Exhibit 10.14

                          PLEDGE AND SECURITY AGREEMENT

      PLEDGE  AND  SECURITY  AGREEMENT,  dated as of  November  30,  2004  (this
"AGREEMENT") made by SPATIALIGHT,  INC., a New York corporation ("SLI") and each
of  its  existing   "Subsidiaries"  (as  defined  in  the  "Securities  Purchase
Agreement" defined below) named on the signature pages hereto (collectively, the
"EXISTING  SUBSIDIARIES")  and each other  Subsidiary of SLI hereafter  becoming
party hereto  (each such other  Subsidiary,  together  with SLI and the Existing
Subsidiaries,  each a "GRANTOR" and, collectively,  the "Grantors"), in favor of
PORTSIDE  GROWTH & OPPORTUNITY  FUND, a company  organized under the laws of the
Cayman  Islands,  in its capacity as  collateral  agent (in such  capacity,  the
"COLLATERAL  AGENT") for the "Buyers" (as defined below) party to the Securities
Purchase  Agreement,  dated as of even date  herewith (as  amended,  restated or
otherwise modified from time to time, the "SECURITIES PURCHASE AGREEMENT").

                              W I T N E S S E T H:

      WHEREAS,  SLI and each  party  listed  as a  "Buyer"  Schedule  of  Buyers
attached  thereto  (collectively,  the "BUYERS")  are parties to the  Securities
Purchase  Agreement,  pursuant to which SLI shall be  required to sell,  and the
Buyers  shall  purchase or have the right to  purchase,  the "Notes" (as defined
therein);

      WHEREAS,  it is a  condition  precedent  to the Buyers  entering  into the
Securities  Purchase Agreement that SLI shall have executed and delivered to the
Collateral Agent this Agreement  providing for the grant to the Collateral Agent
for the benefit of the Buyers of a security interest in all personal property of
SLI to secure all of SLI's obligations under the Securities  Purchase  Agreement
and the "Notes" (as defined  therein) issued pursuant thereto (as such Notes may
be  amended,  restated,  replaced  or  otherwise  modified  from time to time in
accordance with the terms thereof, collectively, the "NOTES");

      WHEREAS, each of the Existing Subsidiaries is a wholly-owned Subsidiary of
SLI and will derive  substantial  benefits from the execution of the  Securities
Purchase Agreement;

      WHEREAS, each of the Existing Subsidiaries, SLI and each other Grantor are
or will be mutually  dependent on each other in the conduct of their  respective
businesses as an integrated operation,  with the credit needed from time to time
by one often  being  provided  through  financing  obtained by the other and the
ability to obtain such financing being dependent on the successful operations of
each of the Existing Subsidiaries, SLI and each other Grantor;

      WHEREAS,  it is a  condition  precedent  to the Buyers  entering  into the
Securities Purchase Agreement that each of the Existing  Subsidiaries shall have
executed  and  delivered  to the  Collateral  Agent the  "Guaranty"  (as defined
therein) with respect to the  obligations of SLI under the  Securities  Purchase
Agreement and the Notes (as amended, restated or otherwise modified from time to
time,  the  "GUARANTY"),  and  this  Agreement  providing  for the  grant to the
Collateral  Agent for the  benefit of the Buyers of a security  interest  in all
personal property of each of the Existing Subsidiaries to secure its obligations
under the Guaranty, and that each future Subsidiary of SLI become a party to the
Guaranty and this Agreement; and

<PAGE>

      WHEREAS,  each of the  Existing  Subsidiaries  and each other  Grantor has
determined  that the execution,  delivery and  performance of this Agreement and
the Guaranty directly benefits, and are in the best interest of SLI; and

      NOW, THEREFORE, in consideration of the premises and the agreements herein
and in order to induce  the  Buyers to  perform  under the  Securities  Purchase
Agreement, each Grantor agrees with the Collateral Agent, for the benefit of the
Buyers, as follows:

      Section 1. Definitions.

      (a) Reference is hereby made to the Securities  Purchase Agreement and the
Notes for a statement of the terms thereof. All terms used in this Agreement and
the recitals hereto which are defined in the Securities Purchase Agreement,  the
Notes or in Articles 8 or 9 of the Uniform  Commercial  Code (the  "CODE") as in
effect from time to time in the State of New York,  and which are not  otherwise
defined  herein  shall  have the same  meanings  herein  as set  forth  therein;
provided  that terms used  herein  which are defined in the Code as in effect in
the State of New York on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute.

      (b) The following terms shall have the respective meanings provided for in
the Code: "Accounts", "Cash Proceeds", "Chattel Paper", "Commercial Tort Claim",
"Commodity  Account",  "Commodity  Contracts",  "Deposit Account",  "Documents",
"Equipment",   "Fixtures",   "General  Intangibles",   "Goods",   "Instruments",
"Inventory",   "Investment  Property",   "Letter-of-Credit   Rights",   "Noncash
Proceeds",  "Payment Intangibles",  "Proceeds",  "Promissory Notes", "Security",
"Record", "Security Account", "Software", and "Supporting Obligations".

      (c) As used  in  this  Agreement,  the  following  terms  shall  have  the
respective  meanings  indicated below, such meanings to be applicable equally to
both the singular and plural forms of such terms:

      "COPYRIGHT  LICENSES" means all licenses,  contracts or other  agreements,
whether  written  or oral,  naming any  Grantor  as  licensee  or  licensor  and
providing  for the grant of any right to use or sell any  works  covered  by any
copyright  (including,  without limitation,  all Copyright Licenses set forth in
Schedule II hereto).

      "COPYRIGHTS" means all domestic and foreign copyrights, whether registered
or not,  including,  without  limitation,  all copyright  rights  throughout the
universe (whether now or hereafter arising) in any and all media (whether now or
hereafter  developed),  in and to all original works of authorship  fixed in any
tangible  medium of  expression,  acquired  or used by any  Grantor  (including,
without  limitation,  all  copyrights  described  in Schedule  II  hereto),  all
applications,   registrations  and  recordings   thereof   (including,   without
limitation,  applications,  registrations  and  recordings  in the United States
Copyright  Office or in any similar office or agency of the United States or any
other  country  or  any  political  subdivision  thereof),   and  all  reissues,
divisions,  continuations,  continuations  in part and  extensions  or  renewals
thereof.

      "EVENT OF DEFAULT" shall have the meaning set forth in the Notes.


                                      -2-
<PAGE>

      "INSOLVENCY  PROCEEDING" means any proceeding  commenced by or against any
Person under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the
United States Code) or under any other bankruptcy or insolvency law, assignments
for the benefit of creditors,  formal or informal  moratoria,  compositions,  or
extensions  generally with  creditors,  or proceedings  seeking  reorganization,
arrangement, or other similar relief.

      "INTELLECTUAL PROPERTY" means the Copyrights, Trademarks and Patents.

      "LICENSES" means the Copyright  Licenses,  the Trademark  Licenses and the
Patent Licenses.

      "LIEN" means any  mortgage,  deed of trust,  pledge,  lien  (statutory  or
otherwise),  security  interest,  charge or other  encumbrance  or  security  or
preferential  arrangement  of any nature,  including,  without  limitation,  any
conditional sale or title retention  arrangement,  any capitalized lease and any
assignment,  deposit  arrangement or financing  lease intended as, or having the
effect of, security.

      "PATENT  LICENSES"  means all  licenses,  contracts  or other  agreements,
whether  written  or oral,  naming any  Grantor  as  licensee  or  licensor  and
providing for the grant of any right to  manufacture,  use or sell any invention
covered by any Patent (including,  without  limitation,  all Patent Licenses set
forth in Schedule II hereto).

      "PATENTS" means all domestic and foreign  letters patent,  design patents,
utility patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques,  processes, proprietary information,  technology, know-how,
formulae,  rights of publicity and other general intangibles of like nature, now
existing or hereafter acquired (including,  without limitation, all domestic and
foreign letters patent,  design patents,  utility patents,  industrial  designs,
inventions,  trade secrets,  ideas, concepts,  methods,  techniques,  processes,
proprietary information, technology, know-how and formulae described in Schedule
II hereto),  all applications,  registrations and recordings thereof (including,
without  limitation,  applications,  registrations  and recordings in the United
States Patent and Trademark  Office,  or in any similar  office or agency of the
United States or any other country or any political  subdivision  thereof),  and
all reissues, divisions, continuations,  continuations in part and extensions or
renewals thereof.

      "TRADEMARK  LICENSES" means all licenses,  contracts or other  agreements,
whether  written  or oral,  naming any  Grantor  as  licensor  or  licensee  and
providing for the grant of any right concerning any Trademark, together with any
goodwill connected with and symbolized by any such trademark licenses, contracts
or  agreements  and the right to prepare for sale or lease and sell or lease any
and all  Inventory  now or  hereafter  owned by any Grantor and now or hereafter
covered by such licenses (including,  without limitation, all Trademark Licenses
described in Schedule II hereto).


                                      -3-
<PAGE>


      "TRADEMARKS"  means all domestic and foreign  trademarks,  service  marks,
collective marks,  certification  marks, trade names,  business names,  d/b/a's,
Internet domain names, trade styles, designs, logos and other source or business
identifiers and all general  intangibles of like nature, now or hereafter owned,
adopted,  acquired or used by any Grantor (including,  without  limitation,  all
domestic and foreign trademarks,  service marks, collective marks, certification
marks,  trade names,  business  names,  d/b/a's,  Internet  domain names,  trade
styles,  designs,  logos and other source or business  identifiers  described in
Schedule II hereto),  all  applications,  registrations  and recordings  thereof
(including,  without limitation,  applications,  registrations and recordings in
the United States Patent and Trademark Office or in any similar office or agency
of the United  States,  any state  thereof or any other country or any political
subdivision thereof), and all reissues, extensions or renewals thereof, together
with all  goodwill of the  business  symbolized  by such marks and all  customer
lists, formulae and other Records of any Grantor relating to the distribution of
products and services in connection with which any of such marks are used.

      Section 2. Grant of Security Interest.  As collateral  security for all of
the "Obligations" (as defined in Section 3 hereof),  each Grantor hereby pledges
and assigns to the Collateral Agent for the benefit of the Buyers, and grants to
the  Collateral  Agent  for the  benefit  of the  Buyers a  continuing  security
interest in, all personal property of such Grantor, wherever located and whether
now or hereafter existing and whether now owned or hereafter acquired,  of every
kind and description,  tangible or intangible (collectively,  the "COLLATERAL"),
including, without limitation, the following:

      (a) all Accounts;

      (b) all Chattel Paper (whether tangible or electronic);

      (c) the Commercial Tort Claims specified on Schedule VI hereto;

      (d) all Deposit Accounts (including, without limitation, all cash, and all
other property from time to time  deposited  therein and the monies and property
in the possession or under the control of the  Collateral  Agent or Buyer or any
affiliate,  representative,  agent or  correspondent  of the Collateral Agent or
Buyer;

      (e) all Documents;

      (f) all Equipment;

      (g) all Fixtures;

      (h) all General Intangibles  (including,  without limitation,  all Payment
Intangibles);

      (i) all Goods;

      (j) all Instruments (including,  without limitation,  Promissory Notes and
each certificated Security);

      (k) all Inventory;

      (l) all Investment Property;


                                      -4-
<PAGE>

      (m) all Copyrights, Patents and Trademarks, and all Licenses;

      (n) all Letter-of-Credit Rights;

      (o) all Supporting Obligations;

      (p) all other  tangible and intangible  personal  property of such Grantor
(whether or not subject to the Code),  including,  without limitation,  all bank
and other  accounts  and all cash and all  investments  therein,  all  proceeds,
products, offspring, accessions, rents, profits, income, benefits, substitutions
and replacements of and to any of the property of such Grantor  described in the
preceding clauses of this Section 2 (including, without limitation, any proceeds
of  insurance  thereon and all causes of action,  claims and  warranties  now or
hereafter held by such Grantor in respect of any of the items listed above), and
all  books,   correspondence,   files  and  other  Records,  including,  without
limitation, all tapes, desks, cards, Software, data and computer programs in the
possession or under the control of such Grantor or any other Person from time to
time acting for such  Grantor that at any time  evidence or contain  information
relating  to any of the  property  described  in the  preceding  clauses of this
Section 2 or are otherwise necessary or helpful in the collection or realization
thereof; and

      (q) all Proceeds,  including all Cash Proceeds and Noncash  Proceeds,  and
products of any and all of the foregoing Collateral;

in each case  howsoever  such  Grantor's  interest  therein  may arise or appear
(whether by ownership, security interest, claim or otherwise).

      Notwithstanding  anything contained in this Section 2 to the contrary,  in
no event shall the "Collateral"  include, and no Grantor shall be deemed to have
granted a security interest in: (a) any right under any lease,  license or other
contract or agreement constituting a General Intangible,  but only to the extent
that the granting of a security interest therein or an assignment  thereof would
violate any applicable law or any enforceable provision of the lease, license or
other contract or agreement,  as applicable  and, then,  only to the extent such
prohibition on transfer is also  enforceable  under  applicable law,  including,
without limitation, Sections 9-406 and 9-408 of the Code), provided, that to the
extent  such  security  interest  at any  time  hereafter  shall  no  longer  be
prohibited  by law,  and/or  immediately  upon such  provision  no longer  being
enforceable,  as the case may be, the Collateral shall automatically and without
any further action include,  and the Guarantors  shall be deemed to have granted
automatically  and without any further action a security interest in, such right
as if such law had never existed or such  provision had never been  enforceable,
as the case may be;  or (b) in the case of  shares of  capital  stock  issued by
SpatiaLight  Korea,  Inc.,  any  outstanding  shares of capital stock thereof in
excess of 65% of voting  power of all  shares of  capital  stock of  SpatiaLight
Korea, Inc. entitled to vote.


                                      -5-
<PAGE>


      Section 3. Security for Obligations.  The security interest created hereby
in the  Collateral  constitutes  continuing  collateral  security for all of the
following obligations, whether now existing or hereafter incurred (collectively,
the "OBLIGATIONS"):

      (a) (i) the  payment by SLI,  as and when due and  payable  (by  scheduled
maturity,  required  prepayment,  acceleration,  demand  or  otherwise),  of all
amounts  from time to time  owing by it in respect  of the  Securities  Purchase
Agreement,  the Notes and the other  "TRANSACTION  DOCUMENTS" (as defined in the
Securities  Purchase  Agreement),  and (ii) the payment by each of the  Existing
Subsidiaries  and each other  Grantor other than SLI as and when due and payable
of all "GUARANTEED  OBLIGATIONS" under (as defined in) the Guaranty,  including,
without  limitation,  (A) all principal of and interest on the Notes (including,
without  limitation,  all interest  that accrues after the  commencement  of any
Insolvency  Proceeding  of any  Grantor,  whether  or not  the  payment  of such
interest is  unenforceable  or is not  allowable  due to the  existence  of such
Insolvency Proceeding),  and (B) all fees, commissions,  expense reimbursements,
indemnifications  and all other  amounts  due or to become  due under any of the
Transaction Documents; and

      (b) the due performance and observance by each Grantor of all of its other
obligations  from time to time  existing  in respect  of any of the  Transaction
Documents for so long as the Notes are outstanding.

      Section 4.  Representations  and Warranties.  Each Grantor  represents and
warrants as follows:

      (a) Schedule I hereto sets forth (i) the exact legal name of such Grantor,
and (ii) the organizational identification number of such Grantor or states that
no such organizational identification number exists.

      (b) There is no pending or written notice  threatening  any action,  suit,
proceeding or claim affecting such Grantor before any governmental  authority or
any arbitrator, or any order, judgment or award by any governmental authority or
arbitrator,  that  may  adversely  affect  the  grant  by such  Grantor,  or the
perfection,  of the  security  interest  purported  to be created  hereby in the
Collateral,  or the  exercise  by the  Collateral  Agent of any of its rights or
remedies hereunder.

      (c) All Federal, state and local tax returns and other reports required by
applicable law to be filed by such Grantor have been filed,  or extensions  have
been obtained, and all taxes, assessments and other governmental charges imposed
upon  such  Grantor  or  any  property  of  such  Grantor  (including,   without
limitation,  all federal income and social  security taxes on employees'  wages)
and which have  become due and  payable on or prior to the date hereof have been
paid,  except to the extent contested in good faith by proper  proceedings which
stay the imposition of any penalty,  fine or Lien resulting from the non-payment
thereof and with respect to which adequate  reserves have been set aside for the
payment  thereof in accordance  with generally  accepted  accounting  principles
consistently applied ("GAAP").


                                      -6-
<PAGE>

      (d) All  Equipment,  Fixtures,  Goods and  Inventory  of such  Grantor now
existing are, and all Equipment,  Fixtures,  Goods and Inventory of such Grantor
hereafter  existing will be,  located  and/or based at the  addresses  specified
therefor  in  Schedule  III  hereto,  except  that  such  Grantor  will give the
Collateral  Agent not less than 30 days' prior  written  notice of any change of
the  location  of any such  Collateral,  other  than to  locations  set forth on
Schedule  III and with  respect  to which  the  Collateral  Agent  has filed UCC
financing  statements  and otherwise  fully  perfected its Liens  thereon.  Such
Grantor's  chief place of business and chief executive  office,  the place where
such Grantor  keeps its Records  concerning  Accounts  and all  originals of all
Chattel  Paper are located at the addresses  specified  therefor in Schedule III
hereto.  None  of the  Accounts  is  evidenced  by  Promissory  Notes  or  other
Instruments. Set forth in Schedule IV hereto is a complete and accurate list, as
of the date of this Agreement,  of (i) each Promissory Note,  Security and other
Instrument  owned by each  Grantor  and (ii) each  Deposit  Account,  Securities
Account and  Commodities  Account of each  Grantor,  together  with the name and
address of each  institution  at which  each such  Account  is  maintained,  the
account  number for each such Account and a  description  of the purpose of each
such Account.  Set forth in Schedule II hereto is a complete and correct list of
each trade name used by each  Grantor  and the name of, and each trade name used
by, each person from which such Grantor has acquired any substantial part of the
Collateral.

      (e) Such  Grantor has  delivered  to the  Collateral  Agent  complete  and
correct  copies of each  material  License  described  in  Schedule  II  hereto,
including  all  schedules  and exhibits  thereto,  which  represents  all of the
Licenses  existing on the date of this  Agreement.  Each such License sets forth
the entire  agreement and  understanding  of the parties thereto relating to the
subject  matter  thereof,  and there are no other  agreements,  arrangements  or
understandings,  written or oral, relating to the matters covered thereby or the
rights  of such  Grantor  or any of its  affiliates  in  respect  thereof.  Each
material  License now existing is, and any material  License entered into in the
future will be, the legal,  valid and binding obligation of the parties thereto,
enforceable  against such parties in accordance with its terms. No default under
any  material  License by any such  party has  occurred,  nor does any  defense,
offset, deduction or counterclaim exist thereunder in favor of any such party.

      (f) Such Grantor owns and controls, or otherwise possesses adequate rights
to use, all Trademarks,  Patents and Copyrights,  which are the only trademarks,
patents,  copyrights,  inventions,  trade secrets,  proprietary  information and
technology,  know-how,  formulae,  rights of publicity  necessary to conduct its
business in  substantially  the same manner as  conducted as of the date hereof.
Schedule  II  hereto  sets  forth a true  and  complete  list of all  registered
copyrights,  issued patents,  Trademarks, and Licenses annually owned or used by
such Grantor as of the date hereof.  To the best knowledge of each Grantor,  all
such  Intellectual  Property of such Grantor is subsisting and in full force and
effect, has not been adjudged invalid or unenforceable, is valid and enforceable
and has not been abandoned in whole or in part.  Except as set forth in Schedule
II, no such Intellectual Property is the subject of any licensing or franchising
agreement.  Such Grantor has no  knowledge  of any  conflict  with the rights of
others to any Intellectual  Property and, to the best knowledge of such Grantor,
such Grantor is not now infringing or in conflict with any such rights of others
in any material  respect,  and to the best  knowledge of such Grantor,  no other
Person is now  infringing  or in conflict in any material  respect with any such
properties,  assets and rights owned or used by such  Grantor.  Such Grantor has
not received  any notice that it is  violating  or has violated the  trademarks,
patents,  copyrights,  inventions,  trade secrets,  proprietary  information and
technology,  know-how,  formulae,  rights  of  publicity  or other  intellectual
property rights of any third party.


                                      -7-
<PAGE>

      (g) Such Grantor is and will be at all times the sole and exclusive  owner
of, or otherwise has and will have adequate  rights in, the Collateral  free and
clear of any Liens,  except for Permitted Liens on any Collateral.  No effective
UCC financing  statement or other  instrument  similar in effect covering all or
any part of the  Collateral  is on file in any recording or filing office except
(i) such as may have been filed in favor of the  Collateral  Agent  relating  to
this  Agreement,  and (ii) with respect to the "Argyle Notes" (as defined in the
Securities Purchase Agreement).

      (h) The exercise by the Collateral Agent of any of its rights and remedies
hereunder will not contravene any law or any contractual  restriction binding on
or otherwise affecting such Grantor or any of its properties and will not result
in or  require  the  creation  of any Lien,  upon or with  respect to any of its
properties.

      (i) No  authorization  or approval or other action by, and no notice to or
filing with, any  governmental  authority or other regulatory body, or any other
Person, is required for (i) the grant by such Grantor, or the perfection, of the
security interest purported to be created hereby in the Collateral,  or (ii) the
exercise by the  Collateral  Agent of any of its rights and remedies  hereunder,
except  (A)  for the  filing  under  the  Code as in  effect  in the  applicable
jurisdiction  of the  UCC  financing  statements,  all of  which  UCC  financing
statements,  have been duly  filed and are in full  force and  effect,  (B) with
respect  to the  perfection  of the  security  interest  created  hereby  in the
Intellectual  Property,  for the  recording of the  appropriate  Assignment  for
Security,  substantially in the form of Exhibit A hereto, as applicable,  in the
United States Patent and Trademark Office or the United States Copyright Office,
as applicable,  and (C) with respect to the perfection of the security  interest
created hereby in foreign Intellectual Property and Licenses,  for registrations
and filings in  jurisdictions  located outside of the United States and covering
rights in such jurisdictions relating to the Intellectual Property and Licenses.

      (j) This Agreement creates in favor of the Collateral Agent a legal, valid
and  enforceable  security  interest  in the  Collateral,  as  security  for the
Obligations.  The Collateral  Agent's  having  possession of or control over all
Instruments,  Investment Property and cash constituting  Collateral from time to
time, the recording of the appropriate Assignment for Security executed pursuant
hereto in the United States  Patent and  Trademark  Office and the United States
Copyright Office, as applicable,  and the filing of the UCC financing statements
and the other filings and  recordings,  as  applicable,  described in Schedule V
hereto and, with respect to the Intellectual Property hereafter existing and not
covered by an appropriate  Assignment for Security,  the recording in the United
States Patent and Trademark  Office or the United States  Copyright  Office,  as
applicable,  of appropriate instruments of assignment,  result in the perfection
of such  security  interests.  Such  security  interests  are, or in the case of
Collateral in which such Grantor obtains rights after the date hereof,  will be,
perfected,  first priority security  interests,  subject only to Permitted Liens
and the recording of such instruments of assignment. Such recordings and filings
and all other action necessary or desirable to perfect and protect such security
interest  have  been  duly  taken,  except  for the  Collateral  Agent's  having
possession  of or control  over all  Instruments,  Investment  Property and cash
constituting  Collateral  after  the  date  hereof  and the  other  filings  and
recordations described in Section 4(l) hereof.


                                      -8-
<PAGE>


      (k) As of the date hereof,  such Grantor does not hold any Commercial Tort
Claims nor is aware of any such pending claims, except for such claims described
in Schedule VI.

      (l) Each of the Existing Subsidiaries is a wholly-owned  Subsidiary of SLI
and are the only Subsidiaries of SLI, as of the date hereof.

      Section  5.  Covenants  as to  the  Collateral.  So  long  as  any  of the
Obligations  shall  remain  outstanding,   unless  the  Collateral  Agent  shall
otherwise consent in writing:

      (a) Further Assurances.  Each Grantor will at its expense, at any time and
from time to time,  promptly  execute and deliver  all further  instruments  and
documents and take all further action that the  Collateral  Agent may reasonably
request in order to: (i) perfect and protect the security interest  purported to
be created hereby;  (ii) enable the Collateral Agent to exercise and enforce its
rights and remedies  hereunder in respect of the Collateral;  or (iii) otherwise
effect the  purposes  of this  Agreement,  including,  without  limitation:  (A)
marking  conspicuously all Chattel Paper and each License and, at the request of
the Collateral  Agent,  each of its Records  pertaining to the Collateral with a
legend, in form and substance  satisfactory to the Collateral Agent,  indicating
that such  Chattel  Paper,  License or  Collateral  is  subject to the  security
interest created hereby, (B) delivering  possession of and pledging (or granting
control over in favor of) to the  Collateral  Agent  hereunder  each  Promissory
Note,  Security,  Chattel Paper or other  Instrument,  now or hereafter owned by
such Grantor,  duly endorsed and accompanied by executed instruments of transfer
or assignment,  all in form and substance  satisfactory to the Collateral Agent,
(C) executing and filing (to the extent,  if any, that such Grantor's  signature
is  required  thereon)  or  authenticating  the filing  of,  such  financing  or
continuation statements, or amendments thereto, as may be necessary or desirable
or that the  Collateral  Agent may request in order to perfect and  preserve the
security  interest  purported  to be  created  hereby,  (D)  furnishing  to  the
Collateral Agent from time to time statements and schedules further  identifying
and  describing  the  Collateral  and such other reports in connection  with the
Collateral in each case as the Collateral Agent may reasonably  request,  all in
reasonable  detail,  (E) if any Collateral shall be in the possession of a third
party, notifying such Person of the Collateral Agent's security interest created
hereby and obtaining a written  acknowledgment from such Person that such Person
holds  possession of the  Collateral  for the benefit of the  Collateral  Agent,
which such written  acknowledgement shall be in form and substance  satisfactory
to the Collateral Agent, (F) if at any time after the date hereof,  such Grantor
acquires or holds any Commercial Tort Claim,  promptly  notifying the Collateral
Agent in a writing signed by such Grantor  setting forth a brief  description of
such  Commercial  Tort Claim and  granting  to the  Collateral  Agent a security
interest therein and in the proceeds  thereof,  which writing shall  incorporate
the  provisions  hereof and shall be in form and substance  satisfactory  to the
Collateral Agent, (G) upon the acquisition after the date hereof by such Grantor
of any motor vehicle or other  Equipment  subject to a  certificate  of title or
ownership (other than a Motor Vehicle or Equipment that is subject to a purchase
money  security  interest),  causing  the  Collateral  Agent to be listed as the
lienholder on such certificate of title or ownership and delivering  evidence of
the same to the  Collateral  Agent in accordance  with the  Securities  Purchase
Agreement;  and (H) taking all actions  required by any earlier  versions of the
Code or by other law, as applicable,  in any relevant Code  jurisdiction,  or by
other law as applicable in any foreign jurisdiction.


                                      -9-
<PAGE>

      (b)  Location of  Equipment  and  Inventory.  Each  Grantor  will keep the
Equipment  and  Inventory at the  locations  specified  therefor in Section 4(d)
hereof or,  upon not less than thirty  (30) days'  prior  written  notice to the
Collateral  Agent  accompanied by a new Schedule III hereto  indicating each new
location of the Equipment and Inventory,  at such other  locations in the United
States.

      (c)  Condition  of  Equipment.  Each  Grantor  will  maintain or cause the
Equipment  (necessary or useful to its business) to be maintained  and preserved
in good  condition,  repair and working order,  ordinary wear and tear excepted,
and will  forthwith,  or in the case of any loss or damage to any  Equipment  of
such  Guarantor  within a  commercially  reasonable  time  after the  occurrence
thereof,  make  or  cause  to  be  made  all  repairs,  replacements  and  other
improvements   in  connection   therewith  which  are  necessary  or  desirable,
consistent with past practice, or which the Collateral Agent may request to such
end.  Such Grantor will  promptly  furnish to the  Collateral  Agent a statement
describing in reasonable detail any such loss or damage in excess of $250,000 to
any Equipment.

      (d) Taxes,  Etc. Each Grantor agrees to pay promptly when due all property
and other taxes,  assessments and  governmental  charges or levies imposed upon,
and all claims (including claims for labor, materials and supplies) against, the
Equipment  and  Inventory,  except to the extent the  validity  thereof is being
contested in good faith by proper  proceedings  which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which  adequate  reserves  in  accordance  with GAAP have been set aside for the
payment thereof.

      (e) Insurance.

            (i)  Each  Grantor  will,  at its own  expense,  maintain  insurance
(including,  without  limitation,  commercial  general  liability  and  property
insurance) with respect to the Equipment and Inventory in such amounts,  against
such risks, in such form and with responsible and reputable  insurance companies
or associations as is required by any governmental authority having jurisdiction
with  respect  thereto  or as is  otherwise  carried  by  such  Grantor  in  its
reasonable business judgment,  consistent with past practices.  Each such policy
for liability insurance shall provide for all losses to be paid on behalf of the
Collateral Agent and such Grantor as their respective  interests may appear, and
each  policy for  property  damage  insurance  shall  provide  that,  during the
continuance of an Event of Default,  all losses shall be adjusted with, and paid
directly to, the Collateral  Agent.  Each such policy shall in addition (A) name
the  Collateral  Agent as an additional  insured party  thereunder  (without any
representation  or warranty by or obligation upon the Collateral Agent) as their
interests  may appear,  (B) contain an  agreement  by the insurer  that any loss
thereunder  shall be payable to the  Collateral  Agent on its own account during
the continuance of an Event of Default,  notwithstanding any action, inaction or
breach of  representation  or warranty by such  Grantor,  (C) provide that there
shall be no  recourse  against the  Collateral  Agent for payment of premiums or
other amounts with respect thereto, and (D) provide that at least 30 days' prior
written notice of cancellation,  lapse, expiration or other adverse change shall
be given to the  Collateral  Agent by the  insurer.  Such  Grantor  will,  if so
requested by the Collateral  Agent,  deliver to the Collateral Agent original or
duplicate  policies of such insurance and, as often as the Collateral  Agent may
reasonably  request,  a report of a reputable  insurance  broker with respect to
such insurance.


                                      -10-
<PAGE>


            (ii)  Reimbursement  under any liability  insurance  maintained by a
Grantor  pursuant to this  Section  5(e) may be paid  directly to the Person who
shall have incurred liability covered by such insurance. In the case of any loss
involving  damage to Equipment or Inventory,  only during the  continuance of an
Event of Default,  any proceeds of insurance maintained by a Grantor pursuant to
this  Section  5(e) shall be paid to the  Collateral  Agent  (except as to which
paragraph (iii) of this Section 5(e) is not applicable),  such Grantor will make
or cause to be made the necessary  repairs to or  replacements of such Equipment
or Inventory,  and any proceeds of insurance maintained by such Grantor pursuant
to this  Section 5(e) shall be paid by the  Collateral  Agent to such Grantor as
reimbursement for the costs of such repairs or replacements.

            (iii)  Only  during  the  continuance  of an Event of  Default,  all
insurance  payments in respect of such  Equipment or Inventory  shall be paid to
the Collateral Agent and applied as specified in Section 7(b) hereof.

      (f) Provisions Concerning the Accounts and the Licenses.

            (i) Each  Grantor  will (A)  give the  Collateral  Agent at least 30
days' prior written  notice of any change in such  Grantor's  name,  identity or
organizational  structure, (B) maintain its jurisdiction of incorporation as set
forth in Section 4(b) hereto,  (C) immediately  notify the Collateral Agent upon
obtaining an  organizational  identification  number, if on the date hereof such
Grantor did not have such  identification  number, and (D) keep adequate records
concerning  the Accounts  and Chattel  Paper and permit  representatives  of the
Collateral  Agent during  normal  business  hours on  reasonable  notice to such
Grantor, to inspect and make abstracts from such Records and Chattel Paper.

            (ii)  Each  Grantor  will,  except  as  otherwise  provided  in this
subsection (f), continue to collect,  at its own expense,  all amounts due or to
become due under the Accounts.  In connection with such  collections  during the
continuance  of an Event of Default,  such Grantor may (and,  at the  Collateral
Agent's  direction,  will) take such  action as such  Grantor or the  Collateral
Agent may deem  necessary or advisable to enforce  collection or  performance of
the Accounts;  provided, however, that the Collateral Agent shall have the right
at any time,  upon the  occurrence  and  during the  continuance  of an Event of
Default,  to notify the account  debtors or obligors  under any  Accounts of the
assignment of such Accounts to the  Collateral  Agent and to direct such account
debtors or obligors to make  payment of all amounts due or to become due to such
Grantor thereunder directly to the Collateral Agent or its designated agent and,
upon such  notification  and at the  expense of such  Grantor  and to the extent
permitted  by law, to enforce  collection  of any such  Accounts  and to adjust,
settle or compromise  the amount or payment  thereof,  in the same manner and to
the same extent as such Grantor might have done. After receipt by a Grantor of a
notice from the Collateral Agent that the Collateral Agent has notified, intends
to notify,  or has enforced or intends to enforce a Grantor's rights against the
account  debtors or obligors under any Accounts as referred to in the proviso to
the  immediately  preceding  sentence,  (A) all amounts and proceeds  (including
Instruments)  received  by such  Grantor  in respect  of the  Accounts  shall be
received in trust for the benefit of the Collateral  Agent  hereunder,  shall be
segregated  from other funds of such Grantor and shall be forthwith paid over to
the  Collateral  Agent in the  same  form as so  received  (with  any  necessary
endorsement)  to be held as cash  collateral and applied as specified in Section
7(b)  hereof,  and (B) such Grantor will not adjust,  settle or  compromise  the
amount or payment of any Account or release  wholly or partly any account debtor
or obligor thereof or allow any credit or discount  thereon.  In addition,  upon
the occurrence and during the continuance of an Event of Default, the Collateral
Agent may (in its sole and absolute  discretion)  direct any or all of the banks
and financial  institutions  with which such Grantor either  maintains a Deposit
Account  or a  lockbox  or  deposits  the  proceeds  of  any  Accounts  to  send
immediately  to the  Collateral  Agent by wire  transfer (to such account as the
Collateral Agent shall specify,  or in such other manner as the Collateral Agent
shall direct) all or a portion of such securities,  cash,  investments and other
items held by such institution. Any such securities, cash, investments and other
items so  received  by the  Collateral  Agent  shall  (in the sole and  absolute
discretion of the  Collateral  Agent) be held as additional  Collateral  for the
Obligations or distributed in accordance with Section 7 hereof.


                                      -11-
<PAGE>


            (iii) Upon the occurrence  and during the  continuance of any breach
or default under any material  License  referred to in Schedule II hereto by any
party  thereto other than a Grantor,  the Grantor  party thereto will,  promptly
after obtaining  knowledge thereof,  give the Collateral Agent written notice of
the nature and duration  thereof,  specifying what action,  if any, it has taken
and proposes to take with respect  thereto and thereafter  will take  reasonable
steps to protect and  preserve its rights and remedies in respect of such breach
or default, or will obtain or acquire an appropriate substitute License.

            (iv) Each  Grantor  will,  at its expense,  promptly  deliver to the
Collateral Agent a copy of each notice or other communication  received by it by
which any other party to any material  License referred to in Schedule II hereto
purports  to  exercise  any of  its  rights  or  affect  any of its  obligations
thereunder, together with a copy of any reply by such Grantor thereto.

            (v) Each Grantor will  exercise  promptly  and  diligently  each and
every right which it may have under each material  License (other than any right
of  termination)  and will duly  perform and observe in all  respects all of its
obligations  under each  material  License  and will take all action  reasonably
necessary to maintain such  Licenses in full force and effect.  No Grantor will,
without the prior written consent of the Collateral  Agent,  cancel,  terminate,
materially  amend or otherwise  materially  modify in any respect,  or waive any
provision of, any material License referred to in Schedule II hereto.

      (g) Transfers and Other Liens.

            (i) No Grantor will sell, assign (by operation of law or otherwise),
lease,  license,  exchange  or  otherwise  transfer  or  dispose  of  any of the
Collateral,  except (A)  Inventory in the ordinary  course of business,  and (B)
worn-out or obsolete assets not necessary to the business.

            (ii) No Grantor will create,  suffer to exist or grant any Lien upon
or with respect to any Collateral other than a Permitted Lien.


                                      -12-
<PAGE>


      (h) Intellectual Property.

            (i) If applicable,  each Grantor shall, upon the Collateral  Agent's
written request, duly execute and deliver the applicable Assignment for Security
in the form attached hereto as Exhibit A. Each Grantor (either itself or through
licensees)  will,  and will  cause each  licensee  thereof  to,  take all action
necessary to maintain all of the Intellectual Property in full force and effect,
including,  without limitation,  using the proper statutory notices and markings
and using the Trademarks on each applicable trademark class of goods in order to
so maintain the  Trademarks in full force and free from any claim of abandonment
for non-use,  and such Grantor will not (nor permit any licensee  thereof to) do
any act or knowingly  omit to do any act whereby any  Intellectual  Property may
become invalidated;  provided,  however, that so long as no Event of Default has
occurred and is continuing,  such Grantor shall not have an obligation to use or
to maintain any Intellectual  Property (A) that relates solely to any product or
work, that has been, or is in the process of being,  discontinued,  abandoned or
terminated,  (B) that is being replaced with Intellectual Property substantially
similar to the  Intellectual  Property that may be abandoned or otherwise become
invalid,  so long as the failure to use or maintain such  Intellectual  Property
does  not  materially   adversely   affect  the  validity  of  such  replacement
Intellectual  Property and so long as such replacement  Intellectual Property is
subject to the Lien created by this Agreement or (C) that is  substantially  the
same as another Intellectual Property that is in full force, so long the failure
to use or maintain  such  Intellectual  Property does not  materially  adversely
affect the  validity of such  replacement  Intellectual  Property and so long as
such other  Intellectual  Property is subject to the Lien and security  interest
created by this  Agreement.  Each Grantor  will cause to be taken all  necessary
steps in any proceeding before the United States Patent and Trademark Office and
the United States  Copyright Office or any similar office or agency in any other
country or political  subdivision  thereof to maintain each  registration of the
Intellectual  Property (other than the  Intellectual  Property  described in the
proviso to the immediately preceding sentence),  including,  without limitation,
filing of  renewals,  affidavits  of use,  affidavits  of  incontestability  and
opposition, interference and cancellation proceedings and payment of maintenance
fees,  filing  fees,  taxes  or other  governmental  fees.  If any  Intellectual
Property (other than Intellectual Property described in the proviso to the first
sentence of subsection  (i) of this clause (h)) is  infringed,  misappropriated,
diluted or  otherwise  violated in any material  respect by a third party,  such
Grantor shall (x) upon learning of such infringement, misappropriation, dilution
or other  violation,  promptly notify the Collateral Agent and (y) to the extent
such Grantor shall deem appropriate  under the  circumstances,  promptly sue for
infringement,  misappropriation,  dilution or other  violation,  seek injunctive
relief where appropriate and recover any and all damages for such  infringement,
misappropriation,  dilution or other  violation,  or take such other  actions as
such Grantor  shall deem  appropriate  under the  circumstances  to protect such
Intellectual  Property.  Each Grantor shall furnish to the Collateral Agent from
time to time upon its request  statements and schedules further  identifying and
describing  the  Intellectual  Property and  Licenses and such other  reports in
connection with the  Intellectual  Property and Licenses as the Collateral Agent
may reasonably  request,  all in reasonable  detail and promptly upon request of
the Collateral  Agent,  following  receipt by the  Collateral  Agent of any such
statements,  schedules or reports,  such Grantor shall modify this  Agreement by
amending  Schedule II hereto,  as the case may be, to include  any  Intellectual
Property and License,  as the case may be, which becomes part of the  Collateral
under this  Agreement and shall execute and  authenticate  such documents and do
such acts as shall be  necessary  or, in the judgment of the  Collateral  Agent,
desirable  to subject  such  Intellectual  Property and Licenses to the Lien and
security interest created by this Agreement.  Notwithstanding anything herein to
the contrary,  upon the  occurrence  and during the  continuance  of an Event of
Default,  such  Grantor may not  abandon or  otherwise  permit any  Intellectual
Property to become invalid  without the prior written  consent of the Collateral
Agent, and if any Intellectual Property is infringed,  misappropriated,  diluted
or  otherwise  violated in any material  respect by a third party,  such Grantor
will take such action as the Collateral Agent shall deem  appropriate  under the
circumstances to protect such Intellectual Property.


                                      -13-
<PAGE>

            (ii) In no event  shall a  Grantor,  either  itself or  through  any
agent, employee,  licensee or designee, file an application for the registration
of any  Trademark  or  Copyright  or the  issuance of any Patent with the United
States Patent and Trademark  Office or the United States  Copyright  Office,  as
applicable,  or in any  similar  office or agency  of the  United  States or any
country or any  political  subdivision  thereof  unless it gives the  Collateral
Agent prompt written notice before or after the occurrence thereof. Upon request
of the Collateral  Agent,  each Grantor shall execute,  authenticate and deliver
any and all assignments,  agreements,  instruments,  documents and papers as the
Collateral  Agent may  reasonably  request to evidence  the  Collateral  Agent's
security  interest  hereunder  in such  Intellectual  Property  and the  General
Intangibles of such Grantor  relating thereto or represented  thereby,  and such
Grantor hereby  appoints the Collateral  Agent its  attorney-in-fact  to execute
and/or authenticate and file all such writings for the foregoing  purposes,  all
acts of such attorney being hereby ratified and confirmed, and such power (being
coupled with an interest) shall be irrevocable  until (A) the earlier of (x) the
indefeasible  payment  in full in  cash  of all of the  Obligations,  or (y) the
indefeasible  conversion of all the Notes in full to Common  Stock,  and (B) the
termination of each of the Transaction Documents.

      (i) Deposit,  Commodities  and  Securities  Accounts.  Upon the Collateral
Agent's  written  request each Grantor shall cause each bank and other financial
institution  with an account  referred  to in  Schedule IV hereto to execute and
deliver  to the  Collateral  Agent a control  agreement,  in form and  substance
reasonably  satisfactory to the Collateral  Agent, duly executed by such Grantor
and such bank or financial institution, or enter into other arrangements in form
and  substance  satisfactory  to the  Collateral  Agent,  pursuant to which such
institution shall irrevocably  agree, inter alia, that (i) it will comply at any
time with the  instructions  originated by the Collateral  Agent to such bank or
financial  institution  directing the disposition of cash,  Commodity Contracts,
securities,  Investment  Property and other items from time to time  credited to
such account,  without further consent of such Grantor,  which  instructions the
Collateral  Agent will not give to such bank or other  financial  institution in
the  absence  of a  continuing  Event  of  Default,  (ii)  all  cash,  Commodity
Contracts,  securities,  Investment  Property  and other  items of such  Grantor
deposited with such institution shall be subject to a perfected,  first priority
security interest in favor of the Collateral Agent,  (iii) any right of set off,
banker's Lien or other similar Lien,  security  interest or encumbrance shall be
fully waived as against the Collateral  Agent,  and (iv) upon receipt of written
notice from the Collateral  Agent during the continuance of an Event of Default,
such bank or financial  institution  shall  immediately  send to the  Collateral
Agent by wire transfer (to such account as the  Collateral  Agent shall specify,
or in such other manner as the Collateral Agent shall direct) all such cash, the
value of any  Commodity  Contracts,  securities,  Investment  Property and other
items held by it.  Without the prior written  consent of the  Collateral  Agent,
such Grantor shall not make or maintain any Deposit Account,  Commodity  Account
or Securities  Account  except for the accounts set forth in Schedule IV hereto.
The provisions of this  paragraph  5(i) shall not apply to (i) Deposit  Accounts
for which the  Collateral  Agent is the  depositary  and (ii)  Deposit  Accounts
specially and  exclusively  used for payroll,  payroll taxes and other  employee
wage  and  benefit  payments  to or for  the  benefit  of a  Grantor's  salaried
employees.


                                      -14-
<PAGE>


      (j) Motor Vehicles.

            (i) Upon the Collateral Agent's written request,  each Grantor shall
deliver  to the  Collateral  Agent  originals  of the  certificates  of title or
ownership for all motor vehicles owned by it with the Collateral Agent listed as
lienholder, for the benefit of the Buyers.

            (ii)  Each  Grantor  hereby  appoints  the  Collateral  Agent as its
attorney-in-fact, effective the date hereof and terminating upon the termination
of this  Agreement,  for the purpose of (A)  executing on behalf of such Grantor
title or ownership  applications for filing with  appropriate  state agencies to
enable  motor  vehicles  now owned or  hereafter  acquired by such Grantor to be
retitled and the Collateral Agent listed as lienholder thereof,  (B) filing such
applications  with such state  agencies,  and (C) executing such other documents
and  instruments on behalf of, and taking such other action in the name of, such
Grantor as the  Collateral  Agent may deem  necessary or advisable to accomplish
the purposes hereof (including,  without limitation, for the purpose of creating
in favor of the  Collateral  Agent a perfected  Lien on the motor  vehicles  and
exercising  the rights and remedies of the  Collateral  Agent  hereunder).  This
appointment as  attorney-in-fact  is coupled with an interest and is irrevocable
until all of the Obligations are indefeasibly paid in full in cash and after all
Transaction Documents have been terminated.

            (iii) Any certificates of title or ownership  delivered  pursuant to
the terms  hereof shall be  accompanied  by odometer  statements  for each motor
vehicle covered thereby.

            (iv) So long as no Event  of  Default  shall  have  occurred  and be
continuing, upon the request of such Grantor, the Collateral Agent shall execute
and deliver to such Grantor such  instruments  as such Grantor shall  reasonably
request to remove the  notation of the  Collateral  Agent as  lienholder  on any
certificate of title for any motor  vehicle;  provided,  however,  that any such
instruments shall be delivered, and the release effective,  only upon receipt by
the Collateral  Agent of a certificate from such Grantor stating that such motor
vehicle  is to be sold or has  suffered  a casualty  loss  (with  title  thereto
passing to the casualty  insurance  company  therefor in settlement of the claim
for such loss) and the amount that such Grantor will receive as sale proceeds or
insurance proceeds.  Any proceeds of such sale or casualty loss shall be paid to
the Collateral Agent hereunder  immediately  upon receipt,  to be applied to the
Obligations then outstanding.

      (k) Control. Each Grantor hereby agrees to take any or all action that may
be necessary or desirable or that the Collateral  Agent may request in order for
the Collateral Agent to obtain control in accordance with Sections 9-105 - 9-107
of the Code with respect to the following  Collateral:  (i)  Electronic  Chattel
Paper, (ii) Investment Property, and (iii) Letter-of-Credit Rights.

      (l) Subsidiaries. SLI hereby represents and warrants that its wholly-owned
Subsidiary,  SpatiaLight  Technologies,  Inc., is currently  inactive and has no
assets, income or operations. SLI herby agrees that if SpatiaLight Technologies,
Inc. ever becomes active or has assets,  income or operations,  and SLI and each
other Grantor hereby agrees if SLI or such other Grantor shall hereafter  create
or acquire any other Subsidiary, simultaneously therewith SLI or such other such
Grantor shall cause SpatiaLight  Technologies,  Inc. or such other Subsidiary to
become a party to the Guaranty,  in the form attached hereto as Exhibit F to the
Securities Purchase Agreement, as a "Guarantor" thereunder and to this Agreement
as an additional  "Grantor"  hereunder,  and to duly execute and/or deliver such
opinions of counsel and other documents, in form and substance acceptable to the
Collateral Agent, as the Collateral Agent shall reasonably  request with respect
thereto.


                                      -15-
<PAGE>


      Section 6. Additional Provisions Concerning the Collateral.

      (a) Each Grantor hereby (i) authorizes the Collateral Agent to file one or
more Code financing or continuation statements, and amendments thereto, relating
to the  Collateral and (ii) ratifies such  authorization  to the extent that the
Collateral  Agent has filed any such financing or  continuation  statements,  or
amendments thereto,  prior to the date hereof. A photocopy or other reproduction
of this Agreement or any UCC financing  statement covering the Collateral or any
part thereof shall be sufficient as a UCC financing statement where permitted by
law.

      (b) Each Grantor hereby  irrevocably  appoints the Collateral Agent as its
attorney-in-fact  and proxy,  with full authority in the place and stead of such
Grantor and in the name of such Grantor or  otherwise,  from time to time in the
Collateral Agent's reasonable  discretion,  so long as an Event of Default shall
have  occurred  and is  continuing,  to  take  any  action  and to  execute  any
instrument which the Collateral Agent may reasonably deem necessary or advisable
to  accomplish  the  purposes of this  Agreement  (subject to the rights of such
Grantor under Section 5 hereof),  including,  without limitation,  (i) to obtain
and adjust  insurance  required to be paid to the  Collateral  Agent pursuant to
Section 5(e) hereof, (ii) to ask, demand,  collect, sue for, recover,  compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any  Collateral,  (iii) to  receive,  endorse,  and collect any
drafts or other  instruments,  documents and chattel  paper in  connection  with
clause  (i) or (ii)  above,  (iv) to file  any  claims  or take  any  action  or
institute  any  proceedings  which the  Collateral  Agent may deem  necessary or
desirable  for the  collection  of any  Collateral  or  otherwise to enforce the
rights of the  Collateral  Agent and the Buyers with respect to any  Collateral,
and (v) to execute  assignments,  licenses  and other  documents  to enforce the
rights of the  Collateral  Agent and the Buyers with respect to any  Collateral.
This power is coupled with an interest and is irrevocable the earlier of (i) the
indefeasible  payment  in full in cash  of all of the  Obligations  or (ii)  the
indefeasible  conversion of all the Notes in full to Common Stock,  until all of
the Obligations are indefeasibly paid in full in cash.

      (c) For the purpose of enabling the  Collateral  Agent to exercise  rights
and remedies  hereunder,  at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies,  and for no other  purpose,  each
Grantor  hereby grants to the Collateral  Agent,  to the extent  assignable,  an
irrevocable,  non-exclusive  license  (exercisable without payment of royalty or
other  compensation to such Grantor) to use,  assign,  license or sublicense any
Intellectual Property now owned or hereafter acquired by such Grantor,  wherever
the same may be located,  including  in such  license  reasonable  access to all
media in which any of the  licensed  items may be  recorded or stored and to all
computer programs used for the compilation or printout thereof.  Notwithstanding
anything contained herein to the contrary,  but subject to the provisions of the
Securities Purchase Agreement that limit the right of such Grantor to dispose of


                                      -16-
<PAGE>


its property and Section 5(h) hereof,  so long as no Event of Default shall have
occurred  and be  continuing,  such Grantor may exploit,  use,  enjoy,  protect,
license, sublicense, assign, sell, dispose of or take other actions with respect
to the  Intellectual  Property  in the  ordinary  course  of  its  business.  In
furtherance of the foregoing, unless an Event of Default shall have occurred and
be continuing, the Collateral Agent shall from time to time, upon the request of
a Grantor, execute and deliver any instruments, certificates or other documents,
in  the  form  so  requested,  which  such  Grantor  shall  have  certified  are
appropriate  (in  such  Grantor's  judgment)  to  allow  it to take  any  action
permitted above (including  relinquishment  of the license provided  pursuant to
this clause (c) as to any Intellectual  Property).  Further, upon the earlier of
(i) the  indefeasible  payment in full in cash of all of the Obligations or (ii)
the  indefeasible  conversion  of all the  Notes in full to  Common  Stock,  the
Collateral Agent (subject to Section 10(e) hereof) shall release and reassign to
such Grantor all of the Collateral  Agent's right,  title and interest in and to
the   Intellectual   Property,   and  the   Licenses,   all  without   recourse,
representation  or warranty  whatsoever.  The  exercise  of rights and  remedies
hereunder by the Collateral  Agent shall not terminate the rights of the holders
of any licenses or sublicenses theretofore granted by such Grantor in accordance
with the second  sentence of this clause (c). Each Grantor  hereby  releases the
Collateral  Agent  from any  claims,  causes of action  and  demands at any time
arising out of or with  respect to any  actions  taken or omitted to be taken by
the  Collateral  Agent under the powers of attorney  granted  herein  other than
actions  taken or omitted  to be taken  through  the  Collateral  Agent's  gross
negligence or willful  misconduct,  as determined by a final  determination of a
court of competent jurisdiction.

      (d) If a Grantor  fails to perform any  agreement  contained  herein,  the
Collateral Agent may itself perform,  or cause performance of, such agreement or
obligation,  in the  name of  such  Grantor  or the  Collateral  Agent,  and the
expenses of the  Collateral  Agent  incurred in  connection  therewith  shall be
payable by such Grantor pursuant to Section 8 hereof and shall be secured by the
Collateral.

      (e) The powers  conferred on the Collateral  Agent hereunder are solely to
protect its interest in the  Collateral and shall not impose any duty upon it to
exercise any such powers.  Except for the safe custody of any  Collateral in its
possession and the accounting for moneys actually received by it hereunder,  the
Collateral  Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.

      (f) Anything herein to the contrary notwithstanding (i) each Grantor shall
remain  liable  under the  Licenses  and  otherwise  with  respect to any of the
Collateral  to the extent set forth  therein to perform  all of its  obligations
thereunder to the same extent as if this Agreement had not been  executed,  (ii)
the exercise by the Collateral  Agent of any of its rights  hereunder  shall not
release such Grantor from any of its obligations under the Licenses or otherwise
in respect of the Collateral,  and (iii) the Collateral Agent shall not have any
obligation or liability by reason of this  Agreement  under the Licenses or with
respect  to any of the  other  Collateral,  nor shall  the  Collateral  Agent be
obligated to perform any of the obligations or duties of such Grantor thereunder
or to take any  action to  collect or  enforce  any claim for  payment  assigned
hereunder.


                                      -17-
<PAGE>

      Section 7. Remedies  Upon Event of Default.  If any Event of Default shall
have occurred and be continuing:

      (a) The  Collateral  Agent may exercise in respect of the  Collateral,  in
addition  to any other  rights and  remedies  provided  for herein or  otherwise
available to it, all of the rights and remedies of a secured  party upon default
under the Code (whether or not the Code applies to the affected Collateral), and
also  may (i)  take  absolute  control  of the  Collateral,  including,  without
limitation,  transfer into the  Collateral  Agent's name or into the name of its
nominee or nominees (to the extent the Collateral Agent has not theretofore done
so) and  thereafter  receive,  for the  benefit  of the  Collateral  Agent,  all
payments made thereon,  give all consents,  waivers and ratifications in respect
thereof and  otherwise  act with respect  thereto as though it were the outright
owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees that
it will at its  expense  and upon  request of the  Collateral  Agent  forthwith,
assemble all or part of its respective  Collateral as directed by the Collateral
Agent and make it available to the  Collateral  Agent at a place or places to be
designated  by the  Collateral  Agent  that  is  reasonably  convenient  to both
parties,  and the Collateral  Agent may enter into and occupy any premises owned
or leased by such Grantor where the Collateral or any part thereof is located or
assembled for a reasonable period in order to effectuate the Collateral  Agent's
rights and remedies  hereunder or under law, without  obligation to such Grantor
in respect of such  occupation,  and (iii)  without  notice  except as specified
below and without any  obligation to prepare or process the Collateral for sale,
(A) sell the  Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Collateral  Agent's offices or elsewhere,  for cash,
on credit or for  future  delivery,  and at such  price or prices  and upon such
other terms as the Collateral Agent may deem commercially  reasonable and/or (B)
lease,  license or dispose of the Collateral or any part thereof upon such terms
as the Collateral Agent may deem  commercially  reasonable.  Each Grantor agrees
that, to the extent notice of sale or any other  disposition  of its  respective
Collateral  shall be  required  by law,  at least ten (10) days'  notice to such
Grantor  of the time and place of any public  sale or the time  after  which any
private sale or other  disposition  of its  respective  Collateral is to be made
shall  constitute  reasonable  notification.  The Collateral  Agent shall not be
obligated to make any sale or other disposition of any Collateral  regardless of
notice of sale having been given. The Collateral Agent may adjourn any public or
private  sale from  time to time by  announcement  at the time and  place  fixed
therefor,  and such sale may,  without further  notice,  be made at the time and
place to which it was so  adjourned.  Each  Grantor  hereby  waives  any  claims
against the  Collateral  Agent and the Buyers arising by reason of the fact that
the price at which  its  respective  Collateral  may have been sold at a private
sale was less than the price which might have been  obtained at a public sale or
was less than the aggregate  amount of the  Obligations,  even if the Collateral
Agent  accepts the first offer  received and does not offer such  Collateral  to
more than one  offeree,  and  waives all rights  that such  Grantor  may have to
require  that all or any part of such  Collateral  be  marshalled  upon any sale
(public or private) thereof.  Each Grantor hereby acknowledges that (i) any such
sale of its respective  Collateral by the Collateral Agent shall be made without
warranty,  (ii) the Collateral Agent may specifically disclaim any warranties of
title, possession, quiet enjoyment or the like, and (iii) such actions set forth
in  clauses  (i) and (ii)  above  shall  not  adversely  effect  the  commercial
reasonableness of any such sale of Collateral. In addition to the foregoing, (1)
upon written notice to any Grantor from the Collateral Agent, such Grantor shall
cease any use of the Intellectual Property or any trademark, patent or copyright
similar  thereto for any purpose  described in such notice;  (2) the  Collateral
Agent may, at any time and from time to time, upon 10 days' prior notice to such
Grantor,  license,  whether  general,  special or  otherwise,  and whether on an
exclusive or non-exclusive basis, any of the Intellectual  Property,  throughout
the universe for such term or terms, on such conditions,  and in such manner, as
the  Collateral  Agent  shall  in its  sole  discretion  determine;  and (3) the
Collateral Agent may, at any time,  pursuant to the authority granted in Section
6 hereof (such  authority  being  effective  upon the  occurrence and during the
continuance  of an Event of  Default),  execute  and  deliver  on behalf of such
Grantor, one or more instruments of assignment of the Intellectual  Property (or
any application or registration thereof), in form suitable for filing, recording
or registration in any country.


                                      -18-
<PAGE>


      (b) Any  cash  held by the  Collateral  Agent as  Collateral  and all Cash
Proceeds  received  by  the  Collateral  Agent  in  respect  of any  sale  of or
collection  from, or other  realization  upon, all or any part of the Collateral
may,  in the  reasonable  discretion  of the  Collateral  Agent,  be held by the
Collateral  Agent as  collateral  for,  and/or  then or at any  time  thereafter
applied (after payment of any amounts  payable to the Collateral  Agent pursuant
to Section 8 hereof) in whole or in part by the Collateral Agent against, all or
any part of the  Obligations in such order as the Collateral  Agent shall elect,
consistent with the provisions of the Securities Purchase Agreement. Any surplus
of such cash or Cash Proceeds held by the Collateral  Agent and remaining  after
(i) the indefeasible payment in full in cash of all of the Obligations,  or (ii)
the indefeasible  conversion of all the Notes in full to Common Stock,  shall be
paid over to whomsoever  shall be lawfully  entitled to receive the same or as a
court of competent jurisdiction shall direct.

      (c) In the  event  that the  proceeds  of any  such  sale,  collection  or
realization are  insufficient  to pay all amounts to which the Collateral  Agent
and the  Buyers  are  legally  entitled,  such  each  shall  be  liable  for the
deficiency,  together with interest thereon at the highest rate specified in any
of the  applicable  Transaction  Documents  for  interest  on overdue  principal
thereof or such other rate as shall be fixed by  applicable  law,  together with
the costs of  collection  and the  reasonable  fees,  costs,  expenses and other
client charges of any attorneys employed by the Collateral Agent to collect such
deficiency.

      (d) Each Grantor hereby acknowledges that if the Collateral Agent complies
with any applicable state, provincial, or federal law requirements in connection
with a disposition of the Collateral,  such compliance will not adversely affect
the  commercial   reasonableness  of  any  sale  or  other  disposition  of  the
Collateral.

      (e) The  Collateral  Agent shall not be required to marshal any present or
future collateral  security  (including,  but not limited to, this Agreement and
the Collateral)  for, or other  assurances of payment of, the Obligations or any
of them or to resort to such collateral  security or other assurances of payment
in any particular order, and all of the Collateral  Agent's rights hereunder and
in respect of such collateral  security and other assurances of payment shall be
cumulative and in addition to all other rights,  however existing or arising. To
the extent that each Grantor  lawfully may,  such Grantor  hereby agrees that it
will not invoke any law relating to the  marshalling  of collateral  which might
cause delay in or impede the enforcement of the Collateral  Agent's rights under
this Agreement or under any other  instrument  creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise  assured,  and, to
the extent that it lawfully  may,  such Grantor  hereby  irrevocably  waives the
benefits of all such laws.


                                      -19-
<PAGE>

      Section 8. Indemnity and Expenses.

      (a) Each  Grantor  agrees,  jointly  and  severally,  to defend,  protect,
indemnify  and hold the  Collateral  Agent and each of the  Buyers,  jointly and
severally,  harmless  from and  against  any and all  claims,  damages,  losses,
liabilities,  obligations,  penalties,  fees,  costs  and  expenses  (including,
without limitation, reasonable legal fees, costs, expenses, and disbursements of
such Person's  counsel) to the extent that they arise out of or otherwise result
from  this  Agreement  (including,  without  limitation,   enforcement  of  this
Agreement),  except claims,  losses or liabilities resulting solely and directly
from such Person's gross  negligence or willful  misconduct,  as determined by a
final judgment of a court of competent jurisdiction.

      (b) Each Grantor agrees, jointly and severally,  to upon demand pay to the
Collateral  Agent the  amount  of any and all  reasonable  costs and  reasonable
expenses,  including the reasonable fees,  costs,  expenses and disbursements of
counsel  for the  Collateral  Agent and of any  experts  and agents  (including,
without  limitation,  any  collateral  trustee  which  may act as  agent  of the
Collateral  Agent),  which the Collateral Agent may incur in connection with (i)
the preparation, negotiation, execution, delivery, recordation,  administration,
amendment,  waiver or other modification or termination of this Agreement,  (ii)
the custody, preservation, use or operation of, or the sale of, collection from,
or other realization upon, any Collateral,  (iii) the exercise or enforcement of
any of the rights of the Collateral Agent hereunder,  or (iv) the failure by any
Grantor to perform or observe any of the provisions hereof.

      Section 9. Notices, Etc. All notices and other communications provided for
hereunder  shall be in writing and shall be mailed (by certified  mail,  postage
prepaid and return receipt requested),  telecopied or delivered, if to a Grantor
at its  address  specified  below and if to the  Collateral  Agent to it, at its
address  specified  below;  or as to any such Person,  at such other  address as
shall be  designated  by such  Person in a written  notice to such other  Person
complying as to delivery  with the terms of this Section 9. All such notices and
other  communications  shall be effective (a) if sent by certified mail,  return
receipt  requested,  when  received or three days after  deposited in the mails,
whichever  occurs first,  (b) if  telecopied,  when  transmitted  (during normal
business  hours) and  confirmation  is  received,  otherwise,  the day after the
notice was transmitted if confirmation  is received,  or (c) if delivered,  upon
delivery.

      Section 10. Miscellaneous.

      (a) No amendment of any  provision  of this  Agreement  shall be effective
unless it is in writing and signed by each Grantor and the Collateral Agent, and
no waiver of any provision of this Agreement, and no consent to any departure by
a Grantor  therefrom,  shall be effective  unless it is in writing and signed by
the Collateral Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.

      (b) No failure on the part of the  Collateral  Agent to  exercise,  and no
delay in exercising,  any right hereunder or under any of the other  Transaction
Documents  shall  operate as a waiver  thereof;  nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right.  The rights and remedies of the Collateral Agent or
any Buyer provided herein and in the other Transaction  Documents are cumulative
and are in addition to, and not exclusive of, any rights or remedies provided by
law.  The  rights of the  Collateral  Agent or any Buyer  under any of the other
Transaction   Documents  against  any  party  thereto  are  not  conditional  or
contingent on any attempt by such Person to exercise any of its rights under any
of the other  Transaction  Documents  against  such party or  against  any other
Person, including but not limited to, any Grantor.


                                      -20-
<PAGE>

      (c) Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or  enforceability of such provision
in any other jurisdiction.

      (d) This  Agreement  shall  create a continuing  security  interest in the
Collateral  and  shall  (i)  remain  in full  force  and  effect  until  (x) the
indefeasible  payment in full in cash of the Obligations or (y) the indefeasible
conversion of all the Notes in full to Common Stock, and (ii) be binding on each
Grantor and all other  Persons who become  bound as debtor to this  Agreement in
accordance with Section 9-203(d) of the Code and shall inure,  together with all
rights and remedies of the  Collateral  Agent and the Buyers  hereunder,  to the
benefit of the Collateral  Agent and the Buyers and their  respective  permitted
successors,  transferees and assigns.  Without limiting the generality of clause
(ii) of the immediately  preceding sentence,  without notice to any Grantor, the
Collateral  Agent and the Buyers may assign or otherwise  transfer  their rights
and obligations under this Agreement and any of the other Transaction Documents,
to any other Person and such other Person shall thereupon become vested with all
of the  benefits  in respect  thereof  granted to the  Collateral  Agent and the
Buyers herein or otherwise. Upon any such assignment or transfer, all references
in this  Agreement  to the  Collateral  Agent or any such  Buyer  shall mean the
assignee  of  the  Collateral  Agent  or  such  Buyer.  None  of the  rights  or
obligations  of any Grantor  hereunder may be assigned or otherwise  transferred
without  the  prior  written  consent  of the  Collateral  Agent,  and any  such
assignment or transfer without the consent of the Collateral Agent shall be null
and void.

      (e) Upon the  earlier of (i) the  indefeasible  payment in full in cash of
the Obligations, or (ii) the indefeasible conversion of all the Notes in full to
Common Stock, (A) this Agreement and the security interests created hereby shall
terminate  and all  rights to the  Collateral  shall  revert  to the  respective
Grantor that granted such security interests  hereunder,  and (B) the Collateral
Agent will,  upon such  Grantor's  request and at such  Grantor's  expense,  (1)
return to such  Grantor  such of the  Collateral  as shall not have been sold or
otherwise  disposed of or applied pursuant to the terms hereof, and (2) promptly
execute  and  deliver to such  Grantor  such  documents  as such  Grantor  shall
reasonably request to evidence such termination, all without any representation,
warranty  or  recourse  whatsoever;  provided,  however,  that if (x)  after the
Additional  Investment  Rights have either been exercised in full or terminated,
the  aggregate  unpaid  principal  balance of the Notes shall,  at any time,  be
indefeasibly  reduced  to less  than  $2,000,000  (after  giving  effect  to any
indefeasible  repayments and redemptions  thereof,  and any indefeasible partial
conversions  thereof to shares of Common Stock),  and (y) the  Collateral  Agent
receives  any  Grantor's  written  request  therefor  91 or more days after such
indefeasible  reduction,  then, so long as no Event of Default (and no any event
or circumstance that, with the passage of time or the giving of notice, or both,
would become an Event of Default)  shall have  occurred and then be  continuing,
the Collateral  Agent shall terminate this Agreement and the security  interests
created hereby,  and all rights to the Collateral shall revert to the respective
Grantor that granted such  security  interests  hereunder as provided in clauses
(A) and (B) hereof.


                                      -21-
<PAGE>


      (f) THIS  AGREEMENT  SHALL BE GOVERNED BY,  CONSTRUED AND  INTERPRETED  IN
ACCORDANCE  WITH THE LAWS OF THE  STATE  OF NEW  YORK,  EXCEPT  AS  REQUIRED  BY
MANDATORY  PROVISIONS  OF LAW AND EXCEPT TO THE  EXTENT  THAT THE  VALIDITY  AND
PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR  NON-PERFECTION  OF
THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES  HEREUNDER,  IN RESPECT OF ANY
PARTICULAR  COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION  OTHER THAN THE
STATE OF NEW YORK.

      (g) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY  DOCUMENT  RELATED  THERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK IN THE COUNTY OF NEW YORK OR THE UNITED  STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK,  AND  APPELLATE  COURTS  THEREOF,  AND, BY  EXECUTION  AND
DELIVERY  OF THIS  AGREEMENT,  EACH  GRANTOR  HEREBY  ACCEPTS  FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,  THE JURISDICTION OF THE
AFORESAID COURTS.  EACH PARTY HERETO HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE  FULLEST  EXTENT  PERMITTED  BY  LAW,  ANY  OBJECTION,   INCLUDING,  WITHOUT
LIMITATION,  ANY  OBJECTION  TO THE  LAYING OF VENUE OR BASED ON THE  GROUNDS OF
FORUM NON CONVENIENS,  WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE  RELIEF AS IS DEEMED  APPROPRIATE BY THE
COURT.

      (h) EACH GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT)
THE COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF
ANY  LITIGATION  BASED ON,  ARISING  OUT OF,  UNDER OR IN  CONNECTION  WITH THIS
AGREEMENT OR ANY OF THE OTHER TRANSACTION  DOCUMENTS,  OR ANY COURSE OF CONDUCT,
COURSE OF DEALING,  VERBAL OR WRITTEN  STATEMENT  OR OTHER ACTION OF THE PARTIES
HERETO.

      (i) Each Grantor irrevocably  consents to the service of process of any of
the  aforesaid  courts in any such action,  suit or proceeding by the mailing of
copies  thereof by registered or certified  mail (or any  substantially  similar
form of mail),  postage prepaid, to such Grantor at its address provided herein,
such service to become effective 10 days after such mailing.

      (j) Nothing  contained  herein  shall  affect the right of the  Collateral
Agent to serve  process in any other manner  permitted by law or commence  legal
proceedings  or  otherwise  proceed  against any Grantor or any property of such
Grantor in any other jurisdiction.


                                      -22-
<PAGE>


      (k) Section headings herein are included for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.

      (l) This  Agreement may be executed in any number of  counterparts  and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original,  but all of which taken  together  constitute one in the same
Agreement.



                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                      -23-
<PAGE>


      IN WITNESS WHEREOF,  each Grantor has caused this Agreement to be executed
and delivered by its officer  thereunto  duly  authorized,  as of the date first
above written.



                                   SLI:

                                   SPATIALIGHT, INC.

                                   By: /s/ Robert A. Olins
                                      -----------------------------------------
                                      Name:  Robert A. Olins
                                      Title: Chief Executive Officer
                                      Address: Five Hamilton Landing, Suite 100,
                                               Novato, CA 94949


                                   EXISTING SUBSIDIARIES

                                   [NONE SIGNING.]


ACCEPTED BY:
-----------


PORTSIDE GROWTH & OPPORTUNITY FUND,
as Collateral Agent

By: /s/ Jeffrey Smith
    ---------------------------------------------
Name:   Jeffrey Smith
Title:  Authorized Signatory
Address:  c/o Ramius Capital Group, L.L.C.
             666 Third Avenue, 26th Floor
             New York, New York  10017
             Attention:  Jeffrey Smith


<PAGE>

                                   SCHEDULE I

          LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OR
                          JURISDICTION OF ORGANIZATION



SpatiaLight, Inc. - Identification No. 16-1363082 - State of New York, USA.


SpatiaLight  Technologies,  Inc. - Identification  No. 36-4560072 - State of New
York, USA.



SpatiaLight  Korea, Inc. - Registration No.  110111-3058983 - Kyungnam Province,
City of Sacheon, Republic of Korea.

<PAGE>

                                   SCHEDULE II
                                       SLI
                       INTELLECTUAL PROPERTY AND LICENSES

                                     PATENTS

<TABLE>
<CAPTION>
------------------ -------------------------------------------- ------------ ----------------------- -----------------------
     Patent                                                     Filing
       No.         Title                                        Date         Inventor                Assignee
------------------ -------------------------------------------- ------------ ----------------------- -----------------------
<S>                <C>                                          <C>          <C>                     <C>
5,396,262          Polysilicon Gate Bus with Interspersed       03/07/95     W.A. Hastings III       SpatiaLight of
                   Buffers for Driving a Row of Pixels in an                                         California, Inc.*
                   Active Matrix Liquid Crystal Display
------------------ -------------------------------------------- ------------ ----------------------- -----------------------
5,365,355          Light Blocking Pixel Enhancement and         11/15/94     W.A. Hastings III       SpatiaLight of
                   Photocurrent Reduction in Active Matrix                                           California, Inc.
                   Liquid Crystal Displays
------------------ -------------------------------------------- ------------ ----------------------- -----------------------
5,784,038          Color Projection System Employing Dual       07/21/98     Dean Irwin              SpatiaLight of
                   Monochrome Liquid Crystal Displays with                                           California, Inc.
                   Misalignment Correction
------------------ -------------------------------------------- ------------ ----------------------- -----------------------
5,903,248          Active Matrix Display Having Pixel Driving   05/11/99     Dean Irwin              SpatiaLight, Inc.
                   Circuits With Integrated Charge Pumps
------------------ -------------------------------------------- ------------ ----------------------- -----------------------
6,057,820          Apparatus and Method For Controlling         06/16/98     Dean Irwin              SpatiaLight, Inc.
                   Contrast In A Dot-Matrix Liquid Crystal
                   Display
------------------ -------------------------------------------- ------------ ----------------------- -----------------------
</TABLE>

                               PATENT APPLICATIONS

<TABLE>
<CAPTION>
--------------------- -------------------------------------------- ------------ ----------------------
    Application                                                      Filing
     Serial No.                          Title                        Date            Inventor
--------------------- -------------------------------------------- ------------ ----------------------
<S>                   <C>                                          <C>
08/734,230            Technique for Driving Dot-Matrix Liquid      10/21/96     Dean Irwin
                      Crystal Displays by Phase Shifting a Front
                      Electrode Voltage One-Half a Refresh Cycle
--------------------- -------------------------------------------- ------------ ----------------------
10/782,045            Cyclic Data Signal Averaging System and      02/19/04     Charles D. Pencil
                      Method for Use in Video Display Systems
--------------------- -------------------------------------------- ------------ ----------------------
60/533,163            Method and Apparatus for Minimization of     12/29/03     Dong-Soo Shin et.al
                      Unwanted Light in Optical and Image
                      Projection Systems
--------------------- -------------------------------------------- ------------ ----------------------
</TABLE>


* Dissolved subsidiary of SpatiaLight, Inc.

<PAGE>

                                   TRADEMARKS


<TABLE>
<CAPTION>
-------------------- ------------------------------------------------ ---------------- --------------------------
     Trademark                                                             Issue               Owner of
        No.                               Title                            Date                 Record
-------------------- ------------------------------------------------ ---------------- --------------------------
<S>                  <C>                                              <C>
2,340,592            SpatiaLight imagEngine                           04/11/00             SpatiaLight, Inc.
-------------------- ------------------------------------------------ ---------------- --------------------------
</TABLE>



                    PATENT, TRADEMARK AND COPYRIGHT LICENSES

None.

                                   COPYRIGHTS

None.

                                   TRADE NAMES

None.



<PAGE>



                              EXISTING SUBSIDIARIES


                       INTELLECTUAL PROPERTY AND LICENSES



None.




<PAGE>

                                  SCHEDULE III

                                LOCATIONS OF SLI


LOCATION                       Description of Location (State if Location
--------
                               (i) contains Rolling Stock, other Equipment,
                               Fixtures, Goods or Inventory,
                               (ii) is chief place of business and chief
                               executive office, or
                               (iii) contains Records concerning
                               Accounts and originals of Chattel Paper)


A. SpatiaLight, Inc., Five Hamilton Landing, Suite 100, Novato, CA 94949 - (i),
(ii) and (iii)

B. SpatiaLight, Inc., 2201 South McDowell Blvd., Petaluma CA, 94954 - (i)

C. Ten-Up / JSI, Unit A 2nd Flr.,  Fortune Industrial  Building,  No. 35 Tai Yip
Street, Kowloon, Hong Kong - (i)

D. Fuji Photo Optical Co., Ltd., 1-324 Uetake, Saitama City, Saitama 30-8624,
Japan - (i)




<PAGE>



                       LOCATIONS OF EXISTING SUBSIDIARIES


LOCATION                            Description of Location (State if Location

                                    (i) contains Rolling Stock, other Equipment,
                                    Fixtures, Goods or Inventory,
                                    (ii) is chief place  of  business   and
                                    chief   executive office, or
                                    (iii) contains Records concerning
                                    Accounts and originals of Chattel Paper)


A. SpatiaLight Korea, Inc., Bangju Officetel, #302, 161-6, Jeongeui-ri,
Sacheon-eup, Sacheon-city, Kyungnam, Republic of Korea - (i), (ii) and (iii)

B. SpatiaLight Korea, Inc., Block 9, Foreigners Complex Jinsa, Bangi-ri,
Seonam-myeon, Sacheon-city, Kyungam, Republic of Korea (Manufacturing facility
under construction at this address) - (i)





<PAGE>




                                   SCHEDULE IV

           PROMISSORY NOTES, SECURITIES, DEPOSIT ACCOUNTS, SECURITIES
                       ACCOUNTS AND COMMODITIES ACCOUNTS



                                       SLI



Promissory Notes:

Private Stock Purchase Installment Agreement with Greenpark Limited*

Private Stock Purchase Installment Agreement with Carol Becker*

* Agreements for payments of money to the Company (not in the form of notes)

Securities and Other Instruments:

SLI holds  155,005  shares  common stock on  SpatiaLight  Korea,  Inc.  (100% of
outstanding common shares)



Name and Address
of Institution
Maintaining Account                 Account Number              Type of Account
-------------------                 --------------              ---------------


American Bank and Trust Company     # 0069542                   Checking
One Warren Place
6100 South Yale                     # 2731180                   Money Market
Tulsa, OK  74136-1982


Wells Fargo Bank                    # 100-7651456               Checking
Novato Office
1590 Grant Ave
Novato, CA  94945



<PAGE>


                              EXISTING SUBSIDIARIES



Promissory Notes
----------------

None



Securities and Other Instruments
--------------------------------



None





Name and Address
of Institution
Maintaining Account                 Account Number            Type of Account
-------------------                 --------------            ---------------


Citibank, Daechi Branch             06-64-001038              Regular
1st Floor Magpie B/D 605-2
Daechi-dong Gangman-gu
Seoul, Korea


Korea Exchange Bank, Jinju Branch   112-22-00862-1            Regular
5-7, Dongseong-dong
Jinju Gyeongsangnam-do, Korea


Pusan Bank, Jangyou Branch          160-13-000156-0           Regular
39-11, Sammoon-ri
Jangyou-myeon Kimhae
Gyeongsangnam-do, Korea




<PAGE>

                                   SCHEDULE V


                                       SLI

                           UCC-1 FINANCING STATEMENTS





Secretary of State of the State of New York







<PAGE>



                              EXISTING SUBSIDIARIES

                           UCC-1 FINANCING STATEMENTS




None applicable.




<PAGE>




                                   SCHEDULE VI



                                       SLI


                             COMMERCIAL TORT CLAIMS



None.











<PAGE>



                              EXISTING SUBSIDIARIES


                             COMMERCIAL TORT CLAIMS



None.



<PAGE>




                                                                       EXHIBIT A


                             ASSIGNMENT FOR SECURITY

                       [TRADEMARKS] [PATENTS] [COPYRIGHTS]


                  WHEREAS, ______________________________ (the "Assignor") [has
adopted, used and is using, and holds all right, title and interest in and to,
the trademarks and service marks listed on the annexed Schedule 1A, which
trademarks and service marks are registered or applied for in the United States
Patent and Trademark Office (the "Trademarks")] [holds all right, title and
interest in the letter patents, design patents and utility patents listed on the
annexed Schedule 1A, which patents are issued or applied for in the United
States Patent and Trademark Office (the "Patents")] [holds all right, title and
interest in the copyrights listed on the annexed Schedule 1A, which copyrights
are registered in the United States Copyright Office (the "Copyrights")];

                  WHEREAS, the Assignor has entered into a Security Agreement,
dated as of ________________, 2004 (as amended, restated or otherwise modified
from time to time the "Security Agreement"), in favor of Portside Growth &
Opportunity Fund, as collateral agent for certain purchasers (the "Assignee");

                  WHEREAS, pursuant to the Security Agreement, the Assignor has
assigned to the Assignee and granted to the Assignee for the benefit of the
Buyers (as defined in the Security Agreement) a continuing security interest in
all right, title and interest of the Assignor in, to and under the [Trademarks,
together with, among other things, the good-will of the business symbolized by
the Trademarks] [Patents] [Copyrights] and the applications and registrations
thereof, and all proceeds thereof, including, without limitation, any and all
causes of action which may exist by reason of infringement thereof and any and
all damages arising from past, present and future violations thereof (the
"Collateral"), to secure the payment, performance and observance of the
"Obligations" (as defined in the Security Agreement);

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Assignor does
hereby pledge, convey, sell, assign, transfer and set over unto the Assignee and
grants to the Assignee for the benefit of the Buyers a continuing security
interest in the Collateral to secure the prompt payment, performance and for the
benefit of the Buyers observance of the Obligations.

                  The Assignor does hereby further acknowledge and affirm that
the rights and remedies of the Assignee with respect to the Collateral are more
fully set forth in the Security Agreement, the terms and provisions of which are
hereby incorporated herein by reference as if fully set forth herein.



<PAGE>



         IN WITNESS WHEREOF,  the Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of _____________, 20__

                                        [GRANTOR]


                                        By:____________________________
                                           Name:
                                           Title:



<PAGE>


STATE OF ____________
                                    ss.:
COUNTY OF __________


                  On this ____ day of _______________, 20__, before me
personally came ________________, to me known to be the person who executed the
foregoing instrument, and who, being duly sworn by me, did depose and say that
s/he is the ________________ of _______________________________________, a
____________________, and that s/he executed the foregoing instrument in the
firm name of _______________________________________, and that s/he had
authority to sign the same, and s/he acknowledged to me that he executed the
same as the act and deed of said firm for the uses and purposes therein
mentioned.




<PAGE>

                     SCHEDULE 1A TO ASSIGNMENT FOR SECURITY


[Trademarks and Trademark Applications]
[Patent and Patent Applications]
[Copyright and Copyright Applications]
Owned by ______________________________