Document:

EXHIBIT 10.4

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES   COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH  EFFECT,  THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE
COMPANY.  THIS  SECURITY  AND THE  SECURITIES  ISSUABLE  UPON  EXERCISE  OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN  ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES

                          COMMON STOCK PURCHASE WARRANT

                  To Purchase 57,144 Shares of Common Stock of

                                SPATIALIGHT, INC.

            THIS COMMON STOCK PURCHASE  WARRANT (the "Warrant")  certifies that,
for value  received,  Portside Growth and  Opportunity  Fund (the "Holder"),  is
entitled,  upon the terms and subject to the  limitations  on  exercise  and the
conditions  hereinafter  set forth, at any time on or after the date hereof (the
"Initial  Exercise  Date") and on or prior to the close of business on the fifth
anniversary  of the  Initial  Exercise  Date (the  "Termination  Date")  but not
thereafter,  to subscribe  for and purchase from  Spatialight,  Inc., a New York
corporation (the  "Company"),  up to Fifty Seven Thousand One Hundred Forty Four
(57,144)  shares (the  "Warrant  Shares") of Common  Stock,  par value $0.01 per
share, of the Company (the "Common  Stock").  The purchase price of one share of
Common Stock under this Warrant shall be equal to the Exercise Price, as defined
in Section 2(b).

      Section 1.  Definitions.  Capitalized terms used and not otherwise defined
herein shall have the meanings  set forth in that  certain  Securities  Purchase
Agreement (the "Purchase  Agreement"),  dated October 7, 2005, among the Company
and the purchasers signatory thereto.

                                       1
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      Section 2. Exercise.

            a) Exercise of Warrant.  Exercise of the purchase rights represented
      by this Warrant may be made,  in whole or in part, at any time or times on
      or after the Initial  Exercise Date and on or before the Termination  Date
      by delivery to the Company of a duly executed facsimile copy of the Notice
      of Exercise  Form  annexed  hereto (or such other  office or agency of the
      Company as it may designate by notice in writing to the registered  Holder
      at the  address of such  Holder  appearing  on the books of the  Company);
      provided,  however,  within 5  Trading  Days of the date  said  Notice  of
      Exercise is  delivered  to the  Company,  if this  Warrant is exercised in
      full,  the Holder shall have  surrendered  this Warrant to the Company and
      the Company shall have received payment of the aggregate Exercise Price of
      the shares thereby  purchased by wire transfer or cashier's check drawn on
      a United States bank. Notwithstanding anything herein to the contrary, the
      Holder shall not be required to physically  surrender  this Warrant to the
      Company until the Holder has purchased all of the Warrant Shares available
      hereunder and the Warrant has been exercised in full. Partial exercises of
      this  Warrant  resulting  in purchases of a portion of the total number of
      Warrant Shares  available  hereunder shall have the effect of lowering the
      outstanding  number of Warrant Shares  purchasable  hereunder in an amount
      equal to the applicable number of Warrant Shares purchased. The Holder and
      the Company shall  maintain  records  showing the number of Warrant Shares
      purchased  and the date of such  purchases.  The Company shall deliver any
      objection to any Notice of Exercise  Form within 1 Business Day of receipt
      of such notice. In the event of any dispute or discrepancy, the records of
      the  Holder  shall be  controlling  and  determinative  in the  absence of
      manifest  error.  The  Holder  and any  assignee,  by  acceptance  of this
      Warrant,  acknowledge  and agree that, by reason of the provisions of this
      paragraph,  following  the  purchase  of a portion of the  Warrant  Shares
      hereunder,  the number of Warrant Shares available for purchase  hereunder
      at any given time may be less than the amount stated on the face hereof.

            b) Exercise Price. The exercise price of the Common Stock under this
      Warrant shall be $5.00,  subject to adjustment  hereunder  (the  "Exercise
      Price").

            c) Cashless Exercise. If at any time after one year from the date of
      issuance of this  Warrant  there is no  effective  Registration  Statement
      registering,  or no current  prospectus  available  for, the resale of the
      Warrant  Shares by the Holder,  then this Warrant may also be exercised at
      such time by means of a "cashless  exercise"  in which the Holder shall be
      entitled to receive a certificate  for the number of Warrant  Shares equal
      to the quotient obtained by dividing [(A-B) (X)] by (A), where:

            (A) = the Closing Price on the Trading Day immediately preceding the
                  date of such election;

            (B) = the Exercise Price of this Warrant, as adjusted; and

            (X) = the number of Warrant  Shares  issuable  upon exercise of this
                  Warrant in accordance  with the terms of this Warrant by means
                  of a cash exercise rather than a cashless exercise.

            Notwithstanding  anything herein to the contrary, on the Termination
      Date, this Warrant shall be automatically  exercised via cashless exercise
      pursuant to this Section 2(c).

            d) Exercise Limitations.

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                  i.  Holder's  Restrictions.  The Company  shall not effect any
            exercise of this  Warrant,  and a Holder shall not have the right to
            exercise  any portion of this  Warrant,  pursuant to Section 2(c) or
            otherwise,  to the extent that after giving  effect to such issuance
            after exercise, such Holder (together with such Holder's affiliates,
            and any other person or entity acting as a group  together with such
            Holder  or any of such  Holder's  affiliates),  as set  forth on the
            applicable Notice of Exercise,  would  beneficially own in excess of
            4.99% of the  number  of  shares  of the  Common  Stock  outstanding
            immediately  after giving effect to such  issuance.  For purposes of
            the  foregoing  sentence,  the  number of  shares  of  Common  Stock
            beneficially  owned by such Holder and its affiliates  shall include
            the number of shares of Common Stock  issuable upon exercise of this
            Warrant with respect to which the  determination of such sentence is
            being made,  but shall  exclude the number of shares of Common Stock
            which  would  be  issuable  upon  (A)  exercise  of  the  remaining,
            nonexercised  portion  of this  Warrant  beneficially  owned by such
            Holder or any of its  affiliates  and (B) exercise or  conversion of
            the unexercised or nonconverted  portion of any other  securities of
            the Company  (including,  without  limitation,  any other  Warrants)
            subject to a limitation on  conversion or exercise  analogous to the
            limitation contained herein beneficially owned by such Holder or any
            of its  affiliates.  Except as set forth in the preceding  sentence,
            for purposes of this Section 2(d)(i),  beneficial ownership shall be
            calculated in accordance  with Section 13(d) of the Exchange Act and
            the  rules  and  regulations   promulgated   thereunder,   it  being
            acknowledged  by a Holder  that the Company is not  representing  to
            such Holder that such  calculation  is in  compliance  with  Section
            13(d) of the Exchange Act and such Holder is solely  responsible for
            any schedules required to be filed in accordance  therewith.  To the
            extent that the  limitation  contained in this Section 2(d) applies,
            the  determination  of  whether  this  Warrant  is  exercisable  (in
            relation to other  securities  owned by such  Holder) and of which a
            portion  of  this  Warrant  is  exercisable  shall  be in  the  sole
            discretion of a Holder,  and the  submission of a Notice of Exercise
            shall be deemed to be each  Holder's  determination  of whether this
            Warrant is  exercisable  (in relation to other  securities  owned by
            such Holder) and of which portion of this Warrant is exercisable, in
            each case subject to such aggregate percentage  limitation,  and the
            Company  shall have no  obligation to verify or confirm the accuracy
            of such determination.  In addition, a determination as to any group
            status as contemplated  above shall be determined in accordance with
            Section  13(d) of the  Exchange  Act and the rules  and  regulations
            promulgated  thereunder.  For  purposes  of this  Section  2(d),  in
            determining  the number of  outstanding  shares of Common  Stock,  a
            Holder may rely on the number of outstanding  shares of Common Stock
            as  reflected  in (x) the  Company's  most  recent Form 10-Q or Form
            10-K, as the case may be, (y) a more recent public  announcement  by
            the Company or (z) any other notice by the Company or the  Company's
            Transfer  Agent  setting  forth the number of shares of Common Stock
            outstanding.  Upon the  written  or oral  request  of a Holder,  the
            Company shall within two Trading Days confirm  orally and in writing
            to  such   Holder  the  number  of  shares  of  Common   Stock  then
            outstanding. In any case, the number of outstanding shares of Common
            Stock shall be determined  after giving effect to the  conversion or
            exercise of securities of the Company,  including  this Warrant,  by
            such Holder or its affiliates since the date as of which such number
            of outstanding  shares of Common Stock was reported.  The provisions
            of this Section  2(d) may be waived by such Holder,  at the election
            of such  Holder,  upon not less  than 61 days'  prior  notice to the
            Company,  and the  provisions of this Section 2(d) shall continue to
            apply until such 61st day (or such later date, as determined by such
            Holder,  as  may  be  specified  in  such  notice  of  waiver).  The
            provisions  of this  paragraph  shall  be  implemented  in a  manner
            otherwise than in strict  conformity  with the terms of this Section
            2(d) to correct this paragraph (or any portion  hereof) which may be
            defective  or  inconsistent   with  the  intended  4.99%  beneficial
            ownership   limitation  herein  contained  or  to  make  changes  or
            supplements  necessary or desirable to properly  give effect to such
            4.99% limitation.  The limitations contained in this paragraph shall
            apply to a successor  holder of this Warrant.  The holders of Common
            Stock of the  Company  shall be third  party  beneficiaries  of this
            Section 2(d) and the Company may not waive this Section 2(d) without
            the consent of holders of a majority of its Common Stock.

                                       3
<PAGE>

                  ii.  Trading  Market  Restrictions.  If the  Company  has  not
            obtained  Shareholder  Approval (as defined below), then the Company
            may not issue upon  exercise  of this  Warrant a number of shares of
            Common Stock, which, when aggregated with any shares of Common Stock
            issued pursuant to the Purchase Agreement and upon prior exercise of
            this or any other Warrant issued pursuant to the Purchase Agreement,
            would  exceed  19.999%  of the  number of  shares  of  Common  Stock
            outstanding  on the Trading Day  immediately  preceding  the Closing
            Date (such  number of shares,  the  "Issuable  Maximum").  If on any
            attempted  exercise of this Warrant,  the issuance of Warrant Shares
            would  exceed the  Issuable  Maximum and the Company  shall not have
            previously obtained the vote of shareholders to approve the issuance
            of shares of Common Stock in excess of the Issuable Maximum pursuant
            to the terms hereof (the "Shareholder  Approval"),  then the Company
            shall issue to the Holder  requesting a Warrant exercise such number
            of Warrant  Shares as may be issued below the Issuable  Maximum and,
            with  respect to the  remainder of the  aggregate  number of Warrant
            Shares,  this  Warrant  shall not be  exercisable  until and  unless
            Shareholder Approval has been obtained.

            e) Mechanics of Exercise.

                  i. Authorization of Warrant Shares. The Company covenants that
            all  Warrant  Shares  which may be issued  upon the  exercise of the
            purchase  rights  represented by this Warrant will, upon exercise of
            the purchase rights represented by this Warrant, be duly authorized,
            validly  issued,  fully  paid and  nonassessable  and free  from all
            taxes, liens and charges in respect of the issue thereof (other than
            taxes in respect of any transfer  occurring  contemporaneously  with
            such issue).

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<PAGE>

                  ii. Delivery of Certificates  Upon Exercise.  Certificates for
            shares  purchased  hereunder  shall be  transmitted  by the transfer
            agent of the Company to the Holder by  crediting  the account of the
            Holder's prime broker with the Depository  Trust Company through its
            Deposit  Withdrawal Agent Commission  ("DWAC") system if the Company
            is a participant in such system,  and otherwise by physical delivery
            to the  address  specified  by the Holder in the Notice of  Exercise
            within 3 Trading Days from the delivery to the Company of the Notice
            of  Exercise  Form,  surrender  of this  Warrant (if  required)  and
            payment of the aggregate Exercise Price as set forth above ("Warrant
            Share  Delivery  Date").  This Warrant  shall be deemed to have been
            exercised on the date the Exercise Price is received by the Company.
            The Warrant  Shares shall be deemed to have been issued,  and Holder
            or any  other  person so  designated  to be named  therein  shall be
            deemed to have  become a holder of  record  of such  shares  for all
            purposes,  as of the date the Warrant has been  exercised by payment
            to the Company of the  Exercise  Price and all taxes  required to be
            paid by the Holder,  if any,  pursuant to Section 2(e)(vii) prior to
            the issuance of such shares, have been paid.

                  iii.  Delivery of New Warrants Upon Exercise.  If this Warrant
            shall have been exercised in part, the Company shall, at the request
            of a Holder and upon surrender of this Warrant  certificate,  at the
            time of delivery of the  certificate  or  certificates  representing
            Warrant  Shares,  deliver  to Holder a new  Warrant  evidencing  the
            rights of Holder to purchase the  unpurchased  Warrant Shares called
            for by this Warrant,  which new Warrant shall in all other  respects
            be identical with this Warrant.

                  iv.  Rescission  Rights.  If the  Company  fails to cause  its
            transfer   agent  to  transmit  to  the  Holder  a  certificate   or
            certificates  representing  the  Warrant  Shares  pursuant  to  this
            Section 2(e)(iv) by the Warrant Share Delivery Date, then the Holder
            will have the right to rescind such exercise.

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                  v.  Compensation  for  Buy-In on  Failure  to  Timely  Deliver
            Certificates  Upon  Exercise.   In  addition  to  any  other  rights
            available to the Holder,  if the Company fails to cause its transfer
            agent to  transmit  to the  Holder  a  certificate  or  certificates
            representing the Warrant Shares pursuant to an exercise on or before
            the Warrant Share  Delivery  Date, and if after such date the Holder
            is required by its broker to purchase (in an open market transaction
            or otherwise) shares of Common Stock to deliver in satisfaction of a
            sale  by  the  Holder  of  the  Warrant   Shares  which  the  Holder
            anticipated  receiving  upon such  exercise (a  "Buy-In"),  then the
            Company  shall (1) pay in cash to the Holder the amount by which (x)
            the Holder's total purchase price (including brokerage  commissions,
            if any) for the shares of Common Stock so purchased  exceeds (y) the
            amount obtained by multiplying (A) the number of Warrant Shares that
            the Company was required to deliver to the Holder in connection with
            the  exercise  at issue  times (B) the price at which the sell order
            giving rise to such purchase obligation was executed, and (2) at the
            option of the Holder,  either  reinstate  the portion of the Warrant
            and equivalent  number of Warrant Shares for which such exercise was
            not  honored or deliver to the Holder the number of shares of Common
            Stock that would have been  issued had the Company  timely  complied
            with its exercise and delivery obligations  hereunder.  For example,
            if the Holder  purchases  Common Stock having a total purchase price
            of $11,000 to cover a Buy-In with respect to an  attempted  exercise
            of shares of Common Stock with an  aggregate  sale price giving rise
            to such  purchase  obligation  of $10,000,  under  clause (1) of the
            immediately  preceding sentence the Company shall be required to pay
            the Holder  $1,000.  The Holder  shall  provide the Company  written
            notice  indicating  the amounts  payable to the Holder in respect of
            the  Buy-In,  together  with  applicable   confirmations  and  other
            evidence reasonably  requested by the Company.  Nothing herein shall
            limit a Holder's right to pursue any other remedies  available to it
            hereunder,  at law or in equity  including,  without  limitation,  a
            decree of specific performance and/or injunctive relief with respect
            to the Company's failure to timely deliver certificates representing
            shares of Common  Stock upon  exercise  of the  Warrant as  required
            pursuant to the terms hereof.

                  vi. No Fractional  Shares or Scrip.  No  fractional  shares or
            scrip  representing  fractional  shares  shall  be  issued  upon the
            exercise of this Warrant. As to any fraction of a share which Holder
            would  otherwise  be entitled to purchase  upon such  exercise,  the
            Company  shall  pay a cash  adjustment  in  respect  of  such  final
            fraction  in an  amount  equal to such  fraction  multiplied  by the
            Exercise Price.

                  vii. Charges, Taxes and Expenses. Issuance of certificates for
            Warrant  Shares shall be made  without  charge to the Holder for any
            issue or transfer tax or other incidental  expense in respect of the
            issuance of such certificate,  all of which taxes and expenses shall
            be paid by the Company, and such certificates shall be issued in the
            name of the  Holder or in such name or names as may be  directed  by
            the Holder;  provided,  however,  that in the event certificates for
            Warrant Shares are to be issued in a name other than the name of the
            Holder,   this  Warrant  when  surrendered  for  exercise  shall  be
            accompanied by the Assignment  Form attached hereto duly executed by
            the Holder; and the Company may require, as a condition thereto, the
            payment of a sum  sufficient  to  reimburse  it for any transfer tax
            incidental thereto.

                                       6
<PAGE>

                  viii.  Closing  of  Books.  The  Company  will not  close  its
            stockholder books or records in any manner which prevents the timely
            exercise of this Warrant, pursuant to the terms hereof.

      Section 3. Certain Adjustments.

            a) Stock  Dividends  and Splits.  If the Company,  at any time while
      this Warrant is outstanding: (A) pays a stock dividend or otherwise make a
      distribution or  distributions  on shares of its Common Stock or any other
      equity or equity equivalent  securities  payable in shares of Common Stock
      (which,  for  avoidance  of doubt,  shall not include any shares of Common
      Stock  issued by the Company  pursuant to this  Warrant),  (B)  subdivides
      outstanding  shares of Common  Stock into a larger  number of shares,  (C)
      combines  (including by way of reverse stock split)  outstanding shares of
      Common  Stock  into  a  smaller  number  of  shares,   or  (D)  issues  by
      reclassification of shares of the Common Stock any shares of capital stock
      of the Company,  then in each case the Exercise  Price shall be multiplied
      by a  fraction  of which the  numerator  shall be the  number of shares of
      Common Stock (excluding  treasury shares, if any) outstanding  immediately
      before  such  event and of which the  denominator  shall be the  number of
      shares of Common Stock  outstanding  immediately  after such event and the
      number  of  shares  issuable  upon  exercise  of  this  Warrant  shall  be
      proportionately  adjusted.  Any  adjustment  made pursuant to this Section
      3(a) shall  become  effective  immediately  after the record  date for the
      determination  of  stockholders  entitled  to  receive  such  dividend  or
      distribution  and shall become effective  immediately  after the effective
      date in the case of a subdivision, combination or re-classification.

            b) [INTENTIONALLY DELETED].

            c) Pro Rata Distributions.  If the Company, at any time prior to the
      Termination Date, shall distribute to all holders of Common Stock (and not
      to  Holders  of the  Warrants)  evidences  of its  indebtedness  or assets
      (including cash and cash dividends) or rights or warrants to subscribe for
      or purchase  any  security  other than the Common  Stock  (which  shall be
      subject to Section 3(b)),  then in each such case the Exercise Price shall
      be adjusted by multiplying the Exercise Price in effect  immediately prior
      to the record date fixed for  determination  of  stockholders  entitled to
      receive such  distribution by a fraction of which the denominator shall be
      the VWAP  determined as of the record date mentioned  above,  and of which
      the  numerator  shall be such VWAP on such  record  date less the then per
      share fair market  value at such record date of the portion of such assets
      or evidence of indebtedness  so distributed  applicable to one outstanding
      share of the Common Stock as  determined by the Board of Directors in good
      faith.  In either case the  adjustments  shall be described in a statement
      provided  to  the  Holder  of  the  portion  of  assets  or  evidences  of
      indebtedness so distributed or such subscription  rights applicable to one
      share of Common  Stock.  Such  adjustment  shall be made whenever any such
      distribution  is made and shall  become  effective  immediately  after the
      record date mentioned above.

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            d)  Fundamental  Transaction.  If, at any time while this Warrant is
      outstanding,  (A) the Company effects any merger or  consolidation  of the
      Company with or into another  Person,  (B) the Company effects any sale of
      all or  substantially  all of its  assets  in one or a series  of  related
      transactions,  (C) any tender  offer or  exchange  offer  (whether  by the
      Company  or another  Person) is  completed  pursuant  to which  holders of
      Common Stock are  permitted  to tender or exchange  their shares for other
      securities,   cash  or   property,   or  (D)  the   Company   effects  any
      reclassification  of the Common  Stock or any  compulsory  share  exchange
      pursuant  to which  the  Common  Stock is  effectively  converted  into or
      exchanged  for other  securities,  cash or property  (in any such case,  a
      "Fundamental  Transaction"),  then,  upon any subsequent  exercise of this
      Warrant,  the Holder  shall have the right to  receive,  for each  Warrant
      Share that would have been issuable upon such exercise  immediately  prior
      to the occurrence of such  Fundamental  Transaction,  at the option of the
      Holder, (a) upon exercise of this Warrant,  the number of shares of Common
      Stock of the successor or acquiring  corporation or of the Company,  if it
      is the  surviving  corporation,  and  any  additional  consideration  (the
      "Alternate  Consideration")  receivable  upon  or  as  a  result  of  such
      reorganization,  reclassification, merger, consolidation or disposition of
      assets by a Holder of the number of shares of Common  Stock for which this
      Warrant  is  exercisable  immediately  prior  to such  event or (b) if the
      Company is acquired in an all cash transaction, cash equal to the value of
      this Warrant as  determined in accordance  with the  Black-Scholes  option
      pricing formula.  For purposes of any such exercise,  the determination of
      the  Exercise  Price  shall  be  appropriately  adjusted  to apply to such
      Alternate  Consideration  based on the amount of  Alternate  Consideration
      issuable  in  respect  of one  share of Common  Stock in such  Fundamental
      Transaction,  and the Company shall apportion the Exercise Price among the
      Alternate  Consideration  in a reasonable  manner  reflecting the relative
      value of any  different  components  of the  Alternate  Consideration.  If
      holders of Common Stock are given any choice as to the securities, cash or
      property  to be  received in a  Fundamental  Transaction,  then the Holder
      shall be given  the  same  choice  as to the  Alternate  Consideration  it
      receives  upon any exercise of this  Warrant  following  such  Fundamental
      Transaction.   To  the  extent   necessary  to  effectuate  the  foregoing
      provisions,  any  successor  to the  Company or  surviving  entity in such
      Fundamental Transaction shall issue to the Holder a new warrant consistent
      with  the  foregoing  provisions  and  evidencing  the  Holder's  right to
      exercise  such  warrant  into  Alternate  Consideration.  The terms of any
      agreement  pursuant to which a Fundamental  Transaction  is effected shall
      include terms  requiring any such successor or surviving  entity to comply
      with the  provisions  of this Section 3(d) and insuring  that this Warrant
      (or any such  replacement  security)  will be similarly  adjusted upon any
      subsequent transaction analogous to a Fundamental Transaction.

            e) Calculations. All calculations under this Section 3 shall be made
      to the nearest cent or the nearest 1/100th of a share, as the case may be.
      For  purposes  of this  Section  3, the  number of shares of Common  Stock
      deemed to be issued and outstanding as of a given date shall be the sum of
      the number of shares of Common Stock (excluding  treasury shares,  if any)
      issued and outstanding.

            f)  Voluntary  Adjustment  By  Company.  The Company may at any time
      during the term of this Warrant reduce the then current  Exercise Price to
      any amount and for any period of time deemed  appropriate  by the Board of
      Directors of the Company.

                                       8
<PAGE>

            g) Notice to Holders.

                  i. Adjustment to Exercise  Price.  Whenever the Exercise Price
            is adjusted  pursuant to this Section 3, the Company shall  promptly
            mail to each Holder a notice  setting forth the Exercise Price after
            such  adjustment  and setting  forth a brief  statement of the facts
            requiring  such  adjustment.  If the Company  issues a variable rate
            security, despite the prohibition thereon in the Purchase Agreement,
            the Company  shall be deemed to have issued  Common  Stock or Common
            Stock  Equivalents  at the lowest  possible  conversion  or exercise
            price at which such  securities may be converted or exercised in the
            case of a Variable  Rate  Transaction  (as  defined in the  Purchase
            Agreement).

                  ii.  Notice to Allow  Exercise  by Holder.  If (A) the Company
            shall declare a dividend (or any other  distribution)  on the Common
            Stock;  (B) the Company  shall declare a special  nonrecurring  cash
            dividend on or a  redemption  of the Common  Stock;  (C) the Company
            shall  authorize  the  granting to all  holders of the Common  Stock
            rights or  warrants  to  subscribe  for or  purchase  any  shares of
            capital stock of any class or of any rights; (D) the approval of any
            stockholders of the Company shall be required in connection with any
            reclassification of the Common Stock, any consolidation or merger to
            which  the  Company  is a  party,  any  sale or  transfer  of all or
            substantially  all of the assets of the Company,  of any  compulsory
            share  exchange  whereby the Common  Stock is  converted  into other
            securities,  cash or property;  (E) the Company shall  authorize the
            voluntary or involuntary  dissolution,  liquidation or winding up of
            the affairs of the Company;  then,  in each case,  the Company shall
            cause to be mailed to the  Holder  at its last  address  as it shall
            appear  upon  the  Warrant  Register  of the  Company,  at  least 20
            calendar  days  prior to the  applicable  record or  effective  date
            hereinafter  specified,  a  notice  stating  (x) the date on which a
            record  is  to  be  taken  for  the   purpose   of  such   dividend,
            distribution,  redemption, rights or warrants, or if a record is not
            to be taken, the date as of which the holders of the Common Stock of
            record to be entitled to such dividend,  distributions,  redemption,
            rights or  warrants  are to be  determined  or (y) the date on which
            such  reclassification,  consolidation,  merger,  sale,  transfer or
            share  exchange is expected to become  effective  or close,  and the
            date as of which it is expected  that holders of the Common Stock of
            record  shall be  entitled to  exchange  their  shares of the Common
            Stock for securities,  cash or other property  deliverable upon such
            reclassification,  consolidation,  merger,  sale,  transfer or share
            exchange;  provided  that the  failure  to mail  such  notice or any
            defect  therein  or in the  mailing  thereof  shall not  affect  the
            validity of the  corporate  action  required to be specified in such
            notice.  The Holder is entitled to exercise this Warrant  during the
            20-day period commencing on the date of such notice to the effective
            date of the event triggering such notice.

                                       9
<PAGE>

      Section 4. Transfer of Warrant.

            a)  Transferability.  Subject  to  compliance  with  any  applicable
      securities  laws and the  conditions  set forth in Sections  5(a) and 4(d)
      hereof and to the  provisions  of Section 4.1 of the  Purchase  Agreement,
      this Warrant and all rights  hereunder  are  transferable,  in whole or in
      part,  upon  surrender  of this  Warrant  at the  principal  office of the
      Company,  together with a written assignment of this Warrant substantially
      in the form  attached  hereto duly  executed by the Holder or its agent or
      attorney and funds  sufficient to pay any transfer  taxes payable upon the
      making of such  transfer.  Upon such  surrender  and,  if  required,  such
      payment,  the Company  shall execute and deliver a new Warrant or Warrants
      in the  name of the  assignee  or  assignees  and in the  denomination  or
      denominations specified in such instrument of assignment,  and shall issue
      to the assignor a new Warrant  evidencing  the portion of this Warrant not
      so assigned,  and this Warrant shall promptly be cancelled.  A Warrant, if
      properly  assigned,  may be  exercised by a new holder for the purchase of
      Warrant Shares without having a new Warrant issued.

            b) New Warrants.  This Warrant may be divided or combined with other
      Warrants upon presentation  hereof at the aforesaid office of the Company,
      together with a written notice  specifying the names and  denominations in
      which new Warrants are to be issued,  signed by the Holder or its agent or
      attorney.  Subject to  compliance  with Section  4(a),  as to any transfer
      which may be involved in such division or  combination,  the Company shall
      execute and deliver a new Warrant or Warrants in exchange  for the Warrant
      or Warrants to be divided or combined in accordance with such notice.

            c) Warrant Register.  The Company shall register this Warrant,  upon
      records to be  maintained  by the Company for that purpose  (the  "Warrant
      Register"), in the name of the record Holder hereof from time to time. The
      Company may deem and treat the  registered  Holder of this  Warrant as the
      absolute  owner  hereof  for the  purpose  of any  exercise  hereof or any
      distribution  to the Holder,  and for all other  purposes,  absent  actual
      notice to the contrary.

            d) Transfer  Restrictions.  If, at the time of the surrender of this
      Warrant in connection  with any transfer of this Warrant,  the transfer of
      this Warrant shall not be registered pursuant to an effective registration
      statement under the Securities Act and under  applicable  state securities
      or blue sky laws, the Company may require, as a condition of allowing such
      transfer (i) that the Holder or transferee  of this  Warrant,  as the case
      may be, furnish to the Company a written opinion of counsel (which opinion
      shall be in form, substance and scope customary for opinions of counsel in
      comparable  transactions)  to the effect  that such  transfer  may be made
      without  registration  under the Securities Act and under applicable state
      securities or blue sky laws,  (ii) that the holder or  transferee  execute
      and  deliver to the  Company an  investment  letter in form and  substance
      acceptable to the Company and (iii) that the  transferee be an "accredited
      investor" as defined in Rule 501(a)(1),  (a)(2), (a)(3), (a)(7), or (a)(8)
      promulgated under the Securities Act or a qualified institutional buyer as
      defined in Rule 144A(a) under the Securities Act.

                                       10
<PAGE>

      Section 5. Miscellaneous.

            a) Title to Warrant.  Prior to the  Termination  Date and subject to
      compliance  with  applicable  laws and  Section  4 of this  Warrant,  this
      Warrant and all rights hereunder are transferable, in whole or in part, at
      the  office or agency of the  Company  by the  Holder in person or by duly
      authorized  attorney,  upon  surrender of this Warrant  together  with the
      Assignment Form annexed hereto  properly  endorsed.  The transferee  shall
      sign an investment letter in form and substance reasonably satisfactory to
      the Company.

            b) No Rights as Shareholder  Until  Exercise.  This Warrant does not
      entitle the Holder to any voting  rights or other rights as a  shareholder
      of the Company  prior to the exercise  hereof.  Upon the surrender of this
      Warrant and the payment of the aggregate  Exercise Price (or by means of a
      cashless exercise), the Warrant Shares so purchased shall be and be deemed
      to be issued to such  Holder as the record  owner of such shares as of the
      close of business on the later of the date of such surrender or payment.

            c) Loss,  Theft,  Destruction or Mutilation of Warrant.  The Company
      covenants  that  upon  receipt  by  the  Company  of  evidence  reasonably
      satisfactory to it of the loss,  theft,  destruction or mutilation of this
      Warrant or any stock  certificate  relating to the Warrant Shares,  and in
      case of loss,  theft or destruction,  of indemnity or security  reasonably
      satisfactory to it (which,  in the case of the Warrant,  shall not include
      the posting of any bond),  and upon  surrender  and  cancellation  of such
      Warrant or stock  certificate,  if  mutilated,  the Company  will make and
      deliver a new Warrant or stock  certificate  of like tenor and dated as of
      such cancellation, in lieu of such Warrant or stock certificate.

            d) Saturdays,  Sundays,  Holidays, etc. If the last or appointed day
      for the taking of any action or the  expiration  of any right  required or
      granted herein shall be a Saturday,  Sunday or a legal holiday,  then such
      action may be taken or such right may be exercised on the next  succeeding
      day not a Saturday, Sunday or legal holiday.

            e) Authorized Shares.

                  The  Company  covenants  that during the period the Warrant is
            outstanding, it will reserve from its authorized and unissued Common
            Stock a  sufficient  number of shares to provide for the issuance of
            the Warrant  Shares upon the exercise of any  purchase  rights under
            this Warrant.  The Company  further  covenants  that its issuance of
            this Warrant shall constitute full authority to its officers who are
            charged with the duty of executing stock certificates to execute and
            issue the  necessary  certificates  for the Warrant  Shares upon the
            exercise of the purchase rights under this Warrant. The Company will
            take all such  reasonable  action as may be necessary to assure that
            such  Warrant  Shares  may be  issued  as  provided  herein  without
            violation  of  any  applicable   law  or   regulation,   or  of  any
            requirements  of the Trading  Market upon which the Common Stock may
            be listed.

                                       11
<PAGE>

                  Except  and to the  extent as waived  or  consented  to by the
            Holder,  the  Company  shall not by any action,  including,  without
            limitation, amending its certificate of incorporation or through any
            reorganization,   transfer   of   assets,   consolidation,   merger,
            dissolution,  issue or sale of  securities  or any  other  voluntary
            action,  avoid or seek to avoid the observance or performance of any
            of the terms of this  Warrant,  but will at all times in good  faith
            assist in the  carrying  out of all such  terms and in the taking of
            all such actions as may be necessary or  appropriate  to protect the
            rights of Holder as set forth in this  Warrant  against  impairment.
            Without  limiting the generality of the foregoing,  the Company will
            (a) not  increase  the par  value of any  Warrant  Shares  above the
            amount payable therefor upon such exercise immediately prior to such
            increase in par value,  (b) take all such action as may be necessary
            or  appropriate  in order that the  Company  may validly and legally
            issue fully paid and nonassessable  Warrant Shares upon the exercise
            of this  Warrant,  and (c) use  commercially  reasonable  efforts to
            obtain all such  authorizations,  exemptions  or  consents  from any
            public  regulatory  body  having  jurisdiction  thereof  as  may  be
            necessary  to enable the  Company to perform its  obligations  under
            this Warrant.

                  Before  taking any action which would result in an  adjustment
            in  the  number  of  Warrant   Shares  for  which  this  Warrant  is
            exercisable or in the Exercise  Price,  the Company shall obtain all
            such  authorizations or exemptions  thereof, or consents thereto, as
            may be necessary  from any public  regulatory  body or bodies having
            jurisdiction thereof.

            f)  Jurisdiction.   All  questions   concerning  the   construction,
      validity,   enforcement  and  interpretation  of  this  Warrant  shall  be
      determined in accordance with the provisions of the Purchase Agreement.

            g)  Restrictions.  The Holder  acknowledges  that the Warrant Shares
      acquired upon the exercise of this Warrant,  if not registered,  will have
      restrictions upon resale imposed by state and federal securities laws.

            h)  Nonwaiver  and  Expenses.  No course of  dealing or any delay or
      failure  to  exercise  any right  hereunder  on the part of  Holder  shall
      operate as a waiver of such right or otherwise  prejudice Holder's rights,
      powers or  remedies,  notwithstanding  the fact that all rights  hereunder
      terminate on the Termination  Date. If the Company willfully and knowingly
      fails to comply with any provision of this  Warrant,  which results in any
      material  damages to the  Holder,  the  Company  shall pay to Holder  such
      amounts as shall be sufficient to cover any costs and expenses  including,
      but not  limited  to,  reasonable  attorneys'  fees,  including  those  of
      appellate  proceedings,  incurred by Holder in collecting  any amounts due
      pursuant  hereto or in otherwise  enforcing  any of its rights,  powers or
      remedies hereunder.

            i)  Notices.  Any  notice,  request or other  document  required  or
      permitted to be given or  delivered to the Holder by the Company  shall be
      delivered  in  accordance  with  the  notice  provisions  of the  Purchase
      Agreement.

            j) Limitation of Liability.  No provision  hereof, in the absence of
      any  affirmative  action by Holder to  exercise  this  Warrant or purchase
      Warrant Shares,  and no enumeration  herein of the rights or privileges of
      Holder,  shall give rise to any liability of Holder for the purchase price
      of any Common  Stock or as a  stockholder  of the  Company,  whether  such
      liability is asserted by the Company or by creditors of the Company.

                                       12
<PAGE>

            k) Remedies.  Holder,  in addition to being entitled to exercise all
      rights granted by law, including recovery of damages,  will be entitled to
      specific  performance of its rights under this Warrant. The Company agrees
      that  monetary  damages  would not be adequate  compensation  for any loss
      incurred by reason of a breach by it of the provisions of this Warrant and
      hereby agrees to waive the defense in any action for specific  performance
      that a remedy at law would be adequate.

            l) Successors and Assigns.  Subject to applicable  securities  laws,
      this Warrant and the rights and obligations  evidenced  hereby shall inure
      to the benefit of and be binding  upon the  successors  of the Company and
      the  successors  and permitted  assigns of Holder.  The provisions of this
      Warrant are  intended  to be for the  benefit of all Holders  from time to
      time of this Warrant and shall be enforceable by any such Holder or holder
      of Warrant Shares.

            m)  Amendment.  This  Warrant  may be  modified  or  amended  or the
      provisions  hereof waived with the written  consent of the Company and the
      Holder.

            n) Severability.  Wherever possible,  each provision of this Warrant
      shall be  interpreted  in such manner as to be  effective  and valid under
      applicable  law, but if any  provision of this Warrant shall be prohibited
      by or invalid under applicable law, such provision shall be ineffective to
      the extent of such  prohibition or invalidity,  without  invalidating  the
      remainder of such provisions or the remaining provisions of this Warrant.

            o)  Headings.  The  headings  used  in  this  Warrant  are  for  the
      convenience of reference only and shall not, for any purpose,  be deemed a
      part of this Warrant.

                              ********************

                                       13
<PAGE>

            IN  WITNESS  WHEREOF,  the  Company  has caused  this  Warrant to be
executed by its officer thereunto duly authorized.

Dated: October 12, 2005

                                        SPATIALIGHT, INC.

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

                                       14
<PAGE>

                               NOTICE OF EXERCISE

TO:   SPATIALIGHT, INC.

            (1) The  undersigned  hereby  elects to  purchase  ________  Warrant
Shares of the Company  pursuant to the terms of the  attached  Warrant  (only if
exercised in full),  and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.

            (2) Payment shall take the form of (check applicable box):

                  [ ] in lawful money of the United States; or

                  [ ] the  cancellation  of such number of Warrant  Shares as is
                  necessary,  in  accordance  with  the  formula  set  forth  in
                  subsection  2(c), to exercise this Warrant with respect to the
                  maximum number of Warrant Shares  purchasable  pursuant to the
                  cashless exercise procedure set forth in subsection 2(c).

            (3) Please issue a certificate  or  certificates  representing  said
Warrant  Shares  in the  name of the  undersigned  or in such  other  name as is
specified below:

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

The Warrant Shares shall be delivered to the following:

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

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

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

            (4) Accredited Investor. The undersigned is an "accredited investor"
as defined in  Regulation D  promulgated  under the  Securities  Act of 1933, as
amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:
                         -------------------------------------------------------
Signature of Authorized Signatory of Investing Entity:
                                                      --------------------------
Name of Authorized Signatory:
                             ---------------------------------------------------
Title of Authorized Signatory:
                              --------------------------------------------------
Date:
     ---------------------------------------------------------------------------

                                       15
<PAGE>

                                 ASSIGNMENT FORM

                 (To assign the foregoing warrant, execute this
                      form and supply required information.
                 Do not use this form to exercise the warrant.)

            FOR VALUE RECEIVED,  the foregoing  Warrant and all rights evidenced
thereby are hereby assigned to

                                               whose address is
-----------------------------------------------

--------------------------------------------------------------.

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

                                               Dated:
                                                     ----------------, ----

            Holder's Signature:
                               ----------------------------

            Holder's Address:
                               ----------------------------

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

Signature Guaranteed:
                     --------------------------------------

NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

                                       16EXHIBIT 10.5

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES   COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH  EFFECT,  THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE
COMPANY.  THIS  SECURITY  AND THE  SECURITIES  ISSUABLE  UPON  EXERCISE  OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN  ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES

                          COMMON STOCK PURCHASE WARRANT

                  To Purchase 57,144 Shares of Common Stock of

                                SPATIALIGHT, INC.

            THIS COMMON STOCK PURCHASE  WARRANT (the "Warrant")  certifies that,
for value received,  Smithfield Fiduciary LLC (the "Holder"),  is entitled, upon
the  terms  and  subject  to the  limitations  on  exercise  and the  conditions
hereinafter  set forth,  at any time on or after the date hereof  (the  "Initial
Exercise  Date")  and on or  prior  to  the  close  of  business  on  the  fifth
anniversary  of the  Initial  Exercise  Date (the  "Termination  Date")  but not
thereafter,  to subscribe  for and purchase from  Spatialight,  Inc., a New York
corporation (the  "Company"),  up to Fifty Seven Thousand One Hundred Forty Four
(57,144)  shares (the  "Warrant  Shares") of Common  Stock,  par value $0.01 per
share, of the Company (the "Common  Stock").  The purchase price of one share of
Common Stock under this Warrant shall be equal to the Exercise Price, as defined
in Section 2(b).

      Section 1.  Definitions.  Capitalized terms used and not otherwise defined
herein shall have the meanings  set forth in that  certain  Securities  Purchase
Agreement (the "Purchase  Agreement"),  dated October 7, 2005, among the Company
and the purchasers signatory thereto.

<PAGE>

      Section 2. Exercise.

            a) Exercise of Warrant.  Exercise of the purchase rights represented
      by this Warrant may be made,  in whole or in part, at any time or times on
      or after the Initial  Exercise Date and on or before the Termination  Date
      by delivery to the Company of a duly executed facsimile copy of the Notice
      of Exercise  Form  annexed  hereto (or such other  office or agency of the
      Company as it may designate by notice in writing to the registered  Holder
      at the  address of such  Holder  appearing  on the books of the  Company);
      provided,  however,  within 5  Trading  Days of the date  said  Notice  of
      Exercise is  delivered  to the  Company,  if this  Warrant is exercised in
      full,  the Holder shall have  surrendered  this Warrant to the Company and
      the Company shall have received payment of the aggregate Exercise Price of
      the shares thereby  purchased by wire transfer or cashier's check drawn on
      a United States bank. Notwithstanding anything herein to the contrary, the
      Holder shall not be required to physically  surrender  this Warrant to the
      Company until the Holder has purchased all of the Warrant Shares available
      hereunder and the Warrant has been exercised in full. Partial exercises of
      this  Warrant  resulting  in purchases of a portion of the total number of
      Warrant Shares  available  hereunder shall have the effect of lowering the
      outstanding  number of Warrant Shares  purchasable  hereunder in an amount
      equal to the applicable number of Warrant Shares purchased. The Holder and
      the Company shall  maintain  records  showing the number of Warrant Shares
      purchased  and the date of such  purchases.  The Company shall deliver any
      objection to any Notice of Exercise  Form within 1 Business Day of receipt
      of such notice. In the event of any dispute or discrepancy, the records of
      the  Holder  shall be  controlling  and  determinative  in the  absence of
      manifest  error.  The  Holder  and any  assignee,  by  acceptance  of this
      Warrant,  acknowledge  and agree that, by reason of the provisions of this
      paragraph,  following  the  purchase  of a portion of the  Warrant  Shares
      hereunder,  the number of Warrant Shares available for purchase  hereunder
      at any given time may be less than the amount stated on the face hereof.

            b) Exercise Price. The exercise price of the Common Stock under this
      Warrant shall be $5.00,  subject to adjustment  hereunder  (the  "Exercise
      Price").

            c) Cashless Exercise. If at any time after one year from the date of
      issuance of this  Warrant  there is no  effective  Registration  Statement
      registering,  or no current  prospectus  available  for, the resale of the
      Warrant  Shares by the Holder,  then this Warrant may also be exercised at
      such time by means of a "cashless  exercise"  in which the Holder shall be
      entitled to receive a certificate  for the number of Warrant  Shares equal
      to the quotient obtained by dividing [(A-B) (X)] by (A), where:

            (A) = the Closing Price on the Trading Day immediately preceding the
                  date of such election;

            (B) = the Exercise Price of this Warrant, as adjusted; and

            (X) = the number of Warrant  Shares  issuable  upon exercise of this
                  Warrant in accordance  with the terms of this Warrant by means
                  of a cash exercise rather than a cashless exercise.

            Notwithstanding  anything herein to the contrary, on the Termination
      Date, this Warrant shall be automatically  exercised via cashless exercise
      pursuant to this Section 2(c).

            d) Exercise Limitations.

                                       2
<PAGE>

                  i.  Holder's  Restrictions.  The Company  shall not effect any
            exercise of this  Warrant,  and a Holder shall not have the right to
            exercise  any portion of this  Warrant,  pursuant to Section 2(c) or
            otherwise,  to the extent that after giving  effect to such issuance
            after exercise, such Holder (together with such Holder's affiliates,
            and any other person or entity acting as a group  together with such
            Holder  or any of such  Holder's  affiliates),  as set  forth on the
            applicable Notice of Exercise,  would  beneficially own in excess of
            4.99% of the  number  of  shares  of the  Common  Stock  outstanding
            immediately  after giving effect to such  issuance.  For purposes of
            the  foregoing  sentence,  the  number of  shares  of  Common  Stock
            beneficially  owned by such Holder and its affiliates  shall include
            the number of shares of Common Stock  issuable upon exercise of this
            Warrant with respect to which the  determination of such sentence is
            being made,  but shall  exclude the number of shares of Common Stock
            which  would  be  issuable  upon  (A)  exercise  of  the  remaining,
            nonexercised  portion  of this  Warrant  beneficially  owned by such
            Holder or any of its  affiliates  and (B) exercise or  conversion of
            the unexercised or nonconverted  portion of any other  securities of
            the Company  (including,  without  limitation,  any other  Warrants)
            subject to a limitation on  conversion or exercise  analogous to the
            limitation contained herein beneficially owned by such Holder or any
            of its  affiliates.  Except as set forth in the preceding  sentence,
            for purposes of this Section 2(d)(i),  beneficial ownership shall be
            calculated in accordance  with Section 13(d) of the Exchange Act and
            the  rules  and  regulations   promulgated   thereunder,   it  being
            acknowledged  by a Holder  that the Company is not  representing  to
            such Holder that such  calculation  is in  compliance  with  Section
            13(d) of the Exchange Act and such Holder is solely  responsible for
            any schedules required to be filed in accordance  therewith.  To the
            extent that the  limitation  contained in this Section 2(d) applies,
            the  determination  of  whether  this  Warrant  is  exercisable  (in
            relation to other  securities  owned by such  Holder) and of which a
            portion  of  this  Warrant  is  exercisable  shall  be in  the  sole
            discretion of a Holder,  and the  submission of a Notice of Exercise
            shall be deemed to be each  Holder's  determination  of whether this
            Warrant is  exercisable  (in relation to other  securities  owned by
            such Holder) and of which portion of this Warrant is exercisable, in
            each case subject to such aggregate percentage  limitation,  and the
            Company  shall have no  obligation to verify or confirm the accuracy
            of such determination.  In addition, a determination as to any group
            status as contemplated  above shall be determined in accordance with
            Section  13(d) of the  Exchange  Act and the rules  and  regulations
            promulgated  thereunder.  For  purposes  of this  Section  2(d),  in
            determining  the number of  outstanding  shares of Common  Stock,  a
            Holder may rely on the number of outstanding  shares of Common Stock
            as  reflected  in (x) the  Company's  most  recent Form 10-Q or Form
            10-K, as the case may be, (y) a more recent public  announcement  by
            the Company or (z) any other notice by the Company or the  Company's
            Transfer  Agent  setting  forth the number of shares of Common Stock
            outstanding.  Upon the  written  or oral  request  of a Holder,  the
            Company shall within two Trading Days confirm  orally and in writing
            to  such   Holder  the  number  of  shares  of  Common   Stock  then
            outstanding. In any case, the number of outstanding shares of Common
            Stock shall be determined  after giving effect to the  conversion or
            exercise of securities of the Company,  including  this Warrant,  by
            such Holder or its affiliates since the date as of which such number
            of outstanding  shares of Common Stock was reported.  The provisions
            of this Section  2(d) may be waived by such Holder,  at the election
            of such  Holder,  upon not less  than 61 days'  prior  notice to the
            Company,  and the  provisions of this Section 2(d) shall continue to
            apply until such 61st day (or such later date, as determined by such
            Holder,  as  may  be  specified  in  such  notice  of  waiver).  The
            provisions  of this  paragraph  shall  be  implemented  in a  manner
            otherwise than in strict  conformity  with the terms of this Section
            2(d) to correct this paragraph (or any portion  hereof) which may be
            defective  or  inconsistent   with  the  intended  4.99%  beneficial
            ownership   limitation  herein  contained  or  to  make  changes  or
            supplements  necessary or desirable to properly  give effect to such
            4.99% limitation.  The limitations contained in this paragraph shall
            apply to a successor  holder of this Warrant.  The holders of Common
            Stock of the  Company  shall be third  party  beneficiaries  of this
            Section 2(d) and the Company may not waive this Section 2(d) without
            the consent of holders of a majority of its Common Stock.

                                       3
<PAGE>

                  ii.  Trading  Market  Restrictions.  If the  Company  has  not
            obtained  Shareholder  Approval (as defined below), then the Company
            may not issue upon  exercise  of this  Warrant a number of shares of
            Common Stock, which, when aggregated with any shares of Common Stock
            issued pursuant to the Purchase Agreement and upon prior exercise of
            this or any other Warrant issued pursuant to the Purchase Agreement,
            would  exceed  19.999%  of the  number of  shares  of  Common  Stock
            outstanding  on the Trading Day  immediately  preceding  the Closing
            Date (such  number of shares,  the  "Issuable  Maximum").  If on any
            attempted  exercise of this Warrant,  the issuance of Warrant Shares
            would  exceed the  Issuable  Maximum and the Company  shall not have
            previously obtained the vote of shareholders to approve the issuance
            of shares of Common Stock in excess of the Issuable Maximum pursuant
            to the terms hereof (the "Shareholder  Approval"),  then the Company
            shall issue to the Holder  requesting a Warrant exercise such number
            of Warrant  Shares as may be issued below the Issuable  Maximum and,
            with  respect to the  remainder of the  aggregate  number of Warrant
            Shares,  this  Warrant  shall not be  exercisable  until and  unless
            Shareholder Approval has been obtained.

            e) Mechanics of Exercise.

                  i. Authorization of Warrant Shares. The Company covenants that
            all  Warrant  Shares  which may be issued  upon the  exercise of the
            purchase  rights  represented by this Warrant will, upon exercise of
            the purchase rights represented by this Warrant, be duly authorized,
            validly  issued,  fully  paid and  nonassessable  and free  from all
            taxes, liens and charges in respect of the issue thereof (other than
            taxes in respect of any transfer  occurring  contemporaneously  with
            such issue).

                                       4
<PAGE>

                  ii. Delivery of Certificates  Upon Exercise.  Certificates for
            shares  purchased  hereunder  shall be  transmitted  by the transfer
            agent of the Company to the Holder by  crediting  the account of the
            Holder's prime broker with the Depository  Trust Company through its
            Deposit  Withdrawal Agent Commission  ("DWAC") system if the Company
            is a participant in such system,  and otherwise by physical delivery
            to the  address  specified  by the Holder in the Notice of  Exercise
            within 3 Trading Days from the delivery to the Company of the Notice
            of  Exercise  Form,  surrender  of this  Warrant (if  required)  and
            payment of the aggregate Exercise Price as set forth above ("Warrant
            Share  Delivery  Date").  This Warrant  shall be deemed to have been
            exercised on the date the Exercise Price is received by the Company.
            The Warrant  Shares shall be deemed to have been issued,  and Holder
            or any  other  person so  designated  to be named  therein  shall be
            deemed to have  become a holder of  record  of such  shares  for all
            purposes,  as of the date the Warrant has been  exercised by payment
            to the Company of the  Exercise  Price and all taxes  required to be
            paid by the Holder,  if any,  pursuant to Section 2(e)(vii) prior to
            the issuance of such shares, have been paid.

                  iii.  Delivery of New Warrants Upon Exercise.  If this Warrant
            shall have been exercised in part, the Company shall, at the request
            of a Holder and upon surrender of this Warrant  certificate,  at the
            time of delivery of the  certificate  or  certificates  representing
            Warrant  Shares,  deliver  to Holder a new  Warrant  evidencing  the
            rights of Holder to purchase the  unpurchased  Warrant Shares called
            for by this Warrant,  which new Warrant shall in all other  respects
            be identical with this Warrant.

                  iv.  Rescission  Rights.  If the  Company  fails to cause  its
            transfer   agent  to  transmit  to  the  Holder  a  certificate   or
            certificates  representing  the  Warrant  Shares  pursuant  to  this
            Section 2(e)(iv) by the Warrant Share Delivery Date, then the Holder
            will have the right to rescind such exercise.

                  v.  Compensation  for  Buy-In on  Failure  to  Timely  Deliver
            Certificates  Upon  Exercise.   In  addition  to  any  other  rights
            available to the Holder,  if the Company fails to cause its transfer
            agent to  transmit  to the  Holder  a  certificate  or  certificates
            representing the Warrant Shares pursuant to an exercise on or before
            the Warrant Share  Delivery  Date, and if after such date the Holder
            is required by its broker to purchase (in an open market transaction
            or otherwise) shares of Common Stock to deliver in satisfaction of a
            sale  by  the  Holder  of  the  Warrant   Shares  which  the  Holder
            anticipated  receiving  upon such  exercise (a  "Buy-In"),  then the
            Company  shall (1) pay in cash to the Holder the amount by which (x)
            the Holder's total purchase price (including brokerage  commissions,
            if any) for the shares of Common Stock so purchased  exceeds (y) the
            amount obtained by multiplying (A) the number of Warrant Shares that
            the Company was required to deliver to the Holder in connection with
            the  exercise  at issue  times (B) the price at which the sell order
            giving rise to such purchase obligation was executed, and (2) at the
            option of the Holder,  either  reinstate  the portion of the Warrant
            and equivalent  number of Warrant Shares for which such exercise was
            not  honored or deliver to the Holder the number of shares of Common
            Stock that would have been  issued had the Company  timely  complied
            with its exercise and delivery obligations  hereunder.  For example,
            if the Holder  purchases  Common Stock having a total purchase price
            of $11,000 to cover a Buy-In with respect to an  attempted  exercise
            of shares of Common Stock with an  aggregate  sale price giving rise
            to such  purchase  obligation  of $10,000,  under  clause (1) of the
            immediately  preceding sentence the Company shall be required to pay
            the Holder  $1,000.  The Holder  shall  provide the Company  written
            notice  indicating  the amounts  payable to the Holder in respect of
            the  Buy-In,  together  with  applicable   confirmations  and  other
            evidence reasonably  requested by the Company.  Nothing herein shall
            limit a Holder's right to pursue any other remedies  available to it
            hereunder,  at law or in equity  including,  without  limitation,  a
            decree of specific performance and/or injunctive relief with respect
            to the Company's failure to timely deliver certificates representing
            shares of Common  Stock upon  exercise  of the  Warrant as  required
            pursuant to the terms hereof.

                                       5
<PAGE>

                  vi. No Fractional  Shares or Scrip.  No  fractional  shares or
            scrip  representing  fractional  shares  shall  be  issued  upon the
            exercise of this Warrant. As to any fraction of a share which Holder
            would  otherwise  be entitled to purchase  upon such  exercise,  the
            Company  shall  pay a cash  adjustment  in  respect  of  such  final
            fraction  in an  amount  equal to such  fraction  multiplied  by the
            Exercise Price.

                  vii. Charges, Taxes and Expenses. Issuance of certificates for
            Warrant  Shares shall be made  without  charge to the Holder for any
            issue or transfer tax or other incidental  expense in respect of the
            issuance of such certificate,  all of which taxes and expenses shall
            be paid by the Company, and such certificates shall be issued in the
            name of the  Holder or in such name or names as may be  directed  by
            the Holder;  provided,  however,  that in the event certificates for
            Warrant Shares are to be issued in a name other than the name of the
            Holder,   this  Warrant  when  surrendered  for  exercise  shall  be
            accompanied by the Assignment  Form attached hereto duly executed by
            the Holder; and the Company may require, as a condition thereto, the
            payment of a sum  sufficient  to  reimburse  it for any transfer tax
            incidental thereto.

                  viii.  Closing  of  Books.  The  Company  will not  close  its
            stockholder books or records in any manner which prevents the timely
            exercise of this Warrant, pursuant to the terms hereof.

                                       6
<PAGE>

      Section 3. Certain Adjustments.

            a) Stock  Dividends  and Splits.  If the Company,  at any time while
      this Warrant is outstanding: (A) pays a stock dividend or otherwise make a
      distribution or  distributions  on shares of its Common Stock or any other
      equity or equity equivalent  securities  payable in shares of Common Stock
      (which,  for  avoidance  of doubt,  shall not include any shares of Common
      Stock  issued by the Company  pursuant to this  Warrant),  (B)  subdivides
      outstanding  shares of Common  Stock into a larger  number of shares,  (C)
      combines  (including by way of reverse stock split)  outstanding shares of
      Common  Stock  into  a  smaller  number  of  shares,   or  (D)  issues  by
      reclassification of shares of the Common Stock any shares of capital stock
      of the Company,  then in each case the Exercise  Price shall be multiplied
      by a  fraction  of which the  numerator  shall be the  number of shares of
      Common Stock (excluding  treasury shares, if any) outstanding  immediately
      before  such  event and of which the  denominator  shall be the  number of
      shares of Common Stock  outstanding  immediately  after such event and the
      number  of  shares  issuable  upon  exercise  of  this  Warrant  shall  be
      proportionately  adjusted.  Any  adjustment  made pursuant to this Section
      3(a) shall  become  effective  immediately  after the record  date for the
      determination  of  stockholders  entitled  to  receive  such  dividend  or
      distribution  and shall become effective  immediately  after the effective
      date in the case of a subdivision, combination or re-classification.

            b) [INTENTIONALLY DELETED].

            c) Pro Rata Distributions.  If the Company, at any time prior to the
      Termination Date, shall distribute to all holders of Common Stock (and not
      to  Holders  of the  Warrants)  evidences  of its  indebtedness  or assets
      (including cash and cash dividends) or rights or warrants to subscribe for
      or purchase  any  security  other than the Common  Stock  (which  shall be
      subject to Section 3(b)),  then in each such case the Exercise Price shall
      be adjusted by multiplying the Exercise Price in effect  immediately prior
      to the record date fixed for  determination  of  stockholders  entitled to
      receive such  distribution by a fraction of which the denominator shall be
      the VWAP  determined as of the record date mentioned  above,  and of which
      the  numerator  shall be such VWAP on such  record  date less the then per
      share fair market  value at such record date of the portion of such assets
      or evidence of indebtedness  so distributed  applicable to one outstanding
      share of the Common Stock as  determined by the Board of Directors in good
      faith.  In either case the  adjustments  shall be described in a statement
      provided  to  the  Holder  of  the  portion  of  assets  or  evidences  of
      indebtedness so distributed or such subscription  rights applicable to one
      share of Common  Stock.  Such  adjustment  shall be made whenever any such
      distribution  is made and shall  become  effective  immediately  after the
      record date mentioned above.

                                       7
<PAGE>

            d)  Fundamental  Transaction.  If, at any time while this Warrant is
      outstanding,  (A) the Company effects any merger or  consolidation  of the
      Company with or into another  Person,  (B) the Company effects any sale of
      all or  substantially  all of its  assets  in one or a series  of  related
      transactions,  (C) any tender  offer or  exchange  offer  (whether  by the
      Company  or another  Person) is  completed  pursuant  to which  holders of
      Common Stock are  permitted  to tender or exchange  their shares for other
      securities,   cash  or   property,   or  (D)  the   Company   effects  any
      reclassification  of the Common  Stock or any  compulsory  share  exchange
      pursuant  to which  the  Common  Stock is  effectively  converted  into or
      exchanged  for other  securities,  cash or property  (in any such case,  a
      "Fundamental  Transaction"),  then,  upon any subsequent  exercise of this
      Warrant,  the Holder  shall have the right to  receive,  for each  Warrant
      Share that would have been issuable upon such exercise  immediately  prior
      to the occurrence of such  Fundamental  Transaction,  at the option of the
      Holder, (a) upon exercise of this Warrant,  the number of shares of Common
      Stock of the successor or acquiring  corporation or of the Company,  if it
      is the  surviving  corporation,  and  any  additional  consideration  (the
      "Alternate  Consideration")  receivable  upon  or  as  a  result  of  such
      reorganization,  reclassification, merger, consolidation or disposition of
      assets by a Holder of the number of shares of Common  Stock for which this
      Warrant  is  exercisable  immediately  prior  to such  event or (b) if the
      Company is acquired in an all cash transaction, cash equal to the value of
      this Warrant as  determined in accordance  with the  Black-Scholes  option
      pricing formula.  For purposes of any such exercise,  the determination of
      the  Exercise  Price  shall  be  appropriately  adjusted  to apply to such
      Alternate  Consideration  based on the amount of  Alternate  Consideration
      issuable  in  respect  of one  share of Common  Stock in such  Fundamental
      Transaction,  and the Company shall apportion the Exercise Price among the
      Alternate  Consideration  in a reasonable  manner  reflecting the relative
      value of any  different  components  of the  Alternate  Consideration.  If
      holders of Common Stock are given any choice as to the securities, cash or
      property  to be  received in a  Fundamental  Transaction,  then the Holder
      shall be given  the  same  choice  as to the  Alternate  Consideration  it
      receives  upon any exercise of this  Warrant  following  such  Fundamental
      Transaction.   To  the  extent   necessary  to  effectuate  the  foregoing
      provisions,  any  successor  to the  Company or  surviving  entity in such
      Fundamental Transaction shall issue to the Holder a new warrant consistent
      with  the  foregoing  provisions  and  evidencing  the  Holder's  right to
      exercise  such  warrant  into  Alternate  Consideration.  The terms of any
      agreement  pursuant to which a Fundamental  Transaction  is effected shall
      include terms  requiring any such successor or surviving  entity to comply
      with the  provisions  of this Section 3(d) and insuring  that this Warrant
      (or any such  replacement  security)  will be similarly  adjusted upon any
      subsequent transaction analogous to a Fundamental Transaction.

            e) Calculations. All calculations under this Section 3 shall be made
      to the nearest cent or the nearest 1/100th of a share, as the case may be.
      For  purposes  of this  Section  3, the  number of shares of Common  Stock
      deemed to be issued and outstanding as of a given date shall be the sum of
      the number of shares of Common Stock (excluding  treasury shares,  if any)
      issued and outstanding.

            f)  Voluntary  Adjustment  By  Company.  The Company may at any time
      during the term of this Warrant reduce the then current  Exercise Price to
      any amount and for any period of time deemed  appropriate  by the Board of
      Directors of the Company.

                                       8
<PAGE>

            g) Notice to Holders.

                  i. Adjustment to Exercise  Price.  Whenever the Exercise Price
            is adjusted  pursuant to this Section 3, the Company shall  promptly
            mail to each Holder a notice  setting forth the Exercise Price after
            such  adjustment  and setting  forth a brief  statement of the facts
            requiring  such  adjustment.  If the Company  issues a variable rate
            security, despite the prohibition thereon in the Purchase Agreement,
            the Company  shall be deemed to have issued  Common  Stock or Common
            Stock  Equivalents  at the lowest  possible  conversion  or exercise
            price at which such  securities may be converted or exercised in the
            case of a Variable  Rate  Transaction  (as  defined in the  Purchase
            Agreement).

                  ii.  Notice to Allow  Exercise  by Holder.  If (A) the Company
            shall declare a dividend (or any other  distribution)  on the Common
            Stock;  (B) the Company  shall declare a special  nonrecurring  cash
            dividend on or a  redemption  of the Common  Stock;  (C) the Company
            shall  authorize  the  granting to all  holders of the Common  Stock
            rights or  warrants  to  subscribe  for or  purchase  any  shares of
            capital stock of any class or of any rights; (D) the approval of any
            stockholders of the Company shall be required in connection with any
            reclassification of the Common Stock, any consolidation or merger to
            which  the  Company  is a  party,  any  sale or  transfer  of all or
            substantially  all of the assets of the Company,  of any  compulsory
            share  exchange  whereby the Common  Stock is  converted  into other
            securities,  cash or property;  (E) the Company shall  authorize the
            voluntary or involuntary  dissolution,  liquidation or winding up of
            the affairs of the Company;  then,  in each case,  the Company shall
            cause to be mailed to the  Holder  at its last  address  as it shall
            appear  upon  the  Warrant  Register  of the  Company,  at  least 20
            calendar  days  prior to the  applicable  record or  effective  date
            hereinafter  specified,  a  notice  stating  (x) the date on which a
            record  is  to  be  taken  for  the   purpose   of  such   dividend,
            distribution,  redemption, rights or warrants, or if a record is not
            to be taken, the date as of which the holders of the Common Stock of
            record to be entitled to such dividend,  distributions,  redemption,
            rights or  warrants  are to be  determined  or (y) the date on which
            such  reclassification,  consolidation,  merger,  sale,  transfer or
            share  exchange is expected to become  effective  or close,  and the
            date as of which it is expected  that holders of the Common Stock of
            record  shall be  entitled to  exchange  their  shares of the Common
            Stock for securities,  cash or other property  deliverable upon such
            reclassification,  consolidation,  merger,  sale,  transfer or share
            exchange;  provided  that the  failure  to mail  such  notice or any
            defect  therein  or in the  mailing  thereof  shall not  affect  the
            validity of the  corporate  action  required to be specified in such
            notice.  The Holder is entitled to exercise this Warrant  during the
            20-day period commencing on the date of such notice to the effective
            date of the event triggering such notice.

                                       9
<PAGE>

      Section 4. Transfer of Warrant.

            a)  Transferability.  Subject  to  compliance  with  any  applicable
      securities  laws and the  conditions  set forth in Sections  5(a) and 4(d)
      hereof and to the  provisions  of Section 4.1 of the  Purchase  Agreement,
      this Warrant and all rights  hereunder  are  transferable,  in whole or in
      part,  upon  surrender  of this  Warrant  at the  principal  office of the
      Company,  together with a written assignment of this Warrant substantially
      in the form  attached  hereto duly  executed by the Holder or its agent or
      attorney and funds  sufficient to pay any transfer  taxes payable upon the
      making of such  transfer.  Upon such  surrender  and,  if  required,  such
      payment,  the Company  shall execute and deliver a new Warrant or Warrants
      in the  name of the  assignee  or  assignees  and in the  denomination  or
      denominations specified in such instrument of assignment,  and shall issue
      to the assignor a new Warrant  evidencing  the portion of this Warrant not
      so assigned,  and this Warrant shall promptly be cancelled.  A Warrant, if
      properly  assigned,  may be  exercised by a new holder for the purchase of
      Warrant Shares without having a new Warrant issued.

            b) New Warrants.  This Warrant may be divided or combined with other
      Warrants upon presentation  hereof at the aforesaid office of the Company,
      together with a written notice  specifying the names and  denominations in
      which new Warrants are to be issued,  signed by the Holder or its agent or
      attorney.  Subject to  compliance  with Section  4(a),  as to any transfer
      which may be involved in such division or  combination,  the Company shall
      execute and deliver a new Warrant or Warrants in exchange  for the Warrant
      or Warrants to be divided or combined in accordance with such notice.

            c) Warrant Register.  The Company shall register this Warrant,  upon
      records to be  maintained  by the Company for that purpose  (the  "Warrant
      Register"), in the name of the record Holder hereof from time to time. The
      Company may deem and treat the  registered  Holder of this  Warrant as the
      absolute  owner  hereof  for the  purpose  of any  exercise  hereof or any
      distribution  to the Holder,  and for all other  purposes,  absent  actual
      notice to the contrary.

            d) Transfer  Restrictions.  If, at the time of the surrender of this
      Warrant in connection  with any transfer of this Warrant,  the transfer of
      this Warrant shall not be registered pursuant to an effective registration
      statement under the Securities Act and under  applicable  state securities
      or blue sky laws, the Company may require, as a condition of allowing such
      transfer (i) that the Holder or transferee  of this  Warrant,  as the case
      may be, furnish to the Company a written opinion of counsel (which opinion
      shall be in form, substance and scope customary for opinions of counsel in
      comparable  transactions)  to the effect  that such  transfer  may be made
      without  registration  under the Securities Act and under applicable state
      securities or blue sky laws,  (ii) that the holder or  transferee  execute
      and  deliver to the  Company an  investment  letter in form and  substance
      acceptable to the Company and (iii) that the  transferee be an "accredited
      investor" as defined in Rule 501(a)(1),  (a)(2), (a)(3), (a)(7), or (a)(8)
      promulgated under the Securities Act or a qualified institutional buyer as
      defined in Rule 144A(a) under the Securities Act.

                                       10
<PAGE>

      Section 5.  Miscellaneous.

            a) Title to Warrant.  Prior to the  Termination  Date and subject to
      compliance  with  applicable  laws and  Section  4 of this  Warrant,  this
      Warrant and all rights hereunder are transferable, in whole or in part, at
      the  office or agency of the  Company  by the  Holder in person or by duly
      authorized  attorney,  upon  surrender of this Warrant  together  with the
      Assignment Form annexed hereto  properly  endorsed.  The transferee  shall
      sign an investment letter in form and substance reasonably satisfactory to
      the Company.

            b) No Rights as Shareholder  Until  Exercise.  This Warrant does not
      entitle the Holder to any voting  rights or other rights as a  shareholder
      of the Company  prior to the exercise  hereof.  Upon the surrender of this
      Warrant and the payment of the aggregate  Exercise Price (or by means of a
      cashless exercise), the Warrant Shares so purchased shall be and be deemed
      to be issued to such  Holder as the record  owner of such shares as of the
      close of business on the later of the date of such surrender or payment.

            c) Loss,  Theft,  Destruction or Mutilation of Warrant.  The Company
      covenants  that  upon  receipt  by  the  Company  of  evidence  reasonably
      satisfactory to it of the loss,  theft,  destruction or mutilation of this
      Warrant or any stock  certificate  relating to the Warrant Shares,  and in
      case of loss,  theft or destruction,  of indemnity or security  reasonably
      satisfactory to it (which,  in the case of the Warrant,  shall not include
      the posting of any bond),  and upon  surrender  and  cancellation  of such
      Warrant or stock  certificate,  if  mutilated,  the Company  will make and
      deliver a new Warrant or stock  certificate  of like tenor and dated as of
      such cancellation, in lieu of such Warrant or stock certificate.

            d) Saturdays,  Sundays,  Holidays, etc. If the last or appointed day
      for the taking of any action or the  expiration  of any right  required or
      granted herein shall be a Saturday,  Sunday or a legal holiday,  then such
      action may be taken or such right may be exercised on the next  succeeding
      day not a Saturday, Sunday or legal holiday.

            e) Authorized  Shares.

                  The  Company  covenants  that during the period the Warrant is
            outstanding, it will reserve from its authorized and unissued Common
            Stock a  sufficient  number of shares to provide for the issuance of
            the Warrant  Shares upon the exercise of any  purchase  rights under
            this Warrant.  The Company  further  covenants  that its issuance of
            this Warrant shall constitute full authority to its officers who are
            charged with the duty of executing stock certificates to execute and
            issue the  necessary  certificates  for the Warrant  Shares upon the
            exercise of the purchase rights under this Warrant. The Company will
            take all such  reasonable  action as may be necessary to assure that
            such  Warrant  Shares  may be  issued  as  provided  herein  without
            violation  of  any  applicable   law  or   regulation,   or  of  any
            requirements  of the Trading  Market upon which the Common Stock may
            be listed.

                                       11
<PAGE>

                  Except  and to the  extent as waived  or  consented  to by the
            Holder,  the  Company  shall not by any action,  including,  without
            limitation, amending its certificate of incorporation or through any
            reorganization,   transfer   of   assets,   consolidation,   merger,
            dissolution,  issue or sale of  securities  or any  other  voluntary
            action,  avoid or seek to avoid the observance or performance of any
            of the terms of this  Warrant,  but will at all times in good  faith
            assist in the  carrying  out of all such  terms and in the taking of
            all such actions as may be necessary or  appropriate  to protect the
            rights of Holder as set forth in this  Warrant  against  impairment.
            Without  limiting the generality of the foregoing,  the Company will
            (a) not  increase  the par  value of any  Warrant  Shares  above the
            amount payable therefor upon such exercise immediately prior to such
            increase in par value,  (b) take all such action as may be necessary
            or  appropriate  in order that the  Company  may validly and legally
            issue fully paid and nonassessable  Warrant Shares upon the exercise
            of this  Warrant,  and (c) use  commercially  reasonable  efforts to
            obtain all such  authorizations,  exemptions  or  consents  from any
            public  regulatory  body  having  jurisdiction  thereof  as  may  be
            necessary  to enable the  Company to perform its  obligations  under
            this Warrant.

                  Before  taking any action which would result in an  adjustment
            in  the  number  of  Warrant   Shares  for  which  this  Warrant  is
            exercisable or in the Exercise  Price,  the Company shall obtain all
            such  authorizations or exemptions  thereof, or consents thereto, as
            may be necessary  from any public  regulatory  body or bodies having
            jurisdiction thereof.

            f)  Jurisdiction.   All  questions   concerning  the   construction,
      validity,   enforcement  and  interpretation  of  this  Warrant  shall  be
      determined in accordance with the provisions of the Purchase Agreement.

            g)  Restrictions.  The Holder  acknowledges  that the Warrant Shares
      acquired upon the exercise of this Warrant,  if not registered,  will have
      restrictions upon resale imposed by state and federal securities laws.

            h)  Nonwaiver  and  Expenses.  No course of  dealing or any delay or
      failure  to  exercise  any right  hereunder  on the part of  Holder  shall
      operate as a waiver of such right or otherwise  prejudice Holder's rights,
      powers or  remedies,  notwithstanding  the fact that all rights  hereunder
      terminate on the Termination  Date. If the Company willfully and knowingly
      fails to comply with any provision of this  Warrant,  which results in any
      material  damages to the  Holder,  the  Company  shall pay to Holder  such
      amounts as shall be sufficient to cover any costs and expenses  including,
      but not  limited  to,  reasonable  attorneys'  fees,  including  those  of
      appellate  proceedings,  incurred by Holder in collecting  any amounts due
      pursuant  hereto or in otherwise  enforcing  any of its rights,  powers or
      remedies hereunder.

            i)  Notices.  Any  notice,  request or other  document  required  or
      permitted to be given or  delivered to the Holder by the Company  shall be
      delivered  in  accordance  with  the  notice  provisions  of the  Purchase
      Agreement.

            j) Limitation of Liability.  No provision  hereof, in the absence of
      any  affirmative  action by Holder to  exercise  this  Warrant or purchase
      Warrant Shares,  and no enumeration  herein of the rights or privileges of
      Holder,  shall give rise to any liability of Holder for the purchase price
      of any Common  Stock or as a  stockholder  of the  Company,  whether  such
      liability is asserted by the Company or by creditors of the Company.

                                       12
<PAGE>

            k) Remedies.  Holder,  in addition to being entitled to exercise all
      rights granted by law, including recovery of damages,  will be entitled to
      specific  performance of its rights under this Warrant. The Company agrees
      that  monetary  damages  would not be adequate  compensation  for any loss
      incurred by reason of a breach by it of the provisions of this Warrant and
      hereby agrees to waive the defense in any action for specific  performance
      that a remedy at law would be adequate.

            l) Successors and Assigns.  Subject to applicable  securities  laws,
      this Warrant and the rights and obligations  evidenced  hereby shall inure
      to the benefit of and be binding  upon the  successors  of the Company and
      the  successors  and permitted  assigns of Holder.  The provisions of this
      Warrant are  intended  to be for the  benefit of all Holders  from time to
      time of this Warrant and shall be enforceable by any such Holder or holder
      of Warrant Shares.

            m)  Amendment.  This  Warrant  may be  modified  or  amended  or the
      provisions  hereof waived with the written  consent of the Company and the
      Holder.

            n) Severability.  Wherever possible,  each provision of this Warrant
      shall be  interpreted  in such manner as to be  effective  and valid under
      applicable  law, but if any  provision of this Warrant shall be prohibited
      by or invalid under applicable law, such provision shall be ineffective to
      the extent of such  prohibition or invalidity,  without  invalidating  the
      remainder of such provisions or the remaining provisions of this Warrant.

            o)  Headings.  The  headings  used  in  this  Warrant  are  for  the
      convenience of reference only and shall not, for any purpose,  be deemed a
      part of this Warrant.

                              ********************

                                       13
<PAGE>

            IN  WITNESS  WHEREOF,  the  Company  has caused  this  Warrant to be
executed by its officer thereunto duly authorized.

Dated: October 12, 2005

SPATIALIGHT, INC.

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

                                       14
<PAGE>

                               NOTICE OF EXERCISE

TO:   SPATIALIGHT, INC.

            (1) The  undersigned  hereby  elects to  purchase  ________  Warrant
Shares of the Company  pursuant to the terms of the  attached  Warrant  (only if
exercised in full),  and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.

            (2) Payment shall take the form of (check applicable box):

                  [ ] in lawful money of the United States; or

                  [ ] the  cancellation  of such number of Warrant  Shares as is
                  necessary,  in  accordance  with  the  formula  set  forth  in
                  subsection  2(c), to exercise this Warrant with respect to the
                  maximum number of Warrant Shares  purchasable  pursuant to the
                  cashless exercise procedure set forth in subsection 2(c).

            (3) Please issue a certificate  or  certificates  representing  said
Warrant  Shares  in the  name of the  undersigned  or in such  other  name as is
specified below:

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

The Warrant Shares shall be delivered to the following:

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

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

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

            (4) Accredited Investor. The undersigned is an "accredited investor"
as defined in  Regulation D  promulgated  under the  Securities  Act of 1933, as
amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:
                         -------------------------------------------------------
Signature of Authorized Signatory of Investing Entity:
                                                      --------------------------
Name of Authorized Signatory:
                             ---------------------------------------------------
Title of Authorized Signatory:
                              --------------------------------------------------
Date:
     ---------------------------------------------------------------------------

                                       15
<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

            FOR VALUE RECEIVED,  the foregoing  Warrant and all rights evidenced
thereby are hereby assigned to

                                               whose address is
-----------------------------------------------

---------------------------------------------------------------.

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

                                                Dated:
                                                      ----------------, -----

                Holder's Signature:
                                   -----------------------------
                Holder's Address:
                                   -----------------------------

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

Signature Guaranteed:
                     -------------------------------------------

NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

                                       16

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