Document:

Exhibit 10.5

                        CONFIDENTIAL TREATMENT REQUESTED

                              LCOS SUPPLY AGREEMENT
                                  ("Agreement")

               Dated as of: July 1, 2004 (the "Effective Date")

THE SELLER:    SPATIALIGHT, INC., a New York corporation
               (hereinafter referred to  as "SpatiaLight")

               Address: 5 Hamilton Landing, Suite 100, Novato, CA 94949, U.S.A.
               Tel: (415)883-1693                Fax: (415)883-3363

THE PURCHASER: LG ELECTRONICS INC., an enterprise of the Republic of Korea
               (hereinafter referred to as "LGE")

               Address: 20 Youido-Dong Yeongdeungpo-Gu, Seoul, Republic of Korea
               Tel: 82-2-3777-1114               Fax: 82-2-3777-5150

      WHEREAS, SpatiaLight is the creator, developer and manufacturer and the
owner of all right, title and interest in and to SpatiaLight's active matrix
liquid crystal on silicon ("LCoS") microdisplay device having an active matrix
of 1920 pixels by 1080 pixels ("LCoS Chip"), and when three (3) LCoS Chips are
fitted onto a light engine, they may be used in display application products
such as high definition televisions and home screen projection systems.

      WHEREAS, LGE is a leading Korean electronics manufacturer that intends to
enter the global market for LCoS televisions ("LCoS Televisions") using
SpatiaLight LCoS Sets (as hereinafter defined) fitted onto a light engine of
LGE's design and manufacture ("LG Light Engine").

      WHEREAS, SpatiaLight specially developed its LCoS Sets for use in LGE's
LCoS televisions (16 by 9 aspect ratio) pursuant to a Memorandum of
Understanding entered into on May 12, 2003, between the parties hereto,
providing for the parties to work jointly in developing the LCoS Sets.

      WHEREAS, LGE and SpatiaLight entered into a mutual Non-Disclosure
Agreement dated May 12, 2003 ("Non-Disclosure Agreement") and the parties agree
to continue to be fully bound by the terms and conditions set forth in that
Non-Disclosure Agreement.

      WHEREAS, LGE desires to purchase LCoS Sets from SpatiaLight pursuant to
and subject to the terms and conditions set forth herein.

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

1.    REPRESENTATIONS

      Each of SpatiaLight and LGE hereby warrants and represents to the other as
follows:

      1.1. That it is a legal person validly existing in its jurisdiction of
establishment; and

      1.2. That it has the full power and authority to enter into this Agreement
and perform its contractual obligations; that its representative who is signing
this Agreement has been duly authorized to do so pursuant to a valid power of
attorney, board of directors' resolution or other valid corporate action
effecting the same.

2.    PRODUCT PURCHASES

      LGE agrees to purchase from SpatiaLight, in accordance with the prices,
quantities, dates and other terms and conditions set forth herein, sets of three
(3) SpatiaLight LCoS Chips combined with necessary SpatiaLight Analog ASICs and
a Flex and Mount Set (as hereinafter defined), which form a SpatiaLight LCoS Set
("LCoS Set").

[*] Represents redacted information - confidential treatment requested.

3.    DELIVERY DATES OF PRODUCTS

      3.1. Initial Deliveries

      t 6 0 SpatiaLight shall deliver a total of one hundred twenty (120) sets
of three (3) trial production LCoS Chips (which shall not include a SpatiaLight
Analog ASIC) (the "Qualification Sets") to LGE by September 30, 2004 (the
"Qualification Date") and one hundred (100) sets of three (3) trial production
LCoS Chips (which shall include a SpatiaLight Analog ASIC) ("Pre-Production
Sets") by November 30, 2004, according to the following delivery schedule;
provided, however, that either party may, in its sole discretion, elect to
change any or all of the delivery dates set forth in this Section 3.1 by not
greater than thirty (30) days sooner or later than such delivery dates as set
forth in this Section 3.1.

      ------------------------------ -------------------------------------
                  Month                                Quantity
      ------------------------------ -------------------------------------
      July 2004                               20 Qualification Sets
      ------------------------------ -------------------------------------
      September 2004                          100 Qualification Sets
      ------------------------------ -------------------------------------
      November 2004                           100 Pre-Production Sets
      ------------------------------ -------------------------------------

3.2.  Subsequent Deliveries of LCoS Sets

      Subsequent deliveries of SpatiaLight LCoS Sets shall be made in accordance
with the rolling commitment schedule set forth in Section 6 of this Agreement
for each month of January 2005 through December 2006.

      3.3. Trial Light Engine Deliveries

      LGE shall deliver to SpatiaLight twenty-five (25) trial Fitted LGE Light
Engines (as hereinafter defined) in November 2004. The LCoS Sets to be
incorporated into such trial Fitted LGE Light Engines shall be delivered by
SpatiaLight to LGE in October 2004 and shall be in addition to the Qualification
Sets and Pre-Production Sets. The purchase price for each trial Fitted LGE Light
Engine shall be determined by the parties at a later date; provided, however,
that such purchase price shall not exceed $3,000 (not including the cost of the
LCoS Sets). It is hereby agreed that such twenty-five (25) trial Fitted LGE
Light Engines [*] and therefore [*] that SpatiaLight [*].

4.    TERM

      The term of this Agreement shall commence on the Effective Date and
terminate on December 31, 2006, subject to LGE's right to cancel set forth in
Section 5 hereof and subject further to early termination by mutual written
consent and agreement as set forth in Section 11.1 hereof.

5.    QUALIFICATION AND RIGHT OF CANCELLATION

      5.1. LGE's obligations to purchase LCoS Sets under this Agreement shall be
expressly conditioned upon the Qualification Sets meeting LGE's Final
Specifications set forth in Exhibit 1 hereto. LGE shall have until October 31,
2004 (the "Determination Date"; and the Effective Date through the Determination
Date, the "Qualification Period") to perform final qualification tests on the
Qualification Sets. In the event that the Qualification Sets meet the Final
Specifications, LGE shall give written notice thereof to SpatiaLight and LGE
shall be required to purchase from SpatiaLight the LCoS Sets in accordance with
all of the provisions of this Agreement. In the event that the Qualification
Sets do not meet the agreed upon Final Specifications, LGE may cancel this
Agreement by providing written notice to SpatiaLight not later than October 31,
2004 ("Notice of Cancellation"). If LGE does not provide a Notice of
Cancellation, the Qualification Sets shall be considered to meet the Final
Specifications and LGE shall be required to purchase and SpatiaLight shall be
required to sell the LCoS Sets in accordance with all of the provisions of this
Agreement. SpatiaLight and LGE agree to work together to the extent necessary
during the Qualification Period to assure that the Qualification Sets meet LGE's
Final Specifications. LGE may elect, in its sole discretion, to change the
Determination Date by not greater than thirty (30) days sooner or later than the
Determination Date set forth in this Section 5.1.

      5.2. LGE shall remain fully responsible for all of its obligations to
SpatiaLight under this Agreement through the end of the Qualification Period
regardless of whether it gives Notice of Cancellation.

6.    CONTRACTUAL OBLIGATIONS

      Following the Qualification Period and in the event that there is no
Notice of Cancellation, LGE hereby covenants and agrees to purchase SpatiaLight
LCoS Sets pursuant to this Agreement as follows:

[*] Represents redacted information - confidential treatment requested.

            6.1. From January 2005 through June 2005, LGE shall purchase
SpatiaLight LCoS Sets according to the following schedule (the "Commitment
Schedule"), and such Commitment Schedule shall be updated for each of the months
of July 2005 through December 2006 according to the terms and conditions of
Section 6.3 and Section 6.4 (if applicable) below:

----------------- ---------------------------------- ----------------------- ---------------------------
        Month              Minimum Monthly             Price Per LCoS Set       Monthly Purchase Price
                  Commitment(Quantity of LCoS Sets)  (United States Dollars)   Commitment(United States
                                                                                       Dollars)
----------------- ---------------------------------- ----------------------- ---------------------------
January 2005                    2,000                          [*]                        [*]
----------------- ---------------------------------- ----------------------- ---------------------------
February 2005                   2,000                          [*]                        [*]
----------------- ---------------------------------- ----------------------- ---------------------------
March 2005                      2,000                          [*]                        [*]
----------------- ---------------------------------- ----------------------- ---------------------------
April 2005                      5,000                          [*]                        [*]
----------------- ---------------------------------- ----------------------- ---------------------------
May 2005                        5,000                          [*]                        [*]
----------------- ---------------------------------- ----------------------- ---------------------------
June 2005                       5,000                          [*]                        [*]
----------------- ---------------------------------- ----------------------- ---------------------------

      6.2 From July 2005 through December 2005, LGE forecasts that it will
purchase SpatiaLight LCoS Sets at the agreed upon purchase price and quantities
set forth in the following schedule (the "Forecast Schedule"). LGE is not bound
to purchase and SpatiaLight is not bound to sell the quantities of LCoS Sets set
forth in the Forecast Schedule:

------------------- -------------------------- --------------------------------- ------------------------------
           Month    Monthly Forecast (Quantity  Price Per LCoS Set(United States   Monthly Forecast Purchase
                           of LCoS Sets)                    Dollars)             Price (United States Dollars)
------------------- -------------------------- --------------------------------- ------------------------------
July 2005                     10,000                           [*]                            [*]
------------------- -------------------------- --------------------------------- ------------------------------
August 2005                   10,000                           [*]                            [*]
------------------- -------------------------- --------------------------------- ------------------------------
September 2005                10,000                           [*]                            [*]
------------------- -------------------------- --------------------------------- ------------------------------
October 2005                  10,000                           [*]                            [*]
------------------- -------------------------- --------------------------------- ------------------------------
November 2005                 10,000                           [*]                            [*]
------------------- -------------------------- --------------------------------- ------------------------------
December 2005                 10,000                           [*]                            [*]
------------------- -------------------------- --------------------------------- ------------------------------

      6.3. Commencing on January 1, 2005, on the first day of each month of
delivery set forth in this Section 6, LGE shall be required to update the
Commitment Schedule for the calendar month six months in advance of such month
and LGE shall be required to update the non-binding Forecast Schedule for the
calendar month twelve months in advance of such month (i.e., on January 1, 2005,
LGE shall provide its monthly LCoS Set quantity commitment for July 2005 and
shall provide its monthly non-binding demand forecast for January 2006). All
such updated commitments required under this Section 6.3 shall be fully binding
upon LGE. All updated commitments required under this Section 6.3 and Section
6.4 (if applicable) hereof shall be sent by LGE to SpatiaLight via facsimile or
email.

      6.4. Commencing on June 20, 2005, the parties shall use their mutual best
efforts and cooperation to negotiate and agree upon the purchase prices of the
LCoS Sets scheduled for delivery pursuant to this Agreement between January 2006
and December 2006. In the event that the parties shall not have agreed in
writing with respect to the second delivery year purchase prices for LCoS Sets
by September 20, 2005, by the terms of this Agreement the terms and conditions
of Section 11 hereof shall then take effect. In such event, commencing on
October 1, 2005, on the first day of each month of delivery set forth in this
Section 6, LGE shall continue to be required to update the Commitment Schedule
for the calendar month six (6) months in advance of such month (i.e., on October
1, 2005, LGE shall provide its monthly LCoS Set quantity commitment for April
2006); provided, that LGE's commitment for each such delivery month shall be in
accordance with the terms and conditions of Section 11 and the other terms and
conditions of this Agreement. All such updated commitments required under this
Section 6.4 shall be fully binding upon LGE.

7.    PRICE PER SPATIALIGHT LCOS SET

      7.1. LGE agrees to pay SpatiaLight the purchase price of $[*] for each
Qualification Set and Pre-Production Set sold prior to LGE commencing to
manufacture LCoS Televisions for the quantities as set forth in Section 3.1
hereof.

      7.2. Following the Qualification Period, for the months of January 2005 to
June 2005, LGE agrees to purchase and SpatiaLight agrees to sell LCoS Sets for
manufacturing LCoS Televisions at the purchase prices set forth in Section 6.1
hereof.

      7.3. For the months of July 2005 to December 2005, LGE agrees to purchase
and SpatiaLight agrees to sell LCoS Sets for manufacturing LCoS Televisions at
the purchase price set forth in Section 6.2 hereof; provided, however, it is
expressly agreed that in the event that LGE purchases a quantity of LCoS Sets
that is less than its monthly forecast for any of such months, then the purchase
price of $[*] per LCoS Set shall apply to a monthly order of up to 3,999 LCoS
Sets and the purchase price of $[*] per LCoS Set shall apply to a monthly order
of between 4,000 and 9,999 LCoS Sets in such months.

[*] Represents redacted information - confidential treatment requested.

      7.4. The purchase prices of the LCoS Sets scheduled for delivery pursuant
to this Agreement for the months of January 2006 through December 2006 shall be
determined in accordance with Section 6.4 and Section 11 of this Agreement.

8.    PURCHASE ORDERS

      8.1. Within two weeks following the Effective Date, LGE shall issue a
purchase order (the "Qualification Purchase Order") to SpatiaLight for LGE's
purchase and SpatiaLight's sale of the Qualification Sets and Pre-Production
Sets.

      8.2. In the event that LGE does not provide Notice of Cancellation
pursuant to Section 5.1 hereof, LGE shall issue, no later than December 15,
2004, a purchase order (the "Rolling Purchase Order"; and together with the
Qualification Purchase Order, the "Purchase Orders") to SpatiaLight for LGE's
purchase and SpatiaLight's sale of the entire quantity of LCoS Sets set forth in
Section 6.1 hereof.

      8.3. Commencing on January 15, 2005, on the fifteenth (15th) day of each
month of delivery set forth in this Agreement, LGE shall be required to reissue
the Rolling Purchase Order to reflect LGE's additional commitment made pursuant
to and in accordance with Section 6.3 and Section 6.4 (if applicable) hereof.

      8.4. The parties shall use their mutual best efforts to negotiate and
agree upon the terms and conditions of the Purchase Orders. Such terms and
conditions shall include, without limitation, terms and means of payment,
packing, shipping terms, insurance, taxes, destination and inspection.

9.    [*]

      The parties acknowledge and agree that the [*] set forth in this Section 9
[*] set forth in Section 6 hereof.

      9.1. The parties hereby acknowledge and agree that [*] at SpatiaLight's
sole discretion) and a [*] for the purpose of [*] in only the following [*]. The
parties covenant and agree to provide [*] and SpatiaLight's current bill of
materials cost for producing one (1) LCoS Set (the "LCoS Set BOM Cost") to the
other party on December 1, 2004; provided, however, that the [*] the cost of the
LCoS Set [*].

      9.2. LGE hereby covenants and agrees to [*]to SpatiaLight during each
month in 2005 and a [*] to SpatiaLight during each month in 2006, provided,
however, that the parties shall not have any rights or obligations under this
Section 9 in the event that LGE gives Notice of Cancellation. It is expressly
agreed and understood that [*] and is not [*] in any way [*] throughout the term
of this Agreement; provided, however, [*], no later than December 1, 2004, to
provide [*] shall commence in [*] and shall be thereafter [*] throughout the
term of this Agreement and shall be fully binding upon the parties hereto.

      9.3. [*] all of such [*] SpatiaLight [*] not greater than the [*] as the
[*] SpatiaLight sells LCoS Sets to LGE under this Agreement. The parties
acknowledge and agree that the [*] may change over time, and therefore agree to
[*] of the [*] and the [*] in light of then prevailing market conditions on each
six (6) month anniversary date of the Effective Date throughout the term of this
Agreement.

10.   EXCLUSIVITY

      10.1. The parties covenant and agree that LGE shall have the exclusive
right in the Republic of Korea to purchase SpatiaLight LCoS Sets (applies only
to SpatiaLight LCoS Chips with active matrix of 1920 pixels by 1080 pixels)
commencing on the Effective Date and terminating on June 30, 2005 ("LGE's Right
of Exclusivity"), unless extended pursuant to the provisions of Section 10.2
hereof.

      10.2. In the event that LGE fulfills its commitment to purchase an
aggregate of 21,000 LCoS Sets during the first six months of delivery as set
forth in Section 6 hereof, then LGE's Right of Exclusivity shall be extended
through December 31, 2005. In the event that LGE's aggregate commitment to
purchase LCoS Sets for the months of July 2005 to December 2005 is equal to or
greater than its aggregate monthly forecast for such months (60,000 LCoS Sets)
and in the further event that LGE fulfills its commitment for such months, then
LGE's Right of Exclusivity shall be extended through June 30, 2006. In the event
that LGE's aggregate commitment to purchase LCoS Sets for the months of January
2006 to June 2006 is equal to or greater than its aggregate monthly forecast for
such months, as will be provided pursuant to Section 6.3 hereof, and in the
further event that LGE fulfills its commitment for such months, then LGE's Right
of Exclusivity shall be extended through December 31, 2006.

      10.3. The parties covenant and agree that SpatiaLight shall be the
exclusive provider of LCoS products, limited to a three (3) panel type, to LGE
throughout the entire term of this Agreement ("SpatiaLight Exclusivity");
provided, however, that in the event that LGE's Right of Exclusivity shall
terminate during the term of this Agreement, the terms of Section 10.4 shall
then take effect; provided, further, however, that in the event that the parties
shall not have agreed in writing with respect to the second delivery year
purchase prices for LCoS Sets by September 20, 2005 pursuant to the terms and
conditions of Section 6.4 hereof, then the terms and conditions of Section 11
shall supercede the terms and conditions of this Section 10 only with respect to
the delivery months of January 2006 through December 2006.

[*] Represents redacted information - confidential treatment requested.

      10.4. In the event that LGE's Right of Exclusivity shall terminate during
the term of this Agreement pursuant to the terms of this Section 10, SpatiaLight
shall then have the right, in its sole discretion, to elect to continue
SpatiaLight Exclusivity throughout the remaining term of this Agreement by
notifying LGE in writing within fifteen (15) days following such termination.

            (a) In the event that SpatiaLight so elects to extend SpatiaLight
Exclusivity, LGE shall then have the first priority right to purchase from
SpatiaLight: (i) all of the quantities of LCoS Sets that LGE has committed to
purchase from SpatiaLight as of the date that LGE's Right of Exclusivity was
terminated, and (ii) fifty percent (50%) of the quantities of LCoS Sets that LGE
has forecast to purchase from SpatiaLight as of such termination date.

            (b) In the event that SpatiaLight does not so elect to extend
SpatiaLight Exclusivity, then SpatiaLight Exclusivity shall terminate as of the
date that LGE's Right of Exclusivity terminated and LGE shall not have any
priority rights with respect to purchasing LCoS Sets.

      10.5. The parties covenant and agree that SpatiaLight shall not contract
to sell LCoS Sets to [*] and/or any or all of its domestic or foreign
subsidiaries or affiliates at any time during which LGE's Right of Exclusivity
is in effect pursuant to this Agreement.

11.   ALTERNATIVE RIGHTS AND OBLIGATIONS IN THE SECOND DELIVERY YEAR

      Solely in the event that the parties shall not have agreed in writing with
respect to the second delivery year purchase prices for LCoS Sets by September
20, 2005 pursuant to the terms and conditions of Section 6.4 hereof, then,
notwithstanding the provisions of Section 10 hereof, for the delivery months
January 2006 through December 2006, the parties covenant and agree that:

      11.1. The matter of the pricing of LCoS Sets to be sold and purchased
under and in accordance with this Section 11 and the other provisions of this
Agreement shall immediately be submitted to binding arbitration, in accordance
with Section 21 hereof; provided, however, that the parties shall have the right
to mutually agree in writing to terminate this Agreement with respect to all of
the rights and obligations of the parties hereunder scheduled to occur after
December 31, 2005. Such termination shall only be effective in the event that
LGE and SpatiaLight mutually agree to it in writing between the dates of June
20, 2005 and September 19, 2005.

      11.2. LGE's Right of Exclusivity and SpatiaLight Exclusivity shall
terminate on December 31, 2005 (provided that such rights of exclusivity had not
previously terminated pursuant to the terms and conditions of Section 10
hereof).

      11.3. LGE shall be obligated to purchase from SpatiaLight a minimum of
fifty percent (50%) of the LCoS products, limited to a three (3) panel type,
that LGE may purchase from any LCoS supplier in each such delivery month and
SpatiaLight commits to sell such LCoS Sets to LGE in each such delivery month in
accordance with the terms and conditions of this Agreement and at such prices as
shall be determined by arbitration in accordance with Section 11.1 and Section
21 hereof. LGE shall have the right to fill the remaining fifty percent (50%) of
its demand for LCoS products from any second sources that it so elects.

      11.4. SpatiaLight shall be obligated to grant LGE the first priority
right, with respect to SpatiaLight's LCoS production output, to purchase from
SpatiaLight all of the quantities of LCoS Sets that LGE commits to purchase from
SpatiaLight in accordance with Section 6.4 hereof.

      11.5. The parties shall have the right, in their respective discretion, to
agree to sell and purchase to and from each other any additional LCoS Sets and
Fitted LGE Light Engines that the parties are not obligated to sell and purchase
to and from each other according to the terms and conditions of this Section 11
and Section 9 hereof.

12.   [Intentionally Omitted]

13.   DIGITAL ASICS

      SpatiaLight covenants and agrees to provide LGE with the codes for the
required Digital ASICs and Digital FPGA and updates to such codes, as they
become available, throughout the term of this Agreement. It is expressly agreed
that SpatiaLight's agreement to provide such codes to LGE constitutes a
consideration for the agreed upon purchase prices set forth in Section 6 hereof.

[*] Represents redacted information - confidential treatment requested.

14.   LCOS SET COMPONENT COSTS

      The parties covenant and agree to use their mutual best efforts throughout
the term of this Agreement, following the Qualification Period, to assist
SpatiaLight to obtain and procure LCoS Set components to be used by SpatiaLight
in connection with this Agreement at lower costs than SpatiaLight currently
incurs and to obtain other favorable procurement terms and conditions for
SpatiaLight. Such best efforts assistance shall include, without limitation,
leveraging of LGE's purchasing power for SpatiaLight's and LGE's benefit. The
parties covenant and agree to form a joint task force with representatives from
both of the parties hereto for the purpose of furthering the objectives set
forth in this Section 14.

15.   PATENT INDEMNIFICATION

      SpatiaLight shall defend and fully indemnify LGE from any suit, cause of
action, judgment, demand, liability, loss damage, cost, expense (including
reasonable attorneys' fees and court costs or other actual or alledged claim of
any kind, whether direct or indirect, that arises out of a claim by a third
party against LGE alleging that the LCoS Sets delivered to LGE under this
Agreement infringes any [*] patent of a third party. The indemnity applies [*]
irrespective of the means, manner or nature of any settlement, compromise or
determination. This indemnity obligation does not apply to any claims based on
the use of the LCoS Sets in violation of this Agreement, or in combination with
any software, hardware, network or system not recommended for use by SpatiaLight
with the LCoS Sets, or in connection with SpatiaLight's compliance with LGE's
instructions, designs or specifications.

16.   SHARING OF INFORMATION

      The parties agree that they will continue to work jointly throughout the
term of this Agreement to achieve its business objectives. The parties agree to
remain in regular contact with the other and to meet and share information as
appropriate. Such sharing of information shall include, without limitation,
information that SpatiaLight has concerning the digital ASIC which LGE intends
to incorporate into its LCoS high definition television sets.

17.   WARRANTIES

      17.1. SpatiaLight shall warrant that LCoS Sets will be: (i) in accordance
with the Final Specifications; (ii) free from any material defect or failure of
a material kind or nature in design, materials and workmanship; and (iii)
merchantable, fit and sufficient for the purpose intended.

      17.2. The warranties made by SpatiaLight with respect to the LCoS Sets set
forth in this Section 17 shall commence on the date of the consumer sale by LGE
of the LCoS Televisions containing such LCoS Sets and shall remain in effect for
the shorter of (i) the same period of time that LGE warrants such LCoS
Televisions to the consumer; or (ii) a period of two years following the
consumer sale by LGE of LCoS Televisions containing such LCoS Sets.

      17.3. In case that any of the LCoS Sets delivered under this Agreement are
not in material compliance with the above warranties, SpatiaLight shall either,
at LGE's option, (i) repair or replace such LCoS Set; or (ii) refund to LGE the
amount paid for such LCoS Set by LGE.

      17.4. Except as set forth in this Section 17, SpatiaLight makes no other
warranties to LGE, express or implied.

18.   FORCE MAJEURE

      18.1. Neither Party shall be liable to the other for any delay or
non-performance of its obligations hereunder in the event and to the extent that
such delay or non-performance is due to an event of Force Majeure ("Force
Majeure Events").

      18.2. Force Majeure Events are events beyond the control of the party
which occur after the date of signing of this Agreement and which were not
reasonably foreseeable at the time of signing of this Agreement and whose
effects are not capable of being overcome without unreasonable expense and/or
loss of time to the party concerned. Force Majeure Events shall include (without
being limited to) war, civil unrest, acts of government, natural disasters,
exceptional weather conditions, breakdown or general unavailability of transport
facilities, accidents, fire, explosions, terrorist acts, political risks and
general shortages of energy.

19.   CONFIDENTIALITY

      Either party ("Recipient") acknowledges that it has had and may continue
to have access to certain Confidential Information of the other party
("Discloser"). For purposes of this Agreement, "Confidential Information" shall
include, but not be limited to, information concerning Discloser 's business,
plans, designs, customers, potential customers, sales, marketing, the terms of
this Agreement including, but not limited to pricing, quantities and dates, and
other related information. Recipient shall not use or appropriate in any way,
for its own account or the account of any third party, nor disclose to any third
party, any of the Confidential Information and shall take all necessary
precautions to protect the confidentiality of such Confidential Information.
Recipient hereby acknowledges that misappropriation or disclosure to any third
party of any Confidential Information would cause irreparable harm to Discloser.
Notwithstanding the provisions of this Section 18, the parties shall, if
required by applicable securities laws and Nasdaq rules and regulations,
publicly disclose such information as shall be in compliance with such laws and
regulations.

[*] Represents redacted information - confidential treatment requested.

20.   GOVERNING LAW

      This Agreement shall be governed by the laws of the State of New York in
the United States, as if the Agreement were wholly executed and performed in the
State of New York, without giving effect to the conflicts of law statutes and
conflicts of law doctrines of New York (except for Section 5-1401 of the New
York General Obligations Law, which shall be applicable and binding on the
parties) or of any other jurisdiction.

21.   ARBITRATION OF ALL CLAIMS AND DISPUTES AS SOLE REMEDY

      The sole remedy for disposing of any claim, dispute or controversy arising
out of or in connection with this Agreement, if not resolved by the parties
within thirty (30) days of written notice of such claim or dispute, including
any question regarding the existence, validity or termination of this Agreement,
shall be referred to and finally resolved by arbitration under the applicable
rules of the International Chamber of Commerce, which rules are deemed to be
incorporated by reference into this clause. There shall be a total of three
arbitrators and the place where the arbitration shall take place shall be New
York City, in the United States. The language to be used in the arbitral
proceedings shall be the English language.

22.   CURRENCY

      Purchase price and all monies paid to SpatiaLight shall be paid in United
States Dollars without regard to any currency fluctuation.

23.   PRESS RELEASE

      23.1. The parties agree that SpatiaLight shall, on July 1, 2004, or within
thirty (30) days thereafter, issue a press release with respect to this
Agreement, which press release SpatiaLight has undertaken to draft and LGE has
reviewed and LGE hereby consents to the contents thereto. LGE agrees to
participate in such press release, without limitation, by making members of
LGE's senior management available to make statements with respect to this
Agreement that may be used as quotations in such press release. During the term
of this Agreement, the parties shall, if required by applicable securities laws
and Nasdaq rules and regulations, file such reports at such dates and containing
such information as shall be in compliance with such laws and regulations.

      23.2. The parties covenant and agree that the parties shall issue a joint
press release and shall hold a joint press conference with respect to this
Agreement by not later than the scheduled date of commencement of the Consumer
Electronics Show in Las Vegas, Nevada in January 2005, and SpatiaLight shall
undertake to draft such press release and shall submit such draft to LGE for
review and approval before its public release.

24.   INTEGRATION OF ACTIONS

      This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes any and all prior oral or
written agreements and negotiations between them. Notwithstanding the foregoing,
the Non-Disclosure Agreement by and between SpatiaLight and LGE shall remain in
full force and effect and the parties shall be fully bound thereby for the term
set forth therein.

25.   AMENDMENTS AND MODIFICATIONS

      No amendment or modification of this Agreement shall be valid unless set
forth in writing and signed by both of the parties hereto.

26.   NOTICES

      All notices required or permitted under this Agreement shall be in writing
and personally delivered or mailed, by certified mail, return receipt requested,
and addressed as follows:

[*] Represents redacted information - confidential treatment requested.

      (a)  If to LGE:          Young Woon Kim
                               Digital Display Research Lab, LG Electronics Inc.
                               16 Woomyeon-dong Seocho-gu, Seoul 137-724,
                               Republic of Korea
                               Tel: 82-2-526-4612     Fax: 82-2-572-3086

      (b)  If to SpatiaLight:  Robert A. Olins
                               5 Hamilton Landing, Suite 100
                               Novato, CA 94949, U.S.A. Tel: (415)
                               883-1693 Fax: (415) 883-1125

27.   NON-ASSIGNABILITY; BINDING EFFECT

      This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
this Agreement, nor any of the rights or obligations of the parties hereto shall
be assignable by either party hereto without the prior written consent of the
other party.

28.   SEVERABILITY

      In case any provision of this Agreement shall be invalid, illegal or
unenforceable, it shall, to the extent practicable, be modified in such manner
as to be valid, legal and enforceable, subject to the condition that, as so
modified, there shall be no material alteration in or to this Agreement with
respect to the business terms or objectives of the parties hereto.

                  [Remainder of page intentionally left blank]

[*] Represents redacted information - confidential treatment requested.

            IN WITNESS WHEREOF, the undersigned, intending to be bound hereby,
have caused this LCoS Supply Agreement to be duly executed by their officers
thereunto duly authorized, on the date first above written.

                                       LG ELECTRONICS INC.

                                       By: /s/ Eunho Yoo
                                           -------------------------------------
                                           Name: Eunho Yoo
                                           Title: Director Digital Display
                                                  Research Laboratory

                                       SPATIALIGHT, INC.

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

[*] Represents redacted information - confidential treatment requested.

                                    Exhibit 1

 Final Specifications of SpatiaLight Qualification Sets and Pre-Production Sets

[*] Represents redacted information - confidential treatment requested.

[*] Represents redacted information - confidential treatment requested.

[*] Represents redacted information - confidential treatment requested.

[*] Represents redacted information - confidential treatment requested.

[*] Represents redacted information - confidential treatment requested.Unassociated Document

    

      EXHIBIT
        10.34

      

      EXECUTIVE
        EMPLOYMENT AGREEMENT

       

      This
        employment agreement (the “Agreement”) is made this 19th day of December 2005,
        by and between I.C. Isaacs & Company LP, a Delaware limited partnership (the
“Company”), and Gregg A. Holst, (the “Executive”).

       

      
        	1.	
                Definitions. 
                  The following terms, as used herein, have the following
                  meanings:

              

      

       

      
        	
              	(a)	
                Agreement
                  has the meaning attributed thereto in the
                  preamble;

              

      

       

      
        	
              	(b)	
                Base
                  Salary
                  shall mean $275,000, provided, however, that in the event the Board
                  or the
                  Compensation Committee thereof increases the amount of the Base
                  Salary at
                  any time during the Term, the term “Base Salary” shall mean, from and
                  after the effective date of each such increase, $275,000 plus the
                  aggregate amount of all such increases therein made on or prior
                  to such
                  effective date;

              

      

       

      
        	
              	(c)	
                Board
                  shall mean the Board of Directors of
                  Isaacs;

              

      

       

      
        	
              	(d)	
                Cash
                  Flow Target
                  has the meaning attributed thereto in Section 5(b)(ii);

              

      

       

      
        	
              	(e)	
                Cause
                  has the meanings attributed thereto in Section 10(a);

              

      

       

      
        	
              	(f)	
                Change
                  of Control
                  has the meanings attributed thereto in Section 14(a);

              

      

       

      
        	
              	(g)	
                Common
                  Stock
                  shall mean Isaacs’ common stock, par value $.0001 per
                  share;

              

      

       

      
        	
              	(h)	
                Company
                  has the meaning attributed thereto in the
                  preamble;

              

      

       

      
        	
              	(i)	
                EBIT
                  Target
                  has the meaning attributed thereto in Section 5(b)(i);
                  

              

      

       

      
        	
              	(j)	
                Effective
                  Date
                  shall mean December 27, 2005;

              

      

       

      
        	
              	(k)	
                Executive
                  has the meaning attributed thereto in the
                  preamble;

              

      

       

      
        	
              	(l)	
                Initial
                  Term
                  has the meaning attributed thereto in Section 3;

              

      

       

      
        	
              	(m)	
                Inventory
                  Turns Target
                  has the meaning attributed thereto in Section 5(b)(iii);

              

      

       

      
        	
              	(n)	
                Isaacs
                  has the meaning attributed thereto in Section 2;

              

      

       

      
        	
              	(o)	
                Isaacs
                  Financial Statements
                  shall mean the audited consolidated financials statements included
                  in
                  Isaacs’ Annual Report on SEC Form 10-K, as filed by Isaacs with the SEC
                  for the year in question; 

              

      

       

      
        	
              	(p)	
                Notice
                  has the meaning attributed thereto in Section 16(a);

              

      

       

      
        	
              	(q)	
                Option
                  has the meaning attributed thereto in Section 6;

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
              	(r)	
                Option
                  Plan
                  shall mean Isaacs’ Amended and Restated Omnibus Stock Option Plan, as
                  amended;

              

      

       

      
        	
              	(s)	
                Option
                  Term
                  has the meaning attributed thereto in Section 6;

              

      

       

      
        	
              	(t)	
                Renewal
                  Term
                  has the meaning attributed thereto in Section 3;

              

      

       

      
        	
              	(u)	
                SEC
                  shall mean the United States Securities and Exchange
                  Commission;

              

      

       

      
        	
              	(v)	
                Severance
                  Payment Period
                  has the meaning attributed thereto in Section 11;

              

      

       

      
        	
              	(w)	
                Severance
                  Payments
                  has the meaning attributed thereto in Section 11;

              

      

       

      
        	
              	(x)	
                Term
                  has the meaning attributed thereto in Section 3;
                  and

              

      

       

      
        	
              	(y)	
                Termination
                  Date
                  shall mean in the context of a termination of the Executive’s
                  employment:

              

      

       

      
        	
              	(i)	
                for
                  Cause, the date on which any of the events specified in Section
                  10(a)
                  shall occur; or

              

      

       

      
        (ii)    without
          Cause:

      

       

      (1)    the
        date of
        the Executive’s death;

       

      (2)    if
        due to the
        Executive’s continuous and uninterrupted inability to perform his duties and
        responsibilities under this Agreement for a period of not less than180 days,
        the
        181st day after the date on which such period commenced;

       

      (3)    the
        last date
        of the then current Initial Term of Renewal Term, as the case may be, if
        either
        party gives timely notice to the other of its or his intention not to extend
        the
        Agreement beyond the end of such Initial Term or Renewal Term; or

       

      (4)    the
        61st day
        after the date upon which notice of termination of the Agreement is given
        by the
        Company to the Executive pursuant to Section 11
        hereof,
        or by the Executive to the Company pursuant to Section 12
        hereof,
        as the case may be; or

       

      (iii)    as
        a result
        of the Executive’s resignation for good cause pursuant to Section 13
        of this
        Agreement, the 31st day after the date upon which notice of termination of
        the
        Agreement is given by the Executive to the Company;

       

      (iv)    as
        a result
        of or in connection with a Change of Control:

       

      (1)    on
        the date
        when the Company gives notice of the termination of the Executive’s employment,
        if such employment is terminated other than for Cause by the Company within
        90
        days prior to a Change of Control;

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

       

      (2)    on
        the date
        when the Company (or its successor corporation) gives notice of the termination
        of the Executive’s employment, if such employment is terminated other than for
        Cause at any time after a Change of Control; or

       

      (3)    on
        the date
        when the Executive gives notice of his resignation, provided, that such notice
        is given not more than 90 days following a Change of Control.

       

      2.    Employment.
        The Company hereby employs the Executive as its Executive Vice President
        and
        Chief Financial Officer. The Executive will provide his services hereunder
        principally at the Company’s offices in New York, New York, and occasionally at
        the Company’s offices in Baltimore, Maryland as and when the requisites of his
        employment activities so require. The Executive shall report to the Chief
        Executive Officer of the Company’s parent, I.C. Isaacs & Company, Inc.
        (“Isaacs”). 

       

      3.    Term. 
        This
        Agreement shall become effective on the Effective Date and shall continue
        until
        December 31, 2008 (the “Initial Term”). This Agreement shall be automatically
        extended for additional periods of one calendar year (each, a “Renewal Term”)
        commencing with calendar year 2009 unless, on or before June 30 of the last
        calendar year of the Initial Term or the then current Renewal Term, as the
        case
        may be, either party gives notice to the other of its or his intention not
        to
        extend the Agreement beyond the end of the Initial Term or the then current
        Renewal Term. The Initial Term and all Renewal Terms taken together are
        hereinafter collectively referred to as the “Term.”

       

      4.    Base
        Salary. 
        The
        Executive’s Base Salary during the Term shall be paid in accordance with the
        Company’s normal payroll practices. The payment of the Executive’s Base Salary
        and all other payments made and to be made to the Executive under this Agreement
        shall be made net of all current and lawful withholdings and deductions,
        including those for federal, state and local taxes. The Executive may be
        considered for annual merit increases in his Base Salary based on the business
        performance objectives of the Company or other goals as determined by the
        Board
        or the Compensation Committee thereof in its discretion.

       

      5.    Incentive
        Compensation. 
        In
        addition to his base salary, the Executive shall be entitled to receive
        incentive compensation calculated and paid, as follows:

       

      (a)    Initial
        Term
        and all Renewal Terms. The Executive shall be eligible to receive the following
        bonuses with respect to calendar years 2006, 2007, 2008 and each Renewal
        Term:

       

      (i)    In
        the event
        that the earnings before interest and taxes achieved by Isaacs during any
        of
        such years shall be: 

       

      (1)    not
        less than
        95% of, and not more than 110% of, the “EBIT Target” specified by the Company
        for such year, the Company shall pay the Executive a bonus equal to the greater
        of $57,750 or 21% of his Base Salary for such year;

       

      (2)    not
        less than
        111% of, and not more than 130% of, the “EBIT Target” specified by the Company
        for such year, the Company shall pay the Executive a bonus equal to the greater
        of $77,000 or 28% of his Base Salary for such year; or

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

       

      (3)    more
        than
        130% of the “EBIT Target” specified by the Company for such year, the Company
        shall pay the Executive a bonus equal to the greater of $96,250 or 35% of
        his
        Base Salary for such year;

       

      (ii)    in
        the event
        that the increase in cash and cash equivalents reflected on the consolidated
        statement of cash flows contained in Isaacs’ annual audited financial statements
        for any of such years shall be:

       

      (1)    not
        less than
        95% of, and not more than 110% of, the “Cash Flow Target” specified by the
        Company for such year, the Company shall pay the Executive a bonus equal
        to the
        greater of $46,200 or 16.8% of his Base Salary for such year;

       

      (2)    not
        less than
        111% of, and not more than 130% of, the “Cash Flow Target” specified by the
        Company for such year, the Company shall pay the Executive a bonus equal
        to the
        greater of $61,600 or 22.4% of his Base Salary for such year; or

       

      (3)    more
        than
        130% of the “Cash Flow Target” specified by the Company for such year, the
        Company shall pay the Executive a bonus equal to the greater of $77,000 or
        28%
        of his Base Salary for such year; and

       

      (iii)    in
        the event
        that the number of turns of the Company’s inventory during any of such years
        shall be:

       

      (1)    not
        less than
        95% of, and not more than 110% of, the “Inventory Turns Target” specified by the
        Company for such year, the Company shall pay the Executive a bonus equal
        to the
        greater of $11,550 or 4.2% of his Base Salary for such year;

       

      (2)    not
        less than
        111% of, and not more than 130% of, the “Inventory Turns Target” specified by
        the Company for such year, the Company shall pay the Executive a bonus equal
        to
        the greater of $15,400 or 5.6% of his Base Salary for such year; or

       

      (3)    more
        than
        130% of the “Inventory Turns Target” specified by the Company for such year, the
        Company shall pay the Executive a bonus equal to the greater of $19,250 or
        7% of
        his Base Salary for such year.

       

      (b)    Definitions.
        For purposes of this Agreement, the term:

       

      (i)    “EBIT
        Target”
        shall mean the amount that the Company shall designate as the earnings before
        interest and taxes that Isaacs must achieve in order for the Executive to
        earn
        the bonus described in Section 5(a)(i)
        of this
        Agreement; 

       

      (ii)    “Cash
        Flow
        Target” shall mean the amount that the Company shall designate as the cash
        provided by operating activities that Isaacs must achieve in order for the
        Executive to earn the bonus described in Section 5(a)(ii)
        of this
        Agreement; and

       

      (iii)    “Inventory
        Turns Target” shall mean the number of turns of the Company’s inventory that
        Isaacs must achieve, as designated by the Company, in order for the Executive
        to
        earn the bonus described in Section 5(a)(iii)
        of this
        Agreement.

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

       

      (c)    Provisions
        Applicable to the Targets. The EBIT Target, Cash Flow Target and Inventory
        Turns
        Target shall (i) not be greater than any of the EBIT Targets, Cash Flow Targets
        and Inventory Turns Targets applicable to any other senior executive of the
        Company; (ii) be determined by the Compensation Committee of the Board after
        consultation with the Executive; and (iii) be specified in writing by the
        Company not more than 60 days after the first day of each year during the
        Initial Term and each Renewal Term with respect to such year.

       

      (d)    Calculation
        of the Targets. Determination of the achievement of:

       

      (i)    the
        EBIT
        Target shall be made by adding the sum of the interest expense net of interest
        income, and income tax expense (but not income tax benefit) reflected on
        the
        consolidated statement of operations contained in Isaacs Financial Statements
        for the year in question from the line item entitled “net income” on such
        consolidated statement of operations;

       

      (ii)    the
        Cash
        Flow Target shall be made by reference to the line item entitled “cash provided
        by operating activities” reflected on the consolidated statement of cash flows
        contained in the Isaacs Financial Statements for the year in question;
        and

       

      (iii)    the
        Inventory Turns Target shall be made by reference to the quotient obtained
        by
        dividing:

       

      (1)    the
        cost of
        goods sold reflected on the consolidated statement of operations contained
        in
        the Isaacs Financial Statements for the year in question by

       

      (2)    the
        quotient derived by dividing the sum of the beginning and ending inventories
        for
        the year in question, as determined by reference to the notes to the Isaacs
        Financial Statements for such year, by the number 2.

       

      (e)    Payment
        of
        Incentive Compensation. Each of the incentive compensation amounts described
        in
        Section 5(a)
        which
        shall be payable for any calendar year during the Term shall be paid on July
        1
        of the immediately succeeding year, provided, that, except in the case of
        the
        termination of the Executive’s employment (i) as a result of the Company’s
        election not to renew this Agreement at the end of the Initial Term or any
        Renewal Term; or (ii) without cause pursuant to Section 11
        hereof,
        the Executive shall be actively employed by the Company on the date of such
        payment.

       

      (f)    Guaranteed
        Incentive Compensation. Anything elsewhere contained in this Agreement to
        the
        contrary notwithstanding,

       

      (i)    the
        Company
        shall pay guaranteed incentive compensation of $96,250 for the year 2006
        to the
        Executive on April 15, 2006;

       

      (ii)    the
        amount of such guaranteed incentive compensation shall be deducted from any
        incentive compensation for the year 2006 in excess of such amount that the
        Executive would otherwise be entitled to receive;

       

      (iii)    in
        the
        event that the aggregate amount of the incentive compensation for the year
        2006
        that the Executive shall be entitled to receive pursuant to Sections
5(a)(i),
        (ii)
        and (iii) hereof shall be greater than $96,250, the Company shall pay the
        difference between such aggregate amount and $96,250 to the Executive. Payment
        of such amount shall be made in accordance with the provisions of Section
        5(e)
        of this
        Agreement; and

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

       

      (iv)    in
        the event
        that the Termination Date occurs in 2006, and the aggregate amount of the
        incentive compensation for such year that the Executive would be entitled
        to
        receive pursuant to Sections 5(a)(i),
        (ii)
        and (iii) hereof shall not be greater than $96,250, the Company shall have
        no
        obligation to pay any further incentive compensation to the Executive
        hereunder.

       

      (g)    Pro-Ration
        of
        Incentive Compensation in Certain Circumstances. In the event that the
        Executive’s employment under this Agreement shall be terminated without cause
        pursuant to Section 11
        hereof,
        any incentive compensation that otherwise would have become due and payable
        to
        the Executive with respect to the year during which the Termination Date
        shall
        occur, pursuant to the provisions of Section 5(a)
        hereof,
        shall be calculated by multiplying the total amount of the incentive
        compensation payable pursuant to Sections 5(a)(i),
        (ii)
        and (iii) for the year in question by a fraction, the numerator of which
        shall
        be the number of days that shall have elapsed between the beginning of such
        year
        and the Termination Date, and the denominator of which shall be
        360.

       

      (h)    Signing
        Bonus. The Company shall pay to the Executive a bonus in the amount of $50,000
        after January 1, 2006 and on or before January 31, 2006.

       

      (i)    Amendment
        of
        Incentive Compensation Provisions. In the event that the Compensation Committee
        of the Board adopts new criteria or procedures for the determination and/or
        payment of the incentive compensation payable hereunder, or modifies such
        incentive compensation determination criteria or payment procedures, the
        Executive hereby agrees to amend this Agreement to incorporate such new or
        modified criteria and/or procedures herein, provided, that, 1) the employment
        agreements of the Company’s Chief Executive Officer and Chief Operating Officer
        are also amended to incorporate such new or modified criteria and/or procedures
        therein; and 2) such amendment shall not reduce the maximum amount of incentive
        compensation payable thereunder.

       

      6.    Stock
        Options. 
        In
        addition to his base salary, and the incentive compensation entitlements
        described in Section 5,
        the
        Executive also shall receive a non-qualified stock option (the “Option”) to
        purchase 100,000 shares of Common Stock, pursuant to the Option Plan. The
        Option
        shall be granted under, and shall be subject to all of the terms and conditions
        of, the Option Plan. Any unexercised portion of the Option shall be exercisable
        for a period of five years commencing on the Effective Date (the “Option Term”),
        provided that (i) the Executive shall have been in the continuous employ
        of the
        Company during the period commencing on the Effective Date and continuing
        through each date on which Executive exercises the Option or the last date
        of
        the Initial Term, whichever shall occur first; and (ii) the Executive’s
        employment shall not be terminated for “Cause” (as such term is hereinafter
        defined) at any time during the Option Term. The Option shall be exercisable
        at
        the price per share which must be applied to all non-qualified stock options
        granted under the Option Plan on the Effective Date. The Executive’s right to
        purchase Common Stock pursuant to the Option shall vest ratably on the first,
        second and third anniversaries, of the Effective Date. The Option shall further
        provide that, in the event that that:

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

       

      (a)    either
        party
        gives notice to the other of its or his intention not to extend the Agreement
        beyond the end of the Initial Term, and the Executive shall be employed by
        the
        Company on the last day of the Initial Term, he shall be entitled to exercise
        the Option, and purchase any and all shares that remain issuable thereunder,
        during the six month period ending on June 30, 2009; or

       

      (b)    the
        Executive’s employment shall be terminated for any reason other than for “Cause”
        or as a result of the Executive’s death, he (or his estate, as the case may be)
        shall be entitled to exercise the Option, to the extent that it shall have
        vested on the Termination Date, and purchase any and all shares that remain
        issuable thereunder, during the one year period ending on the date immediately
        preceding the first anniversary of the Termination Date or such shorter period
        as shall remain until the expiration date of the Option. 

       

      7.    Benefits. 
        During
        the Term, the Executive shall also be entitled to participate in or receive
        benefits under all of the Company’s benefit plans, programs, arrangements and
        practices, including pension, disability, and group life, sickness, accident
        or
        health insurance programs, if any, as may be established from time to time
        by
        the Company for the benefit of executive employees serving in similar capacities
        with the Company (and/or its affiliates), in accordance with the terms of
        such
        plans, as amended by the Company from time to time; it being understood that
        there is no assurance with respect to the establishment of such plans or,
        if
        established, the continuation of such plans during the term of this
        Agreement.

       

      8.    Vacation
        and Sick Leave.

       

      (a)    The
        Executive
        shall be entitled to a total of four weeks of vacation each year, such vacation
        to be in accordance with the terms of the Company’s announced policy for
        executive employees, as in effect from time to time. The Executive may take
        his
        vacation at such time or times as shall not interfere with the performance
        of
        his duties under this Agreement.

       

      (b)    The
        Executive
        shall be entitled to paid sick leave and holidays in accordance with the
        Company’s announced policy for executive employees, as in effect from time to
        time.

       

      9.    Expenses. 
        The Company shall reimburse the Executive for all reasonable expenses incurred
        in connection with his duties on behalf of the Company, (including, in the
        case
        of air travel in excess of 500 miles, business class service, if offered
        and
        available on flights to the destination in question, and first class service
        if
        business class is not so offered and/or available) provided that the Executive
        shall keep, and present to the Company, records and receipts relating to
        reimbursable expenses incurred by him. Such records and receipts shall be
        maintained and presented in a format, and with such regularity, as the Company
        reasonably may require in order to substantiate the Company’s right to claim
        income tax deductions for such expenses. Without limiting the generality
        of the
        foregoing, the Executive shall be entitled to reimbursement for any
        business-related travel, business-related entertainment, and other costs
        and
        expenses reasonably incident to the performance of his duties on behalf of
        the
        company.

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

       

      10.    Termination
        of Employment for Cause.
        

       

      (a)    Notwithstanding
        the
        provisions of Section 3
        of this
        Agreement, the Executive’s employment (and all of his rights and benefits under
        this Agreement) shall terminate immediately and without further notice upon
        the
        occurrence of any one or more of the following events (each of which
        individually, and all of which collectively, shall be hereinafter referred
        to as
“Cause”):

       

      (i)    the
        Executive
        (i) is guilty of a criminal offense involving moral turpitude, (ii) is guilty
        of
        or has engaged in criminal or dishonest conduct pertaining to the business
        or
        affairs of the Company (including, without limitation, fraud and
        misappropriation), (iii) has engaged in any act or omission the intended
        or
        likely consequence of which is material injury to the Company’s business,
        property or reputation (iv) has been grossly negligent or has engaged in
        willful
        misconduct, the likely consequence of which is material injury to the Company’s
        business; or

       

      (ii)    the
        Executive
        persists, for a period of 15 days after receipt of written notice from the
        Company, in willful breach in the performance of his duties under this
        Agreement.

       

      (b)    Upon
        a
        termination of the Executive’s employment for Cause, the Company shall pay the
        Executive his base salary through the Termination Date, and the Executive
        shall
        immediately thereafter forfeit all rights and benefits he otherwise would
        have
        been entitled to receive under this Agreement, or otherwise including, but
        not
        limited to, any right to (i) receive compensation and incentive compensation
        pursuant to Sections 4,
        5
        and
7
        of this
        Agreement, except to the extent that such benefits shall have vested and
        continue after the termination of the Executive’s employment under the terms of
        the applicable benefit plans and programs; and (ii) exercise any then
        unexercised portion of the Option. The Company and the Executive thereafter
        shall have no further obligations under this Agreement except as otherwise
        provided in this Section and in Section 13 of this Agreement.

       

      11.    Termination
        of Employment by the Company Without Cause. 
        Notwithstanding the provisions of Section 3
        of this
        Agreement, the Company may elect (a) not to renew this Agreement at the end
        of
        the Initial Term or any Renewal Term; or (b) to terminate the Executive’s
        employment as provided under this Agreement, at any time, for reasons other
        than
        for Cause by notifying the Executive in writing of such termination. If the
        Executive’s employment is terminated pursuant to this Section 11,
        the
        Company shall pay severance payments to the Executive in an aggregate amount
        equal to the Base Salary that was in effect on the date immediately preceding
        the Termination Date, less all tax and other withholdings required to be
        made in
        accordance with the Company’s normal payroll practices (the “Severance
        Payments”). The Severance Payments shall be made in substantially equal
        installments in accordance with the Company’s normal payroll practices then in
        effect during the six month period commencing on the first day of the seventh
        month following the month in which the Termination Date occurs (such six
        month
        period is referred to herein as, the “Severance Payment Period”). In addition to
        the foregoing payments, the Executive’s participation in all of the Company’s
        benefit plans, programs, arrangements and practices, including all disability,
        medical, life insurance and similar programs, but excluding the Option Plan
        and
        any pension, 401-K or similar retirement income or profit sharing plans,
        shall
        continue during 12 month period commencing on the first day of the month
        immediately following the Termination Date. The termination of the Executive’s
        employment as a result of the Executive’s Death, or by the Company as a result
        of his continuous and uninterrupted inability to perform his duties and
        responsibilities under this Agreement, on behalf of the Company for a period
        of
        not less than180 days from the first day of such inability to perform his
        duties, shall be considered to be a termination without cause hereunder by
        the
        Company.

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

       

      12.    Termination
        of Employment by the Executive Without Cause. 
        Notwithstanding the provisions of Section 3
        of this
        Agreement, the Executive may terminate this Agreement at any time by giving
        the
        Chief Executive Officer of the Company written notice of his intention to
        terminate this Agreement, at least 60 days prior to the effective date of
        such
        termination. Upon expiration of such 60 day notice period (or such earlier
        date
        as may be approved by the Board), the termination of this Agreement by the
        Executive shall become effective (and such effective date shall be deemed
        to be
        the Termination Date). Upon the Termination Date, the Company’s obligations
        under Sections 4,
        5
        and
7
        of this
        Agreement, shall immediately expire, and all entitlements to receive any
        of the
        benefits, vested and unvested, that the Executive may have been entitled
        to
        receive from the Company pursuant to this Agreement or otherwise prior to
        the
        Termination Date shall thereupon be terminated. In the event that the Executive
        gives notice, on or before December 31, 2006, of his intention to terminate
        this
        Agreement, he shall be obligated to repay to the Company all sums that he
        shall
        have received pursuant to Sections 5(f)
        and (g)
        hereof.

       

      13.    Resignation
        by the Executive For Good Reason. 

       

      (a)    Notwithstanding
        the
        provisions of Section 3
        of this
        Agreement, the Executive shall have the right to terminate his employment
        with
        the Company not later than three (3) months following the occurrence, without
        the Executive’s prior written consent, of any of the following
        occurrences:

       

      (i)    Any
        material
        adverse change or reduction in the functions, duties or responsibilities
        of the
        Executive, or elimination of any office or executive position he currently
        holds
        in the Company or Isaacs, including, but not limited to, the removal of the
        Executive from, or failure to reappoint or reelect the Executive to, any
        such
        position during the Term.

       

      (ii)    Any
        reduction
        in the Executive’s Base Salary or any material adverse change in the benefits
        that the Executive shall be entitled to receive pursuant to Section 7
        of this
        Agreement.

       

      (iii)    Any
        requirement imposed upon the Executive to work primarily at a location, other
        than in the New York City metropolitan area, that is more than 100 miles
        from
        the Executive’s residence in Newtown, Pennsylvania, or such other location at
        which the Executive may reside during the Term, provided that such other
        location shall not be more than 100 miles from the Company’s office in the New
        York metropolitan area.

       

      (b)    Notwithstanding
        anything to the contrary set forth in Sections 11
        or
14
        of the
        Agreement, in the event that the Executive gives notice to the Company of
        his
        election to terminate this Agreement for any of the reasons set forth in
        Section
13(a)
        hereof,
        the Company shall pay Severance Payments to the Executive in substantially
        equal
        installments in accordance with the Company’s normal payroll practices then in
        effect during the Severance Payment Period. In addition to the foregoing
        payments, the Executive’s participation in all of the Company’s benefit plans,
        programs, arrangements and practices, including all disability, medical,
        life
        insurance and similar programs, but excluding the Option Plan and any pension,
        401-K or similar retirement income or profit sharing plans, shall continue
        during 12 month period commencing on the first day of the month immediately
        following the Termination Date.

       

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

       

      14.    Change
        of
        Control. 

       

      (a)    Anything
        elsewhere contained in this Agreement to the contrary notwithstanding, if
        Executive’s employment is terminated:

       

      (i)    other
        than
        for Cause by the Company within 90 days prior to a “Change of Control” (as
        defined herein), or

       

      (ii)    other
        than
        for Cause by the Company (or its successor corporation) at any time after
        a
        Change of Control, or

       

      (iii)    as
        a result
        of Executive’s resignation within 60 days following a Change of Control,

       

      such
        termination of employment shall be deemed to be a termination of Executive’s
        employment by the Company without Cause, and he will thereupon be entitled
        to
        receive the payments and benefits that would be due to him upon such occurrence
        pursuant to the provisions of Section 11
        hereof.

       

      (b)    For
        purposes
        of this Agreement, a “Change of Control” shall occur if: 

       

      (i)    any
“Person”
        (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
        Act
        of 1934, as amended), other than François Girbaud, Marithé Bachellerie and/or
        any Person directly or indirectly controlled by either or both of them, is
        or
        becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act),
        directly or indirectly, of securities of Isaacs representing 50% or more
        of the
        total voting power represented by Isaacs’ then outstanding voting securities;

       

      (ii)    any
        merger or
        consolidation of Isaacs with any other Person that has been approved by the
        stockholders of Isaacs, other than a merger or consolidation which would
        result
        in the voting securities of Isaacs outstanding immediately prior thereto
        continuing to represent (either by remaining outstanding or by being converted
        into voting securities of the surviving Person) more than fifty percent (50%)
        of
        the total voting power represented by the voting securities of Isaacs or
        such
        surviving Person outstanding immediately after such merger or consolidation,
        or
        the stockholders of Isaacs approve a plan of complete liquidation of Isaacs;
        or

       

      (iii)    any
        sale,
        merger, dissolution or other disposition of the Company; or

       

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

       

      (iv)    any
        sale or
        other disposition, in one transaction or a series of related transactions,
        of
        all or substantially all the Company’s assets; or 

       

      (v)    a
        change in
        the composition of the Board occurring within a two-year period, as a result
        of
        which fewer than a majority of the directors are Incumbent Directors. “Incumbent
        Directors” will mean directors who either 1) are directors of Isaacs as of the
        Effective Date, or 2) are elected, or nominated for election, to the Board
        with
        the affirmative votes of at least a majority of the Incumbent Directors at
        the
        time of such election or nomination. For purposes of the preceding, individuals
        who are elected pursuant to clause 2) also shall be considered Incumbent
        Directors.

       

      15.    Confidential
        Information. 
        The
        Executive agrees that, during the term of his employment with the Company,
        and
        for a period of one year after the termination of his employment for any
        reason
        whatsoever (including the non-renewal of this agreement by either party),
        he
        shall not disclose to any person or use the same in any way, other than in
        the
        discharge of his duties under this Agreement in connection with the business
        of
        the Company, any trade secrets or confidential or proprietary information
        of the
        Company, including, without limitation, any information or knowledge relating
        to
        (i) the business, operations or internal structure of the Company, (ii) the
        clients (or customers) or potential clients (or potential customers) of the
        Company, (iii) any method and/or procedure (such as records, programs, systems,
        correspondence, or other documents), relating or pertaining to projects
        developed by the Company or contemplated to be developed by the Company,
        or (iv)
        the Company’s business, which information or knowledge the Executive shall have
        obtained during the term of this Agreement, and which is otherwise of a secret
        or confidential nature. Further, upon leaving the employ of the Company for
        any
        reason whatsoever, the Executive shall not take with her, without prior written
        consent of the Company, any documents, forms or other reproductions of any
        data
        or any information relating to or pertaining to the Company, any clients
        (or
        customers) or potential clients (or potential customers) of the Company,
        or any
        other confidential information or trade secrets and will promptly return
        any
        such materials already in his possession to the Company. The provisions of
        this
        Section 15
        shall
        survive the termination of this Agreement.

       

      16.    Miscellaneous.

       

      (a)    Notices. Any
        notice, demand, claim, or consent or other communication to be given hereunder
        (“Notice”) shall be given in writing and shall be sent by overnight delivery
        service, such as Federal Express, UPS or Airborne, and addressed, in the
        case of
        the Company, to its office in New York, New York, or in the case of the
        Executive, to the last address that the Executive has given to the
        Company.

       

      (b)    Benefit;
        Non-Assignment. This
        Agreement shall be binding upon and inure to the benefit of, the parties,
        their
        successors, assigns, personal representatives, distributes, heirs and legatees.
        Neither party shall have the right to assign this Agreement, or to delegate
        its
        or his respective obligations hereunder, except that the Company may assign
        this
        Agreement and all of its rights hereunder to any parent or the Company, any
        wholly owned subsidiary of such parent or to any successor in interest to
        the
        Company.

       

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

       

      (c)    Governing
        Law. This
        Agreement shall be governed by, and construed and enforced in accordance
        with,
        the laws of the State of New York, without giving effect to the principles
        of
        conflicts of law thereof.

       

      (d)    Resolution
        of
        Disputes. Any
        dispute regarding any aspect of this Agreement or any act which allegedly
        has or
        would violate any provision of this Agreement will be submitted to binding
        arbitration. Such arbitration shall be conducted before a single arbitrator
        sitting in New York, New York, in accordance with the rules of the American
        Arbitration Association then in effect. Judgment may be entered on the award
        of
        the arbitrator in any court having competent jurisdiction. In any such
        proceeding, the prevailing party shall be entitled to recover its legal fees
        and
        expenses from the losing party.

       

      (e)    Headings. The
        headings used in this Agreement are solely for convenience of reference and
        will
        not be deemed to limit, characterize, or in any way affect any provision
        of this
        Agreement, and all provisions of this Agreement will be enforced and construed
        as if no heading had been used.

       

      (f)    Merger;
        Modification; Amendment. This Agreement (i) represents the complete terms
        of the
        parties’ agreement regarding the subject matter set forth herein; (ii)
        supersedes any and all prior oral or written agreements and/or understandings
        between and among the parties with respect to the subject matter hereof;
        and
        (iii) may not be amended or modified except in a writing signed by both parties.
        There are no representations, inducements or promises not set forth herein
        on
        which either party has relied or may rely.

       

      (g)    Execution
        in
        Counterparts. This
        Agreement may be executed in two or more counterparts, each of which shall
        be
        deemed to be an original, and all of which, when taken together, shall be
        deemed
        to be one and the same instrument. 

       

      IN
        WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
        of the
        day and year first hereinabove written.

       

      
        	 	 	 
	 	I.
                C. Isaacs &
                Company L.P.
	 	 	 
	 	By:	
                I.C.
                  Isaacs & Company, Inc.

                Its
                  General Partner 

              
	 	 	 
	 	By:  	/s/ PETER
                J.
                RIZZO
	 	
                

              
	 	Peter
                J.
                Rizzo, Chief Executive Officer
	 	 
	 	
                /s/
                  Gregg A. Holst 

              
	 	
                

              
	 	
                Gregg
                  A. Holst

              

      

    

     

     

    
      
        
        

      

      -12-

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