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                                                                     Exhibit 4.1

                                SPATIALIGHT, INC.

                             1999 STOCK OPTION PLAN

     1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

         1.1 ESTABLISHMENT.  This SpatiaLight,  Inc. 1999 Stock Option Plan (the
"PLAN") is hereby established effective as of June 21, 1999.

         1.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Participating  Company Group and its  stockholders  by providing an incentive to
attract,  retain and reward persons  performing  services for the  Participating
Company  Group and by  motivating  such persons to  contribute to the growth and
profitability of the Participating Company Group.

         1.3 TERM OF PLAN.  The Plan shall  continue in effect until the earlier
of its  termination by the Board or the date on which all of the shares of Stock
available for issuance under the Plan have been issued and all  restrictions  on
such shares under the terms of the Plan and the  agreements  evidencing  Options
granted under the Plan have lapsed. However, all Options shall be granted, if at
all,  within ten (10) years from the  earlier of the date the Plan is adopted by
the  Board  or the date the Plan is duly  approved  by the  stockholders  of the
Company.

     2. DEFINITIONS AND CONSTRUCTION.

         2.1 DEFINITIONS.  Whenever used herein,  the following terms shall have
their respective meanings set forth below:

             (a) "BOARD" means the Board of Directors of the Company.  If one or
more Committees have been appointed by the Board to administer the Plan, "BOARD"
also means such Committee(s).

             (b) "CODE" means the Internal Revenue Code of 1986, as amended, and
any applicable regulations promulgated thereunder.

             (c) "COMMITTEE" means the Compensation Committee or other committee
of the Board duly  appointed  to  administer  the Plan and having such powers as
shall be specified by the Board.  Unless the powers of the  Committee  have been
specifically  limited,  the Committee  shall have all of the powers of the Board
granted herein, including,  without limitation,  the power to amend or terminate
the Plan at any  time,  subject  to the  terms  of the  Plan and any  applicable
limitations imposed by law.

             (d) "COMPANY" means SpatiaLight,  Inc., a New York corporation,  or
any successor corporation thereto.

             (e) "CONSULTANT" means any person, including an advisor, engaged by
a  Participating  Company  to render  services  other than as an  Employee  or a
Director.

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             (f)  "DIRECTOR"  means a member  of the  Board  or of the  board of
directors of any other Participating Company.

             (g)  "DISABILITY"  means  the  inability  of the  Optionee,  in the
opinion of a qualified physician acceptable to the Company, to perform the major
duties of the Optionee's  position with the Participating  Company Group because
of the sickness or injury of the Optionee.

             (h) "EMPLOYEE"  means any person treated as an employee  (including
an officer or a Director who is also treated as an employee) in the records of a
Participating Company and, with respect to any Incentive Stock Option granted to
such  person,  who is an  employee  for  purposes  of  Section  422 of the Code;
provided,  however,  that  neither  service  as  a  Director  nor  payment  of a
director's fee shall be sufficient to constitute  employment for purposes of the
Plan.

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

             (j) "FAIR MARKET VALUE" means, as of any date, the value of a share
of Stock or other property as determined by the Board, in its discretion,  or by
the Company, in its discretion,  if such determination is expressly allocated to
the Company herein, subject to the following:

                 (i) If, on such  date,  the Stock is  listed on a  national  or
regional  securities exchange or market system, the Fair Market Value of a share
of Stock  shall  be the  closing  price of a share of Stock  (or the mean of the
closing  bid and  asked  prices  of a share of Stock if the  Stock is so  quoted
instead) as quoted on the Nasdaq National Market,  The Nasdaq SmallCap Market or
such  other   national  or  regional   securities   exchange  or  market  system
constituting  the primary  market for the Stock,  as reported in The Wall Street
Journal or such other source as the Company deems reliable. If the relevant date
does not fall on a day on which the Stock has traded on such securities exchange
or market  system,  the date on which the Fair Market Value shall be established
shall be the last day on which the Stock  was so  traded  prior to the  relevant
date, or such other  appropriate day as shall be determined by the Board, in its
discretion.

                 (ii) If, on such date, there is no public market for the Stock,
the Fair Market Value of a share of Stock shall be as determined by the Board in
good faith without regard to any restriction other than a restriction  which, by
its terms, will never lapse.

             (k) "INCENTIVE STOCK OPTION" means an Option intended to be (as set
forth in the Option  Agreement) and which qualifies as an incentive stock option
within the meaning of Section 422(b) of the Code.

             (l) "INSIDER"  means an officer or a Director of the Company or any
other  person  whose  transactions  in Stock are  subject  to  Section 16 of the
Exchange Act.

             (m) "NONSTATUTORY  STOCK OPTION" means an Option not intended to be
(as set forth in the Option Agreement) or which does not qualify as an Incentive
Stock Option.

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             (n) "OPTION" means a right to purchase Stock (subject to adjustment
as provided in Section 4.2) pursuant to the terms and conditions of the Plan. An
Option may be either an Incentive Stock Option or a Nonstatutory Stock Option.

             (o) "OPTION  AGREEMENT"  means a written  agreement,  including any
related  form of stock  option  grant  agreement,  between  the  Company  and an
Optionee  setting forth the terms,  conditions  and  restrictions  of the Option
granted to the Optionee and any shares acquired upon the exercise thereof.

             (p)  "OPTIONEE"  means a person  who has been  granted  one or more
Options.

             (q)  "PARENT  CORPORATION"  means any  present  or  future  "parent
corporation" of the Company, as defined in Section 424(e) of the Code.

             (r)  "PARTICIPATING  COMPANY"  means  the  Company  or  any  Parent
Corporation or Subsidiary Corporation.

             (s) "PARTICIPATING  COMPANY GROUP" means, at any point in time, all
corporations collectively which are then Participating Companies.

             (t) "PRIOR PLAN OPTIONS'" means the stock options granted under the
Company's 1991 Stock Option Plan, 1993  Nonstatutory  Employee Stock Option Plan
and 1993 Outside  Director  Stock Option Plan that were  outstanding on the date
that the Board approved the Plan.

             (u) "RULE  16B-3"  means  Rule 16b-3  under the  Exchange  Act,  as
amended from time to time, or any successor rule or regulation.

             (v) "SECTION 162(M)" means Section 162(m) of the Code.

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

             (x) "SERVICE"  means an  Optionee's  employment or service with the
Participating  Company Group, whether in the capacity of an Employee, a Director
or a Consultant.  The Optionee's  Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Optionee renders Service
to the Participating  Company Group or a change in the Participating Company for
which the Optionee renders such Service,  provided that there is no interruption
or termination of the Optionee's  Service.  Furthermore,  an Optionee's  Service
with the  Participating  Company Group shall not be deemed to have terminated if
the Optionee takes any military  leave,  sick leave, or other bona fide leave of
absence  approved  by the  Company;  provided,  however,  that if any such leave
exceeds  ninety  (90)  days,  on the  ninety-first  (91st) day of such leave the
Optionee's  Service  shall be deemed to have  terminated  unless the  Optionee's
right to return to Service with the Participating Company Group is guaranteed by
statute or contract.  Notwithstanding the foregoing, unless otherwise designated
by the Company or  required  by law, a leave of absence  shall not be treated as
Service  for  purposes  of  determining  vesting  under  the  Optionee's  Option
Agreement. The Optionee's Service shall be deemed to have terminated either upon
an actual  termination of Service or upon the corporation for which the Optionee
performs  Service  ceasing  to  be  a  Participating  Company.

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Subject to the  foregoing,  the  Company,  in its  discretion,  shall  determine
whether the  Optionee's  Service has  terminated  and the effective date of such
termination.

             (y) "STOCK" means the common stock of the Company, as adjusted from
time to time in accordance with Section 4.2.

             (z)   "SUBSIDIARY   CORPORATION"   means  any   present  or  future
"subsidiary  corporation"  of the Company,  as defined in Section  424(f) of the
Code.

             (aa) "TEN PERCENT  OWNER  OPTIONEE"  means an Optionee  who, at the
time an Option is granted to the Optionee,  owns stock  possessing more than ten
percent  (10%) of the total  combined  voting power of all classes of stock of a
Participating Company within the meaning of Section 422(b)(6) of the Code.

         2.2  CONSTRUCTION.   Captions  and  titles  contained  herein  are  for
convenience  only and shall not affect  the  meaning  or  interpretation  of any
provision of the Plan.  Except when  otherwise  indicated  by the  context,  the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not  intended to be  exclusive,  unless the context  clearly
requires otherwise.

     3. ADMINISTRATION.

         3.1  ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
Board.  All  questions of  interpretation  of the Plan or of any Option shall be
determined by the Board, and such determinations shall be final and binding upon
all persons having an interest in the Plan or such Option.

         3.2 AUTHORITY OF OFFICERS. Any officer of a Participating Company shall
have the  authority  to act on behalf of the Company with respect to any matter,
right,  obligation,  determination or election which is the responsibility of or
which is  allocated  to the Company  herein,  provided  the officer has apparent
authority  with  respect to such matter,  right,  obligation,  determination  or
election.

         3.3   ADMINISTRATION   WITH  RESPECT  TO  INSIDERS.   With  respect  to
participation  by  Insiders  in the  Plan,  at any time that any class of equity
security of the  Company is  registered  pursuant to Section 12 of the  Exchange
Act, the Plan shall be administered in compliance with the requirements, if any,
of Rule 16b-3.

         3.4 POWERS OF THE BOARD.  In addition to any other  powers set forth in
the Plan and  subject to the  provisions  of the Plan,  the Board shall have the
full and final power and authority, in its discretion:

             (a) to  determine  the  persons  to whom,  and the time or times at
which,  Options shall be granted and the number of shares of Stock to be subject
to each Option;

             (b) to designate Options as Incentive Stock Options or Nonstatutory
Stock Options;

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             (c) to determine  the Fair Market Value of shares of Stock or other
property;

             (d) to determine the terms,  conditions and restrictions applicable
to each Option  (which need not be identical)  and any shares  acquired upon the
exercise thereof,  including,  without limitation, (i) the exercise price of the
Option, (ii) the method of payment for shares purchased upon the exercise of the
Option,  (iii) the method for  satisfaction  of any tax  withholding  obligation
arising  in  connection  with  the  Option  or  such  shares,  including  by the
withholding  or  delivery  of  shares  of  stock,  (iv) the  timing,  terms  and
conditions  of the  exercisability  of the  Option or the  vesting of any shares
acquired  upon  the  exercise  thereof,  (v) the time of the  expiration  of the
Option,  (vi) the  effect of the  Optionee's  termination  of  Service  with the
Participating Company Group on any of the foregoing,  and (vii) all other terms,
conditions  and  restrictions  applicable  to the  Option  or  such  shares  not
inconsistent with the terms of the Plan;

             (e) to approve one or more forms of Option Agreement;

             (f) to amend, modify,  extend,  cancel, renew, reprice or otherwise
adjust the  exercise  price of, or grant a new Option in  substitution  for, any
Option or to waive any  restrictions  or conditions  applicable to any Option or
any shares acquired upon the exercise thereof;

             (g) to accelerate,  continue, extend or defer the exercisability of
any Option or the  vesting of any shares  acquired  upon the  exercise  thereof,
including  with respect to the period  following an  Optionee's  termination  of
Service with the Participating Company Group;

             (h) to prescribe,  amend or rescind rules,  guidelines and policies
relating to the Plan, or to adopt  supplements  to, or alternative  versions of,
the Plan,  including,  without  limitation,  as the  Board  deems  necessary  or
desirable to comply with the laws of, or to accommodate the tax policy or custom
of, foreign jurisdictions whose citizens may be granted Options; and

             (i) to correct any defect,  supply any  omission or  reconcile  any
inconsistency  in the  Plan  or any  Option  Agreement  and to  make  all  other
determinations  and take such  other  actions  with  respect  to the Plan or any
Option as the Board may deem  advisable to the extent  consistent  with the Plan
and applicable law.

         3.5 COMMITTEE COMPLYING WITH SECTION 162(M). If a Participating Company
is a "publicly held corporation" within the meaning of Section 162(m), the Board
may establish a Committee of "outside  directors"  within the meaning of Section
162(m) to approve the grant of any Option which might  reasonably be anticipated
to result in the payment of employee  remuneration  that would otherwise  exceed
the limit on employee  remuneration  deductible for income tax purposes pursuant
to Section 162(m).

     4. SHARES SUBJECT TO PLAN.

         4.1  MAXIMUM  NUMBER OF  SHARES  ISSUABLE.  Subject  to  adjustment  as
provided in Section  4.2, the maximum  aggregate  number of shares of Stock that
may be issued

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under the Plan shall be 4,000,000  (the "SHARE  RESERVE")  and shall  consist of
authorized  but  unissued  or  reacquired  shares  of Stock  or any  combination
thereof. However, the Share Reserve, determined at any time, shall be reduced by
the sum of (a) the number of shares,  which remain subject to outstanding  Prior
Plan Options,  and (b) the number of shares,  which have been issued pursuant to
the exercise of Prior Plan Options after the date on which the Plan was adopted.
If an outstanding  Option for any reason expires or is terminated or canceled or
if shares of Stock are  acquired  upon the  exercise  of an Option  subject to a
Company  repurchase  option and are repurchased by the Company at the Optionee's
exercise price, the shares of Stock allocable to the unexercised portion of such
Option or such repurchased shares of Stock shall again be available for issuance
under the Plan. Notwithstanding the foregoing, at any such time as the offer and
sale of securities  pursuant to the Plan is subject to  compliance  with Section
260.140.45  of  Title  10  of  the  California  Code  of  Regulations  ("SECTION
260.140.45"),  the total number of shares of Stock issuable upon the exercise of
all outstanding Options (together with options outstanding under any other stock
option plan of the Company)  and the total  number of shares  provided for under
any stock bonus or similar plan of the Company shall not exceed  thirty  percent
(30%) (or such other  higher  percentage  limitation  as may be  approved by the
stockholders  of the  Company  pursuant  to  Section  260.140.45)  of  the  then
outstanding  shares  of  the  Company  as  calculated  in  accordance  with  the
conditions and exclusions of Section 260.140.45.

         4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL  STRUCTURE.  In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification  or similar  change in the capital  structure  of the  Company,
appropriate  adjustments shall be made in the number and class of shares subject
to the Plan and to any  outstanding  Options,  in the Section 162(m) Grant Limit
set forth in Section 5.4, and in the exercise price per share of any outstanding
Options.  If a majority of the shares  which are of the same class as the shares
that are subject to outstanding  Options are exchanged for,  converted  into, or
otherwise  become  (whether or not pursuant to an  Ownership  Change  Event,  as
defined in Section 8.1) shares of another  corporation  (the "NEW SHARES"),  the
Board may  unilaterally  amend the  outstanding  Options  to  provide  that such
Options are exercisable for New Shares. In the event of any such amendment,  the
number  of  shares  subject  to,  and the  exercise  price  per  share  of,  the
outstanding  Options  shall  be  adjusted  in a fair  and  equitable  manner  as
determined by the Board, in its discretion.  Notwithstanding the foregoing,  any
fractional share resulting from an adjustment pursuant to this Section 4.2 shall
be rounded down to the nearest  whole  number,  and in no event may the exercise
price of any Option be decreased  to an amount less than the par value,  if any,
of the stock  subject to the Option.  The  adjustments  determined  by the Board
pursuant to this Section 4.2 shall be final, binding and conclusive.

     5. ELIGIBILITY AND OPTION LIMITATIONS.

         5.1  PERSONS  ELIGIBLE  FOR  OPTIONS.  Options  may be granted  only to
Employees,  Consultants,  and Directors. For purposes of the foregoing sentence,
"Employees,"  "Consultants" and "Directors" shall include prospective Employees,
prospective Consultants and prospective Directors to whom Options are granted in
connection  with written offers of an employment or other service  relationships
with the Participating  Company Group. Eligible persons may be granted more than
one (1) Option.

         5.2 OPTION GRANT RESTRICTIONS. Any person who is not an Employee on the
effective  date of the grant of an Option to such  person may be granted  only a
Nonstatutory  Stock

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Option.  An Incentive  Stock Option  granted to a prospective  Employee upon the
condition that such person become an Employee shall be deemed granted  effective
on the date such person commences Service with a Participating  Company, with an
exercise price determined as of such date in accordance with Section 6.1.

         5.3 FAIR MARKET VALUE LIMITATION. To the extent that options designated
as  Incentive  Stock  Options  (granted  under  all  stock  option  plans of the
Participating  Company  Group,  including  the Plan)  become  exercisable  by an
Optionee  for the first time during any  calendar  year for stock  having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000),  the portions
of such options which exceed such amount shall be treated as Nonstatutory  Stock
Options. For purposes of this Section 5.3, options designated as Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair  Market  Value of stock shall be  determined  as of the time the option
with  respect to such stock is granted.  If the Code is amended to provide for a
different  limitation  from that set forth in this Section 5.3,  such  different
limitation shall be deemed incorporated herein effective as of the date and with
respect to such Options as required or permitted by such  amendment to the Code.
If an  Option  is  treated  as an  Incentive  Stock  Option  in  part  and  as a
Nonstatutory  Stock Option in part by reason of the limitation set forth in this
Section  5.3,  the  Optionee  may  designate  which  portion of such  Option the
Optionee is exercising.  In the absence of such designation,  the Optionee shall
be deemed to have  exercised  the Incentive  Stock Option  portion of the Option
first. Separate certificates representing each such portion shall be issued upon
the exercise of the Option.

         5.4 SECTION  162(M) GRANT LIMIT.  Subject to  adjustment as provided in
Section 4.2, no Employee  shall be granted one or more Options within any fiscal
year of the Company  which in the  aggregate  are for the  purchase of more than
five hundred thousand  (500,000)  shares (the "SECTION 162(M) GRANT LIMIT").  An
Option  which is canceled in the same fiscal year in which it was granted  shall
continue to be counted against the Section 162(m) Grant Limit for such period.

     6. TERMS AND CONDITIONS OF OPTIONS.

         Options shall be evidenced by Option  Agreements  specifying the number
of shares of Stock covered thereby, in such form as the Board shall from time to
time  establish.  No Option or  purported  Option  shall be a valid and  binding
obligation of the Company unless evidenced by a fully executed Option Agreement.
Option  Agreements  may  incorporate  all or any of the  terms  of the  Plan  by
reference  and shall  comply  with and be  subject  to the  following  terms and
conditions:

         6.1  EXERCISE  PRICE.  The  exercise  price  for each  Option  shall be
established  in the  discretion of the Board;  provided,  however,  that (a) the
exercise  price per share for an  Incentive  Stock Option shall be not less than
the Fair Market Value of a share of Stock on the effective  date of grant of the
Option,  (b) the exercise price per share for a Nonstatutory  Stock Option shall
be not less than  eighty-five  percent (85%) of the Fair Market Value of a share
of Stock on the effective date of grant of the Option, and (c) no Option granted
to a Ten Percent Owner Optionee shall have an exercise price per share less than
one hundred ten percent  (110%) of the Fair Market  Value of a share of Stock on
the effective date of grant of the Option.  Notwithstanding  the  foregoing,  an
Option (whether an Incentive Stock Option or a

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Nonstatutory  Stock Option) may be granted with an exercise price lower than the
minimum  exercise price set forth above if such Option is granted pursuant to an
assumption or substitution  for another option in a manner  qualifying under the
provisions of Section 424(a) of the Code.

         6.2  EXERCISE  PERIOD.  Options  shall be  exercisable  at such time or
times,  or upon such event or events,  and  subject to such  terms,  conditions,
performance  criteria,  and restrictions as shall be determined by the Board and
set forth in the Option  Agreement  evidencing such Option;  provided,  however,
that (a) no Option shall be  exercisable  after the expiration of ten (10) years
after the effective date of grant of such Option,  (b) no Incentive Stock Option
granted  to a  Ten  Percent  Owner  Optionee  shall  be  exercisable  after  the
expiration of five (5) years after the  effective  date of grant of such Option,
(c) no Option  granted to a  prospective  Employee,  prospective  Consultant  or
prospective  Director  may  become  exercisable  prior to the date on which such
person  commences  Service  with a  Participating  Company,  and  (d)  with  the
exception of an Option granted to an officer,  Director or Consultant, no Option
shall become  exercisable at a rate less than twenty percent (20%) per year over
a period  of five (5) years  from the  effective  date of grant of such  Option,
subject to the Optionee's  continued Service.  Subject to the foregoing,  unless
otherwise  specified by the Board in the grant of an Option,  any Option granted
hereunder  shall have a term of ten (10) years from the effective  date of grant
of the Option.

         6.3 PAYMENT OF EXERCISE PRICE.

             (a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise provided
below,  payment of the  exercise  price for the number of shares of Stock  being
purchased  pursuant  to any Option  shall be made (i) in cash,  by check or cash
equivalent,  (ii) by tender to the Company, or attestation to the ownership,  of
shares of Stock owned by the Optionee  having a Fair Market Value (as determined
by the Company without regard to any restrictions on transferability  applicable
to such stock by reason of federal or state  securities  laws or agreements with
an underwriter for the Company) not less than the exercise  price,  (iii) by the
assignment  of the proceeds of a sale or loan with respect to some or all of the
shares  being  acquired  upon the  exercise  of the Option  (including,  without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated  from time to time by the Board of Governors of the Federal  Reserve
System) (a "CASHLESS  EXERCISE"),  (iv) by the Optionee's  promissory  note in a
form approved by the Company, (v) by such other consideration as may be approved
by the Board from time to time to the extent  permitted  by  applicable  law, or
(vi) by any combination thereof. The Board may at any time or from time to time,
by  adoption  of or by  amendment  to the  standard  forms of  Option  Agreement
described in Section 7, or by other means, grant Options which do not permit all
of the foregoing  forms of  consideration  to be used in payment of the exercise
price or which otherwise restrict one or more forms of consideration.

             (b) LIMITATIONS ON FORMS OF CONSIDERATION.

                 (i) TENDER OF STOCK.  Notwithstanding the foregoing,  an Option
may not be exercised by tender to the Company,  or attestation to the ownership,
of shares of Stock to the extent such tender or attestation  would  constitute a
violation of the provisions of any law, regulation or agreement  restricting the
redemption of the Company's stock.  Unless  otherwise  provided by the Board, an
Option may not be  exercised  by tender to the Company,  or  attestation  to the
ownership,  of shares of Stock unless such shares  either have been owned by the

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Optionee  for  more  than  six (6)  months  or were not  acquired,  directly  or
indirectly, from the Company.

                 (ii) CASHLESS  EXERCISE.  The Company reserves,  at any and all
times, the right, in the Company's sole and absolute  discretion,  to establish,
decline to approve or terminate  any program or  procedures  for the exercise of
Options by means of a Cashless Exercise.

                 (iii) PAYMENT BY PROMISSORY  NOTE. No promissory  note shall be
permitted  if the  exercise  of an Option  using a  promissory  note  would be a
violation of any law. Any  permitted  promissory  note shall be on such terms as
the Board shall  determine  at the time the Option is  granted.  The Board shall
have the  authority to permit or require the  Optionee to secure any  promissory
note used to  exercise  an Option  with the  shares of Stock  acquired  upon the
exercise  of the  Option or with other  collateral  acceptable  to the  Company.
Unless otherwise provided by the Board, if the Company at any time is subject to
the  regulations  promulgated  by the Board of Governors of the Federal  Reserve
System or any other  governmental  entity  affecting  the extension of credit in
connection with the Company's securities,  any promissory note shall comply with
such applicable regulations, and the Optionee shall pay the unpaid principal and
accrued interest, if any, to the extent necessary to comply with such applicable
regulations.

         6.4 TAX  WITHHOLDING.  The  Company  shall have the right,  but not the
obligation,  to deduct from the shares of Stock issuable upon the exercise of an
Option,  or to accept from the  Optionee the tender of, a number of whole shares
of Stock having a Fair Market Value, as determined by the Company,  equal to all
or any part of the federal,  state, local and foreign taxes, if any, required by
law to be  withheld  by the  Participating  Company  Group with  respect to such
Option or the shares  acquired upon the exercise  thereof.  Alternatively  or in
addition,  in its  discretion,  the Company  shall have the right to require the
Optionee, through payroll withholding,  cash payment or otherwise,  including by
means  of a  Cashless  Exercise,  to make  adequate  provision  for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Option or the shares  acquired upon the exercise  thereof.  The Company
shall have no  obligation  to deliver  shares of Stock  until the  Participating
Company Group's tax withholding obligations have been satisfied by the Optionee.

         6.5 EFFECT OF TERMINATION OF SERVICE.

             (a) OPTION  EXERCISABILITY.  Subject to earlier  termination of the
Option as otherwise  provided  herein,  an Option shall be exercisable  after an
Optionee's termination of Service as follows:

                 (i)   DISABILITY.   If  the   Optionee's   Service   with   the
Participating  Company  Group is  terminated  because of the  Disability  of the
Optionee,  the Option, to the extent  unexercised and exercisable on the date on
which the Optionee's  Service  terminated,  may be exercised by the Optionee (or
the  Optionee's  guardian  or legal  representative)  at any  time  prior to the
expiration of six (6) months (or such longer period of time as determined by the
Board,  in its  discretion)  after  the date on  which  the  Optionee's  Service
terminated,  but in any  event no  later  than  the  date of  expiration  of the
Option's term as set forth in the Option  Agreement  evidencing such Option (the
"OPTION EXPIRATION DATE").

                                       9
<PAGE>

                 (ii) DEATH.  If the Optionee's  Service with the  Participating
Company Group is terminated because of the death of the Optionee, the Option, to
the  extent  unexercised  and  exercisable  on the date on which the  Optionee's
Service terminated,  may be exercised by the Optionee's legal  representative or
other  person who  acquired  the right to  exercise  the Option by reason of the
Optionee's  death at any time prior to the expiration of six (6) months (or such
longer period of time as determined by the Board, in its  discretion)  after the
date on which the Optionee's Service terminated,  but in any event no later than
the Option  Expiration  Date.  The  Optionee's  Service  shall be deemed to have
terminated  on account of death if the Optionee dies within thirty (30) days (or
such longer period of time as determined by the Board, in its discretion)  after
the Optionee's termination of Service.

                 (iii) OTHER TERMINATION OF SERVICE.  If the Optionee's  Service
with  the  Participating   Company  Group  terminates  for  any  reason,  except
Disability or death,  the Option,  to the extent  unexercised and exercisable by
the  Optionee on the date on which the  Optionee's  Service  terminated,  may be
exercised by the Optionee within ninety (90) days (or such longer period of time
as  determined  by the  Board,  in its  discretion)  after the date on which the
Optionee's  Service  terminated,  but in any  event  no later  than  the  Option
Expiration Date.

             (b)  EXTENSION IF EXERCISE  PREVENTED BY LAW.  Notwithstanding  the
foregoing,  if the exercise of an Option within the applicable  time periods set
forth in Section 6.5(a) is prevented by the provisions of Section 11 below,  the
Option shall remain exercisable until ninety (90) days (or such longer period of
time as determined by the Board, in its discretion)  after the date the Optionee
is notified by the Company that the Option is  exercisable,  but in any event no
later than the Option Expiration Date.

             (c) EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(B). Notwithstanding
the foregoing, if a sale within the applicable time periods set forth in Section
6.5(a) of shares  acquired  upon the  exercise of the Option  would  subject the
Optionee to suit under  Section  16(b) of the  Exchange  Act,  the Option  shall
remain  exercisable  until the  earliest  to occur of (i) the tenth  (10th)  day
following  the  date on which a sale of such  shares  by the  Optionee  would no
longer be subject to such suit,  (ii) the one hundred and ninetieth  (190th) day
after the  Optionee's  termination  of Service,  or (iii) the Option  Expiration
Date.

     7. STANDARD FORMS OF OPTION AGREEMENT.

         7.1  GENERAL.  Unless  otherwise  provided by the Board at the time the
Option is granted,  an Option  shall comply with and be subject to the terms and
conditions  set forth in the standard forms of Option  Agreement  adopted by the
Board  concurrently  with its  adoption of the Plan and as amended  from time to
time.

         7.2 AUTHORITY TO VARY TERMS.  The Board shall have the  authority  from
time to time to vary the terms of any of the standard forms of Option  Agreement
described in this Section 7 either in connection  with the grant or amendment of
an individual  Option or in connection with the  authorization of a new standard
form or forms; provided, however, that the terms and conditions of any such new,
revised  or  amended  standard  form  or  forms  of  Option  Agreement  are  not
inconsistent with the terms of the Plan.

     8. CHANGE IN CONTROL.

                                       10
<PAGE>

         8.1 DEFINITIONS.

             (a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred if
any of the  following  occurs  with  respect to the  Company:  (i) the direct or
indirect sale or exchange in a single or series of related  transactions  by the
stockholders of the Company of more than fifty percent (50%) of the voting stock
of the Company;  (ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange,  or transfer of all or substantially all of the assets
of the Company; or (iv) a liquidation or dissolution of the Company.

             (b) A "CHANGE IN CONTROL" shall mean an Ownership Change Event or a
series of  related  Ownership  Change  Events  (collectively,  a  "TRANSACTION")
wherein the  stockholders of the Company  immediately  before the Transaction do
not  retain  immediately  after  the  Transaction,  in  substantially  the  same
proportions  as  their  ownership  of  shares  of  the  Company's  voting  stock
immediately before the Transaction,  direct or indirect beneficial  ownership of
more  than  fifty  percent  (50%)  of the  total  combined  voting  power of the
outstanding  voting stock of the Company or the  corporation or  corporations to
which  the   assets  of  the   Company   were   transferred   (the   "TRANSFEREE
CORPORATION(S)"),  as the case may be. For purposes of the  preceding  sentence,
indirect beneficial  ownership shall include,  without  limitation,  an interest
resulting from ownership of the voting stock of one or more corporations  which,
as  a  result  of  the   Transaction,   own  the   Company  or  the   Transferee
Corporation(s),  as the case may be,  either  directly  or  through  one or more
subsidiary  corporations.  The Board shall have the right to  determine  whether
multiple  sales or  exchanges  of the voting  stock of the  Company or  multiple
Ownership  Change  Events are  related,  and its  determination  shall be final,
binding and conclusive.

         8.2 EFFECT OF CHANGE IN CONTROL ON OPTIONS. In the event of a Change in
Control,  the surviving,  continuing,  successor,  or purchasing  corporation or
parent corporation  thereof,  as the case may be (the "ACQUIRING  Corporation"),
may either assume the Company's rights and obligations under outstanding Options
or substitute for outstanding Options  substantially  equivalent options for the
Acquiring Corporation's stock. For purposes of this Section 8.2, an Option shall
be deemed  assumed if,  following the Change in Control,  the Option confers the
right to purchase in accordance with its terms and conditions, for each share of
Stock  subject to the Option  immediately  prior to the Change in  Control,  the
consideration  (whether stock,  cash or other securities or property) to which a
holder of a share of Stock on the  effective  date of the Change in Control  was
entitled.  Any  Options  which are  neither  assumed or  substituted  for by the
Acquiring  Corporation in connection with the Change in Control nor exercised as
of the date of the Change in Control shall terminate and cease to be outstanding
effective  as of  the  date  of  the  Change  in  Control.  Notwithstanding  the
foregoing,  shares  acquired  upon  exercise of an Option prior to the Change in
Control and any  consideration  received  pursuant to the Change in Control with
respect to such shares shall continue to be subject to all applicable provisions
of the Option Agreement  evidencing such Option except as otherwise  provided in
such Option Agreement.

     9. PROVISION OF INFORMATION.

         At least  annually,  copies of the  Company's  balance sheet and income
statement  for the just  completed  fiscal year shall be made  available to each
Optionee and  purchaser  of shares of Stock upon the exercise of an Option.  The
Company shall not be required to provide

                                       11
<PAGE>

such  information to key employees  whose duties in connection  with the Company
assure them access to equivalent information.

     10. NONTRANSFERABILITY OF OPTIONS.

         During the lifetime of the  Optionee,  an Option  shall be  exercisable
only by the  Optionee or the  Optionee's  guardian or legal  representative.  No
Option shall be assignable or transferable by the Optionee, except by will or by
the laws of descent and distribution.

     11. COMPLIANCE WITH SECURITIES LAW.

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

     12. INDEMNIFICATION.

         In addition to such other rights of indemnification as they may have as
members of the Board or  officers  or  employees  of the  Participating  Company
Group,  members of the Board and any officers or employees of the  Participating
Company Group to whom authority to act for the Board or the Company is delegated
shall be indemnified by the Company against all reasonable  expenses,  including
attorneys'  fees,  actually  and  necessarily  incurred in  connection  with the
defense of any action,  suit or  proceeding,  or in  connection  with any appeal
therein,  to which  they or any of them may be a party by reason  of any  action
taken or  failure  to act under or in  connection  with the  Plan,  or any right
granted  hereunder,  and against all amounts paid by them in settlement  thereof
(provided such settlement is approved by independent  legal counsel  selected by
the Company) or paid by them in  satisfaction  of a judgment in any such action,
suit or  proceeding,  except  in  relation  to  matters  as to which it shall be
adjudged in such action, suit or proceeding that such person is liable for gross
negligence,  bad faith or intentional misconduct in duties;  provided,  however,
that  within  sixty  (60) days after the  institution  of such  action,  suit or
proceeding,  such person shall offer to the Company, in writing, the opportunity
at its own expense to handle and defend the same.

                                       12
<PAGE>

     13. TERMINATION OR AMENDMENT OF PLAN.

         The Board may terminate or amend the Plan at any time. However, subject
to changes in applicable law,  regulations or rules that would permit otherwise,
without  the  approval  of the  Company's  stockholders,  there  shall be (a) no
increase in the maximum  aggregate  number of shares of Stock that may be issued
under the Plan (except by operation of the  provisions of Section  4.2),  (b) no
change in the class of persons eligible to receive Incentive Stock Options,  and
(c) no other amendment of the Plan that would require  approval of the Company's
stockholders  under any  applicable  law,  regulation or rule. No termination or
amendment of the Plan may adversely  affect any then  outstanding  Option or any
unexercised  portion thereof,  without the consent of the Optionee,  unless such
termination  or  amendment  is  required  to enable an Option  designated  as an
Incentive  Stock Option to qualify as an Incentive  Stock Option or is necessary
to comply with any applicable law, regulation or rule.

     14. STOCKHOLDER APPROVAL.

         The Plan or any increase in the maximum  aggregate  number of shares of
Stock issuable  thereunder as provided in Section 4.1 (the "AUTHORIZED  SHARES")
shall be approved by the  stockholders  of the Company within twelve (12) months
of the  date  of  adoption  thereof  by the  Board.  Options  granted  prior  to
stockholder  approval  of  the  Plan  or in  excess  of  the  Authorized  Shares
previously approved by the stockholders shall become exercisable no earlier than
the date of stockholder  approval of the Plan or such increase in the Authorized
Shares, as the case may be.

                                       13
<PAGE>

                                  PLAN HISTORY
                                  ------------

April 12, 1999             Board  adopts  Plan,  with an initial  maximum  share
                           reserve of 4,000,000 shares, to become effective upon
                           the date of its approval by the shareholders.

June 21, 1999              Shareholders approve Plan.Exhibit 10(ggg)

                        MacAndrews & Forbes Holdings Inc.
                               35 East 62nd Street
                            New York, New York 10021

                                                October 8, 2003

SIGA Technologies, Inc.
420 Lexington Avenue, Suite 601
New York, New York 10170
Attention:  Thomas N. Konatich

Dear Mr. Konatich:

            Reference is made to the Securities Purchase Agreement (the
"Purchase Agreement"), dated August 13, 2003, by and between SIGA Technologies,
Inc. (the "Company") and MacAndrews & Forbes Holdings Inc. ("M & F").
Capitalized terms used but not defined herein shall have the meanings set forth
in the Purchase Agreement.

            Pursuant to Section 10.5 of the Purchase Agreement, M & F hereby
assigns in part its right to purchase Shares and Warrants to a Permitted
Transferee (the "Assignee") as set forth on Schedule A hereto.

            The undersigned Assignee hereby agrees that it will be bound by all
provisions of the Purchase Agreement that are binding on the Purchaser
thereunder. Without limiting the foregoing, the Assignee hereby represents and
warrants to the Company that:

1.    Investment Representations and Warranties. The Assignee understands that
      the Securities have not been, and will not upon issuance be, registered
      under the Securities Act, and that the certificates evidencing the
      Securities shall bear a legend to that effect, unless prior to issuance,
      the Securities shall have been so registered.

2.    Acquisition for Own Account. The Assignee is acquiring the Securities for
      its own account for investment and not with a view toward distribution in
      a manner which would violate the Securities Act.

3.    Ability to Protect Its Own Interests and Bear Economic Risks;
      Understanding of Use of Proceeds. By reason of the business and financial
      experience of its management, the Assignee has the capacity to protect its
      own interests in connection with the transactions contemplated by the
      Purchase Agreement. The Assignee is able to bear the economic risk of an
      investment in the Securities, and has an adequate income independent of
      any income produced from an investment in the Securities and has
      sufficient net worth to sustain a loss of all of its

<PAGE>

      investment in the Securities without economic hardship if such a loss
      should occur. The Assignee understands in all material respects the
      purposes for which the proceeds to the Company from the sale of the Shares
      and the Warrants will be used, as such purposes are set forth in Section
      7.8 of the Purchase Agreement.

4.    Accredited Investor. The Assignee is an "accredited investor" as that term
      is defined in Regulation D promulgated under the Securities Act.

5.    Access to Information. The Assignee has been furnished with the materials
      relating to the Company's business, operations, financial condition,
      assets, liabilities and other matters relevant to the Assignee's
      investment in the Securities, which have been requested by the Assignee.
      The Assignee has had adequate opportunity to ask questions of, and receive
      answers from, the Company's officers, employees, agents, accountants, and
      representatives concerning the Company's business, operations, financial
      condition, assets, liabilities, and all other matters relevant to its
      investment in the Securities.

            In connection with the assignment to the Assignee, Section 7.7(a) of
the Purchase Agreement is hereby amended by deleting it in its entirety and
substituting the following in lieu thereof:

            "(a) (i) At such time as MacAndrews & Forbes Holdings Inc. ("M & F")
      and TransTech Pharma, Inc. ("TTP") shall have invested an aggregate of
      $5,000,000 or more in Shares and, with respect to the M & F Representative
      (as defined below), for so long as M & F, together with its Affiliates
      (other than TTP), beneficially owns at least 1,700,000 Shares (as
      appropriately adjusted for any stock split, combination, reorganization,
      recapitalization, reclassification, stock dividend, stock distribution or
      similar event), and, with respect to the TTP Representative (as defined
      below), for so long as TTP, together with its Affiliates (other than M &
      F, its officers or Affiliates), beneficially owns at least 1,700,000
      Shares (as appropriately adjusted for any stock split, combination,
      reorganization, recapitalization, reclassification, stock dividend, stock
      distribution or similar event), the Company shall use its reasonable best
      efforts to appoint to its Board of Directors one individual designated by
      M & F (the "M & F Representative") and one individual designated by TTP
      (the "TTP Representative" and together with the M & F Representative, the
      "Purchaser Representatives"). Prior to such time, the Company shall enter
      into indemnification agreements with each of the Purchaser Representatives
      on terms no less favorable to the Purchaser Representatives than the terms
      of the indemnification agreements of the existing members of the Board of
      Directors.

            (ii) The initial Purchaser Representatives shall be those Persons
      who are designated by M & F or TTP, as the case may be, following the
      fulfillment of the conditions set forth in Section 7.7(a)(i) hereof to
      serve until their successors are duly elected; and thereafter the
      Purchaser

                                       2
<PAGE>

      Representatives shall be elected at the same time as other members of the
      Company's Board of Directors. If for any reason the M & F Representative
      or the TTP Representative shall resign or otherwise be removed from the
      Company's Board of Directors, then the Company shall use its reasonable
      best efforts to appoint, as his or her replacement, the individual
      designated by M & F or TTP, as the case may be."

            Further, Section 7.7(d) of the Purchase Agreement is hereby amended
by deleting the phrase "M & F Representatives" and inserting in lieu thereof the
phrase "Purchaser Representatives."

            As modified hereby, the Purchase Agreement and its terms and
provisions are hereby ratified and confirmed for all purposes and in all
respects.

            The internal laws, and not the laws of conflicts (other than Section
5-1401 of the General Obligations Law of the State of New York), of New York
shall govern the enforceability and validity of this letter agreement, the
construction of its terms and the interpretation of the rights and duties of the
parties. Any suit, action or proceeding seeking to enforce any provision of, or
based on any matter arising out of or in connection with, this letter agreement
or the transactions contemplated hereby may be brought in any federal or state
court located in the County and State of New York, and each of the parties
hereby consents to the jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
which is brought in any such court has been brought in an inconvenient forum.
Process in any such suit, action or proceeding may be served on either party
anywhere in the world, whether within or without the jurisdiction of any such
court.

            Nothing expressed or referred to in this letter agreement will be
construed to give any person other than the parties to this letter agreement and
the Company any legal or equitable right, remedy, or claim under or with respect
to this letter agreement or any provision of this letter agreement. This letter
agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this letter agreement and the Company.

            No change or modification of this letter agreement shall be valid
unless the same is in writing and signed by the parties hereto. No waiver of any
provision of this letter agreement shall be valid unless in writing and signed
by the party waiving its rights. The failure of any party at any time to insist
upon, or any delay by either party at any time to insist upon, strict
performance of any condition, promise, agreement or understanding set forth
herein shall not be construed as a waiver or relinquishment of the right to
insist upon strict performance of the same condition, promise, agreement or
understanding at a future time.

                                    * * * * *

                                       3
<PAGE>

            Please indicate your agreement with the foregoing by executing and
returning the enclosed copy of this letter agreement.

                                        Sincerely,

                                        MACANDREWS & FORBES HOLDINGS INC.

                                        By: /s/ Howard Gittis
                                            -----------------
                                            Name: Howard Gittis
                                            Title: Vice Chairman

                 [SIGNATURE PAGE TO ASSIGNMENT LETTER AGREEMENT]

<PAGE>

ACCEPTED AND AGREED:

TransTech Pharma, Inc.

By: /s/ Adnan Mjalli
    ----------------
Name: Adnan Mjalli
Title: President and CEO

                 [SIGNATURE PAGE TO ASSIGNMENT LETTER AGREEMENT]

<PAGE>

ACCEPTED AND AGREED:

SIGA Technologies, Inc.

By: /s/ Thomas N. Konatich
    ----------------------
Name: Thomas N. Konatich
Title: Acting Chief Executive Officer

                 [SIGNATURE PAGE TO ASSIGNMENT LETTER AGREEMENT]

<PAGE>

                                                                      Schedule A

                             Assignment to Assignee

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Name of Assignee           Maximum Number of Tranche B    Maximum aggregate purchase price
                           Shares which Assignee is       which Assignee is to pay for
                           assigned right to purchase     Tranche B Shares at the Per
                                                          Share Purchase Price  (Tranche B
                                                          Warrants to be issued for no
                                                          additional consideration)
------------------------------------------------------------------------------------------
<S>                        <C>                            <C>
TransTech Pharma, Inc.     3,472,222                      $4,999,999.68
------------------------------------------------------------------------------------------
</TABLE>

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