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                                                                    Exhibit 10.4

                                SPATIALIGHT, INC.

                  TIME ACCELERATED RESTRICTED STOCK AWARD PLAN

                                   ("TARSAP")

TARSAP (this  "Agreement" or the "Option  Agreement")  made as of the 7th day of
July,   2003,   between   SPATIALIGHT,   INC.,  a  New  York   corporation  (the
"Corporation"),  whose  principal  place of  business  is  located at 5 Hamilton
Landing,  Suite 100,  Novato,  California  94949,  and  Theodore H. Banzhaf (the
"Optionee") whose principal  residence is located at 1801 Gough Street #403, San
Francisco, CA 94109.

                                    Preamble

         A certain provision that was intended to be included in Section 3(b) of
the TARSAP made as of July 7, 2003, between the Corporation and the Optionee was
omitted by  inadvertence  and the sole  purpose of this  corrected  TARSAP is to
remedy such omittance.

         The Corporation and Optionee have entered into an Employment  Agreement
effective as of July 7, 2003 (the "Effective Date"),  pursuant to which Optionee
will serve as the Corporation's  Executive Vice President of Strategic  Planning
upon the terms set forth  therein (the  "Employment  Agreement").  As a material
inducement for Optionee to become employed as the  Corporation's  Executive Vice
President of Strategic  Planning,  the  Corporation has agreed to grant Optionee
options to purchase its Common  Shares,  $.01 par value per share (the "Shares")
subject to the terms and conditions of this Agreement.

         1. Grant of Options.

                  a. Upon the terms and  subject to the  conditions  hereinafter
         set forth, the Corporation  hereby grants to the Optionee the right and
         option  to  purchase  from the  Corporation  a total  of Eight  Hundred
         Thousand  (800,000)  Shares of the  Corporation  at an exercise  (i.e.,
         purchase)  price  determined by the provisions of Section 6 hereof (the
         "Options"). The Options granted hereby shall be exercisable as provided
         in  Sections 2 and 3 hereof  unless  terminated  at an earlier  date in
         accordance  with the  terms of this  Agreement.  If the  Options  shall
         terminate for any reason  without  having been  exercised in full,  the
         Corporation may use any then remaining  unpurchased Shares reserved for
         the grant of options to any other  employee  or party  selected  by the
         Board of Directors of the  Corporation  (the  "Board") or for any other
         appropriate  corporate purpose, as determined in the sole discretion of
         the Board.  The  Options  shall  become  exercisable  immediately  upon
         vesting.


                  b. The Options  granted by this  Agreement  are not, and shall
         not be deemed, to have been granted under the Corporation's  1999 Stock
         Option Plan (the "1999 Plan"),  the  Corporation's  1993  Non-Statutory
         Stock  Option Plan (the "1993  Plan") or any other stock option plan of
         the  Corporation  in effect as of the date hereof or hereafter  adopted
         (the "Other Plans"), and the number of Shares which may be reserved for
         the  Optionee's  exercise of the Options  granted  hereunder  shall not
         reduce the number of Shares reserved under the 1999 Plan, the 1993 Plan
         or any Other  Plans and,  in the event the  Options  granted  hereunder
         shall  terminate for any reason  without having been exercised in full,
         none of any then  remaining  unpurchased  Shares subject to the Options
         shall  increase the total  number of Shares then  reserved for purchase
         under  the  1999  Plan,  the  1993  Plan  or  any  Other  Plan  of  the
         Corporation.





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                  c. It is intended  both by the  Corporation  and Optionee that
         the Options granted hereby shall be Non-Statutory Stock Options.

         2. Exercise of Option.

                  a. Subject to the limitations set forth in this Agreement, the
         Optionee may exercise the Options,  in whole or in part,  to the extent
         then  exercisable in accordance with this  Agreement,  by forwarding to
         the Corporation  written notice stating the Optionee's election of such
         exercise  right  and  specifying  the  number  of  whole  Shares  to be
         purchased,  accompanied  by  the  Optionee's  payment  in  full  of the
         aggregate option price of the Shares being purchased in cash, by check,
         or, in the  discretion  of the Board,  by the  delivery of Shares (such
         Shares to be credited  against the option  price in an amount  equal to
         their  aggregate  Fair Market  Value as defined in Section 13 hereof on
         the  date  of  exercise)  or  any  combination   thereof   ("Notice  of
         Exercise").  The Optionee shall be responsible for and shall pay to the
         Corporation  all  withholding  and  other  similar  taxes  which may be
         payable by the Optionee upon exercise of the Options, if applicable.

                  b. As soon as practicable  after receipt by the Corporation of
         the Notice of Exercise and of full  payment of the  exercise  price for
         all Shares with  respect to which the Options  are being  exercised,  a
         certificate or certificates  representing the purchased Shares shall be
         registered  in the  records  of the  Corporation  in  the  name  of the
         Optionee or his successor and shall be delivered to the Optionee or his
         successor at the Optionee's address shown in the payroll records of the
         Corporation or at such other address as may be designated in writing by
         the Optionee in the Optionee's Notice of Exercise. Neither the Optionee
         nor his  successor or legal  representative  shall have any rights as a
         shareholder of the  Corporation in respect of any Shares  issuable upon
         the  exercise  of this  Option  prior  to the  record  date as of which
         certificates  for such Shares shall have been issued by the Corporation
         as hereinabove provided.

                  c.  Unless the Options are  terminated  earlier in  accordance
         with the terms  hereof,  the  Options and all rights  thereunder  shall
         expire  on,  and may no  longer be  exercised  after,  the third  (3rd)
         anniversary   after  each  of  the  respective  dates  upon  which  the
         percentages of the Options to purchase the number of Shares  designated
         herein  have  vested  and become  exercisable  in  accordance  with the
         provisions of Section 3.

         3. Vesting and Exercisability of Options.

         Options to purchase an aggregate of 800,000  Shares of the  Corporation
         shall vest and be  exercisable  upon the  occurrence  of the  following
         events,  satisfaction  of the following  conditions  and upon or by the
         following dates:

                  a.  Options  to  purchase  125,000  Shares  shall  vest and be
         exercisable on the Effective Date;

                  b.  Options  to  purchase  the  remaining  aggregate  of up to
         675,000  Shares  shall  vest and be  exercisable  on the  second  (2nd)
         anniversary  of the  Effective  Date  as  long  as the  Optionee  is an
         Employee  (as  hereinafter  defined) of the  Corporation  or any of its
         Subsidiaries  as of such  date;  provided,  however,  that the dates of
         vesting and  exercisability of Options for the remaining 675,000 Shares
         shall be accelerated to such dates upon which the following performance
         tests shall have been satisfied;  provided further,  however,  that the
         outside date for the satisfaction of each such performance shall be the
         second (2nd)  anniversary of the Effective Date and no such performance
         test may be  satisfied,  in whole or in part,  after such second  (2nd)
         anniversary of the Effective Date:



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                           (i) Options to purchase an additional  175,000 Shares
                  shall vest and become  exercisable if the Shares shall achieve
                  and  maintain  the Fair  Market  Value of $5 per  Share  for a
                  minimum of twenty (20)  consecutive  trading  days  thereafter
                  (each such period, a "FMV Period");
                           (ii) Options to purchase an additional 225,000 Shares
                  shall vest and become  exercisable if the Shares shall achieve
                  and  maintain  the Fair Market  Value of $7.50 per Share for a
                  minimum of a FMV Period;
                           (iii)  Options  to  purchase  an  additional  275,000
                  Shares shall vest and become  exercisable  if the Shares shall
                  achieve and maintain the Fair Market Value of $12.50 per Share
                  for a minimum of a FMV Period; provided, however, that:

                  (A) In the event  that the Shares  achieve  either of the Fair
                  Market  Values set forth in  Sections  3(b)(ii)  or  3(b)(iii)
                  above  before  satisfying  the Fair  Market  Value  test under
                  Section 3(b)(i) above, or in the event that the Shares achieve
                  the Fair  Market  Value  test set forth in  Section  3(b)(iii)
                  above  before  satisfying  the Fair  Market  Value  test under
                  Section  3(b)(ii),  then the  Options  to  purchase  the total
                  number of Shares  shall vest  cumulatively  at the  respective
                  exercise prices set forth in Sections 3(b)(i), 3(b)(ii) and/or
                  3(b)(iii), as the case may be; and

                  (B) As used in this Section 3(b),  for purposes of determining
                  the twenty (20) trading days  comprising  the FMV Period,  any
                  business  day upon  which  there  shall be no  trading  in the
                  Shares of the Corporation shall not be counted.

                  c. In no event shall any of the Options granted hereunder vest
         and  be  exercisable   unless  the  Optionee  is  an  Employee  of  the
         Corporation  or any of its  Subsidiaries  on  any  such  vesting  date;
         provided, however, in the event the Employee's employment is terminated
         by the Corporation or any of its Subsidiaries without Cause pursuant to
         Section  2(b)(iv) of the Employment  Agreement,  the Options shall vest
         and be exercisable to the extent any of the performance tests set forth
         in Section 3(b)(i) through (iii),  inclusive,  are satisfied during the
         ninety (90) day period  immediately  succeeding the date of termination
         of his employment.

                  d.  Notwithstanding  any of the provisions of Sections 3(a) or
         (b), none of the Options granted hereunder, including any Options which
         have vested and therefore  become  exercisable,  may be exercised until
         the shareholders of the Corporation  shall, if required by New York law
         or the  regulations of any exchange or  inter-dealer  system upon which
         the  Company's  Shares will be listed or in which such Shares  shall be
         traded,  approve the grant of the Options which are the subject of this
         Agreement as provided in Section 15(a) of this Agreement.

         4. Exercise After Termination of Service.

         After the Optionee  ceases to be an Employee of the  Corporation or any
         Subsidiary of the Corporation,  as the case may be, whether as a result
         of  voluntary  termination,  termination  by the  Corporation  or  such
         Subsidiary or by the normal retirement,  early retirement or disability
         (excluding  Permanent  Disability as defined in Section 5 below) of the
         Optionee,  only such Options that have vested and become exercisable on
         or  before  the  Date of  Termination  (as  defined  in the  Employment
         Agreement) may be exercised by the Optionee,  his attorney-in-fact,  or
         his guardian,  as appropriate,  at any time after the date on which the
         Optionee  ceases to be an  Employee  but no later  than the  earlier of
         ninety  (90) days  after the  Optionee  ceases  to be  employed  by the
         Corporation or such Subsidiary or the last day of the fixed term of the
         Option;  provided,  however,  that, in the event that the employment of
         Optionee  is  terminated  for  Cause  (as  defined  in  the  Employment
         Agreement),  any then outstanding Options held by Optionee,  whether or
         not  vested  and  exercisable  by  Optionee  as of  the  date  of  such
         termination  of employment for Cause,  shall  thereupon be canceled and
         terminated  in their  entirety and be of no further force or effect and
         Optionee  shall have no further  rights  thereto or thereunder or under
         this Agreement.



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         5. Exercise In Case of Death or Permanent Disability.

         If the Optionee shall die or become  permanently  and totally  disabled
         within the meaning of relevant  provisions of the Employment  Agreement
         (hereinafter  referred to as  "Permanently  Disabled"  or a  "Permanent
         Disability")  while an employee of the  Corporation  or of a Subsidiary
         thereof, and Optionee, at the time of the Optionee's death or Permanent
         Disability,  shall have been entitled to exercise all or any portion of
         the Options granted hereby, then the Options may be so exercised by the
         Optionee  or his  legal  representative,  as the case may be, or by his
         estate,  or by a person who  acquires the right to exercise the Options
         by  bequest  or  inheritance,  at any time  after  the date of death or
         Permanent  Disability  but no later than the earlier of (a) twelve (12)
         months after the date of death, Permanent Disability of the Optionee or
         (b) the last day of the fixed term of the Options.

         6. Exercise Price of Options.

         The exercise  price of the Options  (subject to adjustment by reason of
         any of the events set forth in Section 7 hereof), shall equal:

              (a) With respect to the Options described in Sections 3(a) of this
         Agreement,  the Fair Market  Value of the Shares as of July 3, 2003 - -
         to wit, Two Dollars and Fifty-five Cents ($2.55) per Share.

              (b) With respect to the Options  described in Sections  3(b)(i) of
         this Agreement, Five Dollars ($5.00) per Share.

              (c) With respect to the Options  described in Sections 3(b)(ii) of
         this Agreement, Seven Dollars and Fifty Cents ($7.50) per Share.

         With  respect to the Options  described  in Sections  3(b)(iii) of this
         Agreement, Twelve Dollars and Fifty Cents ($12.50) per Share.

         7. Adjustments Upon Change of Shares.

              (a) In  the  event  of a  reorganization,  merger,  consolidation,
         reclassification,  recapitalization,  any  combination  or  exchange of
         Shares,  stock split,  stock  dividend,  rights offering or other event
         affecting the  capitalization of the Corporation,  the number and class
         of Shares  then  subject  to the  Options as of the  effective  date or
         record date of any such  event,  and the price per Share  payable  upon
         exercise of the Options,  shall be  equitably  adjusted by the Board to
         reflect any such event.

              (b)  Upon  the  effective  date of any  merger,  consolidation  or
         reorganization  of the  Corporation  with one or more  corporations  or
         other legal  entities  in which the  Corporation  is not the  surviving
         corporation or entity, or upon the effective date of any liquidation of
         the Corporation or of a transfer of substantially  all of the assets or
         transfer  of more  than  fifty  percent  (50%) of the then  outstanding
         Shares of the  Corporation  to a theretofore  unaffiliated  third party
         (hereinafter  collectively  referred  to  as  the  "Transaction"),  any
         Options  granted  hereby  which have not vested and become  exercisable
         (prior to or by  reason  of the  Transaction)  shall  terminate  unless
         provisions  have  been  made in  writing  in  connection  with any such
         Transaction  for  the  assumption  of  such  unvested  Options  by such
         successor  employer   corporation  or  other  entity  or  a  parent  or
         subsidiary  thereof or for the substitution of such unvested Options by
         new options covering shares or other equity interests of such successor
         corporation  or other entity,  with  appropriate  adjustments as to the
         number,  kind and prices of shares or other equity interests,  in which
         event the unvested Options or the new options substituted  therefor, as
         the case may be,  shall  continue to be  exercisable  in the manner and
         upon  the  terms  set  forth  in  this  Agreement.  Prior  to any  such
         termination of any then unvested Options upon the effective date of any
         such Transaction,  the Board may, in its sole discretion,  grant to the
         Optionee  the right  immediately  prior to the  effective  date of such
         Transaction to exercise the Options, in whole or in part, provided that
         all conditions  precedent to the vesting thereof (prior to or by reason
         of the Transaction)  set forth herein,  other than the passage of time,
         shall have been satisfied. In any such event, the Corporation will mail
         or cause to be  mailed  to the  Optionee  a notice  (the  "Acceleration
         Notice")  specifying  the date  which  is to be  fixed as of which  all
         holders of record of the Shares  shall be entitled  to  exchange  their
         Shares for securities,  cash or other property  issuable or deliverable
         pursuant to such Transaction.  The Acceleration  Notice shall be mailed
         at least fifteen (15) days prior to such  specified  date. In the event
         that  any  then  outstanding  Options  which  have  vested  and  become
         exercisable  (prior  to  or by  reason  of  the  Transaction)  are  not
         exercised in their entirety on or before the date specified therefor in
         the  Acceleration  Notice,  all such Options and all rights  thereunder
         shall  terminate  and be canceled as of said date and any Options which
         have not so vested  and become  exercisable  as of said date shall also
         terminate and be canceled in their entirety.




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              (c) Upon any  adjustment  made  pursuant  to this  Section  7, the
         Corporation  will,  upon  request,  deliver  to  the  Optionee  or  his
         successor a certificate or the Corporation's  Secretary or an Assistant
         Secretary  setting forth the adjusted Option price thereafter in effect
         and the number and kind of shares,  other  securities or other property
         thereafter purchasable upon the exercise of the Options.

              (d) The determination of the Board with respect to any adjustments
         effected  pursuant to this Section 7 shall be conclusive and binding on
         the Optionee.

         8. Non-Transferability of Options.

         This Option Agreement shall be binding upon and inure to the benefit of
         the  parties   hereto  and  any   successor  to  the  business  of  the
         Corporation,  but none of the  Options  nor any  rights  granted to the
         Optionee hereunder shall be transferable or assignable,  in whole or in
         part, by the Optionee  otherwise than by will or by the laws of descent
         and distribution, and, during the lifetime of the Optionee, the Options
         and rights  granted to the Optionee  hereunder may be exercised only by
         his except as otherwise expressly provided for herein.

         9. Registration or Qualification of Shares.

         The Options  shall be subject to the  requirement  that, if at any time
         the Board shall determine,  in its sole  discretion,  that the listing,
         registration or qualification of the Shares subject to the Options upon
         any securities exchange,  inter-dealer quotation market system or under
         any state or federal law,  including  the  Securities  Act of 1933,  as
         amended  (the  "Securities  Act"),  or the  consent or  approval of any
         governmental  regulatory body, is necessary or desirable as a condition
         of, or in connection  with, the granting of the Options or the issue or
         purchase of Shares hereunder, then the Options may not be exercised, in
         whole or in part,  unless such  listing,  registration,  qualification,
         consent or approval  shall have been  effected or obtained  free of any
         conditions not  acceptable to the Board.  The  Corporation  may, in its
         sole  discretion,  at any time and from time to time, file (or maintain
         the  effectiveness  of) a registration  statement  under the Securities
         Act,  and list,  register  or qualify  under any other state or federal
         law, all or any portion of the Options and the Shares issuable upon the
         exercise  thereof,  but nothing set forth  herein  shall  obligate  the
         Corporation  to  file  or  effect  any  such  registration   under  the
         Securities  Act  or  listing  or  qualification   upon  any  securities
         exchange,  inter-dealer  quotation  market  system  or under  any other
         federal or state securities law.

         10. Compliance with Securities and Other Applicable Law.

         The grant of Options and the  issuance  of Shares upon the  exercise of
         Options shall be subject to compliance with all applicable requirements
         of  federal,  state and foreign  law with  respect to such  securities.
         Options may not be exercised  if the  issuance of Shares upon  exercise
         would  constitute  a  violation  of any  applicable  federal,  state or
         foreign securities laws or other law or regulations or the requirements


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         of any stock  exchange or  inter-dealer  quotation  market  system upon
         which the Shares may then be listed.  In  addition,  no Options  may be
         exercised unless (a) a registration  statement under the Securities Act
         shall at the time or exercise of the Options be in effect with  respect
         to the  Shares  issuable  upon  exercise  of the  Options or (b) in the
         opinion of legal counsel to the  Corporation,  the Shares issuable upon
         exercise of the Options may be issued in  accordance  with the terms of
         an  applicable  exemption  from the  registration  requirements  of the
         Securities  Act. The  inability of the  Corporation  to obtain from any
         regulatory body having  jurisdiction  the authority,  if any, deemed by
         the Corporation's  legal counsel to be necessary to the lawful issuance
         and sale of any Shares  hereunder  shall relieve the Corporation of any
         liability  in respect of the failure to issue or sell such shares as to
         which  such  requisite  authority  shall not have been  obtained.  As a
         condition to the exercise of any of the Options,  the  Corporation  may
         require  the  Optionee  to  satisfy  any  qualifications  that  may  be
         necessary or  appropriate,  to evidence  compliance with any applicable
         law or  regulation  and to make any  representation  or  warranty  with
         respect hereto as may be requested by the Corporation.

         11. Representations at Time of Exercise: Legend.

         The Board may  require,  as a condition  to the exercise of the Options
         granted  pursuant  to this  Agreement,  in whole  or in part,  that the
         Corporation   receive   from   Optionee   or   his   successor,    such
         representations,  warranties  and  agreements,  at the time of any such
         exercise,  to the effect that all Shares  acquired upon exercise of the
         Options, or any part thereof,  shall be sold,  transferred or otherwise
         disposed of only upon compliance with the registration  requirements of
         the  Securities Act or in reliance on an exemption  therefrom  which is
         the subject of an opinion from the  Corporation's  legal  counsel.  The
         certificate  issued to  evidence  such  Shares  shall bear  appropriate
         legends summarizing such restrictions on the disposition thereof.

         12. Reservation of Shares.
         The  Corporation  shall be under no  obligation  to  reserve  Shares to
         satisfy the Options granted  pursuant to this  Agreement.  The grant of
         Options to the Optionee  hereunder shall not be construed to constitute
         the  establishment  of a trust of such Shares and no particular  Shares
         shall  be   identified  as  optioned  and  reserved  for  the  Optionee
         hereunder.  The  Corporation  shall be deemed to have complied with the
         terms of this Agreement if, at the time of issuance and delivery of the
         Shares  pursuant  to the  exercise  of an option,  it has a  sufficient
         number of Shares  authorized and unissued (or held in its treasury) for
         purposes of this  Agreement,  irrespective of the date when such Shares
         were authorized.

         13. Definitions.

         Except as otherwise  defined in this  Agreement,  the  following  terms
shall have the following meanings:

         (a) "Code"  means the US  Internal  Revenue  Code of 1986 as amended to
date.

         (b) "Board" means the Board of Directors of the Corporation.

         (c) "Employee"  means any person  treated as an Employee  (including an
officer or  director  of the  Corporation)  who is treated as an Employee on the
records of the  Corporation and is deemed to be an Employee at Common Law and as
interpreted by the U.S. Internal Revenue Service under the Code.

         (d) "Fair Market Value" means as of any date the value of the Shares of
the  Corporation  as  determined  by  the  Board  in its  discretion,  or by the
Corporation in its discretion, subject to the following:

                  If, on such date,  the  Shares  are  listed on a  national  or
         regional  securities  exchange  or quoted in a  inter-dealer  quotation
         market system, the Fair Market Value of each Share shall be the closing
         price of a Share (or the mean  between  the closing bid and asked price
         of a Share if the Share is so quoted  instead)  as quoted on the NASDAQ
         National Market,  the NASDAQ Small Cap Market or such other national or


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         regional  securities  exchange or inter-dealer  quotation market system
         constituting  the primary market for the Shares as reported in the Wall
         Street Journal or such other sources as the Corporation deems reliable.
         If the  relevant  date does not fall on a date on which the Shares have
         been traded on such  securities  exchange or been quoted in such market
         system,  the date on which Fair Market Value shall be established shall
         be the last  date on  which  the  Shares  were so  traded  prior to the
         relevant date, or such other appropriate date as shall be determined by
         the Board in its sole  discretion;  and,  if on such date,  there is no
         public market for the Shares, the Fair Market Value of a Share shall be
         as  determined  by the  Board  in  good  faith  without  regard  to any
         restriction  other than a restriction  which, by its terms,  will never
         lapse.

         (e)  "Non-Statutory  Stock Option" means a stock option not intended to
be, or which does not qualify,  as an Incentive  Stock Option within the meaning
of Section 422 et seq. of the Code.

         (f) "Subsidiary" or  "Subsidiaries"  means any corporation or entity in
which the  Corporation  owns  beneficially  more than 50% of the  voting  equity
interest therein.

         14. Notices.

All notices under this  Agreement  and the Plan shall be in writing,  and, if to
the Corporation,  shall be mailed to its principal office at 5 Hamilton Landing,
Suite 100, Novato,  California 94949, Attn.: Secretary,  and if to the Optionee,
shall be delivered personally or mailed to the Optionee at his address appearing
in the payroll  records of the  Corporation  or its Subsidiary as of the date of
such  notice.  The  address  of any party may be  changed at any time by written
notice to the other party given in accordance  with this Section 14. All notices
and other written communications required hereunder shall be deemed to have been
given when personally  delivered or mailed,  postage  prepaid,  by registered or
certified mail.

         15. Miscellaneous.

              (a)  Termination.   Anything  contained  herein  to  the  contrary
         notwithstanding,  in the event that the shareholders of the Corporation
         do not  ratify and  approve  the grant of the  Options to the  Optionee
         pursuant  to  this  Agreement  within  twelve  (12)  months  after  the
         Effective Date at the next Annual or Special Meeting of Shareholders of
         the  Corporation,  unless  shareholders  approval  of the  grant of the
         Options to Optionee  under this  Agreement is no longer  required under
         the New York Business  Corporation Law or any other applicable New York
         or California  statute,  law or regulation and/or by the record date of
         any such Shareholders Meeting,  subject,  however, to the provisions of
         Section 162(m) of the Code, then this Agreement and the Options granted
         hereby shall automatically terminate, be canceled in their entirety and
         the Optionee shall forfeit all rights with respect thereto or otherwise
         under this Agreement and be of no further force of effect.

              (b)  Acknowledgement.  Acknowledgment.  The  Options  may  not  be
         exercised,  to the extent  vested and  exercisable,  until the Optionee
         dates, signs and returns a copy of this Agreement to the Corporation.

              (c)  No  Right  as  Shareholder.  Neither  the  Optionee  nor  his
         successor  shall have any rights as a  shareholder  of the  Corporation
         with  respect to any Shares  subject to the Options  before the date of
         issuance to the  Optionee of a  certificate  or  certificates  for such
         Shares in the name of the Optionee or such successor.

              (d) No Right to Continued Employment. The Options shall not confer
         upon the  Optionee  any  express  or  implied  right  with  respect  to
         continuance of employment by the Corporation or any Subsidiary thereof,
         for any  specific  or  minimum  period  of time  under  the  Employment
         Agreement  or  otherwise,  nor  shall the  grant or  existence  of such
         Options  interfere in any way with the right of the Corporation or such
         Subsidiary to terminate such employment at any time.



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<PAGE>

              (e)  Counterparts.  This  Agreement may be executed in two or more
         counterparts,  each of which shall be deemed to be an original  and all
         of which  together  shall  constitute  but one and the same  instrument
         provided that each of the parties hereto executes such counterpart.

              (f) Choice of Law. This  Agreement and the  respective  rights and
         obligations  of the Optionee  and the  Corporation  hereunder  shall be
         governed  by the  laws  of  the  State  of New  York  with  respect  to
         agreements to be performed  wholly in the State of New York and without
         giving  effect to the  conflicts of law,  statutes and doctrines of New
         York  (except for Section  5-1401 of the New York  General  Obligations
         Law) or of any other jurisdiction.

                                  * * * * * * *


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<PAGE>

         IN WITNESS WHEREOF, the parties have agreed to this Option Agreement as
of July 7, 2003 and duly executed this  Agreement as of the 11th day of February
2004.

                                          SPATIALIGHT, INC.


                                          By: /s/ Robert A. Olins
                                             ----------------------------------
                                          Name: Robert A. Olins
                                          Title: Acting Chief Executive Officer

                                          OPTIONEE


                                          By:/s/ Theodore H. Banzhaf
                                            ----------------------------------
                                          Name: Theodore H. Banzhaf

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