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                                                                  EXHIBIT 10.11

                              SETTLEMENT AGREEMENT


         Agreement, made this 24th day of August, 2000, between SPATIALIGHT,
INC., a New York Corporation (the "Company") and MICHAEL H. BURNEY ("Burney")

                                    PREAMBLE

         WHEREAS, Burney's employment as Chief Executive Officer ("CEO"),
Secretary and Treasurer (collectively, the "Corporate Offices") of the Company
ended in June 2000;

         WHEREAS, Burney desires to continue to serve as a member of the Board
of Directors (the "Board") of the Company until the date hereinafter set forth;

         WHEREAS, Burney and the Company desire to reach agreement and effect a
complete and binding settlement of all outstanding rights and obligations of the
parties with respect to each other;

         NOW, THEREFORE, in consideration of the foregoing, and for all good and
valuable considerations hereinafter set forth, the parties hereto agree as
follows:

         1. End of Employment Term. Burney and the Company hereby confirm that
Burney's employment as CEO, Secretary and Treasurer of the Company ended
effective as of June 21, 2000 (the "End of Employment Date"). The end of
Burney's employment shall be equally effective and binding with respect to any
corporate offices of the Company's subsidiary, SpatiaLight of California, Inc.
("SpatiaLight California") and/or any other subsidiaries of the Company occupied
by Burney as of the End of Employment Date.

         2. Resignation from Board. Burney will remain a member of the Board
through the close of business on December 31, 2000, it being understood that
Burney may tender his resignation as a member of the Board upon any such earlier
date as he, in his discretion, deems appropriate. In furtherance of the
foregoing, upon the execution of this Agreement, Burney shall deliver to the
Board his resignation as a member of the Board, effective December 31, 2000.

         3. Employment Agreement Superseded. In order to effect the full
settlement of the mutual obligations and rights of the parties which are the
subject of this Agreement, the parties hereby agree that, except with respect to
specific provisions of the Employment Agreement between Burney and the Company,
dated as of December 31, 1999 (the "Employment Agreement") referred to herein,
all of the provisions of the Employment Agreement are hereby canceled in their
entirety and superseded by the provisions of this Agreement and shall be of no
further force or effect. The compensation, benefits and agreements to or with
respect to Burney set forth in the following provisions of this Agreement, shall
be in lieu of, and in full substitution for, those provided in the Employment
Agreement.

         4. Compensation and Benefits to Burney. Burney shall be entitled to
receive the following compensation and benefits from the Company:

         (a)   Burney shall receive and shall be paid nine months' salary by the
               Company, commencing on the End of Employment Date through March
               21, 2001 (the "Severance Pay Period") at the current annual rate
               received by Burney, which shall be paid in such periodic
               installments as the Company has heretofore paid to Burney. The
               Company shall deduct from such salary installment payments all
               required federal, state and local withholding and other charges.

         (b)   Burney shall be paid for eighteen (18) days of previously unpaid
               but accrued vacation pay.

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         (c)   Burney shall be reimbursed for outstanding out-of-pocket
               expenses, if any, incurred by Burney on behalf of the Company,
               subject to the submission by Burney of reasonably itemized
               statements therefor.

         (d)   Life Insurance. The Company will pay 75% of the first annual
               premium on an insurance policy on the life of Burney in the
               amount of $660,000.00 due and payable during the Severance Pay
               Period, subject to Burney assuming the obligations to continue to
               pay premiums accruing on such life insurance after the expiration
               of the Severance Pay Period, and provided that the Company shall
               be relieved of and released from any further liability or
               obligations under that policy as of the end of the Severance Pay
               Period. A check for 75% of the applicable premium will be
               delivered to Burney with the execution of this Agreement.

         (e)   Other Benefits. The Company agrees to continue and provide and
               pay for applicable premiums for medical, dental and vision
               insurance for Burney for the Severance Pay Period. Upon the
               expiration of the Severance Pay Period, Burney may elect to
               continue to participate in the Company's medical, dental, and
               vision plan (or any successor plans thereto), at Burney's
               expense, for the additional period required under Federal law.

         (f)   The Company will continue to defend and indemnify Burney in the
               Romano matter, subject to the condition that Burney continues to
               cooperate with the Company and its counsel in the defense or
               other legal actions pertaining to the Romano matter.

         5.    Stock Options.

         (a)   Options Granted Under 1993 Stock Option Plan. The Company
               confirms and agrees that Burney is fully vested in the right to
               purchase a total of 507,500 shares of the Common Stock of
               SpatiaLight; 500,000 of which have an exercise price of $0.75 per
               share, and 7, 500 which have an exercise price of $0.25 per
               share. Burney shall have the right to a "cashless exercise"
               (simultaneous exercise and sale of the option and stock) for all
               of these options through March 21, 2001.

         (b)   Options under 1999 Stock Option Plan. In addition, on December
               31, 1999, Burney was granted additional options to purchase
               500,000 shares of Common Stock of the Company (the "1999
               Options"). By executing this Agreement, Burney hereby
               relinquishes and surrenders to the Company all the 1999 Options
               and any and all exercise and other rights arising under the 1999
               Options in return for the Company's agreement to make a cash
               payment to Burney in an amount equal to the difference between
               the 1999 Options' exercise price of $5.75 per share and the price
               at which an "Ownership Change Event" (as defined in the
               Employment Agreement) occurs, such cash payment, if required to
               be made by the Company to Burney simultaneously upon the
               effective date of the Ownership Change Event as long as the
               Ownership Change Event is consummated within the nine (9) month
               period ending March 21, 2001.

         6. Confidential and Proprietary Information. Burney shall continue to
comply in all respects with the Company's "Proprietary Information and
Assignment of Inventions Agreement" and shall also retain in confidence all
proprietary information and data concerning the Company's sources of supply,
customers, secret processes and inventions, with respect to which Burney has
become apprised in his capacity as an officer and director of the Company
throughout the period called for by the Company's Proprietary Information and
Assignment Agreement.

         7. Reciprocal General Releases. In consideration of the agreements of
the parties herein and of the mutual general releases set forth below, and for
other good and valuable consideration, the receipt of which is hereby
acknowledged by each party hereto, the parties covenant, agree and generally
release as follows:


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         (a)   Except with respect to the continuing rights or obligations that
               the Company has to Burney and Burney has to the Company under
               this Agreement, each party hereto releases and forever discharges
               each other party hereto from any and all claims, demands or
               causes of action heretofore or hereafter arising out of,
               connected with or incidental to the relationships between the
               parties prior to the date hereof, including, without limitation
               on the generality of the foregoing, any and all claims, demands
               and causes of action which either party might otherwise have the
               right to assert against the other.

         (b)   Each party to this Agreement hereby unconditionally, irrevocably
               and specifically waives the benefit of the provisions of Section
               1542 of the Civil Code of the State of California, which provides
               as follows:

               "A general release does not extend to claims which the
               creditor does no know or suspect to exist in his favor at the
               time of executing the release, which if known by him must have
               materially affected his settlement with the debtor."

         (c)   The general release herein extended by Burney to and in favor of
               the Company shall include, and be deemed to include the Company,
               SpatiaLight California, any other subsidiaries and affiliates of
               the Company, and any an all of the Company's officers, directors,
               employees, agents and representatives and their respective
               affiliates.

         8. Representations and Warranties. To induce Burney and the Company,
respectively, to execute and deliver this Agreement, Burney and the Company each
represents and warrants to and agrees that:

         (a)   The Company and Burney have each received independent legal
               counsel from their respective attorneys with respect to the
               advisability of making the settlement provided for herein, with
               respect to the advisability of executing this Agreement, and with
               respect to the meaning of California Civil Code Section 1542.

         (b)   The Company and Burney acknowledge that each is not relying, and
               has not relied, on any promise, representation or statement made
               by or on behalf of the other that is not set forth in this
               Agreement.

         (c)   Each party has not heretofore assigned, transferred or granted,
               or purported to assign, transfer or granted, any of the claims,
               demands, and causes of action disposed of by this Agreement.

         (d)   This Agreement is, and is to be, final and binding between the
               parties hereto and it is the intention of each of the parties to
               fully, finally and forever settle and release all such matters,
               and all claims, relative thereto, which do now exist, may exist,
               or hereto have existed between them. In furtherance of such
               intention, and subject to the performance of their respective
               obligations under this Agreement, the releases given herein shall
               be and remain in effect as full and complete mutual releases of
               all such matters, notwithstanding the discovery or existence of
               any additional or different claims or facts relative thereto.

         (e)   The parties shall execute all such further and additional
               documents as shall be reasonable, convenient, necessary or
               desirable to implement the provisions of this Agreement.

         9. Governing Documents. In the event of any inconsistencies between the
provisions of this Settlement Agreement and the provisions of the Employment
Agreement or any other prior oral or written agreement or understanding between
Burney and the Company and/or any of its subsidiaries or affiliates, the
provisions of this Agreement shall govern and be deemed controlling.

         10. Non-Disclosure. The Company and Burney both agree not to directly
or indirectly disclose the terms of this agreement to anyone other than
immediate family, counsel, employees and anyone else on


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a "need to know basis," except as such disclosure may be required for accounting
or tax reporting purposes or otherwise may be required by law, including Federal
and state securities laws and regulations.

         11.   Modification.

         (a)   This Agreement may only be rescinded, modified or amended by a
               supplemental written instrument executed by Burney and by the
               Company.

         (b)   This Agreement has been executed and delivered in, shall be
               construed and interpreted in accordance with, and shall be
               governed by the laws of the State of California applicable to
               agreements to be performed within the State of California.

         (c)   This Agreement shall be binding upon Burney and his heirs,
               executors, administrators, personal representatives, successors
               and assigns and the Company and its successors and assigns.

         (d)   This Agreement may be executed in one or more counterparts, all
               of which taken together shall constitute one and the same
               Agreement, provided that neither party hereto shall be bound by
               this Agreement unless each of the parties hereto has executed and
               delivered the original or a counterpart thereof.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
         date and year first written above.


                                               SPATIALIGHT, INC.



         \s\ MICHAEL H. BURNEY                 By: \s\ROBERT A. OLINS
         ----------------------------------        ----------------------------
         Michael H. Burney                         Robert A. Olins



                                               By: \s\ LAWRENCE J. MATTESON
                                                   ----------------------------
                                                      Lawrence J. Matteson



                                               By: \s\ STEVEN F. TRIPP
                                                   ----------------------------
                                                      Steven F. Tripp

                                                    (Members of the Board of
                                                    Directors of SpatiaLight,
                                                    Inc.)

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