Exhibit 10.11

                    INTERCREDITOR AND SUBORDINATION AGREEMENT

            This INTERCREDITOR AND SUBORDINATION AGREEMENT is entered into as of
November  30,  2004  between  PORTSIDE  GROWTH &  OPPORTUNITY  FUND,  a  company
organized  under the laws of the Cayman  Islands,  in its capacity as collateral
agent (in such  capacity,  the  "SENIOR  AGENT") for the  "Buyers"  party to the
"Senior Loan  Agreement" (as  hereinafter  defined) and for the other holders of
the "Securities" as defined therein (the Buyers and such other holders,  each, a
"SENIOR  LENDER"  and,  collectively,  the  "SENIOR  LENDERS"),  ARGYLE  CAPITAL
MANAGEMENT  CORPORATION,  a  New  York  corporation  (the  "SENIOR  SUBORDINATED
LENDER").

                                    RECITALS

            A. Concurrently herewith,  SpatiaLight, Inc., a New York corporation
(the "BORROWER") is entering into the Securities Purchase Agreement, dated as of
even date  herewith (as amended,  restated or  otherwise  modified  from time to
time,  the  "SENIOR  LOAN  AGREEMENT"),  with the Buyers  and the  Senior  Agent
pursuant to which the Buyers have agreed to purchase the  Securities  and extend
certain other financial accommodations to the Borrower.

            B.  Concurrently  herewith,  as security for the prompt  payment and
performance of the "Senior Indebtedness" (as hereinafter defined),  the Borrower
is entering into security agreements, pledge agreements,  collateral assignments
and other security  documents (as amended,  restated or otherwise  modified from
time to time, the collectively,  the "SENIOR SECURITY  DOCUMENTS"),  pursuant to
which the  Borrower is granting a lien on and a security  interest in all of its
personal property to the Senior Agent, for the benefit of the Senior Lenders.

            C. Prior  hereto,  the  Borrower  issued  the 13 secured  promissory
notes,  dated and in the  respective  original  principal  amounts  set forth on
Exhibit "A" annexed hereto (as amended, restated or otherwise modified from time
to  time,  collectively,  the  "SENIOR  SUBORDINATED  NOTES  "),  to the  Senior
Subordinated  Lender  pursuant  to which the  Senior  Subordinated  Lender  made
convertible  term loans to the  Borrower  in the  aggregate  original  principal
amount of $1,188,000.

            D. As security for the prompt payment and performance of the "Senior
Subordinated Indebtedness" (as hereinafter defined), the Borrower entered into a
Security  Agreement,  dated as of  February  24,  1998,  in favor of the  Senior
Subordinated  Lender and other security  documents  related thereto (as amended,
restated or  otherwise  modified  from time to time,  collectively,  the "SENIOR
SUBORDINATED  SECURITY  DOCUMENTS"),  pursuant to which the Borrower  granting a
lien on and a security  interest in all of its  personal  property to the Senior
Agent to the Senior Subordinated Lender.

            E. The Senior Agent and the Senior Subordinated Lender wish to agree
as to the priority of the  repayment of the Senior  Indebtedness  and the Senior
Subordinated  Indebtedness,  and the rights of each with respect thereto, and as
to their  respective  liens upon and security  interests in the "Collateral" (as
hereinafter defined) and as to certain other rights,  priorities,  and interests
as between and among the Senior Agent and the Senior  Lenders,  on the one hand,
and the Senior Subordinated Lender, on the other hand.

<PAGE>

                                    AGREEMENT

            In  consideration of the foregoing,  the mutual covenants  contained
herein, and for other good and valuable consideration,  the receipt of which the
Senior Agent and the Senior Subordinated  Lender hereby acknowledge,  the Senior
Agent  (on its own  behalf  and on  behalf of the  Buyers  and the other  Senior
Lenders) and the Senior Subordinated Lender hereby agree as follows:

            1. Definitions and Rules of Construction.

                  (a)  Definitions.   The  following  terms,  as  used  in  this
Agreement, shall have the following meanings:

                  "ACCOUNTS"  means all of each Obligor's now owned or hereafter
acquired right,  title, and interest with respect to "accounts" (as that term is
defined in the UCC), and any and all supporting obligations in respect thereof.

                  "AGREEMENT"   means  this   Intercreditor   and  Subordination
Agreement  together  with  any and all  amendments,  extensions,  modifications,
riders, addenda, exhibits, and schedules hereto.

                  "BANKRUPTCY CASE" means any proceeding commenced by or against
each  Obligor,  under any  provision of the  Bankruptcy  Code or under any other
federal or state  bankruptcy or insolvency  law,  including  assignments for the
benefit of creditors,  formal or informal  moratoria,  compositions,  extensions
generally  with  its   creditors,   or   proceedings   seeking   reorganization,
arrangement,  or other similar relief,  and all converted or succeeding cases in
respect thereof.

                  "BANKRUPTCY  CODE" means the United States Bankruptcy Code (11
U.S.C. ss. 101, et seq.), -- --- as amended, and any successor statute.

                  "BOOKS" means each  Obligor's now owned or hereafter  acquired
books and records  (including  all of its Records  indicating,  summarizing,  or
evidencing its assets  (including the  Collateral)  or  liabilities,  all of its
Records relating to its business operations or financial  condition,  and all of
its goods or General Intangibles related to such information).

                  "BORROWER"  has the meaning set forth in the  Preamble to this
Agreement.

                  "BUSINESS DAY" means any day that is not a Saturday, Sunday or
other day on which  national  banks are  authorized  or required to close in New
York City.

                  "COLLATERAL"  means all assets and  property of each  Obligor,
including,  without  limitation,  all of such Obligor's  presently  existing and
hereafter  acquired  personal  property,  including,  without  limitation,  such
Obligor's Accounts,  Books,  deposit accounts,  Equipment,  General Intangibles,
Inventory,  Investment  Property  and  Negotiable  Collateral;  all proceeds and
insurance  proceeds of the foregoing;  all money or other assets of such Obligor
that now or hereafter come into the possession, custody, or control of a Secured
Creditor; and the proceeds and products,  whether tangible or intangible, of any
of the  foregoing,  including  proceeds of insurance  covering any or all of the
foregoing,  and any and all Accounts,  Books,  Equipment,  General  Intangibles,
Inventory, Investment Property, Negotiable Collateral, leases for real property,
money, deposit accounts, or other tangible or intangible property resulting from
the sale, exchange, collection, or other disposition of any of the foregoing, or
any portion thereof or interest therein.


                                      -2-
<PAGE>

                  "COMMON  STOCK" means shares of common  stock,  $.01 par value
per share, of the Borrower.

                  "DOCUMENTS" means, collectively,  the Senior Documents and the
Senior Subordinated Documents.

                  "EQUIPMENT" means all of each Obligor's now owned or hereafter
acquired  right,  title,  and  interest  with respect to  equipment,  machinery,
machine tools, motors,  furniture,  furnishings,  fixtures,  vehicles (including
motor vehicles),  vessels,  tools, parts, goods (other than consumer goods, farm
products,   or  Inventory),   wherever   located,   including  all  attachments,
accessories,   accessions,   replacements,    substitutions,    additions,   and
improvements to any of the foregoing.

                  "GENERAL INTANGIBLES" means all of each Obligor's now owned or
hereafter   acquired  right,   title,  and  interest  with  respect  to  general
intangibles (including payment intangibles,  contract rights, rights to payment,
judgments, rights arising under common law, statutes, or regulations,  choses or
things in action, goodwill,  patents,  designs,  inventions,  trade names, trade
secrets,  d/b/a's,  Internet  domain  names,  logos,  trademarks,  servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists,  rights to payment and other rights
under  any  royalty  or  licensing  agreements,  infringement  claims,  computer
programs,   information   contained  on  computer  disks  or  tapes,   software,
literature,  reports,  catalogs,  money,  deposit  accounts,  insurance  premium
rebates,  tax  refunds,  and tax  refund  claims),  and  any and all  supporting
obligations  in respect  thereof,  and any other  personal  property  other than
goods, Accounts, Investment Property, and Negotiable Collateral.

                  "GUARANTOR"  means any Person (other than the  Borrower)  that
now or hereafter  (a) is or becomes  obligated in any manner with respect to any
of the  Senior  Indebtedness  or Senior  Subordinated  Indebtedness,  whether as
debtor, guarantor,  surety or otherwise, or (b) has granted or grants a security
inters or other lien on any of its assets to secure the  payment or  performance
any of any of the Senior Indebtedness or Senior Subordinated Indebtedness.

                  "INVENTORY" means all of each Obligor's now owned or hereafter
acquired right,  title, and interest with respect to inventory,  including goods
held for sale or  constituting  raw  materials or work in process,  or materials
used or consumed in such Obligor's business.

                  "INVESTMENT PROPERTY" means all of each Obligor's now owned or
hereafter  acquired  right,  title,  and interest  with  respect to  "investment
property"  as that  term  is  defined  in the  UCC,  and any and all  supporting
obligations in respect thereof.


                                      -3-
<PAGE>

                  "NEGOTIABLE  COLLATERAL" means all of each Obligor's now owned
and hereafter  acquired  right,  title,  and interest with respect to letters of
credit,  letter  of  credit  rights,  instruments,   promissory  notes,  drafts,
documents,  and chattel paper (including  electronic  chattel paper and tangible
chattel paper), and any and all supporting obligations in respect thereof.

                  "OBLIGOR(S)"  means the  Borrower  and/or any  Guarantors,  as
applicable.

                  "PAID IN FULL" means the (a)  earlier of (i) the  indefeasible
final payment in full in cash of all Senior  Indebtedness in accordance with the
Senior Documents, or (ii) the conversion in full of all Senior Indebtedness into
shares of capital stock of the Borrower in accordance with the Senior Documents,
and  (b)  such  payment  or  conversion  shall  not be  subject  to  defeasance,
disgorgement, repayment or return for any reason whatsoever. For the purposes of
this  Agreement,  the Senior  Indebtedness  shall not be deemed to have been (x)
paid in full in cash, until 90 days following the date on which the Senior Agent
and the Senior Lenders thereof shall have received indefeasible final payment in
full in cash of all such  Senior  Indebtedness,  or (y)  converted  in full into
shares of capital  stock of the  Borrower,  until 90 days  following the date on
which the shares issued in conversion of all Senior Indebtedness shall have been
indefeasibly issued by the Borrower to the Senior Agent and the Senior Lenders.

                  "PERSON"   means  natural   persons,   corporations,   limited
liability  companies,  limited  partnerships,   general  partnerships,   limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other  organizations,  irrespective  of  whether  they are legal  entities,  and
governments and agencies and political subdivisions thereof.

                  "RECORD"  means  information  that is  inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.

                  "SECURED  CREDITOR" means any of the Senior Agent,  the Senior
Lenders or the Senior  Subordinated  Lender, or any successor or assignee of any
of them,  or any future  holder of Senior  Indebtedness  or Senior  Subordinated
Indebtedness, respectively.

                  "SECURED PARTY" has the meaning set forth in Section 12(a).

                  "SECURED  CREDITOR  REMEDIES"  means  any  action by a Secured
Creditor in  furtherance  of the sale,  foreclosure,  realization  upon,  or the
repossession  or  liquidation  of  any  of the  Collateral,  including,  without
limitation:  (i) the exercise of any remedies or rights of a "Secured  Creditor"
under Article 9 of the UCC, such as, without  limitation,  the  notification  of
account  debtors;  (ii) the exercise of any remedies or rights as a mortgagee or
beneficiary (or by a trustee on behalf of any beneficiary),  including,  without
limitation,   the  appointment  of  a  receiver,  or  the  commencement  of  any
foreclosure proceedings or the exercise of any power of sale, including, without
limitation,  the placing of any  advertisement  for the sale of any  Collateral;
(iii) the exercise of any remedies  available to a judgment  creditor;  (iv) the
exercise of any rights of forfeiture,  recession or  repossession of any assets;
or (v) any other remedy available in respect of the Collateral available to such
Secured  Creditor under any Document to which it is a party or under  applicable
law;  provided,  however,  that Secured Creditor  Remedies shall not include any
action  taken by a  Secured  Creditor  solely  to (A)  correct  any  mistake  or
ambiguity  in any  Documents,  or (B)  remedy or cure any  defect in or lapse of
perfection of the lien of a Secured Creditor in the Collateral.


                                      -4-
<PAGE>

                  "SECURED CREDITORS'  INDEBTEDNESS"  means,  collectively,  the
Senior Indebtedness and the Senior Subordinated Indebtedness.

                  "SENIOR  AGENT" has the meaning  set forth in the  Recitals to
this  Agreement  and shall  include  any  successor  agent under the Senior Loan
Agreement or any replacement or refinancing thereof.

                  "SENIOR  DOCUMENTS"  means,  collectively,   the  Senior  Loan
Agreement,  the Senior Security Documents, any Loan Documents (as defined in the
Senior Loan  Agreement)  and any other  document  instrument  or  agreement  now
existing or in the future  entered  into  evidencing,  documenting,  securing or
otherwise relating to the Senior Indebtedness or the Collateral,  together with,
to the extent not prohibited by Section 14(a) of this Agreement, any amendments,
replacements, substitutions, or restatements thereof.

                  "SENIOR  INDEBTEDNESS" means any and all presently existing or
hereafter  arising  indebtedness,   reimbursement  obligations,  claims,  debts,
liabilities,   obligations  (including,   without  limitation,   any  prepayment
premium), expenses,  indemnities,  commissions and fees of each Obligor owing to
the Senior  Agent  and/or the Senior  Lenders  under the Senior Loan  Documents,
whether  direct  or  indirect,  whether  contingent  or  of  any  other  nature,
character,  or description  (including  all interest and other amounts  accruing
after  commencement  of any Bankruptcy  Case, and all interest and other amounts
that,  but for the  provisions of the  Bankruptcy  Code,  would have accrued and
become  due or  otherwise  would  have  been  allowed),  and  any  refinancings,
renewals,  refundings,  or, to the extent  permitted  in Section  14(a)  hereof,
extensions of such amounts.

                  "SENIOR  LENDERS" has the meaning set forth in the preamble to
this  Agreement  and  shall  include  all  subsequent   holders  of  the  Senior
Indebtedness.

                  "SENIOR  LOAN  AGREEMENT"  has the  meaning  set  forth in the
Recitals to this  Agreement.  "SENIOR  SECURITY  DOCUMENTS"  has the meaning set
forth in the Recitals to this Agreement.

                  "SENIOR  SUBORDINATED  DOCUMENTS"  means,  collectively,   the
Senior Subordinated  Notes, the Senior  Subordinated  Security Documents and any
other document, instrument,  mortgage or agreement now existing or in the future
entered into evidencing,  documenting,  securing,  or otherwise  relating to the
Senior Subordinated Indebtedness or the Collateral, together with, to the extent
permitted under Section 14(b) of this Agreement,  any amendments,  replacements,
substitutions, or restatements thereof

                  "SENIOR SUBORDINATED INDEBTEDNESs" means any and all presently
existing  or  hereafter  - arising  indebtedness,  claims,  debts,  liabilities,
obligations,  fees and expenses of each Obligor owing to the Senior Subordinated
Lender  under the Senior  Subordinated  Documents,  whether  direct or indirect,
whether contingent or of any other nature,  character, or description (including
all interest and other amounts  accruing  after  commencement  of any Bankruptcy
Case,  and any interest and other  amounts that,  but for the  provisions of the
Bankruptcy  Code, would have accrued and become due or otherwise would have been
allowed),  and any  refinancings,  renewals,  refundings,  or extensions of such
amounts.


                                      -5-
<PAGE>

                  "SENIOR  SUBORDINATED LENDER" has the meaning set forth in the
preamble to this Agreement.

                  "SENIOR  SUBORDINATED  NOTES" has the meaning set forth in the
Recitals to this Agreement.

                  "SENIOR  SUBORDINATED  SECURITY DOCUMENTS" has the meaning set
forth in the Recitals to this Agreement.

                  "SPECIFIED COLLATERAL" has the meaning set forth in Section 12
of this Agreement.

                  "UCC"  means the  Uniform  Commercial  Code as  adopted in the
State of New York, or in such other  jurisdiction  as governs the  perfection of
the liens and  security  interests  in the  Collateral  for the  purposes of the
provisions hereof relating to such perfection or effect of perfection.

                  (b) UCC Definitions.  All other capitalized terms used in this
Agreement  that are defined in the UCC shall have the meanings  given to them in
the UCC unless otherwise expressly defined herein.

                  (c)  Other   Definitional   Provisions.   When  used  in  this
Agreement:  (i) the  words  "herein,"  "hereof,"  and  "hereunder"  and words of
similar import shall refer to this Agreement as a whole and not to any provision
of this Agreement; (ii) the words "include," "includes," and "including" are not
limiting; the word "or" has, except where otherwise required by the context, the
inclusive  meaning  represented by the phrase  "and/or";  (iii) unless otherwise
specified,  the words "Section,"  "Schedule" and "Exhibit" refer to Sections of,
and Schedules and Exhibits to, this Agreement  unless otherwise  specified;  and
(iv) the  singular  number  includes  the plural,  and vice versa,  whenever the
context so requires.

            2. Subordination of Senior Subordinated Indebtedness.

                  2.1  Blockage of Payments to the Senior  Subordinated  Lender.
(a) No payment in cash or other  property or  otherwise on account of any Senior
Subordinated Indebtedness (excluding the issuance of shares of Common Stock upon
the exercise of the Senior  Subordinated  Lender's conversion rights thereunder)
shall be made by or on  behalf  of the  Obligors,  and the  Senior  Subordinated
Lender  will not ask,  demand,  sue for,  take,  or  receive  any such  payment,
directly  or  indirectly,  from or on behalf of the  Obligors,  until the Senior
Indebtedness has been Paid in Full; provided, however, that interest payments in
cash or in shares of Common  Stock may be made in  accordance  with the terms of
the Senior  Subordinated  Documents,  so long as at the time of such  payment or
immediately  after  giving  effect  thereto  there  shall have  occurred  and be
continuing a "Default"  or an "Event of Default"  under (and each as defined in)
any of the Senior Documents.


                                      -6-
<PAGE>

                  (b) If at any time  following  a blockage  of  payments to the
Senior  Subordinated  Lender pursuant to Section 2.1(a), the Senior Subordinated
Lender is no longer  prohibited  from receiving any payments with respect to the
Senior Subordinated Indebtedness by such Section, the Senior Subordinated Lender
shall  be  entitled  to  receive  all  payments   with  respect  to  the  Senior
Subordinated  Indebtedness  that have been  blocked  together  with any  default
interest to the extent provided for by the Senior Subordinated Documents.

                  2.2   Prohibition   of   Payments   of   Senior   Subordinated
Indebtedness  on   Acceleration  or  in  Bankruptcy   Case.  (a)  Upon  (i)  any
acceleration   of  the   principal   amount  due  on  any  Senior   Subordinated
Indebtedness,  or (ii) any payment or distribution of assets of any Obligor,  of
any kind or  character,  whether  in cash,  property  or  securities,  following
commencement  of a  Bankruptcy  Case,  all amounts due or to become due upon all
Senior  Indebtedness  shall first be Paid in Full, before any payment is made on
account  of  any  of  the  Senior  Subordinated   Indebtedness;   and  following
commencement of a Bankruptcy  Case, any payment or distribution of assets of any
Obligor of any kind or character,  whether in cash,  property or securities,  to
which  the  Senior  Subordinated  Lender  would  be  entitled,  except  for  the
provisions hereof,  shall be paid by any Obligor or any other Person making such
payment or distribution, or by the Senior Subordinated Lender if received by it,
directly to the Senior Agent and the Senior Lenders,  to the extent necessary to
result in all  Senior  Indebtedness  being Paid in Full,  before any  payment or
distribution is made to the Senior Subordinated Lender.

                  (b) In any Bankruptcy Case by or against any Obligor,

                  (i) the  Senior  Agent and the  Senior  Lenders  may,  and are
      hereby  irrevocably  authorized and empowered (in their own name or in the
      name of the Senior  Subordinated  Lender or otherwise),  but shall have no
      obligation,  to, (A) demand, sue for, collect and receive every payment or
      distribution referred to in this Section 2.2 and give acquittance therefor
      and (B)  file  claims  and  proofs  of  claim  in  respect  of the  Senior
      Subordinated  Indebtedness and take such other action (including,  without
      limitation,  voting the Senior Subordinated  Indebtedness or enforcing any
      security   interest  or  other  lien   securing   payment  of  the  Senior
      Subordinated  Indebtedness)  as the Senior Agent or the Senior Lenders may
      reasonably  deem necessary or advisable for the exercise or enforcement of
      any of the rights or interests of the Senior Agent and the Senior  Lenders
      hereunder; provided, however, that the Senior Agent and the Senior Lenders
      may only  file  claims  and  proofs of claims  in  respect  of the  Senior
      Subordinated Indebtedness if the Senior Subordinated Lender shall not have
      filed proofs of claim with respect to the Senior Subordinated Indebtedness
      within 30 days  before  such  action is barred,  prohibited  or  otherwise
      cannot be taken; and

                  (ii) the Senior  Subordinated  Lender  will duly and  promptly
      take such action as the Senior Agent or the Senior  Lenders may reasonably
      request  (A) to  collect  the  Senior  Subordinated  Indebtedness  for the
      account of the Senior Agent and the Senior Lenders and to file appropriate
      claims or proofs of claim with respect thereto, (B) to execute and deliver
      to the  Senior  Agent and the  Senior  Lenders  such  powers of  attorney,
      assignments or other instruments as the Senior Agent or the Senior Lenders
      may  request  in order to enable it to  enforce  any and all  claims  with
      respect to, and any security  interests and other liens  securing  payment
      of, the Senior Subordinated  Indebtedness,  and (C) to collect and receive
      for the  account of the Senior  Agent and the Senior  Lenders  any and all
      payments or distributions which may be payable or deliverable upon or with
      respect to the Senior Subordinated Indebtedness.


                                      -7-
<PAGE>

                  2.3  Payments  Held  in  Trust/Turnover.  In the  event  that,
notwithstanding  the  foregoing,  any payment or  distribution  of assets of any
Obligor,  whether in cash, property or securities,  prohibited by this Agreement
shall  be  received  by  the  Senior   Subordinated  Lender  before  all  Senior
Indebtedness is Paid in Full such payment or distribution shall be held IN TRUST
for the benefit of and shall be paid over to or  delivered  to the Senior  Agent
and the Senior Lenders,  until all such Senior Indebtedness shall have been Paid
in Full.

                  2.4 Subrogation, Etc. No payment or distribution to the Senior
Agent or the Senior Lenders  pursuant to the provisions of this Agreement  shall
entitle the Senior  Subordinated  Lender to exercise any rights of  subrogation,
contribution,  reimbursement  or indemnity in respect  thereof  until all Senior
Indebtedness  shall have been Paid in Full.  After the Senior  Indebtedness  has
been Paid in Full,  the Senior  Subordinated  Lender shall be  subrogated to the
rights of the  Senior  Agent and the  Senior  Lenders  to  receive  payments  or
distributions  of assets of the Obligors  applicable to the Senior  Indebtedness
until all amounts owing in respect of the Senior Subordinated Indebtedness shall
have  been  paid in  full;  provided,  however,  that  for the  purpose  of such
subrogation,  no payments  or  distributions  to the Senior  Agent or the Senior
Lenders by virtue of this  Agreement by or on behalf of the Obligors or by or on
behalf of the Senior  Subordinated Lender that otherwise would have been made to
the  Senior   Subordinated   Lender  on  account  of  the  Senior   Subordinated
Indebtedness shall, as among the Obligors, their creditors other than the Senior
Agent and the Senior Lenders,  and the Senior Subordinated  Lender, be deemed to
be payment by the Obligors to or on account of the Senior Indebtedness, it being
understood that the above provisions  relating to  subordination  are solely for
the purpose of defining the  relative  rights of the Senior Agent and the Senior
Lenders on the one hand, and the Senior Subordinated Lender, on the other hand.

            3.  Permitted  Liens and Relative  Priorities.  As among the Secured
Creditors,   and   notwithstanding  the  terms  (including  the  description  of
Collateral),  dating,  execution,  or delivery of any document,  instrument,  or
agreement;  the time, order, method, or manner of granting, or perfection of any
security  interest or lien;  the time of filing or  recording  of any  financing
statements,  assignments,  deeds of trust,  mortgages,  or any other  documents,
instruments,  or agreements  under the UCC or any other  applicable law; and any
provision of the UCC or any other  applicable  law to the contrary,  the Secured
Creditors agree:

                  (a) The Senior Agent, on behalf of the Senior  Lenders,  shall
have a first priority security interest in and lien upon the Collateral; and

                  (b)  The  Senior  Subordinated  Lender  shall  have  a  second
priority security interest in and lien upon the Collateral.

            For purposes of the foregoing allocation of priorities, any claim of
a right to a setoff shall be treated in all respects as a security  interest and
no claimed right of setoff shall be asserted to defeat or diminish the rights or
priorities provided for herein.


                                      -8-
<PAGE>

            4. No  Alteration  of  Priority.  The  lien  and  security  interest
priorities  provided in Section 3 shall not be altered or otherwise  affected by
any amendment, modification,  supplement, extension, renewal, restatement or (to
the extent  permitted in Section 14(a) hereof)  refinancing of any of the Senior
Indebtedness  or any  Senior  Subordinated  Indebtedness  nor by any  action  or
inaction  which any Secured  Creditor may take or fail to take in respect of the
Collateral.  The Secured  Creditors  consent to the  Obligors'  granting to each
other Secured Creditor the liens and security interests reflected in Section 3.

            5.  Perfection.  Each  of the  Secured  Creditors  shall  be  solely
responsible  for, and nothing herein shall  prohibit any Secured  Creditor from,
perfecting and  maintaining  the perfection of its lien or security  interest in
any of the  Collateral  in which such party has been  granted a lien or security
interest.  The  provisions of this  Agreement are intended  solely to govern the
respective  priorities as among the Secured Creditors.  The Senior  Subordinated
Lender agrees that it will not directly or indirectly take any action to contest
or challenge the validity,  legality,  perfection,  priority,  availability,  or
enforceability  of the liens of the Senior Agent and the Senior Lenders upon the
Collateral or seek to have the same avoided, disallowed, set aside, or otherwise
invalidated in any judicial proceeding or otherwise.

            6. Exercise of Remedies;  Management of Collateral.  Notwithstanding
anything to the contrary contained in any of the Documents:

                  (a)  Subject  to  Section  6(b)   hereof,   until  all  Senior
Indebtedness has been Paid in Full: (i) the Senior Agent and the Senior Lenders,
shall have the exclusive right to manage,  perform, and enforce the terms of the
Senior  Documents with respect to the Collateral and to exercise and enforce all
privileges and rights  thereunder in their sole discretion,  including,  without
limitation,  the  exclusive  right to enforce or settle  insurance  claims  with
respect to Collateral, take or retake control or possession of Collateral and to
hold,  prepare  for  sale,  process,  sell,  lease,  dispose  of,  or  liquidate
Collateral;  (ii) the  Senior  Subordinated  Lender  shall  not  accelerate  the
principal  amount due on any Senior  Subordinated  Indebtedness  or exercise any
Secured Creditor  Remedies with respect to Collateral or commence,  or join with
any other  creditor  other  than the  Senior  Agent and the  Senior  Lenders  in
commencing,  any  Bankruptcy  Case; and (iii) any and all proceeds of Collateral
which  shall  come  into the  possession,  control,  or  custody  of the  Senior
Subordinated  Lender will be deemed to have been received for the account of the
Senior Agent and the Senior  Lenders and shall be  immediately  paid over to the
Senior Agent and the Senior Lenders.

                  (b)  Promptly  after the Senior  Subordinated  Lender  becomes
aware  thereof,  the Senior  Subordinated  Lender shall promptly give the Senior
Agent written  notice of any "Event of Default" under (and as defined in) any of
the Senior Subordinated Documents, and, subject to Section 2.1 hereof, until the
Senior  Indebtedness has been Paid in Full, the Senior Subordinated Lender shall
not accelerate the maturity of the  Subordinated  Debt,  commence or join in any
action or  proceeding  to recover  any  amounts  due on the  Subordinated  Debt,
commence or join in any  involuntary  bankruptcy  petition  or similar  judicial
proceeding against the Borrower, or collect, take possession of, foreclose upon,
or exercise  any other  rights or  remedies  with  respect  to, the  Collateral,
judicially or non-judicially,  or attempt to do any of the foregoing); provided,
however, that notwithstanding anything to the contrary contained herein: (i) the
Senior  Subordinated  Lender may, at any time, (A) ask or make demand in respect
of


                                      -9-
<PAGE>

payments permitted to be received by Section 2.1 of this Agreement,  (B) convert
to  equity  any of the  Subordinated  Debt,  and (C) sell,  assign or  otherwise
transfer any and all of the Subordinated Debt and their rights relating thereto,
subject to the provisions of this  Agreement;  and (ii) if an "Event of Default"
under (and as defined in) any of the Senior  Subordinated  Documents  shall have
occurred  and be  continuing,  the Senior  Subordinated  Lender may, at the time
specified in clauses (1) and (2) of this clause (ii),  (A) accelerate any or all
of the  Subordinated  Debt,  (B) file and  prosecute  a lawsuit to  collect,  or
otherwise enforce,  subject to the provisions of this Agreement,  any and all of
the rights in respect of, the Subordinated  Debt, (C) exercise the rights of the
Senior  Subordinated  Lender in any proceeding referred to in this Section 6(b),
subject to the terms of this  Agreement,  and (D) realize  upon and exercise any
and all remedies in respect of any of the Collateral  securing the  Subordinated
Obligations,  in each case described in this clause (ii) following,  (1) written
notice to the Senior Agent, and (2) the expiration of 30 days after such written
notice has been  received by the Senior  Agent,  unless prior to the end of such
30-day period,  the Senior Agent shall have accelerated the Senior  Indebtedness
and commenced and be pursuing  enforcement of its liens on such  Collateral in a
commercially  reasonable manner (it being recognized that the Senior Agent shall
have no duties or obligations to the Senior Subordinated Lender in so doing) and
if the  Senior  Agent is  continuing  to pursue  such a course of  conduct  in a
commercially  reasonable  manner,  then the  Senior  Subordinated  Lender  shall
refrain from taking any of the actions specified in this clause (ii).

                  (c) The  rights  and  priorities  set forth in this  Agreement
shall remain binding  irrespective of the terms of any plan of reorganization in
a Bankruptcy  Case or other  provisions  of the  Bankruptcy  Code or any similar
federal or state statute.

            7. Sale of Collateral.

                  (a)  Subject  to  Section  6(b)   hereof,   until  the  Senior
Indebtedness  has been Paid in Full:  (i) only the  Senior  Agent and the Senior
Lenders  shall have the right to restrict or permit,  or approve or  disapprove,
the sale,  transfer or other disposition of the Collateral;  and (ii) the Senior
Subordinated  Lender will,  immediately  upon the request of the Senior Agent or
the  Senior  Lenders,  release or  otherwise  terminate  its liens and  security
interests  upon  the  Collateral,  to the  extent  such  Collateral  is  sold or
otherwise disposed of by any Obligor with the consent of the Senior Agent or the
Senior  Lenders  in  accordance  with  the  Senior  Documents,  and  the  Senior
Subordinated  Lender will  immediately  deliver  such  release  documents as the
Senior  Agent  or the  Senior  Lenders  may  require  in  connection  therewith;
provided,  however,  that if any such sale or  disposition  results in a surplus
after the Senior  Indebtedness has been Paid in Full, such surplus shall be paid
to the Senior  Subordinated  Lender for application in accordance with the terms
of the Senior Subordinated Documents.

                  (b) Subject to Section 6(b) hereof, if the Senior Subordinated
Lender shall attempt any Secured  Creditor  Remedies or attempt any other action
prohibited or restricted under this Agreement,  any Obligor, the Senior Agent or
the  Senior  Lenders  may  interpose  as a  defense  or plea the  making of this
Agreement and the Senior Agent or the Senior Lenders may intervene and interpose
such  defense in its name or in the name of any  Obligor  and any  Obligor,  the
Senior Agent or the Senior Lenders may by virtue of this Agreement  restrain the
enforcement  thereof in the name of any Obligor,  the Senior Agent or the Senior
Lenders.  Notwithstanding  anything to the contrary, any payment or distribution
of cash, assets or securities of any Obligor received by the Senior Subordinated
Lender prior to all Senior Indebtedness being Paid in Full, shall be held by the
Senior  Subordinated  Lender IN TRUST for and paid over to the Senior  Agent and
the Senior Lenders for application to the Senior  Indebtedness until such Senior
Indebtedness is Paid in Full.


                                      -10-
<PAGE>

                  (c) This  Section 7 shall not be construed in any way to limit
or  impair  the  right  of (i) any  Secured  Creditor  to bid  for and  purchase
Collateral at any private or judicial foreclosure upon such Collateral initiated
by any other Secured Creditor,  (ii) the Senior Subordinated Lender to join (but
not control) any foreclosure or other judicial lien enforcement  proceeding with
respect to such Collateral  initiated by the Senior Agent and the Senior Lenders
thereon,  so long as it does not delay or  interfere  with the  exercise  by the
Senior Agent or the Senior  Lenders of their  rights,  and (iii)  subject to the
terms of this  Agreement,  the right of the  Senior  Subordinated  Lender on any
Collateral  to receive  payments  from the proceeds of the  collection,  sale or
other disposition of such Collateral.

            8. Sections 9-611 and 9-613 Notice and Waiver of  Marshalling.  Each
Secured Creditor hereby acknowledges that this Agreement shall constitute notice
of the other  Secured  Creditors'  respective  interests  in the  Collateral  as
provided  by  Sections  9-611  and  9-613  of the  UCC and  each of the  Secured
Creditors waives any right to compel the other Secured  Creditors to marshal any
of the Collateral or to seek payment from any  particular  assets of any Obligor
or from any third party.

            9. Insurance or Condemnation. In the event of:

                  (a) the  occurrence of a fire or other  casualty  resulting in
damage to all or any portion of any Collateral (each, a "CASUALTY"):

                     (i) the Senior  Subordinated Lender hereby waives any right
to  participate  or join in any  adjustment,  compromise,  or  settlement of any
claims resulting from a Casualty with respect to any Collateral;

                     (ii) all  proceeds  received or to be received on account
of a Casualty  shall be applied  in the  manner or manners  provided  for in the
Senior Documents; and

                     (iii) the Senior  Subordinated  Lender  agrees to execute
and  deliver  any  documents,  instruments,  agreements  or  further  assurances
required to effectuate any of the foregoing.

            10. Bankruptcy Issues.

                  (a) Except as  provided in this  Section  10,  this  Agreement
shall continue in full force and effect after the  commencement  of a Bankruptcy
Case (all  references  herein to Obligors  being  deemed to apply to Obligors as
debtor-in-possession  and to a trustee  for  Obligors'  estate  in a  Bankruptcy
Case), and shall apply with full force and effect with respect to all Collateral
acquired by such Obligors,  and to all Secured Creditors'  Indebtedness incurred
by Obligors, subsequent to such commencement.


                                      -11-
<PAGE>

                  (b) If any Obligor shall become subject to a Bankruptcy  Case,
and if the Senior Agent or the Senior  Lenders shall desire to permit the use of
cash  collateral  or to provide  post-petition  financing to such  Obligor,  the
Senior Subordinated Lender agrees as follows:  (i) adequate notice to the Senior
Subordinated  Lender shall be deemed to have been  provided for such use of cash
collateral or post-petition  financing if the Senior Subordinated Lender receive
notice  thereof  at least  three (3)  Business  Days  prior to any  hearing on a
request to approve such use of cash collateral or post-petition  financing;  and
(ii) no objection will be raised by the Senior  Subordinated  Lender to any such
use of cash  collateral or such  post-petition  financing by the Senior Agent or
the Senior  Lenders.  No  objection  will be raised by the  Senior  Subordinated
Secured  Creditors to the Senior  Agent's  motion for relief from the  automatic
stay in any proceeding  under the  Bankruptcy  Code to foreclose on and sell the
Collateral.

            11.  Notice of Default and Certain  Events.  Each  Secured  Creditor
shall send written notice to each other Secured  Creditor upon the occurrence of
any of the following as applicable:

                  (a)  the   declaration  of  any  default  under  such  Secured
Creditor's  Documents,  or the  acceleration  of any of such Secured  Creditor's
Indebtedness; or

                  (b)  the  commencement  of any  sale  or  liquidation  of,  or
realization upon, any of the Collateral.

            Each  such  notice  shall  be sent to each  other  Secured  Creditor
contemporaneously  with the  sending of such notice to Obligors if and when sent
under the applicable Documents. The failure of any Secured Creditor to give such
notice shall not affect the relative lien or security interest priorities or the
other  privileges of such Secured Creditor as provided in this Agreement or give
rise to any liability.

            12. Mutual Bailee; Relative Priorities. (a) Each of the Senior Agent
and the Senior Subordinated Lender (each, a "SECURED PARTY") hereby appoints the
other  Secured  Creditor as such  appointing  Secured  Party's  bailee and agent
solely for the purpose of perfecting its respective security interests solely in
and on any of the  Collateral  in the  possession  or "control" (as such term is
defined  in  the  Uniform  Commercial  Code  as in  effect  in  each  applicable
jurisdiction)  of such other Secured Party, in which a security  interest may be
perfected  under the UCC or other  relevant  law only by  possession  or control
("SPECIFIED COLLATERAL");  provided, however, that a Secured Party in possession
or  having  control  of any  Specified  Collateral  shall  not  have any duty or
liability to protect or preserve any rights  pertaining to any of such Specified
Collateral, and (except for gross negligence or willful misconduct as determined
pursuant to a final non-appealable  order of a court of competent  jurisdiction)
the non-possessing or  non-controlling  Secured Party hereby waives and releases
the  Secured  Party in  possession  or control  from all claims and  liabilities
arising  pursuant to such  possessing  Secured  Party's role as bailee and agent
with  respect  to the  Specified  Collateral,  so  long as  such  possessing  or
controlling Secured Party shall use the same degree of care with respect thereto
as such  possessing  or  controlling  Secured  Party uses for  similar  property
pledged to such  possessing  or  controlling  Secured  Party as  collateral  for
indebtedness  of others to such  possessing or  controlling  Secured  Party.  If
either  the  Senior  Indebtedness  or Senior  Subordinated  Indebtedness  (each,
"INDEBTEDNESS")  are Paid in Full then, so long as any of the other Indebtedness
remains unpaid,  the Secured Party with respect to such paid Indebtedness  shall
deliver the remainder of the Specified Collateral,  if any, in its possession to
the Secured  Party with respect to such unpaid  Indebtedness,  and, if permitted
under the  applicable  agreements,  transfer  control  of the  remainder  of the
Specified  Collateral,  if any,  under its control to such other Secured  Party,
except in each case as may  otherwise  be  required by  applicable  law or court
order.


                                      -12-
<PAGE>

                  (b) It is  understood  and  agreed  that  this  Section  12 is
intended  solely to  assure  continuous  perfection  of the  security  interests
granted under the documents  evidencing the Debt, and nothing in this Section 12
shall be deemed or construed as altering the priorities or obligations set forth
elsewhere in this Agreement.  Each Secured Party shall be solely responsible for
perfecting  and  maintaining  the  perfection  of its  liens in and to each item
constituting  the  Specified  Collateral  in which such  Secured  Party has been
granted a lien. Each Secured Party  acknowledges  and agrees that: (a) the other
Secured Party makes no representation  or warranty  whatsoever as to the nature,
extent,  description,  validity or priority of any  Specified  Collateral or the
security interests in or liens upon any Specified  Collateral;  (b) such Secured
Party need not act as a bailee or agent for the other Secured Party with respect
to any  Collateral in which a security  interest may be perfected by means other
than  possession  or  control;  and (c) the  priority of each  Secured  Parties'
security interests in and liens upon the Specified  Collateral shall be governed
by the terms of this Agreement.  The foregoing  provisions of this Agreement are
intended  solely to govern the respective lien priorities as between the Secured
Party's and shall not impose on any Secured Party any  obligations in respect of
the  disposition of proceeds of any  Collateral  which would conflict with prior
perfected  claims therein in favor of any other person or any order or decree of
any court or governmental authority or any applicable law.

            13. Authority.

                  (a)  The  Senior  Agent   represents  and  warrants  that  the
execution,  delivery  and  performance  by it of this  Agreement  has been  duly
authorized by the Senior  Lenders and by all necessary  corporate  action of the
Senior Agent, and that this Agreement  constitutes the legal,  valid and binding
obligation of the Senior Agent and the Senior Lenders,  enforceable against each
of them in accordance with its terms.

                  (b) The Senior  Subordinated  Lender  represents  and warrants
that the  execution,  delivery and  performance by it of this Agreement has been
duly  authorized by all necessary  corporate  action of the Senior  Subordinated
Lender,  and that this  Agreement  constitutes  the  legal,  valid  and  binding
obligation  of  the  Senior  Subordinated  Lender,  enforceable  against  it  in
accordance with its terms.

                  (c) The Senior  Subordinated Lender agrees that any assignment
or transfer of an interest in any of the Senior Subordinated  Indebtedness shall
be made expressly  subject to the terms and conditions of this  Agreement.  Each
Person  that  becomes  a  Senior  Subordinated  Lender  after  the  date of this
Agreement  shall  execute  and  deliver  to the  Senior  Subordinated  Lender an
acknowledgement and consent to the terms of this Agreement.


                                      -13-
<PAGE>

            14. Modification of Documents; Additional Covenants.

                  (a) The  Senior  Subordinated  Lender  agrees  that the Senior
Agent and the Senior Lenders shall have absolute power and  discretion,  without
notice to the Senior Subordinated  Lender, to deal in any manner with the Senior
Indebtedness,  including, but not by way of limitation, the power and discretion
to do  any  of  the  following:  (i)  any  demand  for  payment  of  any  Senior
Indebtedness  may be rescinded in whole or in part, and any Senior  Indebtedness
may be continued,  and the Senior Indebtedness or the liability of Obligors upon
or for any part thereof,  or any  Collateral or guaranty  therefor,  or right of
offset with respect  thereto,  may,  from time to time,  in whole or in part, be
renewed, extended, modified, accelerated,  compromised,  waived, surrendered, or
released; and (ii) the Senior Documents may be amended, modified,  supplemented,
refinanced,  renewed, refunded,  extended or terminated, in whole or in part, as
the Senior Agent or the Senior Lenders may deem advisable from time to time; and
(iii) any Collateral may be sold, exchanged,  waived,  surrendered, or released.
The Senior Subordinated  Lender will remain bound under this Agreement,  and the
subordination provided for herein shall not be impaired,  abridged, released, or
otherwise affected  notwithstanding any such renewal,  extension,  modification,
acceleration,  compromise,  amendment, supplement,  termination, sale, exchange,
waiver,  surrender,  or release.  The Senior  Indebtedness shall conclusively be
deemed to have been  created,  contracted,  or incurred  in  reliance  upon this
Agreement,  and all dealings  between the Senior Agent and the Senior Lenders on
the one hand, and the Obligors,  on the other hand, shall be deemed to have been
consummated in reliance upon this Agreement.

                  (b) Without the prior  written  consent of the Senior Agent or
the Senior Lenders,  the Senior  Subordinated Lender agrees not to amend, modify
or  supplement  in whole or in part,  any  terms  or  provisions  of any  Senior
Subordinated Document.

                  (c) So long as any of the  Senior  Indebtedness  shall  remain
outstanding,  the Senior Subordinated Lender will not, without the prior written
consent of the Senior Agent or the Senior Lenders:

                     (i) except as otherwise expressly permitted in this
Agreement,  cancel or otherwise discharge any Senior  Subordinated  Indebtedness
(except upon payment in full  thereof to the Senior  Subordinated  Lender or the
Senior Agent and the Senior Lenders as contemplated  hereby), or (B) subordinate
any Senior  Subordinated  Indebtedness to any  indebtedness of any Obligor other
than the Senior Indebtedness;

                     (ii) sell,  assign,  pledge,  encumber or otherwise dispose
of any Senior Subordinated  Indebtedness unless such sale,  assignment,  pledge,
encumbrance or disposition is made expressly subject to this Agreement; or

                     (iii)  commence,  or join  with any  creditor  other  than
the Senior Agent or the Senior Lenders in commencing, any Bankruptcy Case.

            15.   The  Senior   Subordinated   Lender's   Waivers.   The  Senior
Subordinated   Lender   waives:   (a)  any  and  all  notice  of  the  creation,
modification,  renewal,  extension, or accrual of any of the Senior Indebtedness
and notice of or proof of  reliance by the Senior  Agent and the Senior  Lenders
upon this Agreement; (b) agrees not to assert against the Senior Agent or any of
the Senior  Lenders any rights which a guarantor or surety could  exercise,  but
nothing in this Agreement shall constitute any Senior  Subordinated  Lender as a
guarantor or surety;  and (c) prior to the time the Senior  Indebtedness is Paid
in Full, any right of  subrogation,  contribution,  reimbursement,  or indemnity
which it may have against any Obligor arising directly or indirectly out of this
Agreement.


                                      -14-
<PAGE>

            16. Binding  Effect;  Other.  This  Agreement  shall be a continuing
agreement,  shall be binding  upon and shall inure to the benefit of the parties
hereto from time to time and their respective  successors and assigns,  shall be
irrevocable,  and  shall  remain  in full  force and  effect  until  the  Senior
Indebtedness  shall have been Paid in Full, and the Senior  Documents shall have
been  irrevocably  terminated,  but  shall  continue  to  be  effective,  or  be
reinstated,  as the case may be, if any  payment,  or any part  thereof,  of any
amount  paid  by or  on  behalf  of  any  Obligor  with  regard  to  any  Senior
Indebtedness is rescinded or must otherwise be restored or returned upon or as a
result of any  Bankruptcy  Case,  or for any other  reason,  all as though  such
payments had not been made. Any waiver or amendment  hereunder must be evidenced
by a signed  writing  of the  party  to be  bound  thereby,  and  shall  only be
effective  in the specific  instance.  This  Agreement  shall be governed by and
construed  in  accordance  with the laws of the State of New York.  The  parties
agree that any actions arising out of or in connection with this Agreement shall
be tried and litigated in the state and federal  courts located in the County of
New York,  in the State of New York.  The  headings  in this  Agreement  are for
convenience  of  reference  only,  and shall not alter or  otherwise  affect the
meaning hereof.

            17.  Parties  Intended to be Benefited.  All of the  understandings,
covenants,  and  agreements  contained  herein are solely for the benefit of the
Senior  Agent,  the  Senior  Lenders,  the  Senior  Subordinated  Lender,  their
respective successors and assigns, and future holders of the Senior Indebtedness
and the Senior Subordinated  Indebtedness  respectively,  and there are no other
parties,  including  any  Obligor  or any of  their  creditors,  successors,  or
assigns, which are intended to be benefited, in any way, by this Agreement.

            18. No Limitation  Intended.  Nothing contained in this Agreement is
intended  to or shall  affect or limit,  in any way,  the rights that the Senior
Agent, the Senior Lenders and the Senior  Subordinated  Lender have with respect
to any third  parties.  The  Senior  Agent,  the Senior  Lenders  and the Senior
Subordinated Lender hereby  specifically  reserve all of their respective rights
against the Obligors and all other third parties.

            19. Notice.  Whenever it is provided herein that any notice, demand,
request, consent, approval,  declaration, or other communication shall or may be
given to or  served  upon any of the  parties  hereto,  or  whenever  any of the
parties  desires to give or serve upon the other  communication  with respect to
this  Agreement,   each  such  notice,  demand,  request,   consent,   approval,
declaration,  or other  communication shall be in writing and shall be delivered
either in person or by  registered,  or certified  United  States mail,  postage
prepaid, by facsimile, or by recognized overnight courier service,  addressed as
follows:


                                      -15-
<PAGE>

                  (a) If to the Senior Agent, at:

                          Portside Growth & Opportunity Fund
                      c/o Ramius Capital Group, L.L.C.
                          666 Third Avenue, 26th Floor
                          New York, New York  10017
                          Telephone:  (212) 756-2000
                          Facsimile:  (212) 593-5955
                          Attention:  Jeffrey Smith

                          with a copy to:


                          Schulte Roth & Zabel LLP
                          919 Third Avenue
                          New York, New York  10022
                          Telephone:  (212) 756-2000
                          Facsimile:  (212) 593-5955
                          Attention:  Eleazer N. Klein, Esq.


                  (b) If to the Senior Subordinated Lender, at:

                          c/o SpatiaLight, Inc.
                          Five Hamilton Landing, Suite 100
                          Novato, CA 94949
                          Telephone:  (415) 883-1693
                          Facsimile:  (415) 883-1125
                          Attention:  Robert A. Olins

                          with a copy to:

                          Bryan Cave LLP
                          1290 Avenue of the Americas
                          New York, New York  10104
                          Telephone:  (212) 541-1155
                          Facsimile:  (212) 541-4630
                          Attention:  Melvin Katz, Esq.


                  (c) If to the Obligors, at:

                          SpatiaLight, Inc.
                          Five Hamilton Landing, Suite 100
                          Novato, CA 94949
                          Telephone:  (415) 883-1693
                          Facsimile:  (415) 883-1125
                          Attention:  Robert A. Olins:


                                      -16-
<PAGE>

                          with a copy to:

                          Bryan Cave LLP
                          1290 Avenue of the Americas
                          New York, New York  10104
                          Telephone:  (212) 541-1155
                          Facsimile:  (212) 541-4630
                          Attention:  Melvin Katz, Esq.

or at such  other  address  as may be  substituted  by  notice  given as  herein
provided.  Giving of any notice  required  hereunder may be waived in writing by
the party  entitled to receive  such  notice.  Every  notice,  demand,  request,
consent, approval,  declaration or other communication hereunder shall be deemed
to have been duly given when received.

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

            21.  Complete  Agreement.  This Agreement  constitutes  the complete
agreement and understanding of each of the Secured Creditors, and supersedes all
prior  or  contemporaneous  oral  and  written   negotiations,   agreements  and
understandings, express or implied, with respect to the subject matter hereof.

            22. No Joint Venture. Each of the Secured Creditors acknowledges and
confirms  that  this  Agreement  shall  not  create a joint  venture,  agency or
fiduciary relationship.

            23.  Counterparts.  This  Agreement may be executed in any number of
counterparts,  and by the parties each in separate  counterparts,  each of which
shall be an original,  but all of which shall  together  constitute  one and the
same Agreement.

            24. Choice of Law; Venue; Waiver of Jury Trial.

                  (a) THE  SENIOR  AGENT,  THE  SENIOR  LENDERS  AND THE  SENIOR
SUBORDINATED  LENDER HEREBY EXPRESSLY HEREBY IRREVOCABLY AND UNCONDITIONALLY (I)
IRREVOCABLY AND UNCONDITIONALLY  SUBMIT TO THE EXCLUSIVE  JURISDICTION AND VENUE
OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, (II) WAIVES ANY DEFENSE
BASED ON  DOCTRINES OF VENUE OR FORUM NON  CONVENIENS  OR  OTHERWISE,  AND (III)
IRREVOCABLY  AGREES  THAT ALL CLAIMS IN RESPECT OF SUCH AN ACTION OR  PROCEEDING
MAY BE HEARD AND DETERMINED EXCLUSIVELY IN SUCH NEW YORK STATE OR FEDERAL COURT.

                  (b) THE  SENIOR  AGENT,  THE  SENIOR  LENDERS  AND THE  SENIOR
SUBORDINATED  LENDER  HEREBY  EXPRESSLY  WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY
OTHER  INSTRUMENT,  DOCUMENT,  OR AGREEMENT  EXECUTED OR DELIVERED IN CONNECTION
HEREWITH,  OR


                                      -17-
<PAGE>

(B) IN ANY WAY  CONNECTED  WITH OR RELATED OR  INCIDENTAL TO THE DEALINGS OF THE
SENIOR AGENT, THE SENIOR LENDERS AND THE SENIOR SUBORDINATED LENDER WITH RESPECT
TO THIS  AGREEMENT OR ANY OTHER  INSTRUMENT,  DOCUMENT OR AGREEMENT  EXECUTED OR
DELIVERED BY THEM IN CONNECTION HEREWITH,  OR THE TRANSACTIONS RELATED HERETO OR
THERETO,  IN EACH CASE WHETHER NOW EXISTING OR  HEREAFTER  ARISING,  AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE.  THE SENIOR AGENT, THE SENIOR LENDERS
AND THE SENIOR  SUBORDINATED  LENDER  HEREBY  AGREE AND CONSENT  THAT ANY CLAIM,
DEMAND,  ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT JURY,
AND THAT ANY OF THEM MAY FILE AN ORIGINAL  COUNTERPART OR A COPY OF THIS SECTION
WITH ANY COURT AS  WRITTEN  EVIDENCE  OF THE  CONSENT  TO THE WAIVER OF RIGHT TO
TRIAL BY JURY.

            25.   Specific   Performance.   Each  of  the  parties   agrees  and
acknowledges   that  in  the  event  of  any  breach  of  this  Agreement,   the
non-breaching  party would be irrevocably  harmed and would not be made whole by
monetary damages.  IT IS ACCORDINGLY AGREED THAT THE PARTIES HERETO SHALL AND DO
HEREBY WAIVE THE DEFENSE IN ANY ACTION FOR SPECIFIC PERFORMANCE THAT A REMEDY AT
LAW WOULD BE  ADEQUATE  AND THAT THE  PARTIES  HERETO,  IN ADDITION TO ANY OTHER
REMEDY TO WHICH THEY MADE BE ENTITLED AT LAW OR IN EQUITY,  SHALL BE ENTITLED TO
COMPEL  SPECIFIC  PERFORMANCE OF THIS AGREEMENT IN ANY ACTION  INSTITUTED IN ANY
NEW YORK STATE OR FEDERAL  COURT  SITTING IN NEW YORK CITY OR, IN THE EVENT SUCH
COURTS SHALL NOT HAVE  JURISDICTION  OF SUCH ACTION,  IN ANY COURT OF THE UNITED
STATES OR ANY STATE THEREOF HAVING SUBJECT MATTER JURISDICTION OF SUCH ACTIONS.

            26. Legend; Further Assurances.

                  (a) The Senior Subordinated Lender and each Obligor will cause
each  Senior  Subordinated  Document  and  any  other  instrument  or  agreement
hereafter evidencing or guaranteeing any Senior Subordinated  Indebtedness to be
indorsed with substantially the following legend:

            "The  indebtedness  evidenced by this  instrument is subordinated to
            the prior payment in full of the "Senior Indebtedness"  pursuant to,
            and to the extent provided in (and as defined in), the Intercreditor
            and Subordination Agreement,  dated as of November 30, 2004, between
            Portside  Growth &  Opportunity  Fund (in its capacity as collateral
            agent for the "Buyers" party to the Securities  Purchase  Agreement,
            dated as of even date  therewith,  and for the other  holders of the
            "Securities"  as  defined  therein)  and Argyle  Capital  Management
            Corporation."

                  (b) The Senior  Subordinated  Lender and the Obligors will (i)
mark their books or accounts or take such other  action as shall be effective to
give reasonable notice of the effect of this Agreement,  and (ii) in the case of
any Senior  Subordinated  Indebtedness which is not evidenced by any instrument,
upon the Senior Agent's request, cause such Senior Subordinated  Indebtedness to
be evidenced by an appropriate instrument or instruments indorsed with the above
legend. The Senior  Subordinated Lender and Obligors will, at its expense and at
any  time and from  time to time,  promptly  execute  and  deliver  all  further
instruments  and  other  documents,  and take all  further  action,  that may be
necessary or, in the opinion of the Senior Agent,  desirable, or that the Senior
Agent  may  request,  in order to  protect  any  right or  interest  granted  or
purported  to be granted  hereby or to enable  the  Senior  Agent and the Senior
Lenders to exercise and enforce their rights and remedies hereunder.


                                      -18-
<PAGE>

                  (c) Notwithstanding anything to the contrary contained herein,
to the  extent  that any of the  Senior  Subordinated  Documents  (or any of the
Senior  Subordinated  Lender's  rights or remedies  thereunder)  shall have been
pledged,  transferred or otherwise assigned by the Senior Subordinated Lender to
any other party as of the date  hereof,  the Senior  Subordinated  Lender  shall
fully comply with Section 13(c),  Section 14(c)(ii) and Section 26 hereof within
sixty (60) days of the date of this Agreement.

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first herein above set forth.


                                      -19-
<PAGE>

                                      PORTSIDE GROWTH & OPPORTUNITY FUND,
                                      as Collateral Agent



                                      By: /s/ Jeffrey Smith
                                          ------------------------------------
                                          Name:  Jeffrey Smith
                                          Title: Authorized Signatory

<PAGE>

            The Borrower hereby  acknowledges  and agrees to the foregoing terms
and  provisions.  By its  signature  below,  the  Borrower  agrees that it will,
together with its  successors and assigns,  be bound by the provisions  thereof,
including (without  limitation) Section 26(c) hereof, and that any breach by the
Borrower of any term hereof shall constitute an "Event of Default" under (and as
defined in) the Senior Documents.

            The Borrower  agrees that any Secured Party holding  Collateral does
so as bailee  (under the UCC) for the other  Secured  Party  which has a lien on
such  Collateral  and is hereby  authorized  to and may turn over to such  other
Secured Party upon request therefor any such  Collateral,  after all obligations
and  indebtedness  of the Party to the bailee Secured Party have been fully paid
and performed.

            The Borrower  acknowledges and agrees that: (i) although it may sign
this Intercreditor and Subordination Agreement it is not a party hereto and does
not and will not receive  any right,  benefit,  priority  or  interest  under or
because  of the  existence  of the  foregoing  Intercreditor  and  Subordination
Agreement,  and (ii) it will execute and deliver such  additional  documents and
take such  additional  action as may be necessary or desirable in the reasonable
opinion of any of the Secured Parties' to effectuate the provisions and purposes
of the foregoing Intercreditor and Subordination Agreement.


                                      SPATIALIGHT, INC.


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


                                      -21-
<PAGE>

                                   EXHIBIT "A"

                      ARGYLE CAPITAL MANAGEMENT CORPORATION
                                CONVERTIBLE NOTES


--------------------------------------------------------------------------------
                 ISSUANCE DATE                     ORIGINAL PRINCIPAL
                                                         AMOUNT
--------------------------------------------------------------------------------

                   1/23/1998                             $150,000
--------------------------------------------------------------------------------

                   2/24/1998                             $350,000
--------------------------------------------------------------------------------

                   3/18/1998                              $50,000
--------------------------------------------------------------------------------

                   3/27/1998                              $20,000
--------------------------------------------------------------------------------

                   4/3/1998                               $70,000
--------------------------------------------------------------------------------

                   4/17/1998                              $90,000
--------------------------------------------------------------------------------

                   5/1/1998                               $89,000
--------------------------------------------------------------------------------

                   5/15/1998                              $85,000
--------------------------------------------------------------------------------

                   5/29/1998                              $76,500
--------------------------------------------------------------------------------

                   6/12/1998                              $57,500
--------------------------------------------------------------------------------

                   6/26/1998                              $75,000
--------------------------------------------------------------------------------

                   7/7/1998                               $40,000
--------------------------------------------------------------------------------

                   7/10/1998                              $35,000

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

                                                       $1,118,000
--------------------------------------------------------------------------------