Document:

Exhibit 4.3

                          SECURITIES PURCHASE AGREEMENT

         This Securities  Purchase  Agreement (this  "AGREEMENT") is dated as of
May __, 2003, among  SpatiaLight,  Inc., a New York corporation (the "COMPANY"),
and the purchasers  identified on the signature pages hereto (each a "PURCHASER"
and collectively the "PURCHASERS"); and

         WHEREAS,  subject  to the  terms  and  conditions  set  forth  in  this
Agreement and pursuant to Section 4(2) of the Securities Act (as defined below),
and Rule 506  promulgated  thereunder,  the Company desires to issue and sell to
the  Purchasers,  and each  Purchaser,  severally  and not  jointly,  desires to
purchase  from the Company in the  aggregate,  up to $8,000,000 of the Company's
Common Stock and certain  Warrants,  as more fully  described in this Agreement;
provided that such  aggregate  purchase price shall be reduced to the extent the
aggregate  number of Shares and  Warrant  Shares  does not  exceed  19.9% of the
Company's issued and outstanding Common Stock on the Closing Date.

         NOW,  THEREFORE,  IN CONSIDERATION of the mutual covenants contained in
this Agreement,  and for other good and valuable  consideration  the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

         1.1    DEFINITIONS.  In addition to the terms defined elsewhere in this
Agreement,  for all purposes of this  Agreement,  the  following  terms have the
meanings indicated in this Section 1.1:

                  "ACTION"  shall  have the  meaning  ascribed  to such  term in
         Section 3.1(j).

                  "AFFILIATE"  means any Person  that,  directly  or  indirectly
         through one or more intermediaries,  controls or is controlled by or is
         under  common  control  with a  Person  as such  terms  are used in and
         construed  under Rule 144. With respect to a Purchaser,  any investment
         fund or managed account that is managed on a discretionary basis by the
         same  investment  manager  as such  Purchaser  will be  deemed to be an
         Affiliate of such Purchaser.

                  "BUSINESS DAY" means any day except  Saturday,  Sunday and any
         day which shall be a federal  legal  holiday or a day on which  banking
         institutions in the State of New York are authorized or required by law
         or other governmental action to close.

                  "CLOSING"  means the closing of the  purchase  and sale of the
         Common Stock and Warrant pursuant to Section 2.1(a).

                  "CLOSING DATE" means the date of the Closing.

                  "CLOSING  PRICE"  means  on any  particular  date (a) the last
         reported  closing  price per share of Common  Stock on such date on the
         Trading  Market (as  reported  by  Bloomberg  L.P. at 4:15 PM (New York
         time),  or (b) if there is no such price on such date, then the closing
         price on the Trading Market on the date nearest preceding such date

<PAGE>

         (as  reported  by  Bloomberg  L.P.  at 4:15 PM (New York  time) for the
         closing price for regular  session  trading on such day), or (c) if the
         Common Stock is not then listed or quoted on the Trading  Market and if
         prices  for the Common  Stock are then  reported  in the "pink  sheets"
         published by the National  Quotation Bureau  Incorporated (or a similar
         organization  or  agency  succeeding  to  its  functions  of  reporting
         prices),  the most  recent bid price per share of the  Common  Stock so
         reported,  or (d) if the shares of Common  Stock are not then  publicly
         traded the fair market value of a share of Common  Stock as  determined
         by an appraiser  selected in good faith by the Purchasers of a majority
         in interest of the Shares then outstanding.

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON  STOCK" means the common  stock of the Company,  $0.01
         par value per share,  and any  securities  into which such common stock
         may hereafter be reclassified.

                  "COMMON STOCK EQUIVALENTS" means any securities of the Company
         or the  Subsidiaries  which would entitle the holder thereof to acquire
         at any time  Common  Stock,  including  without  limitation,  any debt,
         preferred stock, rights, options,  warrants or other instrument that is
         at any time convertible into or exchangeable for, or otherwise entitles
         the holder thereof to receive, Common Stock.

                  "DISCLOSURE SCHEDULES" means the Disclosure Schedules attached
         as ANNEX I hereto.

                  "EFFECTIVE   DATE"  means  the  date  that  the   Registration
         Statement is first declared effective by the Commission.

                  "ESCROW  AGENT" shall have the meaning set forth in the Escrow
         Agreement.

                  "ESCROW   AGREEMENT"   shall  mean  the  Escrow  Agreement  in
         substantially  the form of  EXHIBIT  A hereto  executed  and  delivered
         contemporaneously with this Agreement.

                  "EXCHANGE ACT" means the  Securities  Exchange Act of 1934, as
         amended.

                  "INTELLECTUAL PROPERTY RIGHTS" shall have the meaning ascribed
         to such term in Section 3.1(o).

                  "LIENS" means a lien, charge, security interest,  encumbrance,
         right of first refusal or other restriction.

                  "MATERIAL  ADVERSE EFFECT" shall have the meaning  ascribed to
         such term in Section 3.1(b).

                  "MATERIAL  PERMITS"  shall have the  meaning  ascribed to such
         term in Section 3.1(m).

                  "PER SHARE PURCHASE PRICE" equals 80% of the average of the 30
         Closing  Prices  immediately  prior to the  Closing  Date,  subject  to
         adjustment for reverse and forward

<PAGE>

         stock splits,  stock  dividends,  stock  combinations and other similar
         transactions  of the Common  Stock  that  occur  after the date of this
         Agreement.

                  "PERSON"  means an  individual  or  corporation,  partnership,
         trust,  incorporated  or  unincorporated  association,  joint  venture,
         limited  liability  company,  joint stock  company,  government  (or an
         agency or subdivision thereof) or other entity of any kind.

                  "REGISTRATION   STATEMENT"  means  a  registration   statement
         meeting the requirements set forth in the Registration Rights Agreement
         and covering the resale by the Purchasers of the Shares and the Warrant
         Shares.

                  "REGISTRATION  RIGHTS AGREEMENT" means the Registration Rights
         Agreement,  dated as of the date of this  Agreement,  among the Company
         and each Purchaser, in the form of EXHIBIT B hereto.

                  "RULE  144,"  means  Rule 144  promulgated  by the  Commission
         pursuant to the Securities  Act, as such Rules may be amended from time
         to time,  or any similar rule or  regulation  hereafter  adopted by the
         Commission having substantially the same effect as such Rule.

                  "SEC REPORTS" shall have the meaning  ascribed to such term in
         Section 3.1(h).

                  "SECURITIES"  means the Shares,  the  Warrants and the Warrant
         Shares.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "SHARES"  means the shares of Common  Stock issued or issuable
         to each Purchaser  pursuant to this Agreement  other than the shares of
         Common Stock issuable pursuant to Section 4.9.

                  "SUBSCRIPTION  AMOUNT"  means,  as to each  Purchaser  and the
         Closing,  the amounts set forth below such Purchaser's  signature block
         on  the  signature  page  hereto,  in  United  States  dollars  and  in
         immediately available funds.

                  "SUBSIDIARY"  shall have the meaning  ascribed to such term in
         Section 3.1(a).

                  "TRADING  DAY"  means (i) a day on which the  Common  Stock is
         traded on a Trading  Market,  or (ii) if the Common Stock is not listed
         on a Trading  Market,  a day on which the Common Stock is traded on the
         over-the-counter  market,  as reported by the OTC  Bulletin  Board,  or
         (iii) if the Common  Stock is not quoted on the OTC Bulletin  Board,  a
         day on which the Common Stock is quoted in the over-the-counter  market
         as reported  by the  National  Quotation  Bureau  Incorporated  (or any
         similar  organization  or agency  succeeding its functions of reporting
         prices);  provided,  that in the  event  that the  Common  Stock is not
         listed  or quoted as set  forth in (i),  (ii) and  (iii)  hereof,  then
         Trading Day shall mean a Business Day.

                  "TRADING  MARKET" means the following  markets or exchanges on
         which the Common  Stock is listed or quoted for  trading on the date in
         question: the American Stock

<PAGE>

         Exchange,  the New York Stock  Exchange,  the Nasdaq National Market or
         the Nasdaq SmallCap Market.

                  "TRANSACTION DOCUMENTS" means this Agreement, the Registration
         Rights  Agreement,  the Escrow  Agreement,  the  Warrants and any other
         documents or agreements  executed in connection  with the  transactions
         contemplated hereunder.

                  "WARRANTS"  means the Common Stock Purchase  Warrants,  in the
         form of EXHIBIT C, issuable to the  Purchasers  at the Closing,  with a
         term of exercise of 5 years and an exercise  price equal to 115% of the
         average of the 30 Closing Prices immediately prior to the Closing Date,
         subject to adjustment therein.

                  "WARRANT  SHARES"  means the shares of Common  Stock  issuable
         upon exercise of the Warrants.

                                   ARTICLE II.
                                PURCHASE AND SALE

         2.1    CLOSING.   At  the  Closing,   the  Purchasers  shall  purchase,
severally  and not  jointly,  and the  Company  shall  issue  and  sell,  in the
aggregate,  up to  $8,000,000  of  Common  Stock,  together  with the  Warrants;
PROVIDED,  HOWEVER,  that such aggregate  purchase price shall be reduced to the
extent the aggregate  number of Shares and Warrant  Shares does not exceed 19.9%
of the Company's issued and outstanding Common Stock on the Closing Date. If the
aggregate purchase price is reduced on account of the preceding  sentence,  each
Purchaser's  Subscription  Amount  shall  be  reduced  ratably  with  the  other
Purchasers.  Subject to the preceding  sentence,  each Purchaser  shall purchase
from the Company, and the Company shall issue and sell to each Purchaser,  (a) a
number of Shares equal to such  Purchaser's  Subscription  Amount divided by the
Per Share Purchase Price and (b) the Warrants as determined  pursuant to Section
2.2(a).  Upon  satisfaction  of the  conditions  set forth in Section  2.2,  the
Closing shall occur at the offices of the Escrow Agent,  or such other  location
as the parties shall mutually agree.

         2.2    CLOSING CONDITIONS.

                (a) At the  Closing  the  Company  shall  deliver or cause to be
         delivered to  the  Escrow   Agent  on  behalf  of  each  Purchaser  the
         following:

                  (i) this Agreement duly executed by the Company;

                  (ii) a certificate evidencing a number of Shares equal to such
         Purchaser's  Subscription  Amount  divided  by the Per  Share  Purchase
         Price, registered in the name of such Purchaser;

                  (iii) the  Registration  Rights Agreement duly executed by the
         Company;

                  (iv) the Escrow Agreement, duly executed by the Company;

                  (v)  Affiliates  of the Company shall have agreed to the terms
         hereof and wired at least $___________ through the Escrow Agent towards
         the purchase of the Securities issuable hereunder; and

<PAGE>

                  (vi) a  Warrant,  registered  in the  name of such  Purchaser,
         pursuant to which such Purchaser  shall have the right to acquire up to
         the number of shares of Common  Stock  equal to 25% of the Shares to be
         issued to such Purchaser at the Closing.

                (b) At the Closing each Purchaser shall deliver or  cause  to be
         delivered to the Escrow Agent the following:

                  (i) this Agreement duly executed by such;

                  (ii) such Purchaser's  Subscription  Amount as to such Closing
         by wire transfer to the account of the Escrow Agent;

                  (iii) the Escrow  Agreement,  duly executed by such Purchaser;
         and

                  (iv) the  Registration  Rights Agreement duly executed by such
         Purchaser.

                (c) All   representations  and  warranties  of the  other  party
         contained herein shall remain true and correct as of the Closing Date.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

         3.1    REPRESENTATIONS  AND  WARRANTIES  OF THE COMPANY.  Except as set
forth in the SEC Reports or under the  corresponding  section of the  Disclosure
Schedules  delivered   concurrently  herewith,  the  Company  hereby  makes  the
following  representations  and  warranties  as of the date hereof and as of the
Closing Date to each Purchaser:

                  (a)  SUBSIDIARIES.  The  Company  has no  direct  or  indirect
         subsidiaries.  The Company  owns,  directly or  indirectly,  all of the
         capital stock of each  Subsidiary  free and clear of any lien,  charge,
         security  interest,  encumbrance,  right  of  first  refusal  or  other
         restriction (collectively, "LIENS"), and all the issued and outstanding
         shares of capital stock of each  Subsidiary  are validly issued and are
         fully paid,  non-assessable  and free of preemptive and similar rights.
         If the Company has no subsidiaries,  then references in the Transaction
         Documents to the Subsidiaries will be disregarded.

                  (b)  ORGANIZATION AND  QUALIFICATION.  Each of the Company and
         the Subsidiaries is an entity duly incorporated or otherwise organized,
         validly   existing  and  in  good  standing   under  the  laws  of  the
         jurisdiction of its incorporation or organization (as applicable), with
         the  requisite  power and authority to own and use its  properties  and
         assets and to carry on its business as currently conducted. Neither the
         Company nor any  Subsidiary is in violation of any of the provisions of
         its  respective  certificate  or articles of  incorporation,  bylaws or
         other organizational or charter documents.  Each of the Company and the
         Subsidiaries  is duly  qualified  to  conduct  business  and is in good
         standing as a foreign  corporation or other entity in each jurisdiction
         in which the nature of the business  conducted or property  owned by it
         makes such qualification  necessary,  except where the failure to be so
         qualified  or in good  standing,  as the case may be, would not have or
         reasonably  be expected to result in (i) a material  adverse  effect on
         the

<PAGE>

         legality,  validity or enforceability of any Transaction Document, (ii)
         a  material  adverse  effect  on the  results  of  operations,  assets,
         business or financial  condition  of the Company and the  Subsidiaries,
         taken as a whole,  or (iii) adversely  impair the Company's  ability to
         perform in any material respect on a timely basis its obligations under
         any  Transaction  Document  (any of (i),  (ii) or  (iii),  a  "MATERIAL
         ADVERSE EFFECT").

                  (c) AUTHORIZATION;  ENFORCEMENT. The Company has the requisite
         corporate  power and  authority  to enter  into and to  consummate  the
         transactions  contemplated  by each of the  Transaction  Documents  and
         otherwise to carry out its  obligations  thereunder.  The execution and
         delivery of each of the  Transaction  Documents  by the Company and the
         consummation by it of the transactions  contemplated  thereby have been
         duly authorized by all necessary  action on the part of the Company and
         no further  action is required by the Company in connection  therewith.
         Each  Transaction  Document has been (or upon  delivery will have been)
         duly executed by the Company and, when delivered in accordance with the
         terms hereof,  will constitute the valid and binding  obligation of the
         Company  enforceable  against the Company in accordance  with its terms
         except   (i)  as   limited  by   applicable   bankruptcy,   insolvency,
         reorganization,  moratorium  and  other  laws  of  general  application
         affecting  enforcement  of  creditors'  rights  generally  and  (ii) as
         limited by laws relating to the  availability of specific  performance,
         injunctive relief or other equitable remedies.

                  (d) NO CONFLICTS.  The execution,  delivery and performance of
         the  Transaction  Documents by the Company and the  consummation by the
         Company of the  transactions  contemplated  thereby do not and will not
         (i)  conflict  with or violate any  provision  of the  Company's or any
         Subsidiary's certificate or articles of incorporation,  bylaws or other
         organizational  or  charter  documents,   or  (ii)  conflict  with,  or
         constitute  a default (or an event that with notice or lapse of time or
         both  would  become a default)  under,  or give to others any rights of
         termination,  amendment,  acceleration or cancellation (with or without
         notice, lapse of time or both) of, any agreement, credit facility, debt
         or  other  instrument  (evidencing  a  Company  or  Subsidiary  debt or
         otherwise)  or  other   understanding  to  which  the  Company  or  any
         Subsidiary  is a party or by which any property or asset of the Company
         or any Subsidiary is bound or affected,  or (iii) result in a violation
         of any law, rule, regulation,  order, judgment,  injunction,  decree or
         other  restriction of any court or governmental  authority to which the
         Company  or a  Subsidiary  is  subject  (including  federal  and  state
         securities laws and regulations),  or by which any property or asset of
         the Company or a Subsidiary is bound or affected; except in the case of
         each of clauses (ii) and (iii), such as would not have or reasonably be
         expected to result in a Material Adverse Effect.

                  (e)  FILINGS,  CONSENTS  AND  APPROVALS.  The  Company  is not
         required to obtain any consent, waiver, authorization or order of, give
         any notice to, or make any filing or  registration  with,  any court or
         other federal,  state, local or other  governmental  authority or other
         Person in connection  with the execution,  delivery and  performance by
         the  Company of the  Transaction  Documents,  other than (a) the filing
         with the Commission of the Registration  Statement,  the application(s)
         to each Trading Market for the listing of the Shares and Warrant Shares
         for  trading  thereon  in the time and  manner  required  thereby,  and
         applicable Blue Sky filings,  (b) such as have already been obtained or
         such  exemptive  filings as are  required  to be made under  applicable
         securities  laws,  (c) such

<PAGE>

         other  filings as may be required  following the Closing Date under the
         Securities Act, the Exchange Act and corporate law.

                  (f)  ISSUANCE  OF THE  SECURITIES.  The  Securities  are  duly
         authorized  and,  when  issued  and  paid  for in  accordance  with the
         Transaction Documents,  will be duly and validly issued, fully paid and
         nonassessable,  free and clear of all Liens.  The Company has  reserved
         from its duly authorized  capital stock the maximum number of shares of
         Common Stock issuable pursuant to this Agreement and the Warrants.

                  (g)  CAPITALIZATION.  The  capitalization of the Company is as
         described in the Company's most recent  periodic  report filed with the
         Commission.  The Company  has not issued any  capital  stock since such
         filing other than  pursuant to the exercise of employee  stock  options
         under the  Company's  stock  option  plans,  the  issuance of shares of
         Common  Stock to employees  pursuant to the  Company's  employee  stock
         purchase plan and pursuant to the conversion or exercise of outstanding
         Common  Stock  Equivalents.  No Person has any right of first  refusal,
         preemptive  right,  right of  participation,  or any  similar  right to
         participate  in  the  transactions   contemplated  by  the  Transaction
         Documents.  Except  as a  result  of  the  purchase  and  sale  of  the
         Securities,  there are no outstanding options,  warrants, script rights
         to  subscribe  to, calls or  commitments  of any  character  whatsoever
         relating to, or securities,  rights or obligations  convertible into or
         exchangeable  for, or giving any Person any right to  subscribe  for or
         acquire,  any  shares  of  Common  Stock,  or  contracts,  commitments,
         understandings  or  arrangements by which the Company or any Subsidiary
         is or may become bound to issue  additional  shares of Common Stock, or
         securities or rights  convertible or exchangeable into shares of Common
         Stock.  The  issue and sale of the  Securities  will not  obligate  the
         Company  to issue  shares of Common  Stock or other  securities  to any
         Person  (other than the  Purchasers)  and will not result in a right of
         any holder of Company  securities to adjust the  exercise,  conversion,
         exchange or reset price under such securities.

                  (h) SEC REPORTS;  FINANCIAL STATEMENTS.  The Company has filed
         all reports required to be filed by it under the Securities Act and the
         Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
         the two years  preceding the date hereof (or such shorter period as the
         Company  was  required  by law to file such  material)  (the  foregoing
         materials,  including the exhibits thereto, being collectively referred
         to  herein  as the "SEC  REPORTS"  and,  together  with the  Disclosure
         Schedules to this Agreement,  the  "DISCLOSURE  MATERIALS") on a timely
         basis or has received a valid  extension of such time of filing and has
         filed  any  such  SEC  Reports  prior  to the  expiration  of any  such
         extension.  As of their  respective  dates, the SEC Reports complied in
         all material  respects with the  requirements of the Securities Act and
         the  Exchange  Act and the  rules  and  regulations  of the  Commission
         promulgated  thereunder,  and  none of the  SEC  Reports,  when  filed,
         contained any untrue statement of a material fact or omitted to state a
         material  fact  required to be stated  therein or necessary in order to
         make the statements  therein, in light of the circumstances under which
         they were made, not misleading. The financial statements of the Company
         included  in the SEC  Reports  comply  in all  material  respects  with
         applicable accounting requirements and the rules and regulations of the
         Commission  with  respect  thereto  as in effect at the time of filing.
         Such  financial  statements  have  been  prepared  in  accordance  with
         generally accepted accounting  principles applied on a consistent basis
         during  the  periods  involved  ("GAAP"),  except  as may be  otherwise

<PAGE>

         specified in such financial  statements or the notes thereto and except
         that  unaudited  financial  statements  may not contain  all  footnotes
         required  by GAAP,  and fairly  present in all  material  respects  the
         financial position of the Company and its consolidated  subsidiaries as
         of and for the dates  thereof  and the results of  operations  and cash
         flows for the periods  then ended,  subject,  in the case of  unaudited
         statements, to normal, immaterial, year-end audit adjustments.

                  (i)  MATERIAL  CHANGES.  Since the date of the latest  audited
         financial  statements  included  within  the  SEC  Reports,  except  as
         disclosed in the SEC Reports,  (i) there has been no event,  occurrence
         or  development  that has had or that could  reasonably  be expected to
         result in a Material Adverse Effect,  (ii) the Company has not incurred
         any liabilities (contingent or otherwise) other than (A) trade payables
         and  accrued  expenses  incurred  in the  ordinary  course of  business
         consistent  with past practice and (B)  liabilities  not required to be
         reflected in the  Company's  financial  statements  pursuant to GAAP or
         required to be disclosed in filings made with the Commission, and (iii)
         the Company has not altered its method of accounting,  (iv) the Company
         has not declared or made any dividend or  distribution of cash or other
         property  to its  stockholders  or  purchased,  redeemed  or  made  any
         agreements  to purchase  or redeem any shares of its capital  stock and
         (v) the Company has not issued any equity  securities  to any  officer,
         director or Affiliate, except pursuant to existing Company stock option
         plans.  The Company does not have  pending  before the  Commission  any
         request for confidential treatment of information.

                  (j) LITIGATION.  Except as disclosed in the SEC Reports, there
         is no  action,  suit,  inquiry,  notice  of  violation,  proceeding  or
         investigation  pending or, to the knowledge of the Company,  threatened
         against  or  affecting  the  Company,  any  Subsidiary  or any of their
         respective properties before or by any court, arbitrator,  governmental
         or  administrative  agency or  regulatory  authority  (federal,  state,
         county,  local  or  foreign)  (collectively,  an  "ACTION")  which  (i)
         adversely  affects  or  challenges  the  legality,  validity  ------ or
         enforceability of any of the Transaction Documents or the Securities or
         (ii) could, if there were an unfavorable  decision,  have or reasonably
         be expected to result in a Material Adverse Effect. Neither the Company
         nor any Subsidiary, nor any director or officer thereof, is or has been
         the  subject  of any  Action  involving  a  claim  of  violation  of or
         liability  under federal or state  securities laws or a claim of breach
         of  fiduciary  duty.  There has not been,  and to the  knowledge of the
         Company, there is not pending or contemplated, any investigation by the
         Commission  involving the Company or any current or former  director or
         officer of the Company. The Commission has not issued any stop order or
         other order suspending the effectiveness of any registration  statement
         filed by the Company or any  Subsidiary  under the  Exchange Act or the
         Securities Act.

                  (k) LABOR  RELATIONS.  No material labor dispute exists or, to
         the  knowledge of the Company,  is imminent  with respect to any of the
         employees of the Company  which could  reasonably be expected to result
         in a Material Adverse Effect.

                  (l)  COMPLIANCE.  Except  as  disclosed  in the  SEC  Reports,
         neither the Company nor any  Subsidiary  (i) is in default  under or in
         violation of (and no event has occurred  that has not been waived that,
         with notice or lapse of time or both,  would result in a default by the
         Company or any Subsidiary under), nor has the Company or any

<PAGE>

         Subsidiary  received  notice of a claim that it is in default  under or
         that it is in violation of, any indenture,  loan or credit agreement or
         any other agreement or instrument to which it is a party or by which it
         or any of its  properties  is bound  (whether  or not such  default  or
         violation  has been  waived),  (ii) is in violation of any order of any
         court,  arbitrator  or  governmental  body,  or (iii) is or has been in
         violation  of any  statute,  rule  or  regulation  of any  governmental
         authority, including without limitation all foreign, federal, state and
         local laws  applicable to its  business,  except in the case of clauses
         (i),  (ii) and (iii) as would not have or  reasonably  be  expected  to
         result in a Material Adverse Effect.

                  (m)  REGULATORY  PERMITS.  The  Company  and the  Subsidiaries
         possess all  certificates,  authorizations  and  permits  issued by the
         appropriate  federal,  state, local or foreign  regulatory  authorities
         necessary to conduct  their  respective  businesses as described in the
         SEC Reports, except where the failure to possess such permits would not
         have or reasonably be expected to result in a Material  Adverse  Effect
         ("MATERIAL  PERMITS"),  and neither the Company nor any  Subsidiary has
         received  any  notice of  proceedings  relating  to the  revocation  or
         modification of any Material Permit.

                  (n) TITLE TO ASSETS.  The  Company and the  Subsidiaries  have
         good and  marketable  title in fee simple to all real property owned by
         them  that  is  material  to  the  business  of  the  Company  and  the
         Subsidiaries  and good and  marketable  title in all personal  property
         owned by them that is material  to the  business of the Company and the
         Subsidiaries,  in each  case free and clear of all  Liens,  except  for
         Liens as do not materially affect the value of such property and do not
         materially  interfere with the use made and proposed to be made of such
         property by the Company and the  Subsidiaries and Liens for the payment
         of  federal,  state or other  taxes,  the  payment  of which is neither
         delinquent  nor subject to penalties.  Any real property and facilities
         held under lease by the Company and the  Subsidiaries  are held by them
         under valid, subsisting and enforceable leases of which the Company and
         the Subsidiaries are in compliance.

                  (o) PATENTS AND  TRADEMARKS.  To the  knowledge of the Company
         and each  Subsidiary,  the Company and the  Subsidiaries  have, or have
         rights to use, all patents, patent applications,  trademarks, trademark
         applications,  service  marks,  trade names,  copyrights,  licenses and
         other  similar  rights  that  are  necessary  or  material  for  use in
         connection  with their  respective  businesses  as described in the SEC
         Reports  and which the failure to so have could have or  reasonably  be
         expected  to result in a Material  Adverse  Effect  (collectively,  the
         "INTELLECTUAL PROPERTY RIGHTS"). Neither the Company nor any Subsidiary
         has received a written  notice that the  Intellectual  Property  Rights
         used by the Company or any  Subsidiary  violates or infringes  upon the
         rights  of any  Person.  To the  knowledge  of the  Company,  all  such
         Intellectual Property Rights are enforceable.

                  (p) INSURANCE. The Company and the Subsidiaries are insured by
         insurers of recognized financial responsibility against such losses and
         risks  and  in  such  amounts  as  are  prudent  and  customary  in the
         businesses  in which the  Company  and the  Subsidiaries  are  engaged.
         Neither the Company nor any  Subsidiary  has any reason to believe that
         it will not be able to renew its  existing  insurance  coverage  as and
         when such coverage  expires or to obtain similar  coverage from similar
         insurers  as may be  necessary  to  continue  its  business  without  a
         significant increase in cost.

<PAGE>

                  (q) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES.  Except as set
         forth in the SEC  Reports,  none of the  officers or  directors  of the
         Company and, to the knowledge of the Company,  none of the employees of
         the Company is presently a party to any transaction with the Company or
         any  Subsidiary  (other than for  services as  employees,  officers and
         directors),  including  any  contract,  agreement or other  arrangement
         providing for the furnishing of services to or by, providing for rental
         of real  or  personal  property  to or  from,  or  otherwise  requiring
         payments to or from any officer,  director or such  employee or, to the
         knowledge of the Company, any entity in which any officer, director, or
         any  such  employee  has a  substantial  interest  or  is  an  officer,
         director,  trustee or partner,  in each case in excess of $60,000 other
         than  (a) for  payment  of  salary  or  consulting  fees  for  services
         rendered,  (b)  reimbursement  for  expenses  incurred on behalf of the
         Company and (c) for other  employee  benefits,  including  stock option
         agreements under any stock option plan of the Company.

                  (r) INTERNAL ACCOUNTING CONTROLS.  The Company and each of its
         subsidiaries   maintains  a  system  of  internal  accounting  controls
         sufficient to provide  reasonable  assurance that (i)  transactions are
         executed  in   accordance   with   management's   general  or  specific
         authorizations,  (ii)  transactions are recorded as necessary to permit
         preparation  of financial  statements  in  conformity  with GAAP and to
         maintain asset accountability, (iii) access to assets is permitted only
         in accordance with management's general or specific authorization,  and
         (iv) the  recorded  accountability  for  assets  is  compared  with the
         existing assets at reasonable intervals and appropriate action is taken
         with respect to any differences. The Company has established disclosure
         controls  and  procedures  (as defined in Exchange Act Rules 13a-14 and
         15d-14) for the Company and  designed  such  disclosures  controls  and
         procedures to ensure that material information relating to the Company,
         including its subsidiaries, is made known to the certifying officers by
         others within those entities,  particularly  during the period in which
         the Company's Form 10-K or 10-Q, as the case may be, is being prepared.
         The Company's  certifying  officers have evaluated the effectiveness of
         the Company's controls and procedures as of a date within 90 days prior
         to the filing date of the Form 10-Q for the quarter ended September 30,
         2002 (such date, the "EVALUATION  Date").  The Company presented in its
         most  recently  filed  Form  10-k or Form 10-Q the  conclusions  of the
         certifying  officers about the effectiveness of the disclosure controls
         and procedures  based on their  evaluations as of the Evaluation  Date.
         Since the Evaluation  Date,  there have been no significant  changes in
         the Company's internal controls (as such term is defined in Item 307(b)
         of  Regulation  S-K  under  the  Exchange  Act)  or,  to the  Company's
         knowledge,  in  other  factors  that  could  significantly  affect  the
         Company's internal controls.

                  (s) PRIVATE PLACEMENT. Assuming the accuracy of the Purchasers
         representations   and   warranties   set  forth  in  Section   3.2,  no
         registration  under the  Securities  Act is required  for the offer and
         sale of the Securities by the Company to the Purchasers as contemplated
         hereby.

                  (t) LISTING AND MAINTENANCE REQUIREMENTS. The Company has not,
         in the 12 months  preceding the date hereof,  received  notice from any
         Trading  Market  on which  the  Common  Stock is or has been  listed or
         quoted to the effect  that the  Company is not in  compliance  with the
         listing or maintenance requirements of such Trading Market.

<PAGE>

                  (u) NO INTEGRATED  OFFERING.  Neither the Company,  nor any of
         its  affiliates,  nor any  Person  acting on its or their  behalf  has,
         directly  or  indirectly,  made any offers or sales of any  security or
         solicited  any offers to buy any  security,  under  circumstances  that
         would cause this offering of the Securities to be integrated with prior
         offerings  by the Company for  purposes  of the  Securities  Act or any
         applicable   shareholder   approval  provisions,   including,   without
         limitation,  under  the  rules  and  regulations  of  any  exchange  or
         automated  quotation  system  on  which  any of the  securities  of the
         Company are listed or designated.

         3.2    REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:

                  (a) ORGANIZATION;  AUTHORITY. Such Purchaser is an entity duly
         organized,  validly existing and in good standing under the laws of the
         jurisdiction  of  its  organization  with  full  right,   corporate  or
         partnership  power and  authority to enter into and to  consummate  the
         transactions contemplated by the Transaction Documents and otherwise to
         carry out its  obligations  thereunder.  The  execution,  delivery  and
         performance by such Purchaser of the transactions  contemplated by this
         Agreement has been duly authorized by all necessary corporate action on
         the part of such Purchaser.  Each  Transaction  Document to which it is
         party has been duly executed by such  Purchaser,  and when delivered by
         such  Purchaser in accordance  with terms hereof,  will  constitute the
         valid and legally  binding  obligation of such  Purchaser,  enforceable
         against it in accordance with its terms.

                  (b) INVESTMENT  INTENT.  Such Purchaser  understands  that the
         Securities are  "restricted  securities"  and have not been  registered
         under the Securities Act or any applicable  state securities law and is
         acquiring  the   Securities  as  principal  for  its  own  account  for
         investment  purposes only and not with a view to or for distributing or
         reselling such Securities or any part thereof, has no present intention
         of  distributing  any of  such  Securities  and has no  arrangement  or
         understanding with any other persons regarding the distribution of such
         Securities  (this   representation   and  warranty  not  limiting  such
         Purchaser's  right to sell the Securities  pursuant to the Registration
         Statement or otherwise in compliance with applicable  federal and state
         securities laws). Such Purchaser is acquiring the Securities  hereunder
         in the ordinary  course of its business.  Such  Purchaser does not have
         any agreement or understanding, directly or indirectly, with any Person
         to distribute any of the Securities.

                  (c) PURCHASER  STATUS.  At the time such Purchaser was offered
         the  Securities,  it was,  and at the date hereof it is an  "accredited
         investor"  as defined in Rule 501(a)  under the  Securities  Act.  Such
         Purchaser is not required to be  registered  as a  broker-dealer  under
         Section 15 of the Exchange Act.

                  (d) EXPERIENCE OF SUCH PURCHASER. Such Purchaser, either alone
         or   together   with   its   representatives,   has   such   knowledge,
         sophistication  and experience in business and financial  matters so as
         to be capable  of  evaluating  the merits and risks of the  prospective
         investment in the Securities, and has so evaluated the merits and risks
         of such

<PAGE>

         investment.  Such  Purchaser  is able to bear the  economic  risk of an
         investment  in the  Securities  and,  at the present  time,  is able to
         afford a complete loss of such investment.

                  (e) GENERAL SOLICITATION. Such Purchaser is not purchasing the
         Securities as a result of any advertisement,  article,  notice or other
         communication  regarding  the  Securities  published in any  newspaper,
         magazine or similar  media or  broadcast  over  television  or radio or
         presented at any seminar or any other general  solicitation  or general
         advertisement.

                  (f) ACCESS TO INFORMATION. Such Purchaser acknowledges that it
         has reviewed the  Disclosure  Materials  and has been  afforded (i) the
         opportunity to ask such questions as it has deemed necessary of, and to
         receive  answers from,  representatives  of the Company  concerning the
         terms and  conditions of the offering of the  Securities and the merits
         and risks of investing in the  Securities;  (ii) access to  information
         about the Company and the Subsidiaries  and their respective  financial
         condition, results of operations, business, properties,  management and
         prospects sufficient to enable it to evaluate its investment; and (iii)
         the opportunity to obtain such additional  information that the Company
         possesses or can acquire without unreasonable effort or expense that is
         necessary to make an informed  investment  decision with respect to the
         investment.   Neither  such  inquiries  nor  any  other   investigation
         conducted by or on behalf of such Purchaser or its  representatives  or
         counsel shall modify, amend or affect such Purchaser's right to rely on
         the truth,  accuracy and  completeness of the Disclosure  Materials and
         the  Company's   representations   and  warranties   contained  in  the
         Transaction Documents.

                  (g)  INTERNATIONAL   ACTIONS.  Such  Purchaser   acknowledges,
         represents  and agrees  that no action has been or will be taken in any
         jurisdiction  outside  the  United  States by the  Company or any other
         agent on behalf of such  Purchaser that would permit an offering of the
         Securities,  or possession  or  distribution  of offering  materials in
         connection  with  the  issue  of the  Securities,  in any  jurisdiction
         outside the United  States.  If such  Purchaser is located  outside the
         United States,  it has or will take all actions  necessary for the sale
         of the Securities to comply with all applicable laws and regulations in
         each  foreign  jurisdiction  in which it  purchases,  offers,  sells or
         delivers  Securities  or has  in  its  possession  or  distributes  any
         offering material, in all cases at its own expense.

                  (h)  REGISTRATION  REQUIRED.  Such Purchaser  hereby covenants
         with the Company not to make any sale of the Shares, the Warrant Shares
         and the  Anti-Dilution  Shares  without  complying  with the provisions
         hereof  and  of  the  Registration   Rights   Agreement,   and  without
         effectively  causing  the  prospectus  delivery  requirement  under the
         Securities  Act to be satisfied  (unless such Purchaser is selling such
         Shares,  Warrant Shares or  Anti-Dilution  Shares in a transaction  not
         subject to the  prospectus  delivery  requirement),  and such Purchaser
         acknowledges   that  the   certificates   evidencing   the  Shares  and
         Anti-Dilution  Shares will be  imprinted  with a legend that  prohibits
         their transfer except in accordance therewith.

                  (i) NO TAX OR LEGAL ADVICE.  Such Purchaser  understands  that
         nothing in this Agreement,  any other Transaction Document or any other
         materials  presented to such Purchaser in connection  with the purchase
         and sale of the Securities constitutes legal, tax or investment advice.
         Such Purchaser has consulted such legal, tax and investment advisors as
         it, in its sole  discretion,  has deemed  necessary or  appropriate  in
         connection with its purchase of Securities.

         The Company  acknowledges  and agrees that each Purchaser does not make
or  has  not  made  any  representations  or  warranties  with  respect  to  the
transactions contemplated hereby other than those specifically set forth in this
Section 3.2.

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

         4.1    TRANSFER RESTRICTIONS.

                  (a) The Securities may only be disposed of in compliance  with
         state and federal  securities  laws. In connection with any transfer of
         Securities other than pursuant to an effective registration  statement,
         to the Company,  to an Affiliate of a Purchaser or in connection with a
         pledge as contemplated  in Section 4.1(b),  the Company may require the
         transferor  thereof  to  provide  to the  Company an opinion of counsel
         selected by the  transferor,  the form and  substance of which  opinion
         shall be  reasonably  satisfactory  to the Company,  to the effect that
         such  transfer  does  not  require  registration  of  such  transferred
         Securities  under the Securities  Act. As a condition of transfer,  any
         such transferee shall agree in writing to be bound by the terms of this
         Agreement and shall have the rights of a Purchaser under this Agreement
         and the Registration Rights Agreement.

                  (b) The  Purchasers  agree  to the  imprinting,  so long as is
         required by this Section  4.1(b),  of a legend on any of the Securities
         in the following form:

                  THESE  SECURITIES HAVE NOT 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.  THESE SECURITIES MAY BE
                  PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN  ACCOUNT WITH A
                  REGISTERED  BROKER-DEALER  OR  OTHER  LOAN  WITH  A  FINANCIAL
                  INSTITUTION  THAT IS AN  "ACCREDITED  INVESTOR"  AS DEFINED IN
                  RULE 501(a) UNDER THE SECURITIES ACT.

                  The Company  acknowledges and agrees that a Purchaser may from
         time to time pledge  pursuant to a bona fide  margin  agreement  with a
         registered broker-dealer or grant a security interest in some or all of
         the  Securities  to a  financial  institution  that  is an  "accredited
         investor"  as defined in Rule 501(a) under the  Securities  Act and, if
         required

<PAGE>

         under  the  terms of such  arrangement,  such  Purchaser  may  transfer
         pledged or secured Securities to the pledgees or secured parties.  Such
         a pledge or  transfer  would not be subject to  approval of the Company
         and no legal opinion of legal counsel of the pledgee,  secured party or
         pledgor shall be required in connection  therewith.  Further, no notice
         shall  be  required  of such  pledge.  At the  appropriate  Purchaser's
         expense,   the  Company  will  execute  and  deliver  such   reasonable
         documentation   as  a  pledgee  or  secured  party  of  Securities  may
         reasonably  request  in  connection  with a pledge or  transfer  of the
         Securities,  including  the  preparation  and  filing  of any  required
         prospectus  supplement  under Rule  424(b)(3) of the  Securities Act or
         other applicable provision of the Securities Act to appropriately amend
         the list of Selling Stockholders thereunder.

                  (c)  Certificates  evidencing  the Shares and  Warrant  Shares
         shall not contain any legend (including the legend set forth in Section
         4.1(b)), (i) while a registration statement (including the Registration
         Statement)  covering the resale of such security is effective under the
         Securities  Act, or (ii)  following  any sale of such Shares or Warrant
         Shares  pursuant to Rule 144, or (iii) if such Shares or Warrant Shares
         are eligible for sale under Rule 144(k),  or (iv) if such legend is not
         required under applicable requirements of the Securities Act (including
         judicial  interpretations and pronouncements issued by the Staff of the
         Commission).  The  Company  shall  cause its  counsel  to issue a legal
         opinion to the Company's  transfer  agent  promptly after the Effective
         Date if required by the Company's  transfer agent to effect the removal
         of  the  legend  hereunder.  If  all or any  portion  of a  Warrant  is
         exercised at a time when there is an effective  registration  statement
         to cover the resale of the Warrant Shares, such Warrant Shares shall be
         issued free of all  legends.  The Company  agrees  that  following  the
         Effective  Date or at such time as such  legend  is no longer  required
         under this  Section  4.1(c),  it will,  no later than nine Trading Days
         following  the delivery by a Purchaser to the Company or the  Company's
         transfer agent of a certificate  representing Shares or Warrant Shares,
         as the case may be, issued with a restrictive legend,  deliver or cause
         to be  delivered  to such  Purchaser a  certificate  representing  such
         Securities  that is free from all  restrictive  and other legends.  The
         Company may not make any  notation on its records or give  instructions
         to any transfer agent of the Company that enlarge the  restrictions  on
         transfer set forth in this Section.

         4.2    FURNISHING  OF  INFORMATION.  As  long  as  any  Purchaser  owns
Securities,  the  Company  covenants  to timely  file (or obtain  extensions  in
respect  thereof  and file  within the  applicable  grace  period)  all  reports
required  to be filed by the  Company  after  the date  hereof  pursuant  to the
Exchange  Act.  Upon the request of any such holder of  Securities,  the Company
shall  deliver  to such  holder a  written  certification  of a duly  authorized
officer as to whether it has complied  with the preceding  sentence.  As long as
any Purchaser  owns  Securities,  if the Company is not required to file reports
pursuant to such laws,  it will prepare and furnish to the  Purchasers  and make
publicly  available  in  accordance  with Rule  144(c)  such  information  as is
required for the Purchasers to sell the  Securities  under Rule 144. The Company
further  covenants  that it will  take  such  further  action  as any  holder of
Securities may reasonably request,  all to the extent required from time to time
to enable such Person to sell such  Securities  without  registration  under the
Securities Act within the limitation of the exemptions provided by Rule 144.

         4.3    INTEGRATION.  The  Company  shall  not  sell,  offer for sale or
solicit  offers to buy or  otherwise  negotiate  in respect of any  security (as
defined in Section 2 of the  Securities  Act) that

<PAGE>

would be  integrated  with the offer or sale of the  Securities in a manner that
would  require  the  registration  under the  Securities  Act of the sale of the
Securities to the Purchasers.

         4.4    SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall, within
3 Trading  Days of the  Closing  Date,  issue a press  release or file a Current
Report  on Form  8-K,  in each  case  reasonably  acceptable  to each  Purchaser
disclosing the transactions  contemplated hereby and make such other filings and
notices in the manner and time required by the Commission.  The Company and each
Purchaser  shall  consult  with each other in issuing  any press  releases  with
respect to the transactions contemplated hereby, and neither the Company nor any
Purchaser  shall issue any such press release or otherwise  make any such public
statement  without the prior  consent of the Company,  with respect to any press
release of any Purchaser,  or without the prior consent of each Purchaser,  with
respect  to  any  press  release  of  the  Company,   which  consent  shall  not
unreasonably be withheld, except if such disclosure is required by law, in which
case the  disclosing  party  shall  promptly  provide the other party with prior
notice of such public statement or communication. Notwithstanding the foregoing,
the Company shall not publicly  disclose the name of any  Purchaser,  or include
the name of any Purchaser in any filing with the  Commission  or any  regulatory
agency or Trading  Market,  without the prior written consent of such Purchaser,
except  (i) as  required  by  federal  securities  law in  connection  with  the
registration  statement  contemplated by the  Registration  Rights Agreement and
(ii)  to the  extent  such  disclosure  is  required  by law or  Trading  Market
regulations,  in which case the Company shall provide the Purchasers  with prior
notice of such disclosure permitted under subclause (i) or (ii).

         4.5    NON-PUBLIC  INFORMATION.  The Company  covenants and agrees that
neither it nor any other Person  acting on its behalf will provide any Purchaser
or its  agents  or  counsel  with  any  information  that the  Company  believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser shall
be  relying  on the  foregoing  representations  in  effecting  transactions  in
securities of the Company.

         4.6    USE OF PROCEEDS. The Company shall use the net proceeds from the
sale of the Securities  hereunder for working  capital  purposes and not for the
satisfaction  of any portion of the Company's  debt (other than payment of trade
payables in the ordinary course of the Company's  business and prior practices),
to redeem any Company  equity or  equity-equivalent  securities or to settle any
outstanding litigation.

         4.7    RESERVATION OF COMMON STOCK.  As of the date hereof, the Company
has reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive  rights, a sufficient number of shares of Common Stock
for the  purpose of  enabling  the  Company  to issue  Shares  pursuant  to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants.

         4.8    LISTING  OF  COMMON  STOCK.  The  Company  hereby  agrees to use
commercially  reasonably  efforts to maintain the listing of the Common Stock on
the Trading Market, and as soon as reasonably  practicable following the Closing
(but not later than the earlier of the Effective Date and the first  anniversary
of the Closing  Date) to list the  applicable  Shares and Warrant  Shares on the
Trading Market.  The Company further agrees,  if the Company applies to have the
Common  Stock  traded on any  other  Trading  Market,  it will  include  in such
application the Shares and the Warrant  Shares,  and will take such other action
as is necessary or desirable in

<PAGE>

the opinion of the Investors to cause the Shares and Warrant Shares to be listed
on such other Trading Market as promptly as possible.  The Company will take all
action  reasonably  necessary  to continue the listing and trading of its Common
Stock on a Trading  Market and will comply in all  respects  with the  Company's
reporting, filing and other obligations under the bylaws or rules of the Trading
Market.

         4.9    MILESTONE  SHARES.  If, on the one year  anniversary date of the
this  Agreement,  the  Company's  annual  rate of  revenues  has not reached $15
million,  as determined by the revenues  generated  during the 3 months prior to
such anniversary date and C is greater than B (as defined below,  each Purchaser
shall have the right to  purchase,  for a purchase  price per share equal to the
par  value  of the  Common  Stock,  an  additional  number  of  shares  equal to
[A*(C-B)]/B where:

        A = number of Underlying  Shares  issuable upon exercise of  unexercised
            Warrants  held by such  Purchaser  on the date of  exercise  by such
            Purchaser hereunder;

        B = 115% of the average of the 30 Closing  Prices  immediately  prior to
            such anniversary date (the "ANNIVERSARY MARKET PRICE"); and

        C = the then exercise price of the Warrants.

         Any Purchaser  exercising its rights  hereunder  shall also be issued a
warrant to purchase up to 25% of the shares of Common Stock  issued  pursuant to
the preceding  sentence with an exercise price equal to 115% of the  Anniversary
Market  Price,  which  warrant  shall  otherwise  be  identical  to  that of the
Warrants.  The Purchasers must exercise their rights hereunder within 15 days of
the anniversary  date by written notice to the Company or such right shall be of
no further  force and  effect.  At the time of the  issuance,  the  Company  may
require each investor to enter into  customary  subscription  agreements,  which
agreements  shall be  reasonably  acceptable  to the  Purchasers.  The shares of
Common  Stock  issuable  hereunder  shall  not be  subject  to the  terms of the
Registration  Statement,  however, if at any time during the 12 months following
the  issuance  hereunder,  there  is not  an  effective  registration  statement
covering all of the shares of Common Stock  issuable  hereunder  and the Company
shall determine to prepare and file with the Commission a registration statement
relating to an offering  for its own account or the account of others  under the
Securities Act of any of its equity  securities,  other than on Form S-4 or Form
S-8 (each as  promulgated  under the Securities  Act) or their then  equivalents
relating  to equity  securities  to be  issued  solely  in  connection  with any
acquisition  of  any  entity  or  business  or  equity  securities  issuable  in
connection  with the stock  option or other  employee  benefit  plans,  then the
Company shall send to each Purchaser a written notice of such determination and,
if within fifteen days after the date of such notice,  any such Purchaser  shall
so request in writing, the Company shall include in such registration  statement
all or any part of such shares such Purchaser requests to be registered, subject
to customary  underwriter  cutbacks  applicable  to all holders of  registration
rights.

         4.10   NO  SHORT SALES.  The Purchasers and their Affiliates shall not
engage in short sales of the Common Stock (as defined in applicable SEC and NASD
rules) during the term of this Agreement.

<PAGE>

                                   ARTICLE V.
                                  MISCELLANEOUS

         5.1    FEES  AND  EXPENSES.  Except  as  otherwise  set  forth  in this
Agreement, each party shall pay the fees and expenses of its advisers,  counsel,
accountants and other experts,  if any, and all other expenses  incurred by such
party  incident  to  the  negotiation,   preparation,  execution,  delivery  and
performance of this  Agreement.  The Company shall pay all stamp and other taxes
and duties levied in connection with the sale of the Securities.

         5.2    ENTIRE AGREEMENT.  The Transaction Documents,  together with the
exhibits and schedules thereto,  contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

         5.3    NOTICES.   Any  and  all  notices  or  other  communications  or
deliveries  required or permitted to be provided  hereunder  shall be in writing
and  shall be deemed  given and  effective  on the  earliest  of (a) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number  specified in this Section  prior to 6:30 p.m.  (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or  communication  is delivered  via  facsimile at the  facsimile
number  specified  in this  Section on a day that is not a Trading  Day or later
than 6:30 p.m.  (New York City time) on any  Trading  Day,  (c) the  Trading Day
following the date of mailing, if sent by U.S. nationally  recognized  overnight
courier service,  or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and  communications  shall be
as set forth on the signature pages attached hereto.

         5.3    AMENDMENTS;  WAIVERS.  No  provision  of this  Agreement  may be
waived  or  amended  except in a written  instrument  signed,  in the case of an
amendment, by the Company and each Purchaser or, in the case of a waiver, by the
party against whom  enforcement  of any such waiver is sought.  No waiver of any
default  with  respect  to any  provision,  condition  or  requirement  of  this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any  subsequent  default  or a  waiver  of any  other  provision,  condition  or
requirement  hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.

         5.4    CONSTRUCTION.  The headings herein are for convenience  only, do
not  constitute  a part of this  Agreement  and  shall not be deemed to limit or
affect any of the provisions hereof. The language used in this Agreement will be
deemed to be the language  chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

         5.5    SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted  assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written  consent of each  Purchaser.  Any Purchaser may assign
any or all of its  rights  under  this  Agreement  to any  Person  to whom  such
Purchaser  assigns or transfers any Securities,  provided such transferee agrees
in  writing to be bound,  with  respect to the  transferred  Securities,  by the
provisions hereof that apply to the "Purchasers".

<PAGE>

         5.6    NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person.

         5.7    GOVERNING   LAW.  All  questions  concerning  the  construction,
validity,  enforcement and interpretation of the Transaction  Documents shall be
governed by and construed  and enforced in accordance  with the internal laws of
the State of New York,  without  regard to the  principles  of  conflicts of law
thereof.   Each  party  agrees  that  all  legal   proceedings   concerning  the
interpretations,  enforcement  and defense of the  transactions  contemplated by
this Agreement and any other  Transaction  Documents  (whether brought against a
party hereto or its respective affiliates,  directors,  officers,  shareholders,
employees  or agents)  shall be commenced  exclusively  in the state and federal
courts  sitting in the City of New York.  Each party hereto  hereby  irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, New York for the adjudication of any dispute  hereunder or
in connection herewith or with any transaction  contemplated hereby or discussed
herein  (including with respect to the enforcement of the any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that it is not  personally  subject  to the
jurisdiction  of any such  court,  that  such  suit,  action  or  proceeding  is
improper.  Each party  hereto  hereby  irrevocably  waives  personal  service of
process  and  consents  to  process  being  served in any such  suit,  action or
proceeding  by  mailing a copy  thereof  via  registered  or  certified  mail or
overnight  delivery  (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient  service of process and notice  thereof.  Nothing
contained  herein shall be deemed to limit in any way any right to serve process
in any manner  permitted by law. Each party hereto  (including  its  affiliates,
agents,  officers,  directors and employees) hereby  irrevocably  waives, to the
fullest extent  permitted by applicable  law, any and all right to trial by jury
in any legal  proceeding  arising out of or relating  to this  Agreement  or the
transactions  contemplated  hereby.  If either party shall commence an action or
proceeding  to  enforce  any  provisions  of a  Transaction  Document,  then the
prevailing  party in such action or proceeding  shall be reimbursed by the other
party for its  attorneys  fees and other costs and  expenses  incurred  with the
investigation, preparation and prosecution of such action or proceeding.

         5.8    SURVIVAL.   The  representations,   warranties,  agreements  and
covenants contained herein shall survive for one year after the Closing.

         5.9    EXECUTION.  This  Agreement  may be  executed  in  two  or  more
counterparts,  all of which when taken  together shall be considered one and the
same agreement and shall become effective when  counterparts have been signed by
each party and  delivered  to the other  party,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed)  with the same force and effect as if such  facsimile  signature  page
were an original thereof.

         5.10    SEVERABILITY.  If any provision of this Agreement is held to be
invalid or unenforceable in any respect,  the validity and enforceability of the
remaining  terms  and  provisions  of  this  Agreement  shall  not in any way be
affected or impaired  thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor,  and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

<PAGE>

         5.11   REPLACEMENT  OF  SECURITIES.  If any  certificate or instrument
evidencing any Securities is mutilated,  lost, stolen or destroyed,  the Company
shall  issue or cause to be issued in  exchange  and  substitution  for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument,  but only upon receipt of evidence reasonably satisfactory to the
Company  of such  loss,  theft  or  destruction  and  customary  and  reasonable
indemnity,  if requested.  The  applicants  for a new  certificate or instrument
under  such  circumstances  shall  also  pay any  reasonable  third-party  costs
associated with the issuance of such replacement Securities.

         5.12   REMEDIES.  In addition to being entitled to exercise all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  described in the  foregoing  sentence and hereby agrees to waive in
any action for specific  performance  of any such  obligation the defense that a
remedy at law would be adequate.

         5.13   PAYMENT  SET ASIDE.  To the  extent  that the  Company  makes a
payment or payments to any Purchaser  pursuant to any Transaction  Document or a
Purchaser  enforces or  exercises  its rights  thereunder,  and such  payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated,  declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company,  a trustee,  receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable  cause of action),  then to the extent of any such  restoration
the  obligation  or part thereof  originally  intended to be satisfied  shall be
revived and  continued  in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

         5.14   INDEPENDENT  NATURE OF PURCHASERS'  OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations of any other  Purchaser,  and no Purchaser  shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser under any Transaction  Document.  Nothing  contained  herein or in any
Transaction  Document,  and no action taken by any Purchaser  pursuant  thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint  venture  or any other kind of entity,  or create a  presumption  that the
Purchasers  are in any way acting in concert or as a group with  respect to such
obligations or the transactions  contemplated by the Transaction Document.  Each
Purchaser  shall be  entitled to  independently  protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other  Transaction  Documents,  and it shall not be necessary  for any other
Purchaser  to be  joined  as an  additional  party  in any  proceeding  for such
purpose.  Each Purchaser has been  represented by its own separate legal counsel
in their review and  negotiation of the  Transaction  Documents.  For reasons of
administrative  convenience only,  Purchasers and their respective  counsel have
chosen to communicate with the Company through  __________.  ______________ does
not  represent all of the  Purchasers  but only  _____________.  The Company has
elected to provide all Purchasers with the same terms and Transaction  Documents
for the  convenience of the Company and not because it was required or requested
to do so by the Purchasers.

                            (SIGNATURE PAGE FOLLOWS)

<PAGE>

<PAGE>

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Securities Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

SPATIALIGHT, INC.                                      ADDRESS FOR NOTICE:
                                                       ------------------

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

<PAGE>

          [PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

[PURCHASER]                                            ADDRESS FOR NOTICE:
                                                       ------------------

By:
    ------------------------------
    Name:                                              Fax:
    Title:                                             Attn:

Subscription Amount: $

With a copy to:

                           [SIGNATURE PAGE CONTINUES]

<PAGE>

          [PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

[PURCHASER]                                            ADDRESS FOR NOTICE:
                                                       -------------------

By:
   -------------------------------                     Attn:
   Name:                                               Tel:
   Title:

Subscription Amount:  $EXHIBIT B

                          REGISTRATION RIGHTS AGREEMENT

                  This Registration  Rights Agreement (this "AGREEMENT") is made
and entered into as of May __, 2003, by and among SpatiaLight,  Inc., a New York
corporation  (the  "COMPANY"),  and  the  investors  signatory  hereto  (each  a
"PURCHASER" and collectively, the "PURCHASERS").

                  This  Agreement is made  pursuant to the  Securities  Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers (the
"PURCHASE AGREEMENT").

                  The Company and the Purchasers hereby agree as follows:

         1.       DEFINITIONS.  Capitalized terms used and not otherwise defined
herein that are defined in the Purchase  Agreement shall have the meanings given
such terms in the Purchase Agreement.  As used in this Agreement,  the following
terms shall have the following meanings:

                  "EFFECTIVENESS  DATE" means,  with respect to the Registration
         Statement  required  to be filed  hereunder,  the  earlier  of the 90th
         calendar  day  following  the Closing  Date (120th  calendar day in the
         event of a full review by the Commission) and (b) the fifth Trading Day
         following  the date on which the Company is notified by the  Commission
         that the  Registration  Statement  will not be reviewed or is no longer
         subject to further review and comments.

                  "EFFECTIVENESS  PERIOD"  shall have the  meaning  set forth in
         Section 2(a).

                  "FILING  DATE"  means,   with  respect  to  the   Registration
         Statement  required  to be  filed  hereunder,  the  30th  calendar  day
         following the Closing Date.

                  "HOLDER" or "HOLDERS" means the holder or holders, as the case
         may be, from time to time of Registrable Securities.

                  "INDEMNIFIED  PARTY"  shall  have  the  meaning  set  forth in
         Section 5(c).

                  "INDEMNIFYING  PARTY"  shall  have the  meaning  set  forth in
         Section 5(c).

                  "LOSSES" shall have the meaning set forth in Section 5(a).

                  "PROCEEDING" means an action,  claim,  suit,  investigation or
         proceeding (including,  without limitation, an investigation or partial
         proceeding, such as a deposition), whether commenced or threatened.

                  "PROSPECTUS" means the prospectus included in the Registration
         Statement  (including,  without limitation,  a prospectus that includes
         any information  previously  omitted from a prospectus filed as part of
         an  effective   registration  statement  in  reliance  upon  Rule  430A
         promulgated  under the Securities  Act), as amended or  supplemented by
         any prospectus supplement, with respect to the terms of the offering of
         any portion of the Registrable  Securities  covered by the Registration
         Statement,  and all other amendments

<PAGE>

         and supplements to the Prospectus, including post-effective amendments,
         and all material incorporated by reference or deemed to be incorporated
         by reference in such Prospectus.

                  "REGISTRABLE  SECURITIES" means the Shares,  together with any
         shares  of  Common  Stock  issued or  issuable  upon any  stock  split,
         dividend or other distribution,  recapitalization or similar event with
         respect to the foregoing.

                  "REGISTRATION  STATEMENT"  means the  Registration  Statements
         required  to  be  filed   hereunder,   including  (in  each  case)  the
         Prospectus, amendments and supplements to the Registration statement or
         Prospectus,  including pre- and post-effective amendments, all exhibits
         thereto,  and all  material  incorporated  by reference or deemed to be
         incorporated by reference in the Registration statement.

                  "RULE  415"  means  Rule  415  promulgated  by the  Commission
         pursuant to the  Securities  Act, as such Rule may be amended from time
         to time,  or any similar rule or  regulation  hereafter  adopted by the
         Commission having substantially the same effect as such Rule.

                  "RULE  424"  means  Rule  424  promulgated  by the  Commission
         pursuant to the  Securities  Act, as such Rule may be amended from time
         to time,  or any similar rule or  regulation  hereafter  adopted by the
         Commission having substantially the same effect as such Rule.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "SHARES"  solely for the purpose of this  Agreement  means the
         Shares (as defined in the Purchase Agreement) together with the Warrant
         Shares issuable upon exercise of the Warrants.

         2.       REGISTRATION.

                  (a) On or prior to the Filing Date,  the Company shall prepare
         and file with the Commission the  Registration  Statement  covering the
         resale of all of the Registrable  Securities for an offering to be made
         on a continuous basis pursuant to Rule 415. The Registration  Statement
         required  hereunder  shall be on Form S-3 (except if the Company is not
         then eligible to register for resale the Registrable Securities on Form
         S-3,  in which case the  Registration  shall be on another  appropriate
         form in  accordance  herewith).  The  Registration  Statement  required
         hereunder shall contain  (except if otherwise  directed by the Holders)
         the "PLAN OF  DISTRIBUTION"  attached  hereto  as ANNEX A. The  Company
         shall cause the  Registration  Statement to become effective and remain
         effective as provided  herein.  The Company shall use its  commercially
         reasonable  efforts to cause the Registration  Statement to be declared
         effective  under the  Securities  Act as promptly as possible after the
         filing thereof, but in any event not later than the Effectiveness Date,
         and  shall  use  its  commercially   reasonable  efforts  to  keep  the
         Registration  Statement continuously effective under the Securities Act
         until  the date  which is two  years  after  the  Closing  Date or such
         earlier   date  when  all   Registrable   Securities   covered  by  the
         Registration  Statement  have been sold or may be sold  without  volume
         restrictions  pursuant to Rule 144(k) as  determined  by the counsel to
         the  Company  pursuant  to a

                                      -2-
<PAGE>

         written opinion letter to such effect,  addressed and acceptable to the
         Company's  transfer agent and the affected Holders (the  "EFFECTIVENESS
         PERIOD").

                  (b) If:  (i) the  Registration  Statement  is not  filed on or
         prior to its Filing  Date,  or (ii) the Company  fails to file with the
         Commission  a request  for  acceleration  in  accordance  with Rule 461
         promulgated  under the Securities  Act,  within ten Trading Days of the
         date that the Company is notified in writing by the Commission that the
         Registration  Statement  will  not be  "reviewed,"  or not  subject  to
         further review,  or (iii) the Registration  Statement filed or required
         to be filed hereunder is not declared effective by the Commission on or
         before  the  Effectiveness  Date (any  such  failure  or  breach  being
         referred to as an "EVENT,"  and for purposes of clause (i) or (iii) the
         date on which such Event occurs,  or for purposes of ------ clause (ii)
         the date on  which  such ten  Trading  Day  period  is  exceeded  being
         referred  to as "EVENT  ------  Date"),  then in  addition to any other
         rights the Holders may have hereunder or under  applicable  law: (x) on
         each such Event Date the Company  shall pay to each Holder an amount in
         cash,  as liquidated  damages and not as a penalty,  equal to 1% of the
         Subscription  Amount  paid  by such  Holder  pursuant  to the  Purchase
         Agreement for any Registrable  Securities then held by such Holder; and
         (y) on  each  monthly  anniversary  of each  such  Event  Date  (if the
         applicable  Event  shall not have been  cured by such  date)  until the
         applicable  Event is cured,  the  Company  shall pay to each  Holder an
         amount in cash, as liquidated damages and not as a penalty, equal to 2%
         of the  aggregate  purchase  price paid by such Holder  pursuant to the
         Purchase  Agreement for any  Registrable  Securities  then held by such
         Holder.

         3.       REGISTRATION PROCEDURES

                  In  connection  with the  Company's  registration  obligations
hereunder, the Company shall:

                  (a) Not less than two Trading  Days prior to the filing of the
         Registration  Statement or any related  Prospectus  or any amendment or
         supplement  thereto,  the  Company  shall,  (i)  furnish to the Holders
         copies of all such documents proposed to be filed (including  documents
         incorporated  or  deemed   incorporated  by  reference  to  the  extent
         requested by such Person) which documents will be subject to the review
         of such Holders, and (ii) cause its officers and directors, counsel and
         independent  certified public  accountants to respond to such inquiries
         as shall be necessary,  in the reasonable opinion of respective counsel
         to  conduct  a  reasonable  investigation  within  the  meaning  of the
         Securities Act. The Company shall not file the  Registration  Statement
         or any such  Prospectus  or any  amendments or  supplements  thereto to
         which the Holders of a majority  of the  Registrable  Securities  shall
         reasonably object in good faith.

                  (b) (i) Prepare and file with the Commission such  amendments,
         including post-effective  amendments, to the Registration Statement and
         the Prospectus used in connection therewith as may be necessary to keep
         the Registration  Statement continuously effective as to the applicable
         Registrable  Securities for the  Effectiveness  Period;  (ii) cause the
         related  Prospectus  to be  amended  or  supplemented  by any  required
         Prospectus  supplement,  and as so  supplemented or amended to be filed
         pursuant to Rule 424; (iii) respond as promptly as reasonably possible,
         and in any event within fifteen

                                      -3-
<PAGE>

         Trading Days, to any comments received from the Commission with respect
         to the Registration Statement or any amendment thereto and, as promptly
         as  reasonably  possible,  upon  request,  provide the Holders true and
         complete  copies  of all  correspondence  from  and  to the  Commission
         relating to the Registration Statement; and (iv) comply in all material
         respects with the provisions of the Securities Act and the Exchange Act
         with respect to the disposition of all Registrable  Securities  covered
         by  the  Registration   Statement  during  the  applicable   period  in
         accordance  with the  intended  methods of  disposition  by the Holders
         thereof  set forth in the  Registration  Statement  as so amended or in
         such Prospectus as so supplemented.

                  (c) Notify the Holders of Registrable Securities to be sold as
         promptly as reasonably  possible (and, in the case of (i)(A) below, not
         less than two Trading Days prior to such  filing) and (if  requested by
         any such Person) confirm such notice in writing promptly  following the
         day  (i)(A)  when  a  Prospectus  or  any   Prospectus   supplement  or
         post-effective  amendment to the Registration  Statement is proposed to
         be filed;  (B) when the Commission  notifies the Company  whether there
         will be a "review"  of the  Registration  Statement  and  whenever  the
         Commission  comments  in writing  on the  Registration  Statement  (the
         Company shall upon request provide true and complete copies thereof and
         all written  responses  thereto to each of the  Holders);  and (C) with
         respect to the Registration Statement or any post-effective  amendment,
         when  the  same  has  become  effective;  (ii)  of any  request  by the
         Commission or any other Federal or state governmental  authority during
         the  period  of  effectiveness   of  the  Registration   Statement  for
         amendments or supplements to the  Registration  Statement or Prospectus
         or for additional information;  (iii) of the issuance by the Commission
         or any other federal or state governmental  authority of any stop order
         suspending the effectiveness of the Registration Statement covering any
         or  all  of  the  Registrable  Securities  or  the  initiation  of  any
         Proceedings for that purpose; (iv) of the receipt by the Company of any
         notification  with respect to the  suspension of the  qualification  or
         exemption from  qualification of any of the Registrable  Securities for
         sale in any  jurisdiction,  or the  initiation  or  threatening  of any
         Proceeding for such purpose;  and (v) of the occurrence of any event or
         passage of time that makes the  financial  statements  included  in the
         Registration   Statement   ineligible  for  inclusion  therein  or  any
         statement  made in the  Registration  Statement  or  Prospectus  or any
         document incorporated or deemed to be incorporated therein by reference
         untrue in any material  respect or that  requires any  revisions to the
         Registration  Statement,  Prospectus or other documents so that, in the
         case of the Registration  Statement or the Prospectus,  as the case may
         be, it will not contain any untrue statement of a material fact or omit
         to state any material fact  required to be stated  therein or necessary
         to make the statements  therein,  in light of the  circumstances  under
         which they were made, not misleading.

                  (d) Use its  commercially  reasonable  efforts  to  avoid  the
         issuance  of, or, if issued,  obtain  the  withdrawal  of (i) any order
         suspending the effectiveness of the Registration Statement, or (ii) any
         suspension of the  qualification  (or exemption from  qualification) of
         any of the Registrable Securities for sale in any jurisdiction,  at the
         earliest practicable moment.

                                      -4-
<PAGE>

                  (e)  Furnish  to each  Holder,  without  charge,  at least one
         conformed  copy  of  the  Registration  Statement  and  each  amendment
         thereto,  including financial  statements and schedules,  all documents
         incorporated or deemed to be  incorporated  therein by reference to the
         extent  requested  by such  Person,  and  all  exhibits  to the  extent
         requested  by such Person  (including  those  previously  furnished  or
         incorporated by reference)  promptly after the filing of such documents
         with the Commission.

                  (f) Promptly deliver to each Holder,  without charge,  as many
         copies  of the  Prospectus  or  Prospectuses  (including  each  form of
         prospectus)  and each  amendment or supplement  thereto as such Persons
         may  reasonably  request in  connection  with  resales by the Holder of
         Registrable Securities.  The Company hereby consents to the use of such
         Prospectus  and each  amendment  or  supplement  thereto by each of the
         selling  Holders  in  connection  with  the  offering  and  sale of the
         Registrable  Securities covered by such Prospectus and any amendment or
         supplement  thereto,  except after the giving on any notice pursuant to
         Section 3(c).

                  (g) Prior to any resale of Registrable Securities by a Holder,
         use its  commercially  reasonable  efforts  to  register  or qualify or
         cooperate with the selling Holders in connection with the  registration
         or qualification  (or exemption from the Registration or qualification)
         of such  Registrable  Securities for the resale by the Holder under the
         securities  or Blue Sky laws of such  jurisdictions  within  the United
         States as any Holder reasonably  requests in writing,  to keep each the
         Registration or qualification (or exemption therefrom) effective during
         the  Effectiveness  Period  and to do any and all other  acts or things
         reasonably necessary to enable the disposition in such jurisdictions of
         the  Registrable  Securities  covered  by the  Registration  Statement;
         PROVIDED,  that the Company  shall not be required to --------  qualify
         generally  to do business in any  jurisdiction  where it is not then so
         qualified,  subject  the  Company  to any  material  tax  in  any  such
         jurisdiction  where it is not then so subject or file a general consent
         to service of process in any such jurisdiction.

                  (h) If requested by the Holders, cooperate with the Holders to
         facilitate  the  timely   preparation   and  delivery  of  certificates
         representing  Registrable  Securities  to be  delivered to a transferee
         pursuant to the Registration  Statement,  which  certificates  shall be
         free,  to the  extent  permitted  by  the  Purchase  Agreement,  of all
         restrictive legends, and to enable such Registrable Securities to be in
         such denominations and registered in such names as any such Holders may
         request.

                  (i) Upon the occurrence of any event  contemplated  by Section
         3(c)(v),  as promptly as reasonably  possible,  prepare a supplement or
         amendment,  including a post-effective  amendment,  to the Registration
         Statement or a  supplement  to the related  Prospectus  or any document
         incorporated  or deemed to be  incorporated  therein by reference,  and
         file any other  required  document so that,  as  thereafter  delivered,
         neither the Registration  Statement nor such Prospectus will contain an
         untrue  statement of a material  fact or omit to state a material  fact
         required  to be stated  therein  or  necessary  to make the  statements
         therein,  in light of the circumstances under which they were made, not
         misleading.

                                      -5-

<PAGE>

                  (j) Comply with all  applicable  rules and  regulations of the
         Commission.

                  (k) The Company may require each selling  Holder to furnish to
         the Company a certified  statement as to the number of shares of Common
         Stock  beneficially  owned by such  Holder  and any  other  information
         requested by the Commission.

         4.       REGISTRATION  EXPENSES.  All fees and expenses incident to the
performance  of or compliance  with this Agreement by the Company shall be borne
by the Company  whether or not any  Registrable  Securities are sold pursuant to
the Registration  Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including,  without  limitation,  fees and expenses (A) with respect to filings
required  to be made with the Trading  Market on which the Common  Stock is then
listed for trading,  and (B) in compliance with applicable  state  securities or
Blue Sky laws), (ii) printing expenses (including, without limitation,  expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the  printing of  prospectuses  is  reasonably  requested by the holders of a
majority of the Registrable Securities included in the Registration  Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance,  if the Company
so desires  such  insurance,  and (vi) fees and  expenses  of all other  Persons
retained by the Company in connection with the  consummation of the transactions
contemplated  by this Agreement.  In addition,  the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including,  without limitation,
all salaries and expenses of its  officers  and  employees  performing  legal or
accounting  duties),  the expense of any annual  audit and the fees and expenses
incurred in  connection  with the listing of the  Registrable  Securities on any
securities exchange as required hereunder.

         5.       INDEMNIFICATION

                  (a)  INDEMNIFICATION  BY  THE  COMPANY.   The  Company  shall,
         notwithstanding  any termination of this Agreement,  indemnify and hold
         harmless each Holder, the officers,  directors, agents and employees of
         each of them,  each Person who  controls  any such  Holder  (within the
         meaning  of  Section  15 of the  Securities  Act or  Section  20 of the
         Exchange Act) and the officers, directors, agents and employees of each
         such controlling  Person, to the fullest extent permitted by applicable
         law, from and against any and all losses, claims, damages, liabilities,
         costs (including,  without limitation,  reasonable attorneys' fees) and
         expenses  (collectively,  "LOSSES"), as incurred, to the extent arising
         out of or relating to any ------ untrue or alleged untrue  statement of
         a material fact contained in the Registration Statement, any Prospectus
         or any form of prospectus or in any amendment or supplement  thereto or
         in any  preliminary  prospectus,  or arising  out of or relating to any
         omission or alleged  omission of a material  fact required to be stated
         therein or necessary to make the statements therein (in the case of any
         Prospectus or form of prospectus or supplement thereto, in light of the
         circumstances under which they were made) not misleading, except to the
         extent,  but only to the  extent,  that (1) such untrue  statements  or
         omissions  are based  solely  upon  information  regarding  such Holder
         furnished  in writing

                                      -6-
<PAGE>

         to the  Company by such Holder  expressly  for use  therein,  or to the
         extent that such  information  relates to such Holder or such  Holder's
         proposed  method of  distribution  of  Registrable  Securities  and was
         reviewed and expressly approved in writing by such Holder expressly for
         use in the  Registration  Statement,  such  Prospectus  or such form of
         Prospectus  or  in  any  amendment  or  supplement  thereto  (it  being
         understood  that  the  Holder  has  approved  Annex A  hereto  for this
         purpose)  or (2) in the case of an  occurrence  of an event of the type
         specified  in  Section  3(c)(ii)-(v),  the  use by  such  Holder  of an
         outdated or defective  Prospectus  after the Company has notified  such
         Holder in writing  that the  Prospectus  is outdated or  defective  and
         prior to the  receipt  by such  Holder of the  Advice  contemplated  in
         Section  6(c).  The Company  shall  notify the Holders  promptly of the
         institution, threat or assertion of any Proceeding of which the Company
         is  aware in  connection  with the  transactions  contemplated  by this
         Agreement.

                  (b) INDEMNIFICATION BY HOLDERS.  Each Holder shall,  severally
         and  not  jointly,   indemnify  and  hold  harmless  the  Company,  its
         directors, officers, agents and employees, each Person who controls the
         Company  (within  the meaning of Section 15 of the  Securities  Act and
         Section 20 of the Exchange Act), and the directors, officers, agents or
         employees of such controlling  Persons, to the fullest extent permitted
         by  applicable  law, from and against all Losses,  as incurred,  to the
         extent  arising  out of or based  upon:  (x) such  Holder's  failure to
         comply with the prospectus delivery  requirements of the Securities Act
         or (y) any  untrue or  alleged  untrue  statement  of a  material  fact
         contained in any Registration Statement, any Prospectus, or any form of
         prospectus,  or in  any  amendment  or  supplement  thereto  or in  any
         preliminary  prospectus,  or arising out of or relating to any omission
         or alleged omission of a material fact required to be stated therein or
         necessary  to make the  statements  therein not  misleading  (i) to the
         extent, but only to the extent,  that such untrue statement or omission
         is contained in any  information so furnished in writing by such Holder
         to the Company specifically for inclusion in the Registration Statement
         or  such  Prospectus  or  (ii)  to the  extent  that  (1)  such  untrue
         statements  or omissions  are based solely upon  information  regarding
         such  Holder  furnished  in  writing  to the  Company  by  such  Holder
         expressly  for use  therein,  or to the  extent  that such  information
         relates to such Holder or such Holder's proposed method of distribution
         of Registrable  Securities  and was reviewed and expressly  approved in
         writing by such Holder expressly for use in the Registration  Statement
         (it being  understood  that the Holder has approved  Annex A hereto for
         this  purpose),  such  Prospectus  or such form of Prospectus or in any
         amendment or supplement  thereto or (2) in the case of an occurrence of
         an event of the type specified in Section 3(c)(ii)-(v), the use by such
         Holder of an outdated  or  defective  Prospectus  after the Company has
         notified  such  Holder in writing  that the  Prospectus  is outdated or
         defective  and  prior  to the  receipt  by such  Holder  of the  Advice
         contemplated  in Section  6(c).  In no event shall the liability of any
         selling Holder hereunder be greater in amount than the dollar amount of
         the  net  proceeds  received  by  such  Holder  upon  the  sale  of the
         Registrable Securities giving rise to such indemnification obligation.

                  (c) CONDUCT OF INDEMNIFICATION  PROCEEDINGS. If any Proceeding
         shall be brought or asserted  against any Person  entitled to indemnity
         hereunder  (an  "INDEMNIFIED  PARTY"),  such  Indemnified  Party  shall
         promptly   notify  the  Person  from  whom  indemnity  is  sought  (the
         "INDEMNIFYING PARTY") in writing, and the Indemnifying Party shall have
         the right to assume the defense  thereof,  including the  employment of
         counsel  reasonably  satisfactory  to the  Indemnified  Party  and  the
         payment of all fees and expenses  incurred in  connection  with defense
         thereof;  provided,  that the failure of any Indemnified  Party to

                                      -7-

<PAGE>

         give  such  notice  shall not  relieve  the  Indemnifying  Party of its
         obligations  or  liabilities  pursuant to this  Agreement,  except (and
         only) to the extent that it shall be finally  determined  by a court of
         competent jurisdiction (which determination is not subject to appeal or
         further   review)  that  such  failure   shall  have   prejudiced   the
         Indemnifying Party.

                  An Indemnified  Party shall have the right to employ  separate
         counsel  in any  such  Proceeding  and to  participate  in the  defense
         thereof,  but the fees and  expenses  of such  counsel  shall be at the
         expense  of  such  Indemnified   Party  or  Parties  unless:   (1)  the
         Indemnifying Party has agreed in writing to pay such fees and expenses;
         (2) the  Indemnifying  Party shall have  failed  promptly to assume the
         defense  of  such   Proceeding   and  to  employ   counsel   reasonably
         satisfactory to such Indemnified  Party in any such Proceeding;  or (3)
         the named  parties  to any such  Proceeding  (including  any  impleaded
         parties)  include  both such  Indemnified  Party  and the  Indemnifying
         Party,  and such  Indemnified  Party shall have been advised by counsel
         that a conflict of interest is likely to exist if the same counsel were
         to represent  such  Indemnified  Party and the  Indemnifying  Party (in
         which case, if such Indemnified  Party notifies the Indemnifying  Party
         in writing that it elects to employ separate  counsel at the expense of
         the Indemnifying Party, the Indemnifying Party shall not have the right
         to assume the defense  thereof and the reasonable  fees and expenses of
         one  separate  counsel  shall  be at the  expense  of the  Indemnifying
         Party).  The Indemnifying  Party shall not be liable for any settlement
         of any such  Proceeding  effected  without its written  consent,  which
         consent  shall not be  unreasonably  withheld.  No  Indemnifying  Party
         shall,  without the prior  written  consent of the  Indemnified  Party,
         effect any settlement of any pending Proceeding in respect of which any
         Indemnified  Party is a  party,  unless  such  settlement  includes  an
         unconditional  release of such Indemnified  Party from all liability on
         claims that are the subject matter of such Proceeding.

                  All  reasonable  fees and  expenses of the  Indemnified  Party
         (including  reasonable  fees and  expenses  to the extent  incurred  in
         connection with investigating or preparing to defend such Proceeding in
         a manner  not  inconsistent  with  this  Section)  shall be paid to the
         Indemnified  Party,  as  incurred,  within ten Trading  Days of written
         notice  thereof  to  the  Indemnifying   Party;   PROVIDED,   that  the
         Indemnified Party shall promptly  reimburse the Indemnifying  Party for
         that portion of such fees and expenses  applicable  to such actions for
         which  such  Indemnified  Party  is  not  entitled  to  indemnification
         hereunder, determined based upon the relative faults of the parties.

                  (d) CONTRIBUTION. If a claim for indemnification under Section
         5(a) or 5(b) is  unavailable  to an  Indemnified  Party  (by  reason of
         public policy or otherwise),  then each Indemnifying  Party, in lieu of
         indemnifying  such  Indemnified  Party,  shall contribute to the amount
         paid or payable by such  Indemnified  Party as a result of such Losses,
         in such  proportion as is  appropriate to reflect the relative fault of
         the  Indemnifying  Party and  Indemnified  Party in connection with the
         actions,  statements or omissions  that resulted in such Losses as well
         as any other relevant equitable  considerations.  The relative fault of
         such  Indemnifying  Party and Indemnified  Party shall be determined by
         reference  to,  among other  things,  whether  any action in  question,
         including any untrue or alleged untrue  statement of a material fact or
         omission or alleged omission of a material fact, has been taken or made
         by, or relates to information  supplied by, such Indemnifying  Party or

                                      -8-
<PAGE>

         Indemnified Party, and the parties' relative intent, knowledge,  access
         to  information  and  opportunity  to correct or prevent  such  action,
         statement  or  omission.  The  amount  paid or  payable by a party as a
         result  of any  Losses  shall be  deemed  to  include,  subject  to the
         limitations  set forth in Section 5(c),  any  reasonable  attorneys' or
         other reasonable fees or expenses  incurred by such party in connection
         with  any   Proceeding  to  the  extent  such  party  would  have  been
         indemnified for such fees or expenses if the  indemnification  provided
         for in this Section was available to such party in accordance  with its
         terms.

                  The  parties  hereto  agree  that it  would  not be  just  and
         equitable if contribution pursuant to this Section 5(d) were determined
         by pro rata  allocation or by any other method of allocation  that does
         not take into account the equitable  considerations  referred to in the
         immediately preceding paragraph. Notwithstanding the provisions of this
         Section  5(d),  no  Holder  shall be  required  to  contribute,  in the
         aggregate,  any  amount in excess of the  amount by which the  proceeds
         actually  received  by such  Holder  from the  sale of the  Registrable
         Securities  subject to the Proceeding exceeds the amount of any damages
         that such Holder has  otherwise  been required to pay by reason of such
         untrue or alleged  untrue  statement  or omission or alleged  omission,
         except in the case of fraud by such Holder.

                  The indemnity and  contribution  agreements  contained in this
         Section are in addition to any liability that the Indemnifying  Parties
         may have to the Indemnified Parties.

                  6.       MISCELLANEOUS

                  (a) REMEDIES.  In the event of a breach by the Company or by a
         Holder, of any of their  obligations under this Agreement,  each Holder
         or the  Company,  as the case may be, in addition to being  entitled to
         exercise all rights granted by law and under this Agreement,  including
         recovery of damages,  will be entitled to specific  performance  of its
         rights  under this  Agreement.  The Company and each Holder  agree that
         monetary damages would not provide adequate compensation for any losses
         incurred by reason of a breach by it of any of the  provisions  of this
         Agreement  and hereby  further  agrees that, in the event of any action
         for specific  performance in respect of such breach, it shall waive the
         defense that a remedy at law would be adequate.

                  (b) COMPLIANCE.  Each Holder covenants and agrees that it will
         comply with the prospectus delivery  requirements of the Securities Act
         as applicable to it in connection with sales of Registrable  Securities
         pursuant to the Registration Statement.

                  (c)  DISCONTINUED  DISPOSITION.  Each  Holder  agrees  by  its
         acquisition  of such  Registrable  Securities  that,  upon receipt of a
         notice  from the  Company  of the  occurrence  of any event of the kind
         described  in Section  3(c),  such  Holder will  forthwith  discontinue
         disposition  of such  Registrable  Securities  under  the  Registration
         Statement until such Holder's receipt of the copies of the supplemented
         Prospectus and/or amended Registration Statement or until it is advised
         in writing (the "ADVICE") by the Company that the use of the applicable
         Prospectus may be resumed,  and, in either case, has received copies of
         any additional or supplemental  filings that are incorporated or deemed

                                      -9-

<PAGE>

         to be  incorporated  by reference in such  Prospectus  or  Registration
         Statement.  The Company may provide  appropriate stop orders to enforce
         the provisions of this paragraph.

                  (d) AMENDMENTS AND WAIVERS.  The provisions of this Agreement,
         including the provisions of this sentence, may not be amended, modified
         or  supplemented,  and  waivers  or  consents  to  departures  from the
         provisions hereof may not be given, unless the same shall be in writing
         and  signed by the  Company  and each  Holder  of the then  outstanding
         Registrable Securities.

                  (e) NOTICES.  Any and all notices or other  communications  or
         deliveries  required or permitted to be provided  hereunder shall be in
         writing and shall be deemed given and  effective on the earliest of (i)
         the date of transmission,  if such notice or communication is delivered
         via facsimile at the facsimile  number provided for below prior to 6:30
         p.m.  (New York City time) on a Trading Day, (ii) the Trading Day after
         the date of transmission,  if such notice or communication is delivered
         via  facsimile at the  facsimile  number  provided for below later than
         6:30 p.m.  (New York City time) on any date and earlier than 11:59 p.m.
         (New York City time) on such date,  (iii) the Trading Day following the
         date of mailing,  if sent by nationally  recognized  overnight  courier
         service,  or (iv) upon actual  receipt by the party to whom such notice
         is   required  to  be  given.   The   address  for  such   notices  and
         communications  shall be  delivered  and  addressed as set forth in the
         Purchase Agreement

                  (f) SUCCESSORS AND ASSIGNS.  This Agreement shall inure to the
         benefit of and be binding upon the successors and permitted  assigns of
         each of the parties and shall inure to the benefit of each Holder. Each
         Holder may assign their  respective  rights hereunder in the manner and
         to the Persons as permitted under the Purchase Agreement. (g) EXECUTION
         AND  COUNTERPARTS.  This  Agreement  may be  executed  in any number of
         counterparts,  each of which when so executed  shall be deemed to be an
         original and, all of which taken together shall  constitute one and the
         same  Agreement.  In the  event  that any  signature  is  delivered  by
         facsimile  transmission,  such  signature  shall create a valid binding
         obligation of the party executing (or on whose behalf such signature is
         executed) the same with the same force and effect as if such  facsimile
         signature were the original thereof.

                  (h) GOVERNING LAW. All questions  concerning the construction,
         validity,  enforcement  and  interpretation  of this Agreement shall be
         governed by and construed and enforced in accordance  with the internal
         laws of the State of New York,  without  regard  to the  principles  of
         conflicts of law thereof.  Each party agrees that all legal proceedings
         concerning  the   interpretations,   enforcement  and  defense  of  the
         transactions  contemplated by this Agreement (whether brought against a
         party  hereto  or  its  respective  affiliates,   directors,  officers,
         shareholders,  employees or agents) shall be commenced  exclusively  in
         the state and federal courts sitting in the City of New York, New York.
         Each  party  hereto  hereby   irrevocably   submits  to  the  exclusive
         jurisdiction of the state and federal courts sitting in the City of New
         York,  New York for the  adjudication  of any dispute  hereunder  or in
         connection  herewith  or with any  transaction  contemplated  hereby or
         discussed

                                      -10-

<PAGE>

         herein  (including  with respect to the  enforcement of the any of this
         Agreement),  and hereby irrevocably waives, and agrees not to assert in
         any suit,  action or  proceeding,  any claim that it is not  personally
         subject to the jurisdiction of any such court,  that such suit,  action
         or proceeding is improper.  Each party hereto hereby irrevocably waives
         personal service of process and consents to process being served in any
         such  suit,  action  or  proceeding  by  mailing  a  copy  thereof  via
         registered or certified  mail or overnight  delivery  (with evidence of
         delivery)  to such party at the  address  in effect  for  notices to it
         under this Agreement and agrees that such service shall constitute good
         and sufficient service of process and notice thereof. Nothing contained
         herein  shall be deemed to limit in any way any right to serve  process
         in any manner  permitted by law. Each party hereto  hereby  irrevocably
         waives,  to the fullest extent permitted by applicable law, any and all
         right  to  trial  by jury in any  legal  proceeding  arising  out of or
         relating to this Agreement or the transactions  contemplated hereby. If
         either  party  shall  commence an action or  proceeding  to enforce any
         provisions of this Agreement,  then the prevailing party in such action
         or proceeding  shall be reimbursed by the other party for its attorneys
         fees and other  costs and  expenses  incurred  with the  investigation,
         preparation and prosecution of such action or proceeding.

                  (i)  CUMULATIVE  REMEDIES.  The remedies  provided  herein are
         cumulative and not exclusive of any remedies provided by law.

                  (j)  SEVERABILITY.   If  any  term,  provision,   covenant  or
         restriction  of  this  Agreement  is  held  by  a  court  of  competent
         jurisdiction  to  be  invalid,  illegal,  void  or  unenforceable,  the
         remainder of the terms,  provisions,  covenants  and  restrictions  set
         forth  herein shall remain in full force and effect and shall in no way
         be affected, impaired or invalidated,  and the parties hereto shall use
         their commercially reasonable efforts to find and employ an alternative
         means to  achieve  the same or  substantially  the same  result as that
         contemplated by such term,  provision,  covenant or restriction.  It is
         hereby  stipulated and declared to be the intention of the parties that
         they would have executed the remaining terms, provisions, covenants and
         restrictions  without  including  any of  such  that  may be  hereafter
         declared invalid, illegal, void or unenforceable.

                  (k)  HEADINGS.   The  headings  in  this   Agreement  are  for
         convenience of reference  only and shall not limit or otherwise  affect
         the meaning hereof.

                  (l) INDEPENDENT NATURE OF PURCHASERS'  OBLIGATIONS AND RIGHTS.
         The  obligations of each  Purchaser  hereunder is several and not joint
         with the obligations of any other Purchaser hereunder, and no Purchaser
         shall be responsible in any way for the  performance of the obligations
         of any other Purchaser  hereunder.  Nothing  contained herein or in any
         other  agreement or document  delivered  at any closing,  and no action
         taken by any Purchaser  pursuant hereto or thereto,  shall be deemed to
         constitute  the Purchasers as a partnership,  an  association,  a joint
         venture or any other kind of entity,  or create a presumption  that the
         Purchasers  are in any way  acting  in  concert  with  respect  to such
         obligations or the  transactions  contemplated by this Agreement.  Each
         Purchaser  shall  be  entitled  to  protect  and  enforce  its  rights,
         including without  limitation the rights arising out of this Agreement,
         and it shall not be necessary  for any other  Purchaser to be joined as
         an additional party in any proceeding for such purpose.

                                      -11

<PAGE>

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

                                      -12-
<PAGE>
                                                                       EXHIBIT B

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

                                SPATIALIGHT, INC.

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

                     [PURCHASERS' SIGNATURE PAGES TO FOLLOW]

                                      -13-
<PAGE>

                       [PURCHASER'S SIGNATURE PAGE TO RRA]

                                   [PURCHASER]

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

                     [PURCHASERS' SIGNATURE PAGES TO FOLLOW]

                                      -14-
<PAGE>

                       [PURCHASER'S SIGNATURE PAGE TO RRA]

                                  [PURCHASER]

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

                                      -15-
<PAGE>

                                                                         ANNEX A

                              PLAN OF DISTRIBUTION

         The  Selling  Stockholders  and any of their  pledgees,  assignees  and
successors-in-interest  may, from time to time,  sell any or all of their shares
of Common Stock on any stock exchange,  market or trading  facility on which the
shares  are traded or in private  transactions.  These  sales may be at fixed or
negotiated  prices.  The  Selling  Stockholders  may  use any one or more of the
following methods when selling shares:

         o        ordinary brokerage  transactions and transactions in which the
                  broker-dealer solicits purchasers;

         o        block trades in which the  broker-dealer  will attempt to sell
                  the shares as agent but may  position  and resell a portion of
                  the block as principal to facilitate the transaction;

         o        purchases by a  broker-dealer  as principal  and resale by the
                  broker-dealer for its account;

         o        an exchange  distribution  in accordance with the rules of the
                  applicable exchange;

         o        privately negotiated transactions;

         o        settlement of short sales;

         o        broker-dealers may agree with the Selling Stockholders to sell
                  a specified  number of such shares at a  stipulated  price per
                  share;

         o        a combination of any such methods of sale; and

o        any other method permitted pursuant to applicable law.

         The Selling  Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

         Broker-dealers  engaged by the  Selling  Stockholders  may  arrange for
other  brokers-dealers  to  participate  in sales.  Broker-dealers  may  receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares,  from the purchaser) in amounts to be
negotiated.  The  Selling  Stockholders  do not  expect  these  commissions  and
discounts to exceed what is customary in the types of transactions involved.

         The  Selling  Stockholders  may  from  time to time  pledge  or grant a
security  interest  in some or all of the shares of common  stock  owned by them
and,  if they  default in the  performance  of their  secured  obligations,  the
pledgees or secured  parties may offer and sell the shares of common  stock from
time to time under this  prospectus,  or under an amendment  to this  prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933

                                      -16-

<PAGE>

amending the list of Selling Stockholders to include the pledgee,  transferee or
other successors in interest as Selling Stockholders under this prospectus.

         The  Selling  Stockholders  and any  broker-dealers  or agents that are
involved  in selling  the shares may be deemed to be  "underwriters"  within the
meaning of the Securities Act in connection with such sales. In such event,  any
commissions  received  by such  broker-dealers  or agents  and any profit on the
resale  of the  shares  purchased  by  them  may be  deemed  to be  underwriting
commissions or discounts under the Securities Act. The Selling Stockholders have
informed  the  Company  that it does not have any  agreement  or  understanding,
directly or indirectly, with any person to distribute the Common Stock.

         The Company is required  to pay all fees and  expenses  incident to the
registration  of the shares.  The Company  has agreed to  indemnify  the Selling
Stockholders against certain losses, claims, damages and liabilities,  including
liabilities under the Securities Act.

                                      -17-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00053-of-00352.parquet"}]]