SALARY BONUS COMPENSATION UNDERLYING OPTIONS
- ---------------------------- -------- ----- ------------ --------------------
<S> <C> <C> <C> <C>
Alan Ramadan.................................... $214,583 -- -- --
President, Chief Executive Officer and
Director
Les Schmidt..................................... $172,051 -- -- 200,000
Executive Vice President, Chief Financial
Officer and Secretary
</TABLE>

- ---------------
(1) In accordance with the rules of the Securities and Exchange Commission the
compensation described in this table does not include medical, group life
insurance or other benefits received by the named executive officers that
are available generally to all of our salaried employees and certain
perquisites and other personal benefits received by the named executive
officers, which do not exceed the lesser of $50,000 or 10% of any such
officer's salary and bonus disclosed in this table.

(2) Messrs. Riemer and Williams did not serve as employees of Quokka for all of
1998. If these officers' base salaries were annualized for all of fiscal
1998, their compensation would have required disclosure on this table. For
1998, Mr. Riemer's base salary on an annualized basis was $200,000. For
1998, Mr. William's base salary on an annualized basis was $200,000.
Additionally, if Mr. Saralegui, who was not hired by Quokka until April
1999, had been employed with Quokka during 1998 pursuant to the same
compensation arrangement that he has with us during 1999, his compensation
would have required disclosure in this table. For 1999, Mr. Saralegui's base
salary is $275,000.

OPTION GRANTS DURING 1998

The following table sets forth each grant of stock options made during 1998
to each of the named executive officers.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
NUMBER OF PERCENTAGE OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE OPTION TERM(4)
OPTIONS EMPLOYEES PER EXPIRATION ----------------------
NAME GRANTED(1) DURING 1998(2) SHARE(3) DATE 5% 10%
- ---- ---------- -------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Alan Ramadan(5).......... -- -- -- --
Les Schmidt(6)........... 200,000 8.8% $0.50 2/16/08
</TABLE>

- ---------------
(1) Options granted in 1998 to the named executive officers were granted under
the 1997 Equity Incentive Plan. All options granted to the named executive
officers are immediately exercisable, incentive stock options, to the extent
permissible under applicable IRS regulations. Generally, initial option
grants vest as to 20% of the shares subject to the option one year from the
date of hire and one-forty-eighth of the remaining shares subject to the
option vest on each monthly anniversary thereafter. Bonus or promotion
options vest according to the same schedule as the initial option grants
except that the one year waiting period typically commences on the date the
bonus is awarded or on the date of promotion. Other options vest according
to the same schedule as the initial option grants except that the one year
waiting period is reduced to ten months and the waiting period commenced on
January 1, 1999. Upon certain changes in control of Quokka, this vesting
schedule will accelerate as to all shares that are then unvested. Unvested
shares are subject to Quokka's right of repurchase upon termination of
employment. Options expire ten years from the date of grant.

(2) Based on an aggregate of 2,273,000 shares subject to options granted to
employees of Quokka in 1998, including named executive officers.

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<PAGE> 62

(3) The exercise price per share of each option granted was equal to the fair
market value of the common stock as determined by the board of directors on
the date of the grant. In determining the fair market value of the stock
granted on the grant date, the board of directors considered, among other
things, Quokka's absolute and relative levels of revenues and other
operating results and the state of Quokka's strategic relationships.

(4) Potential realizable values are computed by (a) multiplying the number of
shares of common stock subject to a given option by an assumed initial
public offering price of $ per share, (b) assuming that the aggregate
stock value derived from that calculation compounds at the annual 5% or 10%
rate shown in the table for the entire ten-year term of the option and (c)
subtracting from that result the aggregate option exercise price. The 5% and
10% assumed annual rates of stock price appreciation are mandated by the
rules of the SEC and do not represent Quokka's estimate or projection of
future common stock prices.

(5) Excludes 300,000 shares subject to options granted in March 1999. Such
options are subject to the same provisions regarding vesting as described in
footnote (1) above, expire on March 15, 2009 and were granted at an exercise
price of $8.00 per share.

(6) Excludes 250,000 shares subject to options granted in February 1999. Such
options are subject to the same provisions regarding vesting as described in
footnote (1) above, expire on February 25, 2009 and were granted at an
exercise price of $7.00 per share.

AGGREGATE OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES AT DECEMBER 31,
1998

The following table sets forth the number of shares of common stock
acquired and the value realized upon exercise of stock options during 1998 and
the number of shares of common stock subject to exercisable and unexercisable
stock options held as of December 31, 1998 by each of the named executive
officers. Value at fiscal year end is measured as the difference between the
exercise price and the fair market value on December 31, 1998.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED
NUMBER OF OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1998(3) DECEMBER 31, 1998(4)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(1) REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan Ramadan................ -- -- -- -- -- --
Les Schmidt................. 32,000 -- 168,000(5) --
</TABLE>

- ---------------
(1) Represents shares which were vested on the date of exercise.

(2) Based on an assumed initial public offering price per share of $ , minus
the per share exercise price, multiplied by the number of shares issued upon
exercise of the option.

(3) Options granted to named executive officers may be exercised immediately
(i.e. prior to vesting) pursuant to early exercise provisions contained in
option agreements. Any unvested shares issued pursuant to any such early
exercise are subject to a repurchase option in favor of Quokka at the
original exercise price paid per share upon the optionee's cessation of
service as an employee, director or consultant prior to the vesting of such
shares. Such repurchase option lapses at a rate reflecting the vesting
schedule of the underlying option. Accordingly, such repurchase option
generally lapses at a rate of 2.083% per month.

(4) Based on the difference between the assumed initial public offering price
per share of $ and the exercise price.

(5) If exercised in full within 60 days of May 27, 1999, 143,334 of these shares
would be subject to a right of repurchase in favor of Quokka.

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<PAGE> 63

EMPLOYEE BENEFIT PLANS

1997 Equity Incentive Plan

General. In February 1997, the board of directors adopted, and the
stockholders approved, the 1997 Equity Incentive Plan. The incentive plan was
amended in September 1998 and March 1999 and amended and restated in April 1999.
As of May 27, 1999, options to purchase a total of 8,291,102 shares of common
stock were held by all participants under the Incentive Plan and options to
purchase 4,729,801 remained available for grant. The incentive plan provides for
the grant of:

- incentive stock options, as defined under the Internal Revenue Code of
1986, as amended, to employees (including officers);

- nonstatutory stock options;

- restricted stock purchase awards; and

- stock bonuses to employees (including officers), directors and
consultants.

Administration. The incentive plan is administered by the board of
directors. The board of directors may delegate authority to administer the
incentive plan to the compensation committee. The board of directors determines
recipients, types of options to be granted, number of shares subject to the
option vesting, and the exercisability of options granted. The board of
directors also determines the exercise price of options granted. The exercise
price for an incentive stock option cannot be less than 100% of the fair market
value of the common stock on the date of grant. The exercise price for a
nonstatutory stock option cannot be less than 85% of the fair market value of
the common stock on the date of grant. Options granted under the incentive plan
vest at the rate specified in the option agreement.

In general, the term of stock options granted under the incentive plan may
not exceed 10 years. Unless the terms of an optionee's stock option agreement
provide for earlier termination, in the event an optionee's service relationship
with us, or any affiliate of ours, ceases due to disability or death, the
optionee (or his beneficiary) may exercise any vested options up to twelve
months (eighteen months in the event of death) after the date such service
relationship ends. If an optionee's relationship with us, or any affiliate of
ours, ceases for any reason other than disability or death, the optionee may
(unless the terms of the stock option agreement provide for earlier termination)
exercise any vested options up to three months from cessation of service.

Generally, an optionee may not transfer a stock option other than by will
or the laws of descent or distribution unless the optionee holds a nonstatutory
stock option that provides otherwise. However, an optionee may designate a
beneficiary who may exercise the option following the optionee's death.

Option Grants. Incentive stock options may be granted only to our
employees. The aggregate fair market value, determined at the time of grant, of
shares of our common stock with respect to which incentive stock options are
exercisable for the first time by an optionee during any calendar year under all
of our stock plans may not exceed $100,000. No incentive stock option, and prior
to our stock being publicly traded no nonstatutory stock option, may be granted
to any person who, at the time of the grant, owns or is deemed to own stock
possessing more than 10% of the total combined voting power of Quokka or any of
its affiliates unless the following conditions are satisfied:

- the option exercise price must be at least 110% of the fair market
value of the stock subject to the option on the date of grant; and

- the term of the incentive stock option award must not exceed five
years from the date of grant.

When we become subject to Section 162(m) of the Internal Revenue Code of
1986 (which denies a deduction to publicly held corporations for certain
compensation paid to specified employees in a taxable year to the extent that
the compensation exceeds $1.0 million), no person may be granted options under
the incentive plan covering more than 2,000,000 shares of common stock in any
calendar year. Shares subject to stock options that have expired or otherwise
terminated without having been exercised in full

62
<PAGE> 64

again become available for the grant of awards under the incentive plan. Under
its general authority to grant options, the board of directors has the implicit
authority to reprice outstanding options or to offer optionees the opportunity
to replace outstanding options with new options for the same or a different
number of shares. Both the original and new options will count toward the
Section 162(m) limitation.

Restricted Stock and Stock Bonus Awards. Prior to our stock being
publicly traded, the purchase price for each restricted stock award granted must
be at least 100% of the fair market value of the stock subject to the option on
the date of the award or at the time the purchase is consummated. For restricted
stock awards made on or after the date that our stock is publicly traded, the
purchase price for such awards must be at least 85% of the fair market value of
the stock subject to the option on the date of the award or at the time the
purchase is consummated. Rights to acquire shares under a stock bonus or
restricted stock bonus agreement may not be transferred other than by will or by
the laws of descent and distribution and are exercisable during the life of the
optionee only by the optionee. Certain restricted stock awards made following
the completion of this offering may be otherwise transferable if the stock bonus
agreement so provides.

Changes in Control. In the event of certain changes in control, all
outstanding options under the incentive plan either will be assumed, continued
or substituted for by any surviving entity. If the surviving entity determines
not to assume, continue or substitute for such awards, the vesting provisions of
such stock awards will be accelerated and such stock awards will be terminated
upon the change in control if not previously exercised. In the event of an
acquisition pursuant to Section 13(d) or 14(d) of the Exchange Act of securities
representing 50% of our combined voting power, the vesting provisions of stock
awards will either be assumed, continued or substituted by Quokka (or a
controlling affiliate of Quokka) or accelerated immediately upon the occurrence
of such event and such stock awards will be terminated upon such acquisition if
not previously exercised.

1999 Non-Employee Directors' Stock Option Plan

General. In April 1999, the board of directors adopted, subject to
stockholder approval, the 1999 Non-Employee Directors' Stock Option Plan to
provide for the automatic grant of options to purchase shares of common stock to
our non-employee directors. The aggregate number of shares of common stock that
may be issued pursuant to options granted under the directors' plan is 450,000
shares.

Administration and Terms. The board of directors shall administer the
directors' plan unless and until it delegates administration to a committee.
Options granted under the directors' plan are generally subject to the following
terms:

- the exercise price of options granted will be equal to the fair market
value of the common stock on the date of grant;

- no option granted may be exercised after the expiration of 3 years
from the date it was granted;

- options granted are not transferable other than by will or by the laws
of descent and distribution and are exercisable during the life of the
optionee only by the optionee;

- an optionee may designate a beneficiary who may exercise the option
following the optionee's death; and

- an optionee whose service relationship with Quokka or any affiliate
(whether as a non-employee director of Quokka or subsequently as an
employee, director or consultant of either Quokka or an affiliate)
ceases for any reason may exercise vested options for the term
provided in the option agreement (12 months generally, 18 months in
the event of death).

Automatic Grants. Upon the completion of this offering, subject to
certain exceptions, each non-employee director will automatically be granted an
option to purchase 25,000 shares of common stock. Any individual who becomes a
non-employee director after this offering will automatically receive this
initial grant upon being elected to the board of directors. On June 1 of each
year, commencing in 2000,

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<PAGE> 65

any person who is then a non-employee director will automatically will be
granted an option to purchase 25,000 shares of common stock, provided that if
any non-employee director that had not served in that capacity for the entire
period since the preceding June 1, then the number of shares subject to the
annual grant shall be reduced, pro rata, for each full quarter the person did
not serve during the previous period. Initial grants and annual grants vest and
become immediately exercisable upon grant.

1999 Employee Stock Purchase Plan

General. In April 1999, the board of directors adopted, subject to
stockholder approval, the 1999 Employee Stock Purchase Plan, authorizing the
issuance of 1,000,000 shares of common stock pursuant to purchase rights granted
to our employees or to employees of any affiliate of ours. The purchase plan is
intended to qualify as an employee stock purchase plan within the meaning of
Section 423 of the Code. As of the date hereof, no shares of common stock have
been purchased under the purchase plan.

Administration. The purchase plan shall be administered by the board of
directors, but such administration may be delegated to the compensation
committee. The purchase plan provides a means by which employees may purchase
our common stock through payroll deductions. The purchase plan is implemented by
offerings of rights to eligible employees. Generally, all regular employees,
including executive officers, who work at least 20 hours per week and are
customarily employed by Quokka or by an affiliate of Quokka for at least five
months per calendar year may participate in the purchase plan and may authorize
payroll deductions of up to 15% of their earnings for the purchase of stock
under the Purchase Plan. Under the plan, we may specify offerings with a
duration of not more than 27 months, and may specify shorter purchase periods
within each offering. The first offering will begin on the effective date of
this offering and be approximately 12 months in duration with purchases
occurring every six months. Unless otherwise determined by the board of
directors, common stock is purchased for accounts of employees participating in
the purchase plan at a price per share equal to the lower of:

- 85% of the fair market value of a share of our common stock on the
date of commencement of participation in this offering or

- 85% of the fair market value of a share of our common stock on the
date of purchase.

Limitations. Eligible employees may be granted rights only if the
rights, together with any other rights granted under employee stock purchase
plans, do not permit such employee's rights to purchase stock to accrue at a
rate which exceeds $25,000 of the fair market value of such stock for each
calendar year in which such rights are outstanding. In addition, an employee may
purchase no more than 2,000 shares during any one offering. No employee shall be
eligible for the grant of any rights under the Purchase Plan if immediately
after such rights are granted, such employee has voting power over 5% or more of
our outstanding capital stock (measured by vote or value).

401(k) Plan

We sponsor the Quokka Sports, Inc. 401(k) Plan, a defined contribution plan
intended to qualify under Section 401 of the Internal Revenue Code of 1986, as
amended. All employees are eligible to participate and may enter the 401(k) plan
as of the first day of any month. Participants may make pre-tax contributions to
the 401(k) plan of up to 15% of their eligible earnings, subject to a
statutorily prescribed annual limit. We do not make matching contributions. Each
participant's contributions, and the corresponding investment earnings, are
generally not taxable to the participants until withdrawn. Participant
contributions are held in trust as required by law. Individual participants may
direct the trustee to invest their accounts in authorized investment
alternatives.

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<PAGE> 66

EMPLOYMENT AGREEMENTS

In April 1999, we entered into a key employee agreement with Mr. Saralegui,
under which Mr. Saralegui is compensated at a rate of $275,000 per year, paid on
a semi-monthly basis. The agreement also provides for an stock option grant,
pursuant to our 1997 Equity Incentive Plan, for the purchase of 1,000,000 shares
our common stock at an exercise price of $8.50 per share. To the extent
permissible under applicable IRS rules, such grant shall be an incentive stock
option grant. In the event Mr. Saralegui is terminated without cause, he is
entitled to receive from us an amount equal to twelve months of his base salary
as well as acceleration of a portion of his unvested options under certain
circumstances.

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<PAGE> 67

CERTAIN TRANSACTIONS

In January 1997, we issued and sold and aggregate of 3,800,000 shares of
common stock in exchange for all of the properties, rights, interests and other
tangible and intangible assets of Ozware Developments Unit Trust, an Australian
unit trust. From March 1997 to August 1997, we issued and sold an aggregate of
5,851,566 shares of common stock at $0.50 per share. In October 1997, we issued
warrants to purchase an aggregate of 212,800 shares of common stock at an
exercise price of $0.50 per share. In December 1997, we issued and sold an
aggregate of 7,720,590 shares of Series A preferred stock at $0.68 per share.
Between March 1998 and December 1998, we issued and sold warrants to purchase up
to 245,098 shares of Series A preferred stock at an exercise price of $1.02 per
share, 245,098 shares of Series B preferred stock at an exercise price of $1.02
per share, 72,727 shares of Series B preferred stock at an exercise price of
$1.50 per share and 72,727 shares of Series C preferred stock at an exercise
price of $3.25 per share. The warrants were amended and partially exercised in
December 1998 for 145,559 shares of Series A preferred stock, 145,559 shares of
Series B preferred stock, 24,242 shares of Series B preferred stock and 24,242
shares of Series C preferred stock. The warrants, as amended, are currently
exercisable for 99,539 shares of Series A preferred stock at an exercise price
of $1.02 per share, 99,539 shares of Series B preferred stock at an exercise
price of $1.02 per share, 48,485 shares of Series B preferred stock at an
exercise price of $1.50 per share and 48,485 shares of Series C preferred stock
at an exercise price of $3.25 per share and will expire upon the closing of our
initial public offering. From June to August 1998, we issued and sold an
aggregate of 10,737,068 shares of Series B preferred stock at $1.50 per share.
In December 1998, we issued and sold an aggregate of 4,938,756 shares of Series
C preferred stock at $3.25 per share. From February 1999 to March 1999, we
issued and sold warrants to purchase up to an aggregate of 2,391,750 shares of
Series C preferred stock at a weighted average per share price of $5.33. In
April 1999, we issued and sold warrants to purchase up to an aggregate of
161,538 shares of Series C preferred stock at an exercise price of $3.25 per
share. In May 1999, Quokka issued and sold an aggregate of 3,966,667 shares of
Series D preferred stock at $9.00 per share.

The following table identifies the directors, executive officers and five
percent stockholders who have made equity investments in Quokka to purchase
shares of our preferred stock or common stock. See "Principal Stockholders" for
additional information relating to the beneficial ownership of these
stockholders.

<TABLE>
<CAPTION>
SHARES OF SHARES OF SERIES A SHARES OF SERIES B SHARES OF SERIES C SHARES OF SERIES D
INVESTOR COMMON STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
- -------- ------------ ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Alan S. Ramadan(1)............. 2,090,572 -- -- -- --
Richard H. Williams(2)......... 2,500,000 208,823 -- -- --
John Bertrand A.M. ............ 2,116,204 -- -- -- --
Walter W. Bregman(3)........... 200,000 22,058 89,381 30,769 --
Roel Pieper.................... 500,000 257,353 305,523 215,679 --
Les Schmidt(4)................. 35,500 -- 200,000 76,923 --
L. Steve Nelson................ 360,967 -- 33,333 15,385 --
David A. Riemer................ -- -- -- 20,000 --
M. Elizabeth Sandell........... -- -- -- 15,385 --
Media Technology Ventures,
LP(5)........................ -- 2,941,177 1,185,524 769,231 --
MediaOne Interactive Services,
Inc.(6)...................... -- -- 2,666,667 1,230,770 --
Intel Corporation(7)........... -- 1,322,030 1,311,003 1,255,012 --
Accel VI LP(8)................. -- -- 3,333,333 153,846 --
Trinity Ventures V, LP(9)...... -- 2,205,883 884,752 153,846 --
Wakefield Group II LLC.(10).... 800,000 577,942 555,791 92,308 --
</TABLE>

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

(1) Includes 1,900,000 shares of common stock held by Pogmohane Partners, LP,
an entity for which Mr. Ramadan serves as a general partner.

(2) Excludes warrants to purchase 56,800 shares of common stock issued to Mr.
Williams in October 1997.

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<PAGE> 68

(3) Includes 200,000 shares of common stock, 22,058 shares of Series A
preferred stock, 89,381 shares of Series B preferred stock and 30,769
shares of Series C preferred stock held in the Bregman Revocable Trust
u/a/d 8/21/92, for which Mr. Bregman, a director of Quokka, serves as a
trustee. Does not include warrants to purchase 6,000 shares of common stock
issued to the Bregman Revocable Trust u/a/d 8/21/92 in October 1997.
Excludes options to purchase 112,000 shares of common stock granted to Mr.
Bregman outside of the 1997 Equity Incentive Plan.

(4) Includes 182,000 shares of Series B preferred stock and 76,923 shares of
Series C preferred stock held in The Les Schmidt and Joanne P. Hattum
Family Trust u/t/d 4/8/92, for which Mr. Schmidt, an executive officer of
Quokka, serves as a trustee. Also includes 6,000 shares of common stock
held by each of The Schmidt Family Irrevocable Trust, dated 12/27/95, FBO
Caryn H. Schmidt, The Schmidt Family Irrevocable Trust, dated 12/27/95, FBO
Bryan P. Schmidt and The Schmidt Family Irrevocable Trust, dated 12/27/95,
FBO Taylor G. Schmidt.

(5) Includes 769,231 shares of Series C preferred stock held by Media
Technology Equity Partners, LP, and 336,337 shares of Series A preferred
stock and 135,570 shares of Series B preferred stock held by Media
Technology Ventures Entrepreneurs Fund, L.P. Mr. Weinman, a director of
Quokka, is affiliated with the Media Technology entities.

(6) Excludes warrants to purchase 153,846 shares of Series C preferred stock
issued to MediaOne Interactive Services, Inc. in April 1999.

(7) Excludes warrants to purchase 99,539 shares of Series A preferred stock,
warrants to purchase 148,024 shares of Series B preferred stock and
warrants to purchase 48,485 shares of Series C preferred stock issued to
Intel Corporation in December 1998. These warrants represent the balance of
warrants issued upon the amendment and partial exercise of the original
warrants issued between March 1998 and December 1998.

(8) Includes 346,667 shares of Series B preferred stock and 16,000 shares of
Series C preferred stock held by Accel Internet Fund II LP, 230,000 shares
of Series B preferred stock and 10,615 shares of Series C preferred stock
held by Accel Investors '98 LP, and 43,333 shares of Series B preferred
stock and 2,000 shares of Series C preferred stock held by Accel Keiretsu
VI LP.

(9) Includes 121,791 shares of Series A preferred stock, 48,849 shares of
Series B preferred stock and 7,692 shares of Series C preferred stock held
by Trinity V, side-by-side fund, LP. Mr. Shennan, a director of Quokka, is
affiliated with Trinity Ventures V, LP and Trinity V, Side-by-Side Fund,
LP.

(10) Excludes warrants to purchase 100,000 shares of common stock issued to
Wakefield Group LLC in October 1997.

Pursuant to an investors' rights agreement dated May 27, 1999 between
Quokka and certain investors, the investors have certain registration rights for
the shares of common stock held by them, or subject to acquisition upon exercise
of certain warrants. See "Description of Capital Stock -- Registration Rights"
for a description of these registration rights.

In March 1998, we entered into a software license and development agreement
with Intel Corporation, a holder of more than five percent of our outstanding
capital stock. Under this agreement, Intel is developing transport level
software that will allow end users to view multiple video streams which are
delivered over a satellite network. In connection with this agreement, we issued
warrants to Intel to purchase 635,650 shares of our preferred stock at prices
ranging from $1.02 to $3.25 per share. Intel has exercised warrants to purchase
339,602 shares of our preferred stock. The remaining outstanding warrants will
expire upon this offering if not earlier exercised.

In April 1999, we entered into a trial agreement with MediaOne Interactive
Services, Inc., a holder of more than five percent of our outstanding capital
stock. Under this agreement, Quokka and MediaOne are working together to
implement and test streaming media over the MediaOne cable modem infrastructure.
In connection with this agreement, Quokka has issued warrants to MediaOne to
purchase 153,846 shares of our preferred stock at an exercise price of $3.25 per
share. These warrants will expire in January 2009 if not earlier exercised.

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<PAGE> 69

Since February 1, 1999, in connection with Mr. Bertrand's relocation to
London, England, we have been paying, and will continue to pay, Mr. Bertrand an
amount equal to $3,000 per month to secure Mr. Bertrand's residence in San
Francisco, California as short-term corporate housing for various persons
associated with Quokka.

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<PAGE> 70

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information known to us with respect
to beneficial ownership of our common stock as of May 27, 1999 by (1) each
stockholder known by us to be the beneficial owner of more than 5% of our common
stock, (2) each of our directors, (3) the named executive officers and (4) all
executive officers and directors as a group. Unless otherwise noted, the address
for the individuals listed below is: c/o Quokka Sports, 525 Brannan Street, San
Francisco, California 94107.

<TABLE>
<CAPTION>
PERCENTAGE OWNED(1)
NUMBER OF ---------------------------------
NAME OF BENEFICIAL OWNER SHARES BEFORE OFFERING AFTER OFFERING
- ------------------------ ---------- --------------- --------------
<S> <C> <C> <C>
Entities associated with Media Technology
Ventures(2)........................................ 4,895,932 12.8%
One First Street, Suite 2
Los Altos, CA 94022
Intel Corporation.................................... 4,184,093 11.0%
2200 Mission College Blvd.
Santa Clara, CA 95052
MediaOne Interactive Services, Inc.(3)............... 4,051,283 10.6%
9000 E. Nichols Avenue, Suite 100
Englewood, CO 80112
Entities associated with Accel VI LP(4).............. 3,487,179 9.1%
428 University Avenue
Palo Alto, CA 94301
Entities associated with Trinity Ventures(5)......... 3,244,481 8.5%
3000 Sand Hill Road
Building 1, Suite 240
Menlo Park, CA 94025
Wakefield Group II LLC(6)............................ 2,126,041 5.6%
1110 East Morehead
Charlotte, NC 28204
Pogmohane Partners, LP............................... 1,900,000 5.0%
151 Lark Lane
Mill Valley, CA 94941
Alan Ramadan(7)...................................... 2,390,572 6.2%
Richard H. Williams(8)............................... 2,915,623 7.6%
P.O. Box 4281
Incline Village, NV 89450
John Bertrand(9)..................................... 2,266,204 6.0%
c/o Quokka Sports
133 Long Acre
London, WC2E98D
Walter Bregman(10)................................... 379,674 *
Roel Pieper(11)...................................... 1,278,555 3.3%
James G. Shennan, Jr.(12)............................ 3,244,481 8.5%
c/o Trinity Ventures V, L.P.
3000 Sand Hill Road
Building 1, Suite 240
Menlo Park, CA 94025
</TABLE>

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<PAGE> 71

<TABLE>
<CAPTION>
PERCENTAGE OWNED(1)
NUMBER OF ---------------------------------
NAME OF BENEFICIAL OWNER SHARES BEFORE OFFERING AFTER OFFERING
- ------------------------ ---------- --------------- --------------
<S> <C> <C> <C>
Barry M. Weinman(13)................................. 4,895,932 12.8%
c/o Media Technology Ventures
One First Street, Suite 12
Los Altos, CA 94022
Les Schmidt(14)...................................... 708,923 1.8%
All directors and executive officers as a group (8
persons)(15)....................................... 18,079,964 46.0%
</TABLE>

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

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Unless otherwise indicated
below, 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. Percentage ownership
is based on 38,183,396 shares of common stock outstanding as of May 27,
1999 and shares outstanding immediately following completion of
this offering. Shares of common stock subject to options that are currently
exercisable or exercisable within 60 days of May 27, 1999 are deemed to be
outstanding and to be beneficially owned by the person holding such options
for the purpose of computing the percentage ownership of such person but
are not treated as outstanding for the purpose of computing the percentage
ownership of any other person.

(2) Includes 3,654,794 shares held by Media Technology Ventures, LP, 769,231
shares held by Media Technology Equity Partners, LP, and 471,907 shares
held by Media Technology Ventures Entrepreneurs Fund, LP (collectively, the
"MT Funds"). Mr. Weinman, a director of Quokka, is a general partner of
each of the MT Funds and, as such, may be deemed to have an indirect
pecuniary interest (within the meaning of Rule 16a-1 under the Securities
Exchange Act of 1934) in an indeterminate portion of the shares
beneficially owned by the MT Funds. Mr. Weinman disclaims beneficial
ownership of these shares within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934.

(3) Includes warrants to purchase 153,846 shares that are currently
exercisable.

(4) Includes 2,838,564 shares held by Accel VI LP, 362,667 shares held by Accel
Internet Fund II LP, 240,615 shares held by Accel Investors '98 LP, and
45,333 shares held by Accel Keiretsu VI LP (collectively, the "Accel
Funds").

(5) Includes 3,066,149 shares held by Trinity Ventures V, LP and 178,332 shares
held by Trinity V, Side-by-Side Fund, LP. Mr. Shennan, a director of
Quokka, is a general partner of Trinity Ventures V, LP and Trinity V,
side-by-side fund, LP. As such, Mr. Shennan may be deemed to have an
indirect pecuniary interest (within the meaning of Rule 16a-1 under the
Securities Exchange Act of 1934) in an indeterminate portion of the shares
beneficially owned by Trinity Ventures V, LP and Trinity V, side-by-side
fund, LP. Mr. Shennan disclaims beneficial ownership of these shares within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934.

(6) Includes warrants to purchase 100,000 shares that expire if not exercised
prior to the completion of this offering.

(7) Includes 1,900,000 shares held by Pogmohane Partners, L.P. Mr. Ramadan, a
director of Quokka, is a general partner of Pogmohane Partners, L.P. As
such, Mr. Ramadan may be deemed to have an indirect pecuniary interest
(within the meaning of Rule 16a-1 under the Securities Exchange Act of
1934) in an indeterminate portion of the shares beneficially owned by
Pogmohane Partners, L.P. Mr. Ramadan disclaims beneficial ownership of
these shares within the meaning of Rule 13d-3 under the Securities Exchange
Act of 1934. Also includes 300,000 shares underlying currently exercisable
stock options. If exercised in full within 60 days of the date of this
table, all of the shares subject to the options would be subject to a
repurchase right in favor of Quokka.

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<PAGE> 72

(8) Includes warrants to purchase 56,800 shares that expire if not exercised
prior to the completion of this offering. Includes 150,000 shares
underlying currently exercisable stock options. If exercised in full within
60 days of the date of this table, all of the shares subject to the option
would be subject to a repurchase right in favor of Quokka.

(9) Includes 150,000 shares underlying currently exercisable stock options. If
exercised in full within 60 days of the date of this table, all of the
shares subject to the option would be subject to a repurchase right in
favor of Quokka.

(10) Includes 342,208 shares held in the Bregman Revocable Trust u/a/d 8/21/92,
for which Mr. Bregman, a director of Quokka, serves as a trustee. Mr.
Bregman disclaims beneficial ownership of these shares within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934. Includes warrants
to purchase 6,000 shares that expire if not exercised prior to the
completion of this offering. Includes 31,466 shares underlying currently
exercisable stock options granted to Mr. Bregman outside Quokka's 1997
Equity Incentive Plan.

(11) All shares are held outright by Mr. Pieper.

(12) Includes 3,066,149 shares held by Trinity Ventures V, LP and 178,332 shares
held by Trinity V, Side-by-Side Fund, LP See footnote (5) above regarding
Mr. Shennan's indirect pecuniary interest in these shares.

(13) Includes 4,895,932 shares held by MT Funds. See footnote (2) above
regarding Mr. Weinman's indirect pecuniary interest in these shares.

(14) Includes 258,923 shares held in The Les Schmidt and Joanne P. Hattum Family
Trust u/t/d 4/8/92, for which Mr. Schmidt, an executive officer of Quokka,
serves as a trustee. Mr. Schmidt disclaims beneficial ownership of these
shares within the meaning of Rule 13d-3 under the Securities Exchange Act
of 1934. Includes 414,500 shares underlying currently exercisable stock
options. If exercised in full within 60 days of the date of this table,
389,834 shares would be subject to a right of repurchase in favor of
Quokka.

(15) See footnotes (1) through (14) above, as applicable.

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<PAGE> 73

DESCRIPTION OF CAPITAL STOCK

The following description of our capital stock and material provisions of
our certificate of incorporation and bylaws, which will become effective upon
the completion of this offering, is a summary only and is qualified in its
entirety by the complete provisions of the certificate of incorporation and
bylaws, which have been filed as exhibits to the registration statement, of
which this prospectus is a part.

Upon the closing of this offering, our authorized capital stock will
consist of 110,000,000 shares of common stock, $0.0001 par value per share and
10,000,000 shares of preferred stock, $0.0001 par value per share.

COMMON STOCK

Upon the closing of this offering, each outstanding share of non-voting
common stock will be automatically converted to voting common stock and, at such
time, no share of common stock, whether previously designated as non-voting
common stock or voting common stock, will be subject to any further conversion
right. The common stock is not entitled to preemptive rights and is not subject
to redemption.

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 therefor at such
times and in such amounts as the board of directors may from time to time
determine. Each stockholder is entitled to one vote for each share of common
stock held on all matters submitted to a vote of stockholders. Unless Section
2115 of the California Corporations Code is applicable to us, holders of common
stock are not entitled to cumulative voting rights with respect to the election
of directors and, as a consequence, minority stockholders will not be able to
elect directors on the basis of their votes alone. Upon a liquidation,
dissolution or winding-up of Quokka, the assets legally available for
distribution to stockholders are distributable ratably among the holders of the
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. Each outstanding share of common
stock is, and all shares of common stock to be outstanding upon completion of
this offering will be, fully paid and nonassessable.

PREFERRED STOCK

Upon the closing of this offering, all outstanding shares of Series A,
Series B, Series C and Series D preferred stock will be converted into
27,702,683 shares of common stock. Following the conversion, the shares
converted will be retired from the number of authorized shares of preferred
stock.

Upon the closing of this offering, the board of directors will have the
authority, without further action by the stockholders, to issue up to 10,000,000
shares of preferred stock in one or more series, to establish from time to time
the number of shares to be included in each such series, to fix the rights,
preferences and privileges of the shares of each wholly unissued series and any
qualifications, limitations or restrictions thereon, and to increase or decrease
the number of shares of any such series (but not below the number of shares of
such series then outstanding). The board of directors may authorize the issuance
of preferred stock with voting or conversion rights that could adversely affect
the voting power or other rights of the holders of the common stock. The
issuance of preferred stock, while providing flexibility in connection with
possible acquisitions and other corporate purposes, could, among other things,
have the effect of delaying, deferring or preventing a change in control of
Quokka and may adversely affect the market price of the common stock and the
voting and other rights of the holders of common stock.

WARRANTS

In October 1997, we issued warrants to purchase an aggregate of 212,800
shares of common stock at an exercise price of $0.50 per share to four
investors. Each of these warrants will expire upon the closing of this offering,
unless earlier exercised.

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<PAGE> 74

Between March 1998 and December 1998, we issued and sold warrants to
purchase up to 245,098 shares of Series A preferred stock at an exercise price
of $1.02 per share, 245,098 shares of Series B preferred stock at an exercise
price of $1.02 per share, 72,727 shares of Series B preferred stock at an
exercise price of $1.50 per share and 72,727 shares of Series C preferred stock
at an exercise price of $3.25 per share to Intel Corporation (the "Intel
Warrants"). The Intel Warrants were amended in December 1998 and partially
exercised by Intel in December 1998 for 145,559 shares of Series A preferred
stock, 145,559 shares of Series B preferred stock, 24,242 shares of Series B
preferred stock and 24,242 shares of Series C preferred stock. The Intel
Warrants, as amended, are currently exercisable for 99,539 shares of Series A
preferred stock at an exercise price of $1.02 per share, 99,539 shares of Series
B preferred stock at an exercise price of $1.02 per share, 48,485 shares of
Series B preferred stock at an exercise price of $1.50 per share and 48,485
shares of Series C preferred stock at an exercise price of $3.25 per share. Each
of the Intel Warrants will expire upon completion of this offering, unless
earlier exercised.

From February 1999 to April 1999, we issued and sold warrants to purchase
up to an aggregate of 2,553,288 shares of Series C preferred stock at a weighted
average per share price of $5.24 to four investors. On February 8, 2009,
2,100,000 of these warrant shares will expire. On March 19, 2004, 76,366 of
these warrant shares will expire. On January 22, 2009, 153,846 of these warrant
shares will expire. The remaining 223,076 of these warrant shares will expire
three years from the effective date of this offering.

Each of the aforementioned warrants are subject to the provisions of an
investors' rights agreement. See "-- Registration Rights" for additional
information relating to this agreement.

REGISTRATION RIGHTS

Pursuant to an investors' rights agreement dated May 27, 1999, between
Quokka and some of our investors, the investors have registration rights for the
37,863,097 shares of common stock held by them, or subject to acquisition upon
exercise of warrants. Under the rights agreement, the investors may demand, by
written request from holders of more than 50% of the then outstanding investors'
registrable securities, that we file a registration statement under the
Securities Act covering all or a portion of the investors' registrable
securities, provided that, in the case of a registration on a form other than a
Form S-3, there is a reasonably anticipated aggregate offering price to the
public of at least $10.0 million, or in the case of a registration of Form S-3,
there is a reasonably anticipated aggregate offering price to the public of at
least $1.0 million. These registration rights are subject to our right to delay
the filing of a registration statement, in the case of a registration on a form
other than a Form S-3, for a period not to exceed 60 days, and, in the case of a
registration on a Form S-3, for a period not to exceed 90 days. In the case of a
registration on a form other than a Form S-3, we cannot delay more than twice in
a 12-month period after receiving the registration demand. In the case of a
registration on a Form S-3, we cannot delay more than once in a 12-month period
after receiving the registration demand. In the case of a registration on a form
other than a Form S-3, the managing underwriter, if any, of any such offering
has certain rights to limit the number of the Registrable Securities proposed to
be included in such registration.

In addition, the investors have "piggyback" registration rights. If we
propose to register any of its securities under the Securities Act of 1933
(other than pursuant to the investors' demand registration rights noted above),
the investors may require us to include all or a portion of their registrable
securities in such registration. The managing underwriter, if any, of any such
offering will have the right to limit the number of the registrable securities
to no less than 25% of the total number of securities proposed to be included in
such registration.

All registration expenses incurred in connection with the above
registrations would be borne by us. Each selling investor would pay all
underwriting discounts and selling commissions applicable to the sale of his or
its registrable securities.

All registration rights described above will terminate ten years after the
date of our initial public offering. Following the closing of this offering, the
rights of each investor holding less than 1% of our outstanding common stock
under the rights agreement will terminate when that investor may sell all of its

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<PAGE> 75

or his shares under Rule 144(k) of the Securities Act or during any 90-day
period under Rule 144 of the Securities Act.

SECTION 2115

We are currently subject to Section 2115 of the California General
Corporation Law. Section 2115 provides that, regardless of a company's legal
domicile, certain provisions of California corporate law will apply to that
company if more than 50% of its outstanding voting securities are held of record
by persons having addresses in California and the majority of the Company's
operations occur in California.

The following table sets forth some of the effects on our corporate
governance of Section 2115:

<TABLE>
<CAPTION>
SECTION 2115 NON-SECTION 2115
------------ ----------------
<S> <C> <C>
Election of Cumulative voting is allowed which No cumulative voting is allowed;
Directors allows each shareholder to vote the accordingly a holder of 50% or more
number of votes equal to the number of voting stock controls election
of candidates multiplied by the of all directors.
number of votes to which the
shareholders' shares are normally
entitled in favor of one candidate.
This potentially allows minority
stockholders to elect some members
of the board of directors.
Removal of Directors Removal with or without cause by Removal is only allowed without
the affirmative vote of the holders cause upon the affirmative vote of
of a majority of outstanding voting 66 2/3% of the outstanding voting
stock is allowed. stock.
Supermajority Vote In order to institute a Simple majority may adopt amendment
Requirement supermajority provision, the providing for supermajority.
amendment must be approved by at
least as large a proportion as
would be required under the
amendment.
Dividend Dividends are only payable (a) out Dividends are payable out of either
Distribution of the surplus of retained earnings the surplus of retained earnings or
and (b) if, immediately after the out of its net profits for the year
distribution, a company's assets the distribution takes place, or
are at least equal to its the preceding year.
liabilities.
Dissenters' Rights Generally available in any type of Generally only available in a
reorganization, including a merger, merger. No rights so long as our
sale of assets or sale/exchange of common stock is quoted on the
shares. If the shares are listed on Nasdaq National Market or traded on
an exchange, 5% of the stockholders an exchange.
must assert their right for any
stockholder to have these rights.
</TABLE>

In addition to these differences, Section 2115 also provides for information
rights and required filings in the event a company effects a sale of assets or
completes a merger.

We anticipate that our common stock will be qualified for trading as a
national market security on the Nasdaq National Market and that we will have at
least 800 stockholders of record by the record date for our 2000 annual meeting
of stockholders. If these two conditions occur, then we will no longer be
subject to Section 2115 as of the record date for our 2000 annual meeting of
stockholders. See "-- Common Stock" and "Management -- Board Composition" for
additional information relating to the effects of Section 2115 on Quokka.

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<PAGE> 76

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS

Delaware Law

We are subject to Section 203 of the Delaware General Corporation Law
regulating corporate takeovers. Section 203, subject to exceptions, prohibits a
Delaware corporation from engaging in any "business combination" with any
"interested stockholder" for a period of three years following the date that the
stockholder became an interested stockholder unless:

- prior to the date, the board of directors of the corporation approved
either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;

- upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding those shares owned by persons who
are directors and also officers, and employee stock plans in which
employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or
exchange offer; or

- on or subsequent to the date, the business combination is approved by the
board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least two-thirds of the outstanding voting stock that is not owned by the
interested stockholder.

Section 203 defines business combination to include:

- any merger or consolidation involving the corporation and the interested
stockholder;

- any sale, transfer, pledge or other disposition involving the interested
stockholder of 10% or more of the assets of the corporation;

- subject to exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation to the
interested stockholder; or

- the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.

Section 203 defines an "interested stockholder" as:

- any entity or person beneficially owning 15% or more of the outstanding
voting stock of the corporation; and

- any entity or person affiliated with or controlling or controlled by the
entity or person.

A Delaware corporation may "opt out" of Section 203 with an express
provision in its original certificate of incorporation or an express provision
in its certificate or incorporation or bylaws resulting from a stockholders'
amendment approved by a majority of the outstanding voting shares. We have not
"opted out" of the provisions of Section 203. The statute could prohibit or
delay mergers or other takeover or change-in-control attempts with respect to
Quokka and, accordingly, may discourage attempts to acquire Quokka.

Charter Provisions

Our bylaws divide the board of directors into three classes as nearly equal
in size as possible with staggered three-year terms. The classification of the
board of directors could have the effect of making it more difficult for a third
party to acquire, or of discouraging a third party from acquiring, control of
Quokka. In addition, the bylaws provide that any action required or permitted to
be taken by our stockholders at an annual meeting or a special meeting of the
stockholders may be taken only if it is properly brought before such meeting and
may not be taken by written action in lieu of a meeting. The bylaws also provide
that special meetings of our stockholders may be called only by the board of
directors,

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<PAGE> 77

the chairman of the board, the chief executive officer or the holders of 50% or
more of our outstanding stock. See "Management -- Board Composition" for
additional information relating to the classification of the board of directors.

LIMITATION OF LIABILITY AND INDEMNIFICATION

Our certificate of incorporation, which will become effective upon the
closing of this offering, contains provisions permitted under Delaware law
relating to the liability of directors. These provisions eliminate a director's
personal liability for monetary damages resulting from a breach of fiduciary
duty, except in circumstances involving wrongful acts, such as:

- any breach of the director's duty of loyalty;

- acts or omissions which involve a lack of good faith, intentional
misconduct or a knowing violation of the law;

- payment of dividends or approval of stock repurchases or redemptions that
are unlawful under Delaware law; or

- any transaction from which the director derives an improper personal
benefit.

These provisions do not limit or eliminate our rights or any stockholder's
rights to seek non-monetary relief, such as an injunction or rescission, in the
event of a breach of director's fiduciary duty. These provisions will not alter
a director's liability under federal securities laws.

Our bylaws, which will become effective upon the closing of this offering,
require us to indemnify our directors and executive officers to the fullest
extent not prohibited by the Delaware law. We may limit the extent of such
indemnification by individual contracts with our directors and executive
officers. Further, we may decline to indemnify any director or executive officer
in connection with any proceeding initiated by such person or any proceeding by
such person against Quokka or its directors, officers, employees or other
agents, unless such indemnification is expressly required to be made by law or
the proceeding was authorized by our board of directors.

We have entered into indemnity agreements with each of our current
directors and certain of our executive officers to give such directors and
officers additional contractual assurances regarding the scope of the
indemnification set forth in our certificate of incorporation and bylaws and to
provide additional procedural protections. At present, there is no pending
litigation or proceeding involving a director, officer or employee of Quokka for
which indemnification is sought, nor are we aware of any threatened litigation
that may result in claims for indemnification.

We have the power to indemnify our other officers, employees and other
agents, as permitted by Delaware law, but we are not required to do so.

Quokka plans to obtain directors' and officers' liability insurance.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for Quokka's common stock is BankBoston
N.A.

76
<PAGE> 78

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering and based on the number of shares
outstanding as of May 27, 1999, Quokka will have outstanding shares of
common stock, assuming no exercise of the underwriters' over-allotment option
and no exercise of outstanding options. Of these shares, the shares
sold in this offering will be freely tradable without restriction under the
Securities Act unless purchased by "affiliates" of Quokka as that term is
defined in Rule 144 under the Securities Act. Of the remaining shares, all of
the shares held by existing stockholders are subject to lock-up agreements
generally providing that, with certain limited exceptions, the stockholder will
not (1) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of or otherwise dispose of or transfer any shares of common
stock or securities convertible into or exchangeable or exercisable for or
repayable with common stock, or (2) enter into any swap or other agreement that
transfers, in whole or in part, the economic consequence of ownership of the
common stock whether any such swap or transaction is to be settled by delivery
of common stock or other securities, in cash or otherwise, without the prior
written consent of Merrill Lynch on behalf of the underwriters for a period of
180 days after the date of this prospectus. As a result of these lock-up
agreements, notwithstanding possible earlier eligibility for sale under the
provisions of Rules 144, 144(k) and 701, none of these shares can be sold until
181 days after the date of the final prospectus. Beginning 181 days after the
date of the final prospectus, 34,175,242 of these shares will be eligible for
sale in the public market, although a portion of such shares will be subject to
certain volume limitations pursuant to Rule 144. The remaining restricted shares
will become eligible for sale from time to time thereafter upon expiration of
applicable holding periods under Rule 144 under the Securities Act and Quokka's
right to repurchase unvested shares. Holders of options to purchase common stock
of Quokka are also subject to 180-day lock-up agreements.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted shares for at
least one year (including the holding period of any prior owner except an
affiliate) would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of (1) 1% of the number of shares of
common stock then outstanding (which will equal approximately shares
immediately after this offering) or (2) the average weekly trading volume of the
common stock during the four calendar weeks preceding the filing of a Form 144
with respect to such sale. Sales under Rule 144 are also subject to certain
manner of sale provisions and notice requirements and to the availability of
current public information about Quokka. Under Rule 144(k), a person who is not
deemed to have been an affiliate of Quokka at any time during the three months
preceding a sale, and who has beneficially owned the shares proposed to be sold
for at least two years (including the holding period of any prior owner except
an affiliate), is entitled to sell such shares without complying with the manner
of sale, public information, volume limitation or notice provisions of Rule 144.

Rule 701 permits resales of shares in reliance upon Rule 144 but without
compliance with certain restrictions, including the holding period requirement,
of Rule 144. Any employee, officer or director of or consultant to Quokka who
purchased his or her shares pursuant to a written compensatory plan or contract
may be entitled to rely on the resale provisions of Rule 701. Rule 701 permits
affiliates to sell their Rule 701 shares under Rule 144 without complying with
the holding period requirements of Rule 144. Rule 701 further provides that
non-affiliates may sell such shares in reliance on Rule 144 without having to
comply with the holding period, public information, volume limitation or notice
provisions of Rule 144.

Some holders of shares of common stock are also entitled to rights with
respect to registration of such shares of common stock for offer and sale to the
public. See "Description of Capital Stock -- Registration Rights" for additional
information relating to registration rights.

There can be no assurance that an active public market for the common stock
will continue after this offering. Future sales of substantial amounts of common
stock (including shares issued upon exercise of outstanding options) in the
public market after this offering could adversely affect market prices
prevailing from time to time and could impair Quokka's ability to raise capital
through the sale of its equity securities. As described below, only a limited
number of shares will be available for sale immediately after this offering due
to certain contractual restrictions on resale. Sales of substantial amounts of
common stock of Quokka in the public market after the restrictions lapse could
adversely affect the prevailing market price and the ability of Quokka to raise
equity capital in the future.

77
<PAGE> 79

UNDERWRITING

Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"),
Lehman Brothers Inc. and BancBoston Robertson Stephens Inc. are acting as
representatives of each of the underwriters named below. Subject to the terms
and conditions set forth in a purchase agreement among Quokka and the
underwriters, Quokka has agreed to sell to the underwriters, and each of the
underwriters severally and not jointly has agreed to purchase from Quokka, the
number of shares of common stock set forth opposite its name below.

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
- ----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated..........
Lehman Brothers Inc. .......................................
BancBoston Robertson Stephens Inc. .........................
Total..........................................
</TABLE>

In the purchase agreement, the several underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all of the shares of
common stock being sold pursuant to each such agreement if any of the shares of
common stock being sold pursuant to such agreement are purchased. In the event
of a default by an underwriter, the purchase agreement provides that, in certain
circumstances, the purchase commitments of the nondefaulting underwriters may be
increased or the purchase agreement may be terminated. The closing with respect
to the sale of shares of common stock to be purchased by the underwriters are
conditioned upon one another.

The representatives have advised Quokka that the underwriters propose
initially to offer the shares of common stock to the public at the initial
public offering price set forth on the cover page of this prospectus, and to
certain dealers at such price less a concession not in excess of $ per share
of common stock. The underwriters may allow, and such dealers may reallow, a
discount not in excess of $ per share of common stock to certain other
dealers. After the initial public offering, the public offering price,
concession and discount may change.

Quokka has granted options to the underwriters, exercisable for 30 days
after the date of this prospectus, to purchase up to an aggregate of
additional shares of common stock at the public offering price set forth on the
cover page of this prospectus, less the underwriting discount. The underwriters
may exercise these options solely to cover over-allotments, if any, made on the
sale of the common stock offered hereby. To the extent that the underwriters
exercise these options, each underwriter will be obligated, subject to certain
conditions, to purchase a number of additional shares of common stock
proportionate to such underwriters initial amount reflected in the foregoing
table.

The following table shows the per share and total public offering price,
underwriting discount to be paid by Quokka to the underwriters, and the proceeds
before expenses to Quokka. This information is presented assuming either no
exercise or full exercise by the underwriters of their over-allotment options.

<TABLE>
<CAPTION>
PER SHARE WITHOUT OPTION WITH OPTION
--------- -------------- -----------
<S> <C> <C> <C>
Public Offering Price.......................... $ $ $
Underwriting Discount.......................... $ $ $
Proceeds, before expenses, to Quokka........... $ $ $
</TABLE>

The expenses of the offerings (exclusive of the underwriting discount and
commissions) are estimated at $ and are payable by Quokka.

The shares of common stock are being offered by the several underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the underwriters and certain
other conditions. The underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part.

78
<PAGE> 80

At the request of Quokka, the underwriters have reserved for sale, at the
initial public offering price, up to of the shares offered hereby
to be sold to certain directors, officers, employees, distributors, dealers,
business associates and related persons of Quokka. The number of shares of
common stock available for sale to the general public will be reduced to the
extent such persons purchase such reserved shares. Any reserved shares which are
not orally confirmed for purchase within one day of the pricing of this offering
will be offered by the underwriters to the general public on the same terms as
the other shares offered in this prospectus.

Quokka and its executive officers, directors and other stockholders
beneficially owning substantially all of the outstanding shares of common stock
have agreed, subject to certain exceptions, not to directly or indirectly:

- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of or otherwise dispose of or transfer any
shares of common stock or securities convertible into or exchangeable or
exercisable for or repayable with common stock, whether now owned or
thereafter acquired by the person executing the agreement or with respect
to which the person executing the agreement thereafter acquires the power
of disposition, or file a registration statement under the Securities Act
with respect to the foregoing;

- enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of the common stock whether
any such swap or transaction is to be settled by delivery of common stock
or other securities, in cash or otherwise; or

- make any demand for, or exercise any right with respect to, the
registration of any share of common stock or any securities convertible
into or exchangeable for common stock, without the prior written consent
of Merrill Lynch on behalf of the underwriters for a period of 180 days
after the date of this prospectus.

Prior to this offering, there has been no public market for the common
stock of Quokka. The initial public offering price will be determined through
negotiations between Quokka and the representatives. The factors to be
considered in determining the initial public offering price, in addition to
prevailing market conditions, are expected to be price-revenue and discounted
price-earnings ratios of publicly traded companies that the representatives
believe to be comparable to Quokka, certain financial information of Quokka, the
history of, and the prospects for, Quokka and the industry in which it competes,
and an assessment of Quokka's management, its past and present operations, the
prospects for, and timing of, future revenues of Quokka, and the present state
of Quokka's development. There can be no assurance that an active trading market
will develop for the common stock or that the common stock will trade in the
public market subsequent to this offering at or above the initial public
offering price.

The underwriters do not expect sales of the common stock to be made to any
accounts over which they exercise discretionary authority to exceed 5% of the
number of shares being offered hereby.

The underwriters do not intend to confirm sales of the common stock offered
hereby to any accounts over which they exercise discretionary authority.

Quokka has agreed to indemnify the underwriters against certain
liabilities, including certain liabilities under the Securities Act, or to
contribute to payments the underwriters may be required to make in respect of
this offering.

Until the distribution of the common stock is completed, SEC rules may
limit the ability of the underwriters and certain selling group members to bid
for and purchase the common stock. As an exception to these rules, the
representatives are permitted to engage in certain transactions that stabilize
the price of the common stock. Such transactions consist of bids or purchases
for the purpose of pegging, fixing or maintaining the price of the common stock.

If the underwriters create a short position in the common stock in
connection with the offering contemplated hereby, i.e., if they sell more shares
of common stock than are set forth on the cover page of
79
<PAGE> 81

this prospectus, the representatives may reduce that short position by
purchasing common stock in the open market. The representatives may also elect
to reduce any short position by exercising all or part of the overallotment
options described above.

The representatives may also impose a penalty bid on certain underwriters
and selling group members. This means that if the representatives purchase
shares of common stock in the open market to reduce the underwriters' short
position or to stabilize the price of the common stock, they may reclaim the
amount of the selling concession from the underwriters and selling group members
who sold those shares.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of the common stock to the extent that it
discourages resales of the common stock.

Neither Quokka nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
Quokka nor any of the underwriters makes any representation that the
representatives will engage in such transactions or that such transactions, once
commenced, will not be discontinued.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for Quokka by Cooley Godward LLP, San Francisco, California ("Cooley
Godward"). Certain legal matters will be passed upon for the underwriters by
Wilson Sonsini Goodrich & Rosati, Professional Corporation. An investment
partnership affiliated with Cooley Godward owns 127,887 shares of Quokka's
preferred stock, which will convert into 127,887 shares of Quokka's common stock
upon the closing of this offering.

EXPERTS

The financial statements included in this prospectus have been audited by
PricewaterhouseCoopers LLP, independent accountants. The companies and periods
covered by these audits are indicated in the individual reports of
PricewaterhouseCoopers LLP. Such financial statements have been so included in
reliance on the reports of PricewaterhouseCoopers LLP given on the authority of
said firm as experts in auditing and accounting.

CHANGE IN PRINCIPAL ACCOUNTANTS

In March 1998, KPMG LLP ("KPMG") was dismissed and PricewaterhouseCoopers
LLP replaced KPMG as our independent accountants. The selection of
PricewaterhouseCoopers LLP as our independent accountants was ratified by our
board of directors in April 1998. During fiscal 1997 and fiscal 1998, we had no
disagreement with our former accountants, KPMG, on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements if not resolved to their satisfaction would have
caused them to make reference in connection with their opinion to the subject
matter of the disagreement. KPMG did not issue a report on our financial
statements with respect to the years ended December 31, 1997 or 1998.

ADDITIONAL INFORMATION

A registration statement on Form S-1 relating to the common stock offered
hereby has been filed by Quokka with the Securities and Exchange Commission in
Washington, D.C. This prospectus does not contain all of the information set
forth in the registration statement and the exhibits and schedules thereto.
Statements contained in this prospectus as to the contents of any contract or
other document referred to are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the registration statement, each such statement being qualified in
all respects by such reference. For further information with respect to Quokka
and the common stock offered

80
<PAGE> 82

hereby, reference is made to such registration statement, exhibits and
schedules. A copy of the registration statement may be inspected by anyone
without charge at the SEC's principal office at the public reference facility
maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's regional offices located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and 500 Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of all or any part thereof may be obtained
from the SEC's at 450 Fifth Street, N.W., Washington, D.C. 20549, upon the
payment of certain fees prescribed by the SEC. The SEC maintains a Web site that
contains reports, proxy statements and other information regarding registrants,
including Quokka. The address of the SEC's Web site is www.sec.gov.

As a result of this Offering, Quokka will be subject to the information
requirements of the Securities Exchange Act of 1934. So long as Quokka is
subject to periodic reporting requirements of the Exchange Act, it will continue
to furnish the reports and other information required thereby to the SEC. Quokka
intends to furnish its stockholders with annual reports containing financial
statements audited by an independent public accounting firm and quarterly
reports containing unaudited financial information.

81
<PAGE> 83

QUOKKA SPORTS, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Stockholders' Equity............. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>

F-1
<PAGE> 84

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders of
Quokka Sports, Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations and changes in stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Quokka Sports, Inc. and subsidiaries at December 31, 1997 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1998, in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audits 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 the opinion expressed above.

PricewaterhouseCoopers LLP
San Francisco, California

January 22, 1999, except as to Note 11

for which the date is May 28, 1999

F-2
<PAGE> 85

QUOKKA SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
1997 1998 1999 1999
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 4,026,610 $ 23,994,355 $ 15,262,901
Accounts receivable................................... 76,151 1,150,603 819,800
Prepaid expenses and other............................ 246,328 331,108 1,413,683
----------- ------------ ------------
Total current assets........................... 4,349,089 25,476,066 17,496,384
Property and equipment, net............................. 301,944 2,736,298 5,357,025
----------- ------------ ------------
Total assets................................... $ 4,651,033 $ 28,212,364 $ 22,853,409
=========== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable...................................... $ 480,577 $ 289,050 $ 2,220,288
Accrued expenses...................................... 81,990 1,199,357 726,819
Current portion of long-term debt and capitalized
lease obligations................................... 37,112 290,188 347,132
Deferred revenues..................................... 2,305,613 479,735 248,985
----------- ------------ ------------
Total current liabilities...................... 2,905,292 2,258,330 3,543,224
----------- ------------ ------------
Long term debt and capitalized lease obligations, net of
current portion....................................... 82,572 500,710 698,523
Commitments (Note 5)
Stockholders' equity:
Preferred stock, $0.0001 par value; authorized:
8,500,000 at December 31, 1997 and 27,600,000 at
December 31, 1998 and March 31, 1999 (unaudited);
issued and outstanding: 7,720,590 at December 31, 1997
and 23,736,016 at December 31, 1998 and March 31, 1999
and pro forma shares (unaudited); liquidation value:
$37,839,029 at December 31, 1998 and March 31, 1999
(unaudited)........................................... 772 2,374 2,374 $ --
Common stock:
Voting stock, $0.0001 par value; authorized:
20,500,000 at December 31, 1997 and 45,400,000 at
December 31, 1998 and March 31, 1999 (unaudited);
issued and outstanding: 9,351,566 at December 31,
1997 and 9,400,365 at December 31, 1998; and
9,589,342 and March 31, 1999 (unaudited) and
34,134,206 pro forma shares......................... 935 940 959 3,413
Non-voting stock, $0.0001 par value; authorized:
300,000 at December 31, 1997 and 1998 and March 31
1999 (unaudited); issued and outstanding: 300,000 at
December 31, 1997 and 1998 and March 31, 1999
(unaudited) and no pro forma shares................. 30 30 30 --
Additional paid-in capital.............................. 8,107,295 41,018,912 41,086,953 42,166,429
Warrants and other...................................... 61,860 477,115 1,414,993 875,230
Accumulated deficit..................................... (6,507,723) (16,046,047) (23,893,647) (23,893,647)
----------- ------------ ------------ ------------
Total stockholders' equity..................... 1,663,169 25,453,324 18,611,662 $ 19,151,425
----------- ------------ ------------ ============
Total liabilities and stockholders' equity..... $ 4,651,033 $ 28,212,364 $ 22,853,409
=========== ============ ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE> 86

QUOKKA SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------------- -------------------------
1996 1997 1998 1998 1999
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues........................ $ 38,906 $ 3,999,781 $ 8,635,099 $ 4,867,218 $ 896,566
Costs and expenses
Production costs.............. 610,867 5,130,130 7,779,593 3,430,803 2,717,704
Research and engineering...... 423,303 1,029,539 4,480,224 585,500 2,132,284
Sales and marketing........... 53,165 815,540 2,519,418 358,491 1,389,967
General and administrative.... 507,770 1,827,380 3,184,372 870,704 1,790,681
Depreciation and
amortization............... -- 68,247 530,261 43,789 430,406
----------- ----------- ----------- ----------- -----------
Total costs and expenses... 1,595,105 8,870,836 18,493,868 5,289,287 8,461,042
----------- ----------- ----------- ----------- -----------
Loss from operations..... (1,556,199) (4,871,055) (9,858,769) (422,069) (7,564,476)
Equity and losses of associated
venture....................... -- -- -- -- (452,275)
Interest income/(expense),
net........................... (3,580) (70,785) 320,445 32,428 169,151
----------- ----------- ----------- ----------- -----------
Net loss................. $(1,559,779) $(4,941,840) $(9,538,324) $ (389,641) $(7,847,600)
=========== =========== =========== =========== ===========
Historical net loss per share:
Basic and diluted............. $ (0.41) $ (0.73) $ (0.99) $ (0.04) $ (0.80)
Number of shares used in
calculation of historical
net loss per share -- basic
and diluted................ 3,800,000 6,791,534 9,654,835 9,651,566 9,756,059
Pro forma net loss per share
(unaudited):
Basic and diluted............. $ (0.40) $ (0.23)
Shares used in computing pro
forma net loss per share --
basic and diluted.......... 23,914,934 34,000,923
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 87

QUOKKA SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
SERIES A SERIES B SERIES C VOTING
PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK COMMON STOCK
------------------ ------------------- ------------------ ------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------ ---------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996................... -- $ -- -- $ -- -- $ -- 3,800,000 $380
Net loss................................... -- -- -- -- -- -- -- --
--------- ---- ---------- ------ --------- ---- --------- ----
Balance, December 31, 1996................. -- -- -- -- -- -- 3,800,000 380
Issuance of common stock to founder for
cash (January 1997)....................... -- -- -- -- -- -- -- --
Issuance of common stock to founder for
cash net of issuance costs of $31,401
(January 1997)............................ -- -- -- -- -- -- 1,900,000 190
Issuance of common stock for cash at $0.50
per share of issuance costs of $17,591
(August 1997)............................. -- -- -- -- -- -- 3,651,566 365
Issuance of warrants in connection with
promissory notes (October 1997)........... -- -- -- -- -- -- -- --
Issuance of Series A Preferred Stock for
cash of $0.68 per share, net of issuance
costs of $18,141 (December 1997).......... 7,720,590 772 -- -- -- -- -- --
Net loss................................... -- -- -- -- -- -- -- --
--------- ---- ---------- ------ --------- ---- --------- ----
Balance, December 31, 1997................. 7,720,590 772 -- -- -- -- 9,351,566 935
Issuance of Series B Preferred Stock for
cash of $1.50 per share, net of issuance
costs of $75,543 (June and August 1998)... -- -- 10,737,068 1,074 -- -- -- --
Issuance of warrants (August 1998)......... -- -- -- -- -- -- -- --
Issuance of options for services rendered
(August 1998)............................. -- -- -- -- -- -- -- --
Issuance of options for services rendered
(September 1998).......................... -- -- -- -- -- -- -- --
Exercise of voting common stock options to
employees for cash of $0.50 per share
(August -- December 1998)................. -- -- -- -- -- -- 48,799 5
Issuance of Series C Preferred Stock for
cash of $3.25 per share, net of issuance
costs of $36,031 (December 1998).......... -- -- -- -- 4,938,756 494 -- --
Issuance of warrants under joint
development agreement (December 1998)..... -- -- -- -- -- -- -- --
Exercise of warrants (December 1998)....... 145,559 15 169,801 17 24,242 2 -- --
Cumulative translation adjustment.......... -- -- -- -- -- -- -- --
Net loss................................... -- -- -- -- -- -- -- --
--------- ---- ---------- ------ --------- ---- --------- ----
Balance as of December 31, 1998............ 7,866,149 787 10,906,869 1,091 4,962,998 496 9,400,365 940
Exercise of voting common stock options to
employees for cash of $0.50 to $3.25 per
share (January -- March 1999)............. -- -- -- -- -- -- 197,775 20
Repurchase of common stock (11,875 shares
at $8.00 per share)....................... -- -- -- -- -- -- (11,875) (1)
Issuance of common stock for services
rendered.................................. -- -- -- -- -- -- 3,077 --
Issuance of warrants for subordinated-debt
agreement (March 1999).................... -- -- -- -- -- -- -- --
Issuance of warrants for CART rights
agreement (March 1999).................... -- -- -- -- -- -- -- --
Issuance of options for services
rendered.................................. -- -- -- -- -- -- -- --
Cumulative translation adjustment.......... -- -- -- -- -- -- -- --
Net loss................................... -- -- -- -- -- -- -- --
--------- ---- ---------- ------ --------- ---- --------- ----
Balance as of March 31, 1999 (unaudited)... 7,866,149 $787 10,906,869 $1,091 4,962,998 $496 9,589,342 $959
========= ==== ========== ====== ========= ==== ========= ====

<CAPTION>
NON-VOTING
COMMON STOCK ADDITIONAL TOTAL
---------------- PAID-IN WARRANTS ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL AND OTHER DEFICIT EQUITY/(DEFICIT)
------- ------ ----------- ---------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996................... -- $-- $ -- $ -- $ (6,104) $ (5,724)
Net loss................................... -- -- -- -- (1,559,779) (1,559,779)
------- --- ----------- ---------- ------------ -----------
Balance, December 31, 1996................. -- -- -- -- (1,565,883) (1,565,503)
Issuance of common stock to founder for
cash (January 1997)....................... 200,000 20 99,980 -- -- 100,000
Issuance of common stock to founder for
cash net of issuance costs of $31,401
(January 1997)............................ 100,000 10 968,399 -- -- 968,599
Issuance of common stock for cash at $0.50
per share of issuance costs of $17,591
(August 1997)............................. -- -- 1,807,828 -- -- 1,808,193
Issuance of warrants in connection with
promissory notes (October 1997)........... -- -- -- 61,860 -- 61,860
Issuance of Series A Preferred Stock for
cash of $0.68 per share, net of issuance
costs of $18,141 (December 1997).......... -- -- 5,231,088 -- -- 5,231,860
Net loss................................... -- -- -- -- (4,941,840) (4,941,840)
------- --- ----------- ---------- ------------ -----------
Balance, December 31, 1997................. 300,000 30 8,107,295 61,860 (6,507,723) 1,663,169
Issuance of Series B Preferred Stock for
cash of $1.50 per share, net of issuance
costs of $75,543 (June and August 1998)... -- -- 15,988,310 -- -- 15,989,384
Issuance of warrants (August 1998)......... -- -- -- 588,734 -- 588,734
Issuance of options for services rendered
(August 1998)............................. -- -- 5,293 -- -- 5,293
Issuance of options for services rendered
(September 1998).......................... -- -- 29,495 -- -- 29,495
Exercise of voting common stock options to
employees for cash of $0.50 per share
(August -- December 1998)................. -- -- 24,395 -- -- 24,400
Issuance of Series C Preferred Stock for
cash of $3.25 per share, net of issuance
costs of $36,031 (December 1998).......... -- -- 16,014,432 -- -- 16,014,926
Issuance of warrants under joint
development agreement (December 1998)..... -- -- -- 263,996 -- 263,996
Exercise of warrants (December 1998)....... -- -- 849,692 (437,636) -- 412,090
Cumulative translation adjustment.......... -- -- -- 161 -- 161
Net loss................................... -- -- -- -- (9,538,324) (9,538,324)
------- --- ----------- ---------- ------------ -----------
Balance as of December 31, 1998............ 300,000 30 41,018,912 477,115 (16,046,047) 25,453,324
Exercise of voting common stock options to
employees for cash of $0.50 to $3.25 per
share (January -- March 1999)............. -- -- 135,118 -- -- 135,138
Repurchase of common stock (11,875 shares
at $8.00 per share)....................... -- -- (94,999) -- -- (95,000)
Issuance of common stock for services
rendered.................................. -- -- 10,000 -- -- 10,000
Issuance of warrants for subordinated-debt
agreement (March 1999).................... -- -- -- 552,486 -- 552,486
Issuance of warrants for CART rights
agreement (March 1999).................... -- -- -- 400,841 -- 400,841
Issuance of options for services
rendered.................................. -- -- 17,922 -- -- 17,922
Cumulative translation adjustment.......... -- -- -- (15,449) -- (15,449)
Net loss................................... -- -- -- -- (7,847,600) (7,847,600)
------- --- ----------- ---------- ------------ -----------
Balance as of March 31, 1999 (unaudited)... 300,000 $30 $41,086,953 $1,414,993 $(23,893,647) $18,611,662
======= === =========== ========== ============ ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE> 88

QUOKKA SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------------- -------------------------
1996 1997 1998 1998 1999
----------- ----------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................. $(1,559,779) $(4,941,840) $ (9,538,324) $ (389,641) $(7,847,600)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization of
property and equipment............. -- 68,247 530,261 43,789 430,406
Non-cash compensation-related charges
and other.......................... -- 61,860 450,044 381,948 569,077
Non-cash charges for equipment........ -- 44,220 -- -- --
Changes in operating assets and
liabilities:
Accounts receivable................ -- (76,151) (1,074,452) 3,081 330,803
Prepaid expenses and other......... (47,500) (198,828) (84,780) (113,590) (670,403)
Accounts payable................... 70,144 410,433 (433,336) (1,008) 1,447,292
Accrued expenses................... 77,258 (1,293) 1,117,367 621,774 (472,538)
Deferred revenues.................. 1,525,051 780,562 (1,825,878) (1,888,699) (230,750)
----------- ----------- ------------ ----------- -----------
Net cash provided by (used in)
operating activities.......... 65,174 (3,852,790) (10,859,098) (1,342,346) (6,443,713)
----------- ----------- ------------ ----------- -----------
Cash flows from investing activities:
Purchase of property and equipment.... -- (294,727) (2,722,807) (245,712) (2,567,187)
----------- ----------- ------------ ----------- -----------
Net cash used in investing
activities.................... -- (294,727) (2,722,807) (245,712) (2,567,187)
----------- ----------- ------------ ----------- -----------
Cash flows from financing activities:
Proceeds from borrowing............... -- -- 750,000 -- 331,069
Proceeds from bridge loan............. -- 532,000 -- -- --
Payments on notes and long-term
capital leases..................... -- -- (78,786) (11,067) (76,312)
Proceeds from the issuance of common
stock, net of issuance cost........ -- 2,876,792 24,400 -- 119,689
Repurchase of common stock............ -- -- -- -- (95,000)
Proceeds from the issuance of Series A
Preferred Stock, net of issuance
cost............................... -- 4,699,860 -- -- --
Proceeds from the issuance of Series B
Preferred Stock, net of issuance
cost............................... -- -- 15,989,384 -- --
Proceeds from the issuance of Series C
Preferred Stock, net of issuance
cost............................... -- -- 16,014,926 -- --
Proceeds from issuance and exercise of
warrants........................... -- -- 849,726 -- --
----------- ----------- ------------ ----------- -----------
Net cash provided by (used in)
financing activities.......... -- 8,108,652 33,549,650 (11,067) 279,446
----------- ----------- ------------ ----------- -----------
Increase (decrease) in cash... 65,174 3,961,135 19,967,745 (1,599,125) (8,731,454)
Cash, beginning of period............... 301 65,475 4,026,610 4,026,610 23,994,355
----------- ----------- ------------ ----------- -----------
Cash, end of period..................... $ 65,475 $ 4,026,610 $ 23,994,355 $ 2,427,485 $15,262,901
=========== =========== ============ =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE> 89

QUOKKA SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES:

Organization

Prior to August 1996, Quokka Sports, Inc. operated as an Australian
software development and consulting company known as Ozware Developments Unit
Trust. In August 1996, Quokka adopted its current business model, incorporated
in Delaware under the name Quokka Productions, Inc. and relocated its
headquarters to San Francisco. In September 1996, Quokka Productions, Inc.
changed its name to Quokka Sports, Inc.

Quokka is an independent digital sports network providing real-time
coverage of sporting events for worldwide audiences. Utilizing digital assets
generated at a sports venue that are under-utilized by traditional media, Quokka
is building a digital sports network by creating digital programming content
that is specifically designed for interactive distribution systems.

Revenues are generated from digital entertainment sponsorships,
advertising, electronic commerce and studio services. The majority of revenues
are derived from the sale of sponsorship packages to corporations. Digital
entertainment sponsors may embed their products in Quokka's productions, site
branding, access to development projects, the use of trademarks and logos and
participation in various print and media campaigns.

Unaudited Interim Financial Information

The accompanying interim consolidated financial statements as of March 31,
1998 and 1999 and the three months then ended together with the related notes
are unaudited but include all adjustments, consisting of only normal recurring
adjustments, which management considers necessary to present fairly, in all
material respects, the consolidated financial position, and consolidated results
of operations and cash flows for the three month periods ended March 31, 1998
and 1999. Results for the three months ended March 31, 1999 are not necessarily
indicative of results of the entire year.

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.

Foreign Currency Translation

The functional currency of Quokka's subsidiaries is the local currency.
Accordingly, Quokka applies the current rate method to translate the
subsidiaries' financial statements into United States dollars. Translation
adjustments are included as a separate component of stockholders' equity in the
accompanying financial statements.

Basis of Presentation

The consolidated financial statements include the accounts of Quokka, and
all of its wholly and majority-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in the consolidated financial
statements. Investments in and advances to our joint venture in which we have a
50% ownership interest are accounted for by the equity method.

F-7
<PAGE> 90
QUOKKA SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Cash and Cash Equivalents

Quokka includes in cash and cash equivalents all highly liquid investments
that mature within three months of their purchase date. Cash equivalents consist
primarily of money market funds.

Property and Equipment

Property and equipment are stated at cost and are depreciated on a
straight-line basis over the estimated useful lives of the related assets that
range from three to five years. Leased assets are amortized on a straight-line
basis over the lesser of the estimated useful life or the lease term.
Maintenance and repairs are charged to operations as incurred. When assets are
retired or otherwise disposed of, the cost and accumulated depreciation are
removed from the accounts, and any resulting gain or loss is reflected in
operations in the period realized.

Income Taxes

Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, which requires
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statements and tax
bases of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts expected
to be realized.

Net loss per share and pro forma net loss per share

Quokka computes net loss per share in accordance with SFAS No. 128,
Earnings per Share, and SEC Staff Accounting Bulletin ("SAB") No. 98. Under the
provisions of SFAS No. 128 and SAB No. 98, basic net loss per share is computed
by dividing the net loss available to common stockholders for the period by the
weighted average number of common shares outstanding during the period. Diluted
net loss per share is computed by dividing the net loss for the period by the
weighted average number of vested common and common equivalent shares
outstanding during the period. However, as Quokka generated net losses in all
periods presented, common equivalent shares, composed of incremental common
shares issuable upon the exercise of stock options and warrants and upon
conversion of preferred stock, are not included in diluted net loss per share
because such shares are anti-dilutive.

Pro forma net loss per share in 1998 and the period ended March 31, 1999 is
computed using the weighted average number of common shares outstanding,
including the pro forma effects of the automatic conversion of Quokka's
preferred stock and exercise of warrants to purchase 508,848 shares into shares
of Quokka's common stock effective upon the closing of Quokka's initial public
offering as if such conversion and exercise occurred on January 1, 1998 or at
the date of original issuance, if later. The resulting pro forma adjustments
result in an increase in the weighted average shares used to compute basic and
diluted net loss per share in 1998 and for the three months ended March 31,
1999. Pro forma common equivalent shares, composed of unvested restricted common
stock and incremental common shares issuable upon the exercise of stock options
and warrants, are not included in pro forma diluted net loss per share because
they would be anti-dilutive. Unaudited pro forma stockholders' equity at March
31, 1999, as adjusted for the conversion of preferred stock and exercise of
warrants are disclosed on the balance sheet.

Pro Forma Stockholder's Equity (Unaudited)

Effective upon the closing of the Company's initial public offering, the
outstanding shares of Series A, Series B, Series C and Series D Preferred Stock
and a total of 508,848 warrants will automatically convert

F-8
<PAGE> 91
QUOKKA SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

into shares of common stock. The pro forma effects of these transactions are
unaudited and have been reflected in the accompanying pro forma consolidated
balance sheet at March 31, 1999.

The following table sets forth the computation of historical and pro forma
basic and diluted net loss per share for the periods indicated.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------------- -------------------------
1996 1997 1998 1998 1999
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Numerator:
Net loss available to common
stockholders............... $(1,559,779) $(4,941,840) $(9,538,324) $ (389,641) $(7,847,600)
Denominator:
Weighted average shares....... 3,800,000 6,791,534 9,656,857 9,651,566 9,772,933
Weighted average unvested
common shares subject to
repurchase agreements...... -- -- (2,022) -- (16,874)
----------- ----------- ----------- ----------- -----------
Denominator for basic and
diluted calculation........ 3,800,000 6,791,534 9,654,835 9,651,566 9,756,059
=========== =========== =========== =========== ===========
Net loss per share:
Basic and diluted............. $ (0.41) $ (0.73) $ (0.99) $ (0.04) $ (0.80)
Anti-dilutive securities
including options, warrants
and preferred stock not
included in historical net
loss per share calculations... 0 1,643,306 17,755,299 9,373,525 31,389,889
PRO FORMA NET LOSS PER SHARE:
Net loss........................ $(9,538,324) $(7,847,600)
Shares used in computing net
loss per share,
basic and diluted............. 9,654,835 9,756,059
Adjustment to reflect assumed
conversion of preferred stock
and exercise of warrants...... 14,260,099 24,244,864
----------- -----------
Shares used in computing pro
forma net loss per share,
basic and diluted............. 23,914,934 34,000,923
=========== ===========
Pro forma net loss per share,
basic and diluted
(unaudited)................... $ (0.40) $ (0.23)
</TABLE>

Recently Issued Accounting Pronouncements:

In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
130, Reporting Comprehensive Income. SFAS 130 establishes standards for
reporting comprehensive income and its components in a financial statement.
Comprehensive income as defined includes all changes in equity (net assets)
during a period from nonowner sources. Examples of items to be included in
comprehensive income, which are excluded from net income, include foreign
currency translation adjustments and unrealized gains/losses on
available-for-sale securities. The difference between net loss, as reported, and
comprehensive income relates solely to the change in the cumulative translation
adjustment for the respective periods which were not material to these financial
statements.

During June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments
of an Enterprise and Related Information" SFAS No. 131 replaces SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise" and changes the way
public companies report segment information. SFAS No. 131 is

F-9
<PAGE> 92
QUOKKA SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

effective for fiscal years beginning after December 15, 1997 and has been
adopted by Quokka for the year ended December 31, 1998. Quokka operates in one
business segment.

In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position No. 98-1, "Software for Internal Use" which
provides guidance on accounting for the cost of computer software developed or
obtained for internal use. Statement of Position No. 98-1 is effective for
financial statements for fiscal years beginning after December 15, 1998. Quokka
does not expect that the adoption of Statement of Position No. 98-1 will have a
material impact on its financial statements.

In April 1998, the AICPA issued Statement of Position 98-5, "Reporting on
the Costs of Start-Up Activities." This standard requires companies to expense
the costs of start-up activities and organization costs as incurred. In general,
Statement of Position 98-5 is effective for fiscal years beginning after
December 15, 1998. Quokka believes the adoption of Statement of Position 98-5
will not have a material impact on its results of operations.

Fair Value of Financial Instruments

Carrying amounts of certain of Quokka's financial instruments, including
cash and cash equivalents, accounts receivable, accounts payable, accrued
expenses and other liabilities, approximate fair value due to their short
maturities. Based upon borrowing rates currently available for Quokka for loans
with similar terms, the carrying value of capital lease obligations approximates
fair value.

Business Risk and Concentration of Credit Risk

Quokka operates in the Internet industry, which are rapidly evolving and
intensely competitive. Quokka potentially competes with other Internet
companies, large, established media companies and sports marketing
organizations.

Financial instruments that potentially subject Quokka to concentrations of
credit risk consist primarily of one money market account placed with one
financial institution which exceeds federally insured limits.

Quokka performs ongoing credit evaluations, does not require collateral and
does not currently maintain any reserves for potential credit losses. For the
year ended December 31, 1998, three customers accounted for 52%, 16% and 12%,
respectively, of all revenues generated by Quokka. For the three months ended
March 31, 1998, three customers accounted for 63%, 18% and 10% of all revenues
generated by Quokka. For the three months ended March 31, 1999, three customers
accounted for 48%, 25% and 18% of all revenues generated by Quokka. At December
31, 1998, 23% of the outstanding accounts receivable was attributable to the
smallest of the three largest customers. One additional customer accounted for
another 65% of total outstanding accounts receivable. The remaining accounts
receivable balance at December 31, 1998 was attributable to three additional
customers. At March 31, 1999, 100% of the outstanding accounts receivable was
attributable to three customers.

For the year ended December 31, 1997, three customers accounted for 52%,
21% and 15% of all revenues generated by Quokka. At December 31, 1997, there
were no receivables from these customers. For the year ended December 31, 1996,
one customer accounted for all the revenues generated.

REVENUE RECOGNITION

Quokka generates revenues from digital entertainment sponsorships,
advertising, electronic commerce and studio services. Sponsorship revenues are
recognized over the term of the sponsored event based on the ratio of current
period impressions to projected total ultimate impressions based on a
determination that no significant obligations remained and collection of the
resulting receivable was probable. When Quokka was obligated to provide a
minimum number of impressions, a pro rata portion of amounts

F-10
<PAGE> 93
QUOKKA SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

received was recorded as deferred revenue until these obligations were
satisfied. Revenues from studio services are recognized in the period the
service is provided. Advertising and electronic commerce revenues, which have
not been material to date, are recognized when the commitment is met or product
is shipped and payment is assured. Quokka has accepted property and services as
payment for sponsorship. Property and services received as payment are valued at
fair market value based on the amounts normally charged to third parties for
similar property and services.

Total property and services received as payment were $0 in 1996, $1,738,298
in 1997 and $4,320,622 in 1998. Total property and services received as payment
were $2,773,874 and $244,763 for the three months ended March 31, 1998 and 1999.

RESEARCH AND ENGINEERING

Research and engineering expenses include personnel costs, costs incurred
to improve and develop the "Quokka Sports Platform," broadband applications and
costs associated with network operations. Research and engineering costs are
expensed as incurred.

ADVERTISING

Advertising is expensed as incurred. Advertising expenses were $4,000 in
1996, $62,000 in 1997 and $554,000 in 1998.

STOCK-BASED COMPENSATION

In 1997, Quokka adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-based Compensation." Quokka has elected to continue
accounting for stock-based compensation issued to the employees using Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and,
accordingly, pro forma disclosures required under SFAS No. 123 have been
presented (See Note 8). Under APB No. 25, compensation expense is based on the
difference, if any, on the date of the grant, between the fair value of Quokka's
common stock and the exercise price. Additionally, pursuant to SFAS No. 123,
stock issued to non-employees is accounted for at the fair value of the equity
instruments issued, or at the fair value of the consideration received,
whichever is more reliably measurable.

RECLASSIFICATION

Quokka has reclassified the presentation of certain prior year information
to conform to the current year presentation. These changes had no effect on
previously reported financial position or results of operations.

F-11
<PAGE> 94
QUOKKA SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. PROPERTY AND EQUIPMENT

Property and equipment consists of:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- MARCH 31,
1997 1998 1999
-------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Computer, telecommunications equipment and
software..................................... $ 61,595 $2,241,644 $4,156,456
Leasehold improvements......................... 227,394 567,680 780,147
Furniture and fixtures......................... 5,738 356,068 611,346
Production equipment........................... -- 93,951 431,383
Leased equipment............................... 75,464 75,464 406,533
-------- ---------- ----------
370,191 3,334,807 6,385,865
Less accumulated depreciation and
amortization................................. (68,247) (598,509) (1,028,840)
-------- ---------- ----------
Property and equipment, net............... $301,944 $2,736,298 $5,357,025
======== ========== ==========
</TABLE>

Accumulated amortization related to leased equipment was $12,577 at
December 31, 1997 and $37,732 at December 31, 1998. There were no asset
disposals during 1996, 1997 and 1998. Accumulated amortization related to leased
equipment was $18,866 at March 31, 1998 and $62,413 at March 31, 1999. There
were no asset disposals during the three months ended March 31, 1999.

3. INCOME TAXES

The provision for income taxes are summarized as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Current tax expense:
Federal -- Foreign........................ $ -- $ -- $ 12,090
State..................................... -- 800 800
Deferred tax expense
Federal................................... -- (1,438,864) (2,845,930)
State..................................... -- (128,098) (486,101)
Valuation allowance for deferred tax
assets.................................... -- 1,566,962 3,332,031
----------- ----------- -----------
$ -- $ 800 $ 12,890
=========== =========== ===========
</TABLE>

The change in the valuation allowance was $1,566,962 during the period from
August 15, 1996 (date of incorporation) to December 31, 1997 and $3,332,031 in
1998. Tax expenses, which were insignificant, were recorded in general and
administrative expenses.

F-12
<PAGE> 95
QUOKKA SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The primary components of the net deferred tax asset are:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1998
----------- -----------
<S> <C> <C>
Net operating loss carryforwards.................. $ 1,526,769 $ 4,671,438
Other............................................. 40,193 227,554
----------- -----------
1,566,962 4,898,992
Valuation allowance............................... (1,566,962) (4,898,992)
----------- -----------
Deferred tax liability............................ -- --
----------- -----------
Net deferred tax asset............................ $ -- $ --
=========== ===========
</TABLE>

At December 31, 1998, Quokka had net operating loss carryforwards of
$12,025,228 for federal tax purposes expiring in 2011 through 2018, and
$9,987,838 for California income tax purposes which expire in 2004. The issuance
of preferred stock in December, 1997, resulted in a change of ownership under
Section 382 of the Internal Revenue Code. As a result of the change,
approximately $3.8 million in federal losses and $1.8 million in California
losses are subject to an annual limitation of $254,319. The losses incurred
while operating as Ozware Developments Unit Trust in Australia are not available
for future utilization. Therefore, no deferred income taxes were recorded in the
financial statements.

The effective income tax rate differs from the federal statutory income tax
rate of 34% primarily as a result of state income taxes and the change in the
valuation allowance. The difference between Quokka's effective income tax rate
and the federal statutory rate is reconciled below:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1996 1997 1998
---------- ----------- -----------
<S> <C> <C> <C>
Provision computed at federal statutory
rate....................................... $ -- $(1,702,090) $(3,242,713)
State taxes, net of federal tax benefit...... -- (291,325) (556,411)
Change in valuation allowance................ -- 1,566,962 3,332,031
Other........................................ -- 427,253 479,983
---------- ----------- -----------
Net tax provision............................ $ -- $ 800 $ 12,890
========== =========== ===========
</TABLE>

4. ACCRUED LIABILITIES

Accrued liabilities are comprised of:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
--------------------- -----------
1997 1998 1999
------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Accrued compensation and related
expenses................................. $79,993 $ 579,380 $255,817
Accrued expenses........................... 1,997 544,977 450,000
Accrued professional service fees.......... -- 75,000 21,002
------- ---------- --------
Total accrued liabilities........ $81,990 $1,199,357 $726,819
======= ========== ========
</TABLE>

5. COMMITMENTS

Quokka's rental expense for office facilities was $149,839 in 1997 and
$232,799 in 1998 and $174,015 for the three months ended 1999. Quokka has the
option to terminate its facilities lease after December 2000 if the landlord is
unable to accommodate Quokka's expansion needs.

F-13
<PAGE> 96
QUOKKA SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Lease Obligations

Quokka leases office facilities and equipment under noncancelable operating
leases. Additionally, Quokka leases certain office equipment under capital lease
agreements. Minimum future payments under capital and operating lease agreements
for the year ended December 31, are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
-------- ----------
<S> <C> <C>
1999.................................................. $ 51,017 $ 438,668
2000.................................................. 45,960 412,980
2001.................................................. -- 381,314
2002.................................................. -- 55,746
-------- ----------
96,977 $1,288,708
==========
Less amount representing interest..................... 14,412
--------
Present value of minimum lease payments under capital
lease............................................... 82,565
Less current portion.................................. (40,188)
--------
Non-current portion......................... $ 42,377
========
</TABLE>

Long-Term Debt

Quokka has an equipment financing arrangement with a bank. Under the terms
of the agreement, Quokka had the right to draw on a $750,000 line of credit
until November 23, 1998 for the purchase of equipment collateralized by the
loan. These amounts are classified as long-term debt on the accompanying
financial statements. Quokka withdrew the maximum amount available under this
line during the period. The terms of the agreement require repayment over 36
months commencing November 23, 1998. Prior to that date, Quokka was obligated to
make payments of interest only on the unpaid balance. The current rate of 8.50%
is 0.75% over the prime rate quoted by the bank (7.75% at December 31, 1998).
Principal and interest payments are made monthly to fully amortize the loan.

6. STOCKHOLDERS' EQUITY

Preferred Stock

At December 31, 1998, Quokka had Series A, Series B and Series C preferred
stock authorized and outstanding. At December 31, 1997, Quokka was authorized to
issue 8,500,000 shares of preferred stock, all of which were designated Series A
Preferred Stock. At December 31, 1998, Quokka was authorized to issue 27,600,000
shares of preferred stock, 7,965,688 of which were designated Series A Preferred
Stock, 11,127,620 of which were designated Series B Preferred Stock and
8,500,000 of which were designated Series C Preferred Stock. The holders of
preferred stock have the following rights:

Dividends

The holders of all series of preferred stock outstanding are entitled
to receive in any fiscal year, when and if declared by the Board of
Directors, out of any funds legally available, cash dividends at the rate
of 8.00% of the original issuance price per share. The right to dividends
is not cumulative, and no dividends were declared through December 31,
1998.

F-14
<PAGE> 97
QUOKKA SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Conversion Rights

At the option of the holder, each share of Series A, Series B and
Series C Preferred Stock is convertible, at any time, into one share of
common stock. The conversion ratio is subject to adjustment resulting from
future capital transactions. In addition, each share of Series A, Series B
and Series C Preferred Stock will convert automatically into common stock:
(i) at any time based on the affirmative vote of 75% of the outstanding
shares of all of Series A, Series B and Series C Preferred Stock; or (ii)
immediately prior to the closing of a firm commitment underwritten public
offering, provided the gross cash proceeds to Quokka are at least
$15,000,000 and the public offering price per share is at least $4.50.

Liquidation Preference

In the event of any liquidation, dissolution or winding up of Quokka,
either voluntary or involuntary, the holders of the Series C Preferred
Stock retain liquidation preference over Series A and Series B Preferred
Stock and common stock equal to the original issuance price ($3.25 per
share) plus declared but unpaid dividends. After the payment of the full
liquidation preference of the Series C Preferred Stock, the holders of the
Series B Preferred Stock retain liquidation preference over Series A
Preferred Stock and common stock equal to the original issuance price
($1.50 per share) plus declared but unpaid dividends. After the payment of
the full liquidation preference of the Series C Preferred Stock and Series
B Preferred Stock, the holders of the Series A Preferred Stock retain
liquidation preference over common stock equal to the original issuance
price ($0.68 per share) plus declared but unpaid dividends. If there are
any available funds and assets remaining after payments or distributions
are made to the holders of Series A, Series B and Series C Preferred Stock
of their full preferential amounts, then all remaining funds and assets
will be distributed pro rata among the holders of the then-outstanding
common stock and Series A, Series B and Series C Preferred Stock on a pro
rata, as converted to common stock basis.

Voting Rights

The holders of all series of preferred stock and the holders of common
stock are entitled to notice of any stockholders' meeting. Holders of
voting common stock and Series A, Series B and Series C Preferred Stock ,
vote as a single class upon any matter submitted to the stockholders for a
vote, as follows: (i) each holder of Series A, Series B and Series C
Preferred Stock, has one vote for each full share of common stock into
which each share of preferred stock would be convertible on the record date
for the vote and (ii) each holder of common stock has one vote per share of
common stock. Voting as a separate class, holders of Series A Preferred
Stock have the right to elect two directors. This right can be exercised of
any annual meeting or at any special meeting called. Directors elected by
holders of a majority of all outstanding shares of Series A Preferred Stock
will serve until their successors have been elected or have been removed by
holders of the majority of the Series A Preferred Stock.

7. BRIDGE LOANS AND WARRANTS

In October 1997, Quokka obtained a bridge loan and issued warrants to
purchase common stock. The loan amount was subsequently converted into Series A
Preferred Stock in connection with the Series A Preferred Stock financing in
December 1997. Quokka issued 212,800 warrants at an exercise price of $0.50 per
share expiring in November 2004. In connection with these warrants, Quokka
recorded a charge to interest expense of $61,860, representing the fair value of
the warrants issued.

In 1998, Quokka issued warrants to purchase 635,650 shares of Series A, B,
and C Preferred Stock under a joint development agreement. In connection with
these warrants, Quokka recorded charges for
F-15
<PAGE> 98
QUOKKA SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

research and engineering of $852,730, representing the fair value of the
warrants issued. In December 1998, 339,602 shares of preferred stock were
exercised. As of December 31, 1998, the following warrants were outstanding:

<TABLE>
<CAPTION>
AGGREGATE
EXERCISE
SHARES PRICE EXPIRATION DATES
------- --------- ----------------
<S> <C> <C> <C>
Common stock......... 212,800 $106,400 The earlier of November 2004 or initial public offering
Series A Preferred
Stock.............. 99,539 101,530 The earlier of August 2009 or initial public offering
Series B Preferred
Stock.............. 148,024 174,257 The earlier of August 2009 or initial public offering
Series C Preferred
Stock.............. 48,485 157,576 The earlier of August 2009 or initial public offering
</TABLE>

The estimated fair value of these warrants has been determined based on the
Noreen-Wolfson fair value model with a volatility of 70%.

8. STOCK OPTIONS

Pursuant to the Quokka Sports, Inc. 1997 Equity Incentive Plan ("the
Plan"), employees, directors and consultants of Quokka may be granted options to
purchase shares of common stock. At December 31, 1998, 7,350,000 shares of
common stock were reserved for issuance pursuant to the Plan. Options granted
under the Plan are exercisable but subject to repurchase at cost in the event
that the individual ceases to be an employee or provide services to Quokka.
Repurchase rights generally lapse according to a vesting schedule of 60 months.

A summary of the activity under the Plan together with options granted
outside of the Plan is as follows:

<TABLE>
<CAPTION>
EXERCISE WEIGHTED
PRICE AGGREGATE AVERAGE
SHARES PER SHARE PRICE EXERCISE PRICE
--------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Outstanding at December 31,
1996.......................... -- -- -- --
Granted......................... 1,340,000 $0.50 $ 670,000 $0.50
Cancelled....................... (252,000) $0.50 (126,000) $0.50
--------- ----------- ----------- -----
Outstanding at December 31,
1997.......................... 1,088,000 $0.50 544,000 $0.50
Granted......................... 2,695,000 $0.50-$2.60 3,719,000 $1.34
Exercised....................... (48,799) $0.50 (24,400) $0.50
Cancelled....................... (239,001) $0.50-$1.50 (176,000) $0.74
--------- ----------- ----------- -----
Outstanding at December 31,
1998.......................... 3,495,200 $0.50-$2.60 4,062,600 $1.12
--------- ----------- ----------- -----
Granted......................... 3,894,600 $3.25-$8.00 27,276,950 $7.00
Exercised....................... (197,775) $0.50-$7.00 (135,138) $0.68
Cancelled....................... (47,000) $1.50-$7.00 (131,000) $2.79
--------- ----------- ----------- -----
Outstanding at March 31, 1999... 7,145,025 $0.50-$8.00 $31,073,412 $4.35
========= =========== =========== =====
</TABLE>

At December 31, 1998, options to purchase 819,480 shares were fully vested.

F-16
<PAGE> 99
QUOKKA SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes information with respect to stock options
outstanding at December 31, 1998:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ---------------------------------------------------------------- ----------------------------
NUMBER WEIGHTED AVERAGE WEIGHTED NUMBER WEIGHTED
RANGE OF OUTSTANDING REMAINING AVERAGE EXERCISABLE AVERAGE
EXERCISE PRICES AT 12/31/98 CONTRACTUAL LIFE EXERCISE PRICE 12/31/98 EXERCISE PRICE
- --------------- ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$0.50 1,454,200 8.68 $0.50 441,429 $0.50
$0.75-$1.25 911,000 9.65 $1.13 156,867 $1.12
$1.50-$2.60 1,106,000 9.88 $2.08 221,184 $2.08
</TABLE>

The following information concerning the Plan is provided in accordance
with Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation (SFAS 123). Quokka accounts for the Plan in accordance
with Accounting Principles Board (APB) Opinion No. 25 and related
interpretations.

The fair value of each employee stock option grant has been estimated on
the date of grant using the minimum value method with the following weighted
average assumptions used for grants in 1998:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1997 1998
------------ ------------
<S> <C> <C>
Risk-free interest rates........................... 5.72% 5.25%
Expected life of options........................... 5years 5years
Expected dividends................................. $0 $0
</TABLE>

The weighted average fair value of options granted in 1998 was $1.38. Stock
options issued to consultants were valued utilizing the Black-Scholes option
pricing model with a volatility of 71%.

The following comprises the pro forma information pursuant to the provision
of SFAS No. 123:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Net loss -- historical.............. $(1,559,779) $(4,941,840) $(9,538,324)
Pro forma........................... $(1,559,779) $(4,966,164) $(9,694,002)
Basic and diluted net loss per share
Historical........................ ($0.41) ($0.73) ($0.99)
Pro forma......................... ($0.41) ($0.73) ($1.00)
</TABLE>

These pro forma amounts may not be representative of the effects on pro
forma net income (loss) for future years as options vest over several years and
additional awards are generally made each year.

9. 401(K) PLAN

On November 5, 1997, Quokka established a 401(k) plan, which took effect on
January 1, 1998. Under the plan, eligible employees are permitted to contribute
up to 15% of gross compensation, not to exceed the annual 402(g) limitation for
any plan year. Discretionary contributions may be made by Quokka. No
contributions have been made by Quokka since the adoption of the plan.

F-17
<PAGE> 100
QUOKKA SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information and non-cash activities for 1997 and
1998, and the three months ended March 31, 1998 and 1999:

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------- --------------------------
1997 1998 1998 1999
-------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Supplement disclosure of cash:
Equipment financed through capital lease.... $119,684 $ -- $ -- $ --
Account payable related to purchase of
property and equipment................... -- 241,809 -- 483,946
Issuance of warrants for preferred stock
under joint development agreement........ 61,860 415,094 381,948 --
Issuance of preferred warrants under license
rights agreement......................... -- -- -- 400,841
Issuance of preferred warrants for
subordinated debt........................ -- -- -- 552,486
Stock options issued as compensation for
services rendered........................ -- 34,788 -- 27,922
</TABLE>

11. SUBSEQUENT EVENTS

In February 1999, Quokka established NBC/Quokka, LLC a joint venture with
NBC Olympics, Inc. NBC/Olympics, Inc. is owned 51% by Quokka and 49% by NBC
Olympics, Inc. The terms of the operating agreement for the venture require
Quokka to make quarterly capital contributions and contribute $15 million in
cash to be used by the venture, plus any additional cash required by the venture
as determined by the board of directors of the venture. In consideration for
Quokka's share of the equity in the joint venture, Quokka also issued 2,100,000
warrants that have a fair value of $4.9 million. This joint venture has been
consolidated in Quokka's financial statements.

In March 1999, Quokka formed CART Digital Media Enterprises, LLC with
Forsythe Inc. CART Digital Media Enterprises, LLC is 50% owned by Quokka and 50%
owned by Forsythe, Inc., and both parties have an equal representation on the
Board of Managers. The terms of the venture agreement require the two partners
to make equal capital contributions on a quarterly basis. This joint venture
will be treated as an equity investment within the financial statements. As part
of the consideration for the equity in this joint venture, Quokka issued
warrants to purchase 76,366 shares of Series C Preferred Stock, which has a fair
value of $400,841.

In February 1999, Quokka entered into a subordinated debt agreement. Terms
of this agreement call for maximum borrowings of $10 million. Repayment is due
in 36 monthly installments commencing on February 1, 2000 subject to
acceleration under certain conditions including the completion of an initial
public offering. No amounts were outstanding on this facility as of March 31,
1999. In connection with this agreement, Quokka has issued warrants for the
purchase of 215,384 shares of Series C Preferred Stock at an exercise price of
$3.25. The fair value of these warrants was $552,486 and has been treated as a
loan commitment fee and is being amortized over the term of the six-month
draw-down period as no further services are requested to earn the warrants, and
they are fully vested.

The estimated fair value of the above warrants have been determined based
on the Noreen-Wolfson fair value model with a volatility of 70%.

F-18
<PAGE> 101
QUOKKA SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In April 1999, Quokka entered into a Trial Agreement with MediaOne
Interactive Services, Inc. Under this agreement, Quokka and MediaOne are working
together to implement and test streaming media over the MediaOne cable modem
infrastructure. In connection with this agreement, Quokka has issued warrants to
MediaOne to purchase 153,846 shares of Series C preferred stock at an exercise
price of $3.25 per share. These warrants will expire in January 2009 if not
earlier exercised.

In May 1999, Quokka entered into a noncancelable facilities lease. Terms of
the lease call for annual lease payments of approximately $1.9 million. Terms of
the lease agreement further require a $700,000 security deposit in the form of
an irrevocable letter of credit. The lease expires in February 2002.

In May 1999, Quokka completed an additional private sale of equity
securities issuing 3,966,667 shares of Series D Preferred Stock at a price of
$9.00 per share. Aggregate gross proceeds approximate $35.7 million.

F-19
<PAGE> 102
(INSIDE BACK COVER)

[Picture of the Race Viewer web page related to Quokka's coverage of the 1999
FedEx Championship Series car race, a CART event.]
<PAGE> 103
(INSIDE BACK COVER GATE FOLD)

[GRAPHIC TITLED "QUOKKA SPORTS PLATFORM" DEPICTING DATA FLOW THROUGH THE
FOLLOWING SIX STAGES OF THE QUOKKA SPORTS PLATFORM: (1) COLLECTION; (2)
TRANSMISSION; (3) PRODUCTION; (4) DISTRIBUTION; (5) DELIVERY; AND (6) CLIENT.]

<PAGE> 104

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

THROUGH AND INCLUDING , 1999 (THE 25(TH) DAY AFTER THE DATE OF
THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

[QUOKKASPORTS LOGO]

COMMON STOCK

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

PROSPECTUS

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

MERRILL LYNCH & CO.

LEHMAN BROTHERS

BANCBOSTON ROBERTSON STEPHENS

, 1999

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 105

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses to be paid by Quokka
in connection with the sale of the shares of common stock being registered
hereby. All amounts are estimates except for the SEC registration fee, the NASD
filing fee and the Nasdaq National Market filing fee.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 15,985
NASD filing fee............................................. 6,250
Nasdaq National Market filing fee........................... 95,000
Accounting fees and expenses................................ 250,000
Legal fees and expenses..................................... 350,000
Printing and engraving expenses............................. 325,000
Blue sky fees and expenses.................................. 10,000
Transfer agent and registrar fees and expenses.............. 15,000
Miscellaneous............................................... 150,000
----------
Total.................................................. $1,217,235
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

- any breach of the director's duty of loyalty;

- acts or omissions which involve a lack of good faith, intentional
misconduct or a knowing violation of the law;

- payment of dividends or approval of stock repurchases or redemptions that
are unlawful under Delaware law; or

- any transaction from which the director derives an improper personal
benefit.

II-1
<PAGE> 106

We have the power to indemnify our other officers, employees and other
agents, as permitted by Delaware law, but we are not required to do so.

Quokka plans to obtain directors' and officers' liability insurance.

Reference is made to the following documents filed or to be filed as
exhibits to this registration statement regarding relevant indemnification
provisions described above and elsewhere herein:

<TABLE>
<CAPTION>
EXHIBIT DOCUMENT NUMBER
- ---------------- ------
<S> <C>
Form of Underwriting Agreement.............................. 1.01
Amended and Restated Certificate of Incorporation........... 3.03
Amended and Restated Bylaws................................. 3.04
Amended and Restated Investors' Rights Agreement dated May
27, 1999.................................................. 4.02
Form of Indemnity Agreement................................. 10.01
</TABLE>

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The following list sets forth information regarding all securities sold by
Quokka since its incorporation in Delaware on August 15, 1996:

1. In January 1997, Quokka issued and sold an aggregate of 3,800,000
shares of its common stock to one entity in exchange for all of the
properties, rights, interests and other tangible and intangible assets
of Ozware Developments Unit Trust, an Australian unit trust.

2. From March 1997 to August 1997, Quokka issued and sold an aggregate of
5,851,566 shares of its common stock at $0.50 per share, 3,351,076 of
which were sold to five executive officers and/or directors (and
related entities) of Quokka.

3. In October 1997, Quokka issued warrants to purchase an aggregate of
212,800 shares of common stock at an exercise price of $0.50 per share
to four investors, 62,800 of which were sold to two executive officers
and/or directors (and related entities) of Quokka.

4. In December 1997, Quokka issued and sold an aggregate of 7,720,590
shares of Series A Preferred Stock at $0.68 per share to 11 investors,
5,635,294 of which were sold to five executive officers and/or
directors (and related entities) of Quokka.

5. Between March 1998 and December 1998, Quokka issued and sold warrants
to purchase up to 245,098 shares of Series A Preferred Stock at an
exercise price of $1.02 per share, 245,098 shares of Series B Preferred
Stock at an exercise price of $1.02 per share, 72,727 shares of Series
B Preferred Stock at an exercise price of $1.50 per share and 72,727
shares of Series C Preferred Stock at an exercise price of $3.25 per
share to one investor that is now a 5% stockholder of Quokka. The
warrants were amended in December 1998 and partially exercised by the
5% stockholder in December 1998 for 145,559 shares of Series A
Preferred Stock, 145,559 shares of Series B Preferred Stock, 24,242
shares of Series B Preferred Stock and 24,242 shares of Series C
Preferred Stock. The warrants, as amended, are currently exercisable
for 99,539 shares of Series A Preferred Stock at an exercise price of
$1.02 per share, 99,539 shares of Series B Preferred Stock at an
exercise price of $1.02 per share, 48,485 shares of Series B Preferred
Stock at an exercise price of $1.50 per share and 48,485 shares of
Series C Preferred Stock at an exercise price of $3.25 per share.

6. From June to August 1998, Quokka issued and sold an aggregate of
10,737,068 shares of Series B Preferred Stock at $1.50 per share to 21
investors, 9,767,269 of which were sold to six investors that are now
5% stockholders of Quokka, and 576,904 shares of which were sold to
three executive officers and directors (and related entities) of
Quokka.

7. In December 1998, Quokka issued and sold an aggregate of 4,938,756
shares of Series C Preferred Stock at $3.25 per share to 26 investors,
3,630,771 of which were sold to six investors

II-2
<PAGE> 107

that are now 5% stockholders, and 323,371 of which were sold to three executive
officers and directors (and related entities) of Quokka.

8. From February 1999 to March 1999, Quokka issued and sold warrants to
purchase up to an aggregate of 2,391,750 shares of Series C Preferred
Stock at a weighted average per share price of $5.33 to three
investors, one of which is now a 5% stockholder of Quokka.

9. In April 1999, Quokka issued and sold warrants to purchase up to an
aggregate of 161,538 shares of Series C Preferred Stock at an exercise
price of $3.25 per share to two investors, one of which is now a 5%
stockholder of Quokka.

10. In May 1999, Quokka issued and sold an aggregate of 3,966,667 shares of
Series D Preferred Stock at $9.00 per share to 7 investors.

11. Since inception, Quokka has granted stock options under its 1997 Equity
Incentive Plan, covering an aggregate of 8,620,199 shares of common
stock (net of expirations and cancellations) at exercise prices ranging
from $0.50 to $8.50 per share.

12. Since inception, options to purchase an aggregate of 329,097 shares of
common stock have been exercised for an aggregate purchase price of
$250,798.50 at a weighted exercise price of $0.76 per share.

13. Since inception, Quokka has granted stock options outside of its 1997
Equity Incentive Plan, covering an aggregate of 517,000 shares of
common stock (net of expirations and cancellations) at exercise prices
ranging from $0.50 to $8.50 per share. To date, no options granted
outside of the 1997 Equity Incentive Plan have been exercised.

All sales of common stock made pursuant to the exercise of stock options
granted under the 1997 Equity Incentive Plan to Quokka's officers, directors,
employees and consultants were made in reliance on Rule 701 under the Securities
Act or on Section 4(2) of the Securities Act.

All other sales were made in reliance on Section 4(2) of the Securities Act
and/or Regulation D promulgated under the Securities Act. These sales were made
without general solicitation or advertising. Each purchaser was a sophisticated
investor with access to all relevant information necessary to evaluate the
investment and represented to Quokka that the shares were being acquired for
investment.

II-3
<PAGE> 108

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) THE FOLLOWING EXHIBITS ARE FILED HEREWITH:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<C> <S>
1.01** Form of Underwriting Agreement.
3.01 Amended and Restated Certificate of Incorporation.
3.02* Bylaws.
3.03* Form of Amended and Restated Certificate of Incorporation to
be filed upon completion of this offering.
3.04 Form of Amended and Restated Bylaws upon completion of this
offering.
4.01 Form of Specimen Stock Certificate.
4.02 Amended and Restated Investors' Rights Agreement, dated May
27, 1999, among Quokka and certain investors named therein.
5.01** Opinion of Cooley Godward LLP regarding legality of the
securities being registered.
10.01* Form of Indemnity Agreement entered into by Quokka with each
of its directors and certain executive officers.
10.02 Amended and Restated 1997 Equity Incentive Plan.
10.03* Form of Stock Option Agreement under the Amended and
Restated 1997 Equity Incentive Plan.
10.04* 1999 Non-Employee Directors' Stock Option Plan.
10.05* Form of Nonstatutory Stock Option Agreement under the 1999
Non-Employee Directors' Stock Option Plan.
10.06* 1999 Employee Stock Purchase Plan.
10.07* Form of 1999 Employee Stock Purchase Plan Offering.
10.08* Key Employee Agreement, dated March 25, 1999, between Alvaro
Saralegui and Quokka.
10.09* Subordinated Loan and Security Agreement, dated February 12,
1999, between Quokka and Comdisco, Inc.
10.10+* Software License and Development Agreement, dated March 20,
1998, as amended, between Quokka and Intel Corporation.
10.11* Lease, dated October 1, 1996, between Brannan Street
Partners and Quokka, as amended.
10.12* Sublease, dated June 23, 1998, between San Francisco
Mercantile Company, Inc. and Quokka.
10.13* Office Lease, dated February 18, 1999, between Tiffany M.
Gin and Stanton Lowe dba Spear Street Saphire and Quokka.
10.14+* Master Venture Agreement, dated February 9, 1999, by and
among Quokka, NBC Olympics, Inc. and NBC/Quokka Ventures,
LLC.
10.15+* Agreement, dated January 1, 1999, between Championship Auto
Racing Teams, Inc. and CART Digital Media Enterprises, LLC.
10.16+ Operating Agreement of NBC/Quokka Ventures, LLC, dated
February 9, 1999, between Quokka and NBC Olympics, Inc., as
amended.
10.17+ Digital Entertainment Partnership Agreement, dated January
1, 1999, between Quokka and Compaq Computer Corporation.
10.18 Lease, dated April 23, 1999, between Quokka and 1301 Evans
Street Associates, LLC.
10.19 Office Lease Agreement, dated May 27, 1999, between Quokka
and EOP-Mission Street, L.L.C.
</TABLE>

II-4
<PAGE> 109

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<C> <S>
16.01* Letter from KPMG LLP regarding change in certifying
accountant.
21.01 List of Subsidiaries.
23.01** Consent of Cooley Godward LLP (included in Exhibit 5.01).
23.02 Consent of PricewaterhouseCoopers LLP, independent
accountants.
24.01 Power of Attorney. Reference is made to page II-6.
27.01 Financial Data Schedule.
</TABLE>

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

* Previously filed with the Commission.

** To be filed by amendment.

+ Confidential treatment requested.

(B) FINANCIAL STATEMENT SCHEDULES.

All financial statement schedules are omitted because the information
called for is not required, is not applicable, or is shown either in the
consolidated financial statements or the notes thereto.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Quokka
pursuant to the provisions described under Item 14 above, or otherwise, Quokka
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, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Quokka of expenses incurred
or paid by a director, officer or controlling person of Quokka 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, Quokka
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question 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.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by Quokka pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus 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.

II-5
<PAGE> 110

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
Quokka Sports, Inc. has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, State of California, on the 28th day of May, 1999.

QUOKKA SPORTS, INC.

By: /s/ LES SCHMIDT

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

Les Schmidt

Executive Vice President, Chief
Financial Officer and Secretary

Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ ALAN S. RAMADAN* President, Chief Executive Officer and May 28, 1999
- ------------------------------------------ Director (Principal Executive
Alan S. Ramadan Officer)

/s/ LES SCHMIDT Executive Vice President, Chief May 28, 1999
- ------------------------------------------ Financial Officer and Secretary
Les Schmidt (Principal Financial and Accounting
Officer)

/s/ RICHARD H. WILLIAMS* Director (Chairman of the Board of May 28, 1999
- ------------------------------------------ Directors)
Richard H. Williams

/s/ JOHN BERTRAND A.M.* Director (Vice-Chairman of the Board May 28, 1999
- ------------------------------------------ of Directors)
John Bertrand A.M.

/s/ WALTER W. BREGMAN* Director May 28, 1999
- ------------------------------------------
Walter W. Bregman

/s/ ROEL PIEPER* Director May 28, 1999
- ------------------------------------------
Roel Pieper

/s/ JAMES G. SHENNAN, JR.* Director May 28, 1999
- ------------------------------------------
James G Shennan, Jr.

/s/ BARRY M. WEINMAN* Director May 28, 1999
- ------------------------------------------
Barry M. Weinman

*By: /s/ LES SCHMIDT
------------------------------------
Les Schmidt
Attorney-in-Fact

(Signing under the authority of a Power of
Attorney previously filed with the
Securities and Exchange Commission)
</TABLE>

II-6
<PAGE> 111

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT TITLE PAGE
- ------- ------------- ------------
<C> <S> <C>
1.01** Form of Underwriting Agreement..............................
3.01 Amended and Restated Certificate of Incorporation...........
3.02* Bylaws......................................................
3.03* Form of Amended and Restated Certificate of Incorporation to
be filed upon completion of this offering...................
3.04 Form of Amended and Restated Bylaws upon completion of this
offering....................................................
4.01 Form of Specimen Stock Certificate..........................
4.02 Amended and Restated Investors' Rights Agreement, dated May
27, 1999, among Quokka and certain investors named
therein.....................................................
5.01** Opinion of Cooley Godward LLP regarding legality of the
securities being registered.................................
10.01* Form of Indemnity Agreement entered into by Quokka with each
of its directors and certain executive officers.............
10.02 Amended and Restated 1997 Equity Incentive Plan.
10.03* Form of Stock Option Agreement under the Amended and
Restated 1997 Equity Incentive Plan.........................
10.04* 1999 Non-Employee Directors' Stock Option Plan..............
10.05* Form of Nonstatutory Stock Option Agreement under the 1999
Non-Employee Directors' Stock Option Plan...................
10.06* 1999 Employee Stock Purchase Plan...........................
10.07* Form of 1999 Employee Stock Purchase Plan Offering..........
10.08* Key Employee Agreement, dated March 25, 1999, between Alvaro
Saralegui and Quokka........................................
10.09* Subordinated Loan and Security Agreement, dated February 12,
1999, between Quokka and Comdisco, Inc......................
10.10+* Software License and Development Agreement, dated March 20,
1998, as amended, between Quokka and Intel Corporation......
10.11* Lease, dated October 1, 1996, between Brannan Street
Partners and Quokka, as amended.............................
10.12* Sublease, dated June 23, 1998, between San Francisco
Mercantile Company, Inc. and Quokka.........................
10.13* Office Lease, dated February 18, 1999, between Tiffany M.
Gin and Stanton Lowe dba Spear Street Saphire and Quokka....
10.14+* Master Venture Agreement, dated February 9, 1999, by and
among Quokka, NBC Olympics, Inc. and NBC/Quokka Ventures,
LLC.........................................................
10.15+* Agreement, dated January 1, 1999, between Championship Auto
Racing Teams, Inc. and CART Digital Media Enterprises,
LLC.........................................................
10.16+ Operating Agreement of NBC/Quokka Ventures, LLC, dated
February 9, 1999, between Quokka and NBC Olympics, Inc., as
amended.....................................................
10.17+ Digital Entertainment Partnership Agreement, dated January
1, 1999, between Quokka and Compaq Computer Corporation.....
10.18 Lease, dated April 23, 1999, between Quokka and 1301 Evans
Street Associates, LLC......................................
10.19 Office Lease Agreement, dated May 27, 1999, between Quokka
and EOP-Mission Street, L.L.C...............................
16.01* Letter from KPMG LLP regarding change in certifying
accountant..................................................
21.01 List of Subsidiaries........................................
</TABLE>

<PAGE> 112

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT TITLE PAGE
- ------- ------------- ------------
<C> <S> <C>
23.01** Consent of Cooley Godward LLP (included in Exhibit 5.01)....
23.02 Consent of PricewaterhouseCoopers LLP, independent
accountants.................................................
24.01 Power of Attorney. Reference is made to page II-6...........
27.01 Financial Data Schedule.....................................
</TABLE>

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

* Previously filed with the Commission.

** To be filed by amendment.

+ Confidential treatment requested.

<PAGE> 1
EXHIBIT 3.04

AMENDED AND RESTATED

BYLAWS

QUOKKA SPORTS, INC.
(A DELAWARE CORPORATION)

<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I Offices....................................................................1

Section 1. Registered Office......................................................1

Section 2. Other Offices..........................................................1

ARTICLE II Corporate Seal.............................................................1

Section 3. Corporate Seal.........................................................1

ARTICLE III STOCKHOLDERS' MEETINGS.....................................................1

Section 4. Place of Meetings......................................................1

Section 5. Annual Meeting.........................................................1

Section 6. Special Meetings.......................................................3

Section 7. Notice of Meetings.....................................................4

Section 8. Quorum.................................................................4

Section 9. Adjournment and Notice of Adjourned Meetings...........................5

Section 10. Voting Rights..........................................................5

Section 11. Beneficial Owners of Stock.............................................5

Section 12. List of Stockholders...................................................6

Section 13. Action without Meeting.................................................6

Section 14. Organization...........................................................6

ARTICLE IV DIRECTORS..................................................................7

Section 15. Number and Term of Office. Classes of Directors.......................7

Section 16. Powers.................................................................8

Section 17. Vacancies..............................................................8

Section 18. Resignation............................................................9

Section 19. Removal................................................................9

Section 20. Meetings...............................................................9

(a) Annual Meetings........................................................9

(b) Regular Meetings.......................................................9

(d) Telephone Meetings....................................................10

(e) Notice of Meetings....................................................10

(f) Waiver of Notice......................................................10
</TABLE>

i.
<PAGE> 3

TABLE OF CONTENTS
(CONTINUED)

<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 21. Quorum and Voting.....................................................10

Section 22. Action without Meeting................................................11

Section 23. Fees and Compensation.................................................11

Section 24. Committees............................................................11

(a) Executive Committee...................................................11

(b) Other Committees......................................................11

(d) Meetings..............................................................12

Section 25. Organization..........................................................12

ARTICLE V OFFICERS..................................................................12

Section 26. Officers Designated...................................................12

Section 27. Tenure and Duties of Officers.........................................13

(a) General...............................................................13

(b) Duties of Chairman of the Board of Directors..........................13

(d) Duties of Vice Presidents.............................................13

(e) Duties of Secretary...................................................13

(f) Duties of Chief Financial Officer or Treasurer........................14

Section 28. Delegation of Authority...............................................14

Section 29. Resignations..........................................................14

Section 30. Removal...............................................................14

ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED
BY THE CORPORATION........................................................14

Section 31. Execution of Corporate Instruments....................................14

Section 32. Voting of Securities Owned by the Corporation.........................15

ARTICLE VII SHARES OF STOCK...........................................................15

Section 33. Form and Execution of Certificates....................................15

Section 34. Lost Certificates.....................................................16

Section 35. Transfers.............................................................16

Section 36. Fixing Record Dates...................................................16
</TABLE>

ii.
<PAGE> 4

TABLE OF CONTENTS
(CONTINUED)

<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 37. Registered Stockholders...............................................17

ARTICLE VIII OTHER SECURITIES OF THE CORPORATION.......................................17

Section 38. Execution of Other Securities.........................................17

ARTICLE IX DIVIDENDS.................................................................17

Section 39. Declaration of Dividends..............................................17

Section 40. Dividend Reserve......................................................17

ARTICLE X FISCAL YEAR...............................................................18

Section 41. Fiscal Year...........................................................18

ARTICLE XI INDEMNIFICATION...........................................................18

Section 42. Indemnification of Directors, Officers, Employees and Other
Agents................................................................18

(a) Directors and Executive Officers......................................18

(b) Other Officers, Employees and Other Agents............................18

(d) Expenses..............................................................19

(e) Enforcement...........................................................19

(f) Non-Exclusivity of Rights.............................................20

(g) Survival of Rights....................................................20

(h) Insurance.............................................................20

(i) Amendments............................................................20

(j) Saving Clause.........................................................20

(k) Certain Definitions...................................................20

ARTICLE XII NOTICES...................................................................21

Section 43. Notices...............................................................21

(a) Notice to Stockholders................................................21

(b) Notice to Directors...................................................21

(d) Affidavit of Mailing..................................................22

(e) Time Notices Deemed Given.............................................22

(f) Methods of Notice.....................................................22
</TABLE>

iii.
<PAGE> 5
TABLE OF CONTENTS
(CONTINUED)

<TABLE>
<CAPTION>
PAGE
<S> <C>
(g) Failure to Receive Notice.............................................22

(h) Notice to Person with Whom Communication Is Unlawful..................22

(i) Notice to Person with Undeliverable Address...........................22

ARTICLE XIII AMENDMENTS................................................................23

Section 44. Amendments............................................................23

ARTICLE XIV Loans To Officers.........................................................23

Section 45. Loans to Officers.....................................................23
</TABLE>

iv.
<PAGE> 6

AMENDED AND RESTATED

BYLAWS

QUOKKA SPORTS, INC.
(A DELAWARE CORPORATION)

ARTICLE I

OFFICES

SECTION 1. REGISTERED OFFICE. The registered office of the corporation
in the State of Delaware shall be in the City of Dover, County of Kent. (Del.
Code Ann., tit. 8, Section 131)

SECTION 2. OTHER OFFICES. The corporation shall also have and maintain
an office or principal place of business at such place as may be fixed by the
Board of Directors, and may also have offices at such 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. (Del. Code Ann., tit.
8, Section 122(8))

ARTICLE II

CORPORATE SEAL

SECTION 3. CORPORATE SEAL. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise. (Del. Code Ann., tit. 8,
Section 122(3))

ARTICLE III

STOCKHOLDERS' MEETINGS

SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof. (Del.
Code Ann., tit. 8, Section 211(a))

SECTION 5. ANNUAL MEETING.

(a) The annual meeting of the stockholders of the corporation,
for the purpose of election of Directors and for such other business as may
lawfully come before it, shall be held on such date and at such time as may be
designated from time to time by the Board of Directors Nominations of persons
for election to the Board of Directors of the corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of

1.
<PAGE> 7

stockholders: (i) pursuant to the corporation's notice of meeting of
stockholders; (ii) by or at the direction of the Board of Directors; or (iii) by
any stockholder of the corporation who was a stockholder of record at the time
of giving of notice provided for in the following paragraph, who is entitled to
vote at the meeting and who complied with the notice procedures set forth in
Section 5. (Del. Code Ann., tit. 8, Section 211(b)).

(b) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. For
nominations or other business to be properly brought before an annual meeting by
a stockholder pursuant to clause (c) of Section 5(a) of these Bylaws, (i) the
stockholder must have given timely notice thereof in writing to the Secretary of
the corporation, (ii) such other business must be a proper matter for
stockholder action under the Delaware General Corporation Law ("DGCL"), (iii) if
the stockholder, or the beneficial owner on whose behalf any such proposal or
nomination is made, has provided the corporation with a Solicitation Notice (as
defined in this Section 5(b)), such stockholder or beneficial owner must, in the
case of a proposal, have delivered a proxy statement and form of proxy to
holders of at least the percentage of the corporation's voting shares required
under applicable law to carry any such proposal, or, in the case of a nomination
or nominations, have delivered a proxy statement and form of proxy to holders of
a percentage of the corporation's voting shares reasonably believed by such
stockholder or beneficial owner to be sufficient to elect the nominee or
nominees proposed to be nominated by such stockholder, and must, in either case,
have included in such materials the Solicitation Notice, and (iv) if no
Solicitation Notice relating thereto has been timely provided pursuant to this
section, the stockholder or beneficial owner proposing such business or
nomination must not have solicited a number of proxies sufficient to have
required the delivery of such a Solicitation Notice under this Section 5. To be
timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the ninetieth (90th) day nor earlier than the close of business on
the one hundred twentieth (120th) day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced more than thirty (30) days prior to or
delayed by more than thirty (30) days after the anniversary of the preceding
year's annual meeting, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the one hundred twentieth
(120th) day prior to such annual meeting and not later than the close of
business on the later of the ninetieth (90th) day prior to such annual meeting
or the tenth (10th) day following the day on which public announcement of the
date of such meeting is first made. In no event shall the public announcement of
an adjournment of an annual meeting commence a new time period for the giving of
a stockholder's notice as described above. Such stockholder's notice shall set
forth: (A) as to each person whom the stockholder proposed to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "1934 Act") and Rule 14a-11 thereunder (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (B) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (C) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the corporation's books,

2.
<PAGE> 8

and of such beneficial owner, (ii) the class and number of shares of the
corporation which are owned beneficially and of record by such stockholder and
such beneficial owner, and (iii) whether either such stockholder or beneficial
owner intends to deliver a proxy statement and form of proxy to holders of, in
the case of the proposal, at least the percentage of the corporation's voting
shares required under applicable law to carry the proposal or, in the case of a
nomination or nominations, a sufficient number of holders of the corporation's
voting shares to elect such nominee or nominees (an affirmative statement of
such intent, a "Solicitation Notice").

(c) Notwithstanding anything in the second sentence of Section
5(b) of these Bylaws to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the Corporation is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the corporation
at least one hundred (100) days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this Section 5 shall
also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary at
the principal executive offices of the corporation not later than the close of
business on the tenth (10th) day following the day on which such public
announcement is first made by the corporation.

(d) Only such persons who are nominated in accordance with the
procedures set forth in this Section 5 shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Section 5. Except as otherwise provided by law, the Chairman of the
meeting shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made, or proposed, as the
case may be, in accordance with the procedures set forth in these Bylaws and, if
any proposed nomination or business is not in compliance with these Bylaws, to
declare that such defective proposal or nomination shall not be presented for
stockholder action at the meeting and shall be disregarded.

(e) Notwithstanding the foregoing provisions of this Section 5,
in order to include information with respect to a stockholder proposal in the
proxy statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Nothing in these Bylaws shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the corporation proxy statement pursuant to
Rule 14a-8 under the 1934 Act.

(f) For purposes of this Section 5, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the 1934 Act.

SECTION 6. SPECIAL MEETINGS.

3.
<PAGE> 9

(a) Special meetings of the stockholders of the corporation may
be called, for any purpose or purposes, by (i) the Chairman of the Board, (ii)
the President, (iii) the Board of Directors pursuant to a resolution adopted by
a majority of the total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships at the time any such
resolution is presented to the Board for adoption) or (iv) the holders of 50% or
more of the Company's outstanding voting stock, and shall be held at such place,
on such date, and at such time as they or he shall fix. At any time or times
that the corporation is subject to Section 2115(b) of the California General
Corporation Law ("CGCL"), stockholders holding five percent (5%) or more of the
outstanding shares shall have the right to call a special meeting of
stockholders only as set forth in Section 17(c) herein.

(b) If a special meeting is properly called by any person or
persons other than the Board of Directors, the request shall be in writing,
specifying the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the Chairman of the Board of Directors, the
Chief Executive Officer, or the Secretary of the corporation. No business may be
transacted at such special meeting otherwise than specified in such notice. The
Board of Directors shall determine the time and place of such special meeting,
which shall be held not less than thirty-five (35) nor more than one hundred
twenty (120) days after the date of the receipt of the request. Upon
determination of the time and place of the meeting, the officer receiving the
request shall cause notice to be given to the stockholders entitled to vote, in
accordance with the provisions of Section 7 of these Bylaws. If the notice is
not given within one hundred (100) days after the receipt of the request, the
person or persons properly requesting the meeting may set the time and place of
the meeting and give the notice. Nothing contained in this paragraph (b) shall
be construed as limiting, fixing, or affecting the time when a meeting of
stockholders called by action of the Board of Directors may be held.

SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by law or
the Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given. (Del. Code Ann., tit. 8, Sections 222, 229)

SECTION 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. Any shares, the voting of
which at said meeting has been enjoined, or which for any reason cannot be
lawfully voted at such meeting, shall not be counted to determine a quorum at
such meeting. In the absence of a quorum any meeting of stockholders may be
adjourned, from time to time, either by the chairman of the meeting or by vote
of the holders of a majority of the shares represented

4.
<PAGE> 10

thereat, but no other business shall be transacted at such meeting. The
stockholders present at a duly called or convened meeting, at which a quorum is
present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by law, the Certificate of Incorporation or these Bylaws, all
action taken by the holders of a majority of the voting power represented at any
meeting at which a quorum is present shall be valid and binding upon the
corporation; provided, however, that Directors shall be elected by a plurality
of the votes of the shares present in person or represented by proxy at the
meeting and entitled to vote on the election of Directors. Where a separate vote
by a class or classes is required, a majority of the outstanding shares of such
class or classes, present in person or represented by proxy, shall constitute a
quorum entitled to take action with respect to that vote on that matter and the
affirmative vote of the majority (plurality, in the case of the election of
Directors) of shares of such class or classes present in person or represented
by proxy at the meeting shall be the act of such class. (Del. Code Ann., tit. 8,
Section 216)

SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
represented thereat. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken. At the adjourned
meeting the corporation may transact any business which might have been
transacted at the original meeting. 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. (Del. Code Ann., tit. 8,
Section 222(c))

SECTION 10. VOTING RIGHTS.

(a) For the purpose of determining those stockholders entitled to
vote at any meeting of the stockholders, except as otherwise provided by law,
only persons in whose names shares stand on the stock records of the corporation
on the record date, as provided in Section 12 of these Bylaws, shall be entitled
to vote at any meeting of stockholders. Except as may be otherwise provided in
the Certificate of Incorporation or these Bylaws, each stockholder shall be
entitled to one vote for each share of capital stock held by such stockholder.
Every person entitled to vote shall have the right to do so either in person or
by an agent or agents authorized by a written proxy executed by such person or
his duly authorized agent, which proxy shall be filed with the Secretary at or
before the meeting at which it is to be used. An agent so appointed need not be
a stockholder. No proxy shall be voted after three (3) years from its date of
creation unless the proxy provides for a longer period. All elections of
Directors shall be by written ballot, unless otherwise provided in the
Certificate of Incorporation. (Del. Code Ann., tit. 8, Sections 211(e), 212(b))

SECTION 11. BENEFICIAL OWNERS OF STOCK.

(a) If shares or other securities having voting power stand of
record in the names of two (2) or more persons, whether fiduciaries, members of
a partnership, joint tenants, tenants in common, tenants by the entirety, or
otherwise, or if two (2) or more persons have the same fiduciary relationship
respecting the same shares, unless the Secretary is given written notice to the
contrary and is furnished with a copy of the instrument or order appointing them
or

5.
<PAGE> 11

creating the relationship wherein it is so provided, their acts with respect to
voting shall have the following effect: (a) if only one (1) votes, his act binds
all; (b) if more than one (1) votes, the act of the majority so voting binds
all; (c) if more than one (1) votes, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionally, or may apply to the Delaware Court of Chancery for relief as
provided in the General Corporation Law of Delaware, Section 217(b). If the
instrument filed with the Secretary shows that any such tenancy is held in
unequal interests, a majority or even-split for the purpose of this subsection
(c) shall be a majority or even-split in interest. (Del. Code Ann., tit. 8,
Section 217(b))

(b) Persons holding stock in a fiduciary capacity shall be
entitled to vote the shares so held. Persons whose stock is pledged shall be
entitled to vote, unless in the transfer by the pledgor on the books of the
corporation he has expressly empowered the pledgee to vote thereon, in which
case only the pledgee, or his proxy, may represent such stock and vote thereon.
(Del. Code Ann., tit. 8, Section 217(a))

SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order, 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 (10) 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
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time
thereof, and may be inspected by any stockholder who is present. (Del. Code
Ann., tit. 8, Section 219(a))

SECTION 13. ACTION WITHOUT MEETING. No action shall be taken by the
stockholders except at an annual or special meeting of stockholders called in
accordance with these Bylaws, and no action shall be taken by the stockholders
by written consent.

SECTION 14. ORGANIZATION.

(a) At every meeting of stockholders, the Chairman of the Board
of Directors, or, if a Chairman has not been appointed or is absent, the
President, or, if the President is absent, the most senior Vice President
present, or in the absence of any such officer, a chairman of the meeting chosen
by a majority in interest of the stockholders entitled to vote, present in
person or by proxy, shall act as chairman. The Secretary, or, in his absence, an
Assistant Secretary directed to do so by the President, shall act as secretary
of the meeting.

(b) The Board of Directors of the corporation shall be entitled
to make such rules or regulations for the conduct of meetings of stockholders as
it shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and

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constituted proxies, and such other persons as the chairman shall permit,
restrictions on entry to the meeting after the time fixed for the commencement
thereof, limitations on the time allotted to questions or comments by
participants and regulation of the opening and closing of the polls for
balloting on matters which are to be voted on by ballot. Unless, and to the
extent determined by the Board of Directors or the chairman of the meeting,
meetings of stockholders shall not be required to be held in accordance with
rules of parliamentary procedure.

ARTICLE IV

DIRECTORS

SECTION 15. NUMBER AND TERM OF OFFICE. CLASSES OF DIRECTORS.

(a) The authorized number of directors of the corporation shall
be determined from time to time by resolution of the Board of Directors.
Directors need not be stockholders unless so required by the Certificate of
Incorporation. If for any cause, the Directors shall not have been elected at an
annual meeting, they may be elected as soon thereafter as convenient at a
special meeting of the stockholders called for that purpose in the manner
provided in these Bylaws. (Del. Code Ann., tit. 8, Sections 141(b), 211(b), (c))

(b) Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances,
following the closing of the Initial Public Offering, the directors shall be
divided into three classes designated as Class I, Class II and Class III,
respectively. Directors shall be assigned to each class in accordance with a
resolution or resolutions adopted by the Board of Directors. At the first annual
meeting of stockholders following the Closing of the Initial Public Offering,
the term of office of the Class I directors shall expire and Class I directors
shall be elected for a full term of three years. At the second annual meeting of
stockholders following the Closing of the Initial Public Offering, the term of
office of the Class II directors shall expired and Class II directors shall be
elected for a full term of three years. At the third annual meeting of
stockholders following the Closing of the Initial Public Offering, the term of
office of the Class III directors shall expired and Class III directors shall be
elected for a full term of three years. At each succeeding annual meeting of
stockholders, directors shall be elected for a full term of three years to
succeed the directors of the class whose terms expired at such annual meeting.
During such time or times that the corporation is subject to Section 2115(b) of
the CGCL, this Section 15(b) shall become effective and apply only when the
corporation is a "listed" corporation within the meaning of Section 301.5 of the
CGCL.

(c) In the event that the corporation (i) is subject to Section
2115(b) of the CGCL AND (ii) is not a "listed" corporation or ceases to be a
"listed" corporation under Section 301.5 of the CGCL, Section 15(b) of these
Bylaws shall not apply and all directors shall be elected at each annual meeting
of stockholders to hold office until the next annual meeting.

(d) No person entitled to vote at an election for directors may
cumulate votes to which such person is entitled, unless, at the time of such
election, the corporation (i) is subject to Section 2115(b) of the CGCL AND (ii)
is not a "listed" corporation or ceases to be a "listed" corporation under
Section 301.5 of the CGCL. During this time, every stockholder entitled to vote
at an election for directors may cumulate such stockholder's votes and give one
candidate a

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number of votes equal to the number of directors to be elected multiplied by the
number of votes to which such stockholder's shares are otherwise entitled, or
distribute the stockholder's votes on the same principle among as many
candidates as such stockholder thinks fit. No stockholder, however, shall be
entitled to so cumulate such stockholder's votes unless (i) the names of such
candidate or candidates have been placed in nomination prior to the voting and
(ii) the stockholder has given notice at the meeting, prior to the voting, of
such stockholder's intention to cumulate such stockholder's votes. If any
stockholder has given proper notice to cumulate votes, all stockholders may
cumulate their votes for any candidates who have been properly placed in
nomination. Under cumulative voting, the candidates receiving the highest number
of votes, up to the number of directors to be elected, are elected.

(e) Notwithstanding the foregoing provisions of this section,
each director shall serve until his successor is duly elected and qualified or
until his death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.

SECTION 16. POWERS. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation. (Del. Code Ann., tit. 8, Section 141(a))

SECTION 17. VACANCIES.

(a) Unless otherwise provided in the Certificate of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by stockholders, be filled only
by the affirmative vote of a majority of the directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified. A vacancy
in the Board of Directors shall be deemed to exist under this Section 18 in the
case of the death, removal or resignation of any director.
(Del. Code Ann., tit. 8, Section 223(a), (b))

(b) If at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Delaware Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in offices as aforesaid, which election shall be governed by Section 211 of the
DGCL. (Del. Code Ann., tit. 8, Section 223(c)).

(c) At any time or times that the corporation is subject to
Section 2115(b) of the CGCL, if, after the filling of any vacancy, the directors
then in office who have been elected by stockholders shall constitute less than
a majority of the directors then in office, then

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(1) Any holder or holders of an aggregate of five percent
(5%) or more of the total number of shares at the time outstanding having the
right to vote for those directors may call a special meeting of stockholders; or

(2) The Superior Court of the proper county shall, upon
application of such stockholder or stockholders, summarily order a special
meeting of stockholders, to be held to elect the entire board, all in accordance
with Section 305(c) of the CGCL. The term of office of any director shall
terminate upon that election of a successor. (CGCL Section 305(c).

SECTION 18. RESIGNATION. Any Director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. When one
or more Directors shall resign from the Board of Directors, effective at a
future date, a majority of the Directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen shall hold office for the unexpired
portion of the term of the Director whose place shall be vacated and until his
successor shall have been duly elected and qualified. (Del. Code Ann., tit. 8,
Sections 141(b), 223(d))

SECTION 19. REMOVAL.

(a) During such time or times that the corporation is subject to
Section 2115(b) of the CGCL, the Board of Directors or any individual director
may be removed from office at any time without cause by the affirmative vote of
the holders of at least a majority of the outstanding shares entitled to vote on
such removal; provided, however, that unless the entire Board is removed, no
individual director may be removed when the votes cast against such director's
removal, or not consenting in writing to such removal, would be sufficient to
elect that director if voted cumulatively at an election which the same total
number of votes were cast (or, if such action is taken by written consent, all
shares entitled to vote were voted) and the entire number of directors
authorized at the time of such director's most recent election were then being
elected.

(b) Following any date on which the corporation is no longer
subject to Section 2115(b) of the CGCL and subject to any limitations imposed by
law, Section 19(a) above shall no longer apply and removal shall be as follows.
At a special meeting of stockholders called for the purpose in the manner
hereinabove provided, subject to any limitations imposed by law or the
Certificate of Incorporation, the Board of Directors, or any individual
Director, may be removed from office, (i) with cause by the affirmative vote of
the holders of a majority of the voting power of all the then-outstanding shares
of voting stock of the corporation entitled to vote at an election of directors
(the "Voting Stock") or (ii) without cause by the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all the then-outstanding shares of the Voting Stock. (Del. Code Ann.,
tit. 8, Section 141(k)).

SECTION 20. MEETINGS.

(a) ANNUAL MEETINGS. The annual meeting of the Board of Directors
shall be held immediately after the annual meeting of stockholders and at the
place where such meeting is held. No notice of an annual meeting of the Board of
Directors shall be necessary and such

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meeting shall be held for the purpose of electing officers and transacting such
other business as may lawfully come before it.

(b) REGULAR MEETINGS. Except as hereinafter otherwise provided,
regular meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors may also be held at any place within or without the State
of Delaware which has been determined by the Board of Directors. (Del. Code
Ann., tit. 8, Section 141(g))

(c) SPECIAL MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may be
held at any time and place within or without the State of Delaware whenever
called by the President or a majority of the Directors. (Del. Code Ann., tit. 8,
Section 141(g))

(d) TELEPHONE MEETINGS. Any member of the Board of Directors, or
of any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting. (Del. Code
Ann., tit. 8, Section 141(i))

(e) NOTICE OF MEETINGS. Notice of the time and place of all
special meetings of the Board of Directors shall be given orally or in writing,
by telephone, including a voice messaging system or other system or technology
designed to record and communicate messages, facsimile, telegraph or telex, or
by electronic mail or other electronic means, during normal business hours, at
least one (1) day before the date of the meeting, or sent in writing to each
director by first class mail, postage prepaid, at least three (3) days before
the date of the meeting. Notice of any meeting may be waived in writing at any
time before or after the meeting and will be waived by any Director by
attendance thereat, except when the Director attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. (Del. Code
Ann., tit. 8, Section 229)

(f) WAIVER OF NOTICE. The transaction of all business at any
meeting of the Board of Directors, or any committee thereof, however called or
noticed, or wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum be present and if, either before
or after the meeting, each of the Directors not present shall sign a written
waiver of notice, or a consent to holding such meeting, or an approval of the
minutes thereof. [Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the Board of Directors need be specified in
any written waiver of notice or consent unless so required by the Certificate of
Incorporation or these Bylaws. All such waivers, consents or approvals shall be
filed with the corporate records or made a part of the minutes of the meeting.
(Del. Code Ann., tit. 8, Section 229)

SECTION 21. QUORUM AND VOTING.

(a) Unless the Certificate of Incorporation requires a greater
number and except with respect to indemnification questions arising under
Section 42 hereof, for which a quorum shall be one-third of the exact number of
Directors fixed from time to time in accordance with Section 15 hereof, but not
less than one (1), a quorum of the Board of Directors shall consist

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of the greater of three (3) Directors or a majority of the exact number of
Directors fixed from time to time in accordance with Section 15 of these Bylaws;
provided, however, at any meeting whether a quorum be present or otherwise, a
majority of the Directors present may adjourn from time to time until the time
fixed for the next regular meeting of the Board of Directors, without notice
other than by announcement at the meeting. (Del. Code Ann., tit. 8, Section
141(b))

(b) At each meeting of the Board of Directors at which a quorum
is present all questions and business shall be determined by a vote of a
majority of the Directors present, unless a different vote be required by law,
the Certificate of Incorporation or these Bylaws. (Del. Code Ann., tit. 8,
Section 141(b))

SECTION 22. ACTION WITHOUT MEETING. 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 of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee. (Del. Code Ann., tit. 8, Section 141(f))

SECTION 23. FEES AND COMPENSATION. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
Director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor. (Del. Code
Ann., tit. 8, Section 141(h))

SECTION 24. COMMITTEES.

(a) EXECUTIVE COMMITTEE. The Board of Directors may by resolution
passed by a majority of the whole Board of Directors, appoint an Executive
Committee to consist of one (1) or more members of the Board of Directors. The
Executive Committee, to the extent permitted by law and 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 business and
affairs of the corporation and may authorize the seal of the corporation to be
affixed to all papers which may require it; provided, however, that, absent
express authorization by the Board of Directors, no such committee shall have
the power or authority in reference to (i) approving or adopting, or
recommending to the stockholders, any action or mater expressly required by the
Delaware General Corporation Law to be submitted to stockholders for approval,
or (ii) adopting, amending or repealing any bylaw of the corporation. (Del. Code
Ann., tit. 8, Section 141(c))

(b) OTHER COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, from time to time appoint
such other committees as may be permitted by law. Such other committees
appointed by the Board of Directors shall consist of one (1) or more members of
the Board of Directors, and shall have such powers and perform such duties as
may be prescribed by the resolution or resolutions creating such committees, but
in no event shall such committee have the powers denied to the Executive
Committee in these Bylaws. (Del. Code Ann., tit. 8, Section 141(c))

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(c) TERM. The members of all committees of the Board of Directors
shall serve a term coexistent with that of the Board of Directors which shall
have appointed such committee. The Board of Directors, subject to the provisions
of subsections (a) or (b) of this Section 24, may at any time increase or
decrease the number of members of a committee or terminate the existence of a
committee. The membership of a committee member shall terminate on the date of
his death or voluntary resignation from the committee or from the Board of
Directors. The Board of Directors may at any time for any reason remove any
individual committee member and the Board of Directors may fill any committee
vacancy created by death, resignation, removal or increase in the number of
members of the committee. The Board of Directors may designate one or more
Directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee, and, in addition, in the
absence or disqualification of any 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. (Del. Code Ann., tit. 8, Section 141(c))

(d) MEETINGS. Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 24 shall be held at such times and places as
are determined by the Board of Directors, or by any such committee, and when
notice thereof has been given to each member of such committee, no further
notice of such regular meetings need be given thereafter. Special meetings of
any such committee may be held at any place which has been determined from time
to time by such committee, and may be called by any Director who is a member of
such committee, upon written notice to the members of such committee of the time
and place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of any
committee may be waived in writing at any time before or after the meeting and
will be waived by any Director by attendance thereat, except when the Director
attends such special meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. A majority of the authorized number of
members of any such committee shall constitute a quorum for the transaction of
business, and the act of a majority of those present at any meeting at which a
quorum is present shall be the act of such committee. (Del. Code Ann., tit. 8,
Sections 141(c), 229)

SECTION 25. ORGANIZATION. At every meeting of the Directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the Directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.

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ARTICLE V

OFFICERS

SECTION 26. OFFICERS DESIGNATED. The officers of the corporation shall
be the Chairman of the Board of Directors, the President, one or more Vice
Presidents, the Secretary and the Chief Financial Officer or Treasurer, all of
whom shall be elected at the annual organizational meeting of the Board of
Directors. The order of the seniority of the Vice Presidents shall be in the
order of their nomination, unless otherwise determined by the Board of
Directors. The Board of Directors may also appoint one or more Assistant
Secretaries, Assistant Treasurers, and such other officers and agents with such
powers and duties as it shall deem necessary. The Board of Directors may assign
such additional titles to one or more of the officers as it shall deem
appropriate. Any one person may hold any number of offices of the corporation at
any one time unless specifically prohibited therefrom by law. The salaries and
other compensation of the officers of the corporation shall be fixed by or in
the manner designated by the Board of Directors. (Del. Code Ann., tit. 8,
Sections 122(5), 142(a), (b))

SECTION 27. TENURE AND DUTIES OF OFFICERS.

(a) GENERAL. All officers shall hold office at the pleasure of
the Board of Directors and until their successors shall have been duly elected
and qualified, unless sooner removed. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. If the
office of any officer becomes vacant for any reason, the vacancy may be filled
by the Board of Directors. (Del. Code Ann., tit. 8, Section 141(b), (e))

(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of
the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. If there is no President, then the Chairman
of the Board of Directors shall also serve as the Chief Executive Officer of the
corporation and shall have the powers and duties prescribed in paragraph (c) of
this Section 27. (Del. Code Ann., tit. 8, Section 142(a))

(c) DUTIES OF PRESIDENT. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is present.
The President shall be the Chief Executive Officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. The
President shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time. (Del. Code Ann., tit. 8, Section
142(a))

(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents, in the order
of their seniority, may assume and perform the duties of the President in the
absence or disability of the President or whenever the office of President is
vacant. The Vice Presidents shall perform other duties commonly incident to
their office and shall also perform such other duties and have such

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other powers as the Board of Directors or the President shall designate from
time to time. (Del. Code Ann., tit. 8, Section 142(a))

(e) DUTIES OF SECRETARY. The Secretary shall attend all meetings
of the stockholders and of the Board of Directors, and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary shall
give notice in conformity with these Bylaws of all meetings of the stockholders,
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time. (Del. Code Ann., tit. 8, Section 142(a))

(f) DUTIES OF CHIEF FINANCIAL OFFICER OR TREASURER. The Chief
Financial Officer or Treasurer shall keep or cause to be kept the books of
account of the corporation in a thorough and proper manner, and shall render
statements of the financial affairs of the corporation in such form and as often
as required by the Board of Directors or the President. The Chief Financial
Officer or Treasurer, subject to the order of the Board of Directors, shall have
the custody of all funds and securities of the corporation. The Chief Financial
Officer or Treasurer shall perform other duties commonly incident to his office
and shall also perform such other duties and have such other powers as the Board
of Directors or the President shall designate from time to time. The President
may direct any Assistant Treasurer to assume and perform the duties of the Chief
Financial Officer or Treasurer in the absence or disability of the Chief
Financial Officer or Treasurer, and each Assistant Treasurer shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time. (Del. Code Ann., tit. 8, Section 142(a))

SECTION 28. DELEGATION OF AUTHORITY. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officer
or agent, notwithstanding any provision hereof.

SECTION 29. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer. (Del. Code Ann., tit. 8, Section 142(b))

SECTION 30. REMOVAL. Any officer may be removed from office at any time,
either with or without cause, by the vote or written consent of a majority of
the Directors in office at the time, or by any committee or superior officers
upon whom such power of removal may have been conferred by the Board of
Directors.

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ARTICLE VI

EXECUTION OF CORPORATE INSTRUMENTS AND
VOTING OF SECURITIES OWNED BY THE CORPORATION

SECTION 31. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
(Del. Code Ann., tit. 8, Sections 103(a), 142(a), 158)

Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Chief Financial Officer or Treasurer or any Assistant Secretary or
Assistant Treasurer. All other instruments and documents requiring the corporate
signature, but not requiring the corporate seal, may be executed as aforesaid or
in such other manner as may be directed by the Board of Directors. (Del. Code
Ann., tit. 8, Sections 103(a), 142(a), 158)

All checks and drafts drawn on banks or other depositaries on funds to
the credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.

Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount. (Del. Code
Ann., tit. 8, Sections 103(a), 142(a), 158)

SECTION 32. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock and
other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the President, or any Vice President.
(Del. Code Ann., tit. 8, Section 123)

ARTICLE VII

SHARES OF STOCK

SECTION 33. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. 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 any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Where

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such certificate is countersigned by a transfer agent other than the corporation
or its employee, or by a registrar other than the corporation or its employee,
any other signature on the certificate may be a 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 with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue. Each certificate shall state upon the face or back thereof, in full or
in summary, all of the designations, preferences, limitations, restrictions on
transfer and relative rights of the shares authorized to be issued. (Del. Code
Ann., tit. 8, Section 158)

SECTION 34. LOST CERTIFICATES. A new certificate or certificates shall
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. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the corporation a surety bond in such form and amount 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.
(Del. Code Ann., tit. 8, Section 167)

SECTION 35. TRANSFERS.

(a) Transfers of record of shares of stock of the corporation
shall be made only upon its books by the holders thereof, in person or by
attorney duly authorized, and upon the surrender of a properly endorsed
certificate or certificates for a like number of shares. (Del. Code Ann., tit.
8, Section 201, tit. 6, Section 8-401(1))

(b) The corporation shall have power to enter into and perform
any agreement with any number of stockholders of any one or more classes of
stock of the corporation to restrict the transfer of shares of stock of the
corporation of any one or more classes owned by such stockholders in any manner
not prohibited by the General Corporation Law of Delaware. (Del. Code Ann., tit.
8, Section 160 (a))

SECTION 36. FIXING RECORD DATES.

(a) 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, the Board of Directors may fix, in advance, a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which record date
shall not be more than sixty (60) nor less than ten (10) days before the date of
such meeting. If no record date is fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held. 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.

16.
<PAGE> 22

(b) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders 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
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty (60) days prior to such action. If no record date has
been fixed by the Board of Directors, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto. (Del.
Code Ann., tit. 8, Section 213)

SECTION 37. REGISTERED STOCKHOLDERS. 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 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.
(Del. Code Ann., tit. 8, Sections 213(a), 219)

ARTICLE VIII

OTHER SECURITIES OF THE CORPORATION

SECTION 38. EXECUTION OF OTHER SECURITIES. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 33), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature of a trustee under an indenture pursuant to which such bond, debenture
or other corporate security shall be issued, the signatures of the persons
signing and attesting the corporate seal on such bond, debenture or other
corporate security may be the imprinted facsimile of the signatures of such
persons. Interest coupons appertaining to any such bond, debenture or other
corporate security, authenticated by a trustee as aforesaid, shall be signed by
the Treasurer or an Assistant Treasurer of the corporation or such other person
as may be authorized by the Board of Directors, or bear imprinted thereon the
facsimile signature of such person. In case any officer who shall have signed or
attested any bond, debenture or other corporate security, or whose facsimile
signature shall appear thereon or on any such interest coupon, shall have ceased
to be such officer before the bond, debenture or other corporate security so
signed or attested shall have been delivered, such bond, debenture or other
corporate security nevertheless may be adopted by the corporation and issued and
delivered as though the person who signed the same or whose facsimile signature
shall have been used thereon had not ceased to be such officer of the
corporation.

ARTICLE IX

DIVIDENDS

17.
<PAGE> 23

SECTION 39. DECLARATION OF DIVIDENDS. 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 pursuant to law
at any regular or special meeting. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the Certificate
of Incorporation. (Del. Code Ann., tit. 8, Sections 170, 173)

SECTION 40. DIVIDEND RESERVE. 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 Board of 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 purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
(Del. Code Ann., tit. 8, Section 171)

ARTICLE X

FISCAL YEAR

SECTION 41. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.

ARTICLE XI

INDEMNIFICATION

SECTION 42. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
AGENTS.

(a) DIRECTORS AND EXECUTIVE OFFICERS. The corporation shall
indemnify its Directors and executive officers (for the purposes of this Article
XI, "executive officers" shall have the meaning defined in Rule 3b-7 promulgated
under the 1934 Act) to the fullest extent not prohibited by the Delaware General
Corporation Law; provided, however, that the corporation may limit the extent of
such indemnification by individual contracts with its Directors and executive
officers; and, provided, further, that the corporation shall not be required to
indemnify any Director or executive officer in connection with any proceeding
(or part thereof) initiated by such person or any proceeding by such person
against the corporation or its Directors, officers, employees or other agents
unless (i) such indemnification is expressly required to be made by law, (ii)
the proceeding was authorized by the Board of Directors of the corporation or
(iii) such indemnification is provided by the corporation, in its sole
discretion, pursuant to the powers vested in the corporation under the Delaware
General Corporation Law.

(b) OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS. The corporation
shall have power to indemnify its other officers, employees and other agents as
set forth in the Delaware General Corporation Law.

(1) For purposes of any determination under this Bylaw, a
Director or executive officer shall be deemed to have acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any

18.
<PAGE> 24

criminal action or proceeding, to have had no reasonable cause to believe that
his conduct was unlawful, if his action is based on information, opinions,
reports and statements, including financial statements and other financial data,
in each case prepared or presented by:

(i) one or more officers or employees of the
corporation whom the Director or executive officer believed to be reliable and
competent in the matters presented;

(ii) counsel, independent accountants or other
persons as to matters which the Director or executive officer believed to be
within such person's professional competence; and

(iii) with respect to a Director, a committee of
the Board upon which such Director does not serve, as to matters within such
Committee's designated authority, which committee the Director believes to merit
confidence; so long as, in each case, the Director or executive officer acts
without knowledge that would cause such reliance to be unwarranted.

(2) The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal proceeding, that
he had reasonable cause to believe that his conduct was unlawful.

(3) The provisions of this paragraph (c) shall not be
deemed to be exclusive or to limit in any way the circumstances in which a
person may be deemed to have met the applicable standard of conduct set forth by
the Delaware General Corporation Law.

(d) EXPENSES. The corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by any Director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under this Bylaw or otherwise.

Notwithstanding the foregoing, unless otherwise determined
pursuant to paragraph (e) of this Bylaw, no advance shall be made by the
corporation to an executive officer of the corporation (except by reason of the
fact that such executive officer is or was a director of the corporation in
which event this paragraph shall not apply) in any action, suit or proceeding,
whether civil, criminal, administrative or investigation, if a determination is
reasonably and promptly made (1) by the Board of Directors by a majority vote of
a quorum consisting of Directors who were not parties to the proceeding, or (2)
if such quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, that the facts known to the decision making party at the time such
determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation.

(e) ENFORCEMENT. Without the necessity of entering into an
express contract, all rights to indemnification and advances to Directors and
executive officers under this Bylaw shall be deemed to be contractual rights and
be effective to the same extent and as if provided for in a contract between the
corporation and the Director or executive officer. Any right to

19.
<PAGE> 25

indemnification or advances granted by this Bylaw to a Director or executive
officer shall be enforceable by or on behalf of the person holding such right in
any court of competent jurisdiction if (i) the claim for indemnification or
advances is denied, in whole or in part, or (ii) no disposition of such claim is
made within ninety (90) days of request therefor. The claimant in such
enforcement action, if successful in whole or in part, shall be entitled to be
paid also the expense of prosecuting his claim. The corporation shall be
entitled to raise as a defense to any such action that the claimant has not met
the standards of conduct that make it permissible under the Delaware General
Corporation Law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct.

(f) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person
by this Bylaw shall not be exclusive of any other right which such person may
have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its Directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the Delaware General Corporation Law.

(g) SURVIVAL OF RIGHTS. The rights conferred on any person by
this Bylaw shall continue as to a person who has ceased to be a Director,
officer, employee or other agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.

(h) INSURANCE. To the fullest extent permitted by the Delaware
General Corporation Law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this Bylaw.

(i) AMENDMENTS. Any repeal or modification of this Bylaw shall
only be prospective and shall not affect the rights under this Bylaw in effect
at the time of the alleged occurrence of any action or omission to act that is
the cause of any proceeding against any agent of the corporation.

(j) SAVING CLAUSE. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each Director and executive officer to
the full extent not prohibited by any applicable portion of this Bylaw that
shall not have been invalidated, or by any other applicable law.

(k) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:

20.
<PAGE> 26

(1) The term "PROCEEDING" shall be broadly construed and
shall include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony in,
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative.

(2) The term "EXPENSES" shall be broadly construed and
shall include, without limitation, court costs, attorneys' fees, witness fees,
fines, amounts paid in settlement or judgment and any other costs and expenses
of any nature or kind incurred in connection with any proceeding.

(3) The term the "CORPORATION" shall include, in addition
to the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Bylaw with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.

(4) References to a "DIRECTOR," "OFFICER," "EMPLOYEE," or
"AGENT" of the corporation shall include, without limitation, situations where
such person is serving at the request of the corporation as a director, officer,
employee, trustee or agent of another corporation, partnership, joint venture,
trust or other enterprise.

(5) References to "OTHER ENTERPRISES" shall include
employee benefit plans; references to "FINES" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references to
"SERVING AT THE REQUEST OF THE CORPORATION" shall include any service as a
director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent with respect
to an employee benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "NOT OPPOSED TO THE BEST INTERESTS OF THE
CORPORATION" as referred to in this Bylaw.

ARTICLE XII

NOTICES

SECTION 43. NOTICES.

(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of
these Bylaws, notice is required to be given to any stockholder, it shall be
given in writing, timely and duly deposited in the United States mail, postage
prepaid, and addressed to his last known post office address as shown by the
stock record of the corporation or its transfer agent. (Del. Code Ann., tit. 8,
Section 222)

21.
<PAGE> 27

(b) NOTICE TO DIRECTORS. Any notice required to be given to any
Director may be given by the method stated in subsection (a), or by facsimile,
telex or telegram, except that such notice other than one which is delivered
personally shall be sent to such address as such Director shall have filed in
writing with the Secretary, or, in the absence of such filing, to the last known
post office address of such Director.

(c) ADDRESS UNKNOWN. If no address of a stockholder or Director
be known, notice may be sent to the office of the corporation required to be
maintained pursuant to Section 2 hereof.

(d) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by a
duly authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stockholder or stockholders, or
Director or Directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall be conclusive evidence of the
statements therein contained. (Del. Code Ann., tit. 8, Section 222)

(e) TIME NOTICES DEEMED GIVEN. All notices given by mail, as
above provided, shall be deemed to have been given as at the time of mailing and
all notices given by facsimile, telex or telegram shall be deemed to have been
given as of the sending time recorded at time of transmission.

(f) METHODS OF NOTICE. It shall not be necessary that the same
method of giving notice be employed in respect of all Directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.

(g) FAILURE TO RECEIVE NOTICE. The period or limitation of time
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any Director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such Director to receive such
notice.

(h) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL.
Whenever notice is required to be given, under any provision of law or of the
Certificate of Incorporation or Bylaws of the corporation, to any person with
whom communication is unlawful, the giving of such notice to such person shall
not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such person.
Any action or meeting which shall be taken or held without notice to any such
person with whom communication is unlawful shall have the same force and effect
as if such notice had been duly given. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate shall state,
if such is the fact and if notice is required, that notice was given to all
persons entitled to receive notice except such persons with whom communication
is unlawful.

(i) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever notice
is required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and

22.
<PAGE> 28

all notices of meetings or of the taking of action by written consent without a
meeting to such person during the period between such two consecutive annual
meetings, or (ii) all, and at least two, payments (if sent by first class mail)
of dividends or interest on securities during a twelve month period, have been
mailed addressed to such person at his address as shown on the records of the
Corporation and have been returned undeliverable, the giving of such notice to
such person shall not be required. Any action or meeting which shall be taken or
held without notice to such person shall have the same force and effect as if
such notice had been duly given. If any such person shall deliver to the
corporation a written notice setting forth his then current address, the
requirement that notice be given to such person shall be reinstated. In the
event that the action taken by the corporation is such as to require the filing
of a certificate under any provision of the Delaware General Corporation Law,
the certificate need not state that notice was not given to persons to whom
notice was not required to be given pursuant to this paragraph. (Del. Code Ann,
tit. 8, Section 230)

ARTICLE XIII

AMENDMENTS

SECTION 44. AMENDMENTS. Except as otherwise set forth in paragraph (i)
of Section 42 of these Bylaws, these Bylaws may be amended or repealed and new
Bylaws adopted by the affirmative vote of at least sixty-six and two-thirds
percent (66-2/3%) of the voting power of all of the then-outstanding shares of
the Voting Stock. The Board of Directors shall also have the power, if such
power is conferred upon the Board of Directors by the Certificate of
Incorporation, to adopt, amend or repeal Bylaws (including, without limitation,
the amendment of any Bylaw setting forth the number of Directors who shall
constitute the whole Board of Directors). (Del. Code Ann., tit. 8, Sections
109(a), 122(6))

ARTICLE XIV

LOANS TO OFFICERS

SECTION 45. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance may
be with or without interest and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in this Section 46 shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the corporation
at common law or under any statute. (Del. Code Ann., tit. 8, Section 143)

23.

<PAGE> 1

EXHIBIT 4.01

QSI

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

CUSIP 749077 10 3

SEE REVERSE FOR CERTAIN DEFINITIONS

THIS CERTIFIES THAT

is the owner of

FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK, $0.0001 PAR VALUE PER
SHARE, OF

QUOKKA SPORTS, INC.

transferable on the books of the Corporation in person or by a duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned and registered by the Transfer Agent and
Registrar.

WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.

Dated:
President and Chief Executive Officer

Executive Vice President,
Chief Financial Officer and Secretary

COUNTERSIGNED AND REGISTERED:

BANKBOSTON, N.A.

TRANSFER AGENT AND REGISTRAR
BY:

<PAGE> 1
Exhibit 4.02

QUOKKA SPORTS, INC.

AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT

AS OF MAY 27, 1999

<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 1. GENERAL...........................................................1

1.1 Definitions.......................................................1

Section 2. REGISTRATION; RESTRICTIONS ON TRANSFER............................4

2.1 Restrictions on Transfer..........................................4

2.2 Demand Registration...............................................5

2.3 Piggyback Registrations...........................................6

2.4 Form S-3 Registration.............................................7

2.5 Expenses of Registration..........................................8

2.6 Obligations of the Company........................................9

2.7 Termination of Registration Rights...............................10

2.8 Delay of Registration; Furnishing Information....................10

2.9 Indemnification..................................................10

2.10 Assignment of Registration Rights................................12

2.11 Amendment of Registration Rights.................................13

2.12 Limitation on Subsequent Registration Rights.....................13

2.13 "Market Stand-Off" Agreement.....................................13

2.14 Rule 144 Reporting...............................................14

Section 3. COVENANTS OF THE COMPANY.........................................14

3.1 Basic Financial Information and Reporting........................14

3.2 Wakefield Observer Rights........................................15

3.3 Intel Observer Rights............................................15

3.4 Accel Partners Observer Rights...................................15

3.5 Media One Observer Rights........................................15

3.6 Reservation of Voting Common Stock...............................16

3.7 Termination of Covenants.........................................16

Section 4. AFFIRMATIVE COVENANTS OF THE INVESTORS...........................16

4.1 Confidential Information, etc....................................16

Section 5. RIGHT OF FIRST REFUSAL...........................................17

5.1 Subsequent Offerings.............................................17

5.2 Exercise of Rights...............................................17

5.3 Issuance of Equity Securities To Other Persons...................17

5.4 Termination of Rights of First Refusal...........................17
</TABLE>

i
<PAGE> 3
TABLE OF CONTENTS (CONTINUED)

<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
5.5 Transfer of Rights of First Refusal..............................17

5.6 Excluded Securities..............................................17

Section 6. MISCELLANEOUS....................................................18

6.1 Governing Law....................................................18

6.2 Survival.........................................................18

6.3 Successors and Assigns...........................................18

6.4 Entire Agreement.................................................19

6.5 Severability.....................................................19

6.6 Amendment and Waiver.............................................19

6.7 Delays or Omissions..............................................20

6.8 Notices..........................................................20

6.9 Attorneys' Fees..................................................20

6.10 Titles and Subtitles.............................................20

6.11 Counterparts.....................................................20

6.12 Protection of Confidential Information...........................20

6.13 Disclosure of Terms: Press Releases.............................21
</TABLE>

ii
<PAGE> 4
QUOKKA SPORTS, INC.

AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT

THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (the "Agreement") is
entered into as of the 27 day of May, 1999, by and among QUOKKA SPORTS, INC.,
a Delaware corporation (the "Company") and the holders of the Company's Common
Stock, Warrants, Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock set forth on Exhibit A hereto (the
"Investors"). This Agreement amends, restates and supersedes in its entirety
that certain Amended and Restated Investors' Rights Agreement dated December 23,
1998 (the "Original Investors' Rights Agreement").

RECITALS

WHEREAS, the Company and certain of its current stockholders and warrant
holders entered into the Original Investors' Rights Agreement; and

WHEREAS, the Company proposes to sell and issue up to an aggregate of Four
Million Seven Hundred Twenty Two Thousand Two Hundred Twenty Three (4,722,223)
shares of the Company's Series D Preferred Stock (the "Series D Preferred")
pursuant to that certain Series D Preferred Stock Purchase Agreement dated as of
the date hereof (the "Purchase Agreement"); and

WHEREAS, as a condition of entering into the Purchase Agreement, certain
Purchasers (as defined in the Purchase Agreement) have requested that the
Company extend to them registration rights, information rights and other rights
and amend the Original Investors' Rights Agreement as set forth below; and

WHEREAS, as a condition of entering into the Purchase Agreement, the
Company has requested that the Purchasers agree to restrictions on transfer,
confidentiality provisions and other obligations as set forth below; and

WHEREAS, the parties hereto desire to amend the definition of "Warrants"
herein in order to accurately reflect the name of the joint venture with NBC
Olympics, Inc. and to include in such definition the warrants issued to
Comdisco, Inc., Championship Auto Racing Teams, Inc. ("CART") and warrants
anticipated to be issued to AtHome Corp.;

NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and in the
Purchase Agreement, the parties mutually agree as follows:

SECTION 1. GENERAL

1.1 DEFINITIONS. As used in this Agreement the following terms shall have
the following respective meanings:

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

1.
<PAGE> 5
"FORM S-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.

"HOLDER" means any person owning of record any shares of the Non-Voting
Common Stock, Shares, Warrants or Registrable Securities that have not been sold
to the public or any assignee of record of such Registrable Securities in
accordance with Section 2.10 hereof.

"INITIAL OFFERING" means the Company's first firm commitment underwritten
public offering of its Common Stock registered under the Securities Act.

"MAJOR INVESTOR" means each Purchaser (as such term is defined in that
certain Common Stock Purchase Agreement dated August 19, 1997), each Purchaser
(as such term is defined in that certain Series A Preferred Stock Purchase
Agreement dated December 4, 1997 with a subsequent closing on December 19,
1997), each Purchaser (as such term is defined in that certain Series B
Preferred Stock Purchase Agreement dated June 12, 1998 with a subsequent closing
on August 11, 1998), each Purchaser (as such term is defined in that certain
Series C Preferred Stock Purchase Agreement dated December 23, 1998) and each
Purchaser (as such term is defined in the Purchase Agreement) or any assignee of
record in accordance with Section 5.5 hereof.

"NON-VOTING COMMON STOCK" means such shares of the Company's Non-Voting
Common Stock sold pursuant to the Common Stock Purchase Agreement dated April
12, 1997 or the Common Stock Purchase Agreement dated January 31, 1997.

"REGISTER," "REGISTERED," AND "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or documents.

"REGISTRABLE SECURITIES" means (i) any of the Shares, if such Shares are
shares of the Company's Voting Common Stock; (ii) any shares of the Company's
Voting Common Stock issued pursuant to the conversion of the Non-Voting Common
Stock, the Series D Preferred, the Series C Preferred, the Series B Preferred or
the Series A Preferred; (iii) any shares of the Company's Voting Common Stock
issued pursuant to the exercise of the Warrants; and (iv) any shares of the
Company's Voting Common Stock issued as (or issuable upon the conversion or
exercise of any warrants, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of,
such above-described securities or the Non-Voting Common Stock or the Warrants.
Notwithstanding the foregoing, Registrable Securities shall not include any
securities (i) sold by a person to the public either pursuant to a registration
statement or Rule 144, (ii) sold in a private transaction in which the
transferor's rights under Section 2 of this Agreement are not assigned or (iii)
held by a Holder whose registration rights have expired under Section 2.7
hereto.

"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of shares
that are Registrable Securities and either (1) are then issued and outstanding
or (2) are issuable pursuant to then exercisable or convertible securities.

2.
<PAGE> 6

"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company in
complying with Sections 2.2, 2.3 and 2.4 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and disbursements not to exceed Fifteen
Thousand Dollars ($15,000) of a single special counsel for the Holders (which
counsel shall be selected by the holders of a majority of the Registrable
Securities and subject to the approval of the Company, which approval shall not
be unreasonably withheld), blue sky fees and expenses and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company which shall be paid in any
event by the Company).

"SEC" OR "COMMISSION" means the Securities and Exchange Commission.

"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale.

"SERIES A PREFERRED" means the Company's Series A Preferred Stock.

"SERIES B PREFERRED" means the Company's Series B Preferred Stock.

"SERIES C PREFERRED" means the Company's Series C Preferred Stock.

"SERIES D PREFERRED" means the Company's Series D Preferred Stock.

"SHARES" shall mean (i) the Company's Series D Preferred, (ii) the
Company's Series C Preferred, (iii) the Company's Series B Preferred, (iv) the
Company's Series A Preferred, (v) the Company's Voting Common Stock issued
pursuant to that certain Common Stock Purchase Agreement dated August 19, 1997
by and among the Company and the Purchasers set forth on Exhibit A thereto, (vi)
the Company's Voting Common Stock and Non-Voting Common Stock issued pursuant to
that certain Common Stock Purchase Agreement dated April 2, 1997 by and between
the Company and Richard H. Williams and (vii) the Company's Voting Common Stock
issued pursuant to that certain Common Stock Purchase Agreement dated January
31, 1997 between the Company and Quokka Sports Pty Ltd. as trustee for Ozware
Developments Unit Trust.

"WARRANTS" means (i) the warrants to purchase Voting Common Stock of the
Company issued pursuant to that certain Note and Warrant Purchase Agreement
dated October 31, 1997 among the Company and the Purchasers set forth on Exhibit
A thereto and (ii) the warrants, if any, held by Intel Corporation, MediaOne
Interactive Services, Inc. ("MediaOne"), any affiliate of MediaOne to whom such
warrants have been originally issued, NBC/Quokka Ventures, LLC or its assigns,
Comdisco, Inc. or its assigns, Championship Auto Racing Teams, Inc. or its
assigns and @Home or its assigns.

3.
<PAGE> 7
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER

2.1 RESTRICTIONS ON TRANSFER.

(a) Each Holder agrees not to make any disposition of all or any
portion of the Non-Voting Common Stock, Shares or Registrable Securities unless
and until:

(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or

(ii) (A) The disposition is made under Rule 144 or its
equivalent, (B) such Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition, and (C) such Holder shall
have furnished the Company with an opinion of counsel that such disposition will
not require registration under the Securities Act if reasonably requested by the
Company, which request shall only be made in unusual circumstances; or

(iii) (A) The transferee has agreed in writing to be bound by
the terms of this Agreement, (B) such Holder shall have notified the Company of
the proposed disposition and shall have furnished the Company with a statement
of the circumstances surrounding the proposed disposition, and (C) if reasonably
requested by the Company, such Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Securities
Act.

(iv) Notwithstanding the provisions of paragraphs (i), (ii)
and (iii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder which is (A) a partnership to its partners
or former partners in accordance with partnership interests, (B) a corporation
to its shareholders in accordance with their interest in the corporation, or to
a wholly-owned subsidiary or an affiliate of such corporation (the term
"affiliate" being defined herein as any other person or entity directly or
indirectly controlling, controlled by or under common control with such person
or entity, with "control" meaning the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
person or entity, whether through the ownership of voting securities or voting
interests, by contract or otherwise), (C) a limited liability company to its
members or former members in accordance with their interest in the limited
liability company, or (D) to the Holder's family member or trust for the benefit
of an individual Holder, provided any such transferee will be subject to the
terms of this Agreement to the same extent as if he were an original Holder
hereunder.

(b) Each certificate representing the Shares or Registrable
Securities shall (unless otherwise permitted by the provisions of this
Agreement) be stamped or otherwise imprinted with legends substantially similar
to the following (in addition to any legend required under applicable state
securities laws, under Section 45 of the Company's Bylaws (Right of First
Refusal) or as provided elsewhere in this Agreement):

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933

4.
<PAGE> 8
(THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.

THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF AN AGREEMENT BETWEEN
THE COMPANY AND THE REGISTERED HOLDER OR HIS PREDECESSOR IN
INTEREST. COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY.

(c) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall have
obtained an opinion of counsel (which counsel may be counsel to the Company)
reasonably acceptable to the Company to the effect that the securities proposed
to be disposed of may lawfully be so disposed of without registration,
qualification or legend.

(d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.

2.2 DEMAND REGISTRATION.

(a) Subject to the conditions of this Section 2.2, if the Company
shall receive a written request from the Holders of more than fifty percent
(50%) of the Registrable Securities then outstanding (the "Initiating Holders")
that the Company file a registration statement under the Securities Act covering
the registration of Registrable Securities having an aggregate offering price to
the public in excess of $10,000,000, then the Company shall, within twenty (20)
days of the receipt thereof, give written notice of such request to all Holders,
and subject to the limitations of this Section 2.2, use its best efforts to
effect, as soon as practicable, the registration under the Securities Act of all
Registrable Securities that the Holders request to be registered.

(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 2.2
or any request pursuant to Section 2.3 or 2.4 and the Company shall include such
information in the written notice referred to in Section 2.4(a) or Section
2.5(a), as applicable. In such event, the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders

5.
<PAGE> 9
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority in interest of the Initiating
Holders (which underwriter or underwriters shall be reasonably acceptable to the
Company). Notwithstanding any other provision of this Section 2.2, if the
underwriter advises the Company that marketing factors require a limitation of
the number of securities to be underwritten (including Registrable Securities)
then the Company shall so advise all Holders of Registrable Securities which
would otherwise be underwritten pursuant hereto, and the number of shares that
may be included in the underwriting shall be allocated to the Holders of such
Registrable Securities which would otherwise be underwritten pursuant hereto on
a pro rata basis based on the number of Registrable Securities held by all such
Holders (including the Initiating Holders). Any Registrable Securities excluded
or withdrawn from such underwriting shall be withdrawn from the registration.

(i) Prior to the completion of the Company's Initial Offering;

(ii) after the Company has effected two (2) registrations
pursuant to this Section 2.2, and such registrations have been declared or
ordered effective by the SEC;

(iii) during the period starting with the date of filing of,
and ending on the date one hundred eighty (180) days following the effective
date of the registration statement relating to the Company's equity securities
pertaining to the Initial Offering; provided that the Company makes reasonable
good faith efforts to cause such registration statement to become effective; or

(iv) if the Company shall furnish to Holders requesting the
filing of a registration statement pursuant to this Section 2.2, a certificate
signed by the Chairman of the Board stating that in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such registration statement to be effected at
such time, in which event the Company shall have the right to defer such filing
for a period of not more than sixty (60) days after receipt of the request of
the Initiating Holders; provided that such right to delay a request shall be
exercised by the Company not more than twice in any twelve (12) month period.

2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to, the
Initial Offering and registration statements relating to secondary offerings of
securities of the Company, but excluding registration statements relating to
employee benefit plans or with respect to corporate reorganizations or other
transactions under Rule 145 of the Securities Act) and will afford each such
Holder an opportunity to include in such registration statement all or part of
such Registrable Securities held by such Holder. Each Holder desiring to include
in any such registration statement all or any part of the Registrable Securities
held by it shall, within fifteen (15) days after the above-described notice from
the Company, so notify the

6.
<PAGE> 10
Company in writing. Such notice shall state the intended method of disposition
of the Registrable Securities by such Holder. If a Holder decides not to include
all of its Registrable Securities in any registration statement thereafter filed
by the Company, such Holder shall nevertheless continue to have the right to
include any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein.

(a) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated first, to the Company; second, to the Holders on a pro rata
basis based on the total number of Registrable Securities held by the Holders
who wish to sell in such offering; and third, to any shareholder of the Company
(other than a Holder of Registrable Securities) on a pro rata basis.
Notwithstanding the immediately preceding sentence, in no event shall the amount
of securities of the selling Holders included in the registration be reduced
below twenty-five percent (25%) of the total amount of securities included in
such registration, unless such offering is the Initial Offering, in which event
any or all of the Registrable Securities of the Holders may be excluded in
accordance with the immediately preceding sentence. In no event will shares of
any other selling shareholder be included in any such registration which would
reduce the number of shares which may be included by Holders without the written
consent of Holders of more than fifty percent (50%) of the Registrable
Securities proposed to be sold in the offering.

(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.5 hereof.

2.4 FORM S-3 REGISTRATION. After the Initial Offering, in the event the
Company shall receive a written request from the Holders of more than fifty
percent (50%) of the Registrable Securities then outstanding (the "Initiating
Holders") that the Company effect a registration on Form S-3 (or any successor
to Form S-3) or any similar short-form registration statement and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, the Company will:

(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders of Registrable
Securities; and

7.
<PAGE> 11

(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Initiating
Holder's or Initiating Holders' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other Holder or Holders joining in such request as are specified in a written
request given to the Company by any such other Holder or Holders within fifteen
(15) days after receipt of such written notice from the Company; provided,
however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:

(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders, or

(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than $1,000,000, or

(iii) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for (a) a
period of not more than sixty (60) days after receipt of the request of the
Initiating Holder or Initiating Holders under this Section 2.4; and (b) a period
of not more than thirty (30) days after the lapse of the sixty (60) day deferral
referenced in Section 2.4(b)(iii)(a) immediately above; provided, that such
rights to delay a request shall be exercised by the Company not more than once
in any twelve (12) month period, or

(iv) if the Company has, within the twelve (12) month period
preceding the date of such request, already effected one (1) registration on
Form S-3 for the Holders pursuant to this Section 2.4,

(v) in any particular jurisdiction in which the Company would
be required to qualify to do business or to execute a general consent to service
of process in effecting such registration, qualification or compliance, unless
the Registered Securities would not, on account of this limitation, be available
for offer and sale in at least twenty states, or

(vi) if the Company has, within the one hundred eighty (180)
day period preceding the date of such request, effected a Company initiated
registration (other than a registration effected solely to qualify an employee
benefit plan or to effect a business combination pursuant to Rule 145).

(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders.

2.5 EXPENSES OF REGISTRATION. Except as specifically provided in this
Section 2.5, all Registration Expenses incurred in connection with any
registration under Section 2.2, Section 2.3

8.
<PAGE> 12
or Section 2.4 herein shall be borne by the Company. All Selling Expenses
incurred in connection with any registrations hereunder shall be borne by the
holders of the securities so registered pro rata on the basis of the number of
shares sold. The Company shall not, however, be required to pay for expenses of
any registration proceeding begun pursuant to Section 2.2, the request of which
has been subsequently withdrawn by the Initiating Holders unless (a) the
withdrawal is based upon material adverse information concerning the Company of
which the Initiating Holders were not aware at the time of such request or (b)
the Holders of a majority of Registrable Securities agree to forfeit their right
to one requested registration pursuant to Section 2.2, in which event such right
shall be forfeited by all Holders). Additionally, the Company shall not be
required to pay for expenses in any registration proceeding begun pursuant to
Section 2.4, the request of which has been subsequently withdrawn by the
Initiating Holders unless (a) the withdrawal is based upon material adverse
information concerning the Company of which the Initiating Holders were not
aware at the time of such request or (b) the Holders of a majority of
Registrable Securities agree that such registration shall be deemed a completed
registration for the purpose of Section 2.4(b)(iv). If the Holders are required
to pay the Registration Expenses, such expenses shall be borne by the holders of
securities (including Registrable Securities) requesting such registration in
proportion to the number of shares for which such registration was requested.

2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:

(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days or, if earlier,
until the Holder or Holders have completed the distribution related thereto.

(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.

(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities being registered by
them.

(d) Use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions, unless the Registered
Securities would not, on account of this limitation, be available for offer and
sale in at least twenty states.

(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing

9.
<PAGE> 13
underwriter(s) of such offering. Each Holder participating in such underwriting
shall also enter into and perform its obligations under such an agreement.

(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.

(g) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated as of such date,
from the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and if permitted by applicable accounting standards, to the Holders
requesting registration of Registrable Securities.

2.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Section 2 shall terminate and be of no further force and effect ten
(10) years after the date of the Company's Initial Offering. In addition, a
Holder's registration rights shall expire if (i) the Company has completed its
Initial Offering and is subject to the provisions of the Exchange Act, (ii) such
Holder (together with its affiliates, partners and former partners) holds less
than 1% of the Company's outstanding Common Stock (treating all shares of
convertible Preferred Stock on an as converted basis) and (iii) all Registrable
Securities held by and issuable to such Holder may be sold under Rule 144(k) or
all Registrable Securities held by and issuable to such Holder may be sold under
Rule 144 during any ninety (90) day period.

2.8 DELAY OF REGISTRATION; FURNISHING INFORMATION

(a) No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 2.

(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.

10.
<PAGE> 14
2.9 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under Section 2.2, 2.3 or 2.4:

(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers, affiliates, directors and
legal counsel of each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement; and the
Company will reimburse each such Holder, partner, officer or director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 2.9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, affiliate, director,
underwriter or controlling person of such Holder.

(b) To the extent permitted by law, each Holder will, severally and
not jointly, if Registrable Securities held by such Holder are included in the
securities as to which such registration qualifications or compliance is being
effected, indemnify and hold harmless the Company, each of its directors, its
officers, affiliates and legal counsel and each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter and any other
Holder selling securities under such registration statement or any of such other
Holder's partners, directors or officers or any person who controls such Holder,
against any losses, claims, damages or liabilities (joint or several) to which
the Company or any such director, officer, affiliate, controlling person,
underwriter or other such Holder, or partner, director, officer or controlling
person of such other Holder may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder under an instrument duly executed by such
Holder and stated to be specifically for use in connection with such
registration; and each such Holder, severally and not jointly, will reimburse
any legal or other expenses reasonably incurred by the

11.
<PAGE> 15
Company or any such director, officer, controlling person, underwriter or other
Holder, or partner, officer, director or controlling person of such other Holder
in connection with investigating or defending any such loss, claim, damage,
liability or action if it is judicially determined that there was such a
Violation; provided, however, that the indemnity agreement contained in this
Section 2.9(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld;
provided further, that in no event shall any indemnity under this Section 2.9
exceed the net proceeds from the offering received by such Holder.

(c) Promptly after receipt by an indemnified party under this
Section 2.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding or if the counsel retained
by the indemnifying party fails to assume the representation of the indemnified
party. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, shall not relieve such
indemnifying party of any liability to the indemnified party under this Section
2.9, except to the extent that the indemnifying party is materially prejudiced
by such delay, but the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 2.9.

(d) If the indemnification provided for in this Section 2.9 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any losses, claims, damages or liabilities referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Holder hereunder exceed the proceeds from the offering received by such Holder.

(e) The obligations of the Company and Holders under this Section
2.9 shall survive completion of any offering of Registrable Securities in a
registration statement. No

12.
<PAGE> 16
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.

2.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to this Section 2 may be assigned by a
Holder to any transferee or assignee of Registrable Securities which (i) is a
person or entity which holds Registrable Securities pursuant to a transfer
permitted by Section 2.1(a)(iii), or (ii) acquires at least fifty thousand
(50,000) shares of Registrable Securities (as adjusted for stock splits and
combinations); provided, however, (A) the transferor shall furnish to the
Company written notice of the name and address of such transferee or assignee
and the securities with respect to which such registration rights are being
assigned, it being understood that, until such time as the Company receives such
written notice, the Company is under no obligation to treat such transferee or
assignee as a holder of registration rights, and (B) such transferee shall agree
to be subject to all restrictions set forth in this Agreement.

2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 2 may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of more than fifty percent (50%)
of the Registrable Securities then outstanding, provided that such amendment or
waiver does not differentiate among similarly situated stockholders. Any
amendment or waiver effected in accordance with this Section 2.11 shall be
binding upon each Holder and the Company. By acceptance of any benefits under
this Section 2, Holders of Registrable Securities hereby agree to be bound by
the provisions hereunder.

2.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of this
Agreement, the Company shall not, without the prior written consent of the
Holders of more than fifty percent (50%) of the Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Company that would grant such holder registration rights senior to those
granted to the Holders hereunder.

2.13 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that such
Holder shall not sell or otherwise transfer or dispose of any Common Stock (or
other securities) of the Company held by such Holder (other than those included
in the registration) for a period specified by the representative of the
underwriters of Common Stock (or other securities) of the Company not to exceed
one hundred eighty (180) days following the effective date of the first
registration statement of the Company filed under the Securities Act or ninety
(90) days following the effective date of subsequent registration statements,
provided that all officers and directors of the Company enter into similar
agreements and that, to the extent that any such officer or director is released
from any such agreement, the Holders shall also be released to such extent from
the restriction contained in this Section 2.13.

Each Holder agrees to execute and deliver such other agreements as may be
reasonably requested by the Company or the underwriter which are consistent with
the foregoing or which are necessary to give further effect thereto. The
obligations described in this Section 2.13 shall not apply to a registration
relating solely to employee benefit plans on Form S-1 or Form S-8 or

13.
<PAGE> 17
similar forms that may be promulgated in the future, or a registration relating
solely to a Commission Rule 145 transaction on Form S-4 or similar forms that
may be promulgated in the future. The Company may impose stop-transfer
instructions with respect to the shares of Common Stock (or other securities)
subject to the foregoing restriction until the end of said one hundred eighty
(180) day period or ninety (90) day period, as applicable.

2.14 RULE 144 REPORTING. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:

(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;

(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act;

(c) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request: a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 of the Securities
Act, and of the Exchange Act (at any time after it has become subject to such
reporting requirements); a copy of the most recent annual or quarterly report of
the Company; and such other reports and documents as a Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing it to
sell any such securities without registration.

SECTION 3. COVENANTS OF THE COMPANY.

3.1 BASIC FINANCIAL INFORMATION AND REPORTING.

(a) The Company will maintain true books and records of account in
which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.

(b) As soon as practicable after the end of each fiscal year of the
Company, and in any event within ninety (90) days thereafter, the Company will
furnish each Holder holding Registrable Securities a consolidated balance sheet
of the Company, as at the end of such fiscal year, and a consolidated statement
of income and a consolidated statement of cash flows of the Company, for such
year, all prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail. Such financial
statements shall be accompanied by a report and opinion thereon by independent
public accountants of national standing selected by the Company's Board of
Directors. The Company will also furnish to each Holder, in advance, an annual
budget for each year and, within thirty (30) days after each fiscal quarter, a
report on financial and operational highlights.

14.
<PAGE> 18
(c) As soon as practicable after the end of every month, and in any
event within thirty (30) days thereafter, the Company will furnish each Holder
holding Registrable Securities an unaudited monthly report including a
consolidated balance sheet, an unaudited consolidated statement of income and an
unaudited consolidated statement of cash flows of the Company, all prepared in
accordance with generally accepted accounting principles (other than for
accompanying notes and changes resulting from year-end audit adjustments), and
setting forth in each case in comparative form the figures for the previous
fiscal year and the projected results for the upcoming fiscal year, all in
reasonable detail.

3.2 WAKEFIELD OBSERVER RIGHTS. So long as Wakefield Group II LLC
("Wakefield") and its affiliates continue to hold in the aggregate at least
eight hundred thousand (800,000) shares (as adjusted for stock splits and like
events) of the Company's Voting Common Stock, Wakefield shall have the right, at
Wakefield's expense, to designate a representative to attend all meetings
(including meetings to be held by telephone) of the Company's Board of Directors
in a non-voting observer capacity, and, in this respect, the Company shall give
such representative copies of all notices, minutes, consents and other materials
that it provides to directors; provided, however, that such representative shall
agree to hold in confidence and trust all information so provided. The Company
shall have the right to approve Wakefield's representative, such approval not to
be unreasonably withheld.

3.3 INTEL OBSERVER RIGHTS. So long as Intel Corporation ("Intel") and its
affiliates continue to hold in the aggregate at least one million one hundred
seventy-six thousand four hundred seventy-one (1,176,471) shares (as adjusted
for stock splits and like events) of the Company's Series A Preferred Stock,
Intel shall have the right, at Intel's expense, to designate a representative to
attend all meetings (including meetings to be held by telephone) of the
Company's Board of Directors in a non-voting observer capacity, and, in this
respect, the Company shall give such representative copies of all notices,
minutes, consents and other materials that it provides to directors; provided,
however, that such representative shall agree to hold in confidence and trust
all information so provided. The Company shall have the right to approve Intel's
representative, such approval not to be unreasonably withheld.

3.4 ACCEL PARTNERS OBSERVER RIGHTS. So long as Accel Partners ("Accel")
and its affiliates continue to hold in the aggregate at least two million five
hundred thousand (2,500,000) shares (as adjusted for stock splits and like
events) of the Company's Series B Preferred Stock, Accel shall have the right,
at Accel's expense, to designate a representative to attend all meetings
(including meetings to be held by telephone) of the Company's Board of Directors
in a non-voting observer capacity, and, in this respect, the Company shall give
such representative copies of all notices, minutes, consents and other materials
that it provides to directors; provided, however, that such representative shall
agree to hold in confidence and trust all information so provided. The Company
shall have the right to approve Accel's representative, such approval not to be
unreasonably withheld; provided, however, that any employee, director or partner
of Accel who has no significant relationship with any competitor of the Company
and otherwise has no conflict of interest with the Company's interests shall be
deemed acceptable to the Company.

3.5 MEDIA ONE OBSERVER RIGHTS. So long as MediaOne and its affiliates
continue to hold in the aggregate at least two million (2,000,000) shares (as
adjusted for stock splits and like events) of the Company's Series B Preferred
Stock and Series C Preferred Stock, and at such

15.
<PAGE> 19
time as MediaOne or its affiliates do not have a representative on the Company's
Board of Directors, MediaOne shall have the right, at MediaOne's expense, to
designate a representative to attend all meetings (including meetings to be held
by telephone) of the Company's Board of Directors in a non-voting observer
capacity, and, in this respect, the Company shall give such representative
copies of all notices, minutes, consents and other materials that it provides to
directors; provided, however, that such representative shall agree to hold in
confidence and trust all information so provided. The Company shall have the
right to approve MediaOne's representative, such approval not to be unreasonably
withheld; provided, however, that any employee, director or partner of MediaOne
who has no significant relationship with any competitor of the Company and
otherwise has no conflict of interest with the Company's interests shall be
deemed acceptable to the Company.

3.6 RESERVATION OF VOTING COMMON STOCK. The Company will at all times
reserve and keep available, solely for issuance and delivery upon the conversion
of the outstanding Non-Voting Common Stock, all Voting Common Stock issuable
from time to time upon such conversion.

3.7 TERMINATION OF COVENANTS. All covenants of the Company contained in
Section 3 of this Agreement shall expire and terminate as to each Holder on the
closing of the Initial Offering at such time as the Company is otherwise subject
to the provisions of the Securities Exchange Act of 1934, as amended.

SECTION 4. AFFIRMATIVE COVENANTS OF THE INVESTORS

4.1 CONFIDENTIAL INFORMATION, ETC. In addition to the provision set forth
in Sections 6.12 and 6.13, each Investor agrees that (a) all information
received by such Investor pursuant to Section 3 and (b) any other information,
including without limitation information relating to the Company's customers,
technology, processes or formulas, that (i) is disclosed by the Company to such
Investor and (ii) is identified by the Company as being confidential or
proprietary, shall be considered confidential information. Each Investor further
agrees that such Investor shall hold all such confidential information in
confidence and shall not disclose any such confidential information to any third
party other than such Investor's counsel or accountants nor shall such Investor
use such confidential information for any purpose other than evaluation of such
Investor's investment in the Company; provided, however, that the foregoing
obligation to hold in confidence and not to disclose confidential information
shall not apply to any such information that (1) was available to the public
prior to disclosure by the Company, (2) becomes available to the public through
no fault of such Investor, (3) is disclosed to such Investor on a
non-confidential basis by a third party, provided that the Investor determines
after reasonable inquiry that the third party has a legal right to make such
disclosure or (4) is independently developed by such Investor.

SECTION 5. RIGHT OF FIRST REFUSAL

5.1 SUBSEQUENT OFFERINGS. Each Major Investor shall have a right of first
refusal to purchase its pro rata share of all Equity Securities, as defined
below, that the Company may, from time to time, propose to sell and issue after
the date of this Agreement, other than the Equity Securities excluded by Section
5.6 hereof. Each Major Investor's pro rata share is equal

16.
<PAGE> 20
to the ratio of (a) the number of shares of the Company's Voting Common Stock
(including all shares of Voting Common Stock issued or issuable upon conversion
of the Shares) which such Investor is deemed to be a holder immediately prior to
the issuance of such Equity Securities to (b) the total number of shares of the
Company's outstanding Voting Common Stock (including all shares of Voting Common
Stock issued or issuable upon conversion of the Shares or upon the exercise of
any outstanding warrants or options) immediately prior to the issuance of the
Equity Securities. The term "Equity Securities" shall mean (i) any Common Stock,
Preferred Stock or other security of the Company, (ii) any security convertible,
with or without consideration, into any Common Stock, Preferred Stock or other
security (including any option to purchase such a convertible security), (iii)
any security carrying any warrant or right to subscribe to or purchase any
Common Stock, Preferred Stock or other security or (iv) any such warrant or
right.

5.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity
Securities, it shall give each Major Investor written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each Major Investor shall have
fifteen (15) days from the giving of such notice to agree to the purchase of its
pro rata share of the Equity Securities for the price and upon the terms and
conditions specified in the notice by giving written notice to the Company and
stating therein the quantity of Equity Securities to be purchased.
Notwithstanding the foregoing, the Company shall not be required to offer or
sell such Equity Securities to any Investor who would cause the Company to be in
violation of applicable federal securities laws by virtue of such offer or sale.

5.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. The Company shall have
one hundred twenty (120) days after the notice provided pursuant to Section 5.2
to sell the Equity Securities in respect of which the Major Investor's rights
were not exercised, at a price and upon terms and conditions materially no more
favorable to the purchasers thereof than specified in the Company's notice to
the Major Investors pursuant to Section 5.2 hereof. If the Company has not sold
such Equity Securities within one hundred twenty (120) days of the notice
provided pursuant to Section 5.2, the Company shall not thereafter issue or sell
any Equity Securities, without first offering such securities to the Major
Investors in the manner provided above.

5.4 TERMINATION OF RIGHTS OF FIRST REFUSAL. The rights of first refusal
established by this Section 5 shall not apply to, and shall terminate upon the
closing of the Initial Offering.

5.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first refusal of
each Major Investor under this Section 5 may be transferred to the same parties,
subject to the same restrictions as any transfer of registration rights pursuant
to Section 2.10.

5.6 EXCLUDED SECURITIES. The rights of first refusal established by this
Section 5 shall have no application to any of the following Equity Securities:

(a) shares of Common Stock (and/or options, warrants or other Common
Stock purchase rights issued pursuant to such options, warrants or other rights)
issued or to be issued to employees, officers or directors of, or consultants or
advisors to the Company or any subsidiary, pursuant to stock purchase or stock
option plans or other arrangements that are approved by the Board of Directors;

17.
<PAGE> 21

(b) stock issued pursuant to any rights or agreements outstanding as
of the date of this Agreement, including options and warrants outstanding as of
the date of this Agreement, and stock issued pursuant to any such rights or
agreements granted after the date of this Agreement, provided that the rights of
first refusal established by this Section 5 applied with respect to the initial
sale or grant by the Company of such rights or agreements;

(c) any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business
combination;

(d) shares of Common Stock issued in connection with any stock
split, stock dividend or recapitalization by the Company;

(e) shares of Common Stock issued upon conversion of the Shares;

(f) any Equity Securities issued in connection with any technology
licensing, corporate partnering, equipment leasing arrangement, debt financing
or similar transaction approved by the Board of Directors; and

(g) any Equity Securities that are issued by the Company in the
Initial Offering.

SECTION 6. MISCELLANEOUS

6.1 GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.

6.2 SURVIVAL. The representations, warranties, covenants, and agreements
made herein shall survive any investigation made by any Holder and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.

6.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties hereto
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of Registrable Securities from time to time; provided, however, that
prior to the receipt by the Company of adequate written notice of the transfer
of any Registrable Securities specifying the full name and address of the
transferee, the Company may deem and treat the person listed as the holder of
such shares in its records as the absolute owner and holder of such shares for
all purposes, including the payment of dividends or any redemption price.

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

18.
<PAGE> 22

6.5 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

6.6 AMENDMENT AND WAIVER.

(a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of more than fifty percent (50%) of the Registrable Securities, provided that
such amendment or waiver does not differentiate among similarly situated
stockholders.

(b) Except as otherwise expressly provided, the obligations of the
Company and the rights of the Holders under this Agreement may be waived only
with the written consent of the holders of more than fifty percent (50%) of the
Registrable Securities, provided that such amendment or waiver does not
differentiate among similarly situated stockholders.

(c) Each Holder acknowledges that by the operation of this Section
6.6, the holders of more than fifty percent (50%) of the Registrable Securities
may have the right and power to diminish or eliminate all rights of such Holder
under this Agreement.

(d) Notwithstanding the foregoing however, Section 3.2 may not be
amended without the written consent of Wakefield Group II LLC.

(e) Notwithstanding the foregoing however, Section 3.3 may not be
amended without the written consent of Intel Corporation.

(f) Notwithstanding the foregoing however, Section 3.4 may not be
amended without the written consent of Accel.

(g) Notwithstanding the foregoing however, Section 3.5 may not be
amended without the written consent of MediaOne.

(h) Notwithstanding the foregoing however, Section 5 may not be
amended or waived without the written consent of the Major Investors holding
more than sixty-six and two thirds percent (66 2/3%) of the Registrable
Securities held by all Major Investors.

(i) Notwithstanding the foregoing, this Agreement may be amended
with only the written consent of the Company to include additional purchasers of
Shares as "Investors," "Holders" and parties hereto.

6.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under this Agreement
or any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be

19.
<PAGE> 23
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, by law, or otherwise afforded to Holders,
shall be cumulative and not alternative.

6.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, (iv) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt, or (v) if earlier, upon receipt. All
communications shall be sent to the party to be notified at the address as set
forth on Exhibit A hereto or at such other address as such party may designate
by ten (10) days advance written notice to the other parties hereto.

6.9 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

6.10 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

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

6.12 PROTECTION OF CONFIDENTIAL INFORMATION. Intel's investment in the
Company, including the specific terms thereof, shall be considered confidential
information (the "Confidential Information") and shall not be disclosed by the
Company or any other party to this Agreement to any third party, subject to
Section 6.13 below. Each party shall immediately notify the other parties of any
information that comes to its attention which might indicate that there has been
a loss of confidentiality with respect to the Confidential Information. In the
event that the Company or any other party becomes legally compelled (by statute
or regulation or by oral questions, interrogatories, request for information or
documents, subpoena, criminal or civil investigative demand or similar process,
including without limitation, in connection with any public or private offering
of the Company's capital stock) to disclose any of the Confidential Information,
such party (the "Disclosing Party") shall provide the other party (the
"Non-Disclosing Party") with prompt written notice of that fact so that the
appropriate party may seek (with the cooperation and commercially reasonable
efforts of the other parties) a protective order, confidential treatment or
other appropriate remedy. In such event, the Disclosing Party shall furnish only
that portion of the Confidential Information which is legally required and shall
exercise commercially reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded the Confidential Information to the
extent reasonably requested by the Non-Disclosing Party. The provisions of this
Section 6.12 shall be in addition to, and not in substitution for, the
provisions of any separate nondisclosure agreement executed by Intel and the
Company with respect to any collaboration or similar agreement.

20.
<PAGE> 24
6.13 DISCLOSURE OF TERMS: PRESS RELEASES. Notwithstanding the provisions
of Section 6.12 above, from and after the Closing (as defined in the Purchase
Agreement) the Company may disclose the Confidential Information, (i) solely to
the Company's investors, investment bankers, lenders, accountants, legal
counsel, business partners, and bona fide prospective investors, employees,
lenders and business partners, in each case only where such persons or entities
are under appropriate nondisclosure obligations and (ii) as may be required
pursuant to the Securities Act or Exchange Act. In addition, the Company may
disclose the fact that Intel is an investor in the Company to third parties
without the requirement for nondisclosure agreements. Within sixty (60) days of
the Closing, the Company may issue a press release disclosing that Intel has
invested in the Company, provided that the release does not disclose the amount
or other specific terms of the investment and is approved in advance in writing
by Intel. Intel, at its sole discretion, may provide an executive quote or other
material regarding its investment in the Company. Except for such disclosure and
press release, no other announcement regarding Intel's investment in the Company
in a press conference, in any professional or trade publication, in any
marketing materials or otherwise to the general public may be made without the
prior written consent of Intel, which consent may be withheld at the sole
discretion of Intel. Notwithstanding the foregoing and the provisions of Section
6.12 above, from and after the Closing, Intel may disclose its investment in the
Company and the terms thereof to third parties or to the public at its
discretion, and the Company shall have the right to disclose to third parties
any information disclosed by Intel in a press release or other public
announcement or document. If the Company or Intel determines that any disclosure
not otherwise authorized by this Section 6.13 is required by law or regulation,
then the provisions of Section 6.12 regarding disclosure of Confidential
Information by a Disclosing Party shall govern. Notwithstanding the provisions
of Section 6.12 above, from and after the Closing, any party hereunder may
disclose the Confidential Information as may be required pursuant to the
Securities Act or Exchange Act.

21.
<PAGE> 25

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTORS' RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.

COMPANY: INVESTORS:
QUOKKA SPORTS, INC.

By: /s/ ALAN RAMADAN By: /s/ INVESTORS
--------------------------------- -----------------------------------
Alan Ramadan
President
Name of Investor:
-------------------
Name of Signatory:
-------------------
(if applicable)
Title of Signatory:
-------------------
(if applicable)

[AMENDED AND RESTATED INVESTORS'S RIGHTS AGREEMENT]
<PAGE> 26
EXHIBIT A

ADDRESSES

THE COMPANY

Quokka Sports, Inc.
525 Brannan Street, Ground Floor
San Francisco, CA 94107
Attention: Mr. Alan Ramadan
Telephone: 415-908-3800
Fax: 415-908-1841

INVESTORS

Mr. Richard H. Williams
Incline Village
625 Anderson Drive
P.O. Box 4281
Incline Village, NV 89450
Telephone: 415-782-6050
Fax: 415-292-7544

Bayview Investors Ltd.
c/o Robertson, Stephens & Company
555 California Street
23rd Floor
San Francisco, CA 94104
Attn: Sy Kaufman
Telephone: 415-676-2618
Fax: 415-676-2650

Wakefield Group II LLC
1110 East Morehead
Charlotte, NC 28204
Attn: Mike Elliott
Telephone: 704-372-0355
Fax: 704-372-8978

Bregman Revocable Trust u/a/d 8/21/92
Walter W. Bregman, ttee
Roberta F. Bregman, ttee
4629 Vista de la Tierra
Del Mar, CA 92014
Telephone: 619-792-6185
Fax: 619-792-9285

1.
<PAGE> 27
EXHIBIT A

ADDRESSES (CONTINUED)

Roel Pieper
Koninklijke Philips Electronics
Rembrand Tower HRT24
Amstelplein 1
NL-1096HA Amsterdam
Netherlands
Telephone: +31 (20) 59 77 162
Fax: +31 (20) 59 77 160

Alan Ramadan
c/o Quokka Sports, Inc.
Ground Floor
525 Brannan Street
San Francisco, CA 94107
Telephone: 415-908-3800
Fax: 415-908-1841

Pogmohane Partners, L.P.
c/o Alan Ramadan, General Partner
Quokka Sports, Inc.
Ground Floor
525 Brannan Street
San Francisco, CA 94107
Telephone: 415-908-3800
Fax: 415-908-1841

(with a copy to: John J. Buttita
Altheimer & Gray Law Offices
10 South Wacker Drive
Chicago, Illinois 60606-7482
Telephone: 312-715-4000
Fax: 312-715-4800)

John Bertrand
c/o Quokka Sports, Inc.
Ground Floor
525 Brannan Street
San Francisco, CA 94107
Telephone: 415-908-3800
Fax: 415-908-1841

2.
<PAGE> 28
EXHIBIT A

ADDRESSES (CONTINUED)

Intel Corporation
c/o Tamiko Hutchinson
2200 Mission College Blvd. SC4-210
Santa Clara, CA 95052-8119
Telephone: (408) 765-5636
Fax: (408) 765-6038

Steve Nelson
c/o Quokka Sports, Inc.
Ground Floor
525 Brannan Street
San Francisco, CA 94107
Telephone: 415-908-3800
Fax: 415-908-1841

Media Technology Ventures, L.P.
Media Technology Ventures Entrepreneurs Fund, L.P.
Media Technology Equity Partners, L.P.
One First Street, Suite Two
Los Altos, CA 94022
Attn: Barry M. Weinman
Telephone: 415-949-9862
Fax: 415-949-8510

Trinity Ventures Ltd.
Trinity Ventures V, L.P.
Trinity V, side-by-side fund, L.P.
c/o Mr. James G. Shennan, Jr.
3000 Sand Hill Road
Bldg. 1, Suite 240
Menlo Park, CA 94025
Telephone: 650-854-9500
Fax: 650-854-9501

GC&H Investments
c/o Cooley Godward LLP
One Maritime Plaza, 20th Floor
San Francisco, CA 94111-3580
Attn: John Cardoza
Telephone: 415-693-2000
Fax: 415-951-3699

3.
<PAGE> 29
EXHIBIT A

ADDRESSES (CONTINUED)

Stanford University
Stanford Management Company
c/o Carol Gilmer
2770 Sand Hill Road
Menlo Park, CA 94025
Telephone: 650-926-0244
Fax: 650-854-9267

Accel VI L.P.
Accel Internet Fund II L.P.
Accel Keiretsu VI L.P.
Accel Investors '98 L.P.
428 University Avenue
Palo Alto, CA 94301
Attn: Bruce Golden
Telephone: 650-614-4800
Fax: 650-614-4880

(Copy to: Accel Partners
One Palmer Square
Princeton, NJ 08542
Attn: G. Carter Sednaoui
Telephone: (609) 683-4500
Fax: (609) 683-0384)

MediaOne Interactive Services, Inc.
9000 E. Nichols Ave., Suite 100
Englewood, CO 80112
Attn: Natalie Egleston
Telephone: 303-705-7680
Fax: 303-705-5109

The Karr Family 1982 Trust, dated 12/1/82,as amended
Attn: Howard Karr
1777 Borel Place, #408
San Mateo, CA 94402
Telephone: 650-574-5277
Fax: 650-574-0310

Outcast Communications, Inc.
c/o Caryn Marooney
1696B Green Street
San Francisco, CA 94123
Telephone: 510-596-0994
Fax: 510-649-8895

4.
<PAGE> 30
EXHIBIT A

ADDRESSES (CONTINUED)

The Les Schmidt and JoAnne P. Hattum Family Trust U/T/D 4/8/92
c/o Quokka Sports, Inc.
525 Brannan Street, Ground Floor
San Francisco, CA 94107
Attn: Les Schmidt
Telephone: 415-908-3800
Fax: 415-908-1841

The Schmidt Family Irrevocable Trust Dtd. 12/27/95 FBO Caryn H. Schmidt
The Schmidt Family Irrevocable Trust Dtd. 12/27/95 FBO Bryan P. Schmidt
The Schmidt Family Irrevocable Trust Dtd. 12/27/95 FBO Taylor G. Schmidt
Charles H. Packer, Trustee
c/o Quokka Sports, Inc.
525 Brannan Street, Ground Floor
San Francisco, CA 94107
Attn: Les Schmidt
Telephone: 415-908-3800
Fax: 415-908-1841

Charles Bates Thornton Trust
Henry Haskell Rightor Thornton Trust
Jane Cordelia Laney Thornton Trust
Anne Chapman Thornton Trust
Musick, Peeler & Garrett, LLP
One Wilshire Blvd., Suite 2000
Los Angeles, CA 90017
Telephone: 213-629-7657
Attn: Edward A. Landry

The Ignite Group
c/o Steve Payne, Venture Partner
255 Shoreline Drive, Suite 510
Redwood City, CA 94065
Telephone: (650) 622-2030
Fax: (650) 622-2015

5.
<PAGE> 31
EXHIBIT A

ADDRESSES (CONTINUED)

Omega Ventures II, L.P.
Omega Ventures II Cayman, L.P.
Crossover Fund II, L.P.
Crossover Fund IIA, L.P.
c/o Sy Kaufman
555 California Street, 23rd Floor
San Francisco, CA 94104
Telephone: (415) 693-3311
Fax: (415) 676-2556

Michael Carter
c/o Growth Phase Europe Ltd.
50 Margravine Gardens
London, England W6 8RJ

(With a copy to:
Growth Phase Europe
349 Liberty Street
San Francisco, CA 94114
Attn: Matt Hall
Telephone: (415) 385-5639
Fax: (415) 641-4297)

Gerardo Seeliger
12 Elystan Street
London SW3, England
-- Send documents DHL to:
SeeligerY Conde
Velazquez, 18
28001 Madrid, Espana
Spain
Telephone: +34 1 577 99 77
Fax: +34 (1) 577 41 24

Riemer 1991 Revocable Trust
David Riemer
1611 Bonita Avenue
Berkeley, CA 94709
Telephone: (415) 908-3800
Fax: (415) 908-1841

6.
<PAGE> 32
EXHIBIT A

ADDRESSES (CONTINUED)

M. Elizabeth Sandell
c/o Quokka Sports, Inc.
525 Brannan Street, Ground Floor
San Francisco, CA 94107
Attn: Les Schmidt
Telephone: (415) 908-3800
Fax: (415) 908-1841

Liberty QS, Inc.
9197 South Peoria Street
Englewood, CO 80112
Attn: Bruce Ravenal
Phone: (720) 875-5928
Fax: (720) 875-7236
E-mail: [email protected]

Hearst Communications, Inc.
959 Eighth Avenue
New York, NY 10019
Attn: Scott English, Vice President
Phone: (212) 649-2464
Fax: (212) 582-7739
E-mail: [email protected]

MeriTech Capital Partners, LP
428 University Avenue
Palo Alto, CA 94301
Attn: Rob Ward
Phone: (650) 330-5472
Fax: (650) 614-4880
E-mail: [email protected]

Comcast Interactive Investments, Inc.
1201 Market Street
Suite 2201
Wilmington, DE 19801
Attn: Judie Dionglay, Vice President
Phone: (302) 594-8701
Fax: (302) 658-1600
E-Mail: [email protected]

7.
<PAGE> 33
EXHIBIT A

ADDRESSES (CONTINUED)

AtHome Corporation
425 Broadway Street
Redwood City, CA 94063f
Attn: Suneet Wadhwa
Phone: (650) 569-5139
Fax: (650) 569-5139

Crossover Fund II
c/o Omega Ventures
555 California Street, Suite 2350
San Francisco, CA 94104
Attn: Dan Dunn
Phone: (415) 676-2931
Fax: (415) 788-4665
E-mail: [email protected]

Pivotal Partners, LP
1 Embarcadero Center, 23rd Floor
San Francisco, CA 94111
Attn: Christopher Lord
Phone: (415) 362-0292
Fax: (415) 249-1555
E-mail: [email protected]

<PAGE> 1
EXHIBIT 10.02

QUOKKA SPORTS, INC.

1997 EQUITY INCENTIVE PLAN

ADOPTED FEBRUARY 24, 1997
APPROVED BY STOCKHOLDERS FEBRUARY 27, 1997
AMENDED SEPTEMBER 15, 1998
APPROVED BY STOCKHOLDERS OCTOBER 19, 1998
AMENDED MARCH 16, 1999
APPROVED BY STOCKHOLDERS APRIL __, 1999
AMENDED AND RESTATED APRIL 2, 1999
APPROVED BY STOCKHOLDERS _______________, 1999
TERMINATION DATE: APRIL __, 2009

This Quokka Sports, Inc. 1997 Equity Incentive Plan adopted February 24, 1997,
and amended on September 15, 1998, and March 16, 1999, is hereby amended and
restated in its entirety. All options granted under the prior plan continue to
be governed by the terms of the prior plan as such terms existed on the grant
date.

1. PURPOSES.

(a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.

(b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a
means by which selected Employees, Directors and Consultants may be given an
opportunity to benefit from increases in value of the Common Stock through the
granting of: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii)
stock bonuses and (iv) rights to acquire restricted stock.

(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of persons who are now Employees, Directors or Consultants, to
secure and retain the services of new Employees, Directors and Consultants and
to provide incentives for such persons to exert maximum efforts for the success
of the Company and its Affiliates.

2. DEFINITIONS.

(a) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

(b) "BOARD" means the Board of Directors of the Company.

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<PAGE> 2
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c).

(e) "COMMON STOCK" means the common stock of the Company.

(f) "COMPANY" means Quokka Sports, Inc., a Delaware corporation.

(g) "CONSULTANT" means any person, including an advisor, (1) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (2) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors of the Company who are not compensated by the Company for their
services as Directors or Directors of the Company who are merely paid a
director's fee by the Company for their services as Directors.

(h) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director of the
Company will not constitute an interruption of Continuous Service. The Board or
the chief executive officer of the Company, in that party's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case
of any leave of absence approved by that party, including sick leave, military
leave or any other personal leave.

(i) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

(j) "DIRECTOR" means a member of the Board.

(k) "DISABILITY" means (i) before the Listing Date, the inability of a
person, in the opinion of a qualified physician acceptable to the Company, to
perform the major duties of that person's position with the Company or an
Affiliate of the Company because of the sickness or injury of the person and
(ii) after the Listing Date, the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.

(l) "EMPLOYEE" means any person employed by the Company or an Affiliate.
Neither service as a Director nor payment of a director's fee by the Company or
an Affiliate shall be sufficient to constitute "employment" by the Company or an
Affiliate.

(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

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<PAGE> 3
(n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:

(i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in the WALL STREET JOURNAL or such other source as
the Board deems reliable.

(ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.

(iii) Prior to the Listing Date, the value of the Common Stock
shall be determined in a manner consistent with Section 260.140.50 of Title 10
of the California Code of Regulations.

(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

(p) "LISTING DATE" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in
accordance with the provisions of Section 25100(o) of the California Corporate
Securities Law of 1968.

(q) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.

(r) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.

(s) "OFFICER" means (i) before the Listing Date, any person designated
by the Company as an officer and (ii) on and after the Listing Date, a person
who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.

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<PAGE> 4
(t) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.

(u) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.

(v) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.

(w) "OUTSIDE DIRECTOR" means a Director of the Company who either (i) is
not a current employee of the Company or an "affiliated corporation" (within the
meaning of Treasury Regulations promulgated under Section 162(m) of the Code),
is not a former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

(x) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

(y) "PLAN" means this Quokka Sports, Inc. 1997 Equity Incentive Plan, as
amended and restated.

(z) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

(aa) "SECURITIES ACT" means the Securities Act of 1933, as amended.

(bb) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.

(cc) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

(dd) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.

3. ADMINISTRATION.

(a) ADMINISTRATION BY BOARD. The Board will administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).

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<PAGE> 5
(b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive stock pursuant to a Stock Award; and the number of shares with respect
to which a Stock Award shall be granted to each such person.

(ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

(iii) To amend the Plan or a Stock Award as provided in Section
12.

(iv) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.

(i) GENERAL. The Board may delegate administration of the Plan to
a Committee or Committees of one or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.

(ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY TRADED.
At such time as the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (i) delegate to a committee of one or
more members of the Board who are not Outside Directors, the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or (ii)
delegate to a committee of one or more members of the Board who are not

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<PAGE> 6
Non-Employee Directors the authority to grant Stock Awards to eligible persons
who are not then subject to Section 16 of the Exchange Act.

4. SHARES SUBJECT TO THE PLAN.

(a) SHARE RESERVE. Subject to the provisions of Section 11 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate Thirteen Million Three Hundred
Fifty Thousand (13,350,000) shares of Common Stock, such number to be increased
each January 31 by One Million Five Hundred Thousand (1,500,000) shares of
Common Stock.

(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full (or vested in the case of restricted stock), the
stock not acquired under such Stock Award shall revert to and again become
available for issuance under the Plan. If any Common Stock acquired pursuant to
the exercise of an Option shall for any reason be repurchased by the Company
under an unvested share repurchase option provided under the Plan, the stock
repurchased by the Company under such repurchase option shall not revert to and
again become available for issuance under the Plan.

(c) SOURCE OF SHARES. The stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.

(d) SHARE RESERVE LIMITATION. Prior to the Listing Date, at no time
shall the total number of shares issuable upon exercise of all outstanding
Options and the total number of shares provided for under any stock bonus or
similar plan of the Company exceed the applicable percentage as calculated in
accordance with the conditions and exclusions of Section 260.140.45 of Title 10
of the California Code of Regulations, based on the shares of the Company which
are outstanding at the time the calculation is made.

5. ELIGIBILITY.

(a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may
be granted only to Employees. Stock Awards other than Incentive Stock Options
may be granted to Employees, Directors and Consultants.

(b) TEN PERCENT STOCKHOLDERS. No Ten Percent Stockholder shall be
eligible for the grant of an Incentive Stock Option unless the exercise price of
such Option is at least one hundred ten percent (110%) of the Fair Market Value
of the Common Stock at the date of grant and the Option is not exercisable after
the expiration of five (5) years from the date of grant.

Prior to the Listing Date, no Ten Percent Stockholder shall be
eligible for the grant of a Nonstatutory Stock Option unless the exercise price
of such Option is at least one hundred ten percent (110%) of the Fair Market
Value of the Common Stock at the date of grant.

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<PAGE> 7
Prior to the Listing Date, no Ten Percent Stockholder shall be
eligible for a restricted stock award unless the purchase price of the
restricted stock is at least one hundred percent (100%) of the Fair Market Value
of the Common Stock at the date of grant.

(c) SECTION 162(m) LIMITATION. Subject to the provisions of Section 11
relating to adjustments upon changes in stock, no employee shall be eligible to
be granted Options covering more than Two Million (2,000,000) shares of the
Common Stock during any calendar year. This subsection 5(c) shall not apply
prior to the Listing Date and, following the Listing Date, this subsection 5(c)
shall not apply until (i) the earliest of: (1) the first material modification
of the Plan (including any increase in the number of shares reserved for
issuance under the Plan in accordance with Section 4); (2) the issuance of all
of the shares of Common Stock reserved for issuance under the Plan; (3) the
expiration of the Plan; or (4) the first meeting of stockholders at which
Directors of the Company are to be elected that occurs after the close of the
third calendar year following the calendar year in which occurred the first
registration of an equity security under Section 12 of the Exchange Act; or (ii)
such other date required by Section 162(m) of the Code and the rules and
regulations promulgated thereunder.

(d) CONSULTANTS.

(i) Prior to the Listing Date, a Consultant shall not be eligible
for the grant of a Stock Award if, at the time of grant, either the offer or the
sale of the Company's securities to such Consultant is not exempt under Rule 701
of the Securities Act ("Rule 701") because of the nature of the services that
the Consultant is providing to the Company, or because the Consultant is not a
natural person, or as otherwise provided by Rule 701, unless the Company
determines that such grant need not comply with the requirements of Rule 701 and
will satisfy another exemption under the Securities Act as well as comply with
the securities laws of all other relevant jurisdictions.

(ii) From and after the Listing Date, a Consultant shall not be
eligible for the grant of a Stock Award if, at the time of grant, a Form S-8
Registration Statement under the Securities Act ("Form S-8") is not available to
register either the offer or the sale of the Company's securities to such
Consultant because of the nature of the services that the Consultant is
providing to the Company, or because the Consultant is not a natural person, or
as otherwise provided by the rules governing the use of Form S-8, unless the
Company determines both (i) that such grant (A) shall be registered in another
manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or
(B) does not require registration under the Securities Act in order to comply
with the requirements of the Securities Act, if applicable, and (ii) that such
grant complies with the securities laws of all other relevant jurisdictions.

(iii) As of April 7, 1999, Rule 701 and Form S-8 generally are
available to consultants and advisors only if (i) they are natural persons; (ii)
they provide bona fide services to the issuer, its parent, its majority-owned
subsidiaries or majority-owned subsidiaries of the issuer's parent; and (iii)
the services are not in connection with the offer or sale of securities in a
capital-raising transaction, and do not directly or indirectly promote or
maintain a market for the issuer's securities.

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<PAGE> 8
6. OPTION PROVISIONS.

Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and a separate certificate or certificates will be issued for shares
purchased on exercise of each type of Option. The provisions of separate Options
need not be identical, but each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of each
of the following provisions:

(a) TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.

(b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option
may be granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.

(c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise
price of each Nonstatutory Stock Option granted prior to the Listing Date shall
be not less than eighty five percent (85%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. The exercise price of
each Nonstatutory Stock Option granted on or after the Listing Date shall be not
less than eighty five percent (85%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. Notwithstanding the
foregoing, a Nonstatutory Stock Option may be granted with an exercise price
lower than that set forth in the preceding sentence if such Option is granted
pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.

(d) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) by delivery to the
Company of other Common Stock, according to a deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other Common Stock) with the Participant or in any other
form of legal consideration that may be acceptable to the Board; provided,
however, that at any time that the Company is incorporated in Delaware, payment
of the Common Stock's "par value," as defined in the Delaware General
Corporation Law, shall not be made by deferred payment.

In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as

8
<PAGE> 9
interest, under any applicable provisions of the Code, of any amounts other than
amounts stated to be interest under the deferred payment arrangement.

(e) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing provisions of this
subsection 6(e), the Optionholder may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in
the event of the death of the Optionholder, shall thereafter be entitled to
exercise the Option.

(f) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory Stock
Option granted prior to the Listing Date shall not be transferable except by
will or by the laws of descent and distribution and shall be exercisable during
the lifetime of the Optionholder only by the Optionholder. A Nonstatutory Stock
Option granted on or after the Listing Date shall be transferable to the extent
provided in the Option Agreement. If the Nonstatutory Stock Option does not
provide for transferability, then the Nonstatutory Stock Option shall not be
transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing provisions of this subsection 6(f), the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.

(g) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments which may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be exercised.

(h) MINIMUM VESTING PRIOR TO THE LISTING DATE. Notwithstanding the
foregoing subsection 6(g), Options granted prior to the Listing Date shall
provide for vesting of the total number of shares at a rate of at least twenty
percent (20%) per year over five (5) years from the date the Option was granted,
subject to reasonable conditions such as continued employment. However, in the
case of such Options granted to Officers, Directors or Consultants, the Option
may become fully exercisable, subject to reasonable conditions such as continued
employment, at any time or during any period established by the Company; for
example, the vesting provision of the Option may provide for vesting of less
than twenty percent (20%) per year of the total number of shares subject to the
Option.

(i) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionholder's Continuous Service (or
such longer or shorter period specified in the Option Agreement, which, for
Options granted

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<PAGE> 10
prior to the Listing Date, shall not be less than thirty (30) days, unless such
termination is for cause) or (ii) the expiration of the term of the Option as
set forth in the Option Agreement. If, after termination, the Optionholder does
not exercise his or her Option within the time specified in the Option
Agreement, the Option shall terminate.

(j) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Securities Act,
then the Option shall terminate on the earlier of (i) the expiration of the term
of the Option set forth in subsection 6(a) or (ii) the expiration of a period of
three (3) months after the termination of the Optionholder's Continuous Service
during which the exercise of the Option would not be in violation of such
registration requirements.

(k) DISABILITY OF OPTIONHOLDER. In the event an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise it as of the date of termination), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination (or such longer or shorter period specified in the
Option Agreement, which, for Options granted prior to the Listing Date, shall
not be less than six (6) months) or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified
herein, the Option shall terminate.

(l) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder's Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise the Option as of the date of death) by the
Optionholder's estate, by a person who acquired the right to exercise the Option
by bequest or inheritance or by a person designated to exercise the option upon
the Optionholder's death pursuant to subsection 6(e) or 6(f), but only within
the period ending on the earlier of (1) the date eighteen (18) months following
the date of death (or such longer or shorter period specified in the Option
Agreement, which, for Options granted prior to the Listing Date, shall not be
less than six (6) months) or (2) the expiration of the term of such Option as
set forth in the Option Agreement. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.

(m) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares subject to the Option prior to the full vesting of the Option.
Subject to the "Repurchase Limitation" in subsection 10(h), any unvested shares
so purchased may be subject to an unvested share repurchase option in favor of
the Company or to any other restriction the Board determines to be appropriate.

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<PAGE> 11
(n) RIGHT OF REPURCHASE. Subject to the "Repurchase Limitation" in
subsection 10(h), the Option may, but need not, include a provision whereby the
Company may elect, prior to the Listing Date, to repurchase all or any part of
the vested shares acquired by the Optionholder pursuant to the exercise of the
Option.

(o) RIGHT OF FIRST REFUSAL. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to exercise
a right of first refusal following receipt of notice from the Optionholder of
the intent to transfer all or any part of the shares exercised pursuant to the
Option. Except as expressly provided in this subsection 6(o), such right of
first refusal shall otherwise comply with any applicable provisions of the
Bylaws of the Company.

7. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

(a) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate.
The terms and conditions of stock bonus agreements may change from time to time,
and the terms and conditions of separate stock bonus agreements need not be
identical, but each stock bonus agreement shall include (through incorporation
of provisions hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:

(i) CONSIDERATION. A stock bonus shall be awarded in
consideration for past services actually rendered to the Company for its
benefit.

(ii) VESTING. Subject to the "Repurchase Limitation" in
subsection 10(h), shares of Common Stock awarded under the stock bonus agreement
may, but need not, be subject to a share repurchase option in favor of the
Company in accordance with a vesting schedule to be determined by the Board.

(iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject to
the "Repurchase Limitation" in subsection 10(h), in the event a Participant's
Continuous Service terminates, the Company may reacquire any or all of the
shares of Common Stock held by the Participant which have not vested as of the
date of termination under the terms of the stock bonus agreement.

(iv) TRANSFERABILITY. For a stock bonus award made before the
Listing Date, rights to acquire shares under the stock bonus agreement shall not
be transferable except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Participant only by the
Participant. For a stock bonus award made on or after the Listing Date, rights
to acquire shares under the stock bonus agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the stock
bonus agreement, as the Board shall determine in its discretion, so long as
stock awarded under the stock bonus agreement remains subject to the terms of
the stock bonus agreement.

(b) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The

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<PAGE> 12
terms and conditions of the restricted stock purchase agreements may change from
time to time, and the terms and conditions of separate restricted stock purchase
agreements need not be identical, but each restricted stock purchase agreement
shall include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:

(i) PURCHASE PRICE. Subject to the provisions of subsection 5(b)
regarding Ten Percent Stockholders, the purchase price under each restricted
stock purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. For restricted stock
awards made prior to the Listing Date, the purchase price shall not be less than
one hundred percent (100%) of the stock's Fair Market Value on the date such
award is made or at the time the purchase is consummated. For restricted stock
awards made on or after the Listing Date, the purchase price shall not be less
than eighty-five percent (85%) of the stock's Fair Market Value on the date such
award is made or at the time the purchase is consummated.

(ii) CONSIDERATION. The purchase price of stock acquired pursuant
to the restricted stock purchase agreement shall be paid either: (i) in cash at
the time of purchase; (ii) at the discretion of the Board, according to a
deferred payment or other arrangement with the Participant; or (iii) in any
other form of legal consideration that may be acceptable to the Board in its
discretion; provided, however, that at any time that the Company is incorporated
in Delaware, payment of the Common Stock's "par value," as defined in the
Delaware General Corporation Law, shall not be made by deferred payment.

(iii) VESTING. Subject to the "Repurchase Limitation" in
subsection 10(h), shares of Common Stock acquired under the restricted stock
purchase agreement may, but need not, be subject to a share repurchase option in
favor of the Company in accordance with a vesting schedule to be determined by
the Board.

(iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject to
the "Repurchase Limitation" in subsection 10(h), in the event a Participant's
Continuous Service terminates, the Company may repurchase or otherwise reacquire
any or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the restricted stock
purchase agreement.

(v) TRANSFERABILITY. For a restricted stock award made before the
Listing Date, rights to acquire shares under the restricted stock purchase
agreement shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Participant
only by the Participant. For a restricted stock award made on or after the
Listing Date, rights to acquire shares under the restricted stock purchase
agreement shall be transferable by the Participant only upon such terms and
conditions as are set forth in the restricted stock purchase agreement, as the
Board shall determine in its discretion, so long as stock awarded under the
restricted stock purchase agreement remains subject to the terms of the
restricted stock purchase agreement.

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<PAGE> 13
8. COVENANTS OF THE COMPANY.

(a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.

(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any stock issued or issuable pursuant to any such
Stock Award. If, after reasonable efforts, the Company is unable to obtain from
any such regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of stock under the
Plan, the Company shall be relieved from any liability for failure to issue and
sell stock upon exercise of such Stock Awards unless and until such authority is
obtained.

9. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.

10. MISCELLANEOUS.

(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest in accordance
with the Plan, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.

(b) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to such Stock Award unless and until such Participant has satisfied all
requirements for exercise of the Stock Award pursuant to its terms.

(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant or other holder of Stock Awards any right to continue to serve
the Company or an Affiliate in the capacity in effect at the time the Stock
Award was granted or shall affect the right of the Company or an Affiliate to
terminate (i) the employment of an Employee with or without notice and with or
without cause, (ii) the service of a Consultant pursuant to the terms of such
Consultant's agreement with the Company or an Affiliate or (iii) the service of
a Director pursuant to the Bylaws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.

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<PAGE> 14
(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of stock with
respect to which Incentive Stock Options are exercisable for the first time by
any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.

(e) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring stock under any Stock Award, (i) to give
written assurances satisfactory to the Company as to the Participant's knowledge
and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Stock Award; and (ii) to give written assurances
satisfactory to the Company stating that the Participant is acquiring the stock
subject to the Stock Award for the Participant's own account and not with any
present intention of selling or otherwise distributing the stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (iii) the issuance of the shares upon the exercise or acquisition
of stock under the Stock Award has been registered under a then currently
effective registration statement under the Securities Act or (iv) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.

(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means (in addition to the Company's
right to withhold from any compensation paid to the Participant by the Company)
or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares from the shares of the Common Stock
otherwise issuable to the Participant as a result of the exercise or acquisition
of stock under the Stock Award; or (iii) delivering to the Company owned and
unencumbered shares of the Common Stock.

(g) INFORMATION OBLIGATION. Prior to the Listing Date, to the extent
required by Section 260.140.46 of Title 10 of the California Code of
Regulations, the Company shall deliver financial statements to Participants at
least annually. This subsection 10(g) shall not apply to key Employees whose
duties in connection with the Company assure them access to equivalent
information.

(h) REPURCHASE LIMITATION. The terms of any repurchase option shall be
specified in the Stock Award and may be either at Fair Market Value at the time
of repurchase or at not less than the original purchase price. To the extent
required by Section 260.140.41 and Section

14
<PAGE> 15
260.140.42 of Title 10 of the California Code of Regulations, any repurchase
option contained in a Stock Award granted prior to the Listing Date to a person
who is not an Officer, Director or Consultant shall be upon the terms described
below:

(i) FAIR MARKET VALUE. If the repurchase option gives the Company
the right to repurchase the shares upon termination of employment at not less
than the Fair Market Value of the shares to be purchased on the date of
termination of Continuous Service, then (i) the right to repurchase shall be
exercised for cash or cancellation of purchase money indebtedness for the shares
within ninety (90) days of termination of Continuous Service (or in the case of
shares issued upon exercise of Stock Awards after such date of termination,
within ninety (90) days after the date of the exercise) or such longer period as
may be agreed to by the Company and the Participant (for example, for purposes
of satisfying the requirements of Section 1202(c)(3) of the Code regarding
"qualified small business stock") and (ii) the right terminates when the shares
become publicly traded.

(ii) ORIGINAL PURCHASE PRICE. If the repurchase option gives the
Company the right to repurchase the shares upon termination of Continuous
Service at the original purchase price, then (i) the right to repurchase at the
original purchase price shall lapse at the rate of at least twenty percent (20%)
of the shares per year over five (5) years from the date the Stock Award is
granted (without respect to the date the Stock Award was exercised or became
exercisable) and (ii) the right to repurchase shall be exercised for cash or
cancellation of purchase money indebtedness for the shares within ninety (90)
days of termination of Continuous Service (or in the case of shares issued upon
exercise of Options after such date of termination, within ninety (90) days
after the date of the exercise) or such longer period as may be agreed to by the
Company and the Participant (for example, for purposes of satisfying the
requirements of Section 1202(c)(3) of the Code regarding "qualified small
business stock").

11. ADJUSTMENTS UPON CHANGES IN STOCK.

(a) CAPITALIZATION ADJUSTMENTS TO STOCK SUBJECT TO THE PLAN. If any
change is made in the stock subject to the Plan due to a change in corporate
capitalization and without the receipt of consideration by the Company (through
reincorporation, stock dividend, stock split, reverse stock split, combination
or reclassification of shares), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject to the Plan pursuant to
subsection 4(a). Such adjustments shall be made by the Board, the determination
of which shall be final, binding and conclusive.

(b) CAPITALIZATION AND TRANSACTION ADJUSTMENTS TO OUTSTANDING STOCK
AWARDS. If any change is made in the stock subject to any outstanding Stock
Award without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, separation,
stock dividend, dividend in property other than cash, stock split, reverse stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), such outstanding Stock Awards shall be
appropriately adjusted in the classes and number of securities and price per
share of stock subject to such outstanding Stock Awards.

15
<PAGE> 16
Such adjustments shall be made by the Board, the determination of which shall be
final, binding and conclusive.

(c) CAPITALIZATION AND TRANSACTION ADJUSTMENTS (SECTION 162(m)). If any
change is made in the stock subject to the Plan, or subject to any Stock Award,
without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, separation,
stock dividend, dividend in property other than cash, stock split, reverse stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
maximum number of securities subject to award to any person pursuant to
subsection 5(c). (The conversion of any convertible securities of the Company
shall not be treated as a transaction "without receipt of consideration" by the
Company.) Such adjustments shall be made by the Board, the determination of
which shall be final, binding and conclusive.

(d) CHANGE IN CONTROL--DISSOLUTION OR LIQUIDATION. In the event of a
dissolution or liquidation of the Company, then such Stock Awards shall be
terminated if not exercised (if applicable) prior to such event.

(e) CHANGE IN CONTROL--ASSET SALE, MERGER, CONSOLIDATION OR REVERSE
MERGER. In the event of (1) a sale of substantially all of the assets of the
Company, (2) a merger or consolidation in which the Company is not the surviving
corporation or (3) a reverse merger in which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise, then any surviving corporation or
acquiring corporation shall assume or continue any Stock Awards outstanding
under the Plan or shall substitute similar stock awards (including an award to
acquire the same consideration paid to the stockholders in the transaction
described in this subsection 11(e) for those outstanding under the Plan. In the
event any surviving corporation or acquiring corporation refuses to assume or
continue such Stock Awards or to substitute similar stock awards for those
outstanding under the Plan, then with respect to Stock Awards held by
Participants whose Continuous Service has not terminated, the vesting of such
Stock Awards (and, if applicable, the time during which such Stock Awards may be
exercised) shall be accelerated in full prior to such event, and the Stock
Awards shall terminate if not exercised (if applicable) at or prior to such
event. With respect to any other Stock Awards outstanding under the Plan, such
Stock Awards shall terminate if not exercised (if applicable) prior to such
event.

(f) CHANGE IN CONTROL--SECURITIES ACQUISITION. After the Listing Date,
in the event of an acquisition by any person, entity or group within the meaning
of Section 13(d) or 14(d) of the Exchange Act, or any comparable successor
provisions (excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or an Affiliate) of the beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rule) of securities of the Company representing at least fifty percent
(50%) of the combined voting power entitled to vote in the election of
directors, the Company

16
<PAGE> 17
or the entity which is a controlling affiliate of the Company within the meaning
of Rule 144(a)(1) of the Securities Act of 1933, as amend, shall either (i)
assume or continue Stock Awards outstanding under the Plan or substitute similar
Stock Awards for those outstanding under the Plan, or (ii) in the event the
Company or a controlling affiliate of the Company refuses to assume or continue
such Stock Awards or to substitute similar Stock Awards for those outstanding
under the Plan, provide written notice to Participants (mailed to each
Participant's last known address as provided to the Company by such Participant)
that it has refused to assume or continue such Stock Awards or to substitute
similar stock awards for those outstanding under the Plan and (A) with respect
to Stock Awards held by persons then performing services as Employees, Directors
or Consultants, (x) the vesting of such Stock Awards and the time during which
such Stock Awards may be exercised shall be accelerated upon the date that the
Company or the controlling affiliate of the Company mails such notice; and (y)
such Stock Awards shall terminate if not exercised (if applicable) within thirty
(30) days from the date of such notice; and (B) with respect to any other Stock
Awards outstanding under the Plan, such Stock Awards shall terminate if not
exercised (if applicable) within thirty (30) days from the date of such notice.

12. AMENDMENT OF THE PLAN AND STOCK AWARDS.

(a) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.

(b) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.

(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board
may amend the Plan in any respect the Board deems necessary or advisable to
provide eligible Employees with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.

(d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Participant and (ii) the Participant
consents in writing.

(e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under

17
<PAGE> 18

any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the Participant and (ii) the Participant
consents in writing.

13. TERMINATION OR SUSPENSION OF THE PLAN.

(a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
Notwithstanding the foregoing, all Incentive Stock Options shall be granted, if
at all, no later than the last day preceding the tenth (10th) anniversary of the
earlier of (i) the date on which the latest increase in the maximum number of
shares issuable under the Plan was approved by the stockholders of the Company
or (ii) the date such amendment was adopted by the Board.

(b) NO IMPAIRMENT OF RIGHTS. Rights and obligations under any Stock
Award granted while the Plan is in effect shall not be impaired by suspension or
termination of the Plan, except with the written consent of the Participant.

14. EFFECTIVE DATE OF PLAN.

The Plan shall become effective as determined by the Board, but no Stock
Award shall be exercised (or, in the case of a stock bonus, shall be granted)
unless and until the Plan has been approved by the stockholders of the Company,
which approval shall be within twelve (12) months before or after the date the
Plan is adopted by the Board.

15. CHOICE OF LAW.

All questions concerning the construction, validity and interpretation
of this Plan shall be governed by the law of the State of California, without
regard to such state's conflict of laws rules.

<PAGE> 1
OPERATING AGREEMENT Exhibit 10.16

NBC/QUOKKA VENTURES, LLC

<PAGE> 2
<TABLE>
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TABLE OF CONTENTS
PAGE

<S> <C> <C>
ARTICLE 1 DEFINITIONS................................................................1

1.1 Definitions...................................................................1

ARTICLE 2 FORMATION OF COMPANY.......................................................8

2.1 Formation.....................................................................9

2.2 Name..........................................................................9

2.3 Principal Place of Business...................................................9

2.4 Registered Office and Registered Agent........................................9

2.5 Term..........................................................................9

ARTICLE 3 PURPOSES OF COMPANY........................................................9

3.1 Company Purposes..............................................................9

ARTICLE 4 MANAGEMENT OF COMPANY......................................................9

4.1 Generally.....................................................................9

4.2 Number of Directors; Classification of Directors.............................10

4.3 Tenure, Election and Qualifications..........................................10

4.4 Resignation..................................................................10

4.5 Removal......................................................................10

4.6 Vacancies....................................................................11

4.7 Meetings.....................................................................11

4.8 Quorum and Transaction of Business...........................................12

4.9 Directors Have No Exclusive Duty to Company..................................12

4.10 Salaries.....................................................................12

ARTICLE 5 POWERS OF AND RESTRICTIONS ON THE DIRECTORS...............................12

5.1 Management...................................................................12

5.2 Adherence to Current Content Plan............................................13

5.3 Content Plan, Long-term Strategic Plan and Annual Operating Plan.............13

5.4 Additional Capital...........................................................14

5.5 Actions Requiring Simple Majority Approval...................................15

5.6 Actions Requiring Supermajority Approval.....................................16

5.7 Actions Requiring Approval of Only One Class of Directors....................18

5.8 Certain Powers of Directors..................................................19

5.9 Reports to Members ..........................................................20

</TABLE>

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<TABLE>
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5.10 Independent Public Accountants...............................................20

5.11 Litigation...................................................................20

ARTICLE 6 OFFICERS; COMMITTEES......................................................20

6.1 Appointment of Officers......................................................20

6.2 Tenure and Duties of Officers................................................21

ARTICLE 7 RIGHTS AND OBLIGATIONS OF MEMBERS.........................................22

7.1 Limitation of Liability......................................................22

7.2 Nature of Rights and Obligations.............................................22

7.3 Member Access to Records.....................................................22

7.4 Certain Actions Requiring Special Approval...................................22

7.5 Outside Activities...........................................................23

ARTICLE 8 CERTAIN MATTERS CONCERNING MEMBERS, DIRECTORS AND EXECUTIVE OFFICERS......23

8.1 Liability of Directors and Officers; Indemnification.........................23

8.2 Other Matters Concerning the Directors and Officers of the Company...........24

ARTICLE 9 MEETINGS OF MEMBERS.......................................................25

9.1 Annual and Special Meetings..................................................25

9.2 Place of Meetings............................................................25

9.3 Notice of Meetings...........................................................25

9.4 Meeting of all Members.......................................................25

9.5 Record Date..................................................................25

9.6 Quorum.......................................................................26

9.7 Manner of Acting.............................................................26

9.8 Proxies......................................................................26

9.9 Action by Members Without a Meeting..........................................26

9.10 Waiver of Notice.............................................................27

ARTICLE 10 CONTRIBUTIONS TO THE COMPANY, CAPITAL UNITS AND CAPITAL ACCOUNTS..........27

10.1 Capital Contributions........................................................27

10.2 Units........................................................................27

10.3 Capital Accounts ............................................................27

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10.4 Withdrawal or Reduction of Members, Contributions to Capital.................27

10.5 Unit Certificates............................................................28

ARTICLE 11 ALLOCATIONS, INCOME TAX, ELECTIONS AND REPORTS............................28

11.1 Allocation of Profits and Losses from Operations.............................28

11.2 Special Allocations..........................................................29

11.3 Distributions................................................................30

11.4 Limitation Upon Distributions................................................32

11.5 Accounting Principles........................................................32

11.6 Interest on and Return of Capital Contributions..............................32

11.7 Records and Reports..........................................................32

11.8 Returns and Other Elections..................................................33

11.9 Tax Matters Partner..........................................................33

ARTICLE 12 TRANSFERABILITY...........................................................33

12.1 Restrictions on Transferability..............................................34

12.2 No Effect to Transfers in Violation of Operating Agreement...................34

Article 13 Additional And Substitute Members.........................................34

13.1 Admission of Additional Members and Substitute Members.......................34

13.2 Allocations to Additional Members and Substitute Members.....................35

13.3 Effect of Transfer...........................................................35

ARTICLE 14 DISSOLUTION AND TERMINATION...............................................35

14.1 Dissolution..................................................................35

14.2 Effect of Filing of Certificate of Cancellation..............................35

14.3 Distribution of Assets Upon Dissolution......................................35

14.4 Winding Up...................................................................36

14.5 Filing of Certificate of Cancellation........................................36

ARTICLE 15 MERGER OR CONSOLIDATION...................................................36

15.1 Merger or Consolidation......................................................36

15.2 Vote Relating to Merger or Consolidation.....................................37

15.3 Exchange Relating to Merger or Consolidation.................................37

15.4 Filing and Effect of Certificate of Merger or Consolidation..................37

15.5 Amendment of Old or Adoption of New Operating Agreement .....................37

iii.
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15.6 Assumption of Assets and Liabilities.........................................37

ARTICLE 16 MISCELLANEOUS PROVISIONS..................................................37

16.1 Notices......................................................................37

16.2 Application of Delaware Law..................................................38

16.3 Waiver of Action for Partition...............................................38

16.4 Amendments...................................................................38

16.5 Execution of Additional Instruments..........................................38

16.6 Construction.................................................................38

16.7 Headings.....................................................................38

16.8 Waivers......................................................................38

16.9 Rights and Remedies Cumulative...............................................38

16.10 Severability.................................................................38

16.11 Heirs, Successors and Assigns................................................39

16.12 Creditors....................................................................39

16.13 Counterparts.................................................................39

16.14 No Third Party Beneficiaries.................................................39

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NBC/QUOKKA VENTURES, LLC

OPERATING AGREEMENT

THIS OPERATING AGREEMENT is made as of the 9th day of February 1999 (the
"Effective Date"), by and between NBC OLYMPICS, INC., a Delaware corporation
("NBC"), and QUOKKA SPORTS, INC., a Delaware corporation ("Quokka"), with
respect to the operation of NBC/QUOKKA VENTURES, LLC, a Delaware limited
liability company (the "Company").

WHEREAS, the Company was formed under the name "NBC/QUOKKA VENTURES,
LLC" pursuant to the provisions of the Delaware Limited Liability Company Act,
upon the filing of a certificate of formation (the "Certificate of Formation")
with the Delaware Secretary of State on February 5, 1999; and

WHEREAS, NBC and Quokka (together, the "Initial Members") desire to set
forth their respective ownership interests in the Company and the principles by
which the Company will be operated and governed;

NOW, THEREFORE, in consideration of mutual covenants and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

1.1 DEFINITIONS. The following terms used in this Operating Agreement
shall have the following meanings (unless otherwise expressly provided herein):

(a) "ACCOUNTING PERIOD" shall be (i) the Company's Fiscal Year if
there are no changes in the Members' respective interests in Company income,
gain, loss or deductions during such Fiscal Year except on the first day
thereof, or (ii) any other period beginning on the first day of a Fiscal Year,
or any other day during a Fiscal Year, upon which occurs a change in such
respective interests, and ending on the last day of a Fiscal Year, or on the day
preceding an earlier day upon which any change in such respective interest shall
occur.

(b) "ADDITIONAL MEMBER" shall mean any Person who or which is
admitted to the Company as an Additional Member pursuant to Article 13 hereof.

(c) "ADJUSTED ASSET VALUE" with respect to any asset shall be the
asset's adjusted basis for federal income tax purposes, except as follows:

(1) The initial Adjusted Asset Value of any asset (other
than money) contributed by a Member to the Company shall be the gross fair
market value of such asset at the time of contribution, as determined by the
contributing Member and a Supermajority of the Directors; provided, however,
that the initial Adjusted Asset Value (which is the initial fair value as agreed
by the Members) of the assets contributed by the Members to the Company shall be
as set forth on Schedule A attached hereto.

1.
<PAGE> 7

(2) The Adjusted Asset Values of all Company assets
shall be adjusted to equal their respective gross fair market values, as
determined by a Supermajority of the Directors, and the resulting unrecognized
profit or loss allocated to the Capital Accounts of the Members pursuant to
Articles 10 and 11, as of the following times: (i) the acquisition of an
additional interest in the Company by any new or existing Member in exchange for
more than a de minimis capital contribution; (ii) the distribution by the
Company to a Member of more than a de minimis amount of Company assets, unless
all Members receive simultaneous distributions of either undivided interests in
the distributed property or identical Company assets in proportion to their
interests in Company distributions as provided in Section 11.3; and (iii) the
liquidation of the Company within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(g).

(d) "ADVERTISER CATEGORY" shall have the meaning specified in the
Master Venture Agreement.

(e) "AFFILIATE" with respect to any Person other than an entity
subject to the reporting requirements of the Security Exchange Act of 1934, as
amended, shall mean (i) any Person which beneficially holds, directly or
indirectly, or otherwise controls, ten percent (10%) or more of such Person's
outstanding securities, (ii) any Person, ten percent (10%) or more of which
Person's outstanding securities are beneficially held, directly or indirectly,
or are otherwise controlled, by such a Person and (iii) any Person, ten percent
(10%) or more of which Person's outstanding securities are beneficially held,
directly or indirectly, or are otherwise controlled, by a Person described in
(i) above. "Affiliate" with respect to any entity subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, shall mean (i)
any Person which beneficially holds, directly or indirectly, or otherwise
controls, fifteen percent (15%) or more of such entity's outstanding securities,
(ii) any Person, fifteen percent (15%) or more of which Person's outstanding
securities are beneficially held, directly or indirectly, or are otherwise
controlled, by such an entity and (iii) any Person, fifteen percent (15%) or
more of which Person's outstanding securities are beneficially held, directly or
indirectly, or are otherwise controlled, by a Person described in (i) above.

(f) "ANNUAL OPERATING PLAN" shall have the meaning specified in
Section 5.3(c).

(g) "BANKRUPTCY" of a Person shall mean (i) the filing by a
Person of a voluntary petition seeking liquidation, reorganization, arrangement
or readjustment, in any form, of its debts under the U.S. Bankruptcy Code (or
corresponding provisions of future laws) or any other federal, state or foreign
insolvency law, or a Person's filing an answer consenting to or acquiescing in
any such petition; (ii) the making by a Person of any assignment for the benefit
of its creditors or the admission by a Person of its inability to pay its debts
as they mature; or (iii) the expiration of 60 days after the filing of an
involuntary petition under the Bankruptcy Code (or corresponding provisions of
future laws) seeking an application for the appointment of a receiver for the
assets of a Person, or an involuntary petition seeking liquidation,
reorganization, arrangement or readjustment of its debts under any other
federal, state or foreign insolvency law, unless the same shall have been
vacated, set aside or stayed within such 60-day period.

(h) "BOARD OF DIRECTORS" shall have the meaning specified in
Section 4.1.

2.
<PAGE> 8

(i) "CAPITAL ACCOUNT" as of any given date shall mean, with
respect to any Member, the account maintained for such Member in accordance with
the provisions of Section 10.3.

(j) "CAPITAL CONTRIBUTION" shall mean the amount of money and the
initial Adjusted Asset Value of any property contributed to the Company by a
Member whenever made. Any reference to a capital contribution of a Member shall
include the Capital Contribution made by a predecessor holder of any Units held
by such Member with respect to such Units.

(k) "CAUSE" shall mean, with respect to any Person, fraud, gross
negligence, willful misconduct, embezzlement or a material breach of such
Person's obligations under this Operating Agreement or any contract between such
Person and the Company.

(l) "CHAIRMAN OF THE BOARD" shall mean that director who is
elected by the other members of the Board of Directors to serve as Chairman of
the Board of Directors of the Company.

(m) "CHANNEL" shall have the meaning specified in the Master
Venture Agreement.

(n) "CLASS A ACQUISITION DATE" shall mean the date on which any
Person, or any group of Persons that are Affiliated with each other, (i)
acquires or otherwise beneficially holds or controls fifty percent (50%) or more
of the outstanding voting securities of any Class A Member; (ii) acquires or
otherwise beneficially holds or controls thirty percent (30%) or more of the
outstanding voting securities of any Class A Member that is subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, where
such 30% or greater voting block represents the largest voting block held by
stockholders of such Class A Member; (iii) controls the appointment of a
majority of the members of the board of directors of such Class A Member; (iv)
acquires all or substantially all the assets of any Class A Member; or (v)
merges or otherwise consolidates with any Class A Member in a transaction where
the Class A Member is not the surviving entity.

(o) "CLASS A INTEREST" shall mean the proportion that a Class A
Member's Class A Units bear to the aggregate outstanding Class A Units of all
Class A Members.

(p) "CLASS A DIRECTOR" shall mean any Director classified as a
"Class A Director" and elected or designated by the Class A Members in
accordance with Section 4.3(a) of this Operating Agreement.

(q) "CLASS A MEMBER" shall mean any Member holding Class A Units.

(r) "CLASS A TRIGGER DATE" shall mean the date on which any NBC
Competitor (i) merges or otherwise consolidates with any Class A Member in a
transaction where the Class A Member is not the surviving entity, (ii) shall
have become the beneficial owner (as defined in the Securities Exchange Act of
1934) of fifteen percent (15%) or more of the outstanding equity securities of a
Class A Member, (iii) becomes entitled to elect, appoint or replace a member or
members of the board of directors of a Class A Member unless NBC shall also be
granted the same right to elect, appoint or replace a member or members of the
board of directors of such Class A Member or (iv) acquires all or substantially
all the assets of a Class A Member.

3.
<PAGE> 9

(s) "CLASS A UNIT" shall mean any Unit denominated "Class A."

(t) "CLASS B INTEREST" shall mean the proportion that a Class B
Member's Class B Units bear to the aggregate outstanding Class B Units of all
Class B Members.

(u) "CLASS B DIRECTOR" shall mean any Director classified as a
"Class B Director" and elected or designated by the Class B Members in
accordance with Section 4.3(b) of this Operating Agreement.

(v) "CLASS B MEMBER" shall mean any Member holding Class B Units.

(w) "CLASS B TRIGGER DATE" shall mean the date on which any
Quokka Competitor (i) merges with any Class B Member in a transaction where the
Class B Member is not the surviving entity, (ii) shall have become the
beneficial owner (as defined in the Securities Exchange Act of 1934) of fifteen
percent (15%) or more of the outstanding equity securities of a Class B Member,
(iii) becomes entitled to elect a member or members of the board of directors of
a Class B Member unless Quokka shall also be granted the same right to elect,
appoint or replace a member or members of the board of directors of such Class B
Member or (iv) acquires all or substantially all the assets of a Class B Member.

(x) "CLASS B UNIT" shall mean any Unit denominated "Class B."

(y) "CODE" shall mean the Internal Revenue Code of 1986, as
amended, or corresponding provisions of subsequent superseding federal revenue
laws.

(z) "COMPANY PROPERTY" means any tangible and intangible personal
property now owned or hereafter acquired by the Company, including, without
limitation, all cash, cash equivalents, deposits, accounts receivable,
work-in-progress, inventory, equipment, materials, supplies, prototypes,
vehicles, real property, fixtures, permits, approvals, licenses, patents,
consents, contracts, agreements, applications for permits, approvals, licenses,
development rights, development agreements, trade names and warranties, or any
other property.

(aa) "CONTENT PLAN" shall mean with respect to the first Games
the Initial Content Plan and with respect to the later Games the content plan
developed in accordance with Section 5.3(a).

(bb) "CONTENT PLAN DEADLINE" shall mean the date one hundred
twenty (120) days following the conclusion of the Games prior to the Games with
respect to which such Content Plan applies.

(cc) "CURRENT CONTENT PLAN" shall have the meaning specified in
Section 5.2.

(dd) "DELAWARE ACT" shall mean the Delaware Limited Liability
Company Act at 6 Del. C. Sections 18-101, et seq., as amended.

(ee) "DIRECTORS" shall mean the directors designated or elected
by the Members pursuant to the terms of this Operating Agreement. For purposes
of the Delaware Limited Liability Company Act and for all other purposes, the
term "Director" as used in this Operating Agreement shall mean "manager."
Consequently the parties intend that any restriction

4.
<PAGE> 10

on the authority of a Director set forth in this Operating Agreement shall also
be read as a restriction on such person's authority as a manager.

(ff) "DISTRIBUTABLE CASH" shall mean for any period the Operating
Cash Flow (as defined below) for such period plus depreciation and amortization
to the extent reflected in Operating Cash Flow for such period minus (i) the
capital expenditures of the Company for such period determined in accordance
with U.S. generally accepted accounting principles, (ii) any net working capital
requirements to be met from Operating Cash Flow for such period as determined by
the Board of Directors and (iii) all amounts distributed by the Company pursuant
to Section 11.3(a) of this Operating Agreement; and where "Operating Cash Flow"
shall mean for any period the gross revenues of the Company for such period less
all operating and nonoperating expenses of the Company for such period,
including all charges of a proper character (including provision for taxes, if
any, which charges shall be limited to current taxes, and provision for current
additions to reserves), all determined in accordance with GAAP applied on a
basis consistent with the Company's prior corresponding periods, if any.

(gg) "DROP-DEAD DATE" shall mean March 15, 1999.

(hh) "EQUITABLE CLAIM REGARDING CONTENT" shall have the meaning
specified in Section 5.7(c).

(ii) "EVENTS" shall have the meaning specified in the Master
Venture Agreement.

(jj) "EXCESS CAPITAL CONTRIBUTION" shall mean the amount, if any,
by which the sum of Quokka's Initial Capital Contribution and all Quokka
Quarterly Capital Contributions exceeds [*] dollars $[*].

(kk) "FISCAL YEAR" shall mean the Company's fiscal year. The
Company's fiscal year shall be January 1 through December 31 unless a different
taxable year is required by Section 706 of the Code, in which event the
Company's fiscal year shall be the taxable year required by Section 706 of the
Code.

(ll) "FUNDS FROM A SALE OF THE COMPANY" means all Distributable
Cash held by the Company which results from a Sale of the Company.

(mm) "FUNDS FROM OPERATIONS" means all Distributable Cash held by
the Company which results from the operation of the business of the Company from
whatever source, except for Funds From a Sale of the Company and Capital
Contributions.

(nn) "GAMES" shall have the meaning specified in the Master
Venture Agreement.

(oo) "INITIAL CAPITAL CONTRIBUTION" shall mean a Member's initial
contribution to the Capital of the Company pursuant to this Operating Agreement
in connection with the initial issuance of Units by the Company, as set forth on
Schedule A hereto.

(pp) "INITIAL CONTENT PLAN" shall have the meaning specified in
Section 5.3(a).

(qq) "INITIAL MEMBERS" shall mean NBC and Quokka.

[*] Confidential Treatment Requested

5.
<PAGE> 11

(rr) "INTEREST" shall mean the proportion that a Member's Units
bears to the aggregate outstanding Units of all Members.

(ss) "INTEREST INCOME" shall mean all interest income, including
without limitation, income received from commercial paper, certificates of
deposit, United States treasury bills and other money market investments.

(tt) "LONG-TERM STRATEGIC PLAN" shall have the meaning specified
in Section 5.3(b).

(uu) "MASTER VENTURE AGREEMENT" shall mean that certain Master
Venture Agreement of even date herewith among NBC, Quokka and the Company.

(vv) "MEMBER" shall mean each of Quokka, NBC, any Additional
Member and any Substituted Member which is, as of a given time, a member of the
Company.

(ww) "MUTUAL TERMINATION EVENT" shall have the meaning specified
in the Master Venture Agreement.

(xx) "NBC COMPETITOR" shall mean [*].

(yy) "NBC SERVICES AGREEMENT" shall mean that certain NBC Rights
and Services Terms attached as Exhibit A to the Master Venture Agreement.

(zz) "NET PROFIT OR NET LOSS" shall be an amount computed for
each Accounting Period as of the last day thereof that is equal to the Company's
taxable income or loss for such Accounting Period, determined in accordance with
Section 703(a) of the Code (for this purpose, all items of income, gain, loss,
or deduction required to be stated separately pursuant to Code Section 703(a)(1)
shall be included in taxable income or loss), with the following adjustments:

(1) Any income of the Company that is exempt from
federal income tax and not otherwise taken into account in computing Net Profit
or Net Loss pursuant to this Section 1.1(zz) shall be added to such taxable
income or loss;

(2) Any expenditures of the Company described in Code
Section 705(a)(2)(b) or treated as Code Section 705(a)(2)(b) expenditures
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise
taken into account in computing Net Profit or Net Loss pursuant to this Section
1.1(zz) shall be subtracted from such taxable income or loss; and

[*] Confidential Treatment Requested

6.
<PAGE> 12

(3) Items that are specially allocated pursuant to
Section 11.2 hereof shall not be taken into account in computing Net Profit or
Net Loss.

Notwithstanding anything to the contrary contained in this definition of Net
Profit or Net Loss, income, gain or loss resulting from the disposition of,
distribution to a Member of, or depreciation, amortization or other cost
recovery deductions with respect to, any Company asset shall be computed by
reference to the book value of the asset disposed of, distributed or
depreciated, amortized or otherwise recovered, notwithstanding that the adjusted
tax basis of such asset differs from its book value.

(aaa) "OPERATING AGREEMENT" shall mean this Operating Agreement
as originally executed and as amended from time to time in accordance with the
terms of this Operating Agreement.

(bbb) "PERMITTED PLEDGE" shall mean a pledge by a Member of its
interest in the Company in connection with a debt financing transaction creating
an encumbrance on all or substantially all the assets of such Member, which
assets include such Member's interest in the Company.

(ccc) "PERSON" shall mean any individual or corporation,
partnership, limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization or other entity, including any
government or political subdivision or any agency or instrumentality thereof and
the heirs, executors, administrators, legal representatives, successors, and
permitted assigns of such "Person" where the context so admits.

(ddd) "QUARTERLY CAPITAL NEEDS" shall have the meaning specified
in Section 5.3(c).

(eee) "QUOKKA COMPETITOR" shall mean any Person significantly
engaged in the business of providing coverage, promotion or advertising of
sports or sporting events over the Internet Medium (as such term is defined in
the NBC Services Agreement).

(fff) "QUOKKA QUARTERLY CAPITAL CONTRIBUTION" shall have the
meaning specified in Section 5.4(a).

(ggg) "QUOKKA SERVICES AGREEMENT" shall mean that certain Quokka
Rights and Services Terms attached as Exhibit B to the Master Venture Agreement.

(hhh) "QUOKKA WARRANTS" shall have the meaning specified in the
Master Venture Agreement.

(iii) "REDUCED ACTIVITY PERIOD" shall mean any six month period
following the expiration or termination of the Master Venture Agreement (as such
terms are defined in the Master Venture Agreement) during which the Company has
not either accrued expenditures of at least $[*] or recognized revenues of at
least $[*].

(jjj) "REDUCED SPENDING PLAN" shall have the meaning specified in
Section 5.3(b).

[*] Confidential Treatment Requested

7.
<PAGE> 13

(kkk) "RESTRICTED ADVERTISER CATEGORY" shall have the meaning
specified in the Master Venture Agreement.

(lll) "SALE OF COMPANY PROPERTY" shall mean the sale,
disposition, assignment, transfer, lease, pledge, hypothecation or encumbrance
of, or the granting of any security interest in, any Company Property that, when
considered with any other Company Property so transferred or otherwise treated
outside the ordinary course of business, has an aggregate fair market value
greater than 20% of the fair market value of all Company Property (including
without limitation any Sale of the Company).

(mmm) "SALE OF THE COMPANY" shall mean the sale or disposition of
all or substantially all the Company Property.

(nnn) "SERVICES AGREEMENTS" shall mean the NBC Services Agreement
and the Quokka Services Agreement.

(ooo) "SUBSIDIARY" of any Person shall mean any entity of which
such Person beneficially holds, directly or indirectly, fifty percent (50%) or
more of such entities outstanding securities.

(ppp) "SUBSTITUTE MEMBER" shall mean any Person who or which is
admitted to the Company as a Substitute Member pursuant to Articles 12 and 13 of
this Operating Agreement.

(qqq) "SUPERMAJORITY OF THE DIRECTORS" shall mean the vote of
three (3) or more Directors, including at least one (1) Class A Director and at
least one (1) Class B Director. Every act or decision done or made by three (3)
or more Directors, including at least one (1) Class A Director and at least one
(1) Class B Director, at a meeting duly held and at which a quorum is present
shall be the act of a Supermajority of the Directors. Additionally, any act or
decision done or made pursuant to a written consent executed by all five (5)
Directors (or, in the event of a reduction in the number of Directors pursuant
to Section 4.2, all four (4) Directors) in accordance with the terms of Section
4.7(g) shall be the act of a Supermajority of the Directors. Votes by a Director
shall be as a representative of the Members electing such Director and not as a
fiduciary of the Company or all of its Members.

(rrr) "TREASURY REGULATIONS" shall mean the Income Tax
Regulations, including temporary regulations, promulgated under the Code, as
amended from time to time.

(sss) "UNITS" shall mean the capital units issued by the Company
to its Members, in exchange for contributions, which represent the Member's
interest in the Company.

(ttt) "WARRANT ISSUANCE AGREEMENT" shall mean that certain
Warrant Issuance Agreement dated of even date herewith among Quokka, NBC and the
Company.

ARTICLE 2

FORMATION OF COMPANY

2.1 FORMATION. On February 5, 1999, the Company was organized as a
Delaware limited liability company under and pursuant to the Delaware Act.

8.
<PAGE> 14

2.2 NAME. The name of the Company is NBC/Quokka Ventures, LLC.

2.3 PRINCIPAL PLACE OF BUSINESS. The principal place of business of the
Company shall be in the State of New York.

2.4 REGISTERED OFFICE AND REGISTERED AGENT. The Company's registered
office in the state of Delaware shall be at the office of its registered agent,
and the name and address of its initial registered agent shall be The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. The Corporation Trust Company is located in the
County of Newcastle.

2.5 TERM. The Company's existence commenced February 5, 1999 upon the
filing with the Secretary of the State of Delaware of the Company's Certificate
of Formation and shall continue indefinitely, unless the Company is earlier
dissolved in accordance with either the provisions of this Operating Agreement
or the Delaware Act.

ARTICLE 3

PURPOSES OF COMPANY

3.1 COMPANY PURPOSES. The purpose of the Company is to (a) design,
develop, produce and market the Channel in accordance with the Master Venture
Agreement, the Services Agreements and the Content Plans, (b) sell advertising
on, or sponsorships of, the Channel in accordance with the Master Venture
Agreement and the Services Agreements, (c) design, develop, manufacture, market
and sell derivative products relating to the Channel in accordance with the
Master Venture Agreement and the Services Agreements, (d) engage in such other
activities as contemplated by the Master Venture Agreement, the Services
Agreements and the Content Plans and (e) engage in any lawful act or activity
for which a limited liability company may be organized under the laws of the
State of Delaware, incident, necessary, advisable or desirable to carry out the
foregoing. The Company shall have all powers available to limited liability
companies under the Delaware Act to make and perform all contracts and to engage
in all actions and transactions necessary or advisable to carry out the purposes
of the Company.

ARTICLE 4

MANAGEMENT OF COMPANY

4.1 GENERALLY. Except as specifically set forth in this Operating
Agreement, the Members hereby delegate all power and authority to manage the
business and affairs of the Company to the Directors, who shall act as the
managers of the Company subject to and in accordance with the terms of this
Operating Agreement (including, without limitation, Section 5.1). Such five (5)
(or, as provided in Section 4.2 below, four (4)) Directors shall constitute the
"Board of Directors" and such term may be used in this Operating Agreement to
refer to such five (5) (or, as provided in Section 4.2 below, four (4))
Directors. Such term is used for convenience only and is not intended by the
parties to confer to the Board of Directors any additional power or authority
other than that expressly and specifically conferred pursuant to and in
accordance with the terms of this Operating Agreement.

4.2 NUMBER OF DIRECTORS; CLASSIFICATION OF DIRECTORS. The number of
Directors of the Company shall be fixed at five (5) Directors. Three (3)
Directors shall be classified as Class

9.
<PAGE> 15

A Directors and two (2) Directors shall be classified as Class B
Directors. Notwithstanding the foregoing however, if within thirty (30) days
following the date the Class B Directors receive written notice from the Class A
Directors that a Class A Acquisition Date has occurred (a "Class A Acquisition
Date Notice"), the holders of a majority of the Class B Interests elect to
reduce the number of Class A Directors, the number of Directors of the Company
shall be fixed at four (4) Directors. In such event two (2) Directors shall be
classified as Class A Directors and two (2) Directors shall be classified as
Class B Directors. The Class A Directors shall provide a Class A Acquisition
Date Notice promptly following a Class A Acquisition Date.

4.3 TENURE, ELECTION AND QUALIFICATIONS.

(a) The initial Class A Directors shall be Richard H. Williams,
Alan Ramadan and Les Schmidt. Each Class A Director shall serve until the
earlier of (i) the election of such Class A Director's successor by Class A
Members holding a majority of the Class A Interests, (ii) the removal of such
Class A Director in accordance with the terms of this Operating Agreement, (iii)
such Class A Director's resignation and (iv) such Class A Director's death.

(b) The initial Class B Directors shall be Bob Myers and Gary
Zenkel. Each Class B Director shall serve until the earlier of (i) the election
of such Class B Director's successor by Class B Members holding a majority of
the Class B Interests, (ii) the removal of such Class B Director in accordance
with the terms of this Operating Agreement, (iii) such Class B Director's
resignation and (iv) such Class B Director's death.

(c) At the time of his appointment and at all times during his
service as a Director, a Director must be an officer, director or employee of a
Member. In the event a Director shall cease to be an officer, director or
employee of a Member, such Director shall be deemed to have resigned as a
Director effective upon such cessation date. In addition, at least one (1) Class
B Director shall be an officer, director or employee of NBC.

4.4 RESIGNATION. A Director may resign at any time by giving written
notice to the Members. The resignation of a Director shall take effect upon
receipt of notice thereof or at such later time as shall be specified in such
notice; unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.

4.5 REMOVAL.

(a) A Class A Director may be removed at any time, with or
without Cause, by the affirmative vote of Class A Members holding a majority of
the Class A Interests. Without limiting the generality of the foregoing, in the
event of a reduction in the number of Directors classified as Class A Directors
pursuant to Section 4.2, the Class A Members holding a majority of the Class A
Interests shall determine which Class A Director shall be removed as a result of
such reduction.

(b) A Class B Director may be removed at any time, with or
without Cause, by the affirmative vote of Class B Members holding a majority of
the Class B Interests.

(c) Notwithstanding the foregoing, upon the affirmative vote of
any two Directors, any other Director may be removed for Cause.

4.6 VACANCIES.

10.
<PAGE> 16

(a) Any vacancy occurring in the office of a Class A Director
shall be filled by the affirmative vote of Class A Members holding a majority of
the Class A Interests.

(b) Any vacancy occurring in the office of a Class B Director
shall be filled by the affirmative vote of Class B Members holding a majority of
the Class B Interests.

4.7 MEETINGS.

(a) Subject to the notice provisions set forth in this Section
4.7, regular meetings of the Board of Directors shall be held at such times and
dates as determined by the Board of Directors. The Board of Directors shall hold
at least four (4) regular meetings annually, which meetings shall be held in
such locations as determined pursuant to this Section 4.7. The officers and
other executives of the Company, if any, may attend meetings of the Board of
Directors with the prior approval of the Board of Directors. The Board of
Directors shall meet with the officers and other senior executives of the
Company, if any, at least two (2) times annually.

(b) Directors may participate in a meeting through use of
conference telephone or similar communication equipment, so long as all
Directors participating in such meeting can hear one another. Such participation
constitutes presence in person at such meeting.

(c) Special meetings of the Board of Directors for any purpose
may be called by the Chairman of the Board or by any two Directors.

(d) Each Director shall receive notice of the date, time and
place of all meetings of the Board of Directors at least thirty (30) days before
the meeting. Such notice shall be delivered in writing (which may be by
facsimile or by telegraph) to each Director. Such notice may be given by the
Chairman of the Board, the Secretary of the Company or by the person or persons
who called the meeting. Such notice shall specify the purpose of the meeting.
Notice of any meeting of the Board of Directors shall not be required to be
given to any Director who signs a waiver of notice of such meeting or a consent
to holding the meeting, either before or after the meeting, or who attends the
meeting without protesting prior to such meeting or at the commencement thereof.
No meeting of the Board of Directors shall be considered a valid meeting of the
Board of Directors unless notice as required pursuant to this Section 4.7 has
been given. All such waivers, consents and approvals shall be filed with the
corporate records of the Company.

(e) Regular meetings of the Board of Directors shall be held
alternatively in San Francisco, California and New York, New York, or in such
other places as the Directors who desire to attend such meeting may collectively
determine. Special meetings of the Board of Directors shall be held in New York,
New York, or in such other places as the Directors who desire to attend such
meeting may collectively determine, with respect to special meetings called by
the Class A Directors and shall be held in San Francisco, California, or in such
other places the Directors who desire to attend such meeting may collectively
determine, with respect to special meetings called by the Class B Directors. The
location of any meeting of the Board of Directors shall be designated in the
notice of the meeting.

(f) Any meeting of the Board of Directors, whether or not a
quorum is present, may be adjourned to another time and place by the affirmative
vote of a majority of the Directors present. If the meeting is adjourned for
more than twenty-four (24) hours, notice of

11.
<PAGE> 17

such adjournment to another time or place shall be given prior to the time of
the adjourned meeting to the Directors who were not present at the time of the
adjournment.

(g) Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting of the Board of Directors, if all the
Directors individually or collectively consent in writing to such action. Such
written consent or consents shall be filed with the corporate records of the
Company. Such action by written consent shall have the same force and effect as
a unanimous vote of the Directors.

4.8 QUORUM AND TRANSACTION OF BUSINESS. The number of Directors that
constitutes a quorum for the transaction of business at a properly noticed
meeting of the Board of Directors shall be three (3); provided, however, that if
a vote requiring a Supermajority of the Directors shall be taken at such
meeting, a Supermajority of the Directors shall constitute a quorum. Except as
required by the Delaware Act or as otherwise set forth in this Operating
Agreement, every act or decision done or made by three (3) or more Directors at
a meeting duly held and at which a quorum is present shall be the act of the
Board of Directors.

4.9 DIRECTORS HAVE NO EXCLUSIVE DUTY TO COMPANY. The Directors shall not
be required to manage the Company as their sole and exclusive function, and the
Directors may have other business interests and may engage in other activities
in addition to those relating to the Company. Neither the Company nor any Member
shall have any right, by virtue of this Operating Agreement or otherwise, to
share or participate in such other investments or activities of the Directors or
to the income or proceeds derived therefrom.

4.10 SALARIES. The Directors shall receive no salary or other
compensation from the Company; provided, however, the foregoing shall not
prevent any employee of or consultant to the Company from receiving salary or
other compensation from the Company with respect to his services as an employee
or consultant.

ARTICLE 5

POWERS OF AND RESTRICTIONS ON THE DIRECTORS

5.1 MANAGEMENT. The Directors shall in all cases act as a group and
shall have no authority to act individually. The Board of Directors may appoint
one (1) or more officers to manage the day-to-day operations of the Company. The
initial officers shall be as designated in Section 6.1 below and shall have the
respective duties set forth in Section 6.2 below. The Board of Directors may
adopt such rules and regulations for the management of the Company not
inconsistent with this Operating Agreement or the Delaware Act. Except as
otherwise provided in the Delaware Act or authorized pursuant to the terms of
this Operating Agreement, no debt shall be contracted or liability incurred by
or on behalf of the Company except by the Company's Board of Directors.

5.2 ADHERENCE TO CURRENT CONTENT PLAN. Except as approved by a Supermajority of
the Directors, the Board of Directors shall operate the Company, and the Company
shall operate the Channel, in a manner in all ways consistent with and in
accordance with the Content Plan as in effect with respect to a Games at any
given time (the "Current Content Plan"). Amendments to the Current Content Plan
shall require approval by a Supermajority of the Directors.

12.
<PAGE> 18

Notwithstanding any provision herein to the contrary, approval of any
Content Plan shall not constitute approval of the raising of additional capital
for the Company.

5.3 CONTENT PLAN, LONG-TERM STRATEGIC PLAN AND ANNUAL OPERATING PLAN.

(a) Until the Drop-Dead Date, the Members shall negotiate in good
faith to develop, for approval by a Supermajority of the Directors, an initial
content plan (the "Initial Content Plan") with respect the first Games,
provided, however, in conducting such negotiations, it will not be NBC's
intention to acquire "participating rights" as defined in EITF 96-16. Nothing
contained in the foregoing proviso, however, will affect the enforceability of
the Initial Content Plan once it has been approved by a Supermajority of the
Directors. Thereafter, no later than thirty (30) days prior to each Content Plan
Deadline, the officers of the Company shall prepare and submit to the Board of
Directors for approval by a Supermajority of the Directors, a content plan (the
"Content Plan") covering with respect to the next upcoming Games the types of
items covered in the Initial Content Plan with respect to the first Games. The
Members shall cause the Directors of the Company to work together in good faith
to develop and approve by such Supermajority of the Directors a Content Plan
with respect to each Games by the Content Plan Deadline; provided, however, in
the event a Supermajority of the Directors do not approve a Content Plan with
respect to the next upcoming Games on or before the Content Plan Deadline, the
Content Plan with respect to the next upcoming Games shall be the Content Plan
for the prior Games as updated by the General Manager and Production
Coordinating Producer of the Company to adjust for (i) the different sports
occurring during such Games (e.g. figure skating shall be substituted for
gymnastics), (ii) changes in technology and (iii) the current competitive
landscape. In the event that the General Manager and the Production Coordinating
Producer cannot agree on the updates necessary to create the Content Plan, the
General Manager shall have final authority to approve such Content Plan.

(b) From time to time as requested by the Board of Directors, but
at least one hundred twenty (120) days prior to the beginning of every other
Fiscal Year (beginning with the Fiscal Year commencing January 1, 2001), the
officers of the Company shall prepare and submit to the Board of Directors for
approval a long-term strategic plan for the Company (the "Long-term Strategic
Plan") for the period commencing with such Fiscal Year (or, the current Fiscal
Year in the event the Long-term Strategic Plan is not being considered by the
Board of Directors within sixty (60) days prior to the beginning of a Fiscal
Year) and ending with the Fiscal Year following the completion of the last Games
with respect to which the Company has rights under the NBC Services Agreement.
Notwithstanding the foregoing however, the first Long-term Strategic Plan shall
be prepared and submitted to the Board of Directors for approval no later than
ninety (90) days from the date hereof. Each Long-term Strategic Plan shall
include for each Fiscal Year covered by such Long-term Strategic Plan the
financial goals of the Company for each such Fiscal Year including a summary of
target operating revenues and expenses, capital expenditures and sources and
uses of funds and shall set forth an estimate of the additional capital needs,
if any, of the Company during each quarter of each such Fiscal Year, provided,
however, that such information need not be as detailed as the information
provided in the Annual Operating Plan. The Long-term Strategic Plan shall be
prepared on a basis in all respects consistent with the Current Content Plan. In
the event that there are three (3) Class A Directors and the Board of Directors
approves a Long-term Strategic Plan that provides for disbursement of (x) with
respect to the first Games, less than [*] dollars ([*]), (y) with respect to the
second Games, less than the amount equal to [*] dollars ([*]) multiplied by the
NBC Budget Discount, if any, or (z) with

[*] Confidential Treatment Requested

13.
<PAGE> 19

respect to the third Games, less than the amount equal to [*] dollars ([*])
multiplied by the NBC Budget Discount, if any, such Long-term Strategic Plan
shall be deemed a "Reduced Spending Plan." If at any time NBC substantially
reduces its overall television network budget with respect to any Games (other
than the 2000 Games) for reasons relating solely to an adverse change in general
economic conditions in the United States, then the "NBC Budget Discount" shall
mean the percentage by which NBC has reduced such budget. The foregoing
notwithstanding, nothing contained in this Section 5.3(b) shall obligate NBC to
provide Quokka or the Company with any written materials relating to NBC's
television network budget for any Games.

(c) From time to time as requested by the Board of Directors, but
at least one hundred twenty (120) days prior to the beginning of each Fiscal
Year, the officers of the Company shall prepare and submit to the Board of
Directors for approval an annual operating plan for the Company (the "Annual
Operating Plan") for such Fiscal Year. Notwithstanding the foregoing however,
the first Annual Operating Plan shall be prepared and submitted to the Board of
Directors for approval no later than ninety (90) days from the date hereof. The
Annual Operating Plan shall include the budget of the Company for such fiscal
year including estimates of operating revenues and expenses, capital
expenditures and sources and uses of funds and shall set forth an estimate of
the additional capital needs, if any, of the Company during each quarter of each
such Fiscal Year (the "Quarterly Capital Needs"). The Annual Operating Plan
shall be prepared on a basis in all respects consistent with the Current Content
Plan and the Long-term Strategic Plan. In the event that there are only two (2)
Class A Directors as a result of an election by the Class B Directors pursuant
to Section 4.2 and the Board of Directors is unable to approve an Annual
Operating Plan by the date one hundred (100) days prior to the beginning of a
Fiscal Year, the Annual Operating Plan for the upcoming Fiscal Year shall be the
Annual Operating Plan for the prior Fiscal Year increased by five percent (5%)
in each category.

5.4 ADDITIONAL CAPITAL.

(a) From time to time, Quokka shall make additional contributions
(the "Quokka Quarterly Capital Contribution") to the capital of the Company in
such amounts necessary to fund the Company's operations on an on-going basis in
accordance with the current Long-term Strategic Plan and the Annual Operating
Plan. Each Quokka Quarterly Capital Contribution, if any, shall be made at the
beginning of each quarter and shall equal the Quarterly Capital Needs for the
subsequent commencing quarter; provided, however, that in the event that a Games
commences during any particular quarter, then (x) the Quokka Quarterly Capital
Contribution that would have otherwise been due at the beginning of the quarter
in which the Games commence shall instead be due at the beginning of the
previous quarter, (y) the Quokka Quarterly Capital Contribution that would have
otherwise been due at the beginning of the quarter subsequent to the quarter in
which the Games commence shall instead be due at the beginning of the quarter in
which the Games commence and (z) no capital contribution shall be required at
the beginning of the quarter subsequent to the quarter in which the Games
commence because the amount that otherwise would have been contributed at such
time was contributed a quarter earlier (e.g., by way of example only, Quokka
shall make a Quokka Quarterly Capital Contribution at the beginning of the first
quarter of the year in an amount equal to the Quarterly Capital Needs during the
second quarter; provided, however, in the event that a Games commences during
the second quarter, the Quokka Quarterly Capital Contribution that would have
otherwise been payable at the beginning of the second quarter (i.e. the
Quarterly Capital Needs during the third quarter) shall also be paid at the
beginning of the first quarter). Quokka

[*] Confidential Treatment Requested

14.
<PAGE> 20

shall not receive additional Units in exchange for such Quokka Quarterly Capital
Contributions. Additionally, for so long as Quokka shall not have completed an
initial public offering of its equity or other securities, Quokka shall provide
the Board of Directors with (1) Quokka's unaudited quarterly report including a
consolidated balance sheet as at the end of the most recently completed quarter,
and an unaudited consolidated statement of income and an unaudited statement of
cash flows for such quarter, all prepared in accordance with U.S. generally
accepted accounting principles consistently applied (other than for accompanying
notes and changes resulting from year-end audit adjustments) within forty-five
(45) days of the end of each quarter of Quokka's fiscal year and (2) a
consolidated balance sheet of Quokka as at the end of the most recently
completed fiscal year, and a consolidated statement of income and a consolidated
statement of cash flows of Quokka for such year, all prepared in accordance with
U.S. generally accepted accounting principles consistently applied, together
with a report and opinion thereon by independent public accountants of national
standing selected by Quokka's board of directors, within ninety (90) days after
the end of each fiscal year of Quokka.

(b) From time to time, pursuant to the provisions of Section
5.7(b), the Class B Directors, in their sole discretion, may direct the Company
to exercise all or a portion of the Quokka Warrants. Concurrently therewith, NBC
shall contribute to the capital of the Company an amount equal to the exercise
price of the Quokka Warrants being exercised at such time (except in the event
of a "net issuance exercise" in accordance with the terms of the Quokka Warrants
pursuant to which a portion of the Quokka Warrants shall be canceled in
satisfaction of the applicable exercise price). Until such amount has been
contributed to the capital of the Company, the Company shall take no action with
respect to such requested exercise of the Quokka Warrants (except in the event
of a "net issuance exercise" in accordance with the terms of the Quokka Warrants
pursuant to which a portion of the Quokka Warrants shall be canceled in
satisfaction of the applicable exercise price). NBC shall not receive additional
Units in exchange for such additional capital contributions.

(c) Except as set forth in Section 5.4(a) and 5.4(b) above, the
Company shall not raise additional capital (or, in connection therewith, issue
additional units of the Company or admit Additional Members) without the
approval of a Supermajority of the Directors.

(d) Except in the event the Class B Directors elect pursuant to
Section 5.4(b) to exercise the Quokka Warrants for cash or in the event the
Class B Directors elect to control Equitable Claim Regarding Content pursuant to
Section 5.7(c), the Class B Members shall have no obligation to contribute cash
to the Company.

5.5 ACTIONS REQUIRING SIMPLE MAJORITY APPROVAL. As set forth in Section
4.8, except as required by the Delaware Act or as otherwise set forth in this
Operating Agreement (including, without limitation, Section 5.6), every act or
decision done or made by three (3) or more Directors at a meeting duly held and
at which a quorum is present shall be the act of the Board of Directors. Without
limiting the generality of Section 4.8 or Section 5.1 or the obligation of the
Board of Directors to operate the Company in accordance with the Current Content
Plan as set forth in Section 5.2, the Members desire to affirmatively set forth
certain actions which may be taken by a simple majority of the Board of
Directors in accordance with Section 4.7. Such actions are as follows:

(a) Election of the Chairman of the Board, who shall preside at
all meetings of the Board of Directors;

15.
<PAGE> 21

(b) Approval and amendment of the Annual Operating Plan and
Long-term Strategic Plan (as set forth in Section 5.3);

(c) The appointment or removal of the General Manager and other
officers of the Company; provided, however, that the appointment of the
Production Coordinating Producer shall require the approval of a Supermajority
of the Directors;

(d) The hiring, firing and compensation of the Company's
personnel; provided, however, that the hiring of the Production Coordinating
Producer shall require the approval of a Supermajority of the Directors;

(e) Selection of the equipment and production processes of the
Company in the ordinary course of business;

(f) Directing and controlling claims and litigation against or
involving third parties, other than claims or litigation (i) subject to approval
by a Supermajority of the Directors pursuant to Section 5.6, (ii) Equitable
Claims Regarding Content subject to the direction and control of the Class B
Directors pursuant to Section 5.7(c) or (iii) which any Person (other than the
Company) has a contractual right to control and direct; and

(g) Negotiation and approval of agreements with third parties,
other than agreements subject to approval by a Supermajority of the Directors
pursuant to Section 5.6.

5.6 ACTIONS REQUIRING SUPERMAJORITY APPROVAL. Notwithstanding any other
provision in this Operating Agreement to the contrary, every act or decision
outside the ordinary course of business shall require the approval of a
Supermajority of the Directors. For purposes of this Operating Agreement,
"outside the ordinary course of business" shall mean acts or decisions regarding
matters of a type (as opposed to matters involving an amount) that is not
consistent with those normally expected to be addressed in directing and
carrying out the purposes of the Company as set forth in Section 3.1, regardless
of whether the events or transactions that would necessitate such decisions are
expected to occur in the near term or in the long term. Operation of the Company
in any way inconsistent with the Current Content Plan is considered "outside the
ordinary course of business" for purposes hereof. In addition, the following
shall require the approval of a Supermajority of the Directors:

(a) Any agreement, arrangement or understanding with any Member,
Director or any holder of Units or any Affiliate, employee or relative of any
such Member, Director or holder, or any amendment, renewal or extension of any
such agreement, arrangement or understanding (other than employment contracts
between any such natural person and the Company); provided, however, that the
Master Venture Agreement and the Warrant Issuance Agreement as executed and
delivered as of the date hereof shall be deemed to be approved by a
Supermajority of the Directors as of the date hereof for purposes of this
Section 5.6(a);

(b) Amendments of the Current Content Plan of the Company (as set
forth in Section 5.2) and approval of new Content Plans (as set forth in Section
5.3(a));

(d) Distributions pursuant to Section 11.3(b), Section 11.3(d)
and Section 11.3(f);

16.
<PAGE> 22

(e) Acquisitions of assets representing at least twenty percent
(20%) of the net book value of the assets of the Company in any single
transaction or series of related transactions or any Sale of Company Property;
provided, however, that the approval of a Supermajority of Directors shall not
be required if such transaction or transactions represents less than [*] in
any single year and less than [*] in the aggregate;

(f) Hiring and appointing the Production Coordinating Producer;
providing, however, that the initial appointment of the Production Coordinating
Producer set forth in Section 6.1 shall be deemed approved by a Supermajority of
the Directors as of the date hereof for purposes of this Section 5.6(i);

(g) Decisions to put the Company into Bankruptcy;

(h) To prepare and file all tax returns on behalf of the Company,
and to make such tax elections and determinations as a Supermajority of the
Directors deems appropriate;

(i) Approving certain indemnifications of Persons by the Company
(as set forth in Section 8.1);

(j) Directing and controlling claims and litigation against or
involving third parties with respect to which NBC is not entitled to complete
indemnification and has been named as a co-defendant or in connection with which
the Company could face criminal penalties or negotiating or approving any
settlement with respect to any such claims or litigation;

(k) Transfers of Units by the Members (in accordance with Article
12), the admission of any Additional Member or any Substitute Member (in
accordance with Section 13.1) or the issuance of any equity in the Company or
any security convertible into equity in the Company; and

(l) Borrowing money for the Company from banks or other Persons,
or hypothecating, encumbering or granting any security interests in the assets
of the Company to repay borrowed funds until such time that the sum of Quokka's
Initial Capital Contribution and Quarterly Capital Contributions has exceeded
[*]; provided, however, that notwithstanding that the sum of Quokka's Initial
Capital Contribution and Quarterly Capital Contributions has exceeded [*], the
Company may not pledge its rights under the NBC Services Agreement or any
content owned by the Company without the consent of a Supermajority of the
Directors.

Notwithstanding any provision to the contrary contained in this
Operating Agreement, the approval rights set forth in this Section 5.6 shall
continue to be applicable following a Dissolution Event pursuant to Article 14
until the filing of a Certificate of Cancellation.

In voting on any matter requiring approval of a Supermajority of the
Directors, a Director shall vote as a representative of the Members electing
such Director and not as a fiduciary of the Company or all of its Members.

5.7 ACTIONS REQUIRING APPROVAL OF ONLY ONE CLASS OF DIRECTORS.

(a) Notwithstanding any other provision in this Operating
Agreement to the contrary but subject to any fiduciary duties a Director owes to
the Company and its Members

[*] Confidential Treatment Requested.

17.

<PAGE> 23

under Delaware law, (i) the Class A Directors shall have the exclusive right to
direct and control, on behalf of the Company, any claim by the Company against
NBC or any Affiliate of NBC, including, without limitation, exercising all
rights and remedies of the Company in the event any such party breaches the
Master Venture Agreement, the NBC Services Agreement or the Warrant Issuance
Agreement and (ii) the Class B Directors shall have the exclusive right to
direct and control, on behalf of the Company, any claim by the Company against
Quokka or any Affiliate of Quokka, including, without limitation, exercising all
rights and remedies of the Company in the event any such party breaches the
Master Venture Agreement, the Quokka Services Agreement, the Quokka Warrants or
the Warrant Issuance Agreement.

(b) Notwithstanding any other provision in this Operating
Agreement to the contrary but subject to the provisions of Section 5.4(b), the
Class B Directors shall have sole authority to direct the Company to distribute
the Quokka Warrants and any shares issued to the Company upon exercise of the
Quokka Warrants (the "Warrant Shares") to NBC in accordance with the terms of
this Operating Agreement and subject to the terms of the Quokka Warrants,
exercise the Quokka Warrants, vote the Warrant Shares, sell the Warrant Shares,
distribute any proceeds from the sale of any Warrant Shares, any dividends
(whether in cash or otherwise) or other distributions received by the Company in
respect of the Warrant Shares in accordance with the terms of this Operating
Agreement or exercise any other rights available to the Company in respect of
the Warrant Shares. The Class B Directors acknowledge and agree that the Quokka
Warrants and Warrant Shares may not be distributed in kind prior to the earlier
of (i) the initial public offering of equity securities of Quokka; (ii) three
(3) years from the initial issuance of the Quokka Warrants; and (iii) the
dissolution of the Company. Any transfer taxes or other fees and expenses (other
than applicable income taxes) arising from any distribution of the Quokka
Warrants or Warrant Shares shall be borne as set forth in the Quokka Warrants.
Additionally, notwithstanding the foregoing, in the event that the Class B
Members transfer any Class B Units pursuant to Section 12.1(a)(ii), the Class B
Directors shall not be entitled to distribute any of the Quokka Warrants or any
of the Warrant Shares (or any securities issued upon conversion thereof) to such
transferee without the consent of the Class A Members, which consent shall not
be unreasonably withheld, and in such event shall only be entitled to distribute
cash dividends or other distributions in respect of the Warrant Shares or any
proceeds from the sale of the Warrant Shares (or any securities issued upon
conversion thereof) to such transferee in accordance with the terms of this
Operating Agreement; provided, however, that this restriction shall not apply in
the event of a dissolution of the Company.

(c) Notwithstanding any other provision in this Operating
Agreement to the contrary, in the event the Company faces any claim involving
equitable remedies which may limit the Company's ability to exploit content
provided to it by NBC pursuant to the NBC Rights and Services Agreement and NBC
wishes to contest such potential limitation ("Equitable Claim Regarding
Content"), the Class B Directors may elect to direct and control such Equitable
Claim Regarding Content, provided, however, that the Company shall not enter
into any settlement or other agreement restricting the activities of the Company
without the approval of the Class A Directors if such settlement or other
agreement would have a greater negative impact on the Company than would have
been the case had NBC exercised its rights to withhold the content in question
pursuant to any of clauses (i) through (v) of Sections 3(b), 3(c) or 3(e) of the
NBC Services Agreement, as the case may be. In the event that the Class B
Directors elect to direct and control such Equitable Claim Regarding Content,
the Class B Members shall be required pro rata based on Class B Interests to
contribute additional capital to the Company to cover the

18.
<PAGE> 24

expenses and costs relating to such litigation, including without limitation
attorney's fees. No additional Units shall be issued in connection with such
additional capital contributions.

5.8 CERTAIN POWERS OF DIRECTORS. Without limiting the generality of
Section 5.1 or the obligation of the Board of Directors to operate the Company
in accordance with the Current Content Plan as set forth in Section 5.2, and
subject to any limitation set forth in this Operating Agreement (including,
without limitation, Sections 5.6 and 5.7), the Board of Directors shall have
power and authority on behalf of the Company:

(a) To acquire property from any Person as the Board of Directors
may determine in accordance with the terms of this Operating Agreement;

(b) To purchase liability and other insurance to protect the
Company's property and business of a type maintained by companies in a similar
business to that of the Company, it being understood that it shall be reasonable
to maintain insurance providing at least $[*] in coverage and that companies in
a similar business to that of the Company may maintain, without limitation,
director and officer, commercial general liability, umbrella, workers'
compensation, foreign workers compensation and liability, satellite
transmission, errors and omissions and DICE (documentary, industrial, commercial
and educational films);

(d) To invest any Company funds temporarily in time deposits,
short-term governmental obligations, commercial paper or other similar low-risk
investments;

(e) Subject to the approval of Members holding a majority of the
Class A Interests and a majority of the Class B Interests, to effect a Sale of
the Company;

(f) To execute on behalf of the Company all instruments and
documents necessary, in the opinion of the Board of Directors, to the business
of the Company in accordance with the terms of this Operating Agreement;

(g) To open bank accounts from time to time in the name of the
Company;

(h) To employ accountants from nationally-recognized accounting
firms, legal counsel, or other experts to perform services for the Company and
to compensate them from Company funds;

(i) To enter into any and all other agreements on behalf of the
Company, with any other Person for any purpose, in such forms as the Board of
Directors may approve in accordance with the terms of this Operating Agreement;

(j) To establish and enforce limits of authority and internal
controls with respect to all personnel and functions;

(k) To develop or cause to be developed accounting procedures for
the maintenance of the Company's books of account; and

19.

[*] Confidential Treatment Requested
<PAGE> 25

(l) To do and perform all other acts as may be necessary or
appropriate to the conduct of the Company's business.

5.9 REPORTS TO MEMBERS. As soon as practicable after the end of any
quarter but in any event within thirty (30) days thereafter, the Board of
Directors shall provide to each of the Class A Members and Class B Members a
balance sheet, statement of income, statement of operations and statement of
cash flows (including the amount, if any, of the Quokka Quarterly Capital
Contribution made during such quarter) for such period and for the Fiscal Year
to date, prepared in accordance with U.S. generally accepted accounting
principles, consistently applied, with the exception that no notes need be
attached to such statements and year-end audit adjustments may not have been
made. As soon as practicable after the end of any Fiscal Year but in any event
within ninety (90) days thereafter, the Board of Directors shall provide to each
of the Class A Members and Class B Members (i) a balance sheet, statement of
income, statement of operations and statement of cash flows for such Fiscal
Year, prepared in accordance with U.S. generally accepted accounting principles,
consistently applied, and accompanied by a report and opinion thereon by the
Company's independent public accountants and (ii) a statement of the Capital
Account of each of the Class A Members and Class B Members prepared in
accordance with the terms of this Operating Agreement. Additionally, the Board
of Directors shall provide each Member with such other information as shall be
required to support such Member's public reporting obligations as well as such
other information as such Member shall reasonably request from the Board of
Directors.

5.10 INDEPENDENT PUBLIC ACCOUNTANTS. Pricewaterhouse Coopers or such
other nationally-recognized accounting firm selected by the board of directors
of Quokka to serve as Quokka's independent public accountants shall be the
Company's independent public accountants. The Company's independent public
accountant shall complete its audit of the Company in a timely fashion each
Fiscal Year so as to provide each Member with reasonable opportunity to include
the results therefrom, as required, in documents required to be filed by such
Member under the Securities Exchange Act of 1934 as amended.

5.11 LITIGATION. In the event that the Company and any Member are named
in third-party litigation and such Member is not entitled to complete
indemnification in connection therewith, the Board of Directors shall cooperate
with such Member in directing and controlling such litigation on behalf of the
Company in order to coordinate a common defense as appropriate.

ARTICLE 6

OFFICERS; COMMITTEES

6.1 APPOINTMENT OF OFFICERS. The Board of Directors may appoint officers
of the Company which may include, but shall not be limited to: (a) General
Manager; (b) one or more positions similar to the position of vice president of
a Delaware corporation as set forth below; (c) secretary; and (d) treasurer or
chief financial officer; provided, however, that the appointment of the
Production Coordinating Producer shall be subject to the approval of a
Supermajority of the Directors. The Board of Directors may delegate their
day-to-day management responsibilities to any such officers, and such officers
shall have the authority to contract for, negotiate on behalf of and otherwise
represent the interests of the Company as authorized by the Board of Directors
pursuant to this Operating Agreement in any job description created by

20.
<PAGE> 26

the Board of Directors. As of the effective date of this Operating Agreement,
Paul Gudelis shall be designated Technical Coordinating Producer and Tom Feuer
shall be designated Production Coordinating Producer, Mike Novelly shall be
designated Chief Financial Officer and Mike Novelly shall be designated
Secretary. At the time of his appointment and at all times during his service as
an officer of the Company, each officer must be an officer, director or employee
of a Member or the Company. In the event an officer shall cease to be an
officer, director or employee of a Member or the Company, such officer shall be
deemed to have resigned as an officer effective upon such cessation date.

6.2 TENURE AND DUTIES OF OFFICERS. All officers shall hold office at the
pleasure of the Board of Directors and until their successors shall have been
duly elected and qualified, unless sooner removed. Any officer may be removed at
any time by the Board of Directors, with or without Cause. Additionally, any
officer may be removed at any time by any two Directors for Cause. If the office
of any officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors; provided, however, that the appointment of the Production
Coordinating Producer shall be subject to the approval of a Supermajority of the
Directors.

(a) DUTIES OF THE GENERAL MANAGER. The General Manager (the
"General Manager") shall preside at all meetings of the Members, unless the
Board of Directors shall have appointed another person to so preside and such
person is present. The General Manager shall be the Chief Executive Officer of
the Company and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of the
Company. The General Manager shall perform other duties commonly incident to a
president of a Delaware corporation and shall also perform such other duties and
have such other powers as the Board of Directors shall designate from time to
time.

(b) DUTIES OF VICE PRESIDENTIAL LEVEL OFFICERS. The Technical
Coordinating Producer, Production Coordinating Producer and other officers
holding positions designated by the Board of Directors as being similar to the
position of vice president of a Delaware corporation (together, the "Senior
Officers"), in the order of their seniority, may assume and perform the duties
of the General Manager in the absence or disability of the General Manager or
whenever the office of General Manager is vacant. The Senior Officers shall
perform other duties commonly incident to a vice president of a Delaware
corporation and shall also perform such other duties and have such other powers
as the Board of Directors shall designate from time to time.

(c) DUTIES OF SECRETARY. The secretary (the "Secretary") shall
attend all meetings of the Members, and shall record all acts and proceedings
thereof in the minute book of the Company. The Secretary shall give notice in
conformity with this Operating Agreement of all meetings of the Members
requiring notice. The Secretary shall perform all other duties given him or her
in this Operating Agreement and other duties commonly incident to a secretary of
a Delaware corporation and shall also perform such other duties and have such
other powers as the Board of Directors shall designate from time to time. The
General Manager may direct any Assistant Secretary to assume and perform the
duties of the Secretary in the absence or disability of the Secretary, and each
Assistant Secretary shall perform other duties commonly incident to the office
of assistant secretary in a Delaware corporation and shall also perform such
other duties and have such other powers as the Board of Directors or the General
Manager shall designate from time to time.

21.
<PAGE> 27

(d) DUTIES OF CHIEF FINANCIAL OFFICER OR TREASURER. The chief
financial officer (the "Chief Financial Officer") or treasurer (the "Treasurer")
shall keep or cause to be kept the books of account of the Company in a thorough
and proper manner, and shall render statements of the financial affairs of the
Company in such form and as often as required by this Operating Agreement, the
Board of Directors or the General Manager. The Chief Financial Officer or
Treasurer, subject to the order of the Board of Directors, shall have the
custody of all funds and securities of the corporation. The Chief Financial
Officer or Treasurer shall perform other duties commonly incident to the office
of Chief Financial Officer or Treasurer in a Delaware corporation and shall also
perform such other duties and have such other powers as the Board of Directors
or the General Manager shall designate from time to time. The General Manager
may direct any Assistant Treasurer to assume and perform the duties of the Chief
Financial Officer or Treasurer in the absence or disability of the Chief
Financial Officer or Treasurer, and each Assistant Treasurer shall perform other
duties commonly incident to the office the Chief Financial Officer or Treasurer
of a Delaware corporation and shall also perform such other duties and have such
other powers as the Board of Directors or the General Manager shall designate
from time to time.

ARTICLE 7

RIGHTS AND OBLIGATIONS OF MEMBERS

7.1 LIMITATION OF LIABILITY. Each Member's liability shall be limited as
set forth in the Delaware Act and other applicable law. Except as otherwise
provided by the Delaware Act, the debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, shall be the debts,
obligations and liabilities solely of the Company, and the Members of the
Company shall not be obligated personally for any of such debts, obligations or
liabilities solely by reason of being a Member of the Company.

7.2 NATURE OF RIGHTS AND OBLIGATIONS. Except as otherwise expressly
provided herein, nothing contained in this Operating Agreement shall be deemed
to constitute a Member an agent or legal representative of the other Members. A
Member shall not have any authority to act for, or to assume any obligation or
responsibility on behalf of, any other Member or the Company.

7.3 MEMBER ACCESS TO RECORDS. Upon advance notice, each Member shall
have the right, during regular business hours, to inspect and copy the Company
documents set forth in Section 11.7 at the Member's expense.

7.4 CERTAIN ACTIONS REQUIRING SPECIAL APPROVAL. Notwithstanding any
other provision in this Operating Agreement to the contrary, the following shall
require the approval of Members holding a majority of the Class A Interests and
a majority of the Class B Interests:

(a) the merger (or any conversion of the Company from a limited
liability company to another type of entity), consolidation, liquidation or
dissolution of the Company;

(b) any Sale of the Company; and

22.
<PAGE> 28

7.5 OUTSIDE ACTIVITIES. Subject to the terms of the Master Venture
Agreement and Services Agreements, each Member and each Affiliate of each Member
shall be entitled to and may have business interests and engage in business
activities in addition to those relating to the Company, and may engage in the
ownership, operation and management of businesses and activities, for its own
account and for the account of others, and may own interests in the same
properties, as those in which the Company or the other Members own an interest,
without having or incurring obligation to offer any interest in such properties,
businesses or activities to the Company or any other Member, and no other
provision of this Operating Agreement shall be deemed to prohibit any such
Person from conducting such other businesses or activities. Subject to the terms
of the Master Venture Agreement and the Services Agreements, no provision of
this Operating Agreement shall be construed to preclude any Member or any of
their respective Affiliates from engaging in or possessing an interest in any
other business ventures of any nature or description, independently or with
others, whether presently existing or hereafter created, and neither the Company
nor any Member shall have any rights in or to such independent ventures or the
income or profits derived therefrom.

ARTICLE 8

CERTAIN MATTERS CONCERNING
MEMBERS, DIRECTORS AND EXECUTIVE OFFICERS

8.1 LIABILITY OF DIRECTORS AND OFFICERS; INDEMNIFICATION.

(a) No Director or Officer of the Company shall be liable, in
damages or otherwise, to the Company or any Member for any act or omission
performed or omitted to be performed by it in good faith pursuant to the
authority granted to such Director or officer of the Company by this Operating
Agreement or by the Delaware Act.

(b) To the fullest extent permitted by the laws of Delaware, the
Company shall indemnify and hold harmless each Member, Director and its
respective Affiliates, officers, directors, shareholders, members or partners
and each Officer of the Company (each, an "Indemnitee"), from and against any
and all losses, claims, demands, costs, damages, liabilities (joint or several),
expenses of any nature (including reasonable attorneys' fees and disbursements),
judgments, fines, settlements and other amounts ("Damages") arising from any and
all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which an Indemnitee may be involved, or
threatened to be involved, as a party or otherwise, arising out of or incidental
to the business of the Company, regardless of whether an Indemnitee continues to
be a Member, Director or an Affiliate, officer, director, shareholder, member or
partner of such Member or Director or an officer of the Company at the time any
such liability or expense is paid or incurred, except (i) for any Damages based
upon, arising from or in connection with any act or omission of an Indemnitee
committed without authority granted pursuant to this Operating Agreement or in
bad faith or otherwise constituting willful misconduct, (ii) Damages arising
from any obligation of such Indemnitee to indemnify any Person pursuant to the
Master Venture Agreement or Services Agreement or (iii) to the extent that all
Damages with respect to which the Company has provided indemnification hereunder
exceed [*], unless specifically approved by a Supermajority of the Directors.

(c) Expenses (including reasonable attorneys' fees and
disbursements) incurred in defending any claim, demand, action, suit or
proceeding, whether civil, criminal,

23.

[*] Confidential Treatment Requested.
<PAGE> 29

administrative or investigative, subject to Section 8.1(b) hereof, may be paid
(or caused to be paid) by the Company in advance of the final disposition of
such claim, demand, action, suit or proceeding upon receipt of an undertaking by
or on behalf of the Indemnitee to repay such amount if it shall ultimately be
determined, by a court of competent jurisdiction from which no further appeal
may be taken or the time for any appeal has lapsed (or otherwise, as the case
may be), that the Indemnitee is not entitled to be indemnified by the Company as
authorized hereunder or is not entitled to such expense reimbursement.

(d) The indemnification provided by Section 8.1(b) hereof shall
be in addition to any other rights to which an Indemnitee may be entitled under
any agreement properly approved by or vote properly taken by the Members or
Board of Directors (after taking into effect any related party nature of such
agreement or vote), as a matter of law or otherwise, both (i) as to action in
the Indemnitee's capacity as a Member, Director or as an Affiliate, officer,
director, shareholder, member or partner of a Member or Director or as an
Officer of the Company, and (ii) as to action in another capacity, and shall
continue as to an Indemnitee who has ceased to serve in such capacity and shall
inure to the benefit of the heirs, successors, assigns, administrators and
personal representatives of the Indemnitee.

(e) Any indemnification hereunder shall be satisfied only out of
the assets of the Company, and the Members shall not be subject to personal
liability by reason of these indemnification provisions.

(f) In order to facilitate meeting its obligations under this
Section 8.1, the Company may purchase and maintain a customary director and
officer insurance policy. The Company may purchase and maintain such other
insurance policies of a type maintained by companies in a similar business to
that of the Company, it being understood that it shall be reasonable to maintain
insurance providing at least $[*] in coverage and that companies in a similar
business to that of the Company may maintain, without limitation, director and
officer, commercial general liability, umbrella, workers' compensation, foreign
workers compensation and liability, satellite transmission, errors and omissions
and DICE (documentary, industrial, commercial and educational films).

(g) An Indemnitee shall not be denied indemnification in whole or
in part under this Section 8.1 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Operating Agreement.

(h) The provisions of this Section 8.1 are for the benefit of
each Indemnitee and its heirs, successors, assigns, administrators and personal
representatives, and shall not be deemed to create any rights for the benefit of
any other Persons.

8.2 OTHER MATTERS CONCERNING THE DIRECTORS AND OFFICERS OF THE COMPANY.

(a) Each Director and officer of the Company may rely on, and
shall be protected in acting or refraining from acting upon, any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document reasonably believed by it to
be genuine and to have been signed or presented by the proper party or parties.

[*] Confidential Treatment Requested

24.
<PAGE> 30

(b) For purposes of this Operating Agreement, each Director and
officer of the Company may consult with legal counsel, accountants, appraisers,
management consultants, investment bankers, other consultants and advisers
selected by it and any written advice or written opinion of any such Person as
to matters which such Director and Officer of the Company reasonably believes to
be within such Person's professional or expert competence, and any act or
omission, if done or omitted to be done in good faith reliance upon any such
advice or opinion, will be conclusively presumed not to constitute fraud, gross
negligence or willful or wanton misconduct.

ARTICLE 9

MEETINGS OF MEMBERS

9.1 ANNUAL AND SPECIAL MEETINGS. Meetings of the Members shall be held
at such date and time as the Board of Directors may fix from time to time.
Additionally, unless otherwise prescribed by statute, a special meeting may be
called by any Member or Members holding at least a majority of the Class A
Interests or a majority of the Class B Interests. No annual or regular meetings
of Members are required.

9.2 PLACE OF MEETINGS. The Board of Directors may designate any place,
either within or outside the State of Delaware, as the place of meeting for any
meeting of the Members; provided however that if a special meeting is called by
the holders of a majority of the Class A Interests, the meeting shall be held in
New York, New York and if a special meeting is called by the holders of the
Class B Interests, the meeting shall be held in San Francisco, California. If no
designation is made by the Board of Directors or pre-determined pursuant to this
Section 9.2, the place of meeting shall be the principal executive office of the
Company.

9.3 NOTICE OF MEETINGS. Except as provided in Section 9.6, written
notice stating the place, day and hour of the meeting and the purpose or
purposes for which the meeting is called shall be delivered not less than thirty
(30) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the Board of Directors or
person calling the meeting, to each Member entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered as provided in Section 16.1.

9.4 MEETING OF ALL MEMBERS. If all of the Members shall meet at any time
and place, either within or outside of the State of Delaware, and consent to the
holding of a meeting at such time and place, such meeting shall be valid without
call or notice, and at such meeting lawful action may be taken.

9.5 RECORD DATE. For the purpose of determining Members entitled to
notice of or to vote at any meeting of Members or any adjournment thereof, or
Members entitled to receive payment of any distribution, or in order to make a
determination of Members for any other purpose, the date on which notice of the
meeting is mailed or the date on which the resolution declaring such
distribution is adopted, as the case may be, shall be the record date for such
determination of Members. When a determination of Members entitled to vote at
any meeting of Members has been made as provided in this Section 9.5, such
determination shall apply to any adjournment thereof.

25.
<PAGE> 31

9.6 QUORUM. Members holding a majority of the Class A Interests and a
majority of the Class B Interests, present in person or represented by proxy,
shall constitute a quorum at any meeting of Members. Notwithstanding the
foregoing, if the action to be taken by the Members is to be taken only by one
class of Members (such as the election of a Class A Director), Members holding a
majority of the Interests represented by such class shall constitute a quorum.
In the absence of a quorum at any such meeting, Members holding a majority of
the Interests so represented may adjourn the meeting from time to time for a
period not to exceed sixty (60) days without further notice. However, if the
adjournment is for more than sixty (60) 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 Member of record entitled to vote at the meeting.
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 noticed. The Members present at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the withdrawal during
such meeting of Members holding Interests whose absence would cause less than a
quorum.

9.7 MANNER OF ACTING. If a quorum is present, the affirmative vote of
Members entitled to vote holding a majority of the Class A Interests and a
majority of the Class B Interests shall be the act of the Members, unless the
vote of a greater or lesser proportion or number is otherwise required by the
Delaware Act, by the Certificate of Formation or by this Operating Agreement.

9.8 PROXIES. At all meetings of Members, a Member may vote in person or
by proxy executed in writing by the Member or by a duly authorized
attorney-in-fact. Such proxy shall be filed with the Board of Directors of the
Company before or at the time of the meeting. No proxy shall be valid after
eleven (11) months from the date of its execution, unless otherwise provided in
the proxy.

9.9 ACTION BY MEMBERS WITHOUT A MEETING. Action required or permitted to
be taken at a meeting of Members may be taken without a meeting if the action is
evidenced by one (1) or more written consents describing the action taken,
signed and delivered to the Board of Directors within sixty (60) days of the
record date for that action, by Members having not less than the minimum number
of votes that would be necessary to authorize or take that action at a meeting
at which all Members entitled to vote on that action were present and voted. All
such consents shall be delivered to the Board of Directors of the Company for
inclusion in the minutes or for filing with the Company records. Action taken
under this Section 9.9 is effective when the number of consents required to
authorize the proposed action shall have been received by the Board of
Directors, unless the consent specifies a different effective date. Any Member
giving a written consent may revoke the consent by a writing received by the
Board of Directors before written consents representing the number of votes
required to authorize the proposed action have been received by the Board of
Directors. The record date for determining Members entitled to take action
without a meeting shall be the date the first Member signs a written consent.

9.10 WAIVER OF NOTICE. When any notice is required to be given to any
Member, a waiver thereof in writing signed by the person entitled to such
notice, whether before, at or after the time stated therein, shall be equivalent
to the giving of such notice.

ARTICLE 10

26.
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CONTRIBUTIONS TO THE COMPANY,
CAPITAL UNITS AND CAPITAL ACCOUNTS

10.1 CAPITAL CONTRIBUTIONS. Concurrently with the execution and delivery
of this Operating Agreement, Quokka made an Initial Capital Contribution to the
Company in the amount as shown on Schedule A hereto, in exchange for the number
of Class A Units held by Quokka as shown on Schedule A. As reflected on Schedule
A, NBC made [*] in exchange for the number of Class B Units held by NBC as shown
on Schedule A.

10.2 UNITS. Each Member's interest in the Company shall be represented
by Units of membership interest, denoted "Class A" or "Class B" as set forth on
Schedule A. Concurrently with the execution and delivery of this Operating
Agreement, the Initial Members received the number and type of Units set forth
on Schedule A.

10.3 CAPITAL ACCOUNTS.

(a) A separate Capital Account will be maintained for each
Member.

(1) To each Member's Capital Account there shall be
credited (a) such Member's Capital Contributions, (b) such Member's distributive
share of Net Profits and any items in the nature of income or gain which are
specially allocated pursuant to Section 11.2 hereof, and (c) the amount of any
Company liabilities assumed by such Member or which are secured by any Property
distributed to such Member.

(2) To each Member's Capital Account there shall be
debited (a) the amount of money and the Adjusted Asset Value of any Company
asset distributed to such Member pursuant to any provision of this Operating
Agreement, (b) such Member's distributive share of Net Losses and any items in
the nature of expenses or losses which are specially allocated pursuant to
Section 11.2 hereof, and (c) the amount of any liabilities of such Member
assumed by the Company or which are secured by any property contributed by such
Member to the Company.

(b) In the event of a permitted assignment, sale or exchange of
all or part of a Member's interest in the Company, the Capital Account of the
transferor shall become the Capital Account of the transferee to the extent it
relates to the transferred interest.

(c) The manner in which Capital Accounts are to be maintained
pursuant to this Section 10.3 is intended, and shall be construed and applied so
as, to comply with the requirements of Code Section 704(b) and the Treasury
Regulations promulgated thereunder.

10.4 WITHDRAWAL OR REDUCTION OF MEMBERS, CONTRIBUTIONS TO CAPITAL.

(a) A Member shall not receive out of the Company's property any
part of its contributions to capital until all liabilities of the Company,
except liabilities to Members on account of their contributions to capital, have
been paid or there remains property of the Company sufficient to pay them.

[*] Confidential Treatment Requested

27.
<PAGE> 33

(b) A Member shall not be entitled to demand or receive from the
Company the liquidation of his interest in the Company until the Company is
dissolved in accordance with the provisions hereof and other applicable
provisions of the Delaware Act.

10.5 UNIT CERTIFICATES. The Company shall issue certificates evidencing
the Units issued by the Company. Such certificates shall indicate whether the
Units represented thereby are Class A Units or Class B Units and shall (in
addition to any legend required under applicable state securities laws) bear the
following legends:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED.

THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
HOLDER HEREOF OR ITS PREDECESSOR IN INTEREST. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE COMPANY.

ARTICLE 11

ALLOCATIONS, INCOME TAX, ELECTIONS AND REPORTS

11.1 ALLOCATION OF PROFITS AND LOSSES FROM OPERATIONS.

(a) ALLOCATION OF NET PROFITS. The Net Profits of the Company for
each Accounting Period shall be allocated among the Members as follows:

(i) First, to all Class A Members in proportion to their
respective Class A Interests until the Capital Accounts of the Class A Members
are equal to the Excess Capital Contributions of the Class A Members less all
distributions to the Class A Members;

(ii) Second, to all Members in proportion to their
respective Interests.

(b) ALLOCATION OF NET LOSSES. The Net Losses of the Company for
each Accounting Period shall be allocated among the Members as follows:

(i) First, to all Members to the extent of and in
proportion to the Net Profits previously allocated to them pursuant to Section
11.1(a)(ii);

(ii) Second, to all Class A Members in proportion to
their respective Class A Interests until there have been allocated Net Losses
under this Section 11.1(b)(ii) in an amount equal to the Excess Capital
Contribution of the Class A Members;

(iii) Third, to all Class A Members in proportion to
their respective Class A Interests until there have been allocated Net Losses
under this Section 11.1(b)(iii) in an

28.
<PAGE> 34

amount equal to the Capital Contribution of the Class A Members less the Excess
Capital Contribution of the Class A Members;

(iv) Fourth, to all Members in proportion to their
respective Interests.

11.2 SPECIAL ALLOCATIONS. Notwithstanding Section 11.1,

(a) INTEREST INCOME. All Interest Income earned on Capital
Contributions made by the Class A Members (until such Capital Contributions have
either been distributed or utilized to fund the Company's operations) shall be
allocated solely to the Class A Members pro rata in proportion to their
respective Class A Interests.

(b) QUOKKA WARRANTS. The parties agree that, for federal and
state tax purposes, NBC shall be treated as having received ownership of the
Quokka Warrants on the date of grant of the Quokka Warrants to the Company.
Therefore, any profits or losses (including the initial value of the Quokka
Warrants upon receipt by the Company) realized on the receipt by the Company of
or a taxable disposition (including exercise) of, an adjustment of the Adjusted
Asset Values of, or a distribution in kind of the Quokka Warrants or any
securities issued upon exercise thereof (including, without limitation, the
Warrant Shares) shall be allocated solely to NBC. Any transfer taxes or other
costs or expenses (other than applicable income taxes) arising from any
distribution to NBC of the Quokka Warrants shall be borne as set forth in the
Quokka Warrants.

(c) EQUITABLE CLAIM REGARDING CONTENT. Any costs or expenses
connected to any Equitable Claim Regarding Content subject to the direction and
control of the Class B Directors in accordance with Section 5.7(c) shall be
allocated solely to the Class Members in proportion to their respective Class B
Interests. Any profits received by the Company from a final judgment in
connection with, or final settlement of, an Equitable Claim Regarding Content
shall first be allocated to the Class B Members in proportion to their
respective Class B Interests until there have been allocated profits under this
Section 11.2(c) in the current Accounting Period and all prior Accounting
Periods in an amount equal to the costs or expenses previously allocated to the
Class B Members under this Section 11.2.

(d) SUBSTANTIAL ECONOMIC EFFECT. The Members agree that they
shall take such other actions and make such other allocations as are necessary
to ensure that the allocations described in this Article 11 have substantial
economic effect within the meaning of Regulations Section 1.704-1(b)(2).

(e) QUALIFIED INCOME OFFSET. In the event any Member unexpectedly
receives any adjustments, allocations or distributions described in Section
1.704-l(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations, items of
Company income and gain shall be specially allocated to each such Member in an
amount and manner sufficient to eliminate, to the extent required by the
Treasury Regulations, the deficit balance of the Capital Account of such Member
as quickly as possible, provided that an allocation pursuant to this Section
11.2(c) shall only be made if and to the extent such Member would have a deficit
balance in its Capital Account after all other allocations provided for in
Section 11.1 and Section 11.2 have been made as if this Section 11.2(c) were not
in this Operating Agreement.

(f) SECTION 754 ELECTION. At the request of any Member (or
Members) holding not less than twenty-five percent (25%) of the Interests, the
Company shall elect,

29.
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pursuant to Section 754 of the Code, to adjust the basis of the Company assets
as permitted and provided in Sections 734 and 743 of the Code, in which case
Capital Accounts shall be maintained and allocations shall be made in accordance
with Regulations Section 1.704-1(b)(2)(iv)(m).

(g) TAX ALLOCATIONS. Except as otherwise permitted in this
Agreement, the Company's ordinary income and losses, and capital gains income
and losses, as determined for federal income tax purposes (and each item of
income, gain, loss or deduction entering into the computation thereof) shall be
allocated to the Members in the same proportion as the corresponding items are
allocated for Capital Account maintenance purposes. Notwithstanding the
foregoing, federal income tax items relating to assets that have an Adjusted
Asset Value that is not equal to their tax basis shall be allocated in
accordance with Section 704(c) of the Code, and the Company shall adopt the
traditional method under Section 704(c) for purposes of such allocation.

11.3 DISTRIBUTIONS.

(a) MANDATORY DISTRIBUTIONS.

(i) Subject to applicable law and any limitations
contained elsewhere in this Operating Agreement and provided that the Company is
being taxed as a partnership, the Board of Directors shall distribute cash to
the Members in an amount equal to the product of (i) the Tax Percentage and (ii)
the Company's taxable income for such Fiscal Year determined in accordance with
Section 703(a) of the Code as reflected on the Schedule K-1's in respect of each
Unit. For purposes hereof, "Tax Percentage" shall mean initially forty percent
(40%) and shall be adjusted from time to time by the Board of Directors in
response to changes in the tax rates applicable to corporations under the Code
and under the state income tax laws of the State of California and the State of
New York and in response to any other factors which cause the distributions
under this Section 11.3(a) to be less than a Member's tax liability in respect
of each Unit.

(ii) In the event of a Reduced Activity Period, the
Board of Directors shall establish reasonable reserves for purposes of
satisfaction of all liabilities and obligations of the Company (other than those
to Members on account of their Capital Contributions) and shall distribute the
remaining cash of the Company (x) first, to the Class A Members pro rata in
proportion to their Class A Interests on the record date of such distribution
until the Class A Members shall have received total distributions pursuant to
this Article 11 in an amount equal to the Excess Capital Contribution of the
Class A Members and (y) second, to the Members pro rata in proportion to their
respective Interests on the record date of such distribution.

(b) DISTRIBUTIONS OF FUNDS FROM OPERATIONS. Subject to applicable
law and any limitations contained elsewhere in this Operating Agreement
(including, without limitation, Section 5.6), the Board of Directors may elect
from time to time to distribute Funds From Operations (x) first, to the Class A
Members pro rata in proportion to their Class A Interests on the record date of
such distribution until the Class A Members shall have received total
distributions pursuant to this Article 11 in an amount equal to the Excess
Capital Contribution of the Class A Members and (y) second, to the Members pro
rata in proportion to their respective Interests on the record date of such
distribution.

30.
<PAGE> 36

(c) DISTRIBUTIONS RELATING TO THE QUOKKA WARRANTS. The Class B
Directors may elect from time to time to distribute the Quokka Warrants, the
Warrant Shares, any other securities or other rights with respect to the
Warrants or the Warrant Shares or any cash obtained by any sale of the Warrant
Shares to NBC, subject to the terms of the Quokka Warrants. The Class B
Directors acknowledge and agree that the Quokka Warrants and Warrant Shares may
not be distributed in kind prior to the earlier of (i) the initial public
offering of equity securities of Quokka; (ii) three (3) years from the initial
issuance of the Quokka Warrants; and (iii) the dissolution of the Company. The
Class B Directors further acknowledge the additional restrictions set forth in
Section 5.4(b) in the event of any transfer of the Class B Units.

(d) DISTRIBUTIONS OF FUNDS FROM A SALE OF THE COMPANY. Subject to
applicable law and any limitations contained elsewhere in this Operating
Agreement, the Board of Directors may elect from time to time to distribute
Funds From a Sale of the Company to the Members. Any distribution of Funds From
a Sale of the Company made under this Section 11.3(d) shall be made (x) first,
to the Class A Members pro rata in proportion to their Class A Interests on the
record date of such distribution until the Class A Members shall have received
total distributions pursuant to this Article 11 in an amount equal to the Excess
Capital Contribution of the Class A Members and (y) second, to the Members pro
rata in proportion to their respective Interests on the record date of such
distribution.

(e) DISTRIBUTIONS UPON DISSOLUTION OF THE COMPANY. Upon
dissolution of the Company, after satisfaction of the liabilities of the Company
in accordance with Section 14.3(a), the remaining assets of the Company shall be
distributed to the Members pro rata in proportion to their respective Capital
Account balances; provided, however, that any securities or other property
issued upon exercise of the Quokka Warrants shall be distributed to NBC and that
such distribution shall be reflected in the Capital Account balances of NBC
prior to making or determining the amount of any other distribution pursuant to
this Section 11.3(e).

(f) OTHER DISTRIBUTIONS. All other distributions of cash or other
property shall be made (x) first, to the Class A Members in proportion to their
Class A Interests on the record date of such distribution until the Class A
Members shall have received total distributions pursuant to this Article 11 in
an amount equal to the Excess Capital Contribution of the Class A Members and
(y) second, to the Members in proportion to their respective Interests on the
record date of such distribution.

(g) TAX WITHHOLDING. The Company shall comply with withholding
requirements under federal, state and local law and shall remit amounts withheld
to, and file required forms with, the applicable jurisdictions. To the extent
the Company is required to withhold and pay over any amounts to any authority
with respect to distributions or allocations to any Member, the amount withheld
shall be treated as a distribution in the amount of the withholding to that
Member. If the amount of withholding tax paid by the Company was not withheld
from actual distributions, the Company may, at its option, (i) require the
Member to promptly reimburse the Company for such withholding or (ii) reduce any
subsequent distributions by the amount of such withholding. Each Member agrees
to furnish the Company with any representations and forms as shall reasonably be
requested by the Company to assist it in minimizing or eliminating and in
determining the extent of, and in fulfilling, its withholding obligations.

11.4 LIMITATION UPON DISTRIBUTIONS.

31.
<PAGE> 37

(a) No distribution shall be declared and paid to a Member in
violation of the Delaware Act.

(b) A Member who receives a distribution in violation of the
Delaware Act, and who knew at the time of the distribution that the distribution
violated the Delaware Act, shall be liable to the Company for the amount of the
distribution. A Member who receives a distribution in violation of the Delaware
Act, and who did not know at the time of the distribution that such distribution
violated the Delaware Act and shall have made a good faith effort to return as
much as possible of the improper distribution shall not be liable for the amount
of the distribution.

(c) A Member who receives a distribution from the Company shall
have no liability under the Delaware Act or other applicable law for the amount
of the distribution after the expiration of three (3) years from the date of the
distribution unless an action to recover the distribution from such Member is
commenced prior to the expiration of the said three (3) year period and an
adjudication of liability against such Member is made in the said action.

11.5 ACCOUNTING PRINCIPLES. The profits and losses of the Company shall
be determined in accordance with United States generally accepted accounting
principles applied on a consistent basis under the accrual method of accounting.

11.6 INTEREST ON AND RETURN OF CAPITAL CONTRIBUTIONS. No Member shall be
entitled to interest on its Capital Contribution or to return of its Capital
Contribution. In addition, no Member shall have the right to withdraw any
portion of such member's Capital Account. No Member shall be personally liable
to any other Member for the return of any Capital Contributions (or any
additions thereto), it being agreed that any distribution as may be made from
time to time shall be made solely from the assets of the Company and only in
accordance with the terms of this Operating Agreement.

11.7 RECORDS AND REPORTS. At the expense of the Company, the Directors
shall maintain records and accounts of all operations and expenditures of the
Company for a period of five (5) years from the end of the Fiscal Year during
which the last entry was made on such record, the first two (2) years in the
principal office of the Company. At a minimum the Company shall keep the
following records:

(a) A current list of the full name and last known business
address of each Director and each Member;

(b) A copy of the Certificate of Formation and all amendments
thereto, together with executed copies of any written powers of attorney
pursuant to which the Operating Agreement and any certificate and all amendments
thereto have been executed;

(c) Copies of the Company's federal, foreign, state and local
income tax returns and reports, if any, for all years of the Company's
existence, except for those years for which all applicable statures of
limitation, as they may apply to any Member, may have run;

(d) Copies of the Operating Agreement and all amendments thereto;

32.
<PAGE> 38

(e) True and full information regarding the status of the
business and financial condition of the Company, including financial statements
of the Company for the five (5) most recent years;

(f) Information regarding expenses incurred by a Member and
reimbursed by the Company; and

(g) True and full information regarding the amount of cash and a
description and statement of the agreed value of any other property or services
contributed by each Member and which each Member has agreed to contribute in the
future, and the date on which each became a Member.

11.8 RETURNS AND OTHER ELECTIONS. The Company shall be treated as a
partnership for federal income tax purposes and, to the extent possible, state
and local income tax purposes. The Board of Directors shall cause the
preparation and timely filing of all tax returns required to be filed by the
Company pursuant to the Code and all other tax returns deemed necessary and
required in each jurisdiction in which the Company does business. Copies of such
returns, or pertinent information therefrom, shall be furnished to the Members
within a reasonable time after the end of the Company's Fiscal Year. All
elections permitted to be made by the Company under federal or state laws shall
be made by the Board of Directors in its discretion.

11.9 TAX MATTERS PARTNER. Quokka is hereby designated the "tax matters
partner" of Company for purposes of Chapter 63 of the Code and the Treasury
Regulations thereunder. During any Company income tax audit or other income tax
controversy with any governmental agency, the tax matters partner shall keep the
Members informed of all material facts and developments on a timely basis, shall
provide each Member with a copy of each of the Company's tax filings at least
thirty (30) days prior to the filing thereof and shall consult with the Members
upon the request of any Member. The tax matters partner shall not be authorized
to enter into any settlement, agreement or arrangement which binds the Members
or the Company or take any other action with respect to taxes which could
adversely impact any of the Members without the advance consent of such Members
which consent may not be unreasonably withheld. The tax matters partner may be
changed by the Board of Directors.

ARTICLE 12

TRANSFERABILITY

12.1 RESTRICTIONS ON TRANSFERABILITY.

(a) No Member shall sell, assign, pledge, mortgage, or otherwise
encumber, dispose of or transfer its interest in the Company without the prior
approval of a Supermajority of the Directors.

(i) Notwithstanding the foregoing, a Member shall be
entitled to effect a Permitted Pledge, provided that any pledgee of an Interest
shall, in the event of foreclosure, hold such Interest subject to the
restrictions of this Operating Agreement, including the provisions of this
Article 12.

(ii) Furthermore, notwithstanding the foregoing, NBC
shall be entitled to transfer its Interests in the Company to any Affiliate
which assumes NBC's obligations under

33.
<PAGE> 39
the Master Venture Agreement and NBC Rights and Services Agreement and which
assumes NBC's obligations, and is the permitted transferee of NBC's rights with
respect to the IOC (as such term is defined in the Master Venture Agreement).
Furthermore, notwithstanding the foregoing, NBC shall be entitled to transfer up
to [*] of the Class B Interests originally issued to NBC to [*], or any
combination thereof. Furthermore, notwithstanding the foregoing, NBC shall be
entitled to transfer to [*] up to [*] of NBC's economic interest in the Class B
Interests excluding the Quokka Warrants (the effect of any transfer of an
economic interest being that the transferee shall be only an assignee of NBC's
rights to allocations and distributions with respect to the Class B Interests
subject to such transfer of economic interest but shall not become a Member and
shall have no voting rights or other rights of a Member, which non-economic
rights shall be retained by NBC). Notwithstanding any provision in this
Operating Agreement to the contrary, in the event of any transfer of Class B
Interests or any transfer of economic interest with respect to Class B
Interests, any allocations or distributions made pursuant to this Operating
Agreement with respect to the Quokka Warrants shall remain with NBC and shall
not be transferred to such transferee (and shall not be reflected in the Capital
Account of any such transferee).

(b) In addition to other restrictions on transfer contained
herein, each Member agrees that it will not make any disposition of all or any
part of its interest in the Company which will result in the violation by it or
by the Company of the Securities Act of 1933 or any other applicable securities
laws.

12.2 NO EFFECT TO TRANSFERS IN VIOLATION OF OPERATING AGREEMENT. Any
purported transfer in violation of this Article 12 shall be null and void and
the purported transferee shall become neither a Member nor a holder of any
interest in the Company whatsoever.

ARTICLE 13

ADDITIONAL AND SUBSTITUTE MEMBERS

13.1 ADMISSION OF ADDITIONAL MEMBERS AND SUBSTITUTE MEMBERS.

(a) From the date of the formation of the Company, any Person
acceptable to the Board of Directors may, subject to the terms and conditions of
this Operating Agreement and with the approval of a Supermajority of the
Directors, become an Additional Member of the Company by the purchase of new
Units for such consideration as a Supermajority of the Directors shall determine
in accordance with the terms of this Operating Agreement. Except as set forth in
this Section 13.1(a), the Company shall not admit or agree to admit any
Additional Member in connection with the issuance of any additional Units or
other equity interests in the Company, including without limitation, any options
or warrants.

(b) Prior to recognizing any assignment of a Member's Interest
that has been transferred in accordance with this Operating Agreement, the Board
of Directors will require the transferring Member to execute and acknowledge a
written instrument of assignment in form and substance satisfactory to the Board
of Directors, and will require the assignee to execute an agreement to be bound
by all of the terms and provisions of this Operating Agreement. The

[*] Confidential Treatment Requested.

34.
<PAGE> 40

assignee (except any assignee of economic interests only) will become a
Substitute Member upon satisfaction of the requirements of Article 12 and this
Section 13.1. Unless otherwise approved by a Supermajority of the Directors, a
transfer shall be deemed effective as of the last day of the calendar month in
which such transfer is effected.

13.2 ALLOCATIONS TO ADDITIONAL MEMBERS AND SUBSTITUTE MEMBERS. No
Additional or Substitute Member shall be entitled to any retroactive allocation
of losses, income or expense deductions incurred by the Company. The Net Profits
and Net Losses of the Company for each Accounting Period shall be allocated
among the Members in proportion to their respective Interests, with the
Accounting Period being subject to adjustment pursuant to Section 1.1(a) upon
the addition of an Additional or Substitute Member.

13.3 EFFECT OF TRANSFER. The transfer of a Member's Interest or any part
thereof and the admission of a Substituted Member in accordance with the
provisions of this Operating Agreement will not be cause for dissolution of the
Company.

ARTICLE 14

DISSOLUTION AND TERMINATION

14.1 DISSOLUTION. The Company shall be dissolved upon the occurrence of
any of the following events (a "Dissolution Event"):

(a) the unanimous written agreement of all Members;

(b) upon or following the Class B Trigger Date, upon the written
request of Class A Members holding a majority of the Class A Interests;

(c) upon or following the Class A Trigger Date, upon the written
request of Class B Members holding a majority of the Class B Interests;

(d) upon a Mutual Termination Event;

(e) the entry of a decree of judicial dissolution under Section
18-802 of the Delaware Act; and

(f) the Bankruptcy of the Company, Quokka or NBC.

14.2 EFFECT OF FILING OF CERTIFICATE OF CANCELLATION. The Company shall
cease to carry on its business, except insofar as may be necessary for the
winding up of its business, upon the occurrence of a final dissolution event,
but its separate existence shall continue until a Certificate of Cancellation
has been filed with the Secretary of State or until a decree dissolving the
Company has been entered by a court of competent jurisdiction.

14.3 DISTRIBUTION OF ASSETS UPON DISSOLUTION. In settling accounts after
dissolution, the liabilities of the Company shall be entitled to payment in the
following order:

(a) those to creditors, in the order of priority as provided by
law in satisfaction of all liabilities and obligations of the Company whether by
payment or the establishment of

35.
<PAGE> 41

reasonable reserves therefor, except those to Members of the Company on account
of their Capital Contributions;

(b) those to Members of the Company in accordance with Section
11.3(e).

14.4 WINDING UP. Except as provided by law, upon dissolution, each
Member shall look solely to the assets of the Company for the return of its
Capital Contribution. If the Company Property remaining after the payment or
discharge of the debts and liabilities of the Company is insufficient to return
the Capital Contribution of each Member, such Member shall have no recourse
against any other Member. The winding up of the affairs of the Company and the
distribution of its assets shall be conducted exclusively by the Board of
Directors, who subject to the terms of this Operating Agreement (including,
without limitation, applicable requirements that the Board of Directors act by a
Supermajority of the Directors), are hereby authorized to take all actions
necessary to accomplish such distribution, including without limitation, selling
any Company assets the Board of Directors deems necessary or appropriate to
sell.

14.5 FILING OF CERTIFICATE OF CANCELLATION.

(a) When all debts, liabilities and obligations have been paid
and discharged or adequate provisions have been made therefor and all of the
remaining property and assets have been distributed to the Members, a
Certificate of Cancellation shall be executed in duplicate and verified by the
person signing the certificate, which certificate shall set forth the
information required by the Delaware Act. Duplicate originals of such
Certificate of Cancellation shall be delivered to the Delaware Secretary of
State.

(b) Upon the acceptance of the Certificate of Cancellation, the
existence of the Company shall cease, except for the purpose of suits, other
proceedings and appropriate action as provided in the Delaware Act. The Board of
Directors shall thereafter be trustees for the Members and creditors of the
Company and, subject to the terms of this Operating Agreement (including,
without limitation, applicable requirements that the Board of Directors act by a
Supermajority of the Directors), as such shall have authority to distribute any
Company property discovered after dissolution, convey real estate and take such
other action as may be necessary on behalf of and in the name of the Company.

ARTICLE 15

MERGER OR CONSOLIDATION

15.1 MERGER OR CONSOLIDATION. The Company may, upon the approval of the
Board of Directors and a vote of the Members of the Company holding a majority
of the Class A Interests and a majority of the Class B Interests, merge or
consolidate pursuant to an agreement of merger or consolidation with or into one
or more entities formed or organized under the laws of the State of Delaware or
any other state of the United States or any foreign country or other foreign
jurisdiction, with such entity as the agreement shall provide being the
surviving or resulting entity.

15.2 VOTE RELATING TO MERGER OR CONSOLIDATION. A merger or consolidation
by the Company and any other entity shall be approved by the Board of Directors
in accordance with

36.
<PAGE> 42

the provisions of Section 5.6 and by the Members holding a majority of the Class
A Interests and a majority of the Class B Interests.

15.3 EXCHANGE RELATING TO MERGER OR CONSOLIDATION. Rights or securities
of, or interests in, the Company or other entity that is a constituent party to
the merger or consolidation may be exchanged for or converted into cash,
property, rights or securities of, or interests in, the surviving or resulting
entity or, in addition to or in lieu thereof, may be exchanged for or converted
into cash, property, rights or securities of, or interests in, an entity which
is not the surviving or resulting entity in the merger or consolidation.

15.4 FILING AND EFFECT OF CERTIFICATE OF MERGER OR CONSOLIDATION. If the
Company enters into an agreement of merger or consolidation, the surviving
entity shall file a Certificate of Merger or Consolidation in the Office of the
Secretary of State of the State of Delaware containing the information required
by Section 18-209(c) of the Delaware Act. Unless a future date is provided for
in such Certificate of Merger or Consolidation, the effective date shall be the
date of filing with the Secretary of State of the State of Delaware. Such
Certificate of Merger or Consolidation shall act as a Certificate of
Cancellation for the Company if it is not the surviving or resulting entity in
the merger or consolidation.

15.5 AMENDMENT OF OLD OR ADOPTION OF NEW OPERATING AGREEMENT. An
agreement of merger or consolidation approved in accordance with Section 15.2
may effect any amendment to the Company's Operating Agreement or effect the
adoption of a new Operating Agreement for the Company or the surviving entity,
as the case may be. Any amendment of the Operating Agreement or adoption of a
new Operating Agreement shall be effective at the effective time or date of the
merger or consolidation.

15.6 ASSUMPTION OF ASSETS AND LIABILITIES. When any merger or
consolidation shall have become effective under this Article 15, for all
purposes of the laws of the State of Delaware, all of the rights, privileges and
powers of the Company and each of the other entities that have merged or
consolidated, and all property, real, personal and mixed, and all debts due or
incurred to or by any of the constituent parties, as well as all other things
and causes of action belonging to each of such parties to the merger or
consolidation, shall be vested in the surviving or resulting entity, and shall
thereafter be the property or obligation of the surviving or resulting entity,
and the title to any real property vested by deed or otherwise shall not revert
or be in any way impaired.

ARTICLE 16

MISCELLANEOUS PROVISIONS

16.1 NOTICES. Any notice, demand or communication required or permitted
to be given by any provision of this Operating Agreement shall be in writing and
shall be deemed effectively given: (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient; if not, then on the next business day, (iii)
five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, (iv) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt, or (v) if earlier, upon receipt. All
communications shall be delivered to a Director, a Member or the Company, as
appropriate, to such Director's, such Member's or the Company's address or
facsimile number as

37.
<PAGE> 43

such appears in the Company's records as of the date hereof or to such other
address or facsimile number as such Member, such Director or the Company may
designate by ten (10) days advance written notice to the other parties hereto.

16.2 APPLICATION OF DELAWARE LAW. This Operating Agreement, and the
application and interpretation hereof, shall be governed exclusively by its
terms and by the laws of the State of Delaware (without giving effect to
principles of conflicts of laws).

16.3 WAIVER OF ACTION FOR PARTITION. Each Member irrevocably waives
during the term of the Company any right that it may have to maintain any action
for partition with respect to the property of the Company.

16.4 AMENDMENTS. Any amendment to this Operating Agreement may be
proposed to the Members by Members holding at least a majority of the Class A
Interests or a majority of the Class B Interests. A vote on an amendment to this
Operating Agreement shall be taken within sixty (60) days after notice thereof
has been given to the Members unless such period is otherwise extended by
applicable laws, regulations, or agreement of the Members. A proposed amendment
shall become effective at such time as it has been approved by Members holding a
majority of the Class B Interests and a majority of the Class A Interests.

16.5 EXECUTION OF ADDITIONAL INSTRUMENTS. Each Member hereby agrees to
execute such other and further statements of interest and holdings,
designations, powers of attorney and other instruments necessary to comply with
any laws, rules or regulations.

16.6 CONSTRUCTION. Whenever the singular number is used in this
Operating Agreement and when required by the context, the same shall include the
plural, and the masculine gender shall include the feminine and neuter genders
and vice versa. This Operating Agreement is prepared and executed in the English
language only and any translation of this Operating Agreement into any other
language shall have no effect.

16.7 HEADINGS. The headings in this Operating Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define, or
limit the scope, extent or intent of this Operating Agreement or any provision
hereof.

16.8 WAIVERS. The failure of any party to seek redress for violation of
or to insist upon the strict performance of any covenant or condition of this
Operating Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.

16.9 RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies provided by
this Operating Agreement are cumulative, and the use of any one right or remedy
by any party shall not preclude or waive the right to use any or all other
remedies. Such rights and remedies are given in addition to any other rights the
parties may have by law, statute, ordinance or otherwise.

16.10 SEVERABILITY. If any provision of this Operating Agreement or the
application thereof to any person or circumstance shall be invalid, illegal or
unenforceable to any extent, the remainder of this Operating Agreement and the
application thereof shall not be affected and shall be enforceable to the
fullest extent permitted by law.

38.
<PAGE> 44

16.11 HEIRS, SUCCESSORS AND ASSIGNS. Each and all of the covenants,
terms, provisions and agreements herein contained shall be binding upon and
inure to the benefit of the parties hereto and, to the extent permitted by this
Operating Agreement, their respective heirs, legal representatives, successors
and assigns.

16.12 CREDITORS. None of the provisions of this Operating Agreement
shall be for the benefit of or enforceable by any creditor of the Company.

16.13 COUNTERPARTS. This Operating Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.

16.14 NO THIRD PARTY BENEFICIARIES. It is understood and agreed among
the parties that this Operating Agreement and the covenants made herein are made
expressly and solely for the benefit of the parties hereto, and that no other
Person, other than an Indemnitee under Article 8 hereof (but only in respect of
the rights under such Article 8), shall be entitled or be deemed to be entitled
to any benefits or rights hereunder, nor be authorized or entitled to enforce
any rights, claims or remedies hereunder or by reason hereof.

[INTENTIONALLY BLANK]

39.
<PAGE> 45

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

QUOKKA SPORTS, INC.

By: /s/ Les Schmidt
-----------------------------
Name: Les Schmidt
Title: Senior Vice President
and Chief Financial Officer

NBC OLYMPICS, INC.

By: /s/ Randel Falco
-----------------------------
Name: Randel Falco
Title: President

40.
<PAGE> 46

SCHEDULE A

INITIAL CAPITAL CONTRIBUTION

INITIAL CAPITAL NUMBER AND TYPE OF UNITS
NAME AND ADDRESS OF MEMBER CONTRIBUTION OF MEMBERSHIP

<S> <C> <C>
Quokka Sports, Inc. [*] [*]
Ground Floor
525 Brannan Street
San Francisco, CA 94107
Attention: Chief Financial Officer

With a copy to:

Cooley Godward LLP
20th Floor
One Maritime Plaza
San Francisco, CA 94111
Attn: Isobel A. Jones

NBC Olympics, Inc. [*] [*]
30 Rockefeller Plaza
New York, NY 10112
Attn: Gary Zenkel, Sr. VP, Olympic
Marketing

With a copy to:

NBC Law Dept.
30 Rockefeller Plaza
New York, NY 10112
Attn: Corporate & Transactions Group Head

</TABLE>

[*] Confidential Treatment Requested.

<PAGE> 47

AMENDMENT NO. 1
TO THE
OPERATING AGREEMENT OF
NBC/QUOKKA VENTURES, LLC

THIS AMENDMENT NO. 1 to the Operating Agreement of NBC/Quokka Ventures,
LLC is hereby entered into as of the 15th day of March, 1999 by and between NBC
Olympics, Inc. ("NBC") and Quokka Sports, Inc. ("Quokka"). Capitalized terms
used but not defined herein shall have the meanings specified in the Operating
Agreement.

RECITALS

WHEREAS, pursuant to the terms of Section 5.3(a) of the Operating
Agreement of NBC/Quokka Ventures, LLC dated February 9, 1999 between NBC and
Quokka (the "Operating Agreement"), the Members are required to negotiate in
good faith to develop, for approval by a Supermajority of the Directors no
later than the Drop Dead Date, an Initial Content Plan;

WHEREAS, pursuant to Section 1.1(gg) of the Operating Agreement, the
Drop Dead Date is defined as March 19, 1999; and

WHEREAS, NBC and Quokka desire to amend and restate Section 1.1(gg) to
extend the Drop Dead Date;

AGREEMENT

NOW, THEREFORE, the undersigned, intentionally to be legally bound and
in consideration of the mutual promises contained herein, agree as follows:

Section 1.1(gg) of the Operating Agreement shall be amended and restated to
read in full as follows:

"(gg) DROP-DEAD DATE" shall mean March 22, 1999."

1.
<PAGE> 48
In Witness Whereof, the parties hereto have executed this Amendment No. 1
to the Operating Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.

QUOKKA SPORTS, INC.

By: [SIGNATURE ILLEGIBLE]
----------------------------
Name:
Title:

NBC OLYMPICS, INC.

By: /s/ GARY ZENKEL
----------------------------
Name: Gary Zenkel
Title: Sr. VP.

[SIGNATURE PAGE TO AMENDMENT NO. 1 TO
THE OPERATING AGREEMENT OF
NBC/QUOKKA VENTURES, LLC]

2.
<PAGE> 49
AMENDMENT NO. 2
TO THE
OPERATING AGREEMENT OF
NBC/QUOKKA VENTURES, LLC.

THIS AMENDMENT NO. 2 TO THE Operating Agreement of NBC/Quokka Ventures,
LLC is hereby entered into as of the 15th day of March, 1999 by and between NBC
Olympics, inc. ("NBC") and Quokka Sports, Inc. ("Quokka"). Capitalized terms
used but not defined herein shall have the meanings specified in the Operating
Agreement.

RECITALS

WHEREAS, pursuant to the terms of Section 5.3(a) of the Operating Agreement
of NBC/Quokka Ventures, LLC dated February 9, 1999 between NBC and Quokka (the
"Operating Agreement"), the Members are required to negotiate in good faith to
develop, for approval by a Supermajority of the Directors no later than the Drop
Dead Date, an Initial Content Plan;

WHEREAS, pursuant to Section 1.1(gg) of the Operating Agreement, the Drop
Dead Date is defined as March 15, 1999; and

WHEREAS, pursuant to Amendment No. 1 entered into by and between the
parties as of March 15, 1999, the parties agreed to amend Section 1.1(gg) of
the Operating Agreement to change the Drop Dead Date to March 22, 1999; and

WHEREAS, NBC and Quokka desire to again amend and restate Section 1.1(gg)
to extend the Drop Dead Date;

AGREEMENT

NOW, THEREFORE, the undersigned, intentionally to be legally bound and in
consideration of the mutual promises contained herein, agree as follows:

Section 1.1(gg) of the Operating Agreement shall be amended and restated to
read in full a follows:

"(gg) DROP-DEAD DATE" shall mean March 23, 1999."

<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2
to the Operating Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.

QUOKKA SPORTS, INC.

By: /s/ LES SCHMIDT
-----------------------------
Name: Les Schmidt
-----------------------
Title: Sr. VP & CFO
----------------------

NBC OLYMPICS, INC.

By: /s/ GARY ZENKEL
-----------------------------
Name: Gary Zenkel
-----------------------
Title: Sr. VP
----------------------

[SIGNATURE PAGE TO AMENDMENT NO. 2 TO THE OPERATING AGREEMENT OF NBC/QUOKKA
VENTURES, LLC.]
<PAGE> 51
AMENDMENT NO. 3
TO THE
OPERATING AGREEMENT OF
NBC/QUOKKA VENTURES, LLC.

THIS AMENDMENT NO. 3 TO THE Operating Agreement of NBC/Quokka Ventures, LLC
dated February 9, 1999 (the "Operating Agreement") is hereby entered into as of
the 7th day of May, 1999 by and between NBC Olympics, Inc. ("NBC") and Quokka
Sports, Inc. ("Quokka"). Capitalized terms used but not defined herein shall
have the meanings specified in the Operating Agreement.

RECITALS

WHEREAS, pursuant to the terms of Section 5.3(b) of the Operating
Agreement the Board of Directors is required to approve a Long-term Strategic
Plan no later than May 8, 1999 (the "Approval Date");

WHEREAS, NBC and Quokka desire to amend and restate Section 5.3(b) to
extend the Approval Date;

AGREEMENT

NOW, THEREFORE, the undersigned, intending to be legally bound and in
consideration of the mutual promises contained herein, agree as follows;

In the second sentence of Section 5.3(b) of the Operating Agreement the words
"ninety (90)" shall be changed to "one hundred-twenty (120)".

<PAGE> 52
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 3
to the Operating Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.

QUOKKA SPORTS, INC.

By: /s/ THOMAS P. NEWELL
---------------------

Name: Thomas P. Newell
---------------------
Title: Sr. VP, Business & Legal Affairs
--------------------------------

NBC OLYMPICS, INC.

By: /s/ GARY ZENKEL
---------------------------
Name: Gary Zenkel
---------------------
Title: Sr. V.P.
---------------------

<PAGE> 1
EXHIBIT 10.17

DIGITAL ENTERTAINMENT PARTNERSHIP

BETWEEN

COMPAQ COMPUTER CORPORATION
AND

QUOKKA SPORTS, INC.

THIS AGREEMENT (the "Agreement") is made as of January 1, 1999 (the
"Effective Date") by and between QUOKKA SPORTS, INC., a corporation organized
under the laws of Delaware, with principal offices at 525 Brannan Street, San
Francisco, CA. 94107 (hereinafter referred to as "Quokka") and COMPAQ COMPUTER
CORPORATION, a corporation organized under the laws of the state of Delaware,
20555 State Hwy. 249, Houston, TX, 77070-2698 (hereinafter referred to as
"COMPAQ").

RECITALS

WHEREAS, Quokka has and will develop, construct and operate the digital
coverage of a network tentatively known as quokka.com (the "Network"), which
will feature digital coverage of a wide variety of events, including sailing,
adventure and motor racing events over the years, and will, in part, include
certain individual Event Coverage as well. Quokka is establishing quokka.com
which is designed to act as a central portal for Quokka Sports Immersion
productions, the tentative programming calendar for which is set forth on
Exhibit E.

WHEREAS, COMPAQ desires to be a digital entertainment partner in
connection with the Network and the Event Coverage therein, and to receive the
rights and benefits as more fully described herein;

NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:

1. DIGITAL ENTERTAINMENT PARTNERSHIP: Quokka hereby designates COMPAQ as its
exclusive Quokka Performance Team Official Partner for the Computing category
(as defined herein) in connection with the Network. The "Computing" category is
defined as CPU-based devices that process digital information utilizing
software, either visually or aurally, for business, educational or entertainment
purposes. Computing components shall mean all computers which are referred to
as: workstations, personal computers (PC's, desktops, towers, notebooks,
laptops, portables, handhelds, palmtops, etc.), servers, minicomputers and
mainframes. This category also includes Computing-related maintenance, support
services, and professional IT services. Quokka shall be entitled to appoint no
more than [*] additional Official Partners of the Quokka Performance Team,
provided that Quokka shall not appoint as an Official Partner any other company
in the Computing category during the term of this Agreement. Other Quokka
Performance Team categories currently contemplated include, but are not limited
to: Networking, Software, Digital Distribution Communications, Wireless
Communications, Database Software, Consumer Electronics, Digital Documents and
Digital Imaging.

[*] Confidential treatment requested.

Page 1 of 16

<PAGE> 2

2. TERM: The term of this Agreement shall commence upon the execution
of this Agreement and conclude December 31, 2001, unless terminated sooner or
extended pursuant to COMPAQ's first negotiation rights more fully described in
Exhibit A.

3. RIGHTS GRANTED TO COMPAQ: Quokka guarantees, represents and warrants
that it has the legal right and responsibility to provide the rights and
benefits granted to COMPAQ under this Agreement as outlined in the attached
Exhibit A and Exhibit B. Quokka further guarantees, represents and warrants that
the materials, content and services appearing on the Network (collectively
"Materials") are factually accurate and do not contain any fraudulent, deceptive
or obscene materials, or material which misrepresents, ridicules or attacks an
individual or group on the basis of age, color, national origin, race, religion,
sex, sexual orientation or handicap; that the Materials will not violate any
foreign or domestic, federal, state or local law or regulation, or any rights of
any third party, including, but not limited to, any copyright, patent,
trademark, trade secret, music, image, or other proprietary, property, or
contractual right, or constitute false advertising, unfair competition,
defamation, invasion of privacy or rights to celebrity, or any other right of
any person or entity

4. PAYMENT: In consideration of the rights and benefits granted to
COMPAQ herein, COMPAQ shall make payments to Quokka Sports in accordance with
the terms and schedule in the attached Exhibit C. Quokka will invoice COMPAQ
sixty (60) days prior to the due date ("Invoice Date"). Payments received by
Quokka more than seventy (70) days after the Invoice Date will bear interest at
the rate of 1.5% per month from the original Due Date to the date the payment is
received.

4.1 If the cumulative Actual Branded Page Views are less than
the Projected Branded Page Views as set forth in Exhibit C
or the actual number or category of Events covered is
substantially less than those listed in Exhibit E, COMPAQ
shall receive a mutually agreeable "make good" during the
Term or thereafter until such Branded Page Views are
achieved.

4.2 While there shall be no obligation on the part of Quokka to
achieve such Actual Branded Page Views, for any cumulative
Actual Branded Page Views between [*] and [*] of the
Projected Branded Page Views there shall be no additional
charge to COMPAQ.

4.3 Once the cumulative Actual Branded Page Views reach [*] of
the Projected Branded Page Views, then Quokka shall provide
COMPAQ with an option to purchase any additional inventory.

5. PURCHASE OF EQUIPMENT: During the Term, Quokka shall purchase certain
COMPAQ computer products and services in an amount no less than [*] in
accordance with the terms and schedule in the attached Exhibit D. During the
Term, any COMPAQ products and services shall be sold or provided to Quokka [*].
COMPAQ

[*] Confidential treatment requested.

Page 2 of 16

<PAGE> 3
will invoice Quokka thirty (30) days prior to the due date ("Invoice Date").
Payments received by Compaq more than forty five (45) days after the Invoice
Date will bear interest at the rate of 1.5% per month from the original Due Date
to the date the payment is received. Upon completion of Quokka's current
outsourcing agreement with Global Center, Quokka shall enter into good-faith
negotiations for COMPAQ to provide Operations Management Services (outsourcing)
for the Data/IT Infrastructure needs of Quokka, provided that there is no
conflict with any other agreement entered into by Quokka.

6. MEZZANINE FINANCING OPTION: Quokka shall use reasonable efforts to
provide Compaq with an opportunity to participate in its mezzanine round of
finance which is currently planned to be closed on or before its public
offering. The terms of the investment shall be set by the lead investor for that
round, the investment bankers for Quokka's initial public offering or such other
entity as Quokka shall appoint. It is anticipated (though not warranted by
Quokka) that the potential investment from COMPAQ would be in the approximate
range of [*] million, which sum, if COMPAQ elects to participate in the round,
shall be in addition to the 3 Year Fee set forth in Exhibit C. While this round
of finance is currently contemplated by Quokka, there is no guarantee that
Quokka will undertake such a round of finance coincident with or prior to its
public offering, and Quokka makes no representation or warranty with respect
thereto, and the failure to undertake such a round of finance shall not be a
breach of this Agreement.

7. CONFIDENTIALITY: The parties acknowledge that this Agreement and its
terms shall be confidential. The parties further acknowledge that, in the course
of performing duties under this Agreement, each party may obtain from the other
party data or information of a confidential or proprietary nature, including
know-how and trade secrets, relating to the business, the affairs, the
development projects, or current or future products or services of such party
("Confidential Information"). Confidential Information may be disclosed to a
party in writing, in other tangible form (including e-mails), orally, or
visually. Data or information will be considered Confidential Information if:
(a) a party has marked it as such; (b) a party, orally or in writing, has
advised the other party of its confidential or proprietary nature, or (c) due to
its character and nature, a reasonable person under like circumstances would
treat it as confidential. Neither party will at any time, either during or after
the term of this Agreement, either (i) publish, disclose or otherwise divulge
any of the other party's Confidential Information to any person, except its
officers and employees with a need to know under a contractual duty to maintain
the confidentiality of such information consistent with the obligations imposed
hereunder; or (ii) permit its officers or employees to divulge any of the other
party's Confidential Information without the express prior written consent of
the other party. Neither party shall use the other party's Confidential
Information except in the course of performing its duties under this Agreement.
Upon the other party's request or expiration or termination of this Agreement
for any reason, each party will immediately destroy or return to the other party
all of the other party's Confidential Information in its possession, custody or
control. The foregoing obligations will not apply to any Confidential
Information that (1) is already known to the receiving party; (2) is or becomes
publicly known through no wrongful act of the receiving party; (3) is
independently developed by the receiving party without benefit of the disclosing
party's Confidential Information; (4) is received from a third party without
similar restriction and without breach of any obligation of confidentiality; or
(5) is required or reasonably necessary to be disclosed to comply with laws,
statutes, regulations, orders, and other governmental rules, including, without
limitation, any voluntary filing under the Securities Act of 1933, as amended,
or the Securities and Exchange Act of 1934, as amended, to the

[*] Confidential treatment requested.

Page 3 of 16
<PAGE> 4
extent of such required disclosure only and provided that the disclosing party
is notified, if applicable, prior to such disclosures to allow them to seek a
protective order. Additionally, neither party shall be prohibited from
disclosing the terms and conditions of this Agreement to financial institutions
when required to obtain financing provided such financial institutions are under
a contractual duty to maintain the confidentiality of the information that is
consistent with the obligations imposed hereunder. The obligations of
confidentiality shall expire three years after the expiration of termination of
this Agreement.

8. INDEPENDENT CONTRACTORS: Notwithstanding the use of the term Digital
Entertainment Partnership herein, nothing contained herein shall constitute or
be construed as the creation of any partnership, agency or joint venture
relationship between the parties hereto. Neither party shall have the right to
obligate or bind the other in any manner whatsoever, and nothing herein
contained shall give or is intended to give any rights of any kind to any third
persons. The relationship of the parties shall be as independent contractors.

9. CONSEQUENTIAL DAMAGES: Other than for the purchase and sale of
equipment, under Section 5 of this Agreement, in no event shall either party be
liable to the other party or to third parties for lost profits or other
consequential, incidental, indirect, special, punitive damages of any nature
whatsoever, including, without limitation, loss of profits, loss of business, or
anticipatory profits, even if such party has been apprised of the likelihood of
such damages. The terms applicable to the purchase and sale of equipment are
provided in Section 5, Exhibit D and the Limited Warranty Statements
accompanying each product.

10. ASSIGNMENT: This Agreement is in the nature of a contract for
personal services, therefore, neither party shall assign any right or interest
herein nor delegate any duty or obligation without the prior written consent of
the other, unless the assignment is made to a successor in interest or to an
entity that purchases all or substantially all of its assets.

11. USE OF MARKS: Trademark licenses are granted in Exhibit B. Each
party shall submit any promotional materials and advertisements using the other
party's (the "Licensing Party") trademarks, or the third party trademarks
licensed hereunder, to the Licensing Party prior to any commercial availability
thereof. The Licensing Party shall approve or disapprove such materials within
five (5) working days of such submission. If the Licensing Party fails to
approve such materials within such period, the submitted material may be deemed
approved. Once per year, upon a party's request, each party shall supply to the
respective Licensing Party a reasonable number of specimens of its materials
bearing any of the Licensing Party's Marks in determining if such party is
maintaining the applicable quality standards for using the licensed marks.
Notwithstanding the foregoing, neither party shall be permitted to make any
ancillary use of such trademarks without the prior written approval of the other
party. Each party's license to use, copy and distribute such trademarks will
terminate with the expiration or termination of this Agreement.

12. ENTIRE AGREEMENT AND ORDER OF PRECEDENCE: The entire understanding
between the parties is incorporated herein and supersedes all prior discussions
and agreements between the parties relating to the subject matter hereto. All
prior understandings, oral or written, if any, have been merged herein, or, if
not merged, are hereby canceled. This Agreement can be modified only by a
written amendment executed by Quokka and COMPAQ, and shall not be supplemented
or modified by any course of dealing

Page 4 of 16
<PAGE> 5
or trade usage. The terms of this Agreement will prevail over conflicting terms
contained in any purchase order, invoice or confirmation used by the parties or
submitted under this Agreement. No representations have been made except those
expressly set forth herein.

13. FUTURE OBLIGATIONS: Any obligations and duties, which by their
nature extend beyond the expiration or termination of this Agreement, including
but not limited to the confidentiality obligations under Section 8 and the
Indemnity obligations under Section 20, shall survive any expiration and
termination and remain in effect.

14. INVALID PROVISIONS: If any provision or provisions of this Agreement
shall be held to be invalid or unenforceable, such provision shall be enforced
to the fullest extent permitted by applicable law and the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

15. FORCE MAJEURE: Neither party shall be liable for the failure to
perform any of its obligations under this Agreement if such failure is caused by
the occurrence of any contingency beyond its reasonable control. However, each
party shall use its reasonable best efforts to minimize the resulting duration
and consequences of any failure or delay in performance. Additionally, each
party shall cooperate in good faith such that the rights and obligations
hereunder may be fulfilled by rescheduling, substitution, alternate performance,
equitable adjustment of the contract price or similar means.

16. TERMINATION:

16.1 Commencing May 1, 1999, in the event that COMPAQ shall be
dissatisfied with Quokka's performance hereunder and, in Compaq's sole judgment,
shall not have received adequate future assurances from Quokka with respect to
such performance, then COMPAQ shall have the right to terminate the Agreement at
the end of any calendar year by giving Quokka written notice of its intention to
terminate no later than June 30 of such year. Such termination shall become
effective only at the conclusion of such calendar year. Subsequent to the
effective date of such termination, COMPAQ shall not be liable for any further
payment obligations and Quokka shall have no further responsibility to COMPAQ
hereunder, except as provided under Section 12, Future Obligations.

16.2 Commencing May 1, 1999, Quokka shall have the right to terminate
the Agreement at the end of any calendar year by giving COMPAQ written notice of
its intention to terminate no later than June 30 of such year. Such termination
shall become effective only at the conclusion of such calendar year. Subsequent
to the effective date of such termination, COMPAQ shall not be liable for any
further payment obligations and Quokka shall have no further responsibility to
COMPAQ hereunder, except as provided under Section 12, Future Obligations.

16.3 Due to the potential similarity between the Computing category and
certain of the Quokka Performance Team categories, Quokka shall notify Compaq
prior to executing any agreements with any other Official Partner. In the event
that Compaq believes, in its sole judgment, that the category specified for such
additional Official Partner materially dilutes Compaq's exclusive rights
hereunder such that the benefits that COMPAQ receives are less than one half of
that set forth in this Agreement, then Compaq shall have ten (10) business days
from receipt of Quokka's notification that Quokka has, in fact, executed such an

Page 5 of 16
<PAGE> 6
agreement to give Quokka notice of its intention to terminate the Agreement at a
date no earlier than six (6) months from the date of Compaq's notice of
intention to terminate. Such termination shall become effective only at the
conclusion of such six (6) month period. Subsequent to the effective date of
such termination, COMPAQ shall not be liable for any further payment
obligations, and Quokka shall have no further responsibility to COMPAQ
hereunder, except as provided under Section 12, Future Obligations.

17. NOTICE: Notices required or permitted hereunder shall be in writing
and deemed given and received when properly posted by registered or certified
mail, postage prepaid, first class, in an envelope properly addressed

(i) if to COMPAQ, to: COMPAQ Computer Corporation
20555 State Hwy. 249
Houston, TX 77070-2698
ATTN: Doug Wheeler

(ii) if to Quokka, to: Quokka Sports, Inc.
525 Brannan Street, Ground Floor
San Francisco, CA. 94107
ATTN: Alan Ramadan

18. WAIVER: Any waiver of any kind by either party of a breach of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
by the other party. Any delay or omission in exercising any right, power or
remedy pursuant to a breach or default by one party shall not impair any right,
power or remedy which the other party may have. All rights, remedies,
undertakings, obligations and agreements contained in this Agreement shall be
cumulative and none of them shall be in limitation of any other right, remedy,
undertaking, obligation or agreement of either party.

19. GOVERNING LAW:THIS AGREEMENT AND ALL TRANSACTIONS EXECUTED HEREUNDER
SHALL BE GOVERNED EXCLUSIVELY BY AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.

20. ATTORNEYS FEES: In any action or proceeding between the parties
hereto, or brought to enforce the terms of this Agreement, the prevailing party
in such action or proceeding shall be entitled to recover its attorneys' fees
and costs.

21. INDEMNIFICATION:

21.1 Quokka agrees to defend, indemnify and hold harmless Compaq and its
affiliated companies, and their respective employees, directors and officers
from and against any and all third party claims, demands, suits, expenses,
judgments, awards, fines, fees (including court costs and reasonable attorneys
fees) arising out of or related to Quokka's performance of this Agreement and
the activities hereunder, including activities of the Network, or breach or
alleged breach of any of the representations, warranties or guarantees made
hereunder. Compaq shall promptly notify Quokka of any such claims.

Page 6 of 16
<PAGE> 7

21.2 Compaq agrees to defend, indemnify and hold harmless Quokka and its
affiliated companies, and their respective employees, directors and officers
from and against any and all third party claims, demands, suits, expenses,
judgments, awards, fines, fees (including court costs and reasonable attorneys
fees) arising out of or related to Compaq's performance of this Agreement,
claims that Compaq' trademarks, when used in accordance with Compaq's written
approval, infringe any intellectual property or proprietary rights of any third
party or breach or alleged breach of any of the representations, warranties or
guarantees made hereunder. Quokka shall promptly notify Compaq of any such
claims.

Whereof, the parties hereto have signed this Agreement this 3rd day of May
in 1999.

COMPAQ COMPUTER CORPORATION

By: /s/ ENRICO PESATORI Date: 5/3/99
-------------------------------------- ------------------
Enrico Pesatori
Senior Vice President of Corporate Marketing

QUOKKA SPORTS, INC.

By: /s/ ALAN RAMADAN Date: 5/5/99
-------------------------------------- ------------------
Alan Ramadan
President & CEO

Page 7 of 16
<PAGE> 8

EXHIBIT A

RIGHTS AND BENEFITS

I. RIGHTS

A. EXCLUSIVE CATEGORY RIGHTS

Exclusive Computing category rights (as defined in Paragraph 1 of the Agreement)
on the Quokka Performance Team associated with the Network during the Term. The
exclusive category designation for the Network includes all Event coverage
unless any Event rightsholder prohibits Quokka from offering COMPAQ the
exclusive Computing category in connection with coverage of such rightsholder's
Event. Notwithstanding the foregoing and for the sake of clarity, the category
rights granted COMPAQ herein shall not extend to the Olympic Games.

B. EXCLUSIVE RIGHT OF FIRST NEGOTIATION ON RENEWAL

Except in the case where COMPAQ has terminated the Agreement, Quokka shall begin
exclusive negotiations with COMPAQ at least one (1) year prior to the expiration
of COMPAQ's category rights hereunder for a period of ninety (90) days with
respect to the acquisition by COMPAQ of rights similar to the rights granted
herein. If at the end of this negotiating period the parties have not reached a
written agreement, Quokka may enter into agreement with any third party with
respect to rights similar to, or different from, the rights granted herein.

C. WORLDWIDE USAGE OF OFFICIAL MARKS AND DESIGNATIONS

1. Worldwide use of Official Marks, subject to the terms in Exhibit B:
Quokka Performance Team Mark
Quokka Sports Mark

2. Worldwide use of Official Designations, subject to the terms in
Exhibit B:
Official Worldwide Partner of the
Quokka Performance Team Official Worldwide Computing
Partner of the Quokka Performance Team

D. [*]

[*]

[*] Confidential treatment requested.

Page 8 of 16
<PAGE> 9

II. BENEFITS

A. CATEGORY LEADERSHIP BENEFITS

1. Exclusive Association: Exclusive Computing association with
Quokka Sports, the leader in the emerging Digital Entertainment
Marketplace.

2. Exclusive ownership of the Computing category for the Quokka
Performance Team.

3. Incorporation of COMPAQ products in the development of the Quokka
Sports Platform, subject to COMPAQ's efforts to make such
products available in a reasonably timely fashion.

4. Access to Quokka Sports strategic digital media R&D initiatives
done in conjunction with other IT industry leaders (where Quokka
has the unilateral right to include COMPAQ).

5. Insight into leading technology product and service trends from
the Quokka Sports team, Quokka Performance Team partners and
other influential Quokka alliances.

6. Opportunities for COMPAQ digital media products to participate in
real world labs and product development trials for testing and
showcasing purposes.

7. Opportunity to participate in attempts to define and promote
Digital Entertainment Industry Standards to secure long-term
competitive advantages.

8. Access, at no dollar charge, to Quokka Immersion Media syndicated
content to integrate within Alta Vista, compaq.com and other
COMPAQ cross media marketing efforts.

9. Establishment of an on-going relationship between Quokka and
COMPAQ Research to showcase jointly their leading-edge Internet
capabilities.

10. Access for COMPAQ executive(s) to participate in an Annual Quokka
Sports Digital Summit including the leaders in digital media,
technology, sport and entertainment collectively defining the
digital media industry.

11. Access to Quokka Sports digital media market research.

12. As set forth in Exhibit B, worldwide license to use all Quokka
Performance Team cobrandable official marks, performance
meters/icons

Page 9 of 16
<PAGE> 10

and designation in COMPAQ external and internal marketing and
sales efforts, subject to Quokka having such rights.

13. Right to leverage the Quokka Performance Team partnership
alliance as the cross-marketing platform with all internal and
external COMPAQ brand communications, marketing initiatives,
production promotional efforts, new product releases (within the
designated computing category scope) sales efforts, trade events.

14. Quokka will appoint a designated COMPAQ Relationship manager, at
no cost to COMPAQ, to manage and maximize to the extent possible
the benefits hereunder.

15. COMPAQ Digital Entertainment Partnership Plan prepared jointly by
Quokka Sports and COMPAQ focused on executing against COMPAQ
business strategies.

16. Annual ROI-based Assessment Report.

B. BUSINESS TO BUSINESS AND CONSUMER SALES BENEFITS

1. Real-time COMPAQ and Quokka Performance Team Product Showcase
within Network to use as a dynamic visual representation
dedicated to educating and promoting the Quokka Performance Team
story and COMPAQ products and services in a digital media
context. Showcases may be leveraged by COMPAQ as a lead
generation system for pre-screening targeted customers.

2. E-commerce: Integration and promotion of COMPAQ Online Direct
Store to prospects and customers by linking the Quokka Sports
online store(s) to the COMPAQ online store (or retail fulfillment
centers) for back-end management.

3. COMPAQ Sales Tool: Quokka will create a custom URL within the
Network for exclusive use by COMPAQ to showcase COMPAQ equipment
and technology.

4. Ability to sell Quokka products and services on Compaq.com and
Alta Vista.

5. Access to and use of names and other registration information for
direct marketing purposes, in accordance with user agreement
terms.

6. Ability to use Quokka Sports Immersion content across all COMPAQ
sales channels and sales presentations, events and trade shows as
approved by Quokka Sports.

Page 10 of 16
<PAGE> 11

7. Access to and branding throughout the Quokka Digital Studio for
real time product showcasing and corporate customer and employee
events.

8. Direct Marketing: Reasonable commercial efforts to promote QPT
and COMPAQ's role therein in online newsletters, direct mail and
one to one relationship marketing efforts.

C. SPONSORSHIP BENEFITS

1. Exclusive category access and use of Event designations in
connection with coverage of Events, to the extent that Quokka may
grant such rights.

2. Hospitality programs, as mutually agreed, in connection with each
Event, to the extent that Quokka may grant such rights.

3. Exclusive category access to premier product placement and QPT
branding at Quokka Sports production venues, to the extent Quokka
may grant such rights.

4. Option to co-market and/or co-brand with QPT logo all applicable
Quokka Sports collectible products at Quokka's reasonable
discretion.

D. MEDIA BENEFITS

1. Guaranteed Branded Media Impressions: Guaranteed premiere Quokka
Performance Team branding and placement for COMPAQ (as
exemplified in the attached Exhibit F) on or within [*] of the
cumulative Projected Branded Page Views set forth in Exhibit C.
At least [*] of such cumulative Projected Branded Page Views
shall represent solo branding and placement for COMPAQ and/or
Alta Vista (as exemplified in the attached Exhibit G).

2. Exclusive COMPAQ First QPT Partner Mention: To the extent that
Quokka maintains control of placement of any branding on any
particular site or in connection any QPT marketing programs,
COMPAQ's logo shall appear first (at the left or on top, as the
case may be) where the logos of Quokka Performance Team Official
Partners will appear at the same time in a linear fashion (either
horizontally or vertically).

3. Exclusive category access to premier product placement within the
Network.

4. Premium multimedia advertising design, strategic consulting and
creative services furnished by Quokka at no cost to COMPAQ (e.g.,
pop-ups, interstitials, distributed applications and broadband
media advertisements).

[*] Confidential treatment requested.

Page 11 of 16
<PAGE> 12

5. Monthly Network viewer/audience reports, including page views.

E. QPT PUBLIC RELATIONS/COMMUNICATIONS BENEFITS

1. When available, Quokka will use its reasonable efforts to
recognize and endorse the Quokka Performance Team partnership
alliance and COMPAQ's official designation in off-line media
relations, public announcements, advertising and keynote
addresses done by Quokka Sports.

2. From time to time, Quokka shall make reasonable efforts to supply
executive speakers (such as John Bertrand and Alan Ramadan) to
speak to COMPAQ meetings, events and trade shows regarding
COMPAQ's Digital Marketing initiatives. All speaker fees shall be
waived for COMPAQ.

3. From time to time, Quokka shall make reasonable efforts to
participate in COMPAQ promotional events, both online and
otherwise.

4. Access to Quokka Sports Immersion content for COMPAQ use to
integrate in all employee communications.

Page 12 of 16
<PAGE> 13

EXHIBIT B

USAGE OF DESIGNATIONS AND MARKS

1. Subject to Quokka's reasonable, prior written approval which will not be
unreasonably withheld or delayed:

A. License of Marks: Quokka grants to COMPAQ a category-exclusive license
during the Term to use, and authorize third party distributors of its
products and services to use, the marks granted in Exhibit A in COMPAQ's
packaging, advertising and promotional materials, product and services
literature and other communications.

B. License of Designations: Quokka grants COMPAQ a category-exclusive
license during the Term to use, and authorize third party distributors
of its products and services to use, the designations granted in Exhibit
A in COMPAQ's packaging, advertising and promotional materials, product
and services literature and other communications.

C. Reservations: Quokka's trademarks, logos and designations, licensed
hereunder shall remain the property of Quokka. Any and all rights under
trademark or copyright law or otherwise relating to such items shall
inure to the benefit of Quokka. The right to use Quokka's marks as
permitted under this Agreement is nonassignable, nonexclusive and
nontransferable by Compaq.

2. Subject to COMPAQ's reasonable, prior written approval, which will not be
unreasonably withheld or delayed, COMPAQ grants Quokka a license during the Term
to use its marks and designations in Quokka's packaging, advertising and
promotional materials, product and services literature, derivative products and
other communications. Compaq's trademarks, logos and designations, licensed
hereunder shall remain the property of Compaq. Any and all rights under
trademark or copyright law or otherwise relating to such items shall inure to
the benefit of Compaq. The right to use Compaq's marks as permitted under this
Agreement is nonassignable, nonexclusive and nontransferable.

Page 13 of 16
<PAGE> 14

EXHIBIT C

QUOKKA SPORTS DIGITAL ENTERTAINMENT PACKAGE

A. Projected Viewership:

<TABLE>
<CAPTION>
----------------------------------------------
Year Projected Branded Page Views
----------------------------------------------
<S> <C>
1999 [*]
----------------------------------------------
2000 [*]
----------------------------------------------
2001 [*]
----------------------------------------------
TOTAL [*]
----------------------------------------------
</TABLE>

B. Term: January 1, 1999 to December 31, 2001, unless sooner terminated as
set forth herein.

C. 3 Year Fee: [*], payable: [*] for 1999, [*] for 2000 and [*] in 2001,
which Fee represents the following Applied Discount (s):

- Long-term Partner Discount: [*] off List Price

- Additional Repeat Partner Discount for COMPAQ: additional [*] off
List Price.

D. Payment Due Date*:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------
1999 2000 2001
-----------------------------------------------------------------------
<S> <C> <C> <C>
January 15 [*] [*] [*]
-----------------------------------------------------------------------
April 15 [*] [*] [*]
-----------------------------------------------------------------------
July 15 [*] [*] [*]
-----------------------------------------------------------------------
October 15 [*] [*] [*]
-----------------------------------------------------------------------
</TABLE>

*-- pursuant to Paragraph 4, invoices will be sent 60 days prior to the
payment Due Date.

[*] Confidential treatment requested.

Page 14 of 16
<PAGE> 15

EXHIBIT D

EQUIPMENT PURCHASE SCHEDULE

Schedule for Quokka Purchases of Compaq Equipment, Support, and IT Services*:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------
1999 2000 2001
-----------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter $ [*] $ [*] $ [*]
-----------------------------------------------------------------------
Second Quarter [*] [*] [*]
-----------------------------------------------------------------------
Third Quarter [*] [*] [*]
-----------------------------------------------------------------------
Fourth Quarter [*] [*] [*]
-----------------------------------------------------------------------

TOTAL [*] [*] [*]
-----------------------------------------------------------------------
</TABLE>

*In the event that Quokka does not spend the sums set forth in any particular
quarter, Quokka shall not be in breach of this agreement so long as it places
the total amount of purchases in any calendar year by December 31 and so long as
COMPAQ has meet its payment obligations hereunder. In the event that Quokka
purchases more than the sums set forth above in any particular year, such
additional purchases over such minimum sums shall be credited against the next
year's purchase obligation first and then the next succeeding year's obligation.
In the event that this Agreement shall be terminated, then Quokka's obligation
to purchase COMPAQ equipment and services shall also terminate simultaneously.

Warranty:

The warranty provisions applicable to each product are those that accompany the
product and are provided in the standard Limited Warranty Statement packaged
with the product.

COMPAQ MAKES NO OTHER WARRANTIES EXPRESS OR IMPLIED, AND DOES NOT WARRANT THE
PRODUCT'S PERFORMANCE WITH ANY THIRD PARTY PRODUCT. THE WARRANTIES CONTAINED IN
THE PRODUCT PACKAGING AND IN THIS AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF ALL
OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

[*] Confidential treatment requested.

Page 15 of 16
<PAGE> 16

EXHIBIT E

QUOKKA SPORTS IMMERSION PRODUCTIONS AND TENTATIVE PROGRAMMING

<TABLE>
<CAPTION>
PLANNED IN DEVELOPMENT
------- --------------
<S> <C> <C>

Motor Sports CART [*]
Grand Prix Motorcycles

Sailing [*] America's Cup
[*]
[*]
[*]

Adventure Marathon des Sables [*]
Hidden Peak [*]
Trango Tower [*]
[*] [*]
[*]

Other TBD [*]
</TABLE>

NOTE: THE FOREGOING IS SUBJECT TO CHANGE IN THE DISCRETION OF QUOKKA.

[*] Confidential treatment requested.

Page 16 of 16

<PAGE> 1

Exhibit 10.18

1. PARTIES.

THIS LEASE (this "Lease") is made this 23rd day of April, 1999, between
1301 EVANS STREET ASSOCIATES, LLC, a California limited liability company
("Landlord"), and Quokka Sports, Inc., a Delaware incorporated Company
("Tenant").

2. PREMISES.

Landlord does hereby lease to Tenant, and Tenant does hereby lease from
Landlord, for the term and subject to the covenants and conditions hereinafter
set forth, to all of which Landlord and Tenant agree, those certain premises
("Premises") identified in the Basic Lease Information, and located in that
certain building owned by Landlord ("Building") located at 330 Townsend Street,
San Francisco, California. The Premises are as shown cross-hatched on Exhibit A
attached to this Lease and hereby made a part hereof. Tenant shall have the
right to use, in common with others, the entrances, lobbies, corridors, stairs
and elevators of the Building (the "Common Areas") for access to the Premises.
The exterior walls of the Building and any space in the Premises used for
shafts, stacks, pipes, conduits, ducts, electric or other utilities, or other
Building facilities, and the use thereof and access thereto through the
Premises for the purposes of operation, maintenance and repairs, are reserved
to Landlord.

(a) The rentable square footage of the Premises has been determined in
accordance with BOMA's Standard Method of Measuring Floor Area in Office
Buildings (ANSI/BOMA 2.65.1--1996), as modified by Landlord for uniform use in
the Building. The square footage figures contained in this Lease shall be final
and binding on the parties.

3. TERM.

(a) The term of this Lease ("Term") shall be for approximately twelve
(12) months or one (1) year. The Term shall commence on the later of (i) the
Scheduled Commencement Date, and (ii) if Landlord is constructing any
improvements in and to the Premises prior to the Scheduled Commencement Date in
accordance with the terms of this Lease, on such date as such improvements are
substantially complete (subject to punchlist items), and shall end on the
Expiration Date.

(b) If the Premises are substantially complete and ready for occupancy
by Tenant prior to the Scheduled Commencement Date, Tenant may, with the prior
approval of Landlord, accept delivery of the Premises and take early occupancy
thereof prior to the Scheduled Commencement Date and the Term of this Lease
shall thereupon commence effective as of the date of occupancy by Tenant of the
Premises.

(c) The "Commencement Date" shall be the actual date the Term of this
Lease commences in accordance with this Paragraph 3. Landlord and Tenant each
shall, promptly after the Commencement Date has been determined, execute and
deliver to the other a certificate which sets forth the Commencement Date of
this Lease, but the term of this Lease shall commence on the Commencement Date
and end on the Expiration Date whether or not such amendment is executed.

4. DELIVERY OF POSSESSION.

(a) In the event of the inability of Landlord to deliver possession of
the Premises at the time for the commencement of the Term for any reason
whatsoever, neither Landlord nor its agents shall be liable for any damage
caused thereby, nor shall this Lease thereby become void or voidable, nor shall
the Term be in any way extended, but in such event Tenant shall not be liable
for any rent until such time as Landlord can deliver possession.

(b) Landlord shall deliver possession of the Premises to Tenant, and
Tenant shall accept the same, in its "AS IS" condition. Tenant agrees that
Landlord has no obligation and has made no promise to alter, remodel, improve,
or repair the Premises or any part thereof or to repair, bring into compliance
with applicable laws, or improve any condition existing in the Premises as of
the Commencement Date. Tenant agrees that neither Landlord nor any of
Landlord's employees or agents has made any representation or warranty as to
the present of future suitability of the Premises for the conduct of Tenant's
business therein. Any improvements or personal property located in the Premises
are delivered without any representation or warranty from Landlord, either
express or implied, of any kind, including merchantability or suitability for a
particular purpose.

5. RENT.

(a) Tenant shall pay to Landlord the following amounts as rent for the
Premises:

(i) During the Term, Tenant shall pay Landlord, as base monthly
rent, the respective amounts of monthly rent specified in the Basic Lease
Information (the "Base Rent"). If the Commencement Date should occur on a day
other than the first day of a calendar month, or if the Expiration Date should
occur on a day other than the last day of a calendar month, then the Base Rent
for such fractional month shall be prorated upon a daily basis based upon a
thirty (30) day month. Base Rent is due and payable monthly, in advance, on the
first day or each calendar month, except that Base Rent for the first full
calendar month of the Term (the "First Month") shall be paid upon execution of
this Lease. If the Commencement Date occurs on a day other than the first day
of a calendar month, Base Rent for the period from the Commencement Date occurs
on a day other than the first day of a calendar month, Base Rent for the period
from the Commencement Date through the end of said calendar month shall be due
and payable on the Commencement Date, and the Base Rent payable upon execution
of this Lease shall be credited against the Base Rent due for the First Month
as of the first day of the First Month.

1
<PAGE> 2
(b) Rent shall be paid in lawful money of the United States of America,
in advance, free from all claims, demands, or set-offs against Landlord of any
kind or character whatsoever, at the office of Landlord in the Building or to
Landlord, c/o CAC Real Estate Management Co., Inc, 255 California Street, Suite
200, San Francisco, CA 94111, or at such other place as Landlord may designate
in writing.

6. USE.

(a) The Premises shall be used for general office purposes only, except
as limited by Paragraph 6(b), and, subject to the terms of this Lease, uses
incidental thereto, and shall be used for no other purpose without the prior
written consent of Landlord. The use of an existing kitchen facility located in
the Premises, subject to the terms of this Lease, is deemed an incidental use.

(b) Tenant shall in no way obstruct or interfere with the rights of other
tenants of the Building, or injure or annoy them, or use, or allow the Premises
to be used for any unlawful or objectionable purpose. Tenant may not use any
part or all of the Premises for any retail operations; a medical or dental
office; an office providing any type of psychological, or drug counseling or
employment placement or agency, office; telemarketing operations; consulate,
foreign mission or trade office; government or regulatory agency office;
educational institution with classrooms, or similar uses. Solicitations or
promotions by Tenant to other tenants in the Building are prohibited.

(c) Tenant shall not use the Premises or permit anything to be done in or
about the Premises or the Building which will in any way conflict with any
present or future law, statute, ordinance, code, rule regulation, requirement,
license, permit, certificate, judgment, decree, order or direction of any
present or future governmental or quasi-governmental authority, agency,
department, board, panel or court (singularly and collectively "Laws"). Tenant
shall, at its expense, promptly comply with all Laws (including without
limitation, the Federal Americans with Disabilities Act and any Hazardous
Materials Laws (as hereinafter defined), and with the requirements of any board
of fire insurance underwriters or other similar bodies now or hereafter
constituted, relating to or affecting the condition, use or occupancy of the
Premises. It is the intent of the parties to allocate to Tenant the cost of
compliance of any and all Laws, regardless of the existing condition of the
Premises, the cost of compliance or the foreseeability of the enactment or
application of the Laws to the Premises. Notwithstanding the foregoing, Tenant
shall not be required to make structural changes to the Premises unless they
arise or are required because of or in connection with Tenant's specific use of
the Premises, or the type of business conducted by Tenant in the Premises, or
Tenant's Alterations, or Tenant's acts or omissions. Tenant shall obtain and
maintain in effect during the Term all licenses and permits required for the
proper and lawful conduct of Tenant's business in the Premises, and shall at
all times comply with such licenses and permits.

(d) Supplementing the provisions of Paragraph 6(c) above, Tenant shall
not use the Premises or any portion of the Building in violation of any
federal, state, or local law, ordinance, or regulation relating to the
environment, health, or safety. Tenant shall not use, generate, manufacture or
store in or about the Premises or the Building or transport to or from the
Premises or the Building any explosives, radioactive materials, hazardous
materials, hazardous wastes, asbestos, PCB transformers, toxic substances or
related materials (collectively "Hazardous Materials"), other than the use and
storage in the Premises of small quantities of such substances when found in
commonly used household cleansers, office supplies and general office
equipment, and any such substances shall be used, kept, stored and disposed of
in strict accordance with all applicable federal, state and local laws now in
force or which may hereafter be in force relating to the protection of human
health or the environment from Hazardous Materials, including all requirements
pertaining to reporting, licensing, permitting, investigation and remediation
of emissions, discharges, storage, disposal or releases of Hazardous Materials
and all requirements pertaining to the protection of the health and safety of
employees or the public with respect to Hazardous Materials (collectively,
"Hazardous Materials Laws"). Hazardous Materials shall include, without
limitation, substances defined as "hazardous substances", "hazardous materials",
"toxic substances", "hazardous waste" or "waste" in the Comprehensive
Environmental Response. Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sec. 9601 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
Sec. 1801 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sec.
6901 et seq.; and those substances defined as "hazardous wastes" in Section
25117 of the California Health & Safety Code or as "hazardous substances" in
subdivision (f) of Section 25281, and Section 25316, of the California Health &
Safety Code; and any "waste" as defined in subdivision (d) of Section 13050 of
the Water Code; and in the regulations adopted and publications promulgated
pursuant to any of the aforementioned said laws; and in any revised or
successor code thereto; and any other chemical, material or substance at levels
for which exposure is prohibited, limited or regulated by any governmental
authority.

7. RULES AND REGULATIONS.

Tenant shall faithfully observe and comply with the Rules and Regulations
attached to this Lease as Exhibit "C" and made a part hereof, and such other
reasonable rules and regulations as Landlord may from time to time adopt for
the safety, care and cleanliness of the Building, the facilities thereof, or
the preservation of good order therein (collectively, the "Building Rules").
Landlord reserves the right from time to time in its sole discretion to make
all reasonable additions and modifications to the Building Rules. Any additions
and modifications to the Building Rules shall be binding on Tenant when
delivered to Tenant. Landlord shall not be liable to Tenant for violation of
any such Building Rules, or for the breach of any covenant or condition in any
lease, by any other tenant in the Building. In the event of any conflict
between this Lease and the Rules and Regulations, the terms of this Lease shall
govern. A waiver by Landlord of any rule or regulation for any other tenant
shall not constitute nor be deemed a waiver of the rule or regulation for this
Tenant.

<PAGE> 3
8. ASSIGNMENT AND SUBLETTING.

(a) Tenant will not assign, mortgage or hypothecate this Lease, or any
interest therein, or permit the use of the Premises by any person or persons
other than the Tenant, or sublet the Premises, or any part thereof, without the
prior written consent of Landlord. Consent to any such assignment or sublease
shall not operate as a waiver of the necessity for a consent to any subsequent
assignment or sublease, and the terms of such consent shall be binding upon any
person holding by, under or through Tenant.

(b) If Tenant desires to assign its interest in this Lease or to sublease
all or any part of the Premises, Tenant shall notify Landlord in writing at
least thirty (30) days in advance of the proposed transaction. This notice
shall be accompanied by: (i) a statement setting forth the name and business of
the proposed assignee or subtenant; (ii) a copy of the proposed form of
assignment or sublease (and any collateral agreements) setting forth all of the
material terms and the financial details of the sublease or assignment
(including, without limitation, the term, the rent and any security deposit,
"key money," and amounts payable for the use, rental or purchase of Tenant's
property); (iii) financial statements and other information requested by
Landlord relating to the proposed assignee or subtenant; and (iv) any other
information concerning the proposed assignment or sublease which Landlord may
reasonably request. If Tenant proposes to assign this Lease or sublet all or a
substantial part (in excess of sixty percent of the square footage) of the
Premises, Landlord shall have the right, in its sole and absolute discretion,
to terminate this Lease on written notice to Tenant within thirty (30) days
after receipt of Tenant's notice and the information described above or the
receipt of any additional information requested by Landlord. If Landlord elects
to terminate this Lease, this Lease shall terminate as of the effective date of
the proposed assignment or commencement of the term of the proposed sublease as
set forth in Tenant's notice, and Landlord shall have the right (but no
obligation) to enter into a direct lease with the proposed assignee or
subtenant. Tenant may withdraw its request for Landlord's consent at any time
prior to, but not after, Landlord delivers a written notice of termination.

(c) If Landlord elects not to terminate this Lease pursuant to Paragraph
9(b) above, or if a proposed sublease is for less than substantially all of the
Premises, Landlord shall not unreasonably withhold its consent to an assignment
or subletting. (For purposes of this Paragraph 9, an assignment shall not
include an assignment for security purposes, which shall only be permitted with
the prior consent of Landlord in its sole and absolute discretion). Tenant
agrees that the withholding of Landlord's consent shall be deemed reasonable if
all of the following conditions are not satisfied.

(i) The proposed assignee or subtenant shall use the Premises only
for the Permitted Use, and the business of the proposed assignee or subtenant
is consistent with the other uses and the standards of the Building, in
Landlord's reasonable judgment.

(ii) The proposed assignee or subtenant is reputable and has a net
worth not less than the net worth of Tenant on the execution of this Lease, has
a credit rating reasonably acceptable to Landlord, and otherwise has sufficient
financial capabilities to perform all of its obligations under this Lease or
the proposed sublease, in Landlord's reasonable judgment.

(iii) Neither the proposed assignee or subtenant nor any person or
entity that directly or indirectly controls, is controlled by, or is under
common control with, the proposed assignee or subtenant is a party (including,
without limitation, an existing occupant of any part of the Building) to whom
Landlord has, during the six (6) month period prior to the delivery of Tenant's
written notice, marketed space in the Building that would generally fit such
party's leasing requirements.

(iv) Tenant is not in default and has not committed acts or
omissions which with the running of time or the giving of notice or both would
constitute a default under this Lease.

(v) All of the other terms of this Paragraph 9 are complied with.

The conditions described above are not exclusive and shall not limit or prevent
Landlord from considering additional factors in determining if it should
reasonably withhold its consent.

(d) Each permitted assignee, transferee or subtenant, other than
Landlord, shall assume and be deemed to have assumed this Lease and shall be
liable jointly and severally with Tenant for the payment of the rent and for
the due performance or satisfaction of all of the provision, covenants,
conditions and agreements herein contained on Tenant's part to be performed or
satisfied. Regardless of Landlord's consent, no subletting or assignment shall
release or alter Tenant's obligation or primary liability to pay the rent and
perform all other obligations under this Lease. No permitted assignment or
sublease shall be binding on Landlord unless such assignee, subtenant or Tenant
shall deliver to Landlord a counterpart of such assignment or sublease which
contains a covenant of assumption by the assignee or subtenant, but the failure
or refusal of the assignee or subtenant to execute such instrument of
assumption shall not release or discharge the assignee or subtenant from its
liability as set forth above.

(e) If Tenant is a partnership, a transfer of the interest of any general
partner, a withdrawal of one or more general partner(s) from the partnership, or
the dissolution of the partnership, shall be deemed to be an assignment of this
Lease. If Tenant is currently a partnership (either general or limited), joint
venture, co-tenancy, joint tenancy or an individual, the conversion of the
Tenant entity or person into any type of entity which possesses the
characteristics of limited liability such as, by way of example only, a
corporation, a limited liability company, limited liability partnership, or
limited liability limited partnership, shall be deemed an assignment for
purposes of this Lease. If Tenant is a corporation or limited liability company,
unless Tenant is a public corporation, that is to say, a corporation whose
stock is regularly traded on a national stock exchange, or is regularly traded
in the over-the-counter market and quoted on

3
<PAGE> 4
NASDAQ, any merger, consolidation, or other reorganization of Tenant, or the
sale or other transfer of any of the voting stock or membership interests of
Tenant in one or more transactions that in the aggregate results in a transfer
of forty-five percent (45%) or more of the voting equity or membership
interest(s) in Tenant, or the sale or other transfer of substantially all of the
assets of Tenant, shall be deemed to be an assignment of this Lease.

(f) Any notice by Tenant to Landlord pursuant to this Paragraph 9 of a
proposed assignment or sublease shall be accompanied by a payment of $750 as a
non-refundable fee for the processing of Tenant's request for Landlord's
consent. In addition to said fee, Tenant shall reimburse Landlord for reasonable
attorneys' fees incurred by Landlord in connection with such review and the
preparation of documents in connection therewith. Tenant shall pay to Landlord
monthly on or before the first (1st) of each month one-half (1/2) of the rent or
other consideration received from such assignee(s) or subtenant(s) relating to
the leasehold estate of the Premises so assigned or sublet, and with respect to
the use of Tenant's property over and above the concurrent underlying rent
payable by Tenant to Landlord for that portion of the Premises being assigned or
sublet, and after deduction for the amortized portion of the reasonable expenses
actually paid by Tenant to unrelated third parties for brokerage commissions,
legal fees, or tenant improvements to the Premises. Tenant shall furnish
Landlord with a true signed copy of such assignment(s) or sublease(s) and any
supplementary agreements or amendments thereto, within five (5) days after their
respective execution.

9. SALE.

If Landlord sells or conveys the Building containing the Premises and the
successor-in-interest of Landlord assumes the terms, covenants and conditions of
this Lease, Landlord shall be released thereby from any liability arising after
the date of such transfer upon any of said terms, covenants and conditions, and
Tenant agrees to look solely to such successor-in-interest of Landlord.

10. MAINTENANCE AND REPAIRS.

(a) Landlord shall maintain and repair the public and common areas of the
Building, such as plazas, lobbies, stairs, corridors and restrooms, the roof and
exterior elements of the Building, and the elevator, mechanical and electrical
systems of the Building and keep such areas, elements and systems in good order
and condition, consistent with the standards of other comparable buildings in
the South of Market/China Basin district. Any damage in or to any such areas,
elements or systems caused by Tenant or any agent, officer, employee,
contractor, licensee or invitee of Tenant shall be repaired by Landlord at
Tenant's expense and Tenant shall pay to Landlord, upon billing by Landlord, as
additional rent, the cost of such repairs incurred by Landlord.

(b) Tenant shall, at all times during the Term of this Lease and at
Tenant's sole cost and expense, maintain and repair the Premises and every part
thereof and all equipment (including, without limitation, any air conditioning
units exclusively serving Tenant and located in the Premises ("Supplemental
HVAC") and/or any kitchen equipment), and any fixtures and improvements therein,
and keep all of the foregoing clean and in good order and operating condition,
ordinary wear and tear and damage thereto by fire or other casualty excepted.
All repairs and replacements made by or on behalf of Tenant shall be made and
performed at Tenant's cost and expense and at such time and in such manner as
Landlord may reasonably designate, by contractors or mechanics reasonably
approved by Landlord and so that the same shall be at least equal in quality,
value, character and utility to the original work or installation being repaired
or replaced. Tenant hereby waives all rights under California Civil Code Section
1941 and all rights to make repairs at the expense of Landlord or in lieu
thereof to vacate the Premises as provided by California Civil Code Section 1942
or any other law, statute or ordinance now or hereafter in effect. Tenant shall,
at the end of the Term of this Lease, surrender to Landlord the Premises and all
alterations, additions, fixtures and improvements therein or thereto in the same
condition as when received, ordinary wear and tear and damage thereto by fire or
other casualty excepted.

(c) Landlord reserves the right, at any time and from time to time, to
have Landlord's engineer estimate (on an average cost per month basis) the
additional electrical and other related operating costs attributable to Tenant's
operation of any Supplemental HVAC (the "Excess HVAC Cost"). Landlord shall
notify Tenant of such estimate, and provide Tenant with reasonable documentation
in support of the Excess HVAC Cost. Beginning on the first day of the calendar
month next following Tenant's receipt of Landlord's estimate of the Excess HVAC
Cost, Tenant shall pay to Landlord, as additional rent, the amount of the Excess
HVAC Cost.

11. SERVICES.

(a) Landlord agrees to furnish to the Premises at all times (subject to
interruption as provided in this Lease) electricity for lighting and the
operation of desktop office equipment of low electrical consumption and water as
may be required for the comfortable occupation of the Premises. Restroom
(toilet) facilities shall be provided by Landlord for use by Tenant and its
employees and licensees in the common area of the Building, and access thereto
may be limited by "key" access. In addition, subject to the Building Rules,
during the business hours and on the business days established thereunder by
Landlord, Landlord will supply heat as may be required for the comfortable
occupation of the Premises and janitorial services, limited to emptying and
removal of general office refuse, light vacuuming, as needed, and window washing
as determined by Landlord. Tenant shall pay (as additional rent) all costs
attributable to Tenant's use of Building services and utilities outside of the
Building's business hours promptly upon receipt of Landlord's invoice therefor.
Landlord, however, shall not be liable for failure to furnish any of the
foregoing when such failure is caused by accidents or conditions beyond the
control of Landlord, or by repairs, labor disturbances or labor disputes of any
character, whether resulting from or caused by acts of Landlord or otherwise,
nor shall Landlord be liable under any circumstances for loss of or injury to
property, however occurring, through or in connection

4
<PAGE> 5
with or incidental to the furnishing of any of the foregoing, nor shall any
such failure relieve Tenant from the duty to pay the full amount of rent herein
reserved, or constitute or be construed as a constructive or other eviction of
Tenant. Tenant hereby waives the provisions of California Civil Code Section
1932(1) or any other applicable existing or future law.

(b) Subject to Paragraph 34 hereof, Landlord shall provide passenger
elevator service (which may be unmanned) on a 24 hour per day, 365 days per year
basis, and freight elevator service as reasonably required by Tenant.

(c) Tenant shall not alter, modify, add to or disturb any
telecommunications wiring or cabling in the Premises or elsewhere in the
Building without Landlord's prior written consent. Landlord shall provide and
maintain, at no expense to Tenant (other than as an item of Operating Expenses),
telephone riser space in the Building core adequate to accommodate the
telecommunications needs of a general office tenant, and lines and conduit in
Building risers or pathways that provide a continuous connection of
intrabuilding telecommunications cabling from a telephone closet located on the
floor of the Premises ("Tenant's Telephone Closet") to the main telephone closet
located in the ground or basement level floors of the Building. Subject to such
reasonable rules and regulations as may be adopted by Landlord for uniform
application to all tenants in the Building. Landlord shall permit Tenant
reasonable access to Tenant's Telephone Closet and the Buildings intrabuilding
telecommunications cabling for the purposes permitted hereunder and agrees that
Tenant may install, remove and maintain in the Premises such voice and data
telecommunications equipment as is generally utilized by office tenants and, in
connection therewith, to connect the same to the distribution frames located in
Tenant's Telephone Closet. Tenant shall be liable to Landlord for any damage to
the telecommunications cabling and wiring in the Building due to the act
(negligent or otherwise) of Tenant or any employee, agent or contractor of
Tenant. Landlord makes no representation to Tenant regarding the condition,
security, availability or suitability for Tenant's purposes of existing
intrabuilding network cabling or any telecommunications services presently
located within the Building, and Tenant hereby waives any claim against Landlord
for any damages if Tenant's telecommunications services are in any way
interrupted, damaged or otherwise interfered with, except to the extent caused
by the gross negligence or willful or criminal misconduct of Landlord, its
agents or employees, provided that in no event shall such interruption, damage
or interference entitle Tenant to any consequential damages (including damages
for loss of business) or relieve Tenant of any of its obligations under this
Lease. Tenant shall maintain and repair all telecommunications cabling and
wiring within or exclusively serving the Premises. Landlord reserves the right
to limit the number of local exchange carriers and competitive alternative
telecommunications providers (collectively "TSPs") having access to the
Building's riser system and intrastructure, and Landlord reserves the right to
charge TSPs for the use of Landlord's telecommunications riser system and
infrastructure; provided, however, in all cases, Landlord will provide Building
and riser access to at least one TSP for dial tone telecommunications service to
tenants of the Building.

(d) Tenant's installation of telephone lines, cables, and other electronic
telecommunications services and equipment shall be subject to the terms and
conditions of Paragraph 13 of this Lease. Upon the expiration or earlier
termination of this Lease. Tenant shall remove, at its sole cost and expense,
all of Tenant's telecommunications lines and cabling designated by Landlord for
removal.

12. ALTERATIONS

(a) Tenant shall make no alterations, improvements or additions in or to
the Premises or any part thereof (individually and collectively, "Alterations")
without giving Landlord prior notice of the proposed Alterations and obtaining
Landlord's prior written consent thereto, which consent, except as hereafter
provided, shall not be unreasonably withheld or delayed; provided, however,
Landlord may withhold its consent in its sole discretion if any proposed
Alterations would adversely affect any of the structural elements of the
Building, the Building's electrical, plumbing, heating, telecommunications,
mechanical or life safety systems. Any and all work by Tenant shall be performed
only by contractors approved by Landlord and, where the prior consent of
Landlord is required, upon the approval by Landlord of fully detailed and
dimensioned plans and specifications pertaining to the work in question, to be
prepared and submitted by Tenant at its sole cost and expense. The contractor or
person selected to make such Alterations shall at all times be subject to
Landlord's control while in the Building. Upon substantial completion of any
Alterations, Tenant shall deliver to Landlord two (2) sets of "as built" plans
covering said Alterations and a copy of the final building permit for the work
signed off as approved by the appropriate building inspector.

(b) Tenant shall at its sole cost and expense obtain all necessary
approvals and permits pertaining to any Alterations. Tenant shall be solely
responsible for any additional alterations and improvements required by law to
be made elsewhere in or to the Premises, or in or to any portion of the Building
as a result of any Alterations to the Premises made by or for Tenant. All
Alterations (other than trade fixtures), including, but not limited to
carpeting, other floor coverings, built-in shelving, bookcases, paneling and
built-in security systems (excluding any leased system) made in or upon the
Premises either by or for Tenant and affixed to or forming a part of the
Premises, shall immediately upon installation become Landlord's property free
and clear of all liens and encumbrances. If requested by Landlord at the time
Landlord approves of the installation or construction of said alteration,
addition or improvement, Tenant shall remove or cause to be removed at its
expense, upon the expiration or any sooner termination of this Lease, any and
all Alterations made in or upon the Premises during the term of this Lease by or
for Tenant.

(c) Tenant shall keep the Premises and the Building free from any
mechanics' liens, vendors liens or any other liens arising out of any work
performed, materials furnished or obligations incurred by Tenant, and agrees to
defend, indemnify and hold harmless Landlord from and against any such lien or
claim or action thereon, together with costs of suit and reasonable attorney's
fees incurred by Landlord in connection with any such claim or action. Before

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commencing any work or alteration, addition or improvement to the Premises
which requires Landlord's consent, Tenant shall give Landlord at least ten (10)
business days' written notice of the proposed commencement of work (to afford
Landlord an opportunity to post appropriate notices of non-responsibility). In
the event that there shall be recorded against the Premises or the Building or
the property of which the Premises is a part any claim or lien arising out of
any such work performed, materials furnished or obligations incurred by Tenant
and such claim or lien shall not be removed, bonded over or discharged by
Tenant within ten (10) days of written notice from Landlord. Landlord shall
have the right but not the obligation to pay and discharge said lien by bond or
otherwise without regard to whether such lien shall be lawful or correct. Any
reasonable costs, including attorney's fees incurred by Landlord, shall be paid
by Tenant within ten (10) days after demand by Landlord.

(d) Before any Alterations or construction with respect thereto are
undertaken by or on behalf of Tenant, Tenant shall provide Landlord with
certificates of insurance evidencing the maintenance in effect by Tenant (or
Tenant shall require any contractor performing work on the Premises to carry
and maintain, at no expense to Landlord) of workers' compensation insurance as
required by applicable law, and Commercial General Liability insurance
(including, without limitation, Contractor's Liability coverage, Contractual
Liability coverage and Completed Operations coverage) written on an occurrence
basis with a minimum combined single limit of Two Million Dollars ($2,000,000)
and adding the "Owner(s) of the Building and its (or their) respective members,
principals, beneficiaries, partners, officers, directors, employees, agents
(and their respective members and principals) and mortgagee(s)" (and any other
designees of Landlord as the interest of such designees shall appear) as
additional insureds.

(e) Certain materials in the Building, including but not limited to the
sprayed-on fireproofing materials applied to certain structural members in the
Building, contain asbestos containing materials ("ACM"). In order to prevent
exposure to ACM, Landlord has established rules and regulations governing the
manner in which Alterations are to be undertaken. Tenant must comply with all
Building Rules established by Landlord. Tenant shall, at its sole cost and
expense, comply with any and all statutes, ordinances, codes or regulations, or
mandatory or voluntary controls or guidelines with respect to ACM, in the
performance of any Alterations. Such compliance, including the removal of all
or a portion of ACM, whether in the Premises (by Tenant) or elsewhere in the
Building (by Landlord), shall not, in any event, (i) entitle the Tenant to
damages, (ii) relieve Tenant of the obligation to pay any sums due hereunder,
(iii) constitute or be construed as a constructive or other eviction of Tenant,
or (iv) constitute or be construed as a breach of Tenant's quiet enjoyment.

(f) Tenant shall pay to Landlord a project administration fee equal to
five percent (5%) of the cost of any Alterations to compensate Landlord for the
administrative costs incurred and the Building services provided by Landlord in
the supervision and coordination of the work.

13. INDEMNIFICATION, EXCULPATION AND INSURANCE.

(a) Landlord shall not be liable to Tenant, and Tenant hereby waives
all claims against Landlord, for any damage to or loss or theft of any property
or for any bodily or personal injury, illness or death of any person in, on or
about the Premises or the Building arising at any time and from any cause
whatsoever, except to the extent caused by the gross negligence or willful
misconduct of Landlord. In no event shall Landlord be liable for any
consequential or punitive damages (including, but not limited to, damage or
injury to persons, property and the conduct of Tenant's business and any loss
of revenue therefrom).

(b) Tenant shall indemnify and defend Landlord against and hold Landlord
harmless from all claims, demands, liabilities, damages, losses, costs and
expenses, including reasonable attorneys' fees and disbursements, arising from
or related to any use or occupancy of the Premises, or any condition of the
Premises, or any default in the performance of Tenant's obligations, or any
damage to any property (including property of employees and invitees of Tenant)
or any bodily or personal injury, illness or death of any person (including
employees and invitees of Tenant) occurring in, on or about the Premises or any
part thereof arising at any time and from any cause whatsoever (except to the
extent caused by the gross negligence or willful misconduct of Landlord) or
occurring in, on or about any part of the Building other than the Premises when
such damage, bodily or personal injury, illness or death is caused by any act or
omission of Tenant or its agents, officers, employees, contractors, invitees or
licensees. This Paragraph 14(b) shall survive the termination of this Lease with
respect to any damage, bodily or personal injury, illness or death occurring
prior to such termination.

(c) Tenant shall, at all times during the Term of this Lease and at
Tenant's sole cost and expense, obtain and keep in force workers' compensation
insurance as required by law, including an employers' liability endorsement;
business interruption insurance in an amount equal to all rent payable under
this Lease for a period of twelve (12) months (at the then current rent
charged); and commercial general liability insurance, including contractual
liability (specifically covering this Lease), fire legal liability, and
premises operations, with a minimum combined single limit of Two Million
Dollars ($2,000,000) per occurrence for bodily or personal injury to, illness
of, or death of persons and damage to property occurring in, on or about the
Premises or the Building. Tenant shall, at Tenant's sole cost and expense, be
responsible for insuring Tenant's furniture, equipment, fixtures, computers,
office machines and personal property ("Tenant's Property").

(d) All insurance required under this Paragraph 14 and all renewals
thereof shall be issued by financially responsible and reputable insurance
companies, qualified to do business in the State of California and reasonably
acceptable to Landlord. Liability amounts in excess of Two Million Dollars
($2,000,000) may be carried under umbrella coverage policies. Each policy shall
have a deductible or deductibles, if any, which do not exceed Ten Thousand
Dollars ($10,000) per occurrence. Each policy shall expressly provide that the
policy shall not be canceled or altered without thirty (30) days' prior written
notice to Landlord and shall remain in effect notwithstanding any such
cancellation

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or alteration until such notice shall have been given to Landlord and such
period of thirty (30) days shall have expired. All liability insurance under
this Paragraph 14 shall name Landlord and any other parties designated by
Landlord as an additional insured, shall be primary and noncontributing with any
insurance which may be carried by Landlord, shall afford coverage for all claims
based on any act, omission, event or condition that occurred or arose (or the
onset of which occurred or arose) during the policy period, and shall expressly
provide that Landlord, although named as an insured, shall nevertheless be
entitled to recover under the policy for any loss, injury or damage to Landlord.
Upon the issuance thereof, Tenant shall deliver each such policy or a certified
copy and a certificate thereof to Landlord for retention by Landlord. If Tenant
fails to insure or fails to furnish to Landlord upon notice to do so any such
policy or certified copy and certificate thereof as required, Landlord shall
have the right from time to time to effect such insurance for the benefit of
Tenant or Landlord or both of them and all premiums paid by Landlord shall be
payable by Tenant as additional rent on demand.

(e) Tenant waives on behalf of all insurers under all policies of
property, liability and other insurance (excluding workers' compensation) now or
hereafter carried by Tenant insuring or covering the Premises, or any portion or
any contents thereof, or any operations therein, all rights of subrogation which
any insurer might otherwise, if at all, have to any claims of Tenant against
Landlord. Landlord waives on behalf of all insurers under all policies of
property, liability and other insurance (excluding workers' compensation) now or
hereafter carried by Landlord insuring or covering the Building or any portion
or any contents thereof, or any operations therein, all rights of subrogation
which any insurer might otherwise, if at all, have to any claims of Landlord
against Tenant. Tenant shall, prior to or immediately after the date of this
Lease, procure from each of the insurers under all policies of property,
liability and other insurance (excluding workers' compensation) now or hereafter
carried by Tenant insuring or covering the Premises, or any portion or any
contents thereof, or any operations therein, a waiver of all rights of
subrogation which the insurer might otherwise, if at all, have to any claims of
Tenant against Landlord as required by this Paragraph 14.

14. DESTRUCTION.

(a) In the event the Premises or any portion of the Building is damaged
by fire or other insured casualty, Landlord shall diligently repair the same to
the extent possible with the insurance proceeds received by Landlord, subject to
the provisions of this Paragraph hereinafter set forth, if such repairs can in
Landlord's opinion be completed within 45 days following the occurrence of the
casualty under the laws and regulations of federal, state and local governmental
authorities having jurisdiction thereof. In such event this Lease shall remain
in full force and effect except that if such damage is not the result of the
negligence or willful misconduct of Tenant or Tenant's agents, contractors,
employees, subtenants, licenses, invitees or visitors, an abatement of basic
rent shall be allowed Tenant for such part of the Premises as shall be rendered
unusable by Tenant in the conduct of its business during the time such part is
so unusable. Notwithstanding the foregoing, if such casualty shall occur during
the final twelve months of the term of this Lease, Landlord shall not be
obligated to repair such damage, but may instead elect to terminate this Lease
upon written notice given to Tenant within 30 days after the date of such fire
or other casualty, in which event this Lease shall terminate as of the
termination date specified in Landlord's notice. A total destruction of the
Building shall automatically terminate this Lease.

(b) If such repairs cannot in Landlord's opinion be made during the time
period and at a cost provided in subparagraph (a) above, Landlord may elect upon
notice to Tenant given 45 days after the date of such fire or other casualty to
(i) repair or restore such damage, in which event this Lease shall continue in
full force and effect, but Base Rent shall be partially abated as hereinabove in
this Paragraph provided, or (ii) terminate this Lease in which event this Lease
shall terminate as of the termination date specified in Landlord's notice.
Landlord's election shall be binding on Tenant.

(c) Landlord and Tenant acknowledge that this Lease constitutes the
entire agreement of the parties regarding events of damage or destruction, and
Tenant waives the provisions of California Civil Code Section 1932(2) and
1933(4) and any similar statute now or hereafter in force. No such casualty (nor
Landlord's subsequent restoration and repair work) shall constitute a
constructive eviction or give Tenant any rights to terminate this Lease.

(d) If the Premises are to be repaired under this Paragraph, Landlord
shall repair at its cost any injury or damage to the Building itself and the
initial improvements to the Premises made by Landlord. Tenant shall pay the cost
of repairing or replacing all other improvements in the premises and Tenant's
trade fixtures, furnishings, equipment and other personal property.

15. ENTRY.

Tenant will permit Landlord and its agents to enter into and upon the
Premises at all reasonable times for the purpose of inspecting the same, or for
the purpose of protecting owners' reversion, or to make alterations or additions
to the Premises or to any other portion of the Building, or for maintaining any
service provided by Landlord to Tenant hereunder, including engineering
maintenance, window cleaning and janitorial service, without any rebate of rent
to Tenant for any loss of occupancy or quiet enjoyment of the Premises, or
damage, injury or inconvenience thereby occasioned, and will permit Landlord at
any time to bring upon the Premises, for purposes of inspection or display,
prospective tenants thereof.

16. EVENTS OF DEFAULT.

The occurrence of any one or more of the following events (each, an "Event
of Default") shall constitute a breach of this Lease by Tenant: (i) if Tenant
shall default in its obligation to pay any rent or other payment(s) due
hereunder as and when due and payable; provided, however, with respect to the
first such delinquency in payment of

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<PAGE> 8
rent during any twelve (12) month period, such delinquency in payment of rent
shall not, in and of itself, be deemed to be an Event of Default until the
failure of payment continues for a period of five (5) days after written notice
thereof from Landlord to Tenant; or (ii) if Tenant shall fail to perform or
observe any other term hereof (except as otherwise provided in this Paragraph)
or of the Building Rules described in Paragraph 8 hereof to be performed or
observed by Tenant, such failure shall continue for more than ten (10) days
after notice thereof from Landlord, and Tenant shall not within such period
commence with due diligence and dispatch the curing of such default, or, having
so commenced, thereafter shall fail or neglect to prosecute or complete with due
diligence the curing of such default; or (iii) any assignment or subletting in
violation of the terms of this Lease; or (iv) if Tenant shall make a general
assignment for the benefit of creditors, or shall admit in writing its inability
to pay its debts as they become due or shall file a petition in bankruptcy, or
shall be adjudicated as bankrupt or insolvent or shall file a petition seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, or shall seek or consent to or acquiesce in the appointment of any
trustee, receiver or liquidator of Tenant or any material part of its property;
or (v) the taking of any action leading to, or the actual dissolution or
liquidation of Tenant, if Tenant is other than an individual; or (vi) if within
sixty (60) days after the commencement of any proceeding against Tenant seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such proceeding shall not have been dismissed, or if within ninety
(90) days after the appointment without the consent or acquiescence of Tenant,
of any trustee, receiver or liquidator of Tenant or of any material part of its
properties, such appointment shall not have been vacated; or (vii) if this Lease
or any estate of Tenant hereunder shall be levied upon under any attachment or
execution and such attachment or execution is not vacated within thirty (30)
days.

17. TERMINATION UPON DEFAULT.

In any notice given pursuant to any one or more Events of Default, Landlord
in its sole discretion may elect to declare a forfeiture of this Lease as
provided in Section 1161 of the California Code of Civil Procedure, and provided
that Landlord's notice states such an election, Tenant's right to possession
shall terminate and this Lease shall terminate, unless on or before the date
specified in such notice all arrears of rent and all other sums payable by
Tenant under this Lease, and all costs and expenses incurred by or on behalf of
Landlord hereunder, including attorneys' fees, incurred in connection with such
default, shall have been paid by Tenant and all other breaches of this Lease by
Tenant at the time existing shall have been fully remedied to the satisfaction
of Landlord. Upon such termination, Landlord may recover from Tenant (a) the
worth at the time of award of the unpaid rent which had been earned at the time
of termination; (b) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rent loss that Tenant proves could reasonably
have been avoided; (c) the worth at the time of award of the amount by which the
unpaid rent for the balance of the Term after the time of award exceeds the
amount of such rent loss that Tenant proves could be reasonably avoided; and (d)
any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom. The "worth at the time of award" of the amount referred to in clauses
(a) and (b) above is computed by allowing interest at the discount rate of the
Federal Reserve Bank of San Francisco plus 5% per annum at date of termination,
but in no event in excess of the maximum rate of interest permitted by law. The
worth at the time of award of the amount referred to in clause (c) above is
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus 1%. For the purpose of
determining unpaid rent under clause (c) above, the monthly rent reserved in
this Lease shall be deemed to be the sum of the Base Rent and the amounts last
payable by Tenant as reimbursement of expenses pursuant to Paragraphs 5(a)(ii)
and (iii) hereof for the calendar year in which Landlord terminated this Lease
provided herein.

18. CONTINUATION AFTER DEFAULT.

Even though Tenant has breached this Lease and/or abandoned the Premises,
this Lease shall continue in effect for so long as Landlord does not terminate
Tenant's right to possession as provided in Paragraph 18 hereof, and Landlord
may enforce all its rights and remedies under this Lease, including the right to
recover rent as it becomes due under this Lease. In such event, Landlord may
exercise all of the rights and remedies of a landlord under Section 1951.4 of
the California Civil Code (which provides that a landlord may continue a lease
in effect after a tenant's breach and abandonment and recover rent as it becomes
due, if the tenant has the right to sublet or assign, subject only to reasonable
limitations), or any successor statute. Acts of maintenance or preservation or
efforts to relet the Premises or the appointment of a receiver upon initiative
of Landlord to protect Landlord's interest under this Lease shall not constitute
a termination of Tenant's right to possession.

19. OTHER RELIEF.

In the event of re-entry or taking possession of the Premises, Landlord
shall have the right but not the obligation to remove all or any part of the
trade fixtures, furnishings, equipment and personal property located in the
Premises and to place the same in storage at a public warehouse at the expense
and risk of Tenant or to sell such property in accordance with applicable law.
The remedies provided for in this Lease are in addition to any other remedies
available to Landlord at law or in equity, by statute or otherwise.

20. LANDLORD'S RIGHT TO CURE DEFAULT.

All agreements and provisions to be performed by Tenant under any of the
terms of this Lease shall be at its sole cost and expense and without abatement
of rent. If Tenant shall fail to pay any sum of money, other than rent, required
to be paid by it hereunder or shall fail to perform any other act on its part to
be performed hereunder and such failure shall not be cured, Landlord may, but
shall not be obligated to so do, and without waiving or releasing Tenant from
any obligations of Tenant, make any such payment or perform any such other act
on Tenant's part to be made or

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performed as provided in this Lease. All sums so paid by Landlord and all
necessary incidental costs shall be deemed additional rent hereunder and shall
be payable to Landlord on demand.

21. ATTORNEY'S FEES.

If as a result of any breach or default on the part of Tenant under this
Lease Landlord uses the services of an attorney in order to secure compliance
with this Lease, Tenant shall reimburse Landlord upon demand as additional rent
for any and all attorneys' fees and expenses incurred by Landlord, whether or
not formal legal proceedings are instituted. Should either party bring an action
against the other party, by reason of or alleging the failure of the other party
to comply with any or all of its obligations hereunder, whether for declaratory
or other relief, then the party which prevails in such action shall be entitled
to its reasonable attorneys' fees and expenses related to such action, in
addition to all other recovery or relief. A party shall be deemed to have
prevailed in any such action (without limiting the generality or foregoing) if
such action is dismissed upon the payment by the other party of the sums
allegedly due or the performance of obligations allegedly not complied with, or
if such party obtains substantially the relief sought by it in the actions,
irrespective of whether such action is prosecuted to judgment.

22. NO WAIVER.

Landlord's failure to take advantage of any default or breach of covenant
on the part of Tenant shall not be, or be construed as a waiver thereof, nor
shall any custom or practice which may grow up between the parties in the course
of administering this instrument be construed to waive or to lessen the right of
Landlord to insist upon the performance by Tenant of any term, covenant or
condition hereof, or to exercise any rights given him on account of any such
default. A waiver of a particular breach or default shall not be deemed to be a
waiver of the same or any other subsequent breach or default. The acceptance of
rent hereunder shall not be, nor be construed to be a waiver of any breach of
any term, covenant or condition of this Lease.

23. NOTICES.

All approvals, consents and other notices given by Landlord or Tenant
under this Lease shall be property given only if made in writing and either
deposited in the United States mail, postage prepaid, certified with return
receipt requested or delivered by hand (which may be through a messenger or
recognized delivery, courier or air express service) and addressed to Landlord
at the address of Landlord specified in the Basic Lease Information or at such
other place as Landlord may from time to time designate in a written notice to
Tenant and addressed to Tenant at the address of Tenant specified in the Base
Lease Information and, after the Commencement Date, at the Premises together
with a copy to such other address as Tenant may from time to time designate in a
written notice to Landlord. Such approvals, consents and other notices shall be
effective on the date of receipt (evidenced by the certified mail receipt), if
mailed, or on the date of hand delivery, if hand delivered. If any such
approval, consent or other notice is not received or cannot be delivered due to
change in the address of the receiving party of which notice was not previously
given to the sending party or due to a refusal to accept by the receiving party,
such request, approval, consent, notice or other communication shall be
effective on the date delivery is attempted. Any approval, consent or other
notice under this Lease may be given on behalf of a party by the attorney for
such party. Tenant hereby appoints as its agent to receive the service of all
default notices and notice of commencement of unlawful detainer proceedings the
person in charge of or apparently in charge of or occupying the Premises at the
time, and, if there is not such person, then such service may be made by
attaching the same on the main entrance of the Premises and such service shall
be effective for all purposes under this Lease.

24. EMINENT DOMAIN.

If all or any part of the Premises shall be taken as a result of the
exercise of the power of eminent domain or agreement in lieu thereof, this Lease
shall terminate as to the part so taken as of the date of taking, and, in the
case of a partial taking, Landlord shall have the right to terminate this Lease
as to the balance of the Premises by giving written notice to Tenant within
sixty (60) days after such date. Tenant waives the provisions of California Code
of Civil Procedure Section 1265.130 relating to the lease termination from a
partial taking. In the event of any taking, Landlord shall be entitled to any
and all compensation, damages, income, rent, awards, or interest therein which
may be paid or made in connection therewith, and Tenant shall have no claim
against Landlord for the value of any unexpired Term of this Lease or otherwise.
In the event of a partial taking of the Premises which does not result in a
termination of this Lease, the Base Rent thereafter to be paid shall be
equitably reduced. If all or any part of the Building shall be taken as a result
of the exercise of the power of eminent domain, Landlord shall have the right to
terminate this Lease by giving written notice to Tenant within sixty (60) days
after the date of taking, provided Landlord terminates substantially all of the
leases of other Building occupants similarly situated to Tenant.

25. LATE CHARGE.

Tenant acknowledges that late payment of rent and other sums due under
this Lease would cause Landlord to incur costs not contemplated by this Lease,
the exact amount of which would be difficult to ascertain. These costs include,
but are not limited to processing and accounting charges and increased interest
expenses on Landlord's funds. Accordingly, if any installment of rent or any
other sums due from Tenant are not received when due, Tenant shall pay to
Landlord a late charge equal to ten percent (10%) of the overdue amount. In
addition, if any rent or other delinquent, the unpaid amount shall bear interest
from the due date until paid at the publicly announced prime rate or reference
rate charged on such due date by the San Francisco Main Office of Bank of
America, N.T.& S.A. (or any successor bank) for short term, unsecured loans to
its most credit worthy borrowers, plus five percent (5%) per annum but in no
event shall such rate of interest exceed the maximum rate permitted by law. In
addition to the foregoing, in

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the event any payment of rent or other sums due Landlord from by Tenant is made
by the tender of a check, and said check is dishonored by Tenant's bank for
insufficient funds or for any other reason. Tenant shall pay Landlord a $50.00
returned check fee (the "NSF charge") to compensate Landlord for the costs
associated with processing such dishonored check. The parties agree that the
foregoing late charges and NSF charge represent a fair and reasonable estimate
of the costs Landlord will incur because of said late or dishonored payment.
Acceptance of said charges by Landlord shall not constitute a waiver of Tenant's
default for the over due amount, nor prevent Landlord from exercising the other
rights and remedies granted Landlord under this Lease.

26. SECURITY DEPOSIT.

Upon signing this Lease, Tenant shall pay to Landlord the amount of the
Security Deposit specified in the Basic Lease Information.

27. RELOCATION.

Landlord shall have the right, from time to time during Term of this Lease,
to relocate Tenant from the Premises to another location in the Building,
provided (i) Landlord shall give Tenant at least three (3) months' notice prior
to the effective date of such relocation, (ii) the new Premises shall be
substantially equivalent in size to the existing Premises, (iii) there shall be
no increase in rent due to such relocation, and (iv) Landlord shall pay all
reasonable costs of physically relocating Tenant to the new Premises, including
reimbursement of moving costs and communication line relocation, and
installation of leasehold improvements of substantially the same condition and
appearance as of the date of relocation. If Tenant is relocated during the Term
of this Lease, Landlord and Tenant agree to execute an amendment to this Lease
reflecting the relocation of the Premises.

28. ESTOPPEL CERTIFICATE.

Within ten (10) days after notice from Landlord, Tenant shall execute and
deliver to Landlord, in recordable form, a certificate stating (i) that this
Lease is unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect, as modified, and
stating the date and nature of each modification), (ii) the date, if any, to
which rental and other sums payable hereunder have been paid, (iii) that no
notice has been received by Tenant or any default which has not been cured,
except as to defaults specified in said certificate and (iv) such other matters
as may be reasonably requested by Landlord. Failure to deliver such certificate
within such ten (10) day period shall be conclusive upon Tenant for the benefit
of Landlord and any successor to Landlord, that this Lease is in full force and
effect and has not been modified except as may be represented by Landlord.

29. SURRENDER.

Tenant shall surrender the Premises at the termination of the tenancy
herein created broom clean, and in the same condition as herein agreed they have
been received, reasonable use and wear thereof and damage by the act of God or
by the elements excepted. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not work a merger and shall at
the option of Landlord, terminate all of any existing subleases or subtenancies,
or may, at the option of Landlord, operate as an assignment to it of any or all
such subleases or subtenancies. At the expiration or sooner termination of this
Lease, Tenant shall remove or cause to be removed at its sole expense all of
Tenant's personal property, furniture and equipment, including telephone and
data processing lines, and all Alterations required by Landlord in accordance
with Paragraph 13 hereof. Tenant shall repair at its expense all damage to the
Premises and the Building caused by the removal of any of the items provided
herein. Tenant's obligations under this Paragraph shall survive the termination
of this Lease.

30. HOLDING OVER.

If, without objection by Landlord, Tenant holds possession of the Premises
after expiration of the Term of this Lease, Tenant shall become a tenant from
month to month upon the terms herein specified but at a Base Rent equal to two
hundred percent (200%) of the Base Rent in effect at the expiration of the Term
of this Lease, payable in advance on or before the first day of each month. Such
month to month tenancy may be terminated by either Landlord or Tenant by giving
thirty (30) days' written notice of termination to the other at any time. If
Tenant fails to surrender the Premises upon the expiration or termination of
this Lease except as hereinabove provided, Tenant hereby indemnifies and agrees
to hold Landlord harmless from all costs, loss, expense or liability, including
without limitation, costs, real estate brokers claims and attorneys' fees,
arising out of or in connection with any delay by Tenant in surrendering and
vacating the Premises, including, without limitation, any claims made by any
succeeding tenant based on any delay and any liabilities arising out of or in
connection with these claims. Nothing in this Paragraph 31 shall be deemed to
permit Tenant to retain possession of the Premises after the expiration or
sooner termination of the Lease Term.

31. FLOOR LOAD, NOISE, LIGHT AND AIR.

(a) Tenant shall not place a load upon any floor of the Premises which
exceeds the floor load per square foot which such floor was designed to carry.
Landlord reserves the right to prescribe the weight and position of all safes,
file and library systems and other heavy installations which Tenant wishes to
place in the Premises so as to properly distribute the weight thereof.

(b) Business machines and mechanical equipment belonging to Tenant which
cause noise and/or vibration that may be transmitted to the structure of the
Building or to any leased space to such a degree as to be objectionable to
Landlord or to any tenants in the Building shall be placed and maintained by
Tenant, at Tenant's expense, in settings of cork, rubber or spring-type noise
and/or vibration eliminators sufficient to eliminate vibration and/or noise.

10
<PAGE> 11
(c) Any diminution or shutting off of light, air, or view by any
materials, improvements or structures that may be placed on the exterior of the
Building or erected on lands adjacent to the Building shall not affect this
Lease or impose any liability on Landlord.

32. SUBORDINATION.

This Lease shall be subordinate to any ground lease, mortgage, deed of
trust, or any other hypothecation for security now or later placed upon the
Building and to any advances made on the security of it or Landlord's interest
in it, and to all renewals, modifications, consolidations, replacements, and
extensions of it. However, if any mortgagee, trustee, or ground lessor elects
to have this Lease prior to the lien of its mortgage or deed of trust or prior
to its ground lease, and gives notice of that to Tenant, this Lease shall be
deemed prior to the Mortgage, deed of trust or ground lease, whether this Lease
is dated prior or subsequent to the date of the mortgage, deed of trust, or
ground lease, or the date of recording of it. In the event any mortgage or deed
of trust to which this Lease is subordinate is foreclosed or a deed in lieu of
foreclosure is given to the mortgagee or beneficiary, Tenant shall attorn to
the purchaser at the foreclosure sale or to the grantee under the deed in lieu
of foreclosure. In the event of termination of any ground lease to which this
Lease is subordinate, Tenant shall attorn to the ground lessor. Tenant agrees
to execute any documents in form and substance reasonably acceptable to Tenant,
required to effectuate the subordination, to make this Lease prior to the lien
of any mortgage or deed of trust or ground lease, or to evidence the
attornment.

33. INABILITY TO PERFORM

Landlord shall not be in default hereunder nor shall Landlord be liable to
Tenant for any loss or damages if Landlord is unable to fulfill any of its
obligations, or is delayed in doing so, if the inability or delay is caused by
reason of accidents, strike, labor troubles, acts of God, or any other cause,
whether similar or dissimilar, which is beyond the reasonable control of
Landlord.

34. FUTURE CONSTRUCTION WORK

Landlord reserves the right (upon thirty days' prior notice to, but
otherwise without the prior consent of, Tenant) to make additions to, and/or
expand the size of, the Building, including, without limitation, adding floors
to, and/or adding floor area to one or more existing floors of the Building, and
to undertake major structural and seismic improvement projects in the Building.
Such construction activity may result in columns, beams and other structural
components being placed in the Premises to accommodate the construction work
and/or the permanent additions and/or expansions to be constructed. Any such
construction activity is entirely discretionary with Landlord, and Tenant agrees
that no representation, express or implied, with respect to the future condition
of the Building or any improvements thereto have been made to Tenant by Landlord
or any Landlord representative. Tenant hereby waives any and all rights or
claims of any kind for rent offsets or of constructive eviction, nuisance or
interference with enjoyment which may arise in connection with, or result from,
such construction activities; provided, however, Landlord shall use commercially
reasonable efforts to minimize disruption of Tenant's business caused by such
construction activities. Notwithstanding anything in this Lease to the contrary,
if Landlord determines that any of the foregoing construction activity or
activities will result in a material interference with or disruption to Tenant's
business in the Premises, Landlord, upon thirty (30) days' prior written notice
to Tenant that Landlord intends to commence such construction activity, may
terminate this Lease, without liability to Tenant. If this Lease is not
terminated as hereinabove provided, and the Premises are altered by reason of
such improvements, Landlord agrees to remeasure the Premises following the
completion of the improvements and to adjust Tenant's rental obligations
hereunder based on the new square footage of the Premises, as determined by
Landlord.

Lessee expressly acknowledges that Lessor intends to commence major seismic
repair work in and around the Premises and that Lessee's failure to cooperate
and Lessor in accordance with the terms of this Section, will result in delays
in that work and substantial damages for which Lessee would be responsible.

35. MISCELLANEOUS.

(a) The words "Landlord" and "Tenant" as used herein shall include the
plural as well as the singular. Words used in masculine gender include the
feminine and neuter. If there be more than one Tenant, the obligations
hereunder imposed on Tenant shall be joint and several. Subject to the
provisions hereof relating to assignment and subletting, this Lease is intended
to and does bind the heirs, executors, administrators, successors and assigns
of any and all of the parties hereto. Time is of the essence of this Lease.

(b) If Tenant is a corporation or limited liability company, Tenant and
each person executing this Lease on behalf of Tenant represents and warrants to
Landlord that (i) Tenant is duly incorporated or formed, as the case may be and
validly existing under the laws of its state of incorporation or formation,
(ii) Tenant is qualified to do business in California, (iii) Tenant has the
full right, power and authority to enter into this Lease and to perform all of
Tenant's obligations hereunder, and (iv) each person signing this Lease on
behalf of the corporation or company is duly and validly authorized to do so.
If Tenant is a partnership (whether a general or limited partnership), each
person executing this Lease on behalf of Tenant represents and warrants to
Landlord that (A) he/she is a general partner of Tenant (B) he/she is duly
authorized to execute and deliver this Lease on behalf of Tenant, (C) this
Lease is binding on Tenant (and each general partner of Tenant) in accordance
with its terms, and (D) each general partner of Tenant is personally liable for
the obligations of Tenant under this Lease.

(c) There are no oral agreements between Landlord and Tenant affecting
this Lease, and this Lease supersedes and cancels any and all previous
negotiations, arrangements, brochures, agreements and understandings, if any,
between Landlord and Tenant or displayed by Landlord to Tenant with respect to
the subject matter of this Lease

11
<PAGE> 12

or the Building. There are no representations between Landlord and Tenant other
than those contained in this Lease and all reliance with respect to any
representations is based solely upon the Terms of this Lease.

(d) Tenant shall not use the name of the Building for any purpose other
than as an address of the business to be conducted by Tenant in the Premises.
Landlord reserves the right to change the name of the Building at any time in
its sole discretion by written notice to Tenant and Landlord shall not be
liable to Tenant for any loss, cost or expense on account of any such change of
name.

(e) Any provision of this Lease which shall be held invalid, void or
illegal shall in no way affect, impair or invalidate any of the other provisions
hereof and such other provisions shall remain in full force and effect.

(f) Tenant hereby waives trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto on any matters whatsoever
arising out of or in anyway connected with this Lease.

(g) This Lease shall be governed by the laws of the State of California
applicable to transactions to be performed wholly therein.

36. BROKER.

Tenant represents and warrants to Landlord that Tenant has had no
dealings with any broker, finder, or similar person who is or might be entitled
to a commission or other fee in connection with the execution of this Lease,
except for Landlord's Broker and Tenant's Broker. Landlord shall pay the
commission due Landlord's Broker and Tenant's Broker pursuant to a separate
agreement between Landlord and Landlord's Broker. Landlord and Tenant shall
each indemnify, defend and hold the other harmless from and against any and all
claims and damages and for any and all costs and expenses (including reasonable
attorneys' fees and costs) resulting from claims that may be asserted against
the other party by any broker, agent or finder not disclosed herein. It is
hereby disclosed, and all parties agree and accept, that Peter Sullivan
Associates, Inc. is acting as both Landlord's broker and a principal in this
transaction.

37. NO OFFER.

No contractual or other rights shall exist between Landlord and Tenant
with respect to the Premises until both have executed and delivered this Lease.
The submission of this Lease to Tenant shall be for examination purposes only,
and does not and shall not constitute a reservation of or any option for the
Tenant to lease, or otherwise create any interest by Tenant in the Premises or
any other Premises situated in the Building. Execution of this Lease by Tenant
and return to Landlord shall not be binding upon Landlord, notwithstanding any
time interval, until Landlord has in fact executed and delivered this Lease to
Tenant.

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
date first above written.

LANDLORD: TENANT:
- --------- -------
1301 EVANS STREET ASSOCIATES, LLC, QUOKKA SPORTS, INC.
a California limited liability company an Incorporated company

By: Peter Sullivan Associates, Inc., By: [Signature Illegible]
General Manager --------------------------

By: /s/ PETER SULLIVAN Its: EVP & CFO
----------------------------- -------------------------
Peter Sullivan
President Date: 4/30/99
------------------------
Date: 5/3/97
--------------------------- By:
--------------------------

Its:
-------------------------

Date:
------------------------

12
<PAGE> 13
EXHIBIT A

FLOOR PLAN

A-1
<PAGE> 14
EXHIBIT A

[MAP OF FLOOR PLAN]
<PAGE> 15
EXHIBIT B

RULES AND REGULATIONS OF THE
330 TOWNSEND STREET BUILDING

COMMON AREAS

The sidewalks, halls, passages, exits, entrances, elevators and stairways
of the Building shall not be obstructed by Tenant or used for any purpose other
than for ingress to and egress from the Premises. The halls, passages, exits,
entrances, elevators and stairways are not for the general public and Landlord
shall in all cases have the right to control and prevent access thereto of all
persons (including without limitation, messengers or delivery personnel not
wearing uniforms) whose presence in the judgment of Landlord would be
prejudicial to the safety, character, reputation or interests of the building
and its tenants. Neither Tenant nor any agent, employee contractor, invitee or
licensee of Tenant shall go upon the roof of the Building. Landlord shall have
the right at any time, without the same constituting an actual or constructive
eviction and without incurring any liability to Tenant therefor, to change the
arrangement or location of entrances or passageways, doors or doorways,
corridors, elevators, stairs, toilets and common areas of the Building.

SIGNS

No signs, placard, picture, name, advertisement or notice visible from the
exterior of the Premises shall be inscribed, painted, affixed or otherwise
displayed by Tenant on any part of the Building or the Premises without the
prior written consent of Landlord, Landlord will adopt and furnish to tenants
general guidelines relating to signs inside the Building. Tenant agrees to
conform to such guidelines. All approved signs or lettering shall be printed,
painted, affixed or inscribed at the expense of Tenant by a person approved by
Landlord. Material visible from outside the Building will not be permitted.

PROHIBITED USES

The Premises shall not be used for the storage of merchandise held for sale
to the general public or for lodging. No cooking shall be done or permitted on
the Premises except that private use by Tenant of microwave ovens and/or
Underwriters' Laboratory approved equipment for brewing coffee, tea, hot
chocolate and similar beverages will be permitted, provided that such use is in
accordance with all applicable federal, state and municipal laws, codes,
ordinances, rules and regulations. Tenant shall not use electricity for
lighting, machines or equipment in excess of five (5) watts per square foot.

JANITORIAL SERVICE

Tenant shall not employ any person under than the janitor of Landlord for
the purpose of cleaning the Premises unless otherwise agreed to by Landlord in
writing. Except with the written consent of Landlord, no persons other than
those approved by Landlord shall be permitted to enter the Building for the
purpose of cleaning the Premises.

KEYS

Landlord will furnish Tenant without charge with two (2) keys to each door
lock provided in the Premises by Landlord. Landlord may make a reasonable charge
for any additional keys. Tenant shall not have any such keys copied or any keys
made. Tenant shall not alter any lock or install a new or additional lock or any
bolt on any door of the Premises. Tenant, upon the termination of this Lease,
shall deliver to Landlord all keys to doors in the Building.

MOVING PROCEDURES

Landlord shall designate appropriate entrances for deliveries or other
movement to or from the Premises of equipment, materials, supplies, furniture or
other property, and Tenant shall not use any other entrances for such purposes.
All moves shall be scheduled and carried out during non-business hours of the
Building. All persons employed and means or methods used to move equipment,
materials, supplies, furniture or other property in or out of the Building must
be approved by Landlord prior to any such movement. Landlord shall have the
right to prescribe the maximum weight, size and position of all equipment,
materials, furniture or other property brought into the Building. Heavy objects
shall, if considered necessary by Landlord, stand on a platform of such
thickness as is necessary properly to distribute the weight. Landlord will not
be responsible for loss of or damages to any such property from any cause, and
all damage done to the Building by moving or maintaining such property shall be
repaired at the expense of Tenant.

NO NUISANCES

Tenant shall not use or keep in the Premises or the Building any kerosene,
gasoline or inflammable or combustible fluid or material other than limited
quantities thereof reasonably necessary for the operation or maintenance of
office equipment. Tenant shall not use any method of heating or air conditioning
other than that supplied by Landlord. Tenant shall not use or keep or permit to
be used or kept any foul or noxious gas or substance in the Premises, or permit
or suffer the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by reason of noise,
odors or vibrations, or interfere in any way with other

C-1

<PAGE> 16
tenants or those having business in the Building, nor shall any animals be
brought or kept in the Premises or the Building.

CHANGE OF ADDRESS

Landlord shall have the right, exercisable without notice and without
liability to Tenant, to change the name or street address of the Building or
the room or suite number of the Premises.

BUSINESS HOURS

Landlord establishes the hours of 7:00 a.m. to 6:00 p.m., Monday through
Friday, except generally recognized holidays ("business days"), as reasonable
and usual business hours for the purposes of this Lease. Janitorial services
are provided between the hours of 6:00 p.m. and midnight on business days.

ACCESS TO BUILDING

Landlord reserves the right to exclude from the Building during the
evening, night and early morning hours beginning at 6:00 p.m. and ending at
7:00 a.m., Monday through Friday, and at all hours on Saturdays, Sundays, union
holidays and legal holidays, all persons who do not present identification
acceptable to Landlord. Tenant shall provide Landlord with a list of all
persons authorized by Tenant to enter the Premises and shall be liable to
Landlord for all acts of such persons. Landlord shall in no case be liable for
damages for any error with regard to the admission to or exclusion from the
Building of any person. In the case of invasion, mob, riot, public excitement
or other circumstances rendering such action advisable in Landlord's opinion,
Landlord reserves the right to prevent access to the Building during the
continuance of the same by such action as Landlord may deem appropriate,
including closing doors.

BUILDING DIRECTORY

The directory of the Building will be provided for the display of the name
and location of Tenant. Landlord reserves the right to restrict the amount of
directory space utilized by Tenant. Landlord may make a reasonable charge for
the replacement of directory slots/panels requested by Tenant.

WINDOW COVERINGS

No curtains, draperies, blinds, shutters, shades, screens or other
coverings, hangings or decorations shall be attached to, hung or placed in, or
used in connection with any window of the Building without the prior written
consent of Landlord. In any event, with the prior written consent of Landlord,
such items shall be installed on the office side of Landlord's standard window
covering and shall in no way be visible from the exterior of the Building.
Tenant shall keep window coverings closed when the effect of sunlight (or the
lack thereof) would impose unnecessary loads on the Building's air conditioning
systems.

FOOD AND BEVERAGES

Tenant shall not obtain for use in the Premises ice, drinking water, food,
beverage, towel or other similar services, except at such reasonable hours and
under such reasonable regulations as may be established by Landlord.

PROCEDURES WHEN LEAVING

Tenant shall ensure that the doors of the Premises are closed and locked
and that all water faucets, water apparatus and utilities are shut off before
Tenant and its employees leave the Premises so as to prevent waste or damage.
For any default or carelessness in this regard, Tenant shall be liable and pay
for all damage and injuries sustained by Landlord or other tenants or occupants
of the Building. On multiple-tenancy floors, Tenant shall keep the doors to the
Building corridors closed at all times except for ingress and egress.

BATHROOMS

The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed, no
foreign substance of any kind whatsoever shall be thrown therein, and the
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be paid by Tenant if caused by Tenant or its agents, employees,
contractors, invitees or licensees.

NO ANTENNA

Tenant shall not install any radio or television antenna, loudspeaker, or
other device on the roof or exterior walls of the Building. No television or
radio or recorder shall be played in such a manner as to cause a nuisance to
any other tenant.

BICYCLES, VEHICLES

There shall not be used in any space, or in the public halls of the
Building, either by Tenant or others, any hand trucks except those equipped
with rubber tires and side guards or such other material handling equipment as
Landlord approves. No other vehicles of any kind, except as hereinafter
provided, shall be brought by Tenant into the Building or

C-2

<PAGE> 17
kept in or about the Premises. Bicycles are permitted in the Building only in
the areas designated by Landlord and only in accordance with rules and
regulations adopted by Landlord for bicycles and bicycle owners.

TRASH REMOVAL

Tenant shall store all its trash and garbage within the Premises. No
material shall be placed in the trash boxes or receptacles if such material is
of such nature that it may not be disposed of in the ordinary and customary
manner of removing and disposing of office building trash and garbage in the
city or county in which the Building is located without being in violation of
any law or ordinance governing such disposal. All garbage and refuse disposal
shall be made only through entryways and elevators provided for such purposes
and at such times as Landlord shall designate. Tenant shall crush and flatten
all boxes, cartons and containers. Tenant shall pay extra charges for any
unusual trash disposal.

NO SOLICITING

Canvassing, soliciting, distribution of handbills or any other written
material and pedding in the Building are prohibited, and Tenant shall cooperate
to prevent the same.

NO SMOKING

In accordance with Section 1, Part II, Chapter V of the San Francisco
Municipal Code (Health Code), Article 19E, Section 1009.5(a), there shall be NO
SMOKING in the Building.

SERVICES

The requirements of Tenant will be attended to only upon application in
writing at the office of the Building. Personnel of Landlord shall not perform
any work or do anything outside of their regular duties unless under special
instructions from Landlord.

WAIVER

Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenant or tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of any
other tenant or tenants, nor prevent Landlord from thereafter enforcing any
such Rules and Regulations against any or all of the tenants of the Building.

SUPPLEMENTAL TO LEASE

These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the covenants of this Lease.

C-3

<PAGE> 1
EXHIBIT 10.19

201 MISSION STREET
SAN FRANCISCO, CALIFORNIA

OFFICE LEASE AGREEMENT

BETWEEN

EOP-MISSION STREET, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY,
AS BENEFICIARY OF LAND TRUST
DATED OCTOBER 23, 1996 AND KNOWN AS SHELI Z. ROSENBERG TRUST NO. 201
("LANDLORD")

AND

QUOKKA SPORTS, INC., A DELAWARE CORPORATION
("TENANT")

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C>
I. BASIC LEASE INFORMATION....................................................1

II. LEASE GRANT...............................................................4

III. POSSESSION...............................................................4

IV. RENT......................................................................4

V. COMPLIANCE WITH LAWS; USE..................................................9

VI. SECURITY DEPOSIT..........................................................9

VII. SERVICES TO BE FURNISHED BY LANDLORD.....................................9

VIII. LEASEHOLD IMPROVEMENTS.................................................10

IX. REPAIRS AND ALTERATIONS..................................................10

X. USE OF ELECTRICAL SERVICES BY TENANT......................................11

XI. ENTRY BY LANDLORD........................................................12

XII. ASSIGNMENT AND SUBLETTING...............................................12

XIII. LIENS..................................................................13

XIV. INDEMNITY AND WAIVER OF CLAIMS..........................................14

XV. INSURANCE................................................................14

XVI. SUBROGATION.............................................................15

XVII. CASUALTY DAMAGE........................................................15

XVIII. CONDEMNATION..........................................................16

XIX. EVENTS OF DEFAULT.......................................................16

XX. REMEDIES.................................................................17

XXI. LIMITATION OF LIABILITY.................................................18

XXII. NO WAIVER..............................................................18

XXIII. QUIET ENJOYMENT......................................................18

XXIV. RELOCATION.............................................................19

XXV. HOLDING OVER............................................................19

XXVI. SUBORDINATION TO MORTGAGES; ESTOPPEL CERTIFICATE.......................19

XXVII. ATTORNEYS'FEES........................................................20

XXVIII. NOTICE...............................................................20

XXIX.EXCEPTED RIGHTS.........................................................20

XXX. SURRENDER OF PREMISES...................................................20

XXXI. MISCELLANEOUS..........................................................21

XXXII.ENTIRE AGREEMENT.......................................................22
</TABLE>

<PAGE> 3

OFFICE LEASE AGREEMENT

THIS OFFICE LEASE AGREEMENT (the "Lease") is made and entered into as of
the 27th day of May, 1999, by and between EOP-MISSION STREET, L.L.C., A
DELAWARE LIMITED LIABILITY COMPANY, AS BENEFICIARY OF LAND TRUST DATED OCTOBER
23, 1996 AND KNOWN AS SHELI Z. ROSENBERG TRUST NO. 201 ("Landlord") and QUOKKA
SPORTS, INC., A DELAWARE CORPORATION ("Tenant").

I. BASIC LEASE INFORMATION.

A. "Building" shall mean the building located at 201 Mission Street,
San Francisco, California, commonly known as 201 Mission Street.

B. "Rentable Square Footage of the Building" is deemed to be 483,289
square feet.

C. "Premises A", "Premises B" and "Premises C" shall mean the areas
shown on EXHIBITS A-1, A-2 and A-3, respectively, to this Lease.
Premises A are located on floor 19 and known as suite number
1900. Premises B are located on floor 18 and known as suite
number 1800. Premises C are located on floor 17 and known as
suite number 1700. Individually and collectively, Premises A,
Premises B and Premises C shall sometimes be referred to as the
"Premises". The "Rentable Square Footage of Premises A" is deemed
to be 15,215 square feet. The "Rentable Square Footage of
Premises B" is deemed to be 15,614 square feet. The "Rentable
Square Footage of Premises C" is deemed to be 15,631 square feet.
Collectively, the "Rentable Square Footage of the Premises" is
deemed to be 46,460 square feet. If the Premises include one or
more floors in their entirety, all corridors and restroom
facilities located on such full floor(s) shall be considered part
of the Premises. Landlord and Tenant stipulate and agree that the
Rentable Square Footage of the Building and the Rentable Square
Footage of the Premises are correct and shall not be remeasured.

D. "Base Rent":

<TABLE>
<CAPTION>
ANNUAL RATE MONTHLY
PERIOD PER SQUARE FOOT BASE RENT
------ --------------- ---------
<S> <C> <C>
JUNE 1, 1999 - SEPTEMBER 30, 1999 $40.00 $102,763.33

OCTOBER 1, 1999 - OCTOBER 31, 1999 $40.00 $130,551.68

NOVEMBER 1, 1999 - FEBRUARY 28, 2002 $40.00 $154,866.67
</TABLE>

Notwithstanding the foregoing to the contrary, as long as Tenant
is not in default, Tenant shall be entitled to an abatement of
Base Rent with respect to Premises B in the amount of $52,046.67
per month for the period commencing June 1, 1999 through the date
("Premises B Completion Date") which is the earlier to occur of
(a) August 15, 1999, and (b) the date the Initial Alterations for
Premises B are Substantially Complete, as hereinafter defined
(the "Premises B Base Rent Abatement Period"). Notwithstanding
the foregoing to the contrary, as long as Tenant is not in
default, Tenant shall be entitled to an abatement of Base Rent
with respect to Premises A in the amount of $50,716.67 per month
for the period commencing on the day immediately after the
Premises B Completion Date and continuing through the earlier to
occur of (i) the date which is 75 days after the Premises B
Completion Date, and (ii) the date the Initial Alterations for
Premises A are Substantially Complete (the "Premises A Base Rent
Abatement Period"). For purposes of this Lease, the Initial
Alterations for Premises A and Premises B, as the case may be,
shall be "Substantially Complete" on the date that all of
Tenant's work has been performed in Premises A or Premises B, as
the case may be, other than any details of construction,
mechanical adjustment or any other similar matter, the
noncompletion of which does not materially interfere with
Tenant's use of Premises A or Premises B, as the case may be.
During the Premises A Base Rent Abatement Period and the Premises
B Base Rent Abatement Period, only Base Rent shall be abated, and
all Additional Rent and other costs and charges

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<PAGE> 4

specified in this Lease shall remain as due and payable pursuant
to the provisions of this Lease.

E. "Tenant's Pro Rata Share": (i) 6.3790% for the period commencing
on the Premises A Commencement Date and the Premises B
Commencement Date (assuming that the Premises A Commencement Date
and the Premises B Commencement Date are the same day, i.e.,
3.1482% with respect to Premises A and 3.2308% with respect to
Premises B) and ending on the day immediately preceding the
Premises C Commencement Date; and (ii) 9.6133% for the period
commencing on the Premises C Commencement Date and ending on the
Termination Date.

F. "Base Year" for Taxes: 1999; "Base Year" for Expenses: 1999.

G. "Term": With respect to Premises A, a period of 33 months, with
respect to Premises B, a period of 33 months; and with respect to
Premises C, a period of 28 months and 16 days. The "Premises A
Term" shall commence on June 1, 1999 ("Premises A Commencement
Date"). The "Premises B Term" shall commence on June 1, 1999
("Premises B Commencement Date"). The "Premises C Term" shall
commence on the date ("Premises C Commencement Date") which is 75
days after the day Landlord delivers possession of Premises C to
Tenant (75 days after the day Landlord delivers possession of
Premises C to Tenant is currently estimated to be October 15,
1999, the "Premises C Target Commencement Date"). Unless
terminated early in accordance with this Lease, the Premises A
Term, the Premises B Term and the Premises C Term shall end on
February 28, 2002 (the "Termination Date"). Promptly after the
determination of the Premises C Commencement Date, Landlord and
Tenant shall enter into a commencement letter agreement in the
form attached as EXHIBIT C. Landlord and Tenant acknowledge that
the schedule of Base Rent described in Section I.D. above is
based on the assumption that the Lease Term with respect to
Premises A, Premises B and Premises C will commence on the
Premises A Commencement Date, the Premises B Commencement Date,
and the Premises C Target Commencement Date, respectively. If the
Lease Term with respect to Premises A and Premises B does not
commence on the Premises A Commencement Date and the Premises B
Commencement Date, respectively, the beginning and ending dates
set forth in the above schedule with respect to the payment of
any installment(s) of Base Rent shall be appropriately adjusted
on a per diem basis and set forth in the Commencement Letter to
be prepared by Landlord. If the Lease Term with respect to
Premises C does not commence on the Premises C Target
Commencement Date, the beginning date set forth in the above
schedule with respect to the payment of any installment(s) of
Base Rent for Premises C shall be appropriately adjusted on a per
diem basis and set forth in the Commencement Letter to be
prepared by Landlord, but the Termination Date of the Lease shall
not be adjusted.

Notwithstanding the foregoing, if the Premises A Commencement
Date and the Premises B Commencement Date do not occur by August
1, 1999 (the "Outside Completion Date"), Tenant, as its sole
remedy, may terminate this Lease by giving Landlord written
notice of termination on or before the date which is 5 Business
Days after the Outside Completion Date. In such event, this Lease
shall be deemed null and void and of no further force and effect
and Landlord shall promptly refund any Prepaid Rental and
Security Deposit previously advanced by Tenant under this Lease
and, so long as Tenant has not previously defaulted under any of
its obligations under the Work Letter, the parties hereto shall
have no further responsibilities or obligations to each other
with respect to this Lease. Landlord and Tenant acknowledge and
agree that: (i) the determination of the Premises A Commencement
Date and the Premises B Commencement Date shall be postponed by
the number of days the Premises A Commencement Date or the
Premises B Commencement Date are delayed due to events of Force
Majeure. Notwithstanding anything herein to the contrary, if
Landlord determines that it will be unable to cause the Premises
A Commencement Date or the Premises B Commencement Date to occur
by the Outside Completion Date, Landlord shall have the right to
provide Tenant with written notice (the "Outside Extension
Notice") of such inability, which Outside

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<PAGE> 5

Extension Notice shall set forth the date on which Landlord
reasonably believes that the Premises A Commencement Date and the
Premises B Commencement Date will occur. Upon receipt of the
Outside Extension Notice, Tenant shall have the right to
terminate this Lease by providing written notice of termination
to Landlord within 5 Business Days after the date of the Outside
Extension Notice. In the event that Tenant does not terminate
this Lease within such 5 Business Day period, the Outside
Completion Date shall automatically be amended to be the date set
forth in Landlord's Outside Extension Notice.

H. Tenant allowance(s): Allowance of $10.00 per rentable square foot
of the Premises to be applied toward the cost of Initial
Alterations (as defined in EXHIBIT D) as more fully described in
EXHIBIT D.

I. "Security Deposit": $700,000.00 (as more fully defined in Section
VI).

J. "Guarantor(s)": None.

K. "Broker(s)": Triton Commercial, Inc.

L. "Permitted Use": general office use.

M. "Notice Addresses":

Tenant:

Notices shall be sent to Tenant at the following address:

<TABLE>
<S> <C>
525 Brannan Street WITH A COPY TO:
Ground Floor Cooley Godward, LLP
San Francisco, California 94107 One Maritime Plaza
Phone #: (415) 908-3800 San Francisco, California 94111
Fax #: (415) 908-1841 Attention: Paul Churchill, Esq.
Attention: Paul Startz, Esq.

LANDLORD: WITH A COPY TO:

EOP-MISSION STREET, L.L.C., A DELAWARE Equity Office Properties Trust
LIMITED LIABILITY COMPANY, AS BENEFICIARY Two North Riverside Plaza
OF LAND TRUST DATED OCTOBER 23, 1996 AND Suite 2200
KNOWN AS SHELI Z. ROSENBERG TRUST NO. 201 Chicago, Illinois 60606
c/o Equity Office Properties Trust Attention: Regional Counsel-Pacific
201 Mission Street, Suite 250 Region
San Francisco, California 94105
Attention: Building Manager
</TABLE>

Rent (defined in Section IV.A) is payable to the order of EQUITY
OFFICE PROPERTIES at the following address: EOP OPERATING LIMITED
PARTNERSHIP, DBA 201 MISSION, DEPT. #8815, LOS ANGELES,
CALIFORNIA 90084-8815.

N. "Business Day(s)" are Monday through Friday of each week,
exclusive of New Year's Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day ("Holidays").
Landlord may, by written notice to Tenant, designate additional
Holidays, provided that the additional Holidays are commonly
recognized by other office buildings in the area where the
Building is located.

O. "Landlord Work" means the work, if any, that Landlord is
obligated to perform in the Premises pursuant to a separate work
letter agreement (the "Work Letter"), if any, attached as EXHIBIT
D. If a Work Letter is not attached to this Lease or if an
attached Work Letter does not require Landlord to perform any
work, the occurrence of the Commencement Date shall not be
conditioned upon the performance of work by Landlord and,
accordingly, Section III.A. shall not be applicable to the
determination of the Commencement Date.

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<PAGE> 6

P. "Law(s)" means all applicable statutes, codes, ordinances,
orders, rules and regulations of any municipal or governmental
entity.

Q. "Normal Business Hours" for the Building are 8:00 A.M. to 6:00
P.M. on Business Days and 9:00 A.M. to 2:00 P.M. on Saturdays.

R. "Property" means the Building and the parcel(s) of land on which
it is located and, at Landlord's discretion, the Building garage
and other improvements serving the Building, if any, and the
parcel(s) of land on which they are located.

II. LEASE GRANT.

Landlord leases the Premises to Tenant and Tenant leases the Premises
from Landlord, together with the right in common with others to use any other
portions of the Property that are designated by Landlord for the common use of
tenants and others, such as sidewalks, unreserved parking areas, common
corridors, elevator foyers, restrooms, vending areas and lobby areas (the
"Common Areas").

III. POSSESSION.

A. Intentionally Omitted.

B. Subject to Landlord's obligation, if any, to perform Landlord
Work and Landlord's obligations under Section IX.B., the Premises
are accepted by Tenant in "as is" condition and configuration. By
taking possession of the Premises, Tenant agrees that the
Premises are in good order and satisfactory condition, and that
there are no representations or warranties by Landlord regarding
the condition of the Premises or the Building except as may
otherwise be set forth in this Lease. If Landlord is delayed
delivering possession of Premises A, Premises B, Premises C or
any other space due to the holdover or unlawful possession of
such space by any party, and such delay continues for 30 days
after the date Landlord is required to deliver possession
hereunder, Landlord shall proceed with due diligence and take all
legal action reasonably necessary to recapture possession of the
space from such existing tenant and/or regain legal right to
possession thereof. The Premises A Commencement Date, the
Premises B Commencement Date and the Premises C Commencement Date
shall be postponed until the date Landlord delivers possession of
Premises A, Premises B and Premises C, respectively, to Tenant
free from occupancy by any party, and the Termination Date shall
be postponed by an equal number of days.

C. If Tenant takes possession of Premises A, Premises B or Premises
C before the Premises A Commencement Date, the Premises B
Commencement Date or the Premises C Commencement Date,
respectively, such possession shall be subject to the terms and
conditions of this Lease and Tenant shall pay Rent (defined in
Section IV.A.) to Landlord for each day of possession before the
Premises A Commencement Date with respect to Premises A, the
Premises B Commencement Date with respect to Premises B and the
Premises C Commencement Date with respect to Premises C. However,
except for the cost of services requested by Tenant (e.g. freight
elevator usage), Tenant shall not be required to pay Rent for any
days of possession before the Premises A Commencement Date, the
Premises B Commencement Date or the Premises C Commencement Date
during which Tenant, with the approval of Landlord, is in
possession of Premises A, Premises B or Premises C, respectively,
for the sole purpose of performing improvements or installing
furniture, equipment or other personal property.

IV. RENT.

A. Payments. As consideration for this Lease, Tenant shall pay
Landlord, without any setoff or deduction, the total amount of
Base Rent and Additional Rent due for the Term. "Additional Rent"
means all sums (exclusive of Base Rent) that Tenant is required
to pay Landlord. Additional Rent and Base Rent are sometimes
collectively referred to as "Rent". Tenant shall pay and be
liable for all rental, sales and use taxes (but excluding income
taxes), if any, imposed upon or measured by Rent under applicable
Law. Base Rent and recurring monthly

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<PAGE> 7

charges of Additional Rent shall be due and payable in advance on
the first day of each calendar month without notice or demand,
provided that the installment of Base Rent for the first full
calendar month of the Term shall be payable upon the execution of
this Lease by Tenant. All other items of Rent shall be due and
payable by Tenant on or before 30 days after billing by Landlord.
All payments of Rent shall be by good and sufficient check or by
other means (such as automatic debit or electronic transfer)
acceptable to Landlord. If Tenant fails to pay any item or
installment of Rent when due, Tenant shall pay Landlord an
administration fee equal to 5% of the past due Rent, provided
that Tenant shall be entitled to a grace period of 5 days for the
first 2 late payments of Rent in a given calendar year. If the
Term commences on a day other than the first day of a calendar
month or terminates on a day other than the last day of a
calendar month, the monthly Base Rent and Tenant's Pro Rata Share
of any Tax Excess (defined in Section IV.B.) or Expense Excess
(defined in Section IV.B.) for the month shall be prorated based
on the number of days in such calendar month. Landlord's
acceptance of less than the correct amount of Rent shall be
considered a payment on account of the earliest Rent due. No
endorsement or statement on a check or letter accompanying a
check or payment shall be considered an accord and satisfaction,
and either party may accept the check or payment without
prejudice to that party's right to recover the balance or pursue
other available remedies. Tenant's covenant to pay Rent is
independent of every other covenant in this Lease.

B. Expense Excess and Tax Excess. Tenant shall pay Tenant's Pro Rata
Share of the amount, if any, by which Expenses (defined in
Section IV.C.) for each calendar year during the Term exceed
Expenses for the Base Year (the "Expense Excess") and also the
amount, if any, by which Taxes (defined in Section IV.D.) for
each calendar year during the Term exceed Taxes for the Base Year
(the "Tax Excess"). If Expenses and/or Taxes in any calendar year
decrease below the amount of Expenses and/or Taxes for the Base
Year, Tenant's Pro Rata Share of Expenses and/or Taxes, as the
case may be, for that calendar year shall be $0. Landlord shall
provide Tenant with a good faith estimate of the Expense Excess
and of the Tax Excess for each calendar year during the Term. On
or before the first day of each month, Tenant shall pay to
Landlord a monthly installment equal to one-twelfth of Tenant's
Pro Rata Share of Landlord's estimate of the Expense Excess and
one-twelfth of Tenant's Pro Rata Share of Landlord's estimate of
the Tax Excess. If Landlord determines that its good faith
estimate of the Expense Excess or of the Tax Excess was incorrect
by a material amount, Landlord may provide Tenant with a revised
estimate. After its receipt of the revised estimate, Tenant's
monthly payments shall be based upon the revised estimate. If
Landlord does not provide Tenant with an estimate of the Expense
Excess or of the Tax Excess by January 1 of a calendar year,
Tenant shall continue to pay monthly installments based on the
previous year's estimate(s) until Landlord provides Tenant with
the new estimate. Upon delivery of the new estimate, an
adjustment shall be made for any month for which Tenant paid
monthly installments based on the previous year's estimate(s).
Tenant shall pay Landlord the amount of any underpayment within
30 days after receipt of the new estimate. Any overpayment shall
be refunded to Tenant within 30 days or credited against the next
due future installment(s) of Additional Rent.

As soon as is practical following the end of each calendar year,
Landlord shall furnish Tenant with a statement of the actual
Expenses and Expense Excess and the actual Taxes and Tax Excess
for the prior calendar year. If the estimated Expense Excess
and/or estimated Tax Excess for the prior calendar year is more
than the actual Expense Excess and/or actual Tax Excess, as the
case may be, for the prior calendar year, Landlord shall apply
any overpayment by Tenant against Additional Rent due or next
becoming due, provided if the Term expires before the
determination of the overpayment, Landlord shall refund any
overpayment to Tenant after first deducting the amount of Rent
due. If the estimated Expense Excess and/or estimated Tax Excess
for the prior calendar year is less than the actual Expense
Excess and/or actual Tax Excess, as the case may be, for such
prior year, Tenant shall pay Landlord, within 30 days after its
receipt of the statement of Expenses and/or Taxes, any
underpayment for the prior calendar year.

5
<PAGE> 8

C. Expenses Defined. "Expenses" means all costs and expenses
incurred in each calendar year in connection with operating,
maintaining, repairing, and managing the Building and the
Property, including, but not limited to:

1. Labor costs, including, wages, salaries, social security
and employment taxes, medical and other types of
insurance, uniforms, training, and retirement and pension
plans.

2. Management fees, the cost of equipping and maintaining a
management office, accounting and bookkeeping services,
legal fees not attributable to leasing or collection
activity, and other administrative costs. Landlord, by
itself or through an affiliate, shall have the right to
directly perform or provide any services under this Lease
(including management services), provided that the cost of
any such services shall not exceed the cost that would
have been incurred had Landlord entered into an
arms-length contract for such services with an
unaffiliated entity of comparable skill and experience.

3. The cost of services, including amounts paid to service
providers and the rental and purchase cost of parts,
supplies, tools and equipment.

4. Premiums and deductibles paid by Landlord for insurance,
including workers compensation, fire and extended
coverage, earthquake, general liability, rental loss,
elevator, boiler and other insurance customarily carried
from time to time by owners of comparable office
buildings.

5. Electrical Costs (defined below) and charges for water,
gas, steam and sewer, but excluding those charges for
which Landlord is reimbursed by tenants. "Electrical
Costs" means: (a) charges paid by Landlord for
electricity; (b) costs incurred in connection with an
energy management program for the Property; and (c) if and
to the extent permitted by Law, a fee for the services
provided by Landlord in connection with the selection of
utility companies and the negotiation and administration
of contracts for electricity, provided that such fee shall
not exceed 50% of any savings obtained by Landlord.
Notwithstanding any of the foregoing to the contrary,
Tenant shall in no event pay more for electricity during
the Term of the Lease as a result of Landlord's
negotiation and administration of contracts for
electricity and the payment of any fee charged by Landlord
in connection therewith than Tenant would have otherwise
paid if Landlord had not negotiated such contracts and
charged such fees. Electrical Costs shall be adjusted as
follows: (i) amounts received by Landlord as reimbursement
for above standard electrical consumption shall be
deducted from Electrical Costs; (ii) the cost of
electricity incurred to provide overtime HVAC to specific
tenants (as reasonably estimated by Landlord) shall be
deducted from Electrical Costs; and (iii) if Tenant is
billed directly for the cost of building standard
electricity to the Premises as a separate charge in
addition to Base Rent, the cost of electricity to
individual tenant spaces in the Building shall be deducted
from Electrical Costs.

6. The amortized cost of capital improvements (as
distinguished from replacement parts or components
installed in the ordinary course of business) made to the
Property which are: (a) performed primarily to reduce
operating expense costs or otherwise improve the operating
efficiency of the Property; or (b) required to comply with
any Laws that are enacted, or first interpreted to apply
to the Property, after the date of this Lease. The cost of
capital improvements shall be amortized by Landlord over
the lesser of the Payback Period (defined below) or 5
years. The amortized cost of capital improvements may, at
Landlord's option, include actual or imputed interest at
the rate that Landlord would reasonably be required to pay
to finance the cost of the capital improvement. "Payback
Period" means the reasonably estimated period of time that
it takes for the cost savings resulting from a capital
improvement to equal the total cost of the capital
improvement.

6
<PAGE> 9

If Landlord incurs Expenses for the Property together with one or
more other buildings or properties, whether pursuant to a
reciprocal easement agreement, common area agreement or
otherwise, the shared costs and expenses shall be equitably
prorated and apportioned between the Property and the other
buildings or properties. Expenses shall not include:

a. The cost of capital improvements (except as set forth
above); depreciation; interest (except as provided above
for the amortization of capital improvements);

b. Principal payments of mortgage and other non-operating
debts of Landlord;

c. The cost of repairs or other work to the extent Landlord
is reimbursed by insurance or condemnation proceeds;

d. Costs in connection with leasing space in the Building,
including attorneys' fees, brokerage commissions; lease
concessions, including rental abatements and construction
allowances, granted to specific tenants;

e. Costs incurred in connection with the sale, financing or
refinancing of the Building;

f. Fines, interest and penalties incurred due to the late
payment of Taxes (defined in Section IV.D) or Expenses;

g. Organizational expenses associated with the creation and
operation of the entity which constitutes Landlord;

h. Any penalties or damages that Landlord pays to Tenant
under this Lease or to other tenants in the Building under
their respective leases;

i. Ground lease rental;

j. Advertising and promotional expenditures;

k. All items (including repairs) and services for which
Tenant or other tenants pay directly to third parties or
for which Tenant or other tenants reimburse (or are
required to reimburse) Landlord (other than through
Expenses);

l. Any costs, fines or penalties incurred due to violations
by Landlord of any law, order, rule or regulations of any
governmental authority which was in effect (and as
enforced) as of the Lease Commencement Date except where
such costs, fines or penalties are incurred by Landlord
for violations of any such law, order, rule or regulation
that is ultimately determined to be invalid, or
inapplicable;

m. Costs arising out of the admitted or adjudicated
negligence or willful misconduct of Landlord or any
Landlord Related Parties;

n. Any cost or expense related to removal, cleaning,
abatement or remediation of "hazardous materials" in or
about the Building, Common Area or Property, including,
without limitation, hazardous substances in the ground
water or soil, except to the extent such removal,
cleaning, abatement or remediation is related to the
general repair and maintenance of the Building, Common
Area or Property;

o. The cost or expense of any services or benefits provided
to other tenants in the Building and not provided or
available to Tenant;

p. Overhead and profit increment paid to subsidiaries or
other affiliates of Landlord for services (including
management services and the fees paid in connection
therewith) on or to the Property, Building and\or Premises
to the

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<PAGE> 10

extent only that the costs of such services exceed the
competitive cost for such services rendered by persons or
entities of similar skill, competence and experience.

q. Repairs or other work occasioned by (i) fire, windstorm,
or other casualty of the type which Landlord has insured
(to the extent that Landlord has received insurance
proceeds and provided that the amount of any deductible
paid by Landlord shall be included in Expenses), or (ii)
the exercise of the right of eminent domain (to the extent
that such repairs or other work are covered by the
proceeds of the award, if any, received by Landlord);

r. all costs of purchasing or leasing major sculptures,
paintings or other major works or objects of art (as
opposed to decorations purchased or leased by Landlord for
display in the Common Areas of the Building); and

s. the cost of complying with any laws in effect (and as
enforced) on the Commencement Date, provided that if any
portion of the Building that was in compliance with all
applicable laws on the Commencement Date becomes out of
compliance due to normal wear and tear, the cost of
bringing such portion of the Building into compliance
shall be included in Expenses unless otherwise excluded
pursuant to the terms hereof;

If the Building is not at least 95% occupied during any calendar
year or if Landlord is not supplying services to at least 95% of
the total Rentable Square Footage of the Building at any time
during a calendar year, Expenses shall be determined as if the
Building had been 95% occupied and Landlord had been supplying
services to 95% of the Rentable Square Footage of the Building
during that calendar year. If Tenant pays for its Pro Rata Share
of Expenses based on increases over a "Base Year" and Expenses
for a calendar year are determined as provided in the prior
sentence, Expenses for the Base Year and comparison years shall
also be determined as if the Building had been 95% occupied and
Landlord had been supplying services to 95% of the Rentable
Square Footage of the Building. The extrapolation of Expenses
under this Section shall be performed by appropriately adjusting
the cost of those components of Expenses that are impacted by
changes in the occupancy of the Building.

D. Taxes Defined. "Taxes" shall mean: (1) all real estate taxes and
other assessments on the Building and/or Property, including, but
not limited to, assessments for special improvement districts and
building improvement districts, taxes and assessments levied in
substitution or supplementation in whole or in part of any such
taxes and assessments and the Property's share of any real estate
taxes and assessments under any reciprocal easement agreement,
common area agreement or similar agreement as to the Property;
(2) all personal property taxes for property that is owned by
Landlord to the extent used in connection with the operation,
maintenance and repair of the Property; and (3) all reasonable
costs and fees incurred in connection with seeking reductions in
any tax liabilities described in (1) and (2), including, without
limitation, any costs incurred by Landlord for compliance, review
and appeal of tax liabilities. Without limitation, Taxes shall
not include any income, capital levy, franchise, capital stock,
gift, estate or inheritance tax. If an assessment is payable in
installments, Taxes for the year shall include the amount of the
installment and any interest due and payable during that year.
For all other real estate taxes, Taxes for that year shall, at
Landlord's election, include either the amount accrued, assessed
or otherwise imposed for the year or the amount due and payable
for that year, provided that Landlord's election shall be applied
consistently throughout the Term. If a change in Taxes is
obtained for any year of the Term during which Tenant paid
Tenant's Pro Rata Share of any Tax Excess, then Taxes for that
year will be retroactively adjusted and Landlord shall provide
Tenant with a credit (or refund if such change in Taxes is
obtained after the termination of the Lease with respect to any
year of the Term during which the Tenant paid Tenant's Pro Rata
Share of any Tax Excess), if any, based on the adjustment.
Likewise, if a change is obtained for Taxes for the Base Year,
Taxes for the Base Year shall be restated and the Tax Excess for
all subsequent years shall be recomputed. Tenant shall pay
Landlord the amount of Tenant's

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<PAGE> 11

Pro Rata Share of any such increase in the Tax Excess within 30
days after Tenant's receipt of a statement from Landlord.

E. Audit Rights. Tenant may, within 90 days after receiving
Landlord's statement of Expenses, give Landlord written notice
("Review Notice") that Tenant intends to review Landlord's
records of the Expenses for that calendar year. Within a
reasonable time after receipt of the Review Notice, Landlord
shall make all pertinent records available for inspection that
are reasonably necessary for Tenant to conduct its review. If any
records are maintained at a location other than the office of the
Building, Tenant may either inspect the records at such other
location or pay for the reasonable cost of copying and shipping
the records. If Tenant retains an agent to review Landlord's
records, the agent must be with a licensed CPA firm. Tenant shall
be solely responsible for all costs, expenses and fees incurred
for the audit. Within 60 days after the records are made
available to Tenant, Tenant shall have the right to give Landlord
written notice (an "Objection Notice") stating in reasonable
detail any objection to Landlord's statement of Expenses for that
year. If Tenant fails to give Landlord an Objection Notice within
the 60 day period or fails to provide Landlord with a Review
Notice within the 90 day period described above, Tenant shall be
deemed to have approved Landlord's statement of Expenses and
shall be barred from raising any claims regarding the Expenses
for that year. If Tenant provides Landlord with a timely
Objection Notice, Landlord and Tenant shall work together in good
faith to resolve any issues raised in Tenant's Objection Notice.
If Landlord and Tenant determine that Expenses for the calendar
year are less than reported, Landlord shall provide Tenant with a
credit against the next installment of Rent (or refund if such
Expenses adjustment is made after the termination of this Lease
with respect to any calendar year of the Term of this Lease for
which Tenant has paid Tenant's Pro Rata Share of Expenses) in the
amount of the overpayment by Tenant. Likewise, if Landlord and
Tenant determine that Expenses for the calendar year are greater
than reported, Tenant shall pay Landlord the amount of any
underpayment within 30 days. The records obtained by Tenant shall
be treated as confidential. In no event shall Tenant be permitted
to examine Landlord's records or to dispute any statement of
Expenses unless Tenant has paid and continues to pay all Rent
when due.

V. COMPLIANCE WITH LAWS; USE.

The Premises shall be used only for the Permitted Use and for no other use
whatsoever. Tenant shall not use or permit the use of the Premises for any
purpose which is illegal, dangerous to persons or property or which, in
Landlord's reasonable opinion, unreasonably disturbs any other tenants of the
Building or interferes with the operation of the Building. Tenant shall comply
with all Laws, including the Americans with Disabilities Act, regarding the
operation of Tenant's business and the use, condition, configuration and
occupancy of the Premises. Tenant, within 10 days after receipt, shall provide
Landlord with copies of any notices it receives regarding a violation or alleged
violation of any Laws. Tenant shall comply with the rules and regulations of the
Building attached as EXHIBIT B and such other reasonable rules and regulations
adopted by Landlord from time to time. Tenant shall also cause its agents,
contractors, subcontractors, employees, customers, and subtenants to comply with
all rules and regulations. Landlord shall not knowingly discriminate against
Tenant in Landlord's enforcement of the rules and regulations. Except to the
extent properly included in Expenses, Landlord shall be responsible for the cost
of correcting any violations of Title III of the Americans with Disabilities Act
(ADA) with respect to the Common Areas of the Building. Notwithstanding the
foregoing, Landlord shall have the right to contest any alleged violation in
good faith, including, without limitation, the right to apply for and obtain a
waiver or deferment of compliance, the right to assert any and all defenses
allowed by law and the right to appeal any decisions, judgments or rulings to
the fullest extent permitted by law. Landlord, after the exhaustion of any and
all rights to appeal or contest, will make all repairs, additions, alterations
or improvements necessary to comply with the terms of any final order or
judgment.

VI. SECURITY DEPOSIT.

A. The Security Deposit shall be delivered to Landlord upon the
execution of this Lease by Tenant and shall be held by Landlord
without liability for interest (unless required by Law) as
security for the performance of Tenant's obligations. The
Security Deposit is not an advance payment of Rent or a measure
of

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<PAGE> 12

Tenant's liability for damages. Landlord may, from time to time,
without prejudice to any other remedy, use all or a portion of
the Security Deposit to satisfy past due Rent or to cure any
uncured default by Tenant. If Landlord uses the Security Deposit,
Tenant shall on demand restore the Security Deposit to its
original amount. Landlord shall return any unapplied portion of
the Security Deposit to Tenant within 45 days after the later to
occur of: (1) the determination of Tenant's Pro Rata Share of any
Tax Excess and Expense Excess for the final year of the Term; (2)
the date Tenant surrenders possession of the Premises to Landlord
in accordance with this Lease; or (3) the Termination Date. If
Landlord transfers its interest in the Premises, Landlord may
assign the Security Deposit to the transferee and, following the
assignment, Landlord shall have no further liability for the
return of the Security Deposit. Landlord shall not be required to
keep the Security Deposit separate from its other accounts.

B. The Security Deposit may be in the form of an irrevocable letter
of credit (the "Letter of Credit"), which Letter of Credit shall:
(a) be in the initial amount of $700,000.00; (b) be issued on the
form attached hereto as EXHIBIT E; (c) name Landlord as its
beneficiary; (d) be drawn on an FDIC insured financial
institution satisfactory to the Landlord; and (e) expire no
earlier than 60 days after the Termination Date of this Lease.

VII. SERVICES TO BE FURNISHED BY LANDLORD.

A. Landlord agrees to furnish Tenant with the following services:
(1) Water service for use in the lavatories on each floor on
which the Premises are located; (2) Heat and air conditioning in
season during Normal Business Hours, at such temperatures and in
such amounts as are standard for comparable buildings or as
required by governmental authority. Tenant, upon such advance
notice as is reasonably required by Landlord, shall have the
right to receive HVAC service during hours other than Normal
Business Hours. Tenant shall pay Landlord the standard charge for
the additional service as reasonably determined by Landlord from
time to time; (3) Maintenance and repair of the Property as
described in Section IX.B.; (4) Janitor service on Business Days.
If Tenant's use, floor covering or other improvements require
special services in excess of the standard services for the
Building, Tenant shall pay the additional cost attributable to
the special services; (5) Elevator service; (6) Electricity to
the Premises for general office use, in accordance with and
subject to the terms and conditions in Article X; and (7) such
other services as Landlord reasonably determines are necessary or
appropriate for the Property.

B. Landlord's failure to furnish, or any interruption or termination
of, services due to the application of Laws, the failure of any
equipment, the performance of repairs, improvements or
alterations, or the occurrence of any event or cause beyond the
reasonable control of Landlord (a "Service Failure") shall not
render Landlord liable to Tenant, constitute a constructive
eviction of Tenant, give rise to an abatement of Rent, nor
relieve Tenant from the obligation to fulfill any covenant or
agreement. However, if the Premises, or a material portion of the
Premises, is made untenantable for a period in excess of 3
consecutive Business Days as a result of the Service Failure,
then Tenant, as its sole remedy, shall be entitled to receive an
abatement of Rent payable hereunder during the period beginning
on the 4th consecutive Business Day of the Service Failure and
ending on the day the service has been restored. If the entire
Premises has not been rendered untenantable by the Service
Failure, the amount of abatement that Tenant is entitled to
receive shall be prorated based upon the percentage of the
Premises rendered untenantable and not used by Tenant. In no
event, however, shall Landlord be liable to Tenant for any loss
or damage, including the theft of Tenant's Property (defined in
Article XV), arising out of or in connection with the failure of
any security services, personnel or equipment unless caused by
the gross negligence or willful misconduct of Landlord.

VIII. LEASEHOLD IMPROVEMENTS.

All improvements to the Premises (collectively, "Leasehold
Improvements") shall be owned by Landlord and shall remain upon the Premises
without compensation to Tenant. However, Landlord, by written notice to Tenant
within 30 days prior to the Termination Date,

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<PAGE> 13

may require Tenant to remove, at Tenant's expense: (1) Cable (defined in Section
IX.A) installed by or for the exclusive benefit of Tenant and located in the
Premises or other portions of the Building; and (2) any Leasehold Improvements
that are performed by or for the benefit of Tenant and, in Landlord's reasonable
judgment, are of a nature that would require removal and repair costs that are
materially in excess of the removal and repair costs associated with standard
office improvements (collectively referred to as "Required Removables"). Without
limitation, it is agreed that Required Removables include internal stairways,
raised floors, personal baths and showers, vaults, rolling file systems and
structural alterations and modifications of any type. The Required Removables
designated by Landlord shall be removed by Tenant before the Termination Date,
provided that upon prior written notice to Landlord, Tenant may remain in the
Premises for up to 5 days after the Termination Date for the sole purpose of
removing the Required Removables. Tenant's possession of the Premises shall be
subject to all of the terms and conditions of this Lease, including the
obligation to pay Rent on a per diem basis at the rate in effect for the last
month of the Term. Tenant shall repair damage caused by the installation or
removal of Required Removables. If Tenant fails to remove any Required
Removables or perform related repairs in a timely manner, Landlord, at Tenant's
expense, may remove and dispose of the Required Removables and perform the
required repairs. Tenant, within 30 days after receipt of an invoice, shall
reimburse Landlord for the reasonable costs incurred by Landlord.
Notwithstanding the foregoing, Tenant, at the time it requests approval for a
proposed Alteration (defined in Section IX.C), may request in writing that
Landlord advise Tenant whether the Alteration or any portion of the Alteration
will be designated as a Required Removable. Within 10 days after receipt of
Tenant's request, Landlord shall advise Tenant in writing as to which portions
of the Alteration, if any, will be considered to be Required Removables.

IX. REPAIRS AND ALTERATIONS.

A. Tenant's Repair Obligations. Tenant shall, at its sole cost and
expense, promptly perform all maintenance and repairs to the
Premises that are not Landlord's express responsibility under
this Lease, and shall keep the Premises in good condition and
repair, reasonable wear and tear excepted. Tenant's repair
obligations include, without limitation, repairs to: (1) floor
covering; (2) interior partitions; (3) doors; (4) the interior
side of demising walls; (5) electronic, phone and data cabling
and related equipment (collectively, "Cable") that is installed
by or for the exclusive benefit of Tenant and located in the
Premises or other portions of the Building; (6) supplemental air
conditioning units, private showers and kitchens, including hot
water heaters, plumbing, and similar facilities serving Tenant
exclusively; and (7) Alterations performed by contractors
retained by Tenant, including related HVAC balancing. All work
shall be performed in accordance with the rules and procedures
described in Section IX.C. below. If Tenant fails to make any
repairs to the Premises for more than 15 days after notice from
Landlord (although notice shall not be required if there is an
emergency), Landlord may make the repairs, and Tenant shall pay
the reasonable cost of the repairs to Landlord within 30 days
after receipt of an invoice, together with an administrative
charge in an amount equal to 10% of the cost of the repairs.

B. Landlord's Repair Obligations. Landlord shall keep and maintain
in good repair and working order and make repairs to and perform
maintenance upon: (1) structural elements of the Building; (2)
mechanical (including HVAC), electrical, plumbing and fire/life
safety systems serving the Building in general; (3) Common Areas;
(4) the roof of the Building; (5) exterior windows of the
Building; and (6) elevators serving the Building. Landlord shall
promptly make repairs (considering the nature and urgency of the
repair) for which Landlord is responsible.

C. Alterations. Tenant shall not make alterations, additions or
improvements to the Premises or install any Cable in the Premises
or other portions of the Building (collectively referred to as
"Alterations") without first obtaining the written consent of
Landlord in each instance, which consent shall not be
unreasonably withheld or delayed. However, Landlord's consent
shall not be required for any Alteration that satisfies all of
the following criteria (a "Cosmetic Alteration"): (1) is of a
cosmetic nature such as painting, wallpapering, hanging pictures
and installing carpeting; (2) is not visible from the exterior of
the Premises or Building; (3) will not affect the systems or
structure of the Building; and (4) does not require work

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<PAGE> 14

to be performed inside the walls or above the ceiling of the
Premises. However, even though consent is not required, the
performance of Cosmetic Alterations shall be subject to all the
other provisions of this Section IX.C. Prior to starting work,
Tenant shall furnish Landlord with plans and specifications
reasonably acceptable to Landlord; names of contractors
reasonably acceptable to Landlord (provided that Landlord may
designate specific contractors with respect to Building systems);
copies of contracts; necessary permits and approvals; evidence of
contractor's and subcontractor's insurance in amounts reasonably
required by Landlord; and any security for performance that is
reasonably required by Landlord. Changes to the plans and
specifications must also be submitted to Landlord for its
approval. Alterations shall be constructed in a good and
workmanlike manner using materials of a quality that is at least
equal to the quality designated by Landlord as the minimum
standard for the Building. Landlord may designate reasonable
rules, regulations and procedures for the performance of work in
the Building and, to the extent reasonably necessary to avoid
disruption to the occupants of the Building, shall have the right
to designate the time when Alterations may be performed. Tenant
shall reimburse Landlord within 30 days after receipt of an
invoice for sums paid by Landlord for third party examination of
Tenant's plans for non-Cosmetic Alterations. In addition, within
30 days after receipt of an invoice from Landlord, Tenant shall
pay Landlord a fee for Landlord's oversight and coordination of
any non-Cosmetic Alterations equal to 5% of the cost of the
non-Cosmetic Alterations. Landlord and Tenant acknowledge and
agree that such 5% fee for Landlord's oversight of non-Cosmetic
Alterations shall not apply to the Initial Alterations, and that
Landlord shall instead be entitled to receive the fees for
oversight of the Initial Alterations as set forth in EXHIBIT D.
Upon completion, Tenant shall furnish "as-built" plans (except
for Cosmetic Alterations), completion affidavits, full and final
waivers of lien in recordable form, and receipted bills covering
all labor and materials. Tenant shall assure that the Alterations
comply with all insurance requirements and Laws. Landlord's
approval of an Alteration shall not be a representation by
Landlord that the Alteration complies with applicable Laws or
will be adequate for Tenant's use.

X. USE OF ELECTRICAL SERVICES BY TENANT.

A. Electricity used by Tenant in the Premises shall, at Landlord's
option, be paid for by Tenant either: (1) through inclusion in
Expenses (except as provided in Section X.B. for excess usage);
(2) by a separate charge payable by Tenant to Landlord within 30
days after billing by Landlord; or (3) by separate charge billed
by the applicable utility company and payable directly by Tenant.
Electrical service to the Premises may be furnished by one or
more companies providing electrical generation, transmission and
distribution services, and the cost of electricity may consist of
several different components or separate charges for such
services, such as generation, distribution and stranded cost
charges. Landlord shall have the exclusive right to select any
company providing electrical service to the Premises, to
aggregate the electrical service for the Property and Premises
with other buildings, to purchase electricity through a broker
and/or buyers group and to change the providers and manner of
purchasing electricity. Landlord shall be entitled to receive a
fee (if permitted by Law) for the selection of utility companies
and the negotiation and administration of contracts for
electricity, provided that the amount of such fee shall not
exceed 50% of any savings obtained by Landlord.

B. Tenant's use of electrical service shall not exceed, either in
voltage, rated capacity, use beyond Normal Business Hours or
overall load, that which Landlord deems to be standard for the
Building. If Tenant requests permission to consume excess
electrical service, Landlord may refuse to consent only if
Landlord reasonably determines that the Building is unable to
provide such excess electrical service or if Landlord is
prohibited from granting consent because of any Laws, or if
Landlord reasonably determines that Tenant's use of such excess
electrical services will otherwise detrimentally impact
Landlord's ability to provide electrical service or other
services to the Common Areas or other tenants in the Building. If
Landlord does not elect to refuse such consent, Landlord may
condition its consent upon conditions that Landlord reasonably
elects (including, without limitation, the installation of
utility service upgrades,

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<PAGE> 15

meters, submeters, air handlers or cooling units), and the
additional usage (to the extent permitted by Law), installation
and maintenance costs shall be paid by Tenant. Landlord shall
have the right to separately meter electrical usage for the
Premises and to measure electrical usage by survey or other
commonly accepted methods.

XI. ENTRY BY LANDLORD.

Landlord, its agents, contractors and representatives may enter the
Premises to inspect or show the Premises, to clean and make repairs, alterations
or additions to the Premises, and to conduct or facilitate repairs, alterations
or additions to any portion of the Building, including other tenants' premises.
Except in emergencies or to provide janitorial and other Building services after
Normal Business Hours, Landlord shall provide Tenant with reasonable prior
notice of entry into the Premises, which may be given orally. If reasonably
necessary for the protection and safety of Tenant and its employees, Landlord
shall have the right to temporarily close all or a portion of the Premises to
perform repairs, alterations and additions. However, except in emergencies,
Landlord will not close the Premises if the work can reasonably be completed on
weekends and after Normal Business Hours. Entry by Landlord shall not constitute
constructive eviction or entitle Tenant to an abatement or reduction of Rent.

XII. ASSIGNMENT AND SUBLETTING.

A. Except in connection with a Permitted Transfer (defined in
Section XII.E. below), Tenant shall not assign, sublease,
transfer or encumber any interest in this Lease or allow any
third party to use any portion of the Premises (collectively or
individually, a "Transfer") without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or
delayed if Landlord does not elect to exercise its termination
rights under Section XII.B below. Without limitation, it is
agreed that Landlord's consent shall not be considered
unreasonably withheld if: (1) the proposed transferee's financial
condition does not meet the criteria Landlord uses to select
Building tenants having similar leasehold obligations; (2) the
proposed transferee's business is not suitable for the Building
considering the business of the other tenants and the Building's
prestige, or would result in a violation of another tenant's
rights; (3) the proposed transferee is a governmental agency or
occupant of the Building; (4) Tenant is in default after the
expiration of the notice and cure periods in this Lease; or (5)
any portion of the Building or Premises would likely become
subject to additional or different Laws as a consequence of the
proposed Transfer. Tenant shall not be entitled to receive
monetary damages based upon a claim that Landlord unreasonably
withheld its consent to a proposed Transfer and Tenant's sole
remedy shall be an action to enforce any such provision through
specific performance or declaratory judgment. Any attempted
Transfer in violation of this Article shall, at Landlord's
option, be void. Consent by Landlord to one or more Transfer(s)
shall not operate as a waiver of Landlord's rights to approve any
subsequent Transfers. In no event shall any Transfer or Permitted
Transfer release or relieve Tenant from any obligation under this
Lease.

B. As part of its request for Landlord's consent to a Transfer,
Tenant shall provide Landlord with financial statements for the
proposed transferee, a complete copy of the proposed assignment,
sublease and other contractual documents and such other
information as Landlord may reasonably request. Landlord shall,
by written notice to Tenant within 30 days of its receipt of the
required information and documentation, either: (1) consent to
the Transfer by the execution of a consent agreement in a form
reasonably designated by Landlord or reasonably refuse to consent
to the Transfer in writing; or (2) exercise its right to
terminate this Lease with respect to the portion of the Premises
that Tenant is proposing to assign or sublet. Any such
termination shall be effective on the proposed effective date of
the Transfer for which Tenant requested consent. Tenant shall pay
Landlord a review fee of $750.00 for Landlord's review of any
Permitted Transfer or requested Transfer, provided if Landlord's
actual reasonable costs and expenses (including reasonable
attorney's fees) exceed $750.00, Tenant shall reimburse Landlord
for its actual reasonable costs and expenses in lieu of a fixed
review fee.

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C. Tenant shall pay Landlord 60% of all rent and other consideration
which Tenant receives as a result of a Transfer that is in excess
of the Rent payable to Landlord for the portion of the Premises
and Term covered by the Transfer. Tenant shall pay Landlord for
Landlord's share of any excess within 30 days after Tenant's
receipt of such excess consideration. Tenant may deduct from the
excess all reasonable and customary expenses directly incurred by
Tenant attributable to the Transfer (other than Landlord's review
fee), including brokerage fees, legal fees and construction
costs. If Tenant is in Monetary Default (defined in Section
XIX.A. below), Landlord may require that all sublease payments be
made directly to Landlord, in which case Tenant shall receive a
credit against Rent in the amount of any payments received (less
Landlord's share of any excess).

D. If Tenant is a corporation, limited liability company,
partnership, or similar entity, and if the entity which owns or
controls a majority of the voting shares/rights at any time
changes for any reason, such change of ownership or control shall
constitute a Transfer; provided that if the Tenant's net worth
after such change in the ownership or control of a majority of
the voting shares/rights is equal to the greater of Tenant's net
worth at the date of this Lease or the net worth of the Tenant on
the day prior to such change in the ownership or control of a
majority of the voting shares/rights, and the provisions of
subclauses (1), (4) and (5) of Article XII.E. below are otherwise
satisfied, such change of ownership or control shall constitute a
Permitted Transfer. Furthermore, a change in the ownership or
control of a majority of the voting shares/rights of the Tenant
shall not constitute a Transfer so long as Tenant is an entity
whose outstanding stock is listed on a recognized security
exchange, or if at least 80% of its voting stock is owned by
another entity, the voting stock of which is so listed.

E. Tenant may assign its entire interest under this Lease to a
successor to Tenant by purchase, merger, consolidation or
reorganization without the consent of Landlord, provided that all
of the following conditions are satisfied (a "Permitted
Transfer"): (1) Tenant is not in default under this Lease; (2)
Tenant's successor shall own all or substantially all of the
assets of Tenant; (3) Tenant's successor shall have a net worth
which is at least equal to the greater of Tenant's net worth at
the date of this Lease or Tenant's net worth as of the day prior
to the proposed purchase, merger, consolidation or
reorganization; (4) the Permitted Use does not allow the Premises
to be used for retail purposes; and (5) Tenant shall give
Landlord written notice at least 15 days prior to the date the
proposed purchase, merger, consolidation or reorganization
actually occurs. Tenant's notice to Landlord shall include
information and documentation showing that each of the above
conditions has been satisfied. If requested by Landlord, Tenant's
successor shall sign a commercially reasonable form of assumption
agreement.

XIII. LIENS.

Tenant shall not permit mechanic's or other liens to be placed upon the
Property, Premises or Tenant's leasehold interest in connection with any work or
service done or purportedly done by or for benefit of Tenant. If a lien is so
placed, Tenant shall, within 10 days of notice from Landlord of the filing of
the lien, fully discharge the lien by settling the claim which resulted in the
lien or by bonding or insuring over the lien in the manner prescribed by the
applicable lien Law. If Tenant fails to discharge the lien, then, in addition to
any other right or remedy of Landlord, Landlord may bond or insure over the lien
or otherwise discharge the lien. Tenant shall reimburse Landlord for any amount
paid by Landlord to bond or insure over the lien or discharge the lien,
including, without limitation, reasonable attorneys' fees (if and to the extent
permitted by Law) within 30 days after receipt of an invoice from Landlord.

XIV. INDEMNITY AND WAIVER OF CLAIMS.

A. Except to the extent caused by the negligence or willful
misconduct of Landlord or any Landlord Related Parties (defined
below), Tenant shall indemnify, defend and hold Landlord, its
trustees, members, principals, beneficiaries, partners, officers,
directors, employees, Mortgagee(s) (defined in Article XXVI) and
agents ("Landlord Related Parties") harmless against and from all
liabilities, obligations, damages, penalties, claims, actions,
costs, charges and expenses, including, without limitation,
reasonable attorneys' fees and other professional fees (if and

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to the extent permitted by Law), which may be imposed upon,
incurred by or asserted against Landlord or any of the Landlord
Related Parties and arising out of or in connection with any
damage or injury occurring in the Premises or any acts or
omissions (including violations of Law) of Tenant, the Tenant
Related Parties (defined below) or any of Tenant's transferees,
contractors or licensees.

B. Except to the extent caused by the negligence or willful
misconduct of Tenant or any Tenant Related Parties (defined
below), Landlord shall indemnify, defend and hold Tenant, its
trustees, members, principals, beneficiaries, partners, officers,
directors, employees and agents ("Tenant Related Parties")
harmless against and from all liabilities, obligations, damages,
penalties, claims, actions, costs, charges and expenses,
including, without limitation, reasonable attorneys' fees and
other professional fees (if and to the extent permitted by Law),
which may be imposed upon, incurred by or asserted against Tenant
or any of the Tenant Related Parties and arising out of or in
connection with the acts or omissions (including violations of
Law) of Landlord, the Landlord Related Parties or any of
Landlord's contractors.

C. Landlord and the Landlord Related Parties shall not be liable
for, and Tenant waives, all claims for loss or damage to Tenant's
business or loss, theft or damage to Tenant's Property or the
property of any person claiming by, through or under Tenant
resulting from: (1) wind or weather; (2) the failure of any
sprinkler, heating or air-conditioning equipment, any electric
wiring or any gas, water or steam pipes; (3) the backing up of
any sewer pipe or downspout; (4) the bursting, leaking or running
of any tank, water closet, drain or other pipe; (5) water, snow
or ice upon or coming through the roof, skylight, stairs,
doorways, windows, walks or any other place upon or near the
Building; (6) any act or omission of any party other than
Landlord or Landlord Related Parties; and (7) any causes not
reasonably within the control of Landlord. Tenant shall insure
itself against such losses under Article XV below.
Notwithstanding the foregoing, except as provided in Article XVI
to the contrary, Tenant shall not be required to waive any claims
against Landlord (other than for loss or damage to Tenant's
business) where such loss or damage is due to the gross
negligence or willful misconduct of Landlord. Nothing herein
shall be construed as to diminish the repair and maintenance
obligations of Landlord contained elsewhere in this Lease.

XV. INSURANCE.

Tenant shall carry and maintain the following insurance ("Tenant's
Insurance"), at its sole cost and expense: (1) Commercial General Liability
Insurance applicable to the Premises and its appurtenances providing, on an
occurrence basis, a minimum combined single limit of $2,000,000.00; (2) All Risk
Property/Business Interruption Insurance, including flood and earthquake,
written at replacement cost value and with a replacement cost endorsement
covering all of Tenant's trade fixtures, equipment, furniture and other personal
property within the Premises ("Tenant's Property"); (3) Workers' Compensation
Insurance as required by the state in which the Premises is located and in
amounts as may be required by applicable statute; and (4) Employers Liability
Coverage of at least $1,000,000.00 per occurrence. Any company writing any of
Tenant's Insurance shall have an A.M. Best rating of not less than A-VIII. All
Commercial General Liability Insurance policies shall name Tenant as a named
insured and Landlord (or any successor), Equity Office Properties Trust, a
Maryland real estate investment trust, EOP Operating Limited Partnership, a
Delaware limited partnership, and their respective members, principals,
beneficiaries, partners, officers, directors, employees, and agents, and other
designees of Landlord as the interest of such designees shall appear, as
additional insureds. All policies of Tenant's Insurance shall contain
endorsements that the insurer(s) shall give Landlord and its designees at least
30 days' advance written notice of any change, cancellation, termination or
lapse of insurance. Tenant shall provide Landlord with a certificate of
insurance evidencing Tenant's Insurance prior to the earlier to occur of the
Premises Commencement Date or the date Tenant is provided with possession of the
Premises for any reason, and upon renewals at least 15 days prior to the
expiration of the insurance coverage. So long as the same is available at
commercially reasonable rates, Landlord shall maintain so called All Risk
property insurance on the Building at replacement cost value, as reasonably
estimated by Landlord. Except as specifically provided to the contrary, the
limits of either party's' insurance shall not limit such party's liability under
this Lease.

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XVI. SUBROGATION.

Notwithstanding anything in this Lease to the contrary, Landlord and
Tenant shall cause their respective insurance carriers to waive any and all
rights of recovery, claim, action or causes of action against the other and
their respective trustees, principals, beneficiaries, partners, officers,
directors, agents, and employees, for any loss or damage that may occur to
Landlord or Tenant or any party claiming by, through or under Landlord or
Tenant, as the case may be, with respect to Tenant's Property, the Building, the
Premises, any additions or improvements to the Building or Premises, or any
contents thereof, including all rights of recovery, claims, actions or causes of
action arising out of the negligence of Landlord or any Landlord Related Parties
or the negligence of Tenant or any Tenant Related Parties, which loss or damage
is (or would have been, had the insurance required by this Lease been carried)
covered by insurance.

XVII. CASUALTY DAMAGE.

A. If all or any part of the Premises is damaged by fire or other
casualty, Tenant shall immediately notify Landlord in writing.
During any period of time that all or a material portion of the
Premises is rendered untenantable as a result of a fire or other
casualty, the Rent shall abate for the portion of the Premises
that is untenantable and not used by Tenant. Landlord shall have
the right to terminate this Lease if: (1) the Building shall be
damaged so that, in Landlord's reasonable judgment, substantial
alteration or reconstruction of the Building shall be required
(whether or not the Premises has been damaged); (2) Landlord is
not permitted by Law to rebuild the Building in substantially the
same form as existed before the fire or casualty; (3) the
Premises have been materially damaged and there is less than 1
year of the Term remaining on the date of the casualty; (4) any
Mortgagee requires that the insurance proceeds be applied to the
payment of the mortgage debt; or (5) a material uninsured loss to
the Building occurs. Landlord may exercise its right to terminate
this Lease by notifying Tenant in writing within 90 days after
the date of the casualty. In addition to Landlord's rights to
terminate as provided herein, Tenant shall have the right to
terminate this Lease if: (1) a substantial portion of the
Premises has been damaged by fire or other casualty and such
damage cannot reasonably be repaired within 60 days after the
date of such fire or other casualty; (2) there is less than1 year
of the Lease Term remaining on the date of such casualty; (3) the
casualty was not caused by the negligence or willful misconduct
of Tenant or its agents, employees or contractors; and (4) Tenant
provides Landlord with written notice of its intent to terminate
within 30 days after the date of the fire or other casualty. If
neither Landlord nor Tenant elect to terminate this Lease,
Landlord shall commence and proceed with reasonable diligence to
repair and restore the Building and the Leasehold Improvements
(excluding any Alterations that were performed by Tenant in
violation of this Lease). However, in no event shall Landlord be
required to spend more than the insurance proceeds received by
Landlord. Landlord shall not be liable for any loss or damage to
Tenant's Property or to the business of Tenant resulting in any
way from the fire or other casualty or from the repair and
restoration of the damage. Landlord and Tenant hereby waive the
provisions of any Law relating to the matters addressed in this
Article, and agree that their respective rights for damage to or
destruction of the Premises shall be those specifically provided
in this Lease.

B. If all or any portion of the Premises shall be made untenantable
by fire or other casualty, Landlord shall, with reasonable
promptness, cause an architect or general contractor selected by
Landlord to provide Landlord and Tenant with a written estimate
of the amount of time required to substantially complete the
repair and restoration of the Premises and make the Premises
tenantable again, using standard working methods ("Completion
Estimate"). If the Completion Estimate indicates that the
Premises cannot be made tenantable within 270 days from the date
the repair and restoration is started, then regardless of
anything in Section XVII.A above to the contrary, either party
shall have the right to terminate this Lease by giving written
notice to the other of such election within 10 days after receipt
of the Completion Estimate. Tenant, however, shall not have the
right to terminate this Lease if the fire or casualty was caused
by the negligence or intentional misconduct of Tenant, Tenant
Related Parties or any of Tenant's transferees, contractors or
licensees.

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<PAGE> 19
XVIII. CONDEMNATION.

Either party may terminate this Lease if the whole or any material part
of the Premises shall be taken or condemned for any public or quasi-public use
under Law, by eminent domain or private purchase in lieu thereof (a "Taking").
Landlord shall also have the right to terminate this Lease if there is a Taking
of any portion of the Building or Property which would leave the remainder of
the Building unsuitable for use as an office building in a manner comparable to
the Building's use prior to the Taking. In order to exercise its right to
terminate the Lease, Landlord or Tenant, as the case may be, must provide
written notice of termination to the other within 45 days after the terminating
party first receives notice of the Taking. Any such termination shall be
effective as of the date the physical taking of the Premises or the portion of
the Building or Property occurs. If this Lease is not terminated, the Rentable
Square Footage of the Building, the Rentable Square Footage of the Premises and
Tenant's Pro Rata Share shall, if applicable, be appropriately adjusted. In
addition, Rent for any portion of the Premises taken or condemned shall be
abated during the unexpired Term of this Lease effective when the physical
taking of the portion of the Premises occurs. All compensation awarded for a
Taking, or sale proceeds (other than any compensation which may be separately
awarded to Tenant pursuant to the terms of the next succeeding sentence), shall
be the property of Landlord, any right to receive compensation or proceeds being
expressly waived by Tenant. However, Tenant may file a separate claim at its
sole cost and expense in connection with such Taking for Tenant's Property and
Tenant's reasonable relocation expenses, provided the filing of the claim does
not diminish the award which would otherwise be receivable by Landlord.

XIX. EVENTS OF DEFAULT.

Tenant shall be considered to be in default of this Lease upon the
occurrence of any of the following events of default:

A. Tenant's failure to pay when due all or any portion of the Rent,
if the failure continues for 3 days after written notice to
Tenant ("Monetary Default").

B. Tenant's failure (other than a Monetary Default) to comply with
any term, provision or covenant of this Lease, if the failure is
not cured within 10 days after written notice to Tenant. However,
if Tenant's failure to comply cannot reasonably be cured within
10 days, Tenant shall be allowed additional time (not to exceed
75 days) as is reasonably necessary to cure the failure so long
as: (1) Tenant commences to cure the failure within 10 days, and
(2) Tenant diligently pursues a course of action that will cure
the failure and bring Tenant back into compliance with the Lease.
However, if Tenant's failure to comply creates a hazardous
condition, the failure must be cured immediately upon notice to
Tenant. In addition, if Landlord provides Tenant with notice of
Tenant's failure to comply with any particular term, provision or
covenant of the Lease on 3 occasions during any 12 month period,
Tenant's subsequent violation of such term, provision or covenant
shall, at Landlord's option, be an incurable event of default by
Tenant.

C. Tenant or any Guarantor is unable to pay its debts when due or
admits in writing its inability to pay its debts when due, makes
a transfer in fraud of creditors or makes an assignment for the
benefit of creditors.

D. Tenant obtains its leasehold estate by a taking of the leasehold
estate of a prior tenant hereunder by process or operation of
Law.

E In the case of any ground floor or retail Tenant, Tenant does not
take possession of, or abandons or vacates all or any portion of
the Premises.

F. Tenant is in default beyond any notice and cure period under any
other lease or agreement with Landlord in the Building (other
than for parking).

XX. REMEDIES.

A. Upon the occurrence of any event or events of default under this
Lease, whether enumerated in Article XIX or not, Landlord shall
have the option to pursue any one

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<PAGE> 20
or more of the following remedies without any notice or demand
whatsoever (except as expressly prescribed herein or imposed by
applicable Law):

1. Terminate this Lease and Tenant's right to possession of
the Premises and recover from Tenant an award of damages
equal to the sum of the following:

(a) The Worth at the Time of Award of the unpaid Rent
which had been earned at the time of termination;

(b) The Worth at the Time of Award of the amount by
which the unpaid Rent which would have been earned
after termination until the time of award exceeds
the amount of such Rent loss that Tenant
affirmatively proves could have been reasonably
avoided;

(c) The Worth at the Time of Award of the amount by
which the unpaid Rent for the balance of the Term
after the time of award exceeds the amount of such
Rent loss that Tenant affirmatively proves could be
reasonably avoided;

(d) Any other amount necessary to compensate Landlord
for all the detriment either proximately caused by
Tenant's failure to perform Tenant's obligations
under this Lease or which in the ordinary course of
things would be likely to result therefrom; and

(e) All such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time
under applicable law.

The "Worth at the Time of Award" of the amounts referred
to in parts (a) and (b) above, shall be computed by
allowing interest at the lesser of a per annum rate equal
to: (i) the greatest per annum rate of interest permitted
from time to time under applicable law, or (ii) the Prime
Rate plus five percent (5%). For purposes hereof, the
"Prime Rate" shall be the per annum interest rate publicly
announced as its prime or base rate by a federally insured
bank selected by Landlord in the State of California. The
"Worth at the Time of Award" of the amount referred to in
part (c), above, shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one percent (1%);

2. Employ the remedy described in California Civil Code
Section 1951.4 (Landlord may continue this Lease in effect
after Tenant's breach and abandonment and recover Rent as
it becomes due, if Tenant has the right to sublet or
assign, subject only to reasonable limitations); or

3. Notwithstanding Landlord's exercise of the remedy
described in California Civil Code Section 1951.4 in
respect of an event or events of default, at such time
thereafter as Landlord may elect in writing, to terminate
this Lease and Tenant's right to possession of the
Premises and recover an award of damages as provided above
in Paragraph XX.A.1.

B. The subsequent acceptance of Rent hereunder by Landlord shall not
be deemed to be a waiver of any preceding breach by Tenant of any
term, covenant or condition of this Lease, other than the failure
of Tenant to pay the particular Rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of
acceptance of such Rent. No waiver by Landlord of any breach
hereof shall be effective unless such waiver is in writing and
signed by Landlord.

C. TENANT HEREBY WAIVES ANY AND ALL RIGHTS CONFERRED BY SECTION 3275
OF THE CIVIL CODE OF CALIFORNIA AND BY SECTIONS 1174 (C) AND 1179
OF THE CODE OF CIVIL PROCEDURE OF CALIFORNIA AND ANY AND ALL
OTHER LAWS AND RULES OF LAW FROM TIME TO TIME IN EFFECT DURING
THE TERM PROVIDING THAT TENANT SHALL HAVE ANY RIGHT TO REDEEM,
REINSTATE OR RESTORE THIS LEASE FOLLOWING ITS TERMINATION BY
REASON OF TENANT'S BREACH. TENANT ALSO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED

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<PAGE> 21

BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING OUT
OF OR RELATING TO THIS LEASE.

D. No right or remedy herein conferred upon or reserved to Landlord
is intended to be exclusive of any other right or remedy, and
each and every right and remedy shall be cumulative and in
addition to any other right or remedy given hereunder or now or
hereafter existing by agreement, applicable law or in equity. In
addition to other remedies provided in this Lease, Landlord shall
be entitled, to the extent permitted by applicable law, to
injunctive relief, or to a decree compelling performance of any
of the covenants, agreements, conditions or provisions of this
Lease, or to any other remedy allowed to Landlord at law or in
equity. Forbearance by Landlord to enforce one or more of the
remedies herein provided upon an event of default shall not be
deemed or construed to constitute a waiver of such default.

E. This Article XX shall be enforceable to the maximum extent such
enforcement is not prohibited by applicable law, and the
unenforceability of any portion thereof shall not thereby render
unenforceable any other portion.

XXI. LIMITATION OF LIABILITY.

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE
LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) TO TENANT SHALL BE LIMITED
TO THE INTEREST OF LANDLORD IN THE PROPERTY. TENANT SHALL LOOK SOLELY TO
LANDLORD'S INTEREST IN THE PROPERTY FOR THE RECOVERY OF ANY JUDGMENT OR AWARD
AGAINST LANDLORD. NEITHER LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE
PERSONALLY LIABLE FOR ANY JUDGMENT OR DEFICIENCY. BEFORE FILING SUIT FOR AN
ALLEGED DEFAULT BY LANDLORD, TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S)
(DEFINED IN ARTICLE XXVI BELOW) WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES
(DEFINED IN ARTICLE XXVI BELOW) ON THE PROPERTY, BUILDING OR PREMISES, NOTICE
AND REASONABLE TIME TO CURE THE ALLEGED DEFAULT.

XXII. NO WAIVER.

Either party's failure to declare a default immediately upon its
occurrence, or delay in taking action for a default shall not constitute a
waiver of the default, nor shall it constitute an estoppel. Either party's
failure to enforce its rights for a default shall not constitute a waiver of its
rights regarding any subsequent default. Receipt by Landlord of Tenant's keys to
the Premises shall not constitute an acceptance or surrender of the Premises.

XXIII. QUIET ENJOYMENT.

Tenant shall, and may peacefully have, hold and enjoy the Premises,
subject to the terms of this Lease, provided Tenant pays the Rent and fully
performs all of its material covenants and agreements. This covenant and all
other covenants of Landlord shall be binding upon Landlord and its successors
only during its or their respective periods of ownership of the Building, and
shall not be a personal covenant of Landlord or the Landlord Related Parties.

XXIV. RELOCATION.

INTENTIONALLY OMITTED.

XXV. HOLDING OVER.

Except for any permitted occupancy by Tenant under Article VIII, if
Tenant fails to surrender the Premises at the expiration or earlier termination
of this Lease, occupancy of the Premises after the termination or expiration
shall be that of a tenancy at sufferance. Tenant's occupancy of the Premises
during the holdover shall be subject to all the terms and provisions of this
Lease and Tenant shall pay an amount (on a per month basis without reduction for
partial months during the holdover) equal to 150% of the greater of: (1) the sum
of the Base Rent and Additional Rent due for the period immediately preceding
the holdover; or (2) the fair market gross rental for the Premises as reasonably
determined by Landlord. No holdover by Tenant or payment by Tenant after the
expiration or early termination of this Lease shall be construed to extend the
Term or prevent Landlord from immediate recovery of possession of

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<PAGE> 22
the Premises by summary proceedings or otherwise. In addition to the payment of
the amounts provided above, if Landlord is unable to deliver possession of the
Premises to a new tenant, or to perform improvements for a new tenant, as a
result of Tenant's holdover and Tenant fails to vacate the Premises within 15
days after Landlord notifies Tenant of Landlord's inability to deliver
possession, or perform improvements, Tenant shall be liable to Landlord for all
damages, including, without limitation, consequential damages, that Landlord
suffers from the holdover.

XXVI. SUBORDINATION TO MORTGAGES; ESTOPPEL CERTIFICATE.

Tenant accepts this Lease subject and subordinate to any mortgage(s),
deed(s) of trust, ground lease(s) or other lien(s) now or subsequently arising
upon the Premises, the Building or the Property, and to renewals, modifications,
refinancings and extensions thereof (collectively referred to as a "Mortgage").
The party having the benefit of a Mortgage shall be referred to as a
"Mortgagee". This clause shall be self-operative, but upon request from a
Mortgagee, Tenant shall execute a commercially reasonable subordination and
non-disturbance agreement in favor of the Mortgagee. In lieu of having the
Mortgage be superior to this Lease, a Mortgagee shall have the right at any time
to subordinate its Mortgage to this Lease. If requested by a
successor-in-interest to all or a part of Landlord's interest in the Lease,
Tenant shall, without charge, attorn to the successor-in-interest. Landlord and
Tenant shall each, within 10 days after receipt of a written request from the
other, execute and deliver an estoppel certificate to those parties as are
reasonably requested by the other (including a Mortgagee or prospective
purchaser). The estoppel certificate shall include a statement certifying that
this Lease is unmodified (except as identified in the estoppel certificate) and
in full force and effect, describing the dates to which Rent and other charges
have been paid, representing that, to such party's actual knowledge, there is no
default (or stating the nature of the alleged default) and indicating other
matters with respect to the Lease that may reasonably be requested.
Notwithstanding the foregoing, as a condition precedent to the subordination of
this Lease, Landlord shall be required to provide Tenant with a non-disturbance,
subordination and attornment agreement in favor of Tenant from any Mortgagee who
comes into existence after the Commencement Date. Such non-disturbance,
subordination and attornment agreement in favor of Tenant shall provide that, so
long as Tenant is paying the rent due under the Lease and is not otherwise in
default under the Lease, its right to possession and other terms of the Lease
shall remain in full force and effect. Such non-disturbance, subordination and
attornment agreement may include additional time on behalf of the Mortgagee to
cure defaults of the Landlord and provide that (a) neither Mortgagee nor any
successor-in-interest shall be bound by (i) any payment of the Base Rent,
Additional Rent, or other sum due hereunder for more than 1 month in advance or
(ii) any amendment or modification to the Lease made without the express written
consent of Mortgagee or any successor-in-interest; (b) neither Mortgagee nor any
successor-in-interest will be liable for (i) any act or omission or warranties
of any prior landlord (including Landlord), (ii) the breach of any warranties or
obligations relating to construction of improvements on the property or any
tenant finish work performed or to have been performed by any prior landlord
(including Landlord), or (iii) the return of any security deposit, except to the
extent such deposits have been received by Mortgagee; and (c) neither Mortgagee
nor any successor-in-interest shall be subject to any offsets or defenses which
Tenant might have against any prior landlord (including Landlord).

XXVII. ATTORNEYS' FEES.

If either party institutes a suit against the other for violation of or
to enforce any covenant or condition of this Lease, or if either party
intervenes in any suit in which the other is a party to enforce or protect its
interest or rights, the prevailing party shall be entitled to all of its costs
and expenses, including, without limitation, reasonable attorneys' fees.

XXVIII. NOTICE.

If a demand, request, approval, consent or notice (collectively referred
to as a "notice") shall or may be given to either party by the other, the notice
shall be in writing and delivered by hand or sent by registered or certified
mail with return receipt requested, or sent by overnight or same day courier
service at the party's respective Notice Address(es) set forth in Article I,
except that if Tenant has vacated the Premises (or if the Notice Address for
Tenant is other than the Premises, and Tenant has vacated such address) without
providing Landlord a new Notice Address, Landlord may serve notice in any manner
described in this Article or in any other manner permitted by Law. Each notice
shall be deemed to have been received or given on the earlier to occur of actual
delivery or the date on which delivery is refused, or, if Tenant

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<PAGE> 23
has vacated the Premises or the other Notice Address of Tenant without providing
a new Notice Address, three (3) days after notice is deposited in the U.S. mail
or with a courier service in the manner described above. Either party may, at
any time, change its Notice Address by giving the other party written notice of
the new address in the manner described in this Article.

XXIX. EXCEPTED RIGHTS.

This Lease does not grant any rights to light or air over or about the
Building. Landlord excepts and reserves exclusively to itself the use of: (1)
roofs, (2) telephone, electrical and janitorial closets, (3) equipment rooms,
Building risers or similar areas that are used by Landlord for the provision of
Building services, (4) rights to the land and improvements below the floor of
the Premises, (5) the improvements and air rights above the Premises, (6) the
improvements and air rights outside the demising walls of the Premises, and (7)
the areas within the Premises used for the installation of utility lines and
other installations serving occupants of the Building. Notwithstanding the
foregoing to the contrary, Landlord agrees to work in good faith with Tenant to
provide Tenant with reasonable access to the areas set forth in subclauses (1),
(2), (3) and (4) above (subject to availability and such rules, regulations,
restrictions and requirements as Landlord may designate from time to time) to
enable Tenant to reasonably service its telecommunications needs in the
Premises. Landlord has the right to change the Building's name or address.
Landlord also has the right to make such other changes to the Property and
Building as Landlord deems appropriate, provided the changes do not materially
affect Tenant's ability to use the Premises for the Permitted Use. Landlord
shall also have the right (but not the obligation) to temporarily close the
Building if Landlord reasonably determines that there is an imminent danger of
significant damage to the Building or of personal injury to Landlord's employees
or the occupants of the Building. The circumstances under which Landlord may
temporarily close the Building shall include, without limitation, electrical
interruptions, hurricanes and civil disturbances. A closure of the Building
under such circumstances shall not constitute a constructive eviction nor
entitle Tenant to an abatement or reduction of Rent.

XXX. SURRENDER OF PREMISES.

At the expiration or earlier termination of this Lease or Tenant's right
of possession, Tenant shall remove Tenant's Property (defined in Article XV)
from the Premises, and quit and surrender the Premises to Landlord, broom clean,
and in good order, condition and repair, ordinary wear and tear and damage by
fire or other casualty for which Tenant is not required to make repairs
hereunder excepted. Tenant shall also be required to remove the Required
Removables (including, but not limited to, all Cable) in accordance with Article
VIII. At the expiration or earlier termination of this Lease or Tenant's right
of possession, Tenant shall also remove all routers, and all network and
connectivity equipment installed by or for the exclusive benefit of Tenant and
located in the Premises or other portions of the Building. If Tenant fails to
remove any of Tenant's Property within 2 days after the termination of this
Lease or of Tenant's right to possession, Landlord, at Tenant's sole cost and
expense, shall be entitled (but not obligated) to remove and store Tenant's
Property. Landlord shall not be responsible for the value, preservation or
safekeeping of Tenant's Property. Tenant shall pay Landlord, upon demand, the
expenses and storage charges incurred for Tenant's Property. In addition, if
Tenant fails to remove Tenant's Property from the Premises or storage, as the
case may be, within 30 days after written notice, Landlord may deem all or any
part of Tenant's Property to be abandoned, and title to Tenant's Property shall
be deemed to be immediately vested in Landlord.

XXXI. MISCELLANEOUS.

A. This Lease and the rights and obligations of the parties shall be
interpreted, construed and enforced in accordance with the Laws
of the State of California and Landlord and Tenant hereby
irrevocably consent to the jurisdiction and proper venue of such
state. If any term or provision of this Lease shall to any extent
be invalid or unenforceable, the remainder of this Lease shall
not be affected, and each provision of this Lease shall be valid
and enforced to the fullest extent permitted by Law. The headings
and titles to the Articles and Sections of this Lease are for
convenience only and shall have no effect on the interpretation
of any part of the Lease.

B. Tenant shall not record this Lease or any memorandum without
Landlord's prior written consent.

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<PAGE> 24

C. Landlord and Tenant hereby waive any right to trial by jury in
any proceeding based upon a breach of this Lease.

D. Whenever a period of time is prescribed for the taking of an
action by Landlord or Tenant, the period of time for the
performance of such action shall be extended by the number of
days that the performance is actually delayed due to strikes,
acts of God, shortages of labor or materials, war, civil
disturbances and other causes beyond the reasonable control of
the performing party ("Force Majeure"). However, events of Force
Majeure shall not extend any period of time for the payment of
Rent or other sums payable by either party or any period of time
for the written exercise of an option or right by either party.

E. Landlord shall have the right to transfer and assign, in whole or
in part, all of its rights and obligations under this Lease and
in the Building and/or Property referred to herein, and upon such
transfer Landlord shall be released from any further obligations
hereunder, and Tenant agrees to look solely to the successor in
interest of Landlord for the performance of such obligations.
Notwithstanding the foregoing, unless such liability is assumed
in writing by its successor in interest hereunder, Landlord shall
remain liable after its period of ownership with respect to any
sums due in connection with a breach or default that arose during
such period of ownership.

F. Tenant represents that it has dealt directly with and only with
the Broker as a broker in connection with this Lease. Tenant
shall indemnify and hold Landlord and the Landlord Related
Parties harmless from all claims of any other brokers claiming to
have represented Tenant in connection with this Lease. Landlord
agrees to indemnify and hold Tenant and the Tenant Related
Parties harmless from all claims of any brokers claiming to have
represented Landlord in connection with this Lease.

G. Tenant covenants, warrants and represents that: (1) each
individual executing, attesting and/or delivering this Lease on
behalf of Tenant is authorized to do so on behalf of Tenant; (2)
this Lease is binding upon Tenant; and (3) Tenant is duly
organized and legally existing in the state of its organization
and is qualified to do business in the State of California. If
there is more than one Tenant, or if Tenant is comprised of more
than one party or entity, the obligations imposed upon Tenant
shall be joint and several obligations of all the parties and
entities. Notices, payments and agreements given or made by, with
or to any one person or entity shall be deemed to have been given
or made by, with and to all of them.

H. Time is of the essence with respect to Tenant's exercise of any
expansion, renewal or extension rights granted to Tenant. This
Lease shall create only the relationship of landlord and tenant
between the parties, and not a partnership, joint venture or any
other relationship. This Lease and the covenants and conditions
in this Lease shall inure only to the benefit of and be binding
only upon Landlord and Tenant and their permitted successors and
assigns.

I. The expiration of the Term, whether by lapse of time or
otherwise, shall not relieve either party of any obligations
which accrued prior to or which may continue to accrue after the
expiration or early termination of this Lease. Without limiting
the scope of the prior sentence, it is agreed that Tenant's
obligations under Sections IV.A, IV.B., VIII, XIV, XX, XXV and
XXX shall survive the expiration or early termination of this
Lease.

J. Landlord has delivered a copy of this Lease to Tenant for
Tenant's review only, and the delivery of it does not constitute
an offer to Tenant or an option. This Lease shall not be
effective against any party hereto until an original copy of this
Lease has been signed by such party.

K. All understandings and agreements previously made between the
parties are superseded by this Lease, and neither party is
relying upon any warranty, statement or representation not
contained in this Lease. This Lease may be modified only by a
written agreement signed by Landlord and Tenant.

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<PAGE> 25
L. Tenant, within 15 days after request, shall provide Landlord with
a current financial statement and such other information as
Landlord may reasonably request in order to create a "business
profile" of Tenant and determine Tenant's ability to fulfill its
obligations under this Lease. Landlord, however, shall not
require Tenant to provide such information unless Landlord is
requested to produce the information in connection with a
proposed financing or sale of the Building. Upon written request
by Tenant, Landlord shall enter into a commercially reasonable
confidentiality agreement covering any confidential information
that is disclosed by Tenant.

XXXII. ENTIRE AGREEMENT.

This Lease and the following exhibits and attachments constitute the
entire agreement between the parties and supersede all prior agreements and
understandings related to the Premises, including all lease proposals, letters
of intent and other documents: EXHIBIT A-1 (Outline and Location of Premises A),
EXHIBIT A-2 (Outline and Location of Premises B), EXHIBIT A-3 (Outline and
Location of Premises C), EXHIBIT B (Rules and Regulations), EXHIBIT C
(Commencement Letter), EXHIBIT D (Work Letter Agreement), EXHIBIT E (Sample
Letter of Credit) and EXHIBIT F (Parking Agreement).

Landlord and Tenant have executed this Lease as of the day and year
first above written.

LANDLORD:

EOP-MISSION STREET, L.L.C., A DELAWARE LIMITED
LIABILITY COMPANY, AS BENEFICIARY OF LAND TRUST
DATED OCTOBER 23, 1996 AND KNOWN AS SHELI Z.
ROSENBERG TRUST NO. 201

By: EOP Operating Limited Partnership,
a Delaware limited partnership, its sole
member

By: Equity Office Properties Trust, a
Maryland real estate investment trust,
its managing general partner

By:____________________________________

Name:__________________________________

Title: ________________________________

TENANT:

QUOKKA SPORTS, INC., A DELAWARE CORPORATION

By: ______________________________
Name: ______________________________
Title: ______________________________

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<PAGE> 26
EXHIBIT A-1

OUTLINE AND LOCATION OF PREMISES A

This Exhibit is attached to and made a part of the Lease dated as of
_____________, 1999, by and between EOP-MISSION STREET, L.L.C., A DELAWARE
LIMITED LIABILITY COMPANY, AS BENEFICIARY OF LAND TRUST DATED OCTOBER 23, 1996
AND KNOWN AS SHELI Z. ROSENBERG TRUST NO. 201 ("Landlord") and QUOKKA SPORTS,
INC., A DELAWARE CORPORATION ("Tenant") for space in the Building located at 201
Mission Street, San Francisco, California.

A-1
<PAGE> 27
EXHIBIT A-2

OUTLINE AND LOCATION OF PREMISES B

A-2

<PAGE> 28
EXHIBIT A-3

OUTLINE AND LOCATION OF PREMISES C

A-3
<PAGE> 29
EXHIBIT B

BUILDING RULES AND REGULATIONS

The following rules and regulations shall apply, where applicable, to
the Premises, the Building, the parking garage (if any), the Property and the
appurtenances. Capitalized terms have the same meaning as defined in the Lease.

1. Sidewalks, doorways, vestibules, halls, stairways and other similar
areas shall not be obstructed by Tenant or used by Tenant for any
purpose other than ingress and egress to and from the Premises. No
rubbish, litter, trash, or material shall be placed, emptied, or thrown
in those areas. At no time shall Tenant permit Tenant's employees to
loiter in Common Areas or elsewhere about the Building or Property.

2. Plumbing fixtures and appliances shall be used only for the purposes for
which designed, and no sweepings, rubbish, rags or other unsuitable
material shall be thrown or placed in the fixtures or appliances. Damage
resulting to fixtures or appliances by Tenant, its agents, employees or
invitees, shall be paid for by Tenant, and Landlord shall not be
responsible for the damage.

3. No signs, advertisements or notices shall be painted or affixed to
windows, doors or other parts of the Building, except those of such
color, size, style and in such places as are first approved in writing
by Landlord. All tenant identification and suite numbers at the entrance
to the Premises shall be installed by Landlord, at Tenant's cost and
expense, using the standard graphics for the Building. Except in
connection with the hanging of lightweight pictures and wall
decorations, no nails, hooks or screws shall be inserted into any part
of the Premises or Building except by the Building maintenance
personnel.

4. Landlord may provide and maintain in the first floor (main lobby) of the
Building an alphabetical directory board or other directory device
listing tenants, and no other directory shall be permitted unless
previously consented to by Landlord in writing.

5. Tenant shall not place any lock(s) on any door in the Premises or
Building without Landlord's prior written consent and Landlord shall
have the right to retain at all times and to use keys to all locks
within and into the Premises. A reasonable number of keys to the locks
on the entry doors in the Premises shall be furnished by Landlord to
Tenant at Tenant's cost, and Tenant shall not make any duplicate keys.
All keys shall be returned to Landlord at the expiration or early
termination of this Lease.

6. All contractors, contractor's representatives and installation
technicians performing work in the Building shall be subject to
Landlord's prior approval and shall be required to comply with
Landlord's standard rules, regulations, policies and procedures, which
may be revised from time to time.

7. Movement in or out of the Building of furniture or office equipment, or
dispatch or receipt by Tenant of merchandise or materials requiring the
use of elevators, stairways, lobby areas or loading dock areas, shall be
restricted to hours designated by Landlord. Tenant shall obtain
Landlord's prior approval by providing a detailed listing of the
activity. If approved by Landlord, the activity shall be under the
supervision of Landlord and performed in the manner required by
Landlord. Tenant shall assume all risk for damage to articles moved and
injury to any persons resulting from the activity. If equipment,
property, or personnel of Landlord or of any other party is damaged or
injured as a result of or in connection with the activity, Tenant shall
be solely liable for any resulting damage or loss.

8. Landlord shall have the right to approve the weight, size, or location
of heavy equipment or articles in and about the Premises. Damage to the
Building by the installation, maintenance, operation, existence or
removal of Tenant's Property shall be repaired at Tenant's sole expense.

9. Corridor doors, when not in use, shall be kept closed.

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<PAGE> 30

10. Tenant shall not: (1) make or permit any improper, objectionable or
unpleasant noises or odors in the Building, or otherwise unreasonably
interfere with other tenants or persons having business with them; (2)
solicit business or distribute, or cause to be distributed, in any
portion of the Building, handbills, promotional materials or other
advertising; or (3) conduct or permit other activities in the Building
that might, in Landlord's sole opinion, constitute a nuisance.

11. No animals, except those assisting handicapped persons, shall be brought
into the Building or kept in or about the Premises.

12. No inflammable, explosive or dangerous fluids or substances shall be
used or kept by Tenant in the Premises, Building or about the Property
except for commercially reasonable quantities of cleaning and office
supplies of a type normally used by tenants in first-class office
buildings, provided that Tenant keeps, maintains, stores, removes and
disposes of such materials in accordance with all applicable Laws, and
any manufacturer's instructions. Tenant shall not, without Landlord's
prior written consent, use, store, install, spill, remove, release or
dispose of, within or about the Premises or any other portion of the
Property, any asbestos-containing materials or any solid, liquid or
gaseous material now or subsequently considered toxic or hazardous under
the provisions of 42 U.S.C. Section 9601 et seq. or any other applicable
environmental Law which may now or later be in effect. Tenant shall
comply with all Laws pertaining to and governing the use of these
materials by Tenant, and shall remain solely liable for the costs of
abatement and removal.

13. Tenant shall not use or occupy the Premises in any manner or for any
purpose which might injure the reputation or impair the present or
future value of the Premises or the Building. Tenant shall not use, or
permit any part of the Premises to be used, for lodging, sleeping or for
any illegal purpose.

14. Tenant shall not take any action which would violate Landlord's labor
contracts or which would cause a work stoppage, picketing, labor
disruption or dispute, or interfere with Landlord's or any other
tenant's or occupant's business or with the rights and privileges of any
person lawfully in the Building ("Labor Disruption"). Tenant shall take
the actions necessary to resolve the Labor Disruption, and shall have
pickets removed and, at the request of Landlord, immediately terminate
any work in the Premises that gave rise to the Labor Disruption, until
Landlord gives its written consent for the work to resume. Tenant shall
have no claim for damages against Landlord or any of the Landlord
Related Parties, nor shall the Premises A Commencement Date, Premises B
Commencement Date or the Premises C Commencement Date be extended as a
result of the above actions.

15. Tenant shall not install, operate or maintain in the Premises or in any
other area of the Building, electrical equipment that would overload the
electrical system beyond its capacity for proper, efficient and safe
operation as determined solely by Landlord. Tenant shall not furnish
cooling or heating to the Premises, including, without limitation, the
use of electronic or gas heating devices, without Landlord's prior
written consent. Tenant shall not use more than its proportionate share
of telephone lines and other telecommunication facilities available to
service the Building.

16. Tenant shall not operate or permit to be operated a coin or token
operated vending machine or similar device (including, without
limitation, telephones, lockers, toilets, scales, amusement devices and
machines for sale of beverages, foods, candy, cigarettes and other
goods), except for machines for the exclusive use of Tenant's employees,
and then only if the operation does not violate the lease of any other
tenant in the Building, provided that Tenant shall not be in violation
of this Rule due to a violation of the lease of another tenant in the
Building unless Tenant has been notified of the prohibition contained in
such other tenant's lease. In the event Tenant is in violation of such
other tenant's lease and Tenant has been notified of such violation,
Tenant shall promptly cease the activities causing the violation of such
other tenant's lease.

17. Bicycles and other vehicles are not permitted inside the Building or on
the walkways outside the Building, except in areas designated by
Landlord.

18. Landlord may from time to time adopt reasonable systems and procedures
for the security and safety of the Building, its occupants, entry, use
and contents. Tenant, its

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<PAGE> 31
agents, employees, contractors, guests and invitees shall comply with
Landlord's systems and procedures.

19. Landlord shall have the right to prohibit the use of the name of the
Building or any other publicity by Tenant that in Landlord's sole
opinion may impair the reputation of the Building or its desirability.
Upon written notice from Landlord, Tenant shall refrain from and
discontinue such publicity immediately. Notwithstanding the foregoing to
the contrary, Tenant may use the name and address of the Building in its
normal business correspondence solely for the purpose of identifying the
location of Tenant's place of business.

20. Tenant shall not canvass, solicit or peddle in or about the Building or
the Property.

21. Neither Tenant nor its agents, employees, contractors, guests or
invitees shall smoke or permit smoking in the Common Areas, unless the
Common Areas have been declared a designated smoking area by Landlord,
nor shall the above parties allow smoke from the Premises to emanate
into the Common Areas or any other part of the Building. Landlord shall
have the right to designate the Building (including the Premises) as a
non-smoking building.

22. Landlord shall have the right to designate and approve standard window
coverings for the Premises and to establish rules to assure that the
Building presents a uniform exterior appearance. Tenant shall ensure, to
the extent reasonably practicable, that window coverings are closed on
windows in the Premises while they are exposed to the direct rays of the
sun.

23. Deliveries to and from the Premises shall be made only at the times, in
the areas and through the entrances and exits designated by Landlord.
Tenant shall not make deliveries to or from the Premises in a manner
that might unreasonably interfere with the use by any other tenant of
its premises or of the Common Areas, any pedestrian use, or any use
which is inconsistent with good business practice.

24. The work of cleaning personnel shall not be hindered by Tenant after
5:30 P.M., and cleaning work may be done at any time when the offices
are vacant. Windows, doors and fixtures may be cleaned at any time.
Tenant shall provide adequate waste and rubbish receptacles to prevent
unreasonable hardship to the cleaning service.

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<PAGE> 32
EXHIBIT C

COMMENCEMENT LETTER
(EXAMPLE)

Date ______________________

Tenant ______________________
Address ______________________
______________________
______________________

Re: Commencement Letter with respect to that certain Lease dated as of
_______________, 1999, by and between EOP-MISSION STREET, L.L.C., A
DELAWARE LIMITED LIABILITY COMPANY, AS BENEFICIARY OF LAND TRUST DATED
OCTOBER 23, 1996 AND KNOWN AS SHELI Z. ROSENBERG TRUST NO. 201, as
Landlord, and QUOKKA SPORTS, INC., A DELAWARE CORPORATION, as Tenant,
for 46,460 square feet of Rentable Square Footage on the 17th, 18th and
19th floors of the Building located at 201 Mission Street, San
Francisco, California.

Dear __________________:

In accordance with the terms and conditions of the above referenced
Lease, Tenant accepts possession of the Premises and agrees:

1. The Premises A Commencement Date is ________________________.

2. The Premises B Commencement Date is ________________________.

3. The Premises C Commencement Date is ________________________.

4. The Termination Date of the Lease is _______________________.

Please acknowledge your acceptance of possession and agreement to the
terms set forth above by signing all 3 counterparts of this Commencement Letter
in the space provided and returning 2 fully executed counterparts to my
attention.

Sincerely,

________________________________
Property Manager

Agreed and Accepted:

Tenant: ______________________
By: ______________________
Name: ______________________
Title: ______________________
Date: ______________________

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<PAGE> 33
EXHIBIT D

WORK LETTER

I. ALTERATIONS AND ALLOWANCE.

A. Tenant, following the delivery of the Premises by Landlord and
the full and final execution and delivery of this Lease and all
prepaid rental and security deposits required hereunder, shall
have the right to perform alterations and improvements in the
Premises (the "Initial Alterations"). Notwithstanding the
foregoing, Tenant and its contractors shall not have the right to
perform Initial Alterations in the Premises unless and until
Tenant has complied with all of the terms and conditions of
Article IX.C. of this Lease, including, without limitation,
approval by Landlord of the final plans for the Initial
Alterations and the contractors to be retained by Tenant to
perform such Initial Alterations. Tenant shall be responsible for
all elements of the design of Tenant's plans (including, without
limitation, compliance with law, functionality of design, the
structural integrity of the design, the configuration of the
premises and the placement of Tenant's furniture, appliances and
equipment), and Landlord's approval of Tenant's plans shall in no
event relieve Tenant of the responsibility for such design.
Landlord's approval of the contractors to perform the Initial
Alterations shall not be unreasonably withheld. The parties agree
that Landlord's approval of the general contractor to perform the
Initial Alterations shall not be considered to be unreasonably
withheld if any such general contractor (i) does not have trade
references reasonably acceptable to Landlord, (ii) does not
maintain insurance as required pursuant to the terms of this
Lease, (iii) does not have the ability to be bonded for the work
in an amount of no less than $500,000, (iv) does not provide
current financial statements reasonably acceptable to Landlord,
or (v) is not licensed as a contractor in the state/municipality
in which the Premises is located. Tenant acknowledges the
foregoing is not intended to be an exclusive list of the reasons
why Landlord may reasonably withhold its consent to a general
contractor. Notwithstanding the foregoing, the fire, life and
safety subcontractor for the Initial Alterations shall be
Diversified Fire Protection, Inc.

B. Provided Tenant is not in default, and further provided that
Tenant has first expended from its own funds not less than
$464,000 ("Tenant's Portion") toward the cost of preparing design
and construction documents and mechanical and electrical plans
for the Initial Alterations and for hard costs in connection with
the Initial Alterations and has provided Landlord with supporting
documentation showing payment of the Tenant's Portion as provided
herein, Landlord agrees to contribute the sum of $464,600.00 (the
"Allowance") toward the cost of performing the Initial
Alterations in preparation of Tenant's occupancy of the Premises.
The Allowance may only be used for the cost of preparing design
and construction documents and mechanical and electrical plans
for the Initial Alterations and for hard costs in connection with
the Initial Alterations. Notwithstanding the foregoing, Landlord
shall have no obligation to disburse the Allowance unless and
until Tenant has provided Landlord with receipted bills from
contractors and suppliers performing work and providing materials
for the Initial Alterations, and canceled checks from Tenant to
such contractors and suppliers showing Tenant's payment of the
entire Tenant's Portion to the contractors and suppliers
identified in such receipted bills for the amounts specified
therein. Tenant's failure to incur and apply the entire Tenant's
Portion toward the cost of the Initial Alterations or to timely
provide to Landlord the supporting documentation evidencing such
payment as required herein shall constitute an event of default
under this Lease.

Provided Tenant satisfies the requirements set forth above with
respect to the Tenant's Portion, the Allowance, less a 10%
retainage (which retainage shall be

D-1
<PAGE> 34

payable as part of the final draw), shall be paid to Tenant or,
at Landlord's option, to the order of the general contractor that
performs the Initial Alterations, in periodic disbursements
within thirty (30) days after receipt of the following
documentation: (i) an application for payment and sworn statement
of contractor substantially in the form of AIA Document G-702
covering all work for which disbursement is to be made to a date
specified therein; (ii) a certification from an AIA architect
substantially in the form of the Architect's Certificate for
Payment which is located on AIA Document G702, Application and
Certificate of Payment; (iii) Contractor's, subcontractor's and
material supplier's notarized waivers of liens which shall cover
all Initial Alterations for which disbursement is being requested
and all other statements and forms required for compliance with
the mechanics' lien laws of the State of California, together
with all such invoices, contracts, or other supporting data as
Landlord or Landlord's Mortgagee may reasonably require; (iv) a
cost breakdown for each trade or subcontractor performing the
Initial Alterations; (v) plans and specifications for the Initial
Alterations, together with a certificate from an AIA architect
that such plans and specifications comply in all material
respects with all laws affecting the Building, Property and
Premises; (vi) copies of all construction contracts for the
Initial Alterations, together with copies of all change orders,
if any; and (vii) a request to disburse from Tenant containing an
approval by Tenant of the work done and a good faith estimate of
the cost to complete the Initial Alterations. Upon completion of
the Initial Alterations, and prior to final disbursement of the
Allowance, Tenant shall furnish Landlord with: (1) general
contractor and architect's completion affidavits, (2) full and
final notarized waivers of lien, (3) receipted bills covering all
labor and materials expended and used, (4) as-built plans of the
Initial Alterations, and (5) the certification of Tenant and its
architect that the Initial Alterations have been installed in a
good and workmanlike manner in accordance with the approved
plans, and in accordance with applicable laws, codes and
ordinances. In no event shall Landlord be required to disburse
the Allowance more than one time per month. If the cost of the
Initial Alterations exceed the Allowance, Tenant shall be
entitled to the Allowance in accordance with the terms hereof,
but each individual disbursement of the Allowance shall be
disbursed in the proportion that the Allowance bears to the total
cost for the Initial Alterations, less the 10% retainage
referenced above. Notwithstanding anything herein to the
contrary, Landlord shall not be obligated to disburse any portion
of the Allowance during the continuance of an uncured default
under the Lease, and Landlord's obligation to disburse shall only
resume when and if such default is cured. Landlord shall be
entitled to deduct from the Allowance a construction management
fee for Landlord's oversight of the Initial Alterations in an
amount equal to 3% of the Allowance plus 1.5% of the total cost
of the Initial Alterations in excess of the Allowance.

C. In no event shall the Allowance be used for the purchase of
equipment, furniture or other items of personal property of
Tenant. In the event Tenant does not use the entire Allowance by
the date which is 6 months after the Premises C Commencement
Date, any unused amount shall accrue to the sole benefit of
Landlord, it being understood that Tenant shall not be entitled
to any credit, abatement or other concession in connection
therewith. Tenant shall be responsible for all applicable state
sales or use taxes, if any, payable in connection with the
Initial Alterations and/or Allowance.

D. Tenant agrees to accept the Premises in its "as-is" condition and
configuration, it being agreed that Landlord shall not be
required to perform any work or, except as provided above with
respect to the Allowance, incur any costs in connection with the
construction or demolition of any improvements in the Premises.
Notwithstanding the foregoing to the contrary, Landlord, at
Landlord's sole cost and expense, shall upgrade and bring into
compliance with all applicable Laws the currently existing
restrooms in the Premises and shall install and pay for the cost
of "total doors" in the lobbies in each of the 17th, 18th and
19th floors of the Premises.

E. This Exhibit shall not be deemed applicable to any additional
space added to the original Premises at any time or from time to
time, whether by any options under the Lease or otherwise, or to
any portion of the original Premises or any additions to the
Premises in the event of a renewal or extension of the original
Term of this Lease, whether by any options under the Lease or
otherwise, unless expressly so provided in the Lease or any
amendment or supplement to the Lease.

D-2

<PAGE> 35

IN WITNESS WHEREOF, Landlord and Tenant have entered into this Exhibit
as of the date first written above.

LANDLORD:

EOP-MISSION STREET, L.L.C., A DELAWARE LIMITED
LIABILITY COMPANY, AS BENEFICIARY OF LAND TRUST
DATED OCTOBER 23, 1996 AND KNOWN AS SHELI Z.
ROSENBERG TRUST NO. 201

By: EOP Operating Limited Partnership, a
Delaware limited partnership,
its sole member

By: Equity Office Properties Trust, a
Maryland real estate investment trust,
its managing general partner

By: __________________________

Name: ________________________

Title: _______________________

TENANT:

QUOKKA SPORTS, INC., A DELAWARE CORPORATION

By: ______________________________
Name: ______________________________
Title: ______________________________

D-3
<PAGE> 36
EXHIBIT E

SAMPLE LETTER OF CREDIT

------------------------
[Name of Financial Institution]

Irrevocable Standby
Letter of Credit
No. ______________________
Issuance Date:____________
Expiration Date:__________
Applicant:________________

Beneficiary

EOP-MISSION STREET, L.L.C., A
DELAWARE LIMITED LIABILITY
COMPANY, AS BENEFICIARY OF
LAND TRUST DATED OCTOBER 23, 1996
AND KNOWN AS SHELI Z. ROSENBERG TRUST NO. 201
c/o Equity Office Properties Trust
201 Mission Street, Suite 250
San Francisco, California 94105

Ladies/Gentlemen:

We hereby establish our Irrevocable Standby Letter of Credit in your
favor for the account of the above referenced Applicant in the amount of Seven
Hundred Thousand and 00/100 U.S. Dollars ($700,000.00) available for payment at
sight by your draft drawn on us when accompanied by the following documents:

1. An original copy of this Irrevocable Standby Letter of Credit.

2. Beneficiary's dated statement purportedly signed by one of its officers
reading: "This draw in the amount of ______________________ U.S. Dollars
($____________) under your Irrevocable Standby Letter of Credit No.
____________________ represents funds due and owing to us as a result of
the Applicant's commission of an event of default of one or more of the
terms of that certain lease by and between ______________________, as
landlord, and _____________, as tenant."

It is a condition of this Irrevocable Standby Letter of Credit that it
will be considered automatically renewed for a one year period upon the
expiration date set forth above and upon each anniversary of such date, unless
at least sixty (60) days prior to such expiration date or applicable anniversary
thereof, we notify you in writing by certified mail, return receipt requested,
that we elect not to so renew this Irrevocable Standby Letter of Credit. A copy
of any such notice shall also be sent to: Equity Office Properties Trust, 2
North Riverside Plaza, Suite 2200, Chicago, IL 60606, Attention: Vice
President-Corporate Operations. In addition, provided that you have not provided
us with written notice of Applicant's default under the above referenced lease
prior to the effective date of any reduction, the amount of this Irrevocable
Standby Letter of Credit shall automatically reduce in accordance with the
following schedule:

Effective Date of Reduction New Reduced Amount of Letter of Credit
June 1, 2000 $420,000.00
June 1, 2001 $140,000.00
60 days after the Termination Date $40,000.00

In addition to the foregoing, we understand and agree that you shall be entitled
to draw upon this Irrevocable Standby Letter of Credit in accordance with 1. and
2. above in the event that we elect not to renew this Irrevocable Standby Letter
of Credit and, in addition, you provide us with a dated statement proportedly
signed by one of Beneficiary's officers stating that the Applicant has failed to
provide you with an acceptable substitute irrevocable standby letter of credit
in

E-1
<PAGE> 37

accordance with the terms of the above referenced lease. We further acknowledge
and agree that: (a) upon receipt of the documentation required herein, we will
honor your draws against this Irrevocable Standby Letter of Credit without
inquiry into the accuracy of Beneficiary's signed statement and regardless of
whether Applicant disputes the content of such statement; (b) this Irrevocable
Standby Letter of Credit shall permit partial draws and, in the event you elect
to draw upon less than the full stated amount hereof, the stated amount of this
Irrevocable Standby Letter of Credit shall be automatically reduced by the
amount of such partial draw; and (c) you shall be entitled to assign your
interest in this Irrevocable Standby Letter of Credit from time to time without
our approval and without charge. In the event of an assignment, we reserve the
right to require reasonable evidence of such assignment as a condition to any
draw hereunder.

This Irrevocable Standby Letter of Credit is subject to the Uniform
Customs and Practice for Documentary Credits (1993 revision) ICC Publication No.
500.

We hereby engage with you to honor drafts and documents drawn under and
in compliance with the terms of this Irrevocable Standby Letter of Credit.

All communications to us with respect to this Irrevocable Standby Letter
of Credit must be addressed to our office located at
______________________________________________ to the attention of
__________________________________.

Very truly yours,

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

[name]
-----------------------------

-----------------------------
[title}

E-2
<PAGE> 38
EXHIBIT F

PARKING AGREEMENT

1. The parties acknowledge that they have heretofore entered, or are
contemporaneously herewith entering into, a certain lease dated
_______________, 1999 (the "Lease") for the premises known as suite
numbers 1700, 1800 and 1900 (the "Premises") located in the building
known as 201 Mission Street (the "Building"). In the event of any
conflict between the Lease and this Parking Agreement, the latter shall
control.

2. Landlord hereby grants to Tenant and persons designated by Tenant a
license to use 4 non-priority parking spaces in the parking facility
("Parking Facility") servicing the Building. The term of such license
shall commence on the earlier of (i) the Premises A Commencement Date,
(ii) the Premises B Commencement Date, or (iii) the Premises C
Commencement Date, under the Lease and shall continue until the earlier
to occur of the Termination Date under the Lease, the sooner termination
of the Lease, or Tenant's abandonment of the Premises thereunder. During
the term of this license, Tenant shall pay Landlord the prevailing
monthly charges established from time to time for parking in the Parking
Facility, payable in advance, with Tenant's payment of monthly Base
Rent. The initial charge for such parking spaces is $_______ per
non-priority parking space, per month. No deductions from the monthly
charge shall be made for days on which the Parking Facility is not used
by Tenant. Tenant may, from time to time request additional parking
spaces, and if Landlord shall provide the same, such parking spaces
shall be provided and used on a month-to-month basis, and otherwise on
the foregoing terms and provisions, and at such prevailing monthly
parking charges as shall be established from time to time.

3. Tenant shall at all times comply with all applicable ordinances, rules,
regulations, codes, laws, statutes and requirements of all federal,
state, county and municipal governmental bodies or their subdivisions
respecting the use of the Parking Facility. Landlord reserves the right
to adopt, modify and enforce reasonable rules ("Rules") governing the
use of the Parking Facility from time to time including any key-card,
sticker or other identification or entrance system and hours of
operation. The rules set forth herein are currently in effect. Landlord
may refuse to permit any person who violates such rules to park in the
Parking Facility, and any violation of the rules shall subject the car
to removal from the Parking Facility.

4. Unless specified to the contrary above, the parking spaces hereunder
shall be provided on a non-designated basis. Tenant acknowledges that
Landlord has no liability for claims arising through acts or omissions
of any Operator (as hereinafter defined) of the Parking Facility, if
any. Landlord shall have no liability whatsoever for any damage to items
located in the Parking Facility, nor for any personal injuries or death
arising out of any matter relating to the Parking Facility, and in all
events, Tenant agrees to look first to its insurance carrier and to
require that Tenant's employees look first to their respective insurance
carriers for payment of any losses sustained in connection with any use
of the Parking Facility. Tenant hereby waives on behalf of its insurance
carriers all rights of subrogation against Landlord or Landlord's
agents. Landlord reserves the right to assign specific parking spaces,
and to reserve parking spaces for visitors, small cars, handicapped
persons and for other tenants, guests of tenants or other parties, which
assignment and reservation or spaces may be relocated as determined by
Landlord from time to time, and Tenant and persons designated by Tenant
hereunder shall not park in any location designated for such assigned or
reserved parking spaces. Tenant acknowledges that the Parking Facility
may be closed entirely or in part in order to make repairs or perform
maintenance services, or to alter, modify, re-stripe or renovate the
Parking Facility, or if required by casualty, strike, condemnation, act
of God, governmental law or requirement or other reason beyond the
operator's reasonable control.

5. If Tenant shall default under this Parking Agreement, the Landlord or
the Operator, as the case may be, shall have the right to remove from
the Parking Facility any vehicles

<PAGE> 39

hereunder which shall have been involved or shall have been owned or
driven by parties involved in causing such default, without liability
therefor whatsoever. In addition, if Tenant shall default under this
Parking Agreement, Landlord shall have the right to cancel this Parking
Agreement on 10 days' written notice, unless within such 10 day period,
Tenant cures such default. If Tenant defaults with respect to the same
term or condition under this Parking Agreement more than 3 times during
any 12 month period, and Landlord notifies Tenant thereof promptly after
each such default, the next default of such term or condition during the
succeeding 12 month period, shall, at Landlord's election, constitute an
incurable default. Such cancellation right shall be cumulative and in
addition to any other rights or remedies available to Landlord at law or
equity, or provided under the Lease (all of which rights and remedies
under the Lease are hereby incorporated herein, as though fully set
forth). Any default by Tenant under the Lease shall be a default under
this Parking Agreement, but any default under this Parking Agreement
shall not be a default under the Lease.

RULES

(i) Parking Facility hours shall be _____ a.m. to _____ p.m.,
however, Tenant shall have access to the Parking Facility on a
24 hour basis, 7 days a week. Tenant shall not store or permit
its employees to store any automobiles in the Parking Facility
without the prior written consent of the Landlord. Except for
emergency repairs, Tenant and its employees shall not perform
any work on any automobiles while located in the Parking
Facility, or on the Property. If it is necessary for Tenant or
its employees to leave an automobile in the Parking Facility
overnight, Tenant shall provide the Landlord with prior notice
thereof designating the license plate number and model of such
automobile.

(ii) Cars must be parked entirely within the stall lines painted on
the floor, and only small cars may be parked in areas reserved
for small cars.

(iii) All directional signs and arrows must be observed.

(iv) The speed limit shall be 5 miles per hour.

(v) Parking spaces reserved for handicapped persons must be used
only by vehicles properly designated.

(vi) Parking is prohibited in all areas not expressly designated for
parking, including without limitation:

(a) Areas not striped for parking
(b) aisles
(c) where "no parking" signs are posted
(d) ramps
(e) loading zones

(vii) Parking stickers, key cards or any other devices or forms of
identification or entry supplied by the Landlord or the
Operator, as the case may be, shall remain the property of the
Landlord or the Operator. Such device must be displayed as
requested and may not be mutilated in any manner. The serial
number of the parking identification device may not be
obliterated. Parking passes and devices are not transferable and
any pass or device in the possession of an unauthorized holder
will be void.

(viii) Monthly fees shall be payable in advance on or before the first
day of each month. Failure to do so will automatically cancel
parking privileges and a charge at the prevailing daily parking
rate will be due. No deductions or allowances from the monthly
rate will be made for days on which the Parking Facility is not
used by Tenant or its designees.

(ix) Parking Facility managers or attendants are not authorized to
make or allow any exceptions to these Rules.

(x) Every parker is required to park and lock his/her own car.

<PAGE> 40

(xi) Loss or theft of parking pass, identification, key cards or
other such devices must be reported to Landlord and to the
Parking Facility manager immediately. Any parking devices
reported lost or stolen found on any authorized car will be
confiscated and the illegal holder will be subject to
prosecution. Lost or stolen passes and devices found by Tenant
or its employees must be reported to the office of the garage
immediately.

(xii) Washing, waxing, cleaning or servicing of any vehicle by the
customer and/or his agents is prohibited. Parking spaces may be
used only for parking automobiles.

(xiii) By signing this Parking Agreement, Tenant agrees to acquaint all
persons to whom Tenant assigns a parking pass with these Rules.

6. Landlord may elect to provide parking cards or keys to control access to
the Parking Facility or surface parking areas, if any. In such event,
Landlord shall provide Tenant with one card or key for each parking
space that Tenant is entitled to hereunder, provided that Landlord shall
have the right to require Tenant or its employees to place a deposit on
such access cards or keys and to pay a fee for any lost or damaged cards
or keys.

7. Landlord hereby reserves the right to enter into a management agreement
or lease with an entity for the Parking Facility ("Operator"). In such
event, Tenant upon request of Landlord, shall enter into a parking
agreement with the Operator and pay the Operator (rather than the
Landlord) the monthly charge established hereunder, and Landlord shall
have no liability for claims arising through acts or omissions of the
Operator unless caused by Landlord's negligence or willful misconduct.
It is understood and agreed that the identity of the Operator may change
from time to time during the Term. In connection therewith, any parking
lease or agreement entered into between Tenant and an Operator shall be
freely assignable by such Operator or any successors thereto.

8. NO LIABILITY. TENANT ACKNOWLEDGES AND AGREES THAT, TO THE FULLEST EXTENT
PERMITTED BY LAW, LANDLORD SHALL NOT BE RESPONSIBLE FOR ANY LOSS OR
DAMAGE TO TENANT OR TENANT'S PROPERTY (INCLUDING, WITHOUT LIMITATIONS,
ANY LOSS OR DAMAGE TO TENANT'S AUTOMOBILE OR THE CONTENTS THEREOF DUE TO
THEFT, VANDALISM OR ACCIDENT) ARISING FROM OR RELATED TO TENANT'S USE OF
THE PARKING FACILITY OR EXERCISE OF ANY RIGHTS UNDER THIS PARKING
AGREEMENT, WHETHER OR NOT SUCH LOSS OR DAMAGE RESULTS FROM LANDLORD'S
ACTIVE NEGLIGENCE OR NEGLIGENT OMISSION. THE LIMITATION ON LANDLORD'S
LIABILITY UNDER THE PRECEDING SENTENCE SHALL NOT APPLY HOWEVER TO LOSS
OR DAMAGE ARISING DIRECTLY FROM LANDLORD'S WILLFUL MISCONDUCT.

9. Release of Liability. Without limiting the provisions of Paragraph 8
above, Tenant hereby voluntarily releases, discharges, waives and
relinquishes any and all actions or causes of action for personal injury
or property damage occurring to Tenant arising as a result of parking in
the Parking Facility, or any activities incidental thereto, wherever or
however the same may occur, and further agrees that Tenant will not
prosecute any claim for personal injury or property damage against
Landlord or any of its officers, agents, servants or employees for any
said causes of action. It is the intention of Tenant by this instrument,
to exempt and relieve Landlord from liability for personal injury or
property damage caused by negligence.

10. The provisions of Article XXI of the Lease are hereby incorporated by
reference as if fully recited.

Tenant acknowledges that Tenant has read the provisions of this Parking
Agreement, has been fully and completely advised of the potential dangers
incidental to parking in the Parking Facility and is fully aware of the legal
consequences of signing this instrument.

<PAGE> 41

IN WITNESS WHEREOF, Landlord and Tenant have executed this Exhibit as of
the day and year first above written.

LANDLORD:

EOP-MISSION STREET, L.L.C., A DELAWARE LIMITED
LIABILITY COMPANY, AS BENEFICIARY OF LAND TRUST
DATED OCTOBER 23, 1996 AND KNOWN AS SHELI Z.
ROSENBERG TRUST NO. 201

By: EOP Operating Limited Partnership, a
Delaware limited partnership, its sole
member

By: Equity Office Properties Trust,
a Maryland real estate investment
trust, its managing general partner

By: __________________________

Name: __________________________

Title: __________________________

TENANT:

QUOKKA SPORTS, INC., A DELAWARE CORPORATION

By: ______________________________
Name: ______________________________
Title: ______________________________

<PAGE> 1
EXHIBIT 21.1

List of Subsidiaries

1. Quokka Sports Ltd., a United Kingdom limited company.

2. NBC/Quokka Ventures, LLC, a Delaware limited liability company.

3. CART Digital Media Enterprises, LLC, a Delaware limited liability company.

<PAGE> 1
EXHIBIT 23.02

We consent to the inclusion in this registration statement on Form S-1 of our
report dated January 22, 1999, except as to Note 11 for which the date is May
28, 1999, on our audits of the financial statements of Quokka Sports, Inc. We
also consent to the references to our firm under the caption "Experts."

/s/ PricewaterhouseCoopers
- --------------------------
PricewaterhouseCoopers LLP
San Francisco, California
May 28, 1999

<ARTICLE> 5

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<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1998 MAR-31-1999
<CASH> 23,994,355 15,262,901
<SECURITIES> 0 0
<RECEIVABLES> 1,150,603 819,800
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 25,476,066 17,496,384
<PP&E> 3,334,807 6,385,865
<DEPRECIATION> 598,509 1,028,840
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<OTHER-SE> 477,115 1,414,993
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<TOTAL-REVENUES> 8,635,099 896,566
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<TOTAL-COSTS> 18,493,868 8,461,042
<OTHER-EXPENSES> 0 452,275
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