EQUITY CREDIT AGREEMENT
BY AND BETWEEN
SPATIALIGHT, INC.

AND

THE INVESTORS LISTED ON SCHEDULE A

Dated
April 24, 2007

THIS EQUITY CREDIT AGREEMENT is entered into as of the 24th day of April 2007
(this "AGREEMENT"), by and among each of the Investors, severally and not
jointly, in the percentages set forth on Schedule A and SPATIALIGHT, INC., a
corporation organized and existing under the laws of the State of New York (the
"COMPANY").

W I T N E S S E T H :

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Investors, from time
to time as provided herein, and the Investors shall purchase in the aggregate,
up to Fifteen Million Four Hundred Thousand Dollars ($15,400,000) of the Common
Stock (as defined below).

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I
CERTAIN DEFINITIONS

Section 1.1  DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings specified or indicated (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).

"AGREEMENT" shall have the meaning specified in the preamble hereof.

"BY-LAWS" shall have the meaning specified in Section 4.7.

"CERTIFICATE" shall have the meaning specified in Section 4.7

"CLAIM NOTICE" shall have the meaning specified in Section 9.3(a).

"CLOSING" shall mean one of the closings of a purchase and sale of shares of
Common Stock pursuant to Section 2.3.

"CLOSING DATE" shall mean the fifth Trading Day following the Put Date, unless
otherwise agreed between the Investor and the Company.
 

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“CLOSING PRICE” shall mean, for any Trading Day, the closing bid price of the
Common Stock on the Principal Market for such Trading Day.
 
"COMMITMENT PERIOD" shall mean the period commencing on the date hereof, and
ending on the earlier of (i) the date on which the Investors shall have
purchased Put Shares pursuant to this Agreement for an aggregate Purchase Price
of the Maximum Commitment Amount, (ii) the date this Agreement is terminated
pursuant to Section 2.4, or (iii) the date occurring eighteen (18) months from
the date hereof.

"COMMON STOCK" shall mean the Company's common stock, $.01 par value per share,
and any shares of any other class of common stock whether now or hereafter
authorized, having the right to participate in the distribution of dividends (as
and when declared) and assets (upon liquidation of the Company).

"COMMON STOCK EQUIVALENTS" shall mean any securities that are convertible into
or exchangeable for Common Stock or any options or other rights to subscribe for
or purchase Common Stock or any such convertible or exchangeable securities.
 
"COMPANY" shall mean SpatiaLight, Inc.

"CONDITION SATISFACTION DATE" shall have the meaning specified in Section 7.2.

"DAMAGES" shall mean any loss, claim, damage, liability, costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements and
costs and expenses of expert witnesses and investigation).

"DISCOUNT" shall mean (i) with respect to the first $3,700,000 of Common Stock
purchased pursuant to this Agreement, zero and (ii) with respect to the next
$11,700,000 of Common Stock purchased pursuant to this Agreement, 5%.

"DISPUTE PERIOD" shall have the meaning specified in Section 9.3(a).

"DTC" shall the meaning specified in Section 2.2.

"DWAC" shall the meaning specified in Section 2.3.

"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

“EXCESS PUT SHARES” shall mean the excess of the Interim Put Shares over the Put
Shares.

"FAST" shall have the meaning specified in Section 2.2.
  
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"INDEMNIFIED PARTY" shall have the meaning specified in Section 9.3(a).

"INDEMNIFYING PARTY" shall have the meaning specified in Section 9.3(a).

"INDEMNITY NOTICE" shall have the meaning specified in Section 9.3(b).

"INTERIM PUT SHARES" shall be the number of Put Shares equal to (i) the Put
Amount divided by (ii) (A) the average of the three lowest Closing Prices for
the five (5) Trading Days immediately preceding the Put Date minus (B) the
result in the preceding clause (ii)(A) multiplied by the Discount.

"INVESTOR" shall have the meaning specified in the preamble to this Agreement.

"MAXIMUM COMMITMENT AMOUNT" shall mean Fifteen Million Four Hundred Thousand
Dollars ($15,400,000) in the aggregate.

"MATERIAL ADVERSE EFFECT" shall mean any effect on the business, operations,
properties, prospects or financial condition of the Company that is material and
adverse to the Company or to the Company and such other entities controlling or
controlled by the Company, taken as a whole, and/or any condition, circumstance,
or situation that would prohibit or otherwise materially interfere with the
ability of the Company to enter into and perform its obligations under this
Agreement.

"NASD" shall mean the National Association of Securities Dealers, Inc.

"NASDAQ" shall mean The Nasdaq Stock Market, Inc.

"OUTSTANDING" shall mean, with respect to the Common Stock, at any date as of
which the number of shares of Common Stock is to be determined, all issued and
outstanding shares of Common Stock, including all shares of Common Stock
issuable in respect of outstanding options, warrants, convertible securities,
scrip or any certificates representing fractional interests in shares of Common
Stock; provided, however, that Outstanding shall not include any shares of
Common Stock then directly or indirectly owned or held by or for the account of
the Company or held in escrow.

"PERSON" shall mean an individual, a corporation, a partnership, an association,
a trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.

"PRINCIPAL MARKET" shall mean the Nasdaq Global Select Market, the Nasdaq Global
Market, the Nasdaq Capital Market, the Over the Counter Bulletin Board, the
American Stock Exchange or the New York Stock Exchange, whichever is at the time
the principal trading exchange or market for the Common Stock.

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"PURCHASE PRICE" shall mean the Closing Price for each Trading Day set forth in
the Put Notice minus the product of the Discount and the Closing Price for each
Trading Day set forth in the Put Notice.
 
"PUT" shall mean each occasion that the Company elects to exercise its right to
tender a Put Notice requiring Investor to purchase shares of Common Stock,
subject to the terms and conditions of this Agreement.

"PUT AMOUNT" shall mean, with respect to any Put, Sixty Thousand Dollars
($60,000), for each of the Trading Days set forth in the Put Notice unless
otherwise agreed by the Investor and the Company.

"PUT DATE" shall mean the Trading Day during the Commitment Period that a Put
Notice is deemed delivered pursuant to Section 2.2(b).

"PUT NOTICE" shall mean a written notice, substantially in the form of Exhibit A
hereto, to Investor setting forth the Put Amount with respect to which the
Company intends to require Investor to purchase shares of Common Stock pursuant
to the terms of this Agreement.

"PUT SHARES" shall mean the number of shares of Common Stock to be purchased by
the Investor on the applicable Closing Date.

"REGISTRABLE SECURITIES" shall mean the (a) Put Shares and (b) any securities
issued or issuable with respect to the Put Shares by way of exchange, stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise. As
to any particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (i) a Registration Statement has been
declared effective by the SEC and such Registrable Securities have been disposed
of pursuant to a Registration Statement, (ii) such Registrable Securities have
been sold under circumstances under which all of the applicable conditions of
Rule 144 are met, (iii) such time as such Registrable Securities have been
otherwise transferred to holders who may trade such shares without restriction
under the Securities Act, and the Company has delivered a new certificate or
other evidence of ownership for such securities not bearing a restrictive legend
or (iv) in the opinion of counsel to the Company, which counsel shall be
reasonably acceptable to Investor, such Registrable Securities may be sold
without registration under the Securities Actor the need for an exemption from
any such registration requirements and without any time, volume or manner
limitations pursuant to Rule 144(k) (or any similar provision then in effect)
under the Securities Act.

"REGISTRATION STATEMENT" shall mean the Company’s registration statement on Form
S-3, Registration No. 333-137100, covering the registration of the issuance to
each Investor of the Registrable Securities under the Securities Act.

"REMAINDER PUT SHARES" shall mean the number of Put Shares required to be
delivered by the Company on the Closing Date minus the Interim Put Shares.

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"SEC" shall mean the Securities and Exchange Commission.

"SECURITIES ACT" shall mean the Securities Act of 1933, as amended and the rules
and regulations promulgated thereunder.

"SEC DOCUMENTS" shall mean, as of a particular date, all reports and other
documents filed by the Company pursuant to the Securities Act and Section 13(a)
or 15(d) of the Exchange Act since the beginning of the Company's then most
recently completed fiscal year as of the time in question (provided that if the
date in question is within ninety days of the beginning of the Company's fiscal
year, the term shall include all documents filed since the beginning of the
second preceding fiscal year).

"THIRD PARTY CLAIM" shall have the meaning specified in Section 9.3(a).

"TRADING DAY" shall mean any day during which the Principal Market shall be open
for business.

"TRANSACTION DOCUMENTS" means the Equity Credit Agreement and the Closing
Certificate.

"TRANSFER AGENT" shall mean the transfer agent for the Common Stock (and to any
substitute or replacement transfer agent for the Common Stock upon the Company's
appointment of any such substitute or replacement transfer agent).

"UNDERWRITER" shall mean any underwriter participating in any disposition of the
Registrable Securities on behalf of Investor pursuant to a Registration
Statement.

ARTICLE II
PURCHASE AND SALE OF COMMON STOCK

Section 2.1  INVESTMENTS. Upon the terms and conditions set forth herein
(including, without limitation, the provisions of Article VII), on any Put Date
the Company may exercise a Put by the delivery of a Put Notice and each Investor
shall purchase Put Shares based upon the product of the Put Amount multiplied by
the percentage set forth opposite such Investor’s name on Schedule A.

Section 2.2  MECHANICS.

(a) PUT NOTICE. At any time during the Commitment Period, the Company may
deliver a Put Notice to the Investors, subject to the conditions set forth in
Section 7.2. Each Put Notice shall be for the Put Amount for up to five (5)
Trading Days including the date that the Put Notice is deemed to be delivered
pursuant to Section 2.2(b) and up to four (4) of the Trading Days thereafter.
The Purchase Price shall be determined for each Trading Day set forth in the Put
Notice based upon the Put Amount for each such Trading Day. Unless otherwise
agreed by the Investor, the Company shall not be entitled to deliver a Put
Notice more than once every five (5) Trading Days.

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(b) DATE OF DELIVERY OF PUT NOTICE. A Put Notice shall be deemed delivered on
the later of: (i) the Trading Day it is received by facsimile or otherwise by
the Investor if such notice is received on or prior to 2:00 PM New York time, or
the immediately succeeding Trading Day if it is received by facsimile or
otherwise after 2:00 PM New York time on a Trading Day or at anytime on a day
which is not a Trading Day and (ii) the delivery to the Investor of the Interim
Put Shares through the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer Program (“FAST”), as described in Section 2.3.

Section 2.3 CLOSINGS. On each Closing Date (a) the Investor shall provide the
Company with transaction confirmations showing the number of Put Shares sold and
the price at which the Put Shares were sold on each Trading Day, (b) a
computation of whether the Put Shares are greater or less than the Interim Put
Shares, (c) the Company shall authorize the transfer to the Remainder Put Shares
to the Investors, in the manner described below, or the Investor shall deliver
to the Company the Excess Put Shares, as the case may be, and (d) provided all
conditions to Closing have been satisfied by the Company, Investor shall deliver
to the Company the Put Amount, by wire transfer of immediately available funds.
In the event that all of the conditions to Closing are not met, then the
Investor shall return the Interim Put Shares to the Company or deliver the Put
Amount to the Company with respect to the Interim Put Shares, at the option of
the Investor. In lieu of delivering physical certificates representing the Put
Shares and the Interim Put Shares, the Company shall cause the Transfer Agent to
electronically transmit, on the Put Date or the Closing Date, as the case may
be, the Interim Put Shares or the Remainder Put Shares, as the case may be, by
crediting the account of the Investor's prime broker with DTC through its
Deposit Withdrawal Agent Commission ("DWAC") system, and provide proof
satisfactory to the Investor of such delivery. In addition, on such Closing
Date, each of the Company and Investor shall deliver all documents, instruments
and writings required to be delivered or reasonably requested by either of them
pursuant to this Agreement in order to implement and effect the transactions
contemplated herein.

Section 2.4  TERMINATION OF INVESTMENT OBLIGATION. The obligation of Investor
pursuant to this Agreement to purchase shares of Common Stock shall terminate
permanently (including with respect to a Closing Date that has not yet occurred)
in the event that (a) there shall occur any stop order or suspension of the
effectiveness of the Registration Statement for an aggregate of thirty (30)
Trading Days during the Commitment Period, (b) the Company shall at any time
fail to comply with the requirements of Section 6.3, 6.4, or 6.6 and such
failure shall continue for more than thirty (30) days, or (c) in the event of a
breach or an event of default by the Company with respect to any agreement
entered into with an Investor or the occurrence of an event that with notice or
lapse of time or both would become a default and the same is not cured by the
Company within thirty (30) days after written notice.

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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR

Each Investor represents and warrants, severally and not jointly, to the Company
that:

Section 3.1  INTENT. Investor is entering into this Agreement for its own
account and Investor has no present arrangement (whether or not legally binding)
at any time to sell the Common Stock to or through any person or entity;
provided, however, Investor reserves the right to dispose of the Common Stock at
any time in accordance with federal and state securities laws applicable to such
disposition.

Section 3.2  SOPHISTICATED INVESTOR. Investor is a sophisticated investor (as
described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor (as
defined in Rule 501 of Regulation D), and Investor has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in the Common Stock. Investor acknowledges that an
investment in the Common Stock is speculative and involves a high degree of
risk.

Section 3.3  AUTHORITY. (a) Investor has the requisite power and authority to
enter into and perform its obligations under this Agreement and the transactions
contemplated hereby in accordance with its terms; (b) the execution and delivery
of this Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary action and no further consent
or authorization of Investor is required; and (c) this Agreement has been duly
authorized and validly executed and delivered by Investor and is a valid and
binding agreement of Investor enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, or similar laws relating
to, or affecting generally the enforcement of, creditors' rights and remedies or
by other equitable principles of general application.

Section 3.4  NOT AN AFFILIATE. Except as set forth on Schedule 3.4, Investor is
not an officer, director or "affiliate" (as that term is defined in Rule 405 of
the Securities Act) of the Company or any other Investor as of the time of
signing of this document.

Section 3.5  ORGANIZATION AND STANDING. Investor is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Investor is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, other than
those in which the failure so to qualify would not have a material adverse
effect on Investor.

Section 3.6  ABSENCE OF CONFLICTS. The execution and delivery of this Agreement
and any other document or instrument contemplated hereby, and the consummation
of the transactions contemplated hereby and thereby, and compliance with the
requirements hereof and thereof, will not (a) violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on Investor, (b)
violate any provision of any indenture, instrument or agreement to which
Investor is a party or is subject, or by which Investor or any of its assets is
bound, or conflict with or constitute a material default thereunder, (c) result
in the creation or imposition of any lien pursuant to the terms of any such
indenture, instrument or agreement, or constitute a breach of any fiduciary duty
owed by Investor to any third party, or (d) require the approval of any
third-party (that has not been obtained) pursuant to any material contract,
instrument, agreement, relationship or legal obligation to which Investor is
subject or to which any of its assets, operations or management may be subject.

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Investor that, except as disclosed in the
SEC Documents:

Section 4.1  ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized and validly existing and in good standing under the laws of the State
of New York, and has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. The Company
is duly qualified as a domestic corporation to do business and is in good
standing in every jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, other than those in
which the failure so to qualify would not have a Material Adverse Effect.

Section 4.2  AUTHORITY. (a) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and to
issue the Put Shares; (b) the execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required, except for the stockholder approval to issue Put Shares after the
Investors have purchased Put Shares having an aggregate Purchase Price of
$3,700,000; and (c) this Agreement has been duly executed and delivered by the
Company and constitutes valid and binding obligations of the Company enforceable
against the Company in accordance with its respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws relating to, or affecting generally the enforcement of, creditors' rights
and remedies or by other equitable principles of general application.

Section 4.3  CAPITALIZATION. As of the date hereof, the authorized capital stock
of the Company consists of 100,000,000 shares of Common Stock, $.01 par value,
of which 47,773,092 shares were issued and outstanding. Except for options,
warrants and conversion rights to purchase 15,390,727 shares of Common Stock,
there are no options, warrants, or rights to subscribe to, securities, rights or
obligations convertible into or exchangeable for or giving any right to
subscribe for any shares of capital stock of the Company. All of the outstanding
shares of Common Stock of the Company have been duly and validly authorized and
issued and are fully paid and nonassessable.

Section 4.4  COMMON STOCK. The Company has registered the Common Stock pursuant
to Section 12(b) or 12(g) of the Exchange Act and is in full compliance with all
reporting requirements of the Exchange Act, and, except as disclosed in the SEC
Documents, the Company has maintained all requirements for the continued listing
or quotation of the Common Stock, and such Common Stock is currently listed or
quoted on the Principal Market. As of the date of this Agreement, the Principal
Market is NASDAQ.

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Section 4.5  SEC DOCUMENTS. The Company has delivered or made available to
Investor true and complete copies of the SEC Documents on file as of the date
hereof. As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and other federal, state and local laws, rules and regulations
applicable to such SEC Documents, and none of the SEC Documents 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 Documents comply as to
form and substance in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (a) as may be
otherwise indicated in such financial statements or the notes thereto or (b) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of 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 year-end audit
adjustments). The Registration Statement covers the issuance of the Put Shares.
The Registration Statement covering the issuance of the Put Shares was declared
effective on February 14, 2007 by the Commission and neither the Commission nor
any state regulatory authority has issued, or threatened to issue, any order
preventing or suspending the use of the Registration Statement or the prospectus
contained therein or has instituted or, to the Company’s knowledge, threatened
to institute any proceedings with respect to such an order.

Section 4.6  VALID ISSUANCES. When issued and paid for as herein provided, the
Put Shares shall be duly and validly issued, fully paid, and nonassessable.
Neither the sales of the Put Shares pursuant to, nor the Company's performance
of its obligations under, this Agreement shall (a) result in the creation or
imposition of any liens, charges, claims or other encumbrances upon the Put
Shares or any of the assets of the Company, or (b) entitle the holders of
Outstanding Common Stock to preemptive or other rights to subscribe to or
acquire the Common Stock or other securities of the Company. The Put Shares
shall not subject Investor to personal liability by reason of the ownership
thereof.

Section 4.7  CORPORATE DOCUMENTS. The Company has furnished or made available to
Investor true and correct copies of the Company's Certificate of Incorporation,
as amended and in effect on the date hereof (the "CERTIFICATE"), and the
Company's By-Laws, as amended and in effect on the date hereof (the "BY-LAWS").

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Section 4.8  NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not (a) result in a violation of the Certificate or
By-Laws or (b) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become al default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any material agreement, indenture, instrument or any "lock-up" or similar
provision of any underwriting or similar agreement to which the Company is a
party, or (c) result in a violation of any federal, state, local or foreign law,
rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or by which any
property or asset of the Company is bound or affected nor is the Company
otherwise in violation of, conflict with or in default under any of the
foregoing. The business of the Company is not being conducted in violation of
any law, ordinance or regulation of any governmental entity. Except as set forth
on Schedule 4.8, the Company is not required under federal, state or local law,
rule or regulation to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or issue
and sell the Common Stock in accordance with the terms hereof (other than any
SEC, NASD, state securities filings or filings with the Principal Market that
may be required to be made by the Company subsequent to any Closing).

Section 4.9  NO MATERIAL ADVERSE CHANGE. Since March 16, 2007, no event has
occurred that would have a Material Adverse Effect on the Company, except as
disclosed in the SEC Documents.

Section 4.10  NO UNDISCLOSED LIABILITIES. The Company has no liabilities or
obligations that are material, individually or in the aggregate, and that are
not disclosed in the SEC Documents on file on the date hereof or otherwise
publicly announced, other than those incurred in the ordinary course of the
Company's businesses since March 16, 2007 and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect on the Company.

Section 4.11  NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Since March 16, 2007, no
event or circumstance has occurred or exists with respect to the Company or its
businesses, properties, prospects, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the SEC Documents.

Section 4.12  LITIGATION AND OTHER PROCEEDINGS. Except as may be set forth in
the SEC Documents, there are no lawsuits or proceedings pending or to the best
knowledge of the Company threatened, against the Company, nor has the Company
received any written or oral notice of any such action, suit, proceeding or
investigation, which would have a Material Adverse Effect. Except as set forth
in the SEC Documents, no judgment, order, writ, injunction or decree or award
has been issued by or, so far as is known by the Company, requested of any
court, arbitrator or governmental agency which would have a Material Adverse
Effect.

Section 4.13  NO MISLEADING OR UNTRUE COMMUNICATION. Neither this Agreement nor
the Exhibits and schedules hereto contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements, in the light of the circumstances under which they were made, not
misleading.

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ARTICLE V
COVENANTS OF INVESTOR

Section 5.1  COMPLIANCE WITH LAW. Investor's and all of Investor’s affiliates
trading activities with respect to shares of the Common Stock will be and have
been in compliance with all applicable state and federal securities laws, rules
and regulations and the rules and regulations of the NASD and the Principal
Market on which the Common stock is listed. Investor acknowledges that it will
be an underwriter with respect to the Put Shares and will have the obligations
and responsibilities of an underwriter under the Securities Act.

ARTICLE VI
COVENANTS OF THE COMPANY

Section 6.1  REGISTRATION STATEMENT. The Company shall use its best 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
Registerable Securities for sale in any jurisdiction.

Section 6.2  RESERVATION OF COMMON STOCK. The Company shall have available and
the Company shall reserve and keep available at all times, free of preemptive
rights, shares of Common Stock for the purpose of enabling the Company to
satisfy any obligation to issue the Put Shares.

Section 6.3  LISTING OF COMMON STOCK. The Company shall use its best efforts to
maintain the listing of the Common Stock on a Principal Market and, if
applicable, will cause the Put Shares to be listed on the Principal Market. The
Company further shall, if the Company applies to have the Common Stock traded on
any other Principal Market, include in such application the Put Shares and shall
take such other action as is necessary or desirable in the reasonable opinion of
Investor to cause the Common Stock to be listed on such other Principal Market
as promptly as possible. The Company shall use its commercially reasonable
efforts to continue the listing and trading of the Common Stock on the Principal
Market (including, without limitation, maintaining sufficient net tangible
assets) and will comply in all respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the NASD and the Principal
Market.

Section 6.4  EXCHANGE ACT REGISTRATION. The Company shall cause the Common Stock
to continue to be registered under Section 12(g) or 12(b) of the Exchange Act,
and will comply in all material respects with its reporting and filing
obligations under said Act, and will not take any action or file any document
(whether or not permitted by said Act or the rules thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting and filing
obligations under said Act.

Section 6.5  ISSUANCE. The sale of the Put Shares to the Investor shall be
registered pursuant to the Registration Statement. The Put Shares shall be free
of legends and no instructions or "stop transfers orders," so called, "stock
transfer restrictions," or other restrictions have been or shall be given to the
Company's transfer agent.

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Section 6.6  CORPORATE EXISTENCE. The Company shall take all commercially
reasonable steps necessary to preserve and continue the corporate existence of
the Company.

Section 6.7  NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF
RIGHT TO MAKE A PUT. The Company shall promptly notify Investor upon the
occurrence of any of the following events in respect of a registration statement
or related prospectus in respect of an offering of Registrable Securities: (a)
receipt of any request for additional information by the SEC 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 related prospectus; (b) the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of any Registration Statement or the initiation of any proceedings
for that purpose; (c) receipt 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; (d) the happening of any event that makes any
statement made in such Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
registration statement, related prospectus or documents so that, in the case of
a Registration Statement, 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 not misleading, and that in the case of
the related prospectus, 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 the light of the circumstances
under which they were made, not misleading; and (e) the Company's reasonable
determination that a post-effective amendment to the registration statement
would be appropriate, and the Company shall promptly make available to Investor
any such supplement or amendment to the related prospectus. The Company shall
not deliver to Investor any Put Notice during the continuation of any of the
foregoing events.

Section 6.8  CONSOLIDATION; MERGER. The Company shall not, at any time after the
date hereof, effect any merger or consolidation of the Company with or into, or
a transfer of all or substantially all of the assets of the Company to, another
entity unless the resulting successor or acquiring entity (if not the Company)
assumes by written instrument the obligation to deliver to Investor such shares
of Common Stock and/or securities as Investor is entitled to receive pursuant to
this Agreement.

Section 6.9  DILUTION. The number of shares of Common Stock issuable as Put
Shares may increase substantially in certain circumstances as a result of a
decline in the trading price. The Company's executive officers and directors
have studied and fully understand the nature of the transactions contemplated by
this Agreement and recognize that they have a potential dilutive effect. The
board of directors of the Company has concluded, in its good faith business
judgment that such issuance is in the best interests of the Company. The Company
specifically acknowledges that its obligation to issue the Put Shares is binding
upon the Company and enforceable regardless of the dilution such issuance may
have on the ownership interests of other shareholders of the Company.

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Section 6.10 USE OF PROCEEDS. The Company may not use any proceeds from the sale
of Put Shares for the repayment of the principal amount of the indebtedness
represented by the Senior Secured Convertible Notes dated November 30, 2004 or
the principal amount of any notes payable to Argyle Capital Management
Corporation.

ARTICLE VII
CONDITIONS TO DELIVERY OF
PUT NOTICES AND CONDITIONS TO CLOSING

Section 7.1  CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE AND
SELL COMMON STOCK. The obligation hereunder of the Company to issue and sell the
Put Shares to Investor incident to each Closing is subject to the satisfaction,
at or before each such Closing, of each of the conditions set forth below.

(a)  ACCURACY OF INVESTOR'S REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Investor shall be true and correct in all material respects as
of the date of this Agreement and as of the date of each such Closing as though
made at each such time.

(b) PERFORMANCE BY INVESTOR. Investor shall have performed, satisfied and
complied in all respects with all covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by Investor at or
prior to such Closing.

(c) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement shall be
effective and (i) neither the Company nor Investor shall have received notice
that the SEC has issued or intends to issue a stop order with respect to such
Registration Statement or that the SEC otherwise has suspended or withdrawn the
effectiveness of such Registration Statement, either temporarily or permanently,
or intends or has threatened to do so, and (ii) no other suspension of the use
or withdrawal of the effectiveness of such Registration Statement or related
prospectus shall exist.

(d) NO VIOLATION OF LAW. The sale or delivery of the Put Shares would not
violate any applicable law.

Section 7.2  CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER A PUT
NOTICE AND THE OBLIGATION OF INVESTOR TO PURCHASE PUT SHARES. The right of the
Company to deliver a Put Notice and the obligation of Investor hereunder to
acquire and pay for the Put Shares incident to a Closing is subject to the
satisfaction, on (a) the date of delivery of such Put Notice and (b) the
applicable Closing Date (each a "CONDITION SATISFACTION DATE"), of each of the
following conditions:

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(a)  EFFECTIVE REGISTRATION STATEMENT. The issuance of the Put Shares to the
Investor shall be registered pursuant to the Registration Statement. The
Registration Statement shall be effective on each Condition Satisfaction Date
and (i) neither the Company nor Investor shall have received notice that the SEC
has issued or intends to issue a stop order with respect to such Registration
Statement or that the SEC otherwise has suspended or withdrawn the effectiveness
of such Registration Statement, either temporarily or permanently, or intends or
has threatened to do so, and (ii) no other suspension of the use or withdrawal
of the effectiveness of such Registration Statement or related prospectus shall
exist.

(b)  ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company shall be true and correct in all
material respects as of each Condition Satisfaction Date as though made at each
such time (except for representations and warranties specifically made as of a
particular date) with respect to all periods, and as to all events and
circumstances occurring or existing to and including each Condition Satisfaction
Date.

(c)  PERFORMANCE BY THE COMPANY. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to each Condition Satisfaction Date.

(d) NO BANKRUPTCY. The Company has not (i) made an assignment for the benefit of
its creditors; (ii) filed a voluntary bankruptcy petition; (iii) become the
subject of an order for relief or been declared insolvent in any federal or
state bankruptcy or insolvency proceedings; (iv) filed a petition or answer
seeking reorganization, arrangement, composition, readjustment, liquidation,
dissolution, termination, or similar relief under any law; (v) filed an answer
or other pleading admitting or failing to contest the material allegations of a
petition filed against the Company in any proceeding; or (vi) sought, consented
to, or acquiesced in the appointment of a trustee, receiver, or liquidator of
all or any substantial part of the Company's properties; and no proceeding
seeking reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any law has been filed that has not been
dismissed within one hundred twenty (120) after filing or with respect to which
a trustee, receiver, or liquidator of any substantial part of the Company's
properties has been appointed and ninety (90) days have expired without the
appointment being vacated or stayed, or ninety (90) days have expired after the
date of expiration of a stay, if the appointment has not previously been
vacated.

(e)  NO INJUNCTION. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or adopted by
any court or governmental authority of competent jurisdiction that prohibits or
directly and materially adversely affects any of the transactions contemplated
by this Agreement, and no proceeding shall have been commenced that may have the
effect of prohibiting or materially adversely affecting any of the transactions
contemplated by this Agreement.

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(f)  ADVERSE CHANGES. Since the date of filing of the Company's most recent SEC
Document, no event that had or is reasonably likely to have a Material Adverse
Effect has occurred.

(g)  NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK. The trading of
the Common Stock shall not have been suspended by the SEC, the Principal Market
or the NASD and the Common Stock shall have been approved for listing or
quotation on and shall not have been delisted from the Principal Market.
Investors acknowledge that the Company has received a delisting notice from the
NASD and may be delisted from the NASDAQ Capital Market.

(h)  LEGAL OPINION. The Company shall have caused to be delivered to Investor,
an opinion of the Company's legal counsel in the form of Exhibit B hereto,
addressed to Investor.

(i)  TEN PERCENT LIMITATION. Notwithstanding anything to the contrary contained
herein, if, on any Closing Date, the number of Put Shares then to be purchased
pursuant to a Put Notice by Investor would, when aggregated with all other
shares of Common Stock then held by Investor (including, for the purposes of
this Section 7.2(h), Common Stock issuable upon conversion, exercise or
exchange, as applicable, of Common Stock Equivalents then held by Investor),
cause Investor to beneficially own in excess of 9.99% of the total number of
issued and outstanding shares of Common Stock after giving effect to the Put
(the "Percentage Cap"), then the number of Put Shares shall be reduced to the
extent necessary for Investor's beneficial ownership of Common Stock, after
giving effect to the Put, not to exceed the Percentage Cap. For such purposes,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. In the event
the number of Put Shares with respect to any Put are required to be reduced
pursuant to this Section 7.2(h), Investor shall provide, via facsimile, as soon
as possible on the Closing Date, and in no event later than 12:00 p.m. EST, a
notice to the Company setting forth the maximum number of shares issuable
pursuant to such Put which would not result in Investor's beneficial ownership
exceeding the Percentage Cap and shall return to the Company any Excess Put
Shares. In the event that the amount of any Put Amount is limited as a result of
this paragraph, at SpatiaLight’s option, the maximum Put Amount thereafter shall
be increased, subject to the Percentage Cap, until such time as the total Put
Amount available under the terms of this Agreement shall be equal to the amount
that would have been available in the absence of the Percentage Cap.
 
(j)  SHAREHOLDER VOTE. The issuance of shares of Common Stock with respect to
the applicable Closing, if any, shall not violate the shareholder approval
requirements of the Principal Market. In the event that the Company desires to
put shares of Common Stock to the Investors having an aggregate Purchase Price
in excess of $3,700,000 commencing on the date of this Agreement, then the
Company shall be obligated to obtain shareholder approval to issue Put Shares in
excess of such amount.

(k)  OTHER. On each Condition Satisfaction Date, Investor shall have received
and been reasonably satisfied with such other certificates and documents as
shall have been reasonably requested by Investor in order for Investor to
confirm the Company's satisfaction of the conditions set forth in this Section
7.2., including, without limitation, a certificate in substantially the form and
substance of Exhibit C hereto, executed by an executive officer of the Company
and to the effect that all the conditions to such Closing shall have been
satisfied as at the date of each such certificate.

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(l) NO BREACH. On each Condition Satisfaction Date, there shall not (i) be an
uncured event of default or a breach of any agreement between the Company and an
Investor or (ii) have occurred an event that with notice or lapse of time or
both would become a default or a breach of an agreement between the Company and
the Investor which is uncured.

Section 7.3  DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION.

(a)  The Company shall make available for inspection and review by Investor,
advisors to and representatives of Investor (who may or may not be affiliated
with Investor and who are reasonably acceptable to the Company), and any
Underwriter, any Registration Statement or amendment or supplement thereto or
any blue sky, NASD or other filing, all financial and other records, all SEC
Documents and other filings with the SEC, and all other corporate documents and
properties of the Company as may be reasonably necessary for the purpose of such
review, and cause the Company's officers, directors and employees to supply all
such information reasonably requested by Investor or any such representative,
advisor or Underwriter in connection with such Registration Statement
(including, without limitation, in response to all questions and other inquiries
reasonably made or submitted by any of them), prior to and from time to time
after the filing and effectiveness of such Registration.

(b)  Notwithstanding anything contained herein to the contrary, each of the
Company, its officers, directors, employees and agents shall in no event
disclose non-public information to Investor, advisors to or representatives of
Investor.

(c)  Nothing herein shall require the Company to disclose non-public information
to Investor or its advisors or representatives, and the Company represents that
it does not disseminate non-public information to any investors who purchase
stock in the Company in a public offering, to money managers or to securities
analysts; provided, however, that notwithstanding anything herein to the
contrary, the Company shall, as hereinabove provided, immediately notify the
advisors and representatives of Investor and any Underwriters of any event or
the existence of any circumstance (without any obligation to disclose the
specific event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in a Registration Statement
would cause such prospectus to include a material misstatement or to omit a
material fact required to be stated therein in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
Nothing contained in this Section 7.3 shall be construed to mean that such
persons or entities other than Investor (without the written consent of Investor
prior to disclosure of such information) may not obtain non-public information
in the course of conducting due diligence in accordance with the terms and
conditions of this Agreement and nothing herein shall prevent any such persons
or entities from notifying the Company of their opinion that based on such due
diligence by such persons or entities, any Registration Statement contains an
untrue statement of a material fact or omits a material fact required to be
stated in such Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.
 
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ARTICLE VIII
COVER

Section 8.1  COVER. If the Company fails for any reason to deliver the Put
Shares within two Trading Days after a Closing Date and the Investor purchases,
in an open market transaction or otherwise, shares of Common Stock (the
"Covering Shares") in order to make delivery in satisfaction of a sale of Common
Stock by such Investor (the "Sold Shares"), which delivery such Investor
anticipated to make using the Put Shares (a "Buy-In"), then the Company shall
pay to such Investor, in addition to all other amounts contemplated in other
provisions of the Transaction Documents, and not in lieu thereof, the Buy-In
Adjustment Amount (as defined below). The "Buy-In Adjustment Amount" is the
amount equal to the excess, if any, of (x) such Investor's total purchase price
(including brokerage commissions, if any) for the Covering Shares over (y) the
net proceeds (after brokerage commissions, if any) received by such Investor
from the sale of the Sold Shares. The Company shall pay the Buy-In Adjustment
Amount to such Investor in immediately available funds immediately upon demand
by such Investor. By way of illustration and not in limitation of the foregoing,
if such Investor purchases Covering Shares having a total purchase price
(including brokerage commissions) of $11,000 to cover a Buy-In with respect to
shares of Common Stock that it sold for net proceeds of $10,000, the Buy-In
Adjustment Amount that the Company will be required to pay to such Investor will
be $1,000.
 
ARTICLE IX
NOTICES; INDEMNIFICATION

Section 9.1  NOTICES. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (a) personally served, (b) deposited
in the mail, registered or certified, return receipt requested, postage prepaid,
(c) delivered by reputable air courier service with charges prepaid, or (d)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice given in accordance herewith. Any notice or other
communication required or permitted to be given hereunder shall be deemed
effective (i) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (ii) on the second business day
following the date of mailing by express courier service or on the fifth
business day after deposited in the mail, in each case, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications shall be:

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If to the Company:

SpatiaLight, Inc.
Five Hamilton Landing,
Novato CA 94949
Facsimile No. (415) 883-3363

with a copy (which shall not constitute notice) to:

Lawrence E. Wilson, Esq.
Franklin, Cardwell & Jones
1001 McKinney, 18th Floor
Houston, Tx 77002
Facsimile: 713-222-0938

If to Investor at the address set forth on Schedule A; with a copy (which shall
not constitute notice):

Marc G. Rosenberg, Esq.
McLaughlin & Stern, LLP
260 Madison Avenue
New York, New York 10016
Facsimile: 800-933-0981

Either party hereto may from time to time change its address or facsimile number
for notices under this Section 9.1 by giving at least ten (10) days' prior
written notice of such changed address or facsimile number to the other party
hereto.

Section 9.2  INDEMNIFICATION. The Company agrees to indemnify and hold harmless
Investor and its officers, directors, employees, and agents, and each Person or
entity, if any, who controls Investor 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, from and against any
Damages, and any action in respect thereof to which any of such persons becomes
subject to, resulting from, arising out of or relating to (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, any prospectus contained therein or in any amendment or
supplement thereto 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 supplement thereto, in
light of the circumstances under which they were made) not misleading or (ii)
any misrepresentation, breach of warranty or nonfulfillment of or failure to
perform any covenant or agreement on the part of Company contained in this
Agreement, in each such case as such Damages are incurred, except to the extent
such Damages result solely from Investor's failure to perform any covenant or
agreement contained in this Agreement or Investor's or its officer's,
director's, employee's, agent's gross negligence or willful misconduct ( 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).
 
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Section 9.3  METHOD OF ASSERTING INDEMNIFICATION CLAIMS. All claims for
indemnification by any Indemnified Party (as defined below) under Section 9.2
shall be asserted and resolved as follows:

(a) (i) In the event any claim or demand in respect of which any person claiming
indemnification under any provision of this Article IX (an "INDEMNIFIED PARTY")
might seek indemnity under this Article is asserted against or sought to be
collected from such Indemnified Party by a person other than a party hereto or
an affiliate thereof (a "THIRD PARTY CLAIM"), the Indemnified Party shall
deliver a written notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and for the
Indemnified Party's claim for indemnification that is being asserted under any
provision of this Article against any person (the "INDEMNIFYING PARTY"),
together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such Third Party Claim (a "CLAIM NOTICE")
with reasonable promptness to the Indemnifying Party. If the Indemnified Party
fails to provide the Claim Notice with reasonable promptness after the
Indemnified Party receives notice of such Third Party Claim, the Indemnifying
Party shall not be obligated to indemnify the Indemnified Party with respect to
such Third Party Claim to the extent that the Indemnifying Party's ability to
defend has been irreparably and materially prejudiced by such failure of the
Indemnified Party.

(ii) The Indemnifying Party shall notify the Indemnified Party as soon as
practicable within the period ending thirty (30) calendar days following receipt
by the Indemnifying Party of either a Claim Notice or an Indemnity Notice (as
defined below) (the "DISPUTE PERIOD") whether the Indemnifying Party disputes
its liability or the amount of its liability to the Indemnified Party under this
Article and whether the Indemnifying Party desires, at its sole cost and
expense, to defend the Indemnified Party against such Third Party Claim.

(A)  If the Indemnifying Party notifies the Indemnified Party within the Dispute
Period that the Indemnifying Party desires to defend the Indemnified Party with
respect to the Third Party Claim pursuant to this Section 9.3(a), then the
Indemnifying Party shall have the right to defend, with counsel reasonably
satisfactory to the Indemnified Party, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all appropriate proceedings, which
proceedings shall be vigorously and diligently prosecuted by the Indemnifying
Party to a final conclusion or will be settled at the discretion of the
Indemnifying Party (but only with the consent of the Indemnified Party in the
case of any settlement that provides for any relief other than the payment of
monetary damages or that provides for the payment of monetary damages as to
which the Indemnified Party shall not be indemnified in full pursuant to this
Article). The Indemnifying Party shall have full control of such defense and
proceedings, including any compromise or settlement thereof; provided, however,
that the Indemnified Party may, at the sole cost and expense of the Indemnified
Party, at any time prior to the Indemnifying Party's delivery of the notice
referred to in the first sentence of this clause (i), file any motion, answer or
other pleadings or take any other action that the Indemnified Party reasonably
believes to be necessary or appropriate to protect its interests; and provided
further, that if requested by the Indemnifying Party, the Indemnified Party
will, at the sole cost and expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnifying Party in contesting any Third Party Claim that
the Indemnifying Party elects to contest. The Indemnified Party may participate
in, but not control, any defense or settlement of any Third Party Claim
controlled by the Indemnifying Party pursuant to this clause (A), and except as
provided herein, the Indemnified Party shall bear its own costs and expenses
with respect to such participation. Notwithstanding the foregoing, the
Indemnified Party may takeover the control of the defense or settlement of a
Third Party Claim at any time if it irrevocably waives its right to indemnity
under this Article with respect to such Third Party Claim. Notwithstanding the
foregoing, an Indemnified Party shall have the right to employ separate counsel
in any such proceeding and to control and participate in the defense thereof and
the expense thereof shall be borne by the Indemnifying Party: (1) if the
Indemnifying Party has agreed in writing to pay such fees and expenses; or (2)
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, (but no more than one separate counsel on behalf of all of the
Indemnified Parties) shall be at the expense of the Indemnifying Party).

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(B) If the Indemnifying Party fails to notify the Indemnified Party within the
Dispute Period that the Indemnifying Party desires to defend the Third Party
Claim pursuant to Section 9.3(a), or if the Indemnifying Party gives such notice
but fails to prosecute vigorously and diligently or settle the Third Party
Claim, or if the Indemnifying Party fails to give any notice whatsoever within
the Dispute Period, then the Indemnified Party shall have the right to defend,
at the sole cost and expense of the Indemnifying Party, the Third Party Claim by
all appropriate proceedings, which proceedings shall be prosecuted by the
Indemnified Party in a reasonable manner and in good faith or will be settled at
the discretion of the Indemnified Party (with the consent of the Indemnifying
Party, which consent will not be unreasonably withheld). The Indemnified Party
will have full control of such defense and proceedings, including any compromise
or settlement thereof; provided, however, that if requested by the Indemnified
Party, the Indemnifying Party will, at the sole cost and expense of the
Indemnifying Party, provide reasonable cooperation to the Indemnified Party and
its counsel in contesting any Third Party Claim which the Indemnified Party is
contesting. Notwithstanding the foregoing provisions of this clause (B), if the
Indemnifying Party has notified the Indemnified Party within the Dispute Period
that the Indemnifying Party disputes its liability or the amount of its
liability hereunder to the Indemnified Party with respect to such Third Party
Claim and if such dispute is resolved in favor of the Indemnifying Party in the
manner provided in clause (C) below, the Indemnifying Party will not be required
to bear the costs and expenses of the Indemnified Party's defense pursuant to
this clause (B) or of the Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified Party shall reimburse the
Indemnifying Party in full for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such litigation. The Indemnifying Party
may participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this clause (B), and the Indemnifying Party shall
bear its own costs and expenses with respect to such participation.

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(C)  If the Indemnifying Party notifies the Indemnified Party that it does not
dispute its liability or the amount of its liability to the Indemnified Party
with respect to the Third Party Claim under this Article or fails to notify the
Indemnified Party within the Dispute Period whether the Indemnifying Party
disputes its liability or the amount of its liability to the Indemnified Party
with respect to such Third Party Claim, the amount of Damages specified in the
Claim Notice shall be conclusively deemed a liability of the Indemnifying Party
under this Article and the Indemnifying Party shall pay the amount of such
Damages to the Indemnified Party on demand. If the Indemnifying Party has timely
disputed its liability or the amount of its liability with respect to such
claim, the Indemnifying Party and the Indemnified Party shall proceed in good
faith to negotiate a resolution of such dispute; provided, however, that if the
dispute is not resolved within thirty (30) days after the Claim Notice, the
Indemnifying Party shall be entitled to institute such legal action as it deems
appropriate.

(b)  In the event any Indemnified Party should have a claim under this Article
against the Indemnifying Party that does not involve a Third Party Claim, the
Indemnified Party shall deliver a written notification of a claim for indemnity
under this Article specifying the nature of and basis for such claim, together
with the amount or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such claim (an "INDEMNITY NOTICE") with reasonable
promptness to the Indemnifying Party. The failure by any Indemnified Party to
give the Indemnity Notice shall not impair such party's rights hereunder except
to the extent that the Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim or the amount of the claim
described in such Indemnity Notice or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party disputes the claim or
the amount of the claim described in such Indemnity Notice, the amount of
Damages specified in the Indemnity Notice will be conclusively deemed a
liability of the Indemnifying Party under this Article and the Indemnifying
Party shall pay the amount of such Damages to the Indemnified Party on demand.
If the Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that if the dispute is not resolved within thirty (30) days
after the Claim Notice, the Indemnifying Party shall be entitled to institute
such legal action as it deems appropriate.

(c)  The indemnity agreements contained herein shall be in addition to (i) any
cause of action or similar rights of the Indemnified Party against the
Indemnifying Party or others which would be available to the Indemnified Party
at law or in equity, and (ii) any liabilities the Indemnifying Party may be
subject to.
 
ARTICLE X
MISCELLANEOUS

Section 10.1  GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of New York without
regard to the principles of conflicts of law. Each of the Company and Investor
hereby submit to the exclusive jurisdiction of the United States Federal and
state courts located in the State of New York, County of New York with respect
to any dispute arising under this Agreement, the agreements entered into in
connection herewith or the transactions contemplated hereby or thereby.

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Section 10.2  JURY TRIAL WAIVER. The Company and the Investor hereby waive a
trial by jury in any action, proceeding or counterclaim brought by either of the
parties hereto against the other in respect of any matter arising out of or in
connection with the Transaction Documents.

Section 10.3  Omitted
 
Section 10.4  ASSIGNMENT. Neither this Agreement nor any rights of Investor or
the Company hereunder may be assigned by either party to any other person.

Section 10.5  THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the Company and Investor, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.

Section 10.6  TERMINATION. This Agreement shall terminate at the end of the
Commitment Period or as otherwise provided herein (unless extended by the
agreement of the Company and the Investors); provided, however, that the
provisions of Article VI, VIII, IX and X shall survive the termination of this
Agreement.

Section 10.7  ENTIRE AGREEMENT. This Agreement together with schedules and
exhibits hereto, and the instruments referenced herein contain the entire
understanding of the Company and Investor with respect to the matters covered
herein and therein and, except as specifically set forth herein or therein,
neither the Company nor Investor makes any representation, warranty, covenant or
undertaking with respect to such matters.

Section 10.8  FEES AND EXPENSES. Except as otherwise provided in this Agreement
or any of the exhibits hereto, each of the Company and Investor agrees to pay
its own expenses in connection with the preparation of this Agreement and
performance of its obligations hereunder provided, however, that the Company
agrees to the fees and expenses of an Investor’s counsel not to exceed $30,000
and shall be payable in three equal installments, 30, 60 and 90 days from the
date hereof. In addition, the Company shall pay all reasonable fees and expenses
incurred by the Investor in connection with any amendments, modifications or
waivers of this Agreement. The Company shall pay all stamp or other similar
taxes and duties levied in connection with issuance of the Shares pursuant
hereto.

Section 10.9 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 all of the Investors or, in the case of a waiver, by the
party against whom enforcement of any such waived provision 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 any party to exercise any
right hereunder in any manner impair the exercise of any such right.

- 22 -

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Section 10.10  NO BROKERS. The Company agrees to indemnify the Investors
against, and hold the Investors harmless from, any judgments entered against
Investors for fees in connection with this transaction based on agreements
between the Company and any broker or finder.

Section 10.11 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument. This Agreement, once executed by a
party, may be delivered to the other parties hereto by electronic transmission
of a portable document format (“PDF”) copy or facsimile transmission of a copy
of this Agreement bearing the signature of the parties so delivering this
Agreement.

Section 10.12 SURVIVAL; SEVERABILITY. The representations, warranties, covenants
and agreements of the Company hereto shall survive each Closing hereunder. In
the event that any provision of this Agreement becomes or is declared by a court
of competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision; provided that
such severability shall be ineffective if it materially changes the economic
benefit of this Agreement to any party.

Section 10.13 FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

Section 10.14  NO STRICT CONSTRUCTION. 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.

Section 10.15  TITLE AND SUBTITLES. The titles and subtitles used in this
Agreement are used for the convenience of reference and are not to be considered
in construing or interpreting this Agreement.

Section 10.16  REPORTING ENTITY FOR THE COMMON STOCK. The reporting entity
relied upon for the determination of the trading price of the Common Stock on
any given Trading Day for the purposes of this Agreement shall be Bloomberg L.P.
or any successor thereto.

Section 10.17  PUBLICITY. The Company and Investor shall consult with each other
in issuing any press releases or otherwise making public statements with respect
to the transactions contemplated hereby and no party shall issue any such press
release or otherwise make any such public statement without the prior written
consent of the other parties, which consent shall not be unreasonably withheld
or delayed, except that no prior consent shall be required if such disclosure is
required by law, in which such case the disclosing party shall provide the other
parties with prior notice of such public statement. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of Investor without
the prior written consent of such Investor, except to the extent required by
law. Investor acknowledges that this Agreement and all or part of the
Transaction Documents may be deemed to be "material contracts" as that term is
defined by Item 601(b)(10) of Regulation S-K, and that the Company may therefore
be required to file such documents as exhibits to reports or registration
statements filed under the Securities Act or the Exchange Act. Investor further
agrees that the status of such documents and materials as material contracts
shall be determined solely by the Company, in consultation with its counsel.
 
- 23 -

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IN WITNESS WHEREOF, the parties hereto have caused this Equity Credit Agreement
to be executed by the undersigned, thereunto duly authorized, as of the date
first set forth above.
 
 

 
SPATIALIGHT, INC.

By:  /s/ David Hakala

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

Name:  David Hakala
Title:  CEO

SOUTHRIDGE PARTNERS LP

By:  /s/ Steve Hicks

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

Name:  Steve Hicks
Title:

SOUTHSHORE CAPITAL FUND LTD.
 
By:  /s/ David Sims

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

Name:  David Sims
Title:

PIERCE DIVERSIFIED STRATEGY MASTER FUND, LLC, ENA

By:  /s/ Brendan O' Neil

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

Name:  Brendan O' Neil
Title:

 
- 24 -

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ENABLE OPPORTUNITY PARTNERS LP

By:  /s/ Brendan O' Neil

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

Name:  Brendan O' Neil
Title:

ENABLE GROWTH PARTNERS LP

By:  /s/ Brendan O' Neil

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

Name:  Brendan O' Neil
Title:

IROQUOIS MASTER FUND LTD.

By:  /s/ Joshua Silverman

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

Name:  Joshua Silverman
Title:

 
- 25 -

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EXHIBITS

EXHIBIT A
Put Notice
   
EXHIBIT B
Opinion
   
EXHIBIT C
Closing Certificate

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EXHIBIT A

PUT NOTICE

TO:
SOUTHRIDGE PARTNERS LP

SOUTHSHORECAPITAL FUND LTD.
PIERCE DIVERSIFIED STRATEGY MASTER FUND, LLC, ENA
ENABLE OPPORTUNITY PARTNERS LP
ENABLE GROWTH PARTNERS LP
IROQUOIS MASTER FUND LTD.

We refer to the Equity Credit Agreement dated April 24, 2007 (the "Agreement")
by and among SpatiaLight, Inc. (the “Company”) and the Investors listed on
Schedule A annexed thereto.

We hereby give the Investors notice that the Investors are required to purchase
Put Shares in the Put Amount, based upon the percentages set forth in Schedule A
to the Agreement, in accordance with the terms of the Agreement for the
following Trading Days:

Place check mark next to the applicable Trading Days:

ü
Put Date

ü
First Trading Day Following Put Date

ü
Second Trading Day Following Put Date

ü
Third Trading Day Following Put Date

ü
Fourth Trading Day Following Put Date

The Company is simultaneously delivering the Interim Put Shares in accordance
with the Agreement.

The conditions set forth in Section 7.2 of the Agreement have been satisfied.

Unless the context otherwise requires, capitalized terms utilized herein shall
have the meanings ascribed to such terms in the Agreement.

IN WITNESS WHEREOF, this instrument has been executed as of the 27th day of
April, 2007.
 
 

 
SPATIALIGHT, INC.
 
By:  /s/ David Hakala

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

Name:  David Hakala
Title:  CEO

 

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EXHIBIT B

FORM OF OPINION

Re:
Equity Credit Agreement dated April 24, 2007 (the “Agreement”) by and among
SpatiaLight, Inc. (the “Company”) and the Investors listed on Schedule A annexed
thereto

Ladies and Gentlemen:

We have acted as counsel to SpatiaLight, Inc., a New York corporation (the
"Company"), in connection with (i) the preparation and filing by the Company
with the Securities and Exchange Commission of the Company’s registration
statement (the “Registration Statement”) on Form S-3, Registration No.
333-137100 under the Securities Act. of 1933, as amended (the “Act”), relating
to the offering on a continuous basis of up to $75,000,000 of the Company’s
Common Stock, warrants, units and/or subscription rights, and (ii) the
negotiation and preparation of the Agreement. Unless the context otherwise
requires, capitalized terms utilized herein shall have the meanings ascribed to
such terms in the Agreement.

We have examined original, photostatic or certified copies of such records of
the Company as we have deemed relevant and necessary for purposes of the
opinions hereinafter set forth. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents and instruments
submitted to us as originals and the conformity to authentic originals of all
documents and instruments submitted to us as certified or photostatic copies. As
to various questions of fact material to our opinions we have relied upon
representations made to us by various officers and directors of the Company and
we have not conducted or received independent verification of those facts.

Based on the foregoing, we are of the opinion that:

(1) The Registration Statement has become effective under the Act and, to our
knowledge after due inquiry, no stop order suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the prospectus
which forms a part thereof, has been issued and no proceedings for that purpose
have been instituted or are pending or threatened under the Act.

(2) Any required filing of the prospectus and any supplement thereto pursuant to
Rule 424(b) of the Rules and Regulations under the Act has been made in the
manner and within the time period required by such Rule 424(b).
 
(3) The sale of the Put Shares to the Investors pursuant to the Registration
Statement is covered by the Registration Statement and, subject to the
prospectus delivery requirements and the limitations on actions by underwriters
under the Act, the Put Shares may be sold by the Investors without restriction
under the Act.

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EXHIBIT C

CLOSING CERTIFICATE

The undersigned, David F. Hakala, hereby certifies, with respect to the Put
Shares of SpatiaLight, Inc., Inc. (the "Company") issuable in connection with
the Put Notice, dated April 27, 2007 (the "Notice"), delivered pursuant to the
Equity Credit Agreement dated April 24, 2007 (the "Agreement") by and among
SpatiaLight, Inc. (the “Company”) and the Investors listed on Schedule A annexed
thereto as follows:

1.
The undersigned is the duly elected President of the Company.

2.
The representations and warranties of the Company set forth in the Agreement are
true and correct in all material respects as though made on and as of the date
hereof.

 
3.
The Company has performed in all material respects all covenants and agreements
to be performed by the Company on or prior to the Closing Date related to the
Notice and has complied in all material respects with its obligations contained
in the Agreement.

4.
The conditions set forth in Section 7.2 of the Agreement have been satisfied.

  Unless the context otherwise requires, capitalized terms utilized herein shall
have the meanings ascribed to such terms in the Agreement.

IN WITNESS WHEREOF, this instrument has been executed as of the 24th day of
April, 2007
 

 
SPATIALIGHT, INC.
 
By:  /s/ David Hakala

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

Name:  David F. Hakala
Title:  CEO

 

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SCHEDULE A

INVESTOR
PERCENTAGE
ADDRESS FOR NOTICE
     
Southridge Partners LP
40.79%
Southridge Partners LP
90 Grove Street
Ridgefield, CT 06877
Fax: 203-431-8301
     
Southshore Capital Fund Ltd.
13.60%
Southshore Capital Fund Ltd.
Harbour House, 2nd Floor
Waterfront Drive
P.O. Box 972
Road Town, Tortola
BVI
Fax: 284-494-4771
     
Pierce Diversified Strategy
Master Fund, LLC, ENA
1.34%
Enable Capital Management
One Ferry Building, Suite 255
San Francisco, CA 94111
Fax: 415-677-1580
     
Enable Opportunity Partners LP
2.68%
Enable Capital Management
One Ferry Building, Suite 255
San Francisco, CA 94111
Fax: 415-677-1580
     
Enable Growth Master Fund Ltd.
22.77%
Enable Capital Management
One Ferry Building, Suite 255
San Francisco, CA 94111
Fax: 415-677-1580
     
Iroquois Master Fund Ltd.
18.83%
Iroquois Master Fund Ltd.
641 Lexington Avenue,
26th Floor
New York, New York 10022
Fax: 212-207-3452

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SCHEDULE 3.4
AFFILIATES OF COMPANY

Pierce Diversified Strategy Master Fund, LLC, ENA, Enable Opportunity Partners
LP and Enable Growth Partners LP are managed by Enable Capital Management.

 

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SCHEDULE 4.8
REQUIRED CONSENTS

None
 

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