Document:

Exhibit 10.10

                         REGISTRATION RIGHTS AGREEMENT

      REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of November 30,
2004, by and among SpatiaLight,  Inc., a New York corporation, with headquarters
located at Five  Hamilton  Landing,  Suite 100,  Novato,  California  94949 (the
"COMPANY"),  and the undersigned buyers (each, a "BUYER", and collectively,  the
"BUYERS").

      WHEREAS:

      A.    In connection  with the Securities  Purchase  Agreement by and among
the parties hereto of even date herewith (the "SECURITIES PURCHASE  AGREEMENT"),
the Company has agreed,  upon the terms and subject to the  conditions set forth
in the  Securities  Purchase  Agreement,  to issue and sell to each Buyer senior
secured  convertible  notes of the Company (the  "INITIAL  NOTES"),  which will,
among other things,  be convertible  into the Company's  common stock,  $.01 par
value per share (the "COMMON  Stock",  as  converted,  the  "INITIAL  CONVERSION
SHARES") in accordance with the terms of the Notes.

      B.    In connection with the Securities  Purchase  Agreement,  Company has
agreed, upon the terms and subject to the conditions set forth in the Securities
Purchase  Agreement,  to  issue  and  sell  to  each  Buyer  certain  additional
investment rights (the "ADDITIONAL INVESTMENT RIGHTS") which will be exercisable
to purchase  additional  senior  secured  convertible  notes of the Company (the
"ADDITIONAL NOTES", and collectively with the Initial Notes, the "NOTES"), which
will be convertible  into shares of Common Stock (as converted,  the "ADDITIONAL
CONVERSION  SHARES",  and collectively with the Initial  Conversion  Shares, the
"CONVERSION SHARES") in accordance with the terms of the Additional Notes.

      C.    The Notes bear interest, which at the option of the Company, subject
to certain  conditions,  may be paid in shares of Common  Stock  (the  "INTEREST
SHARES").

      D.    To induce the Buyers to execute and deliver the Securities  Purchase
Agreement,  the Company has agreed to provide certain  registration rights under
the  Securities  Act  of  1933,  as  amended,  and  the  rules  and  regulations
thereunder, or any similar successor statute (collectively, the "1933 ACT"), and
applicable state securities laws.

      NOW, THEREFORE,  in consideration of the premises and the mutual covenants
contained  herein and other good and  valuable  consideration,  the  receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
hereby agree as follows:

      1.    Definitions.

      Capitalized  terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Securities Purchase Agreement.  As used
in this Agreement, the following terms shall have the following meanings:

            a.    "BUSINESS  DAY" means any day other than  Saturday,  Sunday or
any other day on which  commercial  banks in The City of New York are authorized
or required by law to remain closed.

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            b.    "CLOSING  DATE"  shall  have  the  meaning  set  forth  in the
Securities Purchase Agreement.

            c.    "EFFECTIVE DATE" means the date the Registration Statement has
been declared effective by the SEC.

            d.    "EFFECTIVENESS  DEADLINE"  means  the  date  which is 120 days
after the Closing Date.

            e.    "FILING DEADLINE" means 60 days after the Closing Date.

            f.    "INVESTOR" means a Buyer or any transferee or assignee thereof
to whom a Buyer assigns its rights under this Agreement and who agrees to become
bound by the provisions of this  Agreement in accordance  with Section 9 and any
transferee  or assignee  thereof to whom a  transferee  or assignee  assigns its
rights under this  Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9.

            g.    "PERSON" means an individual,  a limited liability  company, a
partnership,  a  joint  venture,  a  corporation,  a  trust,  an  unincorporated
organization and a government or any department or agency thereof.

            h.    "REGISTER,"   "REGISTERED,"  and  "REGISTRATION"  refer  to  a
registration   effected  by  preparing  and  filing  one  or  more  Registration
Statements  (as defined  below) in compliance  with the 1933 Act and pursuant to
Rule 415 and the declaration or ordering of effectiveness  of such  Registration
Statement(s) by the SEC.

            i.    "REGISTRABLE  SECURITIES"  means  (i)  the  Conversion  Shares
issued or issuable upon conversion of the Notes, (ii) the Interest Shares issued
or issuable under the Notes and (iii) any share capital of the Company issued or
issuable  with respect to the  Conversion  Shares,  the Notes or the  Additional
Investment   Rights   as  a  result  of  any  share   split,   share   dividend,
recapitalization,  exchange or similar event or otherwise, without regard to any
limitations  on  conversions  of  the  Notes  or  exercises  of  the  Additional
Investment Rights.

            j.    "REGISTRATION  STATEMENT"  means a  registration  statement or
registration  statements  of the Company  filed under the 1933 Act  covering the
Registrable Securities.

            k.    "REQUIRED HOLDERS" means the holders of at least a majority of
the Registrable Securities.

            l.    "REQUIRED  REGISTRATION  AMOUNT"  means the sum of (i) 150% of
the maximum number of Interest Shares issued and issuable  pursuant to the terms
of the Notes as of the trading date immediately preceding the applicable date of
determination  and (ii) 100% of the maximum  number of Conversion  Shares issued
and issuable  pursuant to the Notes  (including the Additional  Notes) as of the
trading day  immediately  preceding the applicable  date of  determination,  all
subject to adjustment as provided in Section 2(e).

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            m.    "RULE 415" means Rule 415 under the 1933 Act or any  successor
rule providing for offering securities on a continuous or delayed basis.

            n.    "SEC"  means  the  United  States   Securities   and  Exchange
Commission.

      2.    Registration.

            a.    Mandatory  Registration.  The Company shall  prepare,  and, as
soon as practicable  but in no event later than the Filing  Deadline,  file with
the SEC the Registration Statement on Form S-3 covering the resale of all of the
Registrable  Securities.  In the event that Form S-3 is  unavailable  for such a
registration,  the Company  shall use such other form as is available for such a
registration,  subject to the  provisions  of  Section  2(d).  The  Registration
Statement prepared pursuant hereto shall register for resale at least the number
of shares of Common Stock equal to the Required  Registration  Amount as of date
the  Registration  Statement is initially  filed with the SEC. The  Registration
Statement shall contain (except if otherwise  directed by the Required  Holders)
the "Selling  Shareholders" and "Plan of Distribution" sections in substantially
the form attached hereto as Exhibit B. The Company shall use its best efforts to
have  the  Registration  Statement  declared  effective  by the  SEC as  soon as
practicable, but in no event later than the Effectiveness Deadline.

            b.    Allocation of  Registrable  Securities.  The initial number of
Registrable  Securities included in any Registration  Statement and any increase
in the number of Registrable  Securities included therein shall be allocated pro
rata among the Investors  based on the number of Registrable  Securities held by
each  Investor at the time the  Registration  Statement  covering  such  initial
number of Registrable  Securities or increase  thereof is declared  effective by
the SEC. In the event that an Investor sells or otherwise  transfers any of such
Investor's Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining number of Registrable  Securities included in such
Registration Statement for such transferor.  Any shares of Common Stock included
in a  Registration  Statement  and which  remain  allocated  to any Person which
ceases to hold any Registrable Securities covered by such Registration Statement
shall be allocated to the remaining  Investors,  pro rata based on the number of
Registrable  Securities  then held by such  Investors  which are covered by such
Registration  Statement.  In no event shall the Company  include any  securities
other than  Registrable  Securities on any  Registration  Statement  without the
prior written consent of the Required Holders.

            c.    Legal  Counsel.  Subject to Section 3(c) hereof,  the Required
Holders shall have the right to select one legal  counsel to review  information
relating to the Investors in any registration pursuant to this Section 2 ("LEGAL
COUNSEL"),  which  shall be Schulte  Roth & Zabel LLP or such  other  counsel as
thereafter  designated  by the Required  Holders.  The Company and Legal Counsel
shall  reasonably   cooperate  with  each  other  in  performing  the  Company's
obligations  under this Agreement;  provided,  that such cooperation  shall only
relate to the  Company's  obligation  to provide  information  pertaining to the
Investors to the Legal Counsel.

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            d.    Ineligibility  for Form S-3. In the event that Form S-3 is not
available  for  the  registration  of  the  resale  of  Registrable   Securities
hereunder,  the  Company  shall  (i)  register  the  resale  of the  Registrable
Securities on another  appropriate  form  reasonably  acceptable to the Required
Holders and (ii) undertake to register the Registrable Securities on Form S-3 as
soon as such form is available,  provided  that the Company  shall  maintain the
effectiveness of the Registration  Statement then in effect until such time as a
Registration  Statement on Form S-3 covering the Registrable Securities has been
declared effective by the SEC.

            e.    Sufficient  Number  of  Shares  Registered.  In the  event the
number of shares  available  under a  Registration  Statement  filed pursuant to
Section 2(a) is insufficient to cover all of the Registrable Securities required
to be covered by such Registration  Statement or an Investor's allocated portion
of the Registrable  Securities pursuant to Section 2(b), the Company shall amend
the applicable  Registration Statement, or file a new Registration Statement (on
the short form available  therefor,  if applicable),  or both, so as to cover at
least  the  Required  Registration  Amount  as of the  trading  day  immediately
preceding  the  date  of the  filing  of  such  amendment  or  new  Registration
Statement, in each case, as soon as practicable, but in any event not later than
fifteen (15) days after the necessity therefor arises. The Company shall use its
best efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable  following the filing thereof.  For purposes of
the foregoing  provision,  the number of shares  available  under a Registration
Statement  shall  be  deemed  "insufficient  to  cover  all of  the  Registrable
Securities"  if at any time the number of shares of Common Stock  available  for
resale under the Registration  Statement is less than the product  determined by
multiplying (i) the Required  Registration  Amount as of such time by (ii) 0.90.
The calculation set forth in the foregoing sentence shall be made without regard
to any  limitations  on the  conversion  of the  Notes  or the  exercise  of the
Additional  Investment  Rights and such calculation  shall assume that the Notes
are then  convertible  into  shares  of  Common  Stock  at the  then  prevailing
Conversion  Rate (as  defined in the Notes) and that the  Additional  Investment
Rights are then  exercisable  for shares of Common Stock at the then  prevailing
Exercise Price (as defined in the Additional Investment Rights).

            f.    Effect  of   Failure   to  File  and   Obtain   and   Maintain
Effectiveness  of  Registration  Statement.  If  (i)  a  Registration  Statement
covering all of the  Registrable  Securities  required to be covered thereby and
required to be filed by the Company  pursuant to this Agreement is (A) not filed
with the SEC on or before the respective Filing Deadline (a "FILING FAILURE") or
(B) not declared effective by the SEC on or before the respective  Effectiveness
Deadline (an  "EFFECTIVENESS  FAILURE")  or (ii) on any day after the  Effective
Date sales of all of the Registrable  Securities required to be included on such
Registration  Statement  cannot be made (other than  during an  Allowable  Grace
Period (as  defined in Section  3(r))  pursuant to such  Registration  Statement
(including,  without limitation,  because of a failure to keep such Registration
Statement  effective,  to disclose such information as is necessary for sales to
be made  pursuant to such  Registration  Statement  or to register a  sufficient
number of shares of Common  Stock) (a  "MAINTENANCE  FAILURE")  then, as partial
relief for the damages to any holder by reason of any such delay in or reduction
of its ability to sell the underlying shares of Common Stock (which remedy shall
not be  exclusive  of any other  remedies  available  at law or in equity),  the
Company  shall pay to each  holder of  Registrable  Securities  relating to such
Registration  Statement  an  amount  in cash  equal to one  percent  (1%) of the
aggregate  Purchase  Price (as such term is defined in the  Securities  Purchase

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<PAGE>

Agreement)  of  such  Investor's   Registrable   Securities   included  in  such
Registration  Statement on each of the following  dates: (i) the day of a Filing
Failure and on every  thirtieth  day (pro rated for periods  totaling  less than
thirty days) thereafter  until such Filing Failure is cured;  (ii) the day of an
Effectiveness Failure and on every thirtieth day (pro rated for periods totaling
less than thirty days)  thereafter  until such  Effectiveness  Failure is cured;
(iii) the initial day of a Maintenance  Failure and on every  thirtieth day (pro
rated for  periods  totaling  less  than  thirty  days)  thereafter  until  such
Maintenance  Failure is cured.  The payments to which a holder shall be entitled
pursuant to this  Section  2(f) are  referred to herein as  "REGISTRATION  DELAY
PAYMENTS."  Registration  Delay Payments shall be paid on the earlier of (I) the
last day of the calendar month during which such Registration Delay Payments are
incurred and (II) the third  Business Day after the event or failure giving rise
to the  Registration  Delay Payments is cured. In the event the Company fails to
make Registration  Delay Payments in a timely manner,  such  Registration  Delay
Payments  shall bear interest at the rate of 1% per month  (prorated for partial
months) until paid in full.

      3.    Related Obligations.

      At such time as the Company is obligated to file a Registration  Statement
with the SEC pursuant to Section  2(a),  2(d) or 2(e),  the Company will use its
best  efforts  to effect  the  registration  of the  Registrable  Securities  in
accordance  with the  intended  method  of  disposition  thereof  and,  pursuant
thereto, the Company shall have the following obligations:

            a.    The Company  shall submit to the SEC,  within two (2) Business
Days  after the  Company  learns  that no review  of a  particular  Registration
Statement  will be made by the staff of the SEC or that the staff has no further
comments on a particular  Registration  Statement, as the case may be, a request
for acceleration of effectiveness of such  Registration  Statement to a time and
date not later than 48 hours after the  submission of such request.  The Company
shall keep each  Registration  Statement  effective  pursuant to Rule 415 at all
times until the earlier of (i) the date as of which the  Investors  may sell all
of the Registrable  Securities  covered by such  Registration  Statement without
restriction pursuant to Rule 144(k) (or any successor thereto) promulgated under
the 1933 Act or (ii) the date on which the Investors  shall have sold all of the
Registrable Securities covered by such Registration Statement (the "REGISTRATION
PERIOD").  The Company shall ensure that each Registration  Statement (including
any amendments or supplements thereto and prospectuses  contained therein) shall
not contain any untrue  statement of a material fact or omit to state a material
fact required to be stated therein,  or necessary to make the statements therein
(in the case of  prospectuses,  in the light of the  circumstances in which they
were made) not misleading.

            b.    The  Company   shall  prepare  and  file  with  the  SEC  such
amendments   (including   post-effective   amendments)   and  supplements  to  a
Registration   Statement  and  the  prospectus  used  in  connection  with  such
Registration  Statement,  which  prospectus is to be filed  pursuant to Rule 424
promulgated  under the 1933 Act, as may be necessary  to keep such  Registration
Statement  effective at all times during the  Registration  Period,  and, during
such  period,  comply with the  provisions  of the 1933 Act with  respect to the
disposition  of all  Registrable  Securities  of the  Company  covered  by  such
Registration  Statement  until such time as all of such  Registrable  Securities
shall  have  been  disposed  of in  accordance  with  the  intended  methods  of
disposition by the seller or sellers  thereof as set forth in such  Registration
Statement. In the case of amendments and supplements to a Registration Statement

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which are required to be filed pursuant to this Agreement (including pursuant to
this Section 3(b)) by reason of the Company  filing a report on Form 10-Q,  Form
10-K or any  analogous  report under the  Securities  Exchange  Act of 1934,  as
amended (the "1934 ACT"),  the Company  shall have  incorporated  such report by
reference into such Registration  Statement,  if applicable,  or shall file such
amendments  or  supplements  with the SEC on the same day on which  the 1934 Act
report is filed  which  created  the  requirement  for the  Company  to amend or
supplement such Registration Statement.

            c.    The Company  shall permit Legal  Counsel to review and comment
upon  information  relating to the  Investors  contained  in (i) a  Registration
Statement at least three (3) Business  Days prior to its filing with the SEC and
(ii) all amendments and supplements to all Registration  Statements  (except for
Annual  Reports  on Form  10-K,  and  Reports  on Form 10-Q and any  similar  or
successor reports) within a reasonable number of days prior to their filing with
the SEC. The Company shall furnish to Legal Counsel,  without charge, (i) copies
of any correspondence from the SEC or the staff of the SEC to the Company or its
representatives  relating to the  Selling  Shareholder  or Plan of  Distribution
sections of any Registration Statement;  provided, that the Company is obligated
to disclose only such portion of the  correspondence  relating to the Investors,
(ii) promptly after the same is prepared and filed with the SEC, one copy of any
Registration  Statement  and  any  amendment(s)  thereto,   including  financial
statements and schedules,  all documents  incorporated therein by reference,  if
requested by an Investor,  and all exhibits and (iii) upon the  effectiveness of
any  Registration  Statement,  one  copy  of the  prospectus  included  in  such
Registration  Statement and all amendments and supplements  thereto. The Company
shall  reasonably  cooperate  with Legal  Counsel in  performing  the  Company's
obligations pursuant to this Section 3.

            d.    The Company shall furnish to each Investor  whose  Registrable
Securities  are included in any  Registration  Statement,  without  charge,  (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration  Statement and any amendment(s)  thereto,  including financial
statements and schedules,  all documents  incorporated therein by reference,  if
requested by an Investor,  all exhibits and each  preliminary  prospectus,  (ii)
upon the  effectiveness  of any Registration  Statement,  ten (10) copies of the
prospectus  included  in such  Registration  Statement  and all  amendments  and
supplements  thereto  (or such  other  number  of copies  as such  Investor  may
reasonably  request)  and (iii) such other  documents,  including  copies of any
preliminary or final  prospectus,  as such Investor may reasonably  request from
time  to  time  in  order  to  facilitate  the  disposition  of the  Registrable
Securities owned by such Investor.

            e.    The Company  shall use its best  efforts to (i)  register  and
qualify,  unless an exemption from registration and qualification  applies,  the
resale by  Investors of the  Registrable  Securities  covered by a  Registration
Statement  under such  other  securities  or "blue  sky" laws of all  applicable
jurisdictions   in  the  United   States,   (ii)   prepare  and  file  in  those
jurisdictions,   such  amendments  (including  post-effective   amendments)  and
supplements  to such  registrations  and  qualifications  as may be necessary to
maintain the effectiveness  thereof during the Registration  Period,  (iii) take
such other  actions as may be  necessary  to  maintain  such  registrations  and
qualifications in effect at all times during the Registration  Period,  and (iv)
take all  other  actions  reasonably  necessary  or  advisable  to  qualify  the
Registrable Securities for sale in such jurisdictions;  provided,  however, that
the  Company  shall not be required in  connection  therewith  or as a condition

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thereto to (x)  qualify to do business  in any  jurisdiction  where it would not
otherwise be required to qualify but for this Section 3(e),  (y) subject  itself
to general taxation in any such  jurisdiction,  or (z) file a general consent to
service of process in any such  jurisdiction.  The Company shall promptly notify
Legal Counsel and each Investor who holds Registrable  Securities of the receipt
by the  Company  of any  notification  with  respect  to the  suspension  of the
registration  or  qualification  of any of the  Registrable  Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its  receipt  of  actual  notice  of the  initiation  or  threatening  of any
proceeding for such purpose.

            f.    The Company  shall notify Legal  Counsel and each  Investor in
writing of the happening of any event, as promptly as practicable after becoming
aware  of such  event,  as a  result  of  which  the  prospectus  included  in a
Registration  Statement,  as then in effect,  includes an untrue  statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements  therein,  in the light of the circumstances
under which they were made, not misleading (provided that in no event shall such
notice contain any material,  nonpublic  information),  and,  subject to Section
3(r), promptly prepare a supplement or amendment to such Registration  Statement
to correct such untrue  statement  or  omission,  and deliver ten (10) copies of
such  supplement  or amendment to Legal Counsel and each Investor (or such other
number of copies as Legal Counsel or such Investor may reasonably request).  The
Company  shall also  promptly  notify Legal Counsel and each Investor in writing
(i) when a prospectus or any prospectus  supplement or post-effective  amendment
has  been  filed,  and  when a  Registration  Statement  or  any  post-effective
amendment has become  effective  (notification  of such  effectiveness  shall be
delivered  to Legal  Counsel and each  Investor by  facsimile on the same day of
such  effectiveness  and by overnight mail),  (ii) of any request by the SEC for
amendments or supplements to a Registration  Statement or related  prospectus or
related information,  and (iii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.

            g.    The Company shall use its best efforts to prevent the issuance
of any  stop  order or  other  suspension  of  effectiveness  of a  Registration
Statement,  or the  suspension of the  qualification  of any of the  Registrable
Securities for sale in any  jurisdiction  and, if such an order or suspension is
issued,  to obtain the  withdrawal  of such order or  suspension at the earliest
possible  moment  and to  notify  Legal  Counsel  and each  Investor  who  holds
Registrable  Securities  being  sold  of the  issuance  of  such  order  and the
resolution  thereof or its receipt of actual notice of the  initiation or threat
of any proceeding for such purpose.

            h.    If an Investor can demonstrate  reasonable  necessity,  at the
reasonable  request of any Investor,  the Company shall use its reasonable  best
efforts to furnish to such  Investor,  on the date of the  effectiveness  of the
Registration  Statement  and  thereafter  from time to time on such  dates as an
Investor  may  reasonably  request  (i) a  letter,  dated  such  date,  from the
Company's  independent  certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters in
an  underwritten  public  offering,  addressed  to the  Investors,  and  (ii) an
opinion, dated as of such date, of counsel representing the Company for purposes
of such Registration  Statement,  in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the Investors.

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            i.    In connection with the Investors' due diligence  efforts,  the
Company  shall make  available for  inspection  during  business  hours and upon
reasonable advance request by (i) any Investor, (ii) Legal Counsel and (iii) one
firm of accountants or other agents retained by the Investors (collectively, the
"INSPECTORS"),   all  pertinent  financial  and  other  records,  and  pertinent
corporate documents and properties of the Company (collectively, the "RECORDS"),
as shall be  reasonably  deemed  necessary  by each  Inspector,  and  cause  the
Company's officers,  directors and employees to supply all information which any
Inspector  may  reasonably  request;  provided,  however,  that  if  any  of the
foregoing  information  shall constitute  material  nonpublic  information,  the
Company shall provide such  information  solely to the Legal Counsel;  provided,
further that each Inspector shall agree in writing to hold in strict  confidence
and shall not make any  disclosure  (except to an Investor) or use of any Record
or  other  information  which  the  Company  determines  in  good  faith  to  be
confidential,  and of which determination the Inspectors are so notified, unless
(a)  the  disclosure  of such  Records  is  necessary  to  avoid  or  correct  a
misstatement or omission in any Registration  Statement or is otherwise required
under the 1933 Act,  (b) the  release of such  Records is ordered  pursuant to a
final,  non-appealable  subpoena  or order  from a court or  government  body of
competent  jurisdiction,  or (c) the  information  in such Records has been made
generally  available to the public other than by disclosure in violation of this
or any other  agreement of which the  Inspector  has  knowledge.  Each  Investor
agrees that it shall, upon learning that disclosure of such Records is sought in
or by a court or  governmental  body of competent  jurisdiction or through other
means, give prompt notice to the Company and allow the Company,  at its expense,
to  undertake  appropriate  action  to  prevent  disclosure  of,  or to obtain a
protective order for, the Records deemed confidential. Nothing herein (or in any
other  confidentiality  agreement between the Company and any Investor) shall be
deemed to limit the  Investors'  ability  to sell  Registrable  Securities  in a
manner which is otherwise consistent with applicable laws and regulations.

            j.    The  Company  shall  hold  in  confidence  and  not  make  any
disclosure of information  concerning an Investor provided to the Company unless
(i) disclosure of such  information is necessary to comply with federal or state
securities  laws, (ii) the disclosure of such  information is necessary to avoid
or correct a misstatement or omission in any Registration  Statement,  (iii) the
release of such  information  is ordered  pursuant to a subpoena or other final,
non-appealable   order  from  a  court  or   governmental   body  of   competent
jurisdiction,  or (iv) such information has been made generally available to the
public other than by  disclosure  in  violation  of this  Agreement or any other
agreement.  The Company agrees that it shall,  upon learning that  disclosure of
such  information  concerning  an  Investor  is  sought  in  or  by a  court  or
governmental body of competent  jurisdiction or through other means, give prompt
written  notice to such  Investor  and allow such  Investor,  at the  Investor's
expense, to undertake  appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

            k.    The  Company  shall use its best  efforts  to cause all of the
Registrable  Securities covered by a Registration Statement to be listed on each
securities  exchange on which  securities  of the same class or series issued by
the  Company  are  then  listed,  if any,  if the  listing  of such  Registrable
Securities is then permitted under the rules of such exchange. The Company shall
pay all fees and expenses in connection  with  satisfying its  obligation  under
this Section 3(k).

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<PAGE>

            l.    The  Company  shall  cooperate  with  the  Investors  who hold
Registrable  Securities being offered and, to the extent applicable,  facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legend)  representing  the  Registrable  Securities to be offered  pursuant to a
Registration  Statement and enable such certificates to be in such denominations
or amounts,  as the case may be, as the  Investors  may  reasonably  request and
registered in such names as the Investors may request.

            m.    If requested by an Investor,  the Company shall (i) as soon as
practicable  incorporate in a prospectus supplement or post-effective  amendment
such  information  as an Investor  reasonably  requests  to be included  therein
relating to the sale and  distribution  of  Registrable  Securities,  including,
without  limitation,  information  with  respect  to the  number of  Registrable
Securities being offered or sold, the purchase price being paid therefor and any
other terms of the  offering of the  Registrable  Securities  to be sold in such
offering;  (ii)  as  soon as  practicable  make  all  required  filings  of such
prospectus  supplement or  post-effective  amendment after being notified of the
matters to be  incorporated  in such  prospectus  supplement  or  post-effective
amendment;  and (iii) as soon as  practicable,  supplement or make amendments to
any  Registration  Statement if reasonably  requested by an Investor holding any
Registrable Securities.

            n.    The  Company   shall  use  its  best   efforts  to  cause  the
Registrable Securities covered by a Registration Statement to be registered with
or  approved  by such  other  governmental  agencies  or  authorities  as may be
necessary to consummate the disposition of such Registrable Securities.

            o.    The Company  shall  otherwise  use its best  efforts to comply
with all  applicable  rules and  regulations  of the SEC in connection  with any
registration hereunder.

            p.    Within two (2) Business  Days after a  Registration  Statement
which covers Registrable Securities is ordered effective by the SEC, the Company
shall deliver,  and shall cause legal counsel for the Company to deliver, to the
transfer  agent for such  Registrable  Securities  (with copies to the Investors
whose  Registrable  Securities  are  included  in such  Registration  Statement)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.

            q.    Notwithstanding  anything to the contrary herein,  at any time
after the  Registration  Statement has been  declared  effective by the SEC, the
Company may delay the disclosure of material,  non-public information concerning
the  Company  the  disclosure  of which at the  time is not,  in the good  faith
opinion of the Board of Directors of the  Company,  in the best  interest of the
Company (a "GRACE PERIOD"); provided, that the Company shall promptly (i) notify
the  Investors in writing of the existence of material,  non-public  information
giving rise to a Grace Period (provided that in each notice the Company will not
disclose the content of such material,  non-public information to the Investors)
and the date on which the Grace Period will begin, and (ii) notify the Investors
in writing of the date on which the Grace Period ends;  and,  provided  further,
that no Grace Period shall exceed five (5) consecutive days and during any three
hundred  sixty  five (365) day period  such  Grace  Periods  shall not exceed an
aggregate  of twenty (20) days and the first day of any Grace  Period must be at
least two (2) trading days after the last day of any prior Grace  Period  (each,
an "ALLOWABLE GRACE PERIOD").  For purposes of determining the length of a Grace

                                       9
<PAGE>

Period above, the Grace Period shall begin on and include the date the Investors
receive  the notice  referred  to in clause (i) and shall end on and include the
later of the date the  Investors  receive the notice  referred to in clause (ii)
and the date referred to in such notice.  The  provisions of Section 3(g) hereof
shall not be applicable  during the period of any Allowable  Grace Period.  Upon
expiration  of the Grace  Period,  the Company shall again be bound by the first
sentence of Section  3(f) with  respect to the  information  giving rise thereto
unless  such  material,   non-public   information  is  no  longer   applicable.
Notwithstanding  anything to the contrary,  the Company shall cause its transfer
agent to  deliver  unlegended  shares  of  Common  Stock to a  transferee  of an
Investor in accordance  with the terms of the Securities  Purchase  Agreement in
connection  with any sale of  Registrable  Securities  with  respect to which an
Investor  has  entered  into a contract  for sale,  and  delivered a copy of the
prospectus included as part of the applicable Registration  Statement,  prior to
the  Investor's  receipt  of the  notice  of a Grace  Period  and for  which the
Investor has not yet settled.

      4.    Obligations of the Investors.

            a.    At least five (5) Business Days prior to the first anticipated
filing date of a Registration Statement,  the Company shall notify each Investor
in writing of the  information  the Company  requires from each such Investor if
such  Investor  elects  to have any of such  Investor's  Registrable  Securities
included in such Registration  Statement.  It shall be a condition  precedent to
the  obligations  of the Company to complete the  registration  pursuant to this
Agreement with respect to the  Registrable  Securities of a particular  Investor
that such  Investor  shall  furnish to the Company  such  information  regarding
itself,  the  Registrable  Securities  held by it and  the  intended  method  of
disposition  of the  Registrable  Securities  held by it as shall be  reasonably
required to effect the  effectiveness  of the  registration of such  Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request.

            b.    Each   Investor,   by  such   Investor's   acceptance  of  the
Registrable  Securities,  agrees to  cooperate  with the  Company as  reasonably
requested by the Company in connection  with the  preparation  and filing of any
Registration Statement hereunder,  unless such Investor has notified the Company
in  writing  of such  Investor's  election  to  exclude  all of such  Investor's
Registrable Securities from such Registration Statement.

            c.    Each Investor agrees that, upon receipt of any notice from the
Company of the  happening of any event of the kind  described in Section 3(g) or
the  first  sentence  of  3(f),  such  Investor  will  immediately   discontinue
disposition of Registrable Securities pursuant to any Registration  Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of the  supplemented or amended  prospectus  contemplated by Section 3(g) or the
first  sentence of 3(f) or receipt of notice that no  supplement or amendment is
required.  Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver  unlegended  shares of Common Stock to a transferee of
an Investor in accordance with the terms of the Securities Purchase Agreement in
connection  with any sale of  Registrable  Securities  with  respect to which an
Investor has entered into a contract for sale prior to the Investor's receipt of
a notice from the Company of the happening of any event of the kind described in
Section  3(g) or the first  sentence of 3(f) and for which the  Investor has not
yet settled.

                                       10
<PAGE>

            d.    Each  Investor  covenants  and agrees that it will comply with
the  prospectus  delivery  requirements  of the 1933 Act as  applicable to it in
connection  with sales of Registrable  Securities  pursuant to the  Registration
Statement.

      5.    Expenses of Registration.

      All   reasonable   expenses,   other  than   underwriting   discounts  and
commissions,   incurred   in   connection   with   registrations,   filings   or
qualifications pursuant to Sections 2 and 3, including,  without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company shall be paid by the Company.

      6.    Indemnification.

      In the event any  Registrable  Securities  are included in a  Registration
Statement under this Agreement:

            a.    To the fullest extent  permitted by law, the Company will, and
hereby does, indemnify,  hold harmless and defend each Investor,  the directors,
officers,  members, partners,  employees,  agents,  representatives of, and each
Person,  if any, who controls any Investor within the meaning of the 1933 Act or
the 1934 Act (each,  an  "INDEMNIFIED  PERSON"),  against  any  losses,  claims,
damages,  liabilities,  judgments, fines, penalties,  charges, costs, reasonable
attorneys'  fees,  amounts paid in  settlement  or  expenses,  joint or several,
(collectively,  "CLAIMS") incurred in investigating,  preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing  by or  before  any  court or  governmental,  administrative  or other
regulatory  agency,  body or the SEC, whether pending or threatened,  whether or
not an indemnified party is or may be a party thereto  ("INDEMNIFIED  DAMAGES"),
to which any of them may become  subject  insofar as such  Claims (or actions or
proceedings,  whether commenced or threatened,  in respect thereof) arise out of
or are based upon:  (i) any untrue  statement or alleged  untrue  statement of a
material  fact  in a  Registration  Statement  or any  post-effective  amendment
thereto  or in any  filing  made in  connection  with the  qualification  of the
offering  under the securities or other "blue sky" laws of any  jurisdiction  in
which Registrable Securities are offered ("BLUE SKY FILING"), or the omission or
alleged  omission  to state a material  fact  required  to be stated  therein or
necessary  to make the  statements  therein  not  misleading,  (ii)  any  untrue
statement  or alleged  untrue  statement  of a material  fact  contained  in any
preliminary  prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,  if
the Company files any amendment  thereof or supplement  thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein,  in the light of the circumstances under which
the statements therein were made, not misleading, (iii) any violation or alleged
violation  by the  Company  of the  1933  Act,  the 1934  Act,  any  other  law,
including,  without  limitation,  any  state  securities  law,  or any  rule  or
regulation  thereunder  relating  to  the  offer  or  sale  of  the  Registrable
Securities  pursuant to a  Registration  Statement or (iv) any violation of this
Agreement  (the  matters  in the  foregoing  clauses  (i)  through  (iv)  being,
collectively,   "VIOLATIONS").  Subject  to  Section  6(c),  the  Company  shall
reimburse the  Indemnified  Persons,  promptly as such expenses are incurred and
are due and payable, for any legal fees or other reasonable expenses incurred by
them  in   connection   with   investigating   or  defending   any  such  Claim.

                                       11
<PAGE>

Notwithstanding  anything to the contrary contained herein, the  indemnification
agreement  contained in this Section 6(a):  (i) shall not apply to a Claim by an
Indemnified  Person  arising  out of or based upon a Violation  which  occurs in
reliance upon and in  conformity  with  information  furnished in writing to the
Company by such Indemnified Person for such Indemnified Person expressly for use
in connection  with the  preparation of the  Registration  Statement or any such
amendment  thereof or supplement  thereto,  if such  prospectus  was timely made
available  by the Company  pursuant to Section  3(d);  (ii) with  respect to any
preliminary  prospectus,  shall not inure to the benefit of any such Person from
whom the Person  asserting any such Claim purchased the  Registrable  Securities
that are the subject thereof (or to the benefit of any Person  controlling  such
Person) if the untrue  statement or omission of material  fact  contained in the
preliminary  prospectus  was  corrected  in the  prospectus,  as then amended or
supplemented,  if such  prospectus  was timely  made  available  by the  Company
pursuant to Section 3(d),  and the  Indemnified  Person was promptly  advised in
writing not to use the  incorrect  prospectus  prior to the use giving rise to a
violation and such Indemnified Person,  notwithstanding  such advice, used it or
failed to deliver  the correct  prospectus  as required by the 1933 Act and such
correct  prospectus  was timely made available  pursuant to Section 3(d);  (iii)
shall not be  available  to the  extent  such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available by
the Company,  including a corrected prospectus,  if such prospectus or corrected
prospectus  was timely made  available by the Company  pursuant to Section 3(d);
and (iv)  shall not apply to  amounts  paid in  settlement  of any Claim if such
settlement is effected  without the prior written consent of the Company,  which
consent shall not be  unreasonably  withheld or delayed.  Such  indemnity  shall
remain in full force and effect  regardless of any  investigation  made by or on
behalf  of  the  Indemnified  Person  and  shall  survive  the  transfer  of the
Registrable Securities by the Investors pursuant to Section 9.

            b.    In  connection  with any  Registration  Statement  in which an
Investor  is  participating,  each such  Investor  agrees to  severally  and not
jointly indemnify,  hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the  Registration  Statement and each Person,  if any,
who  controls  the  Company  within the  meaning of the 1933 Act or the 1934 Act
(each,  an  "INDEMNIFIED  PARTY"),  against any Claim or Indemnified  Damages to
which  any of them may  become  subject,  under  the 1933  Act,  the 1934 Act or
otherwise,  insofar as such  Claim or  Indemnified  Damages  arise out of or are
based upon any  Violation,  in each case to the extent,  and only to the extent,
that such  Violation  occurs in reliance  upon and in  conformity  with  written
information  furnished  to the  Company by such  Investor  expressly  for use in
connection with such Registration Statement;  and, subject to Section 6(c), such
Investor will  reimburse any reasonable  legal or other expenses  incurred by an
Indemnified Party in connection with  investigating or defending any such Claim;
provided,  however,  that the indemnity agreement contained in this Section 6(b)
and the agreement with respect to contribution  contained in Section 7 shall not
apply to amounts paid in settlement of any Claim if such  settlement is effected
without the prior written  consent of such Investor,  which consent shall not be
unreasonably withheld or delayed; provided,  further, however, that the Investor
shall be liable  under  this  Section  6(b) for only  that  amount of a Claim or
Indemnified  Damages as does not exceed the net  proceeds to such  Investor as a
result  of the sale of  Registrable  Securities  pursuant  to such  Registration
Statement.  Such indemnity  shall remain in full force and effect  regardless of
any  investigation  made by or on  behalf  of such  Indemnified  Party and shall
survive the transfer of the Registrable  Securities by the Investors pursuant to
Section 9.  Notwithstanding  anything  to the  contrary  contained  herein,  the
indemnification  agreement  contained  in this  Section 6(b) with respect to any
preliminary  prospectus shall not inure to the benefit of any Indemnified  Party
if  the  untrue  statement  or  omission  of  material  fact  contained  in  the
preliminary  prospectus  was corrected on a timely basis in the  prospectus,  as
then amended or supplemented.

                                       12
<PAGE>

            c.    Promptly after receipt by an Indemnified Person or Indemnified
Party  under  this  Section  6 of notice of the  commencement  of any  action or
proceeding  (including any governmental action or proceeding) involving a Claim,
such  Indemnified  Person or  Indemnified  Party  shall,  if a Claim in  respect
thereof is to be made  against  any  indemnifying  party  under this  Section 6,
deliver to the indemnifying party a written notice of the commencement  thereof,
and the  indemnifying  party shall have the right to participate in, and, to the
extent the indemnifying  party so desires,  jointly with any other  indemnifying
party similarly  noticed,  to assume control of the defense thereof with counsel
mutually  satisfactory to the indemnifying  party and the Indemnified  Person or
the  Indemnified  Party,  as  the  case  may  be;  provided,  however,  that  an
Indemnified  Person or Indemnified  Party shall have the right to retain its own
counsel  with the fees  and  expenses  of not  more  than one  counsel  for such
Indemnified  Person or Indemnified  Party to be paid by the indemnifying  party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation  by such counsel of the Indemnified  Person or Indemnified  Party
and the  indemnifying  party would be  inappropriate  due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party  represented by such counsel in such  proceeding.  In the case of an
Indemnified  Person,  legal  counsel  referred to in the  immediately  preceding
sentence  shall be  selected  by the  Investors  holding at least a majority  in
interest of the Registrable Securities included in the Registration Statement to
which the Claim  relates.  The  Indemnified  Party or  Indemnified  Person shall
cooperate fully with the  indemnifying  party in connection with any negotiation
or  defense  of any such  action  or Claim by the  indemnifying  party and shall
furnish to the indemnifying  party all information  reasonably  available to the
Indemnified  Party or Indemnified  Person which relates to such action or Claim.
The indemnifying  party shall keep the Indemnified  Party or Indemnified  Person
reasonably  apprised  at all  times  as to the  status  of  the  defense  or any
settlement  negotiations  with respect thereto.  No indemnifying  party shall be
liable for any settlement of any action,  claim or proceeding  effected  without
its prior written consent, provided,  however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the prior written consent of the Indemnified Party or Indemnified
Person,  consent to entry of any judgment or enter into any  settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified  Party or Indemnified  Person of a
release  from all  liability in respect to such Claim or  litigation.  Following
indemnification  as provided  for  hereunder,  the  indemnifying  party shall be
subrogated to all rights of the  Indemnified  Party or  Indemnified  Person with
respect to all third parties,  firms or corporations  relating to the matter for
which  indemnification  has been made. The failure to deliver  written notice to
the indemnifying  party within a reasonable time of the commencement of any such
action  shall  not  relieve  such  indemnifying  party of any  liability  to the
Indemnified  Person or  Indemnified  Party  under this  Section 6, except to the
extent that the  indemnifying  party is prejudiced in its ability to defend such
action.

                                       13
<PAGE>

            d.    The  indemnification  required by this Section 6 shall be made
by  periodic   payments  of  the  amount   thereof  during  the  course  of  the
investigation or defense,  as and when bills are received or Indemnified Damages
are incurred.

            e.    The indemnity agreements contained herein shall be in addition
to (i) any  cause  of  action  or  similar  right  of the  Indemnified  Party or
Indemnified  Person  against  the  indemnifying  party or  others,  and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

      7.    Contribution.

      To the extent any  indemnification  by an indemnifying party is prohibited
or  limited  by  law,  the  indemnifying   party  agrees  to  make  the  maximum
contribution  with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no Person  involved in the sale of  Registrable  Securities  which Person is
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the 1933 Act) in  connection  with such sale shall be entitled  to  contribution
from any Person  involved  in such sale of  Registrable  Securities  who was not
guilty of fraudulent  misrepresentation;  and (ii) contribution by any seller of
Registrable  Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities pursuant to
such Registration Statement.

      8.    Reports Under the 1934 Act.

      With a view to making  available to the Investors the benefits of Rule 144
promulgated  under the 1933 Act or any other  similar rule or  regulation of the
SEC that may at any time permit the Investors to sell  securities of the Company
to the public without registration ("RULE 144"), the Company agrees to:

            a.    make and keep public information available, as those terms are
understood and defined in Rule 144;

            b.    file with the SEC in a timely  manner  all  reports  and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such  requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and

            c.    furnish  to  each  Investor  so long  as  such  Investor  owns
Registrable  Securities,  promptly upon request,  (i) a written statement by the
Company,  if true, that it has complied with the reporting  requirements of Rule
144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual report
of the Company and such other reports and documents so filed by the Company, and
(iii)  such  other  information  as may be  reasonably  requested  to permit the
Investors to sell such securities pursuant to Rule 144 without registration.

                                       14
<PAGE>

      9.    Assignment of Registration Rights.

      The rights under this Agreement shall be  automatically  assignable by the
Investors to any transferee of all or any portion of such Investor's Registrable
Securities  if:  (a) the  Investor  agrees in  writing  with the  transferee  or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company  within a  reasonable  time after such  assignment;  (b) the Company is,
within a  reasonable  time after such  transfer or  assignment,  furnished  with
written notice of (i) the name and address of such  transferee or assignee,  and
(ii) the  securities  with respect to which such  registration  rights are being
transferred or assigned;  (c) immediately  following such transfer or assignment
the further  disposition  of such  securities  by the  transferee or assignee is
restricted  under the 1933 Act and applicable  state  securities laws; (d) at or
before the time the Company  receives the written notice  contemplated by clause
(b) of this  sentence  the  transferee  or assignee  agrees in writing  with the
Company  to be bound by all of the  provisions  contained  herein;  and (e) such
transfer shall have been made in accordance with the applicable  requirements of
the Securities Purchase Agreement.

      10.   Amendment of Registration Rights.

      Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and the Required
Holders.  Any amendment or waiver  effected in  accordance  with this Section 10
shall be binding upon each Investor and the Company.  No such amendment shall be
effective  to the extent  that it applies to less than all of the holders of the
Registrable Securities.  No consideration shall be offered or paid to any Person
to amend or consent to a waiver or  modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement.

      11.   Miscellaneous.

            a.    A Person is deemed  to be a holder of  Registrable  Securities
whenever  such  Person  owns or is  deemed  to own of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or  more  Persons  with  respect  to the  same  Registrable
Securities,  the  Company  shall act upon the basis of  instructions,  notice or
election received from the record owner of such Registrable Securities.

            b.    Any  notices,   consents,   waivers  or  other  communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be deemed  to have  been  delivered:  (i) upon  receipt,  when
delivered  personally;  (ii)  upon  receipt,  when sent by  facsimile  (provided
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
a  nationally  recognized  overnight  delivery  service,  in each case  properly
addressed to the party to receive the same. The addresses and facsimile  numbers
for such communications shall be:

                                       15
<PAGE>

                     If to the Company:

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

                     With a copy to:

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

           If to Legal Counsel:

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

If to a Buyer, to its address and facsimile  number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers,  or to such other  address  and/or  facsimile  number
and/or  to the  attention  of such  other  Person  as the  recipient  party  has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change.  Written  confirmation of receipt (A) given by the
recipient  of  such  notice,  consent,   waiver  or  other  communication,   (B)
mechanically  or  electronically  generated  by the sender's  facsimile  machine
containing the time, date,  recipient facsimile number and an image of the first
page of such  transmission  or (C)  provided by a courier or  overnight  courier
service shall be rebuttable  evidence of personal service,  receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

            c.    Failure  of any party to  exercise  any right or remedy  under
this  Agreement or otherwise,  or delay by a party in  exercising  such right or
remedy, shall not operate as a waiver thereof.

            d.    All   questions   concerning   the   construction,   validity,
enforcement  and  interpretation  of this  Agreement  shall be  governed  by the
internal laws of the State of New York,  without  giving effect to any choice of
law or conflict of law  provision  or rule  (whether of the State of New York or
any other  jurisdictions)  that would cause the  application  of the laws of any
jurisdictions  other than the State of New York.  Each party hereby  irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan,  for the adjudication of any dispute
hereunder or in connection herewith or with any transaction  contemplated hereby

                                       16
<PAGE>

or discussed herein, and hereby irrevocably  waives, and agrees not to assert in
any suit, action or proceeding,  any claim that it is not personally  subject to
the  jurisdiction  of any such court,  that such suit,  action or  proceeding is
brought  in an  inconvenient  forum or that the  venue of such  suit,  action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process  and  consents  to  process  being  served in any such  suit,  action or
proceeding  by  mailing a copy  thereof to such  party at the  address  for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient  service of process and notice  thereof.  Nothing  contained
herein  shall be deemed to limit in any way any  right to serve  process  in any
manner  permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction  or the  validity  or  enforceability  of  any  provision  of  this
Agreement in any other  jurisdiction.  EACH PARTY HEREBY  IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,  A JURY TRIAL FOR THE ADJUDICATION
OF ANY  DISPUTE  HEREUNDER  OR IN  CONNECTION  HEREWITH  OR ARISING  OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

            e.    This Agreement, the other Transaction Documents (as defined in
the Securities  Purchase  Agreement) and the instruments  referenced  herein and
therein constitute the entire agreement among the parties hereto with respect to
the subject  matter  hereof and thereof.  There are no  restrictions,  promises,
warranties or undertakings, other than those set forth or referred to herein and
therein.  This Agreement,  the other  Transaction  Documents and the instruments
referenced herein and therein supersede all prior agreements and  understandings
among the parties  hereto with respect to the subject matter hereof and thereof.

            f.    Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

            g.    The  headings  in  this  Agreement  are  for   convenience  of
reference only and shall not limit or otherwise affect the meaning hereof.

            h.    This Agreement may be executed in identical counterparts, each
of which shall be deemed an original but all of which shall  constitute  one and
the same agreement.  This Agreement,  once executed by a party, may be delivered
to the other party hereto by facsimile  transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

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

                                       17
<PAGE>

            j.    All consents and other  determinations  required to be made by
the  Investors  pursuant  to this  Agreement  shall  be made,  unless  otherwise
specified in this Agreement, by the Required Holders.

            k.    The language used in this  Agreement  will be deemed to be the
language  chosen by the parties to express  their mutual  intent and no rules of
strict construction will be applied against any party.

            l.    This  Agreement  is  intended  for the  benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

            m.    The  obligations  of each Buyer  hereunder are several and not
joint  with  the  obligations  of any  other  Buyer,  and no  provision  of this
Agreement is intended to confer any obligations on any Buyer vis-a-vis any other
Buyer.  Nothing  contained  herein,  and no action  taken by any Buyer  pursuant
hereto,  shall  be  deemed  to  constitute  the  Buyers  as  a  partnership,  an
association,  a  joint  venture  or any  other  kind  of  entity,  or  create  a
presumption  that the Buyers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated herein.

            n.    If any  term,  provision,  covenant  or  restriction  of  this
Agreement is held by a court of competent  jurisdiction to be invalid,  illegal,
void or  unenforceable,  the remainder of the terms,  provisions,  covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be  affected,  impaired  or  invalidated;  provided,  however,  that  the
remainder of the terms, provisions, covenants and restrictions shall reflect the
original intention of the parties. The parties hereto shall use their reasonable
efforts  to find  and  employ  an  alternative  means  to  achieve  the  same or
substantially  the same  result as that  contemplated  by such term,  provision,
covenant  or  restriction.  It is  hereby  stipulated  and  declared  to be  the
intention of the parties  that they would have  executed  the  remaining  terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

                                   * * * * * *

                                       18
<PAGE>

      IN  WITNESS  WHEREOF,  each  Buyer  and  the  Company  have  caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                             COMPANY:

                                             SPATIALIGHT, INC.

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

<PAGE>

      IN  WITNESS  WHEREOF,  each  Buyer  and  the  Company  have  caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                                 BUYERS:

                                                 PORTSIDE GROWTH & OPPORTUNITY
                                                 FUND

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

<PAGE>

      IN  WITNESS  WHEREOF,  each  Buyer  and  the  Company  have  caused  their
respective  signature  page to this  Registration  Rights  Agreement  to be duly
executed as of the date first written above.

                                                 BUYERS:

                                                 SMITHFIELD FIDUCIARY LLC

                                                 By: /s/ Adam J. Chill
                                                     ---------------------------
                                                     Name:  Adam J. Chill
                                                     Title: Authorized Signatory

<PAGE>

      IN  WITNESS  WHEREOF,  each  Buyer  and  the  Company  have  caused  their
respective  signature page to this  Registration  Purchase  Agreement to be duly
executed as of the date first written above.

                                                 BUYERS:

                                                 BLUEGRASS GROWTH FUND, LP

                                                 BY: BLUEGRASS GROWTH FUND
                                                     PARTNERS LLC, ITS GENERAL
                                                     PARTNER

                                                 By: /s/ Brian Shatz
                                                     ---------------------------
                                                     Name:  Brian Shatz
                                                     Title: Managing Member

<PAGE>

      IN  WITNESS  WHEREOF,  each  Buyer  and  the  Company  have  caused  their
respective  signature page to this  Registration  Purchase  Agreement to be duly
executed as of the date first written above.

                                                 BUYERS:

                                                 BLUEGRASS GROWTH FUND, LTD

                                                 By: /s/ Brian Shatz
                                                     ---------------------------
                                                     Name:  Brian Shatz
                                                     Title: Director

<PAGE>

                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>

                                                 BUYER'S ADDRESS                           BUYER'S REPRESENTATIVE'S ADDRESS
           BUYER                              AND FACSIMILE NUMBER                              AND FACSIMILE NUMBER
----------------------------------         --------------------------------------          ---------------------------------
<S>                                        <C>                                             <C>
Portside Growth & Opportunity Fund         c/o Ramius Capital Group, L.L.C.                    Schulte Roth & Zabel LLP
                                           666 Third Avenue, 26th Floor                        919 Third Avenue
                                           New York, New York  10017                           New York, New York 10022
                                           Attention:  Jeffrey Smith                           Attn:  Eleazer Klein, Esq.
                                                        Nancy Wu                               Facsimile:  (212) 593-5955
                                           Facsimile:  (212) 845-7999                          Telephone:  (212) 756-2000
                                           Telephone: (212) 845-7955

Smithfield Fiduciary LLC                   c/o Highbridge Capital Management, LLC
                                           9 West 57th Street, 27th Floor
                                           New York, New York  10019
                                           Attention:  Ari J. Storch
                                                      Adam J. Chill
                                           Facsimile:  (212) 751-0755
                                           Telephone: (212) 287-4720

Bluegrass Growth Fund, LP
                                           c/o Bluegrass Growth Fund Partners LLC
                                           122 East 42nd Street
                                           Suite 2606
                                           New York, New York 10168
                                           Attention:  Brian Shatz
                                           Facsimile:  (212) 202-9624
                                           Telephone:  (212) 682-2392
                                           Residence:  Delaware

Bluegrass Growth Fund, Ltd.                c/o Bluegrass Growth Fund Partners LLC
                                           122 East 42nd Street
                                           Suite 2606
                                           New York, New York 10168
                                           Attention:  Brian Shatz
                                           Facsimile:  (212) 202-9624
                                           Telephone:  (212) 682-2392
                                           Residence:  Cayman Islands
</TABLE>

<PAGE>

                                                                       EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

American Stock Transfer & Trust Company
[Address]
Attention:

                     Re:       SpatiaLight, Inc.

Ladies and Gentlemen:

      [We are][I am] counsel to SpatiaLight,  Inc., a New York  corporation (the
"COMPANY"),  and have  represented  the Company in connection  with that certain
Securities Purchase Agreement (the "SECURITIES PURCHASE AGREEMENT") entered into
by and among  the  Company  and the  buyers  named  therein  (collectively,  the
"HOLDERS")  pursuant to which the Company  issued to the Holders  senior secured
convertible  notes (the "INITIAL  NOTES")  convertible into the Company's common
stock,  $.01 par value per share (THE "COMMON STOCK") and additional  investment
rights  exercisable  for  additional  senior  secured  convertible  notes of the
Company (the "ADDITIONAL  NOTES",  and collectively  with the Initial Notes, the
"NOTES") which will be convertible into shares of Common Stock.  Pursuant to the
Securities Purchase Agreement,  the Company also has entered into a Registration
Rights Agreement with the Holders (the "REGISTRATION RIGHTS AGREEMENT") pursuant
to which the Company  agreed,  among other things,  to register the  Registrable
Securities  (as defined in the  Registration  Rights  Agreement),  including the
shares of Common Stock issuable upon  conversion of the Notes and as interest on
the Notes,  under the  Securities  Act of 1933, as amended (the "1933 ACT").  In
connection  with  the  Company's   obligations  under  the  Registration  Rights
Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
on Form S-3 (File No. 333-_____________) (the "REGISTRATION STATEMENT") with the
Securities  and  Exchange  Commission  (the "SEC")  relating to the  Registrable
Securities which names each of the Holders as a selling shareholder thereunder.

      In connection with the foregoing,  [we][I] advise you that a member of the
SEC's staff has advised  [us][me] by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF  EFFECTIVENESS]  on  [ENTER  DATE  OF  EFFECTIVENESS]  and  [we][I]  have  no
knowledge,  after  telephonic  inquiry of a member of the SEC's staff,  that any
stop order suspending its  effectiveness has been issued or that any proceedings
for  that  purpose  are  pending  before,  or  threatened  by,  the  SEC and the
Registrable  Securities  are available for resale under the 1933 Act pursuant to
the Registration Statement.

      This letter shall serve as our standing  opinion to you that the shares of
Common Stock are freely transferable by the Holders pursuant to the Registration
Statement.  You need not require  further  letters  from us to effect any future
legend-free  issuance or  reissuance of shares of Common Stock to the Holders as
contemplated  by the Company's  Irrevocable  Transfer Agent  Instructions  dated
________ __, 2004.  This letter shall serve as our standing  opinion with regard
to this matter.

                                       1
<PAGE>

                                                 Very truly yours,

                                                 [ISSUER'S COUNSEL]

                                                 By:____________________________
CC:        [LIST NAMES OF HOLDERS]

                                       2
<PAGE>

                                                                       EXHIBIT B

                              SELLING SHAREHOLDERS

      The shares of Common Stock being offered by the selling  shareholders  are
issuable upon conversion of the convertible  notes (including  convertible notes
issuable  upon  exercise  of  additional  investment  rights  which were  issued
pursuant to a Securities  Purchase Agreement dated as of November ___, 2004) and
as interest on the convertible notes. For additional  information  regarding the
issuance  of those  convertible  notes and  additional  investment  rights,  see
"Private  Placement of Shares of Common Stock,  Convertible Notes and Additional
Investment Rights" above. We are registering the shares of Common Stock in order
to permit the selling  shareholders  to offer the shares for resale from time to
time.  Except for the  ownership  of the  Convertible  Notes and the  Additional
Investment  Rights issued  pursuant to the Securities  Purchase  Agreement,  the
selling  shareholders have not had any material  relationship with us within the
past three years.

      The table  below  lists the  selling  shareholders  and other  information
regarding the beneficial  ownership of the shares of Common Stock by each of the
selling  shareholders.  The second  column  lists the number of shares of Common
Stock beneficially owned by each selling shareholder,  based on its ownership of
the convertible notes and additional  investment  rights, as of ________,  200_,
assuming  conversion  of all  convertible  notes  (including  convertible  notes
issuable upon exercise of all of the  additional  investment  rights held by the
selling  shareholders),  without  regard to any  limitations  on  conversions or
exercise.

      The third column  lists the shares of Common  Stock being  offered by this
prospectus by the selling shareholders.

      In accordance  with the terms of registration  rights  agreements with the
selling  shareholders,  this prospectus  generally covers the resale of at least
150% of the sum of (i) the number of shares of Common Stock issuable as interest
on the convertible  notes and (ii) the number of shares of Common Stock issuable
upon conversion of the convertible  notes (including  convertible notes issuable
upon  exercise  of all of the  additional  investment  rights  which were issued
pursuant to a Securities  Purchase  Agreement) as of the trading day immediately
preceding the date the  registration  statement is initially filed with the SEC.
Because the conversion  price of the convertible  notes, the interest payable on
the  convertible  notes may be adjusted and the exercise price of the additional
investment  rights may be adjusted,  the number of shares that will  actually be
issued  may be more or less  than the  number of shares  being  offered  by this
prospectus.  The fourth column  assumes the sale of all of the shares offered by
the selling shareholders pursuant to this prospectus.

      Under the terms of the  convertible  notes, a selling  shareholder may not
convert the  convertible  notes to the extent such  conversion or exercise would
cause such selling  shareholder,  together with its affiliates,  to beneficially
own a number of shares of Common  Stock  which  would  exceed  4.99% of our then
outstanding  shares of Common  Stock  following  such  conversion  or  exercise,
excluding  for purposes of such  determination  shares of Common Stock  issuable
upon conversion of the convertible  notes which have not been converted and upon
exercise of the additional investment rights which have not been exercised.  The
number of shares in the second  column does not  reflect  this  limitation.  The
selling  shareholders  may  sell  all,  some  or none of  their  shares  in this
offering. See "Plan of Distribution."

                                       1
<PAGE>

<TABLE>
<CAPTION>

                                                                          MAXIMUM NUMBER OF SHARES TO
                                          NUMBER OF SHARES OWNED PRIOR     BE SOLD PURSUANT TO THIS       NUMBER OF SHARES OWNED
NAME OF SELLING SHAREHOLDER                        TO OFFERING                     PROSPECTUS                  AFTER OFFERING
---------------------------               ----------------------------    -----------------------------   ----------------------
<S>                                       <C>                              <C>                            <C>
(1) Portside Growth & Opportunity Fund                                                                               0
(2) Smithfield Fiduciary LLC
(3) Bluegrass Growth Fund, LP
(4) Bluegrass Growth Fund, Ltd
</TABLE>

      (1)   Ramius  Capital  Group,  LLC ("Ramius  Capital")  is the  investment
adviser of Portside Growth and Opportunity  Fund  ("Portside")  and consequently
has voting control and investment  discretion  over securities held by Portside.
Ramius Capital  disclaims  beneficial  ownership of the shares held by Portside.
Peter A. Cohen,  Morgan B. Stark,  Thomas W.  Strauss and Jeffrey M. Solomon are
the sole managing  members of C4S& Co., LLC, the sole managing  member of Ramius
Capital.  As a  result,  Messrs.  Cohen,  Stark,  Strauss  and  Solomon  may  be
considered  beneficial  owners of any shares deemed to be beneficially  owned by
Ramius Capital.  Messrs.  Cohen, Stark,  Strauss and Solomon disclaim beneficial
ownership of these shares.

      (2)   Highbridge Capital Management,  LLC  ("Highbridge"),  is the trading
manager of Smithfield  Fiduciary LLC  ("Smithfield") and consequently has voting
control  and  investment  discretion  over the  shares of Common  Stock  held by
Smithfield.  Glenn Dubin and Henry Swieca control Highbridge. Each of Highbridge
and Messrs.  Dubin and Swieca disclaims  beneficial ownership of the shares held
by Smithfield.

      (3)   Brian  Shatz has  voting  control  and  investment  discretion  over
securities  held by Bluegrass  Growth Fund, LP. Mr. Shatz  disclaims  beneficial
ownership of the Common Stock held by Bluegrass Growth Fund, LP.

      (4)   Brian  Shatz has  voting  control  and  investment  discretion  over
securities held by Bluegrass  Growth Fund,  Ltd. Mr. Shatz disclaims  beneficial
ownership of the Common Stock held by Bluegrass Growth Fund, Ltd.

                                       2
<PAGE>

                              PLAN OF DISTRIBUTION

      We are  registering the shares of Common Stock issuable upon conversion of
the convertible notes (including convertible notes issuable upon exercise of the
additional  investment  rights) and in payment of  interest  on the  convertible
notes to permit the resale of these shares of Common Stock by the holders of the
convertible  notes and additional  investment rights from time to time after the
date of this  prospectus.  We will not receive any of the proceeds from the sale
by the selling shareholders of the shares of Common Stock. We will bear all fees
and expenses incident to our obligation to register the shares of Common Stock.

      The selling shareholders may sell all or a portion of the shares of Common
Stock  beneficially  owned by them and offered hereby from time to time directly
or through one or more underwriters,  broker-dealers or agents. If the shares of
Common  Stock are sold  through  underwriters  or  broker-dealers,  the  selling
shareholders  will be responsible for  underwriting  discounts or commissions or
agent's  commissions.  The  shares  of  Common  Stock may be sold in one or more
transactions  at fixed prices,  at  prevailing  market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions,  which may involve crosses or block
transactions,

      o     on any national  securities  exchange or quotation  service on which
            the securities may be listed or quoted at the time of sale;

      o     in the over-the-counter market;

      o     in  transactions  otherwise than on these exchanges or systems or in
            the over-the-counter market;

      o     through the writing of options,  whether  such options are listed on
            an options exchange or otherwise;

      o     ordinary  brokerage  transactions  and  transactions  in  which  the
            broker-dealer solicits purchasers;

      o     block  trades in which the  broker-dealer  will  attempt to sell the
            shares as agent but may  position  and resell a portion of the block
            as principal to facilitate the transaction;

      o     purchases  by  a  broker-dealer  as  principal  and  resale  by  the
            broker-dealer for its account;

      o     an  exchange  distribution  in  accordance  with  the  rules  of the
            applicable exchange;

      o     privately negotiated transactions;

      o     short sales;

      o     sales pursuant to Rule 144;

                                       1
<PAGE>

      o     broker-dealers may agree with the selling  securityholders to sell a
            specified number of such shares at a stipulated price per share;

      o     a combination of any such methods of sale; and

      o     any other method permitted pursuant to applicable law.

      If the selling  shareholders effect such transactions by selling shares of
Common  Stock  to  or  through  underwriters,  broker-dealers  or  agents,  such
underwriters,  broker-dealers  or agents may receive  commissions in the form of
discounts,   concessions  or  commissions  from  the  selling   shareholders  or
commissions  from purchasers of the shares of Common Stock for whom they may act
as agent or to whom they may sell as principal (which discounts,  concessions or
commissions as to particular  underwriters,  broker-dealers  or agents may be in
excess of those customary in the types of transactions  involved). In connection
with sales of the shares of Common Stock or otherwise,  the selling shareholders
may enter  into  hedging  transactions  with  broker-dealers,  which may in turn
engage in short sales of the shares of Common  Stock in the course of hedging in
positions they assume.  The selling  shareholders may also sell shares of Common
Stock short and deliver  shares of Common Stock  covered by this  prospectus  to
close out short  positions and to return borrowed shares in connection with such
short sales.  The selling  shareholders may also loan or pledge shares of Common
Stock to broker-dealers that in turn may sell such shares.

      The selling  shareholders may pledge or grant a security  interest in some
or all of the  convertible  notes,  additional  investment  rights  or shares of
Common  Stock owned by them and,  if they  default in the  performance  of their
secured  obligations,  the  pledgees  or secured  parties may offer and sell the
shares of Common  Stock from time to time  pursuant  to this  prospectus  or any
amendment to this prospectus under Rule 424(b)(3) or other applicable  provision
of the Securities Act of 1933, as amended,  amending, if necessary,  the list of
selling  shareholders to include the pledgee,  transferee or other successors in
interest as selling shareholders under this prospectus. The selling shareholders
also may transfer  and donate the shares of Common Stock in other  circumstances
in which case the transferees,  donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this prospectus.

      The  selling  shareholders  and  any  broker-dealer  participating  in the
distribution  of the shares of Common  Stock may be deemed to be  "underwriters"
within the  meaning of the  Securities  Act,  and any  commission  paid,  or any
discounts or concessions  allowed to, any such broker-dealer may be deemed to be
underwriting  commissions or discounts  under the Securities  Act. At the time a
particular  offering  of the  shares  of  Common  Stock  is made,  a  prospectus
supplement,  if required, will be distributed which will set forth the aggregate
amount of shares of Common  Stock being  offered and the terms of the  offering,
including  the name or names of any  broker-dealers  or agents,  any  discounts,
commissions  and  other  terms   constituting   compensation  from  the  selling
shareholders and any discounts,  commissions or concessions allowed or reallowed
or paid to broker-dealers.

      Under the securities  laws of some states,  the shares of Common Stock may
be sold in such states only through  registered or licensed  brokers or dealers.
In  addition,  in some states the shares of Common  Stock may not be sold unless
such  shares  have been  registered  or  qualified  for sale in such state or an
exemption from registration or qualification is available and is complied with.

                                       2
<PAGE>

      There can be no assurance  that any selling  shareholder  will sell any or
all of the shares of Common Stock registered  pursuant to the shelf registration
statement, of which this prospectus forms a part.

      The  selling  shareholders  and any  other  person  participating  in such
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended,  and the rules and regulations  thereunder,  including,
without limitation, Regulation M of the Exchange Act, which may limit the timing
of  purchases  and sales of any of the  shares of  Common  Stock by the  selling
shareholders and any other participating person.  Regulation M may also restrict
the ability of any person  engaged in the  distribution  of the shares of Common
Stock to engage in market-making activities with respect to the shares of Common
Stock. All of the foregoing may affect the marketability of the shares of Common
Stock and the  ability  of any  person  or  entity  to  engage in  market-making
activities with respect to the shares of Common Stock.

      We will pay all expenses of the registration of the shares of Common Stock
pursuant to the registration  rights  agreement,  estimated to be $[ ] in total,
including,  without  limitation,  Securities and Exchange Commission filing fees
and expenses of compliance with state  securities or "blue sky" laws;  provided,
however,  that a selling  shareholder  will pay all  underwriting  discounts and
selling commissions,  if any. We will indemnify the selling shareholders against
liabilities,  including some liabilities under the Securities Act, in accordance
with the registration  rights  agreements,  or the selling  shareholders will be
entitled to  contribution.  We may be  indemnified  by the selling  shareholders
against civil liabilities,  including liabilities under the Securities Act, that
may  arise  from  any  written  information  furnished  to  us  by  the  selling
shareholder  specifically  for use in this  prospectus,  in accordance  with the
related registration rights agreements, or we may be entitled to contribution.

      Once sold under the shelf registration statement, of which this prospectus
forms a part, the shares of Common Stock will be freely tradable in the hands of
persons other than our affiliates.

                                       3Exhibit 10.11

                    INTERCREDITOR AND SUBORDINATION AGREEMENT

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

                                    RECITALS

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

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

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

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

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

<PAGE>

                                    AGREEMENT

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

            1. Definitions and Rules of Construction.

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

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

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

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

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

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

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

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

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

                                      -2-
<PAGE>

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

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

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

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

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

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

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

                                      -3-
<PAGE>

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

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

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

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

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

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

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

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

                                      -4-
<PAGE>

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

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

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

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

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

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

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

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

                                      -5-
<PAGE>

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

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

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

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

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

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

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

            2. Subordination of Senior Subordinated Indebtedness.

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

                                      -6-
<PAGE>

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

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

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

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

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

                                      -7-
<PAGE>

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

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

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

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

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

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

                                      -8-
<PAGE>

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

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

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

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

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

                                      -9-
<PAGE>

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

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

            7. Sale of Collateral.

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

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

                                      -10-
<PAGE>

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

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

            9. Insurance or Condemnation. In the event of:

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

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

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

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

            10. Bankruptcy Issues.

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

                                      -11-
<PAGE>

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

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

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

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

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

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

                                      -12-
<PAGE>

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

            13. Authority.

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

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

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

                                      -13-
<PAGE>

            14. Modification of Documents; Additional Covenants.

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

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

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

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

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

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

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

                                      -14-
<PAGE>

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

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

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

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

                                      -15-
<PAGE>

                  (a) If to the Senior Agent, at:

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

                          with a copy to:

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

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

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

                          with a copy to:

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

                  (c) If to the Obligors, at:

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

                                      -16-
<PAGE>

                          with a copy to:

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

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

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

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

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

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

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

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

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

                                      -17-
<PAGE>

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

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

            26. Legend; Further Assurances.

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

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

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

                                      -18-
<PAGE>

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

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

                                      -19-
<PAGE>

                                      PORTSIDE GROWTH & OPPORTUNITY FUND,
                                      as Collateral Agent

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

<PAGE>

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

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

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

                                      SPATIALIGHT, INC.

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

                                      -21-
<PAGE>

                                   EXHIBIT "A"

                      ARGYLE CAPITAL MANAGEMENT CORPORATION
                                CONVERTIBLE NOTES

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

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

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

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

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

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

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

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

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

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

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

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

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

                   7/10/1998                              $35,000

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

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

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