Common use of Covenants of the Company Clause in Contracts

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the Company acknowledges, represents, warrants and agrees as follows: (i) The Company shall use its best efforts to reserve, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officer

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as follows: (ia) The To prepare the prospectus supplement in a form approved by you (such approval not to be unreasonably withheld or delayed) and to file such prospectus supplement pursuant to Rule 424(b) under the Act not later than the Commission’s close of business on the second (2nd) business day following the execution and delivery of this Agreement; to make no further amendment or any supplement to the Registration Statement or Prospectus which shall be disapproved by you promptly after reasonable notice thereof; to advise you, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish you with copies thereof other than as required by law; to file promptly all reports and any definitive proxy or information statements required to be filed by the Company shall with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus is required in connection with the offering or sale of the Public Securities; to advise you, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus, of the suspension of the qualification of the Public Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any prospectus or suspending any such qualification, promptly to use its best efforts to reserveobtain the withdrawal of such order. If, at any time when a prospectus relating to the Securities is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or if it shall be necessary to amend or supplement the Prospectus to comply with the Securities Act or the Exchange Act or the respective rules thereunder, the Company promptly will prepare and file with the Commission, subject to the Company furnishing to the Representative for its review a copy thereof prior to February 15filing, 2000an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance. (b) Prior to 12:00 P.M., New York City time, on the business day next succeeding the date of this Agreement and from time to time, to furnish each Underwriter with written and electronic copies of the Prospectus in New York City in such quantities as you may reasonably request, and, if the delivery of a sufficient number Prospectus is required at any time prior to the expiration of shares nine (9) months after the time of Common Stock issue of the Prospectus in connection with the offering or sale of the Securities and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act or the Exchange Act, to notify you and upon your reasonable request to file such document and to prepare and furnish without charge to the Underwriter and to any dealer in securities as many written and electronic copies as you may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance, and in case any Underwriter is required to deliver a prospectus in connection with sales of any of the Public Securities at any time nine (9) months or more after the time of issue of the Prospectus, upon your request but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as you may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Securities Act. (c) The Company shall have the right to engage the Representative, on a non-exclusive basis, as its authorized but unissued shares agents for the solicitation of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company, if it so engages the Representative, will (i) assist the Representative with respect to such solicitation, if requested by the Representative, and (ii) at the Representative’s request, provide the Representative, and direct the Company’s transfer and warrant agent to provide to the Representative, at the Company’s cost, lists of the record and, to the extent known, beneficial owners of, the Warrants. Commencing one (1) year from the Effective Date, if it so engages the Representative, the Company will pay the Representative a commission of five percent (5%) of the exercise price of the Warrants for each Warrant exercised after such date, payable upon payment of the exercise price, on the terms provided for in the Warrant Agreement, only if permitted under the rules and regulations of the FINRA and only to the extent that an investor who exercises his Warrants specifically designates, in writing, that the Representative solicited his exercise. The Representative may engage sub-agents in their solicitation efforts if engaged by the Company. (d) The Company hereby agrees to pay on each of the Closing Date to the extent not paid at Closing Date, all expenses incident to the performance of the obligations of the Company under this Agreement, including but not limited to (i) the preparation, printing, filing and mailing (including the payment of postage with respect to such mailing) of the Registration Statement and exhibits thereto, the Prospectuses and the printing and mailing of this Agreement and related documents, including the cost of all copies thereof and any amendments thereof or supplements thereto supplied to the Underwriters in quantities as may reasonably be required by the Underwriters, (ii) the printing, issuance and delivery of the Units and the Representative’s Warrants, including any transfer or other taxes payable thereon, (iii) the filing fees incident to securing any required review by the FINRA of the fairness or reasonableness of the underwriting terms and arrangements of the Offering and the reasonable fees and disbursements of the Representative’s counsel relating thereto in the amount of $125,000, (iv) costs of placing “tombstone” advertisements in The Wall Street Journal, The New York Times and a third publication to be selected by the Representative not to exceed $10,000, (v) fees and disbursements of the transfer and warrant agent, (vi) the Company’s expenses associated with “due diligence” meetings arranged by the Representative including a videotape or power-point presentation, and other costs and expenses of due diligence, not to exceed $10,000, and (vii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section 3(d), provided that the Representative provides reasonably detailed invoices. The Representative may deduct from the net proceeds of the Offering payable to the Company on the Closing Date the expenses set forth herein to be paid by the Company to the Representative and others. If the Offering contemplated by this Agreement is currently organizing a stockholder meeting not consummated for any reason whatsoever for reasons not attributable to increase the number Underwriters, then the Company shall reimburse the Underwriters in full for their reasonable out of authorized shares pocket accountable expenses actually incurred by the Representative. The Representative shall retain such part of Common Stock the non-accountable expense allowance previously paid, if any, as shall equal its reasonable actual out-of-pocket accountable expenses and refund the balance. If the amount previously paid is insufficient to cover such reasonable actual out-of-pocket accountable expenses, the Company shall remain liable for and promptly pay any other actual out-of-pocket accountable expenses. The Company and the Representative agree that no advances in connection with the Offering have been received as of the date hereof. (e) Neither the Company, and nor any of its employees, directors or stockholders (without the consent of the Representative) has filed with taken or will take, directly or indirectly, any action designed to or that has constituted or that might reasonably be expected to cause or result in, under the SEC prior Exchange Act, or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the date hereof a preliminary proxy statement in connection with such stockholder meetingsale or resale of the Securities . (f) The Company will maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization, (ii) It will transactions are recorded as necessary in order to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the listing of its Common Stock on the OTC Bulletin Boardrecorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (iiig) It will permit Subscriber The Company shall advise the FINRA if it is aware that any five percent (5%) or greater stockholder of the Company becomes an affiliate or associated person of an FINRA member participating in the distribution of the Public Securities. (h) All corporate proceedings and other legal matters necessary to exercise its right to exercise carry out the Warrants by telecopying an executed provisions of this Agreement and completed Notice of Exercise the transactions contemplated hereby shall have been done to the reasonable satisfaction to counsel for the Underwriters. (i) For a period of five (5) years from the Effective Date, the Company and delivering shall not take any action or omit to take any action that would cause the original Notice Company to be in breach or violation of Exercise and the original Warrant its certificate of incorporation or by-laws. (j) The Company further agrees that, in addition to the Company by overnight courier. Each business date expenses payable pursuant to Section 3(d), on which the Closing Date it will pay to the Representative a Notice nonaccountable expense allowance equal to two percent (2%) of Exercise is telecopied the gross proceeds (not applicable to and the Over-Allotment Option) received by the Company in accordance with from the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion sale of the Warrant exercised shall be delivered as follows: To Units (less any amounts previously paid) by deduction from the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerproceeds of the Offering contemplated herein.

Covenants of the Company. The Company covenants and agrees with each Underwriter that: (a) The Company will use its best efforts to cause the Registration Statement to become effective and, upon notification from the Commission that the Registration Statement has become effective, will so advise the Representative and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement to the Prospectus of which the Representative shall not previously have been advised and furnished with a copy or to which the Representative or counsel to the Underwriters shall have reasonably objected in writing or which is not in compliance with the Act and the Rules and Regulations. At any time prior to the later of (A) the completion by you of the distribution of the Securities contemplated hereby (but in no event more than nine months after the Effective Date) and (B) 25 days after the Effective Date, the Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus which, in the Representative's reasonable opinion, may be necessary or advisable in connection with the distribution of the Securities. Promptly after the Representative or the Company is advised thereof, the Representative will advise the Company or the Company will advise the Representative, as the case may be, and confirm the advice in writing, of the receipt of any comments of the Commission, of the effectiveness of any post effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop orders or other order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any preliminary prospectus or the Prospectus, or of the suspension of the qualification of the Securities for offering in any jurisdiction, or the institution of any proceedings for any of such purposes, and will use its best efforts to prevent the issuance of any such order and, if issued, to obtain as soon as possible the lifting thereof. The Company has caused to be delivered to the Underwriters copies of each Preliminary Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriters and selected dealers to use the Prospectus in connection with the sale of the Securities for such period not to exceed nine months from the Effective Date as in the reasonable opinion of counsel for the Underwriters the use thereof is required to comply with the applicable provisions of the Act and the Rules and Regulations. In case of the happening, at any time within such period as a Prospectus is required under the Act to be delivered in connection with sales by an underwriter or dealer, of any event of which the Company has knowledge and which materially affects the Company or the Securities, or which in the opinion of counsel for the Company or counsel for the Underwriters should be set forth in an amendment to the Registration Statement or a supplement to the Prospectus in order to make the statements therein not then misleading, in light of the circumstances existing at the time the Prospectus is required to be delivered to a purchaser of the Securities, or in case it shall be necessary to amend or supplement the Prospectus to comply with the Act or with the Rules and Regulations, the Company will notify the Representative promptly and forthwith prepare and furnish to the Underwriters copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as the Underwriters may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state any material facts necessary in order to make the statements in the Prospectus, in the light of the circumstances under which they are made, not misleading. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be without expense to the Underwriters, except that in case the Underwriters are required, in connection with the sale of the Shares, to deliver a Prospectus nine months or more after the Effective Date, the Company will upon request of and at the Underwriters' expense, amend or supplement the Registration Statement and Prospectus and furnish you with reasonable quantities of prospectuses complying with Section 10(a)(3) of the Act. (b) The Company will comply with the Act, the Rules and Regulations and the Shares Exchange Act of 1934, as amended (the "Exchange Act") and the rules and regulations thereunder in connection with the offering and issuance of the Securities. The Company will use its best efforts to qualify or register the Securities for sale under the securities or "blue sky" laws of such jurisdictions as the Representative may have designated in writing prior to the execution hereof and will make such applications and furnish such information to counsel for the Underwriters as may be required for that purpose and to comply with such laws, provided that the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent to service process in any jurisdiction. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long a period as you may reasonably request. Legal fees for such qualifications shall be itemized based on the time expended and costs incurred, shall not in any event exceed $30,000.00, exclusive of filing fees (unless otherwise agreed). (c) The Company will instruct its transfer agent to provide the Representative with copies of the Depository Trust Company stock transfer sheets on a weekly basis for a period of six months from the First Closing Date and on a monthly basis thereafter for six additional months. (d) The Company will use its best efforts to cause a Registration Statement under the Exchange Act to be declared effective on the Effective Date. (e) For so long as any Securities held by Subscriber remain outstandingthe Company is a reporting company under either Section 12(g), 13 or 15(d) of the Exchange Act, the Company, at its expense, will furnish to its stockholders an annual report (including financial statements audited by independent public accountants), in reasonable detail and at its expense, will furnish to the Representative during the period ending five years from the date hereof, (i) as soon as practicable after the end of each fiscal year, a balance sheet of the Company acknowledgesand any subsidiaries as at the end of such fiscal year, representstogether with statements of income, warrants stockholders, equity and agrees cash flows of the Company and any subsidiaries as follows:at the end of such fiscal year, all in reasonable detail and accompanied by a copy of the certificate or report thereon of independent accountants; (ii) as soon as they are available, a copy of all reports (financial or other) mailed to security holders; (iii) as soon as they are available, a copy of all non-confidential reports and financial statements furnished to or filed with the Commission; and (iv) such other information of a public nature as you may from time to time reasonably request. (f) In the event the Company has an active subsidiary or subsidiaries, such financial statements referred to in sub-section (e) above will be on a consolidated basis to the extent the accounts of the Company and its subsidiary or subsidiaries are consolidated in reports furnished to its stockholders generally. (g) The Company will deliver to the Representative at or before the First Closing Date one signed copy of the Registration Statement including all financial statements and exhibits filed therewith, and of all amendments thereto. The Company will deliver to or upon the Representative's order, from time to time until the Effective Date as many copies of any Preliminary Prospectus filed with the Commission prior to the Effective Date as the Underwriters may reasonably request. The Company will deliver to the Representative on the Effective Date and thereafter for so long as a Prospectus is required to be delivered under the Act, from time to time, as many copies of the Prospectus, in final form, or as thereafter amended or supplemented, as the Underwriters may from time to time reasonably request. (h) The Company will make generally available to its security holders and deliver to the Representative as soon as it is practicable to do so, but in no event later than 90 days after the end of 12 months after its current fiscal quarter, an earnings statement (which need not be audited) covering a period of at least 12 consecutive months beginning after the Effective Date which shall satisfy the requirements of Section 11(a) of the Act. (i) The Company will apply the net proceeds from the sale of the Securities substantially for the purposes set forth under "Use of Proceeds" in the Prospectus, and will file such reports with the Commission with respect to the sale of the Shares and the application of the proceeds therefrom as may be required pursuant to Rule 463 of the Rules and Regulations. (j) The Company will, promptly upon the Representative's request, prepare and file with the Commission any amendments or supplements to the Registration Statement, Preliminary Prospectus or Prospectus and take any other action, which in the opinion of Berliner ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C., counsel to the Underwriters, may be reasonably necessary or advisable in connection with the distribution of the Securities and will use its best efforts to cause the same to become effective as promptly as possible. (k) Prior to the Effective Date, the Company will use its best efforts to cause the cause the Selling Stockholders and all other Stockholders of the Company to enter into a written agreement with the Representative, which among other things shall provide that for a period of 10 and 12 months following the closing date of the offering, respectively, such stockholders will not sell, assign, hypothecate or pledge any of the securities of the Company owned by them on the Effective Date, or subsequently acquired by the exercise of any options or warrants or conversion of any convertible security of the Company held by them on the Effective Date directly or indirectly, except with the Representative's prior written consent (except for transfers during such stockholder's lifetime or on death by will or intestacy to his or her immediate family or a family trust; provided that such transferee shall agree in writing to the restrictions on transfer set forth therein). Such stockholders will permit all certificates evidencing those shares to be stamped with an appropriate restrictive legend, and will cause the transfer agent for the Company to note such restrictions on transfer books and records of the Company. (l) The Company shall, as soon as practicable after the initial filing of the Registration Statement, make all filings required to obtain approval for the quotation of the Securities on the Nasdaq SmallCap market ("NASDAQ") and will use its best efforts to effect and maintain the aforesaid approval for at least five (5) years from the date of this Agreement. Within ten (10) days after the Effective Date, the Company shall use its best efforts to cause the Company to be listed in the ▇▇▇▇▇'▇ OTC Industrial Manual and cause such listing to be maintained for five years from the date of this Agreement. (m) The Company represents that it has not taken, and agrees that it will not take, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result in the stabilization or manipulation of the price of the Securities or to facilitate the sale or resale of the Securities. (n) During the period of the offering, and for a period of twelve (12) months from the Effective Date, the Company will not sell or otherwise dispose of any securities of the Company (except for shares of Common Stock issuable pursuant to acquisitions and upon exercise of options or warrants outstanding on the Effective Date ) without your prior written consent. (o) Prior to the Effective Date, the Company shall had retained a public relations firm reasonably acceptable to the Representative, and shall continue to retain such firm, or any alternate firm reasonably acceptable to the Representative, for a minimum period of one (1) year from the First Closing Date. (p) The Company will reserve and keep available that maximum number of its authorized but unissued securities which are issuable upon exercise of the Representative's Warrants (including securities issuable upon the exercise of the Warrants which are issuable upon the exercise of the Representative's Warrants) outstanding from time to time. (q) The Company shall deliver to the Representative, at the Company's expense, a total of three (3) bound volumes in form and content acceptable to you, containing the Registration Statement and all exhibits filed therewith, and all amendments thereto, and all other material correspondence, filings, certificates and other documents filed and/or delivered in connection with this offering. The Company shall use its best efforts to reservedeliver such volumes within ninety (90) days of the First Closing Date. (r) The Company shall have acquired a reasonable amount of Director and Officer Liability Insurance (provided that such insurance can be obtained at a reasonable cost as determined by the Company and the Representative) from a responsible insurer, all satisfactory to the Representative, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all effectiveness of the outstanding WarrantsRegistration Statement. The Company is currently organizing a stockholder meeting to increase shall have acquired keyman life insurance on ▇▇▇▇▇ ▇▇▇▇▇▇ on the number of authorized shares of Common Stock of terms described in the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingProspectus. (iis) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇& Associates, ▇▇▇▇▇ ▇▇▇ ▇▇Inc. shall have the right for a period of four (4) years from the First Closing Date to designate one nominee for election to the Board of Directors of the Company, such nominee to be reasonably acceptable to the Company. In the event that the Company is unable to obtain the Directors and Officers insurance described in subparagraph (r) above, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, Inc. shall have the right for such four (4) year period to designate a consultant to the Board of Directors of the Company, which consultant shall have the right to attend all Board and Board committee meetings and shall be compensated with respect to meetings of the Board on the same basis as outside members of the Board. (t) The Company agrees to deliver to the Representative a financial consulting agreement whereby the Company will retain ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: & Associates, Inc. as a financial consultant for a period of two years following the First Closing Date for a fee of $3,000 per month. (▇▇▇u) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerEach Selling Shareholder agrees to deliver to the Representative on or prior to the First Closing Date a properly completed and executed United States Treasury Department Form W-9 (or other applicable form or statement specified by Treasury Department regulations in lieu thereof).

Covenants of the Company. For so long The Company covenants and agrees with each Underwriter as any Securities held follows: (a) During such period beginning on the Time of Sale and ending on the later of the Closing Date or such date, as in the opinion of counsel for the Underwriters, the Prospectus is no longer required by Subscriber remain outstandinglaw to be delivered in connection with sales as contemplated by this Agreement by an Underwriter or dealer, including in circumstances where such requirement may be satisfied pursuant to Rule 172 of the Rules and Regulations (the “Prospectus Delivery Period”), prior to amending or supplementing the Registration Statement, the Time of Sale Disclosure Package or the Prospectus, the Company acknowledgesshall furnish to the Representatives for review a copy of each such proposed amendment or supplement, representsand the Company shall not file any such proposed amendment or supplement to which the Representatives reasonably object. (b) After the date of this Agreement and through the Prospectus Delivery Period, the Company shall promptly advise the Representatives in writing (i) when the Registration Statement, if not effective at the date and time this Agreement is executed and delivered to the parties, shall have become effective, (ii) of the receipt of any comments of, or requests for additional or supplemental information from, the Commission, (iii) of the time and date of any filing of any post-effective amendment to the Registration Statement or any amendment or supplement to any preliminary prospectus or the Prospectus, (iv) of the time and date that any post-effective amendment to the Registration Statement becomes effective and (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or of any order or notice preventing or suspending the use of the Registration Statement, any preliminary prospectus or the Prospectus, or of any proceedings to remove, suspend or terminate from listing or quotation the Common Stock from any securities exchange upon which it is listed (or approved for listing) for trading or included or designated (or approved for inclusion or designation) for quotation, or of the threatening or initiation of any proceedings for any of such purposes. The Company shall use its commercially reasonable efforts to prevent the issuance of any such stop order or prevention or suspension of such use. If the Commission shall enter any such stop order or order or notice of prevention or suspension at any time, the Company will use its commercially reasonable efforts to obtain the lifting of such order at the earliest possible moment or will file a new registration statement and use its commercially reasonable efforts to have such new registration statement declared effective as soon as practicable. Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b) and 434, as applicable, of the Rules and Regulations, including with respect to the timely filing of documents thereunder, and will use its commercially reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) of the Rules and Regulations were received in a timely manner by the Commission. (i) If any event or development shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Disclosure Package in order to make the statements therein, in the light of the circumstances under which they were made or then prevailing, as the case may be, not misleading (in which case the Company agrees to notify the Representatives of any such event or condition), or if in the reasonable opinion of the Representatives it is otherwise necessary to amend or supplement the Time of Sale Disclosure Package to comply with law, the Company agrees to promptly prepare, file with the Commission and furnish to the Underwriters, at its own expense, amendments or supplements to the Time of Sale Disclosure Package, and to furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request, so that the statements in the Time of Sale Disclosure Package as so amended or supplemented will not be, in the light of the circumstances under which they were made or then prevailing, as the case may be, misleading or so that the Time of Sale Disclosure Package, as amended or supplemented, will comply with law; (ii) if, during the Prospectus Delivery Period, any event or development shall occur or condition exist as a result of which it is necessary to amend or supplement the Registration Statement or the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made or then prevailing, as the case may be, not misleading (in which case the Company agrees to notify the Representatives of any such event or condition), or if in the reasonable opinion of the Representatives it is otherwise necessary to amend or supplement the Registration Statement or the Prospectus to comply with law, including in connection with the delivery of the Prospectus, the Company agrees to promptly prepare, file with the Commission (and use its best efforts to have any amendment to the Registration Statement or any new registration statement to be declared effective) and furnish to the Underwriters, amendments or supplements to the Registration Statement or the Prospectus, or any new registration statement, and to furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request, so that the statements in the Registration Statement or the Prospectus as so amended or supplemented will not be, in the light of the circumstances under which they were made or then prevailing, as the case may be, misleading or so that the Registration Statement or the Prospectus, as amended or supplemented, will comply with law. (d) The Company agrees that, until the Option Closing Date, unless it obtains the prior written consent of the Representatives, it will not make any offer relating to the Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 of the Rules and Regulations) required to be filed by the Company with the Commission or retained by the Company under Rule 433 of the Rules and Regulations; provided that the prior written consent of the Representatives shall be deemed to have been given in respect of any Issuer Free Writing Prospectuses included in Schedule II attached hereto. Any such free writing prospectus consented to by the Representatives is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company agrees that it (i) has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) has complied and will comply, as the case may be, with the requirements of Rules 164 and 433 of the Rules and Regulations applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the Commission where required, legending and record keeping. (e) The Company shall furnish to the Underwriters upon request, from time to time and without charge, copies of the Registration Statement of which three shall be signed and shall include exhibits and all amendments and supplements to any of such Registration Statement, in each case as soon as available and in such quantities as the Representatives may from time to time reasonably request. (f) The Company shall take or cause to be taken all necessary action and furnish to whomever the Representatives may direct such information as may be required in qualifying the Securities for sale under the laws of such jurisdictions which the Representatives shall designate and to continue such qualifications in effect for as long as may be necessary for the distribution of the Securities; except that in no event shall the Company be obligated in connection therewith to qualify as a foreign corporation, to execute a general consent for service of process or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. (g) The Company shall make generally available to its securityholders, in the manner contemplated by Rule 158(b) of the Rules and Regulations, as soon as practicable but in any event not later than 60 days after the end of its fiscal quarter in which the first anniversary date of the effective date of the Registration Statement occurs, an earning statement which will comply with Section 11(a) of the Securities Act covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement. (h) Except for the Securities to be issued hereunder, the Company will not, without the prior written consent of the Representatives (which consent may be withheld in the Representatives’ sole discretion), directly or indirectly, issue, sell, offer, agree to sell, contract or grant any option to sell (including, without limitation, pursuant to any short sale), pledge, make any short sale of, maintain any short position with respect to, transfer, establish or maintain an open “put equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act, enter into any swap, derivative transaction or other arrangement (whether such transaction is to be settled by delivery of common stock, other securities, cash or other consideration) that transfers to another, in whole or in part, any of the economic consequences of ownership, or otherwise dispose of any shares of Common Stock, options or warrants to acquire shares thereof, or securities exchangeable or exercisable for or convertible into shares thereof, or publicly announce an intention to do any of the foregoing, for a period commencing on the date hereof and agrees as follows:continuing through the close of trading on the date 30 days after the date of the Prospectus (the “Lock-Up Period”). (i) The Company shall maintain, at its expense, a registrar and transfer agent for the Common Stock. (j) The Company shall apply the net proceeds of the sale of the Securities substantially in the manner specified in the Prospectus under the heading “Use of Proceeds”. (k) The Company will furnish to its securityholders annual reports containing financial statements audited by independent public accountants and quarterly reports containing financial statements and financial information which may be unaudited. During the period of two years from the date hereof, the Company will furnish to the Representatives and, upon request, to each of the other Underwriters, copies of each annual report of the Company and each other report furnished by the Company to its securityholders and will deliver to the Representatives, as soon as they are available, copies of any other reports (financial or otherwise) which the Company shall publish or otherwise make available to any of its securityholders as such, and as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission. (l) The Company will use its commercially reasonable efforts to effect the listing of the Securities on the Nasdaq Global Select Market within the time period specified in the Prospectus. (m) The Company will use its best efforts to reserveenable the Company to meet the requirements to qualify as a REIT under the Code until the Board of Directors of the Company determines that it is no longer in the best interests of the Company to qualify as a REIT. (n) Except for activity permitted under Regulation M, prior the Company will not take, directly or indirectly, any action designed to February 15or that would constitute or that might reasonably be expected to cause or result in, 2000stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Securities. (o) During the period of five (5) years hereafter, the Company will furnish to the Representatives and, upon request, to each of the other Underwriters, as soon as practicable after the end of each fiscal year, a sufficient number copy of shares its annual report to shareholders for such year; and the Company will furnish to the Representatives (A) as soon as available, a copy of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all each report and any definitive proxy statement of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior Commission under the Exchange Act or mailed to shareholders, and (B) from time to time, such other information concerning the Company as the Representatives may reasonably request. However, so long as the Company is subject to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (iireporting requirements of either Section 13 or Section 15(d) It will maintain of the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed Exchange Act and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance timely filing reports with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇Commission on ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇it is not required to furnish such reports or statements to the Underwriters. (p) The Company shall pay or cause to be paid (A) all expenses (including stock transfer taxes) incurred in connection with the delivery to the several Underwriters of the Securities, ▇▇ ▇▇▇▇▇(B) all fees and expenses (including, without limitation, fees and expenses of the Company’s accountants and counsel) in connection with the preparation, printing, filing, delivery and shipping of the Registration Statement (including the financial statements therein and all amendments and exhibits thereto), each preliminary prospectus, the Time of Sale Disclosure Package and the Prospectus as amended or supplemented, (C) any applicable listing fees, (D) to the extent necessary, the cost of printing certificates representing the Securities, (E) the cost and charges of any transfer agent or registrar and (F) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise provided for in this subsection. The Company, on the one hand, and the Underwriters, on the other hand, shall be responsible for their own expenses in connection with any road shows and other presentations undertaken in connection with the Offering (including all travel, hotel and food expenses for their respective personnel). The Company shall not in any event be liable to any of the Underwriters for loss of anticipated profits from the transactions covered by this Agreement. The Representatives may deduct, after providing the Company with an itemized list and supporting documentation of expenses actually incurred, from the net proceeds of the Offering payable to the Company on the applicable Closing Date the expenses set forth above (which shall be mutually agreed upon between the Company and the Representatives prior to the applicable Closing Date) to be paid by the Company to the Underwriters and others. If the Offering is not consummated for any reason whatsoever, other than a breach of this Agreement by the Underwriters, a default pursuant to Section 8 hereof or a termination of this Agreement pursuant to Section 9(a)(iii), (v), (vi), (vii) or (viii), then the Company shall reimburse the Underwriters in full for their respective out-▇▇▇▇ Fax: of-pocket accountable expenses actually incurred through such date, including, without limitation, fees of counsel to the Underwriters (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇up to a maximum of $50,000), Interim Chief Executive Officerless any amounts previously paid.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith each of the Underwriters that: (ia) The Company shall comply with the provisions of and make all requisite filings with the Commission pursuant to Rules 424 and 430A of the Rules and Regulations and to notify you promptly (in writing, if requested) of all such filings. The Company shall notify you promptly of any request by the Commission for any amendment of or supplement to the Registration Statement, the Effective Prospectus or the Final Prospectus or for additional information; the Company shall prepare and file with the Commission, promptly upon your request, any amendments of or supplements to the Registration Statement, the Effective Prospectus or the Final Prospectus which, in your opinion, may be necessary or advisable in connection with the distribution of the Notes; and the Company shall not file any amendment of or supplement to the Registration Statement, the Effective Prospectus or the Final Prospectus which is not approved by you after reasonable notice thereof. The Company shall advise you promptly of the issuance by the Commission or any jurisdiction or other regulatory body of any stop order or other order suspending the effectiveness of the Registration Statement, suspending or preventing the use of any Preliminary Prospectus, the Effective Prospectus or the Final Prospectus or suspending the qualification of the Notes for offering or sale in any jurisdiction, or of the institution of any proceedings for any such purpose; and the Company shall use its best efforts to reserveprevent the issuance of any stop order or other such order and, prior should a stop order or other such order be issued, to February 15obtain as soon as possible the lifting thereof. (b) The Company will take or cause to be taken all necessary action and furnish to whomever you direct such information as may be reasonably required in qualifying the Notes for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Underwriters may designate (which shall not include the State of New York unless the Company otherwise requests) and will continue such qualifications in effect for as long as may be reasonably necessary to complete the distribution. The Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. (c) Within the time during which a Final Prospectus relating to the Notes is required to be delivered under the Securities Act, 2000the Company shall comply with all requirements imposed upon it by the Securities Act, a sufficient number of shares of Common Stock as now and hereafter amended, and by the Rules and Regulations, as from its authorized but unissued shares of Common Stock time to time in force, so far as is necessary to permit the exercise continuance of sales of or dealings in full the Notes as contemplated by the provisions hereof and the Final Prospectus. If during such period any event occurs as a result of all which the Final Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the outstanding Warrants. The circumstances then existing, not misleading, or if during such period it is necessary to amend the Registration Statement or supplement the Final Prospectus to comply with the Securities Act, the Company is currently organizing a stockholder meeting to increase shall promptly notify you and shall amend the number of authorized shares of Common Stock Registration Statement or supplement the Final Prospectus (at the expense of the Company, and has filed with the SEC prior ) so as to the date hereof a preliminary proxy correct such statement in connection with or omission or effect such stockholder meetingcompliance. (iid) It The Company will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise furnish without charge to the Company Representatives and delivering make available to the original Notice Underwriters copies of Exercise the Registration Statement (four of which shall be signed and shall be accompanied by all exhibits, including any which are incorporated by reference, which have not previously been furnished), each Preliminary Prospectus, the Effective Prospectus and the original Warrant to Final Prospectus, and all amendments and supplements thereto, including any prospectus or supplement prepared after the Company by overnight courier. Each business effective date on which a Notice of Exercise is telecopied to the Registration Statement, in each case as soon as available and received by in such quantities as the Company in accordance with the provisions hereof shall be deemed an "Exercise Date"Underwriters may reasonably request. The Company will transmit deliver to each Underwriter a copy of each document incorporated by reference in the certificates representing shares effective Prospectus and the Final Prospectus which has not previously been furnished. (e) The Company will (i) deliver to you at such office or offices as you may designate as many copies of Common Stock issuable upon exercise the Preliminary Prospectus and Final Prospectus as you may reasonably request, and (ii) for a period of not more than nine months after the Registration Statement becomes effective, send to the Underwriters as many additional copies of the Final Prospectus and any Warrants supplement thereto as you may reasonably request. (together with f) The Company shall make generally available to its security holders, in the certificates representing manner contemplated by Rule 158(b) under the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business Securities Act as promptly as practicable and in any event no later than 90 days after the Exercise Date if end of its fiscal quarter in which the first anniversary of the effective date of the Registration Statement occurs, an earning statement satisfying the provisions of Section 11(a) of the Securities Act covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement. (g) The Company will apply the net proceeds from the sale of the Notes as set forth under the caption "Use of Proceeds" in the Final Prospectus. (h) During a period of five years from the effective date of the Registration Statement, the Company has received will furnish to the original Notice Representatives copies of Exercise all reports and Warrant being exercised other communications (financial or other) furnished by such date. In addition the Company to its shareholders and, as soon as available, copies of any other remedies reports or financial statements furnished or filed by the Company to or with the Commission or any national securities exchange on which any class of securities of the Company may be available listed. (i) The Company will not at any time, directly or indirectly, take any action designed, or which might reasonably be expected to Subscribercause or result in, in or which will constitute, stabilization or manipulation of the event that price of the Company fails Notes to effect delivery facilitate the sale or resale of such shares any of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of ExerciseNotes. The Notice Company will not make bids for or purchases of Exercise and Warrant representing or induce bids for or purchases of, directly or indirectly, any Notes until the portion distribution of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerall Notes has been completed.

Covenants of the Company. For so long as The Company covenants and agrees that: (a) The Company will use its best efforts to cause the Registration Statement and any Securities held amendment thereof, if not effective at the time and date that this Agreement is executed and delivered by Subscriber remain outstandingthe parties hereto, to become effective. If the Registration Statement has become or becomes effective pursuant to Rule 430A of the Rules and Regulations, or the filing of the Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations, the Company acknowledgeswill file the Prospectus, representsproperly completed, warrants pursuant to the applicable paragraph of Rule 424(b) of the Rules and agrees Regulations within the time period prescribed and will provide evidence satisfactory to you of such timely filing. The Company will promptly advise you in writing (i) of the receipt of any comments of the Commission, (ii) of any request of the Commission for amendment of or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus or for additional information, (iii) when the Registration Statement shall have become effective, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the institution of any proceedings for that purpose. If the Commission shall enter any such stop order at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible moment. The Company will not file any amendment or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus of which you have not been furnished with a copy a reasonable time prior to such filing or to which you reasonably object or which is not in compliance with the Act and the Rules and Regulations. (b) The Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or the Prospectus that in your judgment may be necessary or advisable to enable the several Underwriters to continue the distribution of the Common Shares and will use its best efforts to cause the same to become effective as followspromptly as possible. The Company will fully and completely comply with the provisions of Rule 430A of the Rules and Regulations with respect to information omitted from the Registration Statement in reliance upon such Rule. (c) If at any time within the nine-month period referred to in Section 10(a)(3) of the Act during which a prospectus relating to the Common Shares is required to be delivered under the Act any event occurs, as a result of which the Prospectus, including any amendments or 11 supplements, would include an untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or if it is necessary at any time to amend the Prospectus, including any amendments or supplements, to comply with the Act or the Rules and Regulations, the Company will promptly advise you thereof and will promptly prepare and file with the Commission, at its own expense, an amendment or supplement that will correct such statement or omission or an amendment or supplement which will effect such compliance and will use its best efforts to cause the same to become effective as soon as possible; and, in case any Underwriter is required to deliver a prospectus after such nine-month period, the Company upon request, but at the expense of such Underwriter, will promptly prepare such amendment or amendments to the Registration Statement and such Prospectus or Prospectuses as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Act. (d) As soon as practicable, but not later than 45 days after the end of the first quarter ending after one year following the "effective date of the Registration Statement" (as defined in Rule 158(c) of the Rules and Regulations), the Company will make generally available to its security holders an earnings statement (which need not be audited) covering a period of 12 consecutive months beginning after the effective date of the Registration Statement that will satisfy the provisions of the last paragraph of Section 11(a) of the Act and the relevant Rules and Regulations (including, at the option of the Company, Rule 158). (e) During such period as a prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, the Company, at its expense, but only for the nine-month period referred to in Section 10(a)(3) of the Act, will furnish to you or mail to your order copies of the Registration Statement, the Prospectus, the Preliminary Prospectus and all amendments and supplements to any such documents in each case as soon as available and in such quantities as you may request, for the purposes contemplated by the Act and the relevant Rules and Regulations. (f) The Company will deliver to, or upon the order of, the Representatives, from time to time, as many copies of any Preliminary Prospectus as the Representatives may reasonably request. The Company will deliver to, or upon the order of, the Representatives at any time when delivery of a Prospectus is required under the Act, as many copies of the Prospectus in final form, or as thereafter supplemented, as the Representatives may reasonably request. The Company will deliver to the Representatives at or before the First Closing Date four signed copies of the Registration Statement and all amendments thereto including all exhibits filed therewith, and will deliver to the Representatives such number of copies of the Registration Statement, including documents incorporated by reference therein, but without exhibits, and of all amendments thereto, as the Representatives may reasonably request. Prior to the filing thereof with the Commission, the Company will submit to you, for your information, a copy of any post-effective amendment to the Registration Statement and any supplement to the Prospectus or any amended prospectus proposed to be filed. (g) The Company shall cooperate with you and your counsel in order to qualify or register the Common Shares for sale under (or obtain exemptions from the application of) the Blue Sky laws of such jurisdictions as you designate, will comply with such laws and will continue (h) During the period of five (5) years hereafter, the Company will furnish to the Representatives and, upon request of the Representatives, to each of the other Underwriters: (i) The Company shall use its best efforts to reserveas soon as practicable after the end of each fiscal year, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all copies of the outstanding Warrants. The Annual Report of the Company is currently organizing a stockholder meeting to increase containing the number balance sheet of authorized shares the Company as of Common Stock the close of such fiscal year and statements of income, stockholders' equity and cash flows for the year then ended and the opinion thereon of the Company's independent public accountants; (ii) as soon as practicable after the filing thereof, and has copies of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other report filed by the Company with the SEC prior Commission, the NASD or any securities exchange; and (iii) as soon as available, copies of any report or communication of the Company mailed generally to the date hereof a preliminary proxy statement in connection with such stockholder meetingholders of its Common Stock. (iii) It will maintain During the listing period of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business 180 days after the Exercise Date if first date that any of the Company has received the original Notice of Exercise and Warrant being exercised Common Shares are released by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect you for sale to the Company whereupon public, without the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery written consent of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇Mont▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇urities (which consent may be withheld at the sole discretion of Mont▇▇▇▇▇▇ ▇▇▇urities), the Company will not, other than (i) the Common Shares to be sold to the Underwriters pursuant to this Agreement and (ii) shares of Common Stock issued, or issuable upon the exercise of options granted, to employees or directors of, or consultants to, the Company (provided that any such shares of Common Stock issued or issuable upon the exercise of options are not transferable until after the expiration of such 180-day period) issue, offer, sell, grant options to purchase or otherwise dispose of any of the Company's equity securities or any other securities convertible into or exchangeable with its Common Stock or other equity security, or file any registration statement with the Commission other than registration statements on Form S-8. For purposes of this paragraph (i), a sale, offer or other disposition shall be deemed to include any sale of Common Stock to the public in reliance on Rule 144A. (j) The Company will apply the net proceeds of the sale of the Common Shares sold by it substantially in accordance with its statements under the caption "Use of Proceeds" in the Prospectus and will file such reports with the Commission with respect to its sale of the Common Shares and the application of the proceeds therefrom as may be required by Rule 463 under the Act. The Company will invest such proceeds pending their use in such a manner that, upon completion of such investment, the Company will not be an "investment company" as defined in the Investment Company Act of 1940, as amended. (k) The Company will use its best efforts to qualify or register its Common Stock for sale in non-issuer transactions under (or obtain exemptions from the application of) the Blue Sky laws of the State of California (and thereby permit market making transactions and secondary trading in the Company's Common Stock in California), will comply with such Blue Sky laws and will continue such qualifications, registrations and exemptions in effect for a period of five (5) years after the date hereof. (l) The Company will use its best efforts to designate the Common Stock for quotation as a national market system security on the Nasdaq National Market. (m) The Company will maintain a transfer agent and, if necessary under the jurisdiction of incorporation of the Company, a registrar (which may be the same entity as the transfer agent) for its Common Stock. (n) The Company will file Form SR in conformity with the requirements of the Act and the Rules and Regulations. (o) The Company will not file a Form S-8 registration statement until ninety (90) days after the date of the final prospectus filed pursuant to Rule 424(b) of the Rules and Regulations. (p) The Company will inform the Florida Department of Banking and Finance at any time prior to the consummation of the distribution of the Securities by the Underwriters if it commences engaging in business with the government of Cuba or with any person or affiliate located in Cuba. Such information will be provided within 90 days after the commencement thereof or after a change occurs with respect to previously reported information. (q) The Company will use its best efforts to do and perform all things required or necessary to be done and performed under this Agreement by the Company prior to the First Closing Date or the Second Closing Date, as the case may be, and to satisfy all conditions precedent to the delivery of the Common Shares. (r) The Company will use its best efforts to cause all directors, officers, and other beneficial owners of shares of Common Stock to agree with Mont▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇urities that without the prior written consent of Mont▇▇▇▇▇▇ ▇▇▇urities (which consent may be withheld at the sole discretion of Mont▇▇▇▇▇▇ ▇▇▇urities), Interim Chief Executive Officereach of such holders will not, directly or indirectly, sell, offer, contract to sell, make any short sale, pledge or otherwise dispose of any shares of Common Stock (or interest therein or right thereto) that such person, directly or indirectly, beneficially owns or may in the future beneficially own for a period of 180 days following the commencement of the public offering of the Firm Common Shares by the Underwriters. A person shall be deemed to beneficially own shares of Common Stock that are issuable upon the exercise of options, warrants or other rights to acquire Common Stock on or before 180 days following the commencement of the public offering of the Common Shares by the Underwriters. (s) If at any time during the 25-day period after the Registration Statement becomes effective any rumor, publication or event relating to or affecting the Company and the

Covenants of the Company. For so long The Company covenants and agrees with you that: (a) It will cooperate in all respects in making the Prospectus effective and will not at any time, whether before or after the effective date, file any amendment to or supplement to the Prospectus of which you shall not previously have been advised and furnished with a copy or to which you or your counsel shall have reasonably objected or which is not in material compliance with the Act and the Rules and Regulations or applicable state law. As soon as any Securities held by Subscriber remain outstandingthe Company is advised thereof, the Company acknowledgeswill advise you, representsand confirm the advice in writing, warrants and agrees as follows: (i) The Company shall use its best efforts to reserve, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting receipt of any comments of the Commission or any state securities department, when the Registration Statement becomes effective if the provisions of Rule 430A promulgated under the Act will be relied upon, when the Prospectus has been filed in accordance with said Rule 430A, of the effectiveness of any post-effective amendment to increase the number Registration Statement or Prospectus, or the filing of authorized shares any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission or any state securities department for amendment of the Prospectus or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance of any stop order suspending the effectiveness of the Prospectus or any order preventing or suspending the use of any Prospectus or any order suspending trading in the Common Stock of the Company, or of the suspension of the qualification of the Securities, the Option Securities or the Representatives Securities for offering in any jurisdiction, or of the institution of any proceedings for any such purposes, and will use its best efforts to prevent the issuance of any such order and, if issued, to obtain as soon as possible the lifting or dismissal thereof. The Company has filed with caused to be delivered to you copies of such Prospectus, and the SEC prior Company has consented and hereby consents to the date hereof a preliminary proxy statement use of such copies for the purposes permitted by law. The Company authorizes you and the dealers to use the Prospectus and such copies of the Prospectus in connection with such stockholder meeting. (ii) It will maintain the listing sale of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise Securities, the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise Option Securities and the original Warrant Representative's Securities for such period as in the opinion of your counsel and our counsel the use thereof is required to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance comply with the applicable provisions hereof shall be deemed an "Exercise Date"of the Act and the Rules and Regulations. The Company will prepare and file with the states, promptly upon your request, any such amendments or supplements to the Prospectus, and take any other action, as, in the opinion of your counsel, may be necessary or advisable in connection with the initial sale of the Securities, the Option Securities and the Underwriter's Securities and will use its best efforts to cause the same to become effective as promptly as possible. The Company shall file the Prospectus (in form and substance satisfactory to the Underwriter) or transmit the certificates representing shares Prospectus by a means reasonably calculated to result in filing with the Commission pursuant to rule 424(b)(1) or pursuant to Rule 424(b)(3) not later than the Commission's close of Common Stock issuable upon exercise business on the earlier of (i) the second business day following the execution and delivery of this Agreement, and (ii) the fifth business day after the effective date of the Registration Statement. In case of the happening, at any time within such period as a Prospectus is required under the Act to be delivered in connection with the initial sale of the Securities, the Option Securities and the Representative's Securities of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if event of which the Company has received knowledge and which materially affects the original Notice Company, or the securities thereof, and which should be set forth in an amendment of Exercise or a supplement to the Prospectus in order to make the statements therein not then misleading, in light of the circumstances existing at the time the Prospectus is required under the Act to be delivered, or in case it shall be necessary to amend or supplement the Prospectus to comply with the Act, the Rules and Warrant being exercised by such date. In addition to Regulations or any other remedies law, the Company will forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they are made. The preparation and furnishing of any such amendment or supplement to the Prospectus or supplement to be attached to the Prospectus shall be without expense to you. The Company will to the best of its ability comply with the Act, the Exchange Act and applicable state securities laws so as to permit the initial offer and sales of the Securities, the Option Securities and the Representatives Securities under the Act, the Rules and Regulations, and applicable state securities laws. (b) It will cooperate to qualify the Securities and the Option Securities and the Representative's Securities for initial sale under the securities laws of such jurisdictions as you may designate and will make such applications and furnish such information as may be available required for that purpose, provided the Company shall not be required to Subscriberqualify as a foreign corporation or a dealer in securities. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long as the Underwriter may reasonably request. (c) So long as any of the Securities, the Option Securities or the Representative's Securities remain outstanding in the hands of the public, the Company, at its expense, will annually furnish to its shareholders a report of its operations to include financial statements audited by independent public accountants, and will furnish to the Underwriter as soon as practicable after the end of each fiscal year, a balance sheet of the Company as at the end of such fiscal year, together with statements of operations, shareholders' equity, and changes in cash flow of the Company for such fiscal year, all in reasonable detail and accompanied by a copy of the certificate or report thereon of independent public accountants. (d) It will deliver to you at or before the Initial Closing Date three signed copies of the signature pages to the Registration Statement and three copies of the registration statement including all financial statements and exhibits filed therewith, whether or not incorporated by reference. The Company will deliver to you, from time to time until the effective date of the Prospectus, as many copies of the Prospectus as you may reasonably request. The Company will deliver to you on the effective date of the Prospectus and thereafter for so long as a Prospectus is required to be delivered under the Act and the Rules and Regulations as many copies of the Prospectus, in final form, or as thereafter amended or supplemented, as you may from time to time reasonably request. (e) The Company will apply the event that net proceeds from the Company fails to effect delivery sale of such shares the Securities and the Option Securities substantially in the manner set forth under "Use of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke Proceeds" in the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of ExerciseProspectus. The Notice of Exercise and Warrant representing the No portion of the Warrant exercised proceeds shall be delivered as follows: To used, directly or indirectly, to acquire any securities issued by the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇without the prior written consent of the Underwriter. (f) As soon as it is practicable, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇but in any event not later than the first (lst) day of the fifteenth (15th) full calendar month following the effective date of the Registration Statement, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: the Company will make available to its security holders and the Underwriter an earnings statement (▇▇▇which need not be audited) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇covering a period of at least twelve (12) consecutive months beginning after the effective date of the Registration Statement, Interim Chief Executive Officerwhich shall satisfy the requirements of Section 11(a) of the Act and Rule 158(a) of the Rules and Regulations.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstandingTHE MID-TIER COMPANY, THE MHC AND THE BANK. The Company, the Company acknowledgesMid-Tier Company, represents, warrants the MHC and agrees the Bank covenant with the Agent as follows: (a) The Company, the Mid-Tier Company, the MHC and the Bank will prepare and file such amendments or supplements to the Registration Statement, the Prospectus, the Conversion Application, the Members’ Proxy Statement and the Stockholders’ Proxy Statement as may hereafter be required by the Commission Regulations or the OTS Regulations or as may hereafter be requested by the Agent. Following completion of the Subscription and Community Offering, in the event of a Syndicated Community Offering, the Company, the Mid-Tier Company, the MHC and the Bank will (i) promptly prepare and file with the Commission a post-effective amendment to the Registration Statement relating to the results of the Subscription and Community Offering, any additional information with respect to the proposed plan of distribution and any revised pricing information or (ii) if no such post-effective amendment is required, will file with the Commission a prospectus or prospectus supplement containing information relating to the results of the Subscription and Community Offering and pricing information pursuant to Rule 424 of the Securities Act Regulations, in either case in a form acceptable to the Agent. The Company, the Mid-Tier Company, the MHC and the Bank will notify the Agent immediately, and confirm the notice in writing, (i) of the effectiveness of any post-effective amendment of the Registration Statement, the filing of any supplement to the Prospectus and the filing of any amendment to the Conversion Application, (ii) of the receipt of any comments from the OTS or the Commission with respect to the transactions contemplated by this Agreement or the Plan, (iii) of any request by the Commission or the OTS for any amendment to the Registration Statement or the Conversion Application or any amendment or supplement to the Prospectus or for additional information, (iv) of the issuance by the OTS of any order suspending the Offerings or the use of the Prospectus or the initiation of any proceedings for that purpose, (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, and (vi) of the receipt of any notice with respect to the suspension of any qualification of the Securities for offering or sale in any jurisdiction. The Company, the Mid-Tier Company, the MHC and the Bank will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (b) The Company represents and agrees that, unless it obtains the prior consent of the Agent and the Agent represents and agrees that, unless it obtains the prior consent of the Company, it has not made and will not make any offer relating to the offered Securities that would constitute an “issuer free writing prospectus,” as defined in Rule 433, or that would constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission. Any such free writing prospectus consented to by the Company and the Agent is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company represents that it has and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely Commission filing where required, legending and record keeping. The Company need not treat any communication as a free writing prospectus if it is exempt from the definition of prospectus pursuant to Clause (a) of Section 2(a)(10) of the 1933 Act without regard to Rule 172 or 173. (c) The Company, the Mid-Tier Company, the MHC and the Bank will give the Agent notice of its intention to file or prepare any amendment to the Conversion Application or Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus (including any revised prospectus that the Company proposes for use in connection with the Syndicated Community Offering of the Securities that differs from the prospectus on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the Securities Act Regulations), will furnish the Agent with copies of any such amendment or supplement a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file any such amendment or supplement or use any such prospectus to which the Agent or counsel for the Agent may object. (d) The Company, the Mid-Tier Company, the MHC and the Bank will deliver to the Agent as many signed copies and as many conformed copies of the Holding Company Application, the Conversion Application and the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein) as the Agent may reasonably request, and from time to time such number of copies of the Prospectus as the Agent may reasonably request. (e) During the period when the Prospectus is required to be delivered, the Company, the Mid-Tier Company, the MHC and the Bank will comply, at their own expense, with all requirements imposed upon them by the OTS, by the applicable OTS Regulations, as from time to time in force, and by the Nasdaq, Securities Act, the Securities Act Regulations, the Exchange Act, and the rules and regulations of the Commission promulgated thereunder, including, without limitation, Regulation M under the Exchange Act, so far as necessary to permit the continuance of sales or dealing in shares of Common Stock during such period in accordance with the provisions hereof and the Prospectus. (f) If any event or circumstance shall occur as a result of which it is necessary, in the reasonable opinion of counsel for the Agent, to amend or supplement the Registration Statement or Prospectus in order to make the Prospectus not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, the Company, the Mid-Tier Company, the MHC and the Bank will forthwith amend or supplement the Registration Statement or Prospectus (in form and substance satisfactory to counsel for the Agent) so that, as so amended or supplemented, the Registration Statement or Prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a purchaser, not misleading, and the Company, the Mid-Tier Company, the MHC and the Bank will furnish to the Agent a reasonable number of copies of such amendment or supplement. For the purpose of this subsection, the Company, the Mid-Tier Company, the MHC and the Bank will each furnish such information with respect to itself as the Agent may from time to time reasonably request. (g) The Company, the Mid-Tier Company, the MHC and the Bank will take all necessary action, in cooperation with the Agent, to qualify the Securities for offering and sale under the applicable securities laws of such states of the United States and other jurisdictions as the OTS Regulations may require and as the Agent and the Company have agreed; provided, however, that neither the Company, the Mid-Tier Company, the MHC nor the Bank shall be obligated to file any general consent to service of process or to qualify as a foreign corporation in any jurisdiction in which it is not so qualified. In each jurisdiction in which the Securities have been so qualified, the Company, the Mid-Tier Company, the MHC and the Bank will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for a period of not less than one year from the effective date of the Registration Statement. (h) The Company authorizes Sandler ▇’▇▇▇▇▇ and any Selected Dealer to act as agent of the Company in distributing the Prospectus to persons entitled to receive subscription rights and other persons to be offered Securities having record addresses in the states or jurisdictions set forth in a survey of the securities or “blue sky” laws of the various jurisdictions in which the Offerings will be made (the “Blue Sky Survey”). (i) The Company will make generally available to its security holders as soon as practicable, but not later than 60 days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 of the Securities Act Regulations) covering a twelve month period beginning not later than the first day of the Company’s fiscal quarter next following the “effective date” (as defined in said Rule 158) of the Registration Statement. (j) During the period ending on the third anniversary of the expiration of the fiscal year during which the closing of the transactions contemplated hereby occurs, the Company will furnish to its stockholders as soon as practicable after the end of each such fiscal year an annual report (including consolidated statements of financial condition and consolidated statements of income, stockholders’ equity and cash flows, certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), consolidated summary financial information of the Company and the Bank for such quarter in reasonable detail. In addition, such annual report and quarterly consolidated summary financial information shall be made public through the issuance of appropriate press releases at the same time or prior to the time of the furnishing thereof to stockholders of the Company. (k) During the period ending on the third anniversary of the expiration of the fiscal year during which the closing of the transactions contemplated hereby occurs, the Company will furnish to the Agent (i) as soon as publicly available, a copy of each report or other document of the Company furnished generally to stockholders of the Company or furnished to or filed with the Commission under the Exchange Act or any national securities exchange or system on which any class of securities of the Company is listed, and (ii) from time to time, such other information concerning the Company as the Agent may reasonably request. For purposes of this paragraph, any document filed electronically with the Commission shall be deemed furnished to the Agent. (l) The Company, the Mid-Tier Company, the MHC and the Bank will conduct the Conversion in all material respects in accordance with the Plan, the OTS Regulations, the Commission Regulations and all other applicable regulations, decisions and orders, including all applicable terms, requirements and conditions precedent to the Conversion imposed upon the Company, the Mid-Tier Company, the MHC or the Bank by the OTS and the Commission. (m) The Company, the Mid-Tier Company, the MHC and the Bank will comply, at their own expense, with all requirements imposed by the Commission, the OTS, and the Nasdaq or pursuant to the applicable Commission Regulations, OTS Regulations, and Nasdaq regulations as from time to time in force. (n) The Company will promptly inform the Agent upon its receipt of service with respect to any material litigation or administrative action instituted with respect to the Conversion or the Offerings. (o) Each of the Company and the Bank will use the net proceeds received by it from the sale of the Securities in the manner specified in the Prospectus under “Use of Proceeds.” (p) The Company will report the use of proceeds from the Offerings on its first periodic report filed pursuant to Sections 13(a) and 15(d) of the Exchange Act and on any subsequent periodic reports as may be required pursuant to Rule 463 of the Securities Act Regulations. (q) The Company will maintain the effectiveness of the Exchange Act Registration Statement for not less than three years and will comply in all material respects with its filing obligations under the Exchange Act. For three years, the Company will use its best efforts to reserveeffect and maintain the listing of the Common Stock on the Nasdaq Global Market and, once listed on the Nasdaq Global Market, the Company will comply with all applicable corporate governance standards required by the Nasdaq Global Market. The Company will file with the Nasdaq Global Market all documents and notices required by the Nasdaq Global Market of companies that have issued securities that are traded in the over-the-counter market and quotations for which are reported by the Nasdaq Global Market. (r) The Company and the Bank will take such actions and furnish such information as are reasonably requested by the Agent in order for the Agent to ensure compliance with the National Association of Securities Dealers, Inc.’s “Interpretation Relating to Free-Riding and Withholding.” (s) Other than in connection with any employee benefit plan or arrangement described in the Prospectus, the Company will not, without the prior written consent of the Agent, sell or issue, contract to February 15sell or otherwise dispose of, 2000, a sufficient number of any shares of Common Stock from its authorized but unissued shares other than the Securities or Exchange Shares for a period of Common Stock to permit 180 days following the exercise in full of all Closing Time. (t) During the period beginning on the date hereof and ending on the later of the outstanding Warrants. The Company is currently organizing a stockholder meeting third anniversary of the Closing Time or the date on which the Agent receives full payment in satisfaction of any claim for indemnification or contribution to increase which it may be entitled pursuant to Sections 6 or 7 hereof, respectively, made prior to the number third anniversary of authorized shares of Common Stock of the Closing Time, neither the Company, and has filed the Mid-Tier Company, the MHC nor the Bank shall, without the prior written consent of the Agent, take or permit to be taken any action that could result in the Company Common Stock, the Mid-Tier Common Stock or the Bank Common Stock becoming subject to any security interest, mortgage, pledge, lien or encumbrance, with the SEC exception of the intended loan to the Bank’s ESOP by the Company to enable the ESOP to purchase securities in an amount up to 8.0% of the Company Common Stock that will be outstanding following the Conversion. (u) The Company, the Mid-Tier Company, the MHC and the Bank will comply with the conditions imposed by or agreed to with the OTS in connection with its approval of the Holding Company Application and the Conversion Application. (v) During the period ending on the first anniversary of the Closing Time, the Bank will comply with all applicable law and regulation necessary for the Bank to continue to be a “qualified thrift lender” within the meaning of 12 U.S.C. Section 1467a(m). (w) The Company shall not deliver the Securities or the Exchange Shares until the Company, the Mid-Tier Company, the MHC and the Bank have satisfied each condition set forth in Section 5 hereof, unless such condition is waived by the Agent. (x) The MHC, the Mid-Tier Company, the Company or the Bank will furnish to the Agent as early as practicable prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. Closing Date, but no later than two (ii2) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) full business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriberprior thereto, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion copy of the Warrant exercised shall be delivered as follows: To latest available unaudited interim financial statements of the Mid-Tier Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ which have been read by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇& Company, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇as stated in their letters to be furnished pursuant to subsections (e) and (f) of Section 5 hereof. (y) During the period in which the Prospectus is required to be delivered, ▇▇ ▇▇▇▇▇each of the Company, the Mid-▇▇▇▇ Fax: Tier Company, the MHC and the Bank will conduct its business in compliance in all material respects with all applicable federal and state laws, rules, regulations, decisions, directives and orders, including all decisions, directives and orders of the Commission, the OTS and the Nasdaq Global Market. (▇▇▇z) ▇▇▇The Bank will not amend the Plan in any manner that would affect the sale of the Securities or the terms of this Agreement without the consent of the Agent. (aa) The Company, the Mid-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇Tier Company, Interim Chief Executive Officerthe MHC and the Bank will not, prior to the Closing Time, incur any liability or obligation, direct or contingent, or enter into any material transaction, other than in the

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees with each of the Underwriters as follows: (ia) The Company shall use its best efforts to reservecause the Registration Statement and any amendments thereto to become effective as promptly as practicable and will not at any time, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit whether before or after the exercise in full of all effective date of the outstanding Warrants. The Company is currently organizing a stockholder meeting Registration Statement, file any amendment to increase the number of authorized shares of Common Stock Registration Statement or supplement to the Prospectus or file any document under the Act or Exchange Act before termination of the Companyoffering of the Shares by the Underwriters of which the Representative shall not previously have been advised and furnished with a copy, and has filed or to which the Representative shall have objected or which is not in compliance with the SEC prior to Act, the date hereof a preliminary proxy statement in connection with such stockholder meetingExchange Act or the Regulations. (b) As soon as the Company is advised or obtains knowledge thereof, the Company will advise the Representative and confirm the notice in writing, (i) when the Registration Statement, as amended, becomes effective, if the provisions of Rule 430A promulgated under the Act will be relied upon, when the Prospectus has been filed in accordance with said Rule 430A and when any post-effective amendment to the Registration Statement becomes effective, (ii) It of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding, suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of the Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto, or the institution of proceedings for that purpose, (iii) of the issuance by the Commission or by any state securities commission of any proceedings for the suspension of the qualification of any of the Registered Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose, (iv) of the receipt of any comments from the Commission; and (v) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information. If the Commission or any state securities commission authority shall enter a stop order or suspend such qualification at any time, the Company will maintain use its best efforts to obtain promptly the listing lifting of its Common Stock on the OTC Bulletin Boardsuch order. (iiic) It will permit Subscriber to exercise its right to exercise The Company shall file the Warrants by telecopying an executed Prospectus (in form and completed Notice of Exercise substance satisfactory to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company Representative) in accordance with the provisions hereof shall be deemed an "Exercise Date". requirements of the Act. (d) The Company will transmit give the certificates representing shares Representative notice of Common Stock issuable upon exercise its intention to file or prepare any amendment to the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus (including any revised prospectus which the Company proposes for use by the Underwriters in connection with the offering of the Registered Securities which differs from the corresponding prospectus on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the Regulations), and will furnish the Representative with copies of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer such amendment or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice supplement a reasonable amount of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice time prior to such effect proposed filing or use, as the case may be, and will not file any such amendment or supplement to which the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ Representative or Camhy ▇▇▇▇▇▇▇▇▇, ▇ & ▇▇▇▇▇ ▇▇▇ LLP ("Underwriters' Counsel") shall reasonably object. (e) The Company shall endeavor in good faith, in cooperation with the Representative, at or prior to the time the Registration Statement becomes effective, to qualify the Registered Securities for offering and sale under the securities laws of such jurisdictions as the Representative may reasonably designate to permit the continuance of sales and dealings therein for as long as may be necessary to complete the distribution, and shall make such applications, file such documents and furnish such information as may be required for such purpose; provided, however, the Company shall not be required to qualify as a foreign corporation or become subject to service of process in any such jurisdiction. In each jurisdiction where such qualification shall be effected, the Company will, unless the Representative agree that such action is not at the time necessary or advisable, use all reasonable efforts to file and make such statements or reports at such times as are or may reasonably be required by the laws of such jurisdiction to continue such qualification. (f) During the time when a prospectus is required to be delivered under the Act, the Company shall use all reasonable efforts to comply with all requirements imposed upon it by the Act, as now and hereafter amended, and by the Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Registered Securities in accordance with the provisions hereof and the Prospectus, or any amendments or supplements thereto. If at any time when a prospectus relating to the Registered Securities is required to be delivered under the Act, any event shall have occurred as a result of which, in the opinion of counsel for the Company or Underwriters' Counsel, the Prospectus, as then amended or supplemented, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the Prospectus to comply with the Act, the Company will notify the Representative promptly and prepare and file with the Commission an appropriate amendment or supplement in accordance with Section 10 of the Act, each such amendment or supplement to be satisfactory to Underwriters' Counsel, and the Company will furnish to the Underwriters copies of such amendment or supplement as soon as available and in such quantities as the Underwriters may request. (g) As soon as practicable, but in any event not later than 45 days after the end of the 12-month period beginning on the day after the end of the fiscal quarter of the Company during which the effective date of the Registration Statement occurs (90 days in the event that the end of such fiscal quarter is the end of the Company's fiscal year), the Company shall make generally available to its security holders, in the manner specified in Rule 158(b) of the Regulations, and to the Representative, an earnings statement which will be in the detail required by, and will otherwise comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Regulations, which statement need not be audited unless required by the Act, covering a period of at least 12 consecutive months after the effective date of the Registration Statement. (h) During a period of five (5) years after the date hereof, the Company will furnish to its stockholders, as soon as practicable, annual reports (including financial statements audited by independent public accountants) and will make available to its stockholders unaudited quarterly reports of earnings, and will deliver to the Representative: (i) concurrently with furnishing such quarterly reports to its stockholders, statements of income of the Company for each quarter in the form furnished to the Company's stockholders; (ii) concurrently with furnishing such annual reports to its stockholders, a balance sheet of the Company as at the end of the preceding fiscal year, together with statements of operations, stockholders' equity, and cash flows of the Company for such fiscal year, accompanied by a copy of the certificate thereon of independent certified public accountants; (iii) as soon as they are available, copies of all reports (financial or other) mailed to stockholders; (iv) as soon as they are available, copies of all reports and financial statements furnished to or filed with the Commission, the Nasdaq National Market or any securities exchange; (v) every press release and every material news item or article of interest to the financial community in respect of the Company or its affairs which was released or prepared by or on behalf of the Company; and (vi) any additional information of a public nature concerning the Company (and any future subsidiaries) or its businesses which the Representative may reasonably request. During such five-year period, if the Company has active subsidiaries, the foregoing financial statements will be on a consolidated basis to the extent that the accounts of the Company and its subsidiaries are consolidated, and will be accompanied by similar financial statements for any significant subsidiary which is not so consolidated. (i) The Company will maintain a transfer agent (the "Transfer Agent") and, if necessary under the jurisdiction of incorporation of the Company, a registrar (which may be the same entity as the transfer agent) for the Common Stock and the Representative's Warrants. (j) The Company will furnish to the Representative or on the Represen- tative's order, without charge, at such place as the Representative may designate, copies of each Preliminary Prospectus, the Registration Statement and any pre-effective or post-effective amendments thereto (two of which copies will be signed and will include all financial statements and exhibits), each Preliminary Prospectus, the Prospectus, and all amendments and supplements thereto, including any prospectus prepared after the effective date of the Registration Statement, in each case as soon as available and in such quantities as the Representative may reasonably request. (k) On or before the effective date of the Registration Statement, the Company shall provide the Representative with true copies of duly executed, legally binding and enforceable Lock-up Agreements. On or before the Closing Date, the Company shall deliver instructions to the Transfer Agent authorizing it to place appropriate stop transfer orders on the Company's ledgers. (l) The Company shall use its best efforts to cause its officers, directors, stockholders or affiliates (within the meaning of the Regulations) not to take, directly or indirectly, any action designed to, or which might in the future reasonably be expected to cause or result in, stabilization or manipulation of the price of any securities of the Company. (m) The Company shall apply the net proceeds from the sale of the Registered Securities substantially in the manner, and subject to the conditions, set forth under "Use of Proceeds" in the Prospectus. (n) The Company shall timely file all such reports, forms or other documents as may be required (including, but not limited to, a Form SR as may be required pursuant to Rule 463 under the Act) from time to time, under the Act, the Exchange Act, and the Regulations, and all such reports, forms and documents filed will comply as to form and substance with the applicable requirements under the Act, the Exchange Act, and the Regulations. (o) The Company shall cause the Registered Securities to be quoted on the NASDAQ SmallCap Market, and for a period of two (2) years from the date hereof shall use its best efforts to maintain the quotation of the Registered Securities to the extent outstanding. (p) For a period of two (2) years from the Closing Date, the Company shall furnish to the Representative, at the Company's sole expense, daily consolidated transfer sheets relating to the Common Stock. (q) For a period of five (5) years after the effective date of the Registration Statement the Company shall, at the Company's sole expense, take all necessary and appropriate actions to further qualify the Company's securities in all jurisdictions of the United States in order to permit secondary sales of such securities pursuant to the Blue Sky laws of those jurisdictions which do not require the Company to qualify as a foreign corporation or to file a general consent to service of process. (r) The Company (i) prior to the effective date of the Registration Statement, has filed a Form 8-A with the Commission providing for the registration of the Common Stock under the Exchange Act and (ii) as soon as practicable, will use its best efforts to take all necessary and appropriate actions to be included in Standard and Poor's Corporation Descriptions and ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇OTC Manual and to continue such inclusion for a period of not less than five (5) years. (s) The Company agrees that for a period of thirteen (13) months following the effective date of the Registration Statement it will not, ▇▇ ▇▇▇▇▇without the prior written consent of National, offer, issue, sell, contract to sell, grant any option for the sale of or otherwise dispose of any Common Stock, or securities convertible into Common Stock, except for the issuance of the Option Shares, the Representative's Warrants, and shares of Common Stock issued upon the exercise of currently outstanding warrants or options issued under any stock option plan in effect on the Closing Date, shares of Common Stock automatically granted pursuant to any stock option plan in effect on the Closing Date, or shares of Common Stock issued pursuant to any employee stock purchase plan in effect on the Closing Date. (t) Until the completion of the distribution of the Registered Securities, the Company shall not without the prior written consent of National or Underwriters' Counsel, issue, directly or indirectly any press release or other communication or hold any press conference with respect to the Company or its activities or the offering contemplated hereby, other than trade releases issued in the ordinary course of the Company's business consistent with past practices with respect to the Company's operations. (u) For a period equal to the lesser of (i) five (5) years from the date hereof, and (ii) the sale to the public of the Representative's Shares, the Company will not take any action or actions which may prevent or disqualify the Company's use of Form 1 (or other appropriate form) for the registration under the Act of the Representative's Shares. (v) The Company agrees that it shall use its best efforts, which shall include, but shall not be limited to, the solicitation of proxies, to elect one (1) designee of National to the Company's Board of Directors for a period of five (5) years following the Closing, provided that such designee is reasonably acceptable to the Company. (w) The Company agrees that within forty-▇▇▇▇ Fax: five (▇▇▇45) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇days after the Closing it shall retain a public relations firm which is acceptable to National. ▇▇▇▇▇▇▇The Company shall keep such public relations firm, Interim Chief Executive Officeror any replacement, for a period of three (3) years from the Closing. Any replacement public relations firm shall be retained only with the consent of National. (x) The Company agrees that any and all future transactions between the Company and its officers, directors, principal stockholders and the affiliates of the foregoing persons will be on terms no less favorable to the Company than could reasonably be obtained in arm's length transactions with independent third parties, and that any such transactions also be approved by a majority of the Company's outside independent directors disinterested in the transaction. (y) The Company shall prepare and deliver, at the Company's sole expense, to National within the one hundred and twenty (120) day period after the later of the effective date of the Registration Statement or the latest Option Closing Date, as the case may be, one bound volume containing all correspondence with regulatory officials, agreements, documents and all other materials in connection with the offering as requested by the Underwriters' Counsel.

Covenants of the Company. For so long (a) The Company will notify you promptly upon becoming aware of, and (if requested by you) will confirm in writing, (i) when the Registration Statement has become effective (if such Registration Statement has not become effective prior to the execution of this Agreement), if and when any Prospectus is mailed (or otherwise sent) for filing pursuant to Rule 424 under the Securities Act, and when any post-effective amendment to the Registration Statement becomes effective; (ii) any comment of or request by the Commission or any other federal or state agency for amendments or supplements to the Registration Statement or the Prospectus or for additional information; (iii) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose or prohibiting or restraining the use of any Offer Document as a "proxy" statement or "soliciting material" under the Exchange Act; (iv) the issuance by any state securities commission or other regulatory authority of any order suspending the qualification or the exemption from the qualification of the New Securities held by Subscriber remain outstandingunder state securities or Blue Sky laws or the initiation of any proceeding for that purpose; (v) the happening of any event which in the judgment of the Company makes any statement made in the Registration Statement or the Prospectus untrue or which requires the making of any change in the Registration Statement or the Prospectus in order to make the statements therein in the light of the circumstances under which they were made not misleading; (vi) the occurrence of any event which would cause the Company to withdraw or terminate the Exchange Offer or would permit the Company to exercise any right not to accept Old Securities tendered for exchange; (vii) any other information reasonably available to the Company relating to the Exchange Offer which you may from time to time reasonably request. If at any time the Commission shall issue any order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the New Securities under state securities or Blue Sky laws, the Company acknowledges, represents, warrants and agrees as follows:will make every reasonable effort to obtain the withdrawal of such order at the earliest practicable time. (ib) The Company shall will use its best reasonable efforts to reserve, prior cause the Registration Statement and any post-effective amendments thereto to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date"become effective as promptly as practicable. The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together file no such amendments and supplements or make no such changes to which you shall object in writing or which are not in compliance in all material respects with the certificates representing Securities Act or the Warrants not so exercised) Exchange Act. The Company will prepare and file with the Commission, promptly upon your request, any amendment to Subscriber via express courier, by electronic transfer the Registration Statement or otherwise within three (3) business days after amendments or supplements to the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies Prospectus which may be available necessary or advisable in connection with the Exchange Offer so long as each such amendment or supplement complies with all applicable laws, and will use reasonable efforts to Subscribercause the Registration Statement to become effective as promptly as practicable. (c) Prior to the issuance of New Securities, in the event that the Company fails will use reasonable efforts to effect delivery obtain the registration or qualification of the New Securities under the securities or Blue Sky laws of such shares of Common Stock within such three (3) business day period, Subscriber will jurisdictions as may be entitled to revoke required for the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion consummation of the Warrant exercised shall be delivered as follows: To Exchange Offer. (d) The Company will not voluntarily claim, and will actively resist any attempts to claim, the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: benefit of any usury laws against the holders of the New Securities. (▇▇▇e) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerThe Company will fully comply with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstandingThe Company covenants and agrees with each Underwriter that: (a) After the execution and delivery of this Agreement, the Company acknowledgeswill not, representsat any time, warrants whether before or after the Effective Date, file any amendment of or supplement to the Registration Statement or the Prospectus of which you shall not previously have been advised and agrees as follows:furnished with a copy, or which you or Porter, Wright, Morr▇▇ & ▇rth▇▇ ("▇ounsel for the Underwriters") shall not have approved (which approval shall not be unreasonably withheld or delayed) or which is not in compliance with the Act or the Rules and Regulations. (ib) The If the Registration Statement has not become effective, the Company shall will promptly file the Final Amendment with the Commission and will use its best efforts to reservecause the Registration Statement to become effective. If the Registration Statement has become effective, prior the Company will file the Rule 430A Prospectus or other Prospectus with the Commission as promptly as practicable, but in no event later than is permitted by Rule 424(b). The Company will promptly advise you (i) when the Registration Statement, or any post-effective amendment thereto, shall hereafter become effective, or any amendments or supplements to February 15the Prospectus shall have been filed with the Commission; (ii) of any request of the Commission or any state or other regulatory body for any amendment or supplement of the Registration Statement or the Prospectus or for additional information and the nature and substance thereof; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus or prohibiting the offer or sale of any of the Shares or of the initiation of any proceedings for such purpose; (iv) of any receipt by the Company of any notification with respect to the suspension of qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (v) of the happening of any event during the periods in which the Prospectus is to be used in conjunction with the offer or sale of Shares which makes any statement made in the Registration Statement or the Prospectus untrue in any material respect or which requires the making of any changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading. The Company will use its best efforts to prevent the issuance of any stop order or any order preventing or suspending the use of the Registration Statement or Prospectus and, 2000if such order is issued, a sufficient number to obtain the lifting thereof as promptly as possible. (c) The Company will prepare and file with the Commission, upon your request, any such amendments of shares or supplements to the Registration Statement or the Prospectus, in form satisfactory to Squire, Sand▇▇▇ & ▇emp▇▇▇ ("▇ounsel for the Company"), as in the opinion of Common Stock from counsel for the Underwriters may be necessary or advisable in connection with the distribution of the Shares or any change in the price at which, or the terms upon which, the Shares may be offered by you, and will use its authorized but unissued shares of Common Stock best efforts to cause the same to become effective as promptly as possible. (d) The Company will comply with the Act and the Rules and Regulations and the Exchange Act and the rules and regulations thereunder so as to permit the exercise continuance of sales of and dealings in full the Shares under the Act and the Exchange Act. If at any time when a prospectus is required to be delivered under the Act an event shall have occurred as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein not untrue or not misleading in any material respect or to make the Prospectus comply with the Act and the (e) The Company will comply with all of the outstanding Warrantsprovisions of any undertakings contained in the Registration Statement. (f) The Company will take all reasonable actions to furnish to whomever you direct, when and as requested by you, all necessary documents, exhibits, information, applications, instruments and papers as may be required or, in the opinion of counsel for the Underwriters, desirable in order to permit or facilitate the sale of the Shares. The Company is currently organizing will use its best efforts to qualify or register the Shares for sale under the so-called blue sky laws of such jurisdictions as you shall request, to make such applications, file such documents and furnish such information as may be required for such purpose and to comply with such laws so as to continue such qualification in effect so long as required for the purposes of the distribution of the Shares; provided, however, that the Company shall not be required to qualify as a stockholder meeting foreign corporation in any jurisdiction; and provided further that the Company shall not be required to increase file a consent to service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Shares. (g) During the period of two years commencing on the Effective Date, the Company will furnish to each Underwriter, in such number of authorized shares copies as such Underwriter may reasonably request, (i) within 90 days after the end of Common Stock each fiscal year of the Company, either (A) a consolidated balance sheet of the Company and has its then consolidated subsidiaries, and a separate balance sheet of each subsidiary, if any, of the Company the accounts of which are not included in such consolidated balance sheet, as of the end of such fiscal year, and consolidated statements of income and retained earnings of the Company and its then consolidated subsidiaries, and separate statements of income and retained earnings of each of the subsidiaries, if any, of the Company the accounts of which are not included in such consolidated statements, for the fiscal year then ended, all in reasonable detail, prepared in accordance with generally accepted accounting principles, consistently applied, and all certified by independent accountants (within the meaning of the Act and the Rules and Regulations), or (B) the Company's Form 10-K for such fiscal year as filed with the SEC prior Commission in accordance with the Exchange Act; (ii) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, either (A) similar balance sheets as of the end of such fiscal quarter and similar statements of income and retained earnings for the fiscal quarter then ended, all in reasonable detail, and all certified by the Company's principal financial officer or the Company's principal accounting officer as having been prepared in accordance with generally accepted accounting principles, consistently applied, or (B) the Company's Form 10-Q for such fiscal quarter as filed with the Commission in accordance with the Exchange Act; (iii) as soon as available, each report and each proxy or information statement furnished to or filed with the Commission or any securities exchange and each report and financial statement furnished to the date hereof a preliminary proxy statement Company's stockholders generally; and (iv) any material reports filed by the Company in connection with such stockholder meeting. (ii) It will maintain the listing quotation of its Common Stock in the Nasdaq National Market ("Nasdaq/NM") or any listing on the OTC Bulletin Boardany stock exchange. (iiih) It will permit Subscriber to exercise its right to exercise Counsel for the Warrants by telecopying an executed Company, the Company's accountants and completed Notice the officers of Exercise to the Company and delivering will respectively furnish the original Notice of Exercise opinions, the letters and the original Warrant certificates referred to the Company by overnight courier. Each business date on which a Notice in subsections (e), (g), (h) and (i) of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courierSection 10 hereof, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriberand, in the event that the Company fails shall file any amendment to effect delivery the Registration Statement relating to the offering of the Shares or any amendment or supplement to the Prospectus relating to the offering of the Shares subsequent to the Effective Date, whether pursuant to subsection (c) of this Section 7 or otherwise, such counsel, such accountants and such officers will, at the time of such filing or at such subsequent time as you shall specify, respectively, furnish to you such opinions, letters and certificates, each dated the date of its delivery, of the same nature as the opinions, letters and certificates referred to in said subsections (e), (g), (h) and (i), respectively, as you may reasonably request, or, if any such opinion, letter or certificate cannot be furnished by reason of the fact that such counsel or such accountants or any such officer believes that the same would be inaccurate, such counsel or such accountants or any such officer will furnish an accurate opinion, letter or certificate with respect to the same subject matter. (i) Prior to the expiration of the Option, the Company will not issue, directly or indirectly, without first consulting with you and counsel for the Underwriters, any press release or other communication or hold any press conference with respect to the Company or its activities or the offering contemplated hereby. (j) Except as described in the Prospectus or as contemplated by this Agreement, the Company shall not, without your prior written consent, sell, contract to sell or otherwise dispose of any shares of Common Stock within such three Stock, or any securities convertible into shares of Common Stock, for a period of 180 days after the Effective Date. (3k) business day periodThe Company will apply the net proceeds from the sale of the Shares in the manner set forth under "Use of Proceeds" in the Prospectus and will deliver promptly to the Representatives a signed copy of each Form SR filed by it with the Commission. (l) The Company has applied, Subscriber or will, prior to the Effective Date, apply for the listing of the Shares on Nasdaq/NM and will use its best efforts to complete that listing, subject only to official notice of issuance and evidence of satisfactory distribution, prior to the Closing Date. (m) The Company will file with the NASD all documents and notices required of companies that have issued securities that are traded in the over-the-counter market and quotations for which are reported on the Nasdaq/NM. (n) After the Closing Time and the Option Exercise Time, the Company will be entitled to revoke in compliance with the relevant Notice financial record-keeping requirements and internal accounting control requirements of Exercise by delivering a notice to such effect to Section 13(b)(2) of the Exchange Act. (o) As soon as practicable after the Effective Date, the Company whereupon the Company will make generally available to its security holders and Subscriber shall each deliver to you an earnings statement (which need not be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officeraudited)

Covenants of the Company. For The Company covenants and agrees with the Underwriter that: (a) The Company will use its best efforts to cause the Registration Statement to become effective (if it has not already been declared effective) as promptly as possible and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement to the Prospectus of which you shall not previously have been advised and furnished with a copy a reasonable time prior to the proposed filing or to which you or your counsel shall object or which is not in compliance with the Act. If at any time prior to the Termination Date, any event shall occur which in the professional judgment of counsel to the Company or of counsel to the Underwriter would cause the Registration Statement or the Prospectus to include an untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading or otherwise requires an amendment to the Registration Statement or supplement to the Prospectus, the Company will prepare and file with the Commission any amendments to the Registration Statement or supplements to the Prospectus which may be necessary and will cause the same to become effective as soon as practicable, subject to the provisions of the prior sentence. The Company will make all filings of the Prospectus required under the Act. (b) As soon as the Company is advised or obtains knowledge thereof, the Company will advise you of any requests made by the Commission (or any state securities or Blue Sky authority) for amending the Registration Statement, (or any state securities or Blue Sky authority) of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or of the institution of any proceedings for that purpose and will use its best efforts to prevent the issuance of any such order and, if any such order is issued, will use its best efforts to obtain the lifting thereof as promptly as possible. The Company will also promptly comply with any requests for additional information. (c) The Company will furnish to you copies of the Registration Statement, including exhibits, all amendments thereto (including pre- effective and post-effective), each Preliminary Prospectus, the Prospectus and any supplements thereto, in each case as soon as available and in such reasonable quantities as you may, from time to time, request. (d) The Company consents to the use, in accordance with the provisions of the Securities Act and of the securities or Blue Sky laws of the jurisdictions in which the Debentures are offered by the Underwriter or by Selected Dealers, prior to the Effective Date, of each Preliminary Prospectus furnished by the Company (e) The Company will continue to use its best efforts to register or qualify the Debentures for sale by the Underwriter and any Selected Dealers under the securities or Blue Sky laws of such jurisdictions as you may request and will file such consents to service of process or other documents as may be necessary in order to effect such registration or qualification; provided, however, that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to the service of process in suits, other than those arising out of the offering or sale of the Debentures or subject itself to taxation, in any jurisdiction where it is not now so subject. In each jurisdiction where any of the Debentures shall have been registered or qualified as provided above, the Company will continue such registrations or qualifications in effect for so long as may be required for purposes of the distribution of the Debentures and shall file such statements and reports as are or may be required by the laws of such jurisdiction to continue such qualification in effect for so long as there are Debentures outstanding. The Company will notify the Underwriter immediately of, and confirm in writing, the suspension of qualification of the Debentures or threat of such action in any Securities held jurisdiction. The Company will use its best efforts to qualify or register the Debentures for sale in nonissuer transactions under (or obtain exemptions from the application of) securities laws of such states designated by Subscriber the Underwriter (and thereby permit market and making transactions and secondary trading of the Debentures in such states); and will comply with such securities laws and will continue such qualifications, registrations and exemptions in effect for so long as the Debentures remain outstanding. (f) If at any time during the period that the delivery of a Prospectus relating to the Debentures is required under the Act, any event occurs as a result of which the Prospectus, as then amended or supplemented, would include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the Prospectus to comply with the Act, the Company acknowledgespromptly will notify you thereof and will prepare and file with the Commission at its own expense an amendment or supplement which will correct such statement or omission or effect such compliance, representssubject to the requirements of advice and objection contained in the first sentence of paragraph a. (g) As soon as practicable (but in no event later than 90 days after the Effective Date) the Company will make generally available to its security holders, warrants including Debenture holders, and agrees furnish to you, an earnings statement of the Company covering the period of 12 months beginning not later than the first day of the next fiscal quarter following the Effective Date of the Registration Statement which will satisfy the requirements of Section 11(a) or Rule 158 of the Act and which need not be certified by independent public accountants. (h) During a period of five years from the Effective Date, the Company will, as followssoon as practicable, deliver to the Underwriter, without need of request: (i) Copies of each report (financial or other) or proxy solicitation material mailed to security holders of the Company; (ii) After the end of each of the first three fiscal quarters, a copy of the statement of income of the Company for such quarter and a copy of the balance sheet of the Company as of the end of such quarter all in reasonable detail and certified by its principal financial or accounting officer or, in the alternative, a report on Form 10-Q or 10-QSB, as filed with the Commission; (iii) After the end of each fiscal year, a balance sheet of the Company as of the end of such fiscal year, together with statements of income, changes in cash flows and stockholders' equity for such fiscal year, in reasonable detail and accompanied by a copy of the certificate or report thereon of the independent certified public accountants or, in the alternative, a report on Form 10-K or Form 10-KSB for such fiscal year; and (iv) Copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange or Nasdaq. (i) The Company shall use its best efforts will file with the Commission in a timely manner all reports on Form SR required by Rule 463 and will furnish to reserveyou copies of any such reports as soon as practicable after the filing period. (j) During the period that the Company is required to furnish reports pursuant to paragraph h above, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all Company will notify you promptly of the outstanding Warrants. commencement of any litigation or proceedings against the Company or any of its officers. (k) The Company is currently organizing a stockholder meeting to increase will apply the number of authorized shares of Common Stock net proceeds from the sale of the Company, and has filed Debentures in the manner set forth under the caption "Use of Proceeds" in the Prospectus. (l) The Company shall cooperate with the SEC prior to the date hereof a preliminary proxy statement Underwriter and its counsel in connection with their investigation of the Company and related matters and shall furnish to the Underwriter or its counsel all such stockholder meetinginformation and documents as may be requested. (m) The Company agrees that from the date of its execution of this Agreement to the Final Closing Date, it will issue press releases, make public statements and respond to inquiries of the press and securities analysts only (i) in accordance with its obligations under the Securities Exchange Act of 1934, as amended, after conferring with its counsel or (ii) It will maintain after conferring with its counsel and with the listing consent of its Common Stock on the OTC Bulletin BoardUnderwriter. (iiin) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit not claim the certificates representing shares of Common Stock issuable upon exercise benefit of any Warrants usury laws against any holders of the Debentures. (together o) The Company will provide the Underwriter with copies of certificates and supporting documentation furnished to the certificates representing Trustee pursuant to the Warrants Indenture or otherwise. (p) Continue to appoint its current auditors or any replacement firm of auditors acceptable to you to audit its financial statements, provided that you shall not so exercisedunreasonably withhold your consent to a replacement. (q) to Subscriber via express courierThe Company will pay, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In in addition to the Underwriter commission and discount referred to in paragraph 3(a) and management fee, accountable expenses and non-accountable expense allowance (as described in paragraph 4(c) hereof), upon the closing of the sale of any of the Debentures, unless otherwise limited by this Agreement, all other remedies which may be available expenses related to Subscriber, in the event that subject matter of this Agreement including: (i) all expenses incident to the Company fails to effect issuance and delivery of such shares of Common Stock within such three the Debentures; (3ii) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion first $20,000 of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ expenses charged by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇Corporation, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇as financial printer, ▇▇ ▇▇▇▇▇for services rendered in connection with the offering described in the Prospectus and one-▇▇▇▇ Fax: half of the expenses charged for printing Preliminary Prospectuses; (▇▇▇iii) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇all expenses incident to the preparation, filing, delivery and qualification of the Indenture and any amendments, supplements or submissions related thereto; (iv) all Commission, National Association of Securities Dealers, Inc. ("NASD") and state securities or Blue Sky filing fees and all fees and expenses of legal counsel for the Underwriter incurred in registering the Debentures for sale under the securities or blue sky laws of such states as the Underwriter may designate; and (v) the cost of all certificates representing the Debentures; (vi) the fees and expenses of the Trustee and paying agent under the Indenture; (vii) the cost of preparing two leather bound volumes of all documents (Closing Books) related to the offering to be delivered to the Underwriter; (viii) the fees and expenses of the Company's independent accounts, including the cost of "cold comfort" review; and (ix) the fees and expenses of legal counsel for the Company. ▇▇▇▇▇▇▇Whether or not the transactions contemplated hereunder are consummated, Interim Chief Executive Officerthe Company shall reimburse the Underwriter for all its costs, fees and expenses incurred in connection with the performance of the Underwriter's obligations hereunder, including, without limiting the generality of the foregoing, (i) all fees and expenses of legal counsel for the Underwriter incurred in preparing the Registration Statement, Indenture and this Agreement and in connection with review of the Underwriter's compensation by the NASD; (ii) all costs and expenses incurred by the Underwriter in connection with the preparation, filing and distribution of the Registration Statement, each preliminary prospectus and the Prospectus (including all exhibits and financial statements) and all amendments and supplements thereto; (iii) all advertising, marketing and sales expenses incurred in connection with the sale of the Debentures; and (iv) any and all expenses of the Underwriter in connection with this Agreement and the sale of the Debentures, provided that the Company shall not be obligated to reimburse the Underwriter for accountable expenses in excess of $120,000 ($140,000 in the event all the Debentures are sold). Notwithstanding the obligations of the Company to reimburse the Underwriter for its expenses pursuant to the first paragraph of this subsection 5(q), in the event that the Underwriter fails to perform its obligations under this Agreement, through no fault of the Company or any third party not affiliated with the Underwriter, the Company shall only be obligated to reimburse the Underwriter for its expenses up to $75,000. The Underwriter acknowledges that it has received $25,000 from the Company as an advance against the Company's expense reimbursement obligations. (r) The Company and Subsidiaries will maintain through the Final Closing Date insurance of the types and in amounts which are adequate for their businesses.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees with each of the Underwriters as follows: (ia) The Company shall use its best efforts to reservecause the Registration Statement and any amendments thereto to become effective as promptly as practicable and will not at any time, whether before or after the effective date of the Registration Statement, file any amendment to the Registration Statement or supplement to the Prospectus or file any document under the Act or Exchange Act before termination of the offering of the Shares by the Underwriters of which the Representative shall not previously have been advised and furnished with a copy, or to which the Representative shall have objected or which is not in compliance with the Act, the Exchange Act or the Regulations. (b) As soon as the Company is advised or obtains knowledge thereof, the Company will advise the Representative and confirm the notice in writing, (i) when the Registration Statement, as amended, becomes effective, if the provisions of Rule 430A promulgated under the Act will be relied upon, when the Prospectus has been filed in accordance with said Rule 430A and when any post-effective amendment to the Registration Statement becomes effective, (ii) of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding, suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of the Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto, or the institution of proceedings for that purpose, (iii) of the issuance by the Commission or by any state securities commission of any proceedings for the suspension of the qualification of any of the Registered Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose, (iv) of the receipt of any comments from the Commission; and (v) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information. If the Commission or any state securities commission authority shall enter a stop order or suspend such qualification at any time, the Company will use its best efforts to obtain promptly the lifting of such order. (c) The Company shall file the Prospectus (in form and substance satisfactory to the Representative) in accordance with the requirements of the Act. (d) The Company will give the Representative notice of its intention to file or prepare any amendment to the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus (including any revised prospectus which the Company proposes for use by the Underwriters in connection with the offering of the Registered Securities which differs from the corresponding prospectus on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the Regulations), and will furnish the Representative with copies of any such amendment or supplement a reasonable amount of time prior to February 15such proposed filing or use, 2000as the case may be, a sufficient number and will not file any such amendment or supplement to which the Representative or Camhy Karl▇▇▇▇▇ & ▇tei▇ ▇▇▇ ("Underwriters' Counsel") shall reasonably object. (e) The Company shall endeavor in good faith, in cooperation with the Representative, at or prior to the time the Registration Statement becomes effective, to qualify the Registered Securities for offering and sale under the securities laws of shares of Common Stock from its authorized but unissued shares of Common Stock such jurisdictions as the Representative may reasonably designate to permit the exercise in full continuance of all of sales and dealings therein for as long as may be necessary to complete the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Companydistribution, and has filed with shall make such applications, file such documents and furnish such information as may be required for such purpose; provided, however, the SEC prior Company shall not be required to qualify as a foreign corporation or become subject to service of process in any such jurisdiction. In each jurisdiction where such qualification shall be effected, the date hereof a preliminary proxy statement in connection with Company will, unless the Representative agree that such stockholder meetingaction is not at the time necessary or advisable, use all reasonable efforts to file and make such statements or reports at such times as are or may reasonably be required by the laws of such jurisdiction to continue such qualification. (iif) It will maintain During the listing of its Common Stock on time when a prospectus is required to be delivered under the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to Act, the Company and delivering the original Notice of Exercise and the original Warrant shall use all reasonable efforts to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received comply with all requirements imposed upon it by the Company Act, as now and hereafter amended, and by the Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Registered Securities in accordance with the provisions hereof and the Prospectus, or any amendments or supplements thereto. If at any time when a prospectus relating to the Registered Securities is required to be delivered under the Act, any event shall have occurred as a result of which, in the opinion of counsel for the Company or Underwriters' Counsel, the Prospectus, as then amended or supplemented, includes an untrue statement of a material fact or omits to state any material fact required to be deemed an "Exercise Date". The stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the Prospectus to comply with the Act, the Company will transmit notify the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together Representative promptly and prepare and file with the certificates representing Commission an appropriate amendment or supplement in accordance with Section 10 of the Warrants Act, each such amendment or supplement to be satisfactory to Underwriters' Counsel, and the Company will furnish to the Underwriters copies of such amendment or supplement as soon as available and in such quantities as the Underwriters may request. (g) As soon as practicable, but in any event not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business later than 45 days after the Exercise Date if end of the 12-month period beginning on the day after the end of the fiscal quarter of the Company has received during which the original Notice effective date of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, the Registration Statement occurs (90 days in the event that the Company fails to effect delivery end of such shares fiscal quarter is the end of Common Stock within such three (3the Company's fiscal year), the Company shall make generally available to its security holders, in the manner specified in Rule 158(b) business day periodof the Regulations, Subscriber and to the Representative, an earnings statement which will be entitled in the detail required by, and will otherwise comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Regulations, which statement need not be audited unless required by the Act, covering a period of at least 12 consecutive months after the effective date of the Registration Statement. (h) During a period of five (5) years after the date hereof, the Company will furnish to revoke the relevant Notice its stockholders, as soon as practicable, annual reports (including financial statements audited by independent public accountants) and will make available to its stockholders unaudited quarterly reports of Exercise by delivering a notice to such effect earnings, and will deliver to the Company whereupon Representative: (i) concurrently with furnishing such quarterly reports to its stockholders, statements of income of the Company and Subscriber shall for each be restored quarter in the form furnished to their respective positions immediately prior the Company's stockholders; (ii) concurrently with furnishing such annual reports to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion its stockholders, a balance sheet of the Warrant exercised shall be delivered Company as follows: To at the Company: Spatializer Audio Laboratoriesend of the preceding fiscal year, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇together with statements of operations, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇stockholders' equity, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: and cash flows of the Company for such fiscal year, accompanied by a copy of the certificate thereon of independent certified public accountants; (▇▇▇iii) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇as soon as they are available, Interim Chief Executive Officercopies of all reports (financial or other) mailed to stockholders; (iv) as soon as they are available, copies of all reports and financial statements furnished to or filed with the Commission, the Nasdaq National Market or any securities exchange;

Covenants of the Company. For so long as 10.1 If execution, delivery and performance of this Agreement and the Pledged Equity Interest hereunder requires any Securities held by Subscriber remain outstandingconsent, license, waiver, authorization from any third party or any approval, license, waiver from or registration or filing with any government authority, the Company acknowledges, represents, warrants and agrees as follows: (i) The Company shall use its best efforts to reservesecure and maintain such consent, license, waiver, authorization, approval, registration or fiing. 10.2 Without prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all written consent of the outstanding Warrants. The Company is currently organizing a stockholder meeting Pledgee, it will not assist or cause the Pledgors to increase create any new pledge or any other security interest upon the number of authorized shares of Common Stock Pledged Security Interest,. 10.3 Without prior written consent of the CompanyPledgee, it will not assist or cause the Pledgors to transfer the Pledged Equity Interest. 10.4 In the event of any lawsuit, arbitration or claim which may have adverse effect upon the interest of the Company or Pledgee under this Agreement or any other Transaction Document or upon the Pledged Equity Interest, it warrants to notify the Pledgee immediately in writing and, at the reasonable request of the Pledgee, take all measures necessary to protect the interest of the Pledgee upon the Pledged Equity Interest 10.5 It may not make or cause to make any conduct or action which may have any adverse effect upon the interest of the Pledgee under this Agreement or any other Transaction Document or upon the Pledged Equity Interest. 10.6 The Pledgors shall provide quarterly financial statements, including the balance sheet, income statement and has filed cash flow statement, of the Company within the first month of the immediately next quarter to the Pledgee. 10.7 It will use its best efforts to take all measures necessary to complete registration of the Pledge with the SEC prior competent industrial and commercial authority immediately after execution of this Agreement. Upon reasonable request of the Pledgee, it will take all measures and execute all documents (including without limitation any supplement hereto) necessary to ensure realization and perfection of the date hereof a preliminary proxy statement in connection with such stockholder meetingPledged Equity Interest by the Pledgee. (ii) 10.8 It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber take all measures necessary to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of complete any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To Pledged Equity Interest arising from enforcement of the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerPledge under this Agreement.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith you that: (ia) The Company shall use its best efforts to reservecause the Registration Statement and any amendments thereto to become effective as promptly as practicable and will not at any time, prior whether before or after the effective date, file any amendment to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock or supplement to permit the exercise in full of all Registration Statement or supplement to the Prospectus or file any document under the Act or Exchange Act before the termination of the outstanding Warrants. The offering of Securities to the public by the Underwriters of which you shall not previously have been advised and furnished with a copy or to which you or your counsel shall have objected or which is not in material compliance with the Act, the Exchange Act and the Rules and Regulations or applicable state law. (b) As soon as the Company is currently organizing a stockholder meeting advised thereof, the Company will advise you, and confirm the advice in writing, of the receipt of any comments of the Commission or any state securities department, when the Registration Statement becomes effective if the provisions of Rule 430A promulgated under the Act will be relied upon, when the Prospectus has been filed in accordance with said Rule 430A, of the effectiveness of any post-effective amendment to increase the number Registration Statement or Prospectus, or the filing of authorized shares any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission or any state securities department for amendment of the Prospectus or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance of any stop order suspending the effectiveness of the Prospectus or any order preventing or suspending the use of any Prospectus or any order suspending trading in the Common Stock of the Company, or of the suspension of the qualification of the Securities or the Representatives Securities for offering in any jurisdiction, or of the institution of any proceedings for any such purposes, and will use its best efforts to prevent the issuance of any such order and, if issued, to obtain as soon as possible the lifting or dismissal thereof. (c) The Company has filed with caused to be delivered to you copies of such Prospectus, and the SEC prior Company has consented and hereby consents to the date hereof a preliminary proxy statement use of such copies for the purposes permitted by law. The Company authorizes you and the dealers to use the Prospectus and such copies of the Prospectus in connection with the sale of the Securities and the Representatives' Securities for such stockholder meetingperiod as in the opinion of your counsel and our counsel the use thereof is required to comply with the applicable provisions of the Act and the Rules and Regulations. The Company will prepare and file with the states, promptly upon your request, any such amendments or supplements to the Prospectus, and take any other action, as, in the opinion of your counsel, may be necessary or advisable in connection with the initial sale of the Securities, the Option Securities and the Securities and will use its best efforts to cause the same to become effective as promptly as possible. (d) The Company shall file the Prospectus (in form and substance satisfactory to the Representatives) or transmit the Prospectus by a means reasonably calculated to result in filing with the Commission pursuant to rule 424(b)(1) or pursuant to Rule 424(b)(3) not later than the Commission's close of business on the earlier of (i) the second business day following the execution and delivery of this Agreement, and (ii) It will maintain the listing fifth business day after the effective date of its Common Stock on the OTC Bulletin BoardRegistration Statement. (iiie) It will permit Subscriber In case of the happening, at any time within such period as a Prospectus is required under the Act to exercise its right to exercise be delivered in connection with the Warrants by telecopying initial sale of the Securities and the Representatives' Securities of any event of which the Company has knowledge and which materially affects the Company or the Acquisition Companies, or the securities thereof, and which should be set forth in an executed and completed Notice amendment of Exercise or a supplement to the Prospectus in order to make the statements therein not then misleading, in light of the circumstances existing at the time the Prospectus is required under the Act to be delivered, or in case it shall be necessary to amend or supplement the Prospectus to comply with the Act, the Rules and Regulations or any other law, the Company will forthwith prepare and delivering furnish to you copies of such amended Prospectus or of such supplement to be attached to the original Notice Prospectus, each such amended Prospectus or supplement to be satisfactory to you and your counsel, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of Exercise a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they are made. The preparation and furnishing of any such amendment or supplement to the Prospectus or supplement to be attached to the Prospectus shall be without expense to you. (f) The Company will to the best of its ability comply with the Act, the Exchange Act and applicable state securities laws so as to permit the initial offer and sales of the Securities and the original Warrant Representatives Securities under the Act, the Rules and Regulations, and applicable state securities laws. (g) The Company will cooperate to qualify the Initial Securities and the Option Securities and the Representatives' Securities for initial sale under the securities laws of such jurisdictions as you may designate to permit the continuance of sales and dealings therein for as long as may be necessary to complete the distribution contemplated hereby and will make such applications and furnish such information as may be required for that purpose, provided the Company shall not be required to qualify as a foreign corporation or a dealer in securities. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long as the Representatives may reasonably request. (h) So long as any of the Initial Securities, the Option Securities or the Representatives' Securities remain outstanding in the hands of the public, the Company, at its expense, will annually furnish to its stockholders a report of its operations to include financial statements audited by independent public accountants, and will furnish to the Representatives as soon as practicable after the end of each fiscal year, a balance sheet of the Company as at the end of such fiscal year, together with statements of operations, stockholders' equity, and changes in cash flow of the Company for such fiscal year, all in reasonable detail and accompanied by overnight couriera copy of the certificate or report thereon of independent public accountants. (i) The Company will deliver to you at or before the Initial Closing Date three signed copies of the signature pages to the Registration Statement and three copies of the registration statement including all financial statements and exhibits filed therewith, whether or not incorporated by reference. Each business The Company will deliver to you, from time to time until the effective date of the Prospectus, as many copies of the Prospectus as you may reasonably request. The Company will deliver to you on the effective date of the Prospectus and thereafter for so long as a Prospectus is required to be delivered under the Act and the Rules and Regulations as many copies of the Prospectus, in final form, or as thereafter amended or supplemented, as you may from time to time reasonably request. (j) The Company will apply the net proceeds from the sale of the Securities substantially in the manner set forth under "Use of Proceeds" in the Prospectus. No portion of the proceeds shall be used, directly or indirectly, to acquire any securities issued by the Company, without the prior written consent of the Representatives. (k) As soon as it is practicable, but in any event not later than the first (1st) day of the fifteenth (15th) full calendar month following the effective date of the Registration Statement, the Company will make available to its security holders and the Representatives an earnings statement (which need not be audited) covering a Notice period of Exercise is telecopied at least twelve (12) consecutive months beginning after the effective date of the Registration Statement, which shall satisfy the requirements of Section 11(a) of the Act and Rule 158(a) of the Rules and Regulations. (l) Non-Accountable Expense Allowance and other Costs and Expenses. The Company shall pay to the Representatives at each closing date, and to be deducted from the purchase price for the Securities an amount equal to three percent (3%) of the gross proceeds received by the Company in accordance with from the provisions hereof shall be deemed an "Exercise Date". The Company will transmit sale of the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by Securities at such date. In addition to any other remedies which may be available to Subscriberclosing date less, in the event that case of the Initial Closing Date, the sum of $50,000 previously paid by the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Securities, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇Inc. If the sale of the Securities by the Representatives is not consummated for any reason not attributable to the Representatives, ▇▇ ▇▇▇▇▇including if this Agreement is terminated by the Underwriters in accordance with the provisions of SECTION 5 or SECTION 9(a), or if (i) the Company unilaterally withdraws the Registration Statement or does not proceed with the public offering for reasons other than the affirmative wrongdoing of the Representatives, or (ii) the representations in SECTION 3 hereof are not correct or the covenants cannot be complied with, or (iii) there has been a materially adverse change in the condition, prospects or obligations of the Company or a materially adverse change in stock market conditions from current conditions, all as determined by the Representatives, then the Company shall reimburse the Representatives for its out of pocket expenses including without limitation, its legal fees and disbursements all on a non-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officeraccountable basis.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith the several Underwriters that: (ia) The Company shall Marquee will use its best efforts to reservecause the Registration Statement to become effective as promptly as possible. If required, Marquee will file the Prospectus or any Term Sheet that constitutes a part thereof and any amendment or supplement thereto with the Commission in the manner and within the time period required by Rules 434 and 424(b) under the Act. Upon notification from the Commission that the Registration Statement has become effective, Marquee will so advise you and will not at any time, whether before or after the effective date, file the Prospectus, Term Sheet or any amendment to the Registration Statement or supplement to the Prospectus of which you shall not previously have been advised and furnished with a copy or to which you or your counsel shall have objected in writing or which is not in compliance with the Act and the Rules and Regulations. At any time prior to February 15, 2000, a sufficient number the later of shares of Common Stock from its authorized but unissued shares of Common Stock to permit (A) the exercise in full of completion by all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock Underwriters of the Companydistribution of the Units contemplated hereby (but in no event more than nine months after the date on which the Registration Statement shall have become or been declared effective) and (B) 25 days after the date on which the Registration Statement shall have become or been declared effective, Marquee will prepare and has filed file with the SEC prior Commission, promptly upon your request, any amendments or supplements to the date hereof a preliminary proxy statement Registration Statement or Prospectus which, in your opinion, may be necessary or advisable in connection with such stockholder meeting. (ii) It the distribution of the Units. As soon as Marquee is advised thereof, Marquee will maintain advise you, and confirm the listing advice in writing, of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise receipt of any comments of the Warrants by telecopying an executed and completed Notice Commission, of Exercise the effectiveness of any post-effective amendment to the Company Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order or threat thereof suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Units for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and delivering will use its best efforts to prevent the original Notice issuance of Exercise any such order, and, if issued, to obtain as soon as possible the lifting thereof. Marquee has caused to be delivered to you copies of each Preliminary Prospectus, and Marquee has consented and hereby consents to the use of such copies for the purposes permitted by the Act. Marquee authorizes the Underwriters and dealers to use the Prospectus in connection with the sale of the Units for such period as in the opinion of counsel to the several Underwriters the use thereof is required to comply with the applicable provisions of the Act and the original Warrant Rules and Regulations. In case of the happening, at any time within such period as a Prospectus is required under the Act to be delivered in connection with sales by an underwriter or dealer of any event of which Marquee has knowledge and which materially affects the Company or the securities of Marquee, or which in the opinion of counsel for the Company or counsel for the Underwriters should be set forth in an amendment to the Company by overnight courier. Each business date on which Registration Statement or a Notice supplement to the Prospectus in order to make the statements therein not then misleading, in light of Exercise the circumstances existing at the time the Prospectus is telecopied required to be delivered to a purchaser of the Units or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the Rules and received by Regulations, the Company will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in accordance such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state any material facts necessary in order to make the statements in the Prospectus, in light of the circumstances under which they are made, not misleading. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be without expense to the Underwriters, except that in case any Underwriter is required, in connection with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit sale of the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) Units to Subscriber via express courier, by electronic transfer deliver a Prospectus nine months or otherwise within three (3) business days more after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion effective date of the Warrant exercised shall be delivered as follows: To Registration Statement, Marquee will upon request of and at the Company: Spatializer Audio Laboratoriesexpense of the Underwriter, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officeramend or

Covenants of the Company. For The Company covenants and agrees that: (a) The Company will use its best efforts to cause the Registration Statement and any amendment thereof, if not effective at the time and date that this Agreement is executed and delivered by the parties hereto, to become effective. If the Registration Statement has become or becomes effective pursuant to Rule 430A of the Rules and Regulations, or the filing of the Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations, the Company will file the Prospectus, properly completed, pursuant to the applicable paragraph of Rule 424(b) of the Rules and Regulations within the time period prescribed and will provide evidence satisfactory to you of such timely filing. The Company will promptly advise you in writing (i) of the receipt of any comments of the Commission, (ii) of any request of the Commission for amendment of or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus or for additional information, (iii) when the Registration Statement shall have become effective, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the institution of any proceedings for that purpose. If the Commission shall enter any such stop order at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible moment. The Company will not file any amendment or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus of which you have not been furnished with a copy a reasonable time prior to such filing or to which you reasonably object or which is not in compliance with the Act and the Rules and Regulations. (b) The Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or the Prospectus which in your judgment may be necessary or advisable to enable the several Underwriters to continue the distribution of the Common Shares and will use its best efforts to cause the same to become effective as promptly as possible. The Company will fully and completely comply with the provisions of Rule 430A of the Rules and Regulations with respect to information omitted from the Registration Statement in reliance upon such Rule. (c) If at any time within the nine-month period referred to in Section 10(a) (3) of the Act during which a prospectus relating to the Common Shares is required to be delivered under the Act any event occurs, as a result of which the Prospectus, including any amendments or supplements, would include an untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or if it is necessary at any time to amend the Prospectus, including any amendments or supplements, to comply with the Act or the Rules and Regulations, the Company will promptly advise you thereof and will promptly prepare and file with the Commission, at its own expense, an amendment or supplement which will correct such statement or omission or an amendment or supplement which will effect such compliance and will use its best efforts to cause the same to become effective as soon as possible; and, in case any Underwriter is required to deliver a prospectus after such nine-month period, the Company upon request, but at the expense of such Underwriter, will promptly prepare such amendment or amendments to the Registration Statement and such Prospectus or Prospectuses as may be necessary to permit compliance with the requirements of Section 10(a) (3) of the Act. (d) The Company will timely file such reports pursuant to the Exchange Act as are necessary in order to make generally available to its security holders as soon as practicable an earnings statement for the purposes of, and to provide the benefits contemplated by, the last paragraph of Section 11(a) of the Act. (e) During such period as a prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, the Company, at its expense, but only for the nine-month period referred to in Section 10(a) (3) of the Act, will furnish to you or mail to your order copies of the Registration Statement, the Prospectus, the Preliminary Prospectus and all amendments and supplements to any such documents in each case as soon as available and in such quantities as you may request, for the purposes contemplated by the Act. (f) The Company shall cooperate with you and your counsel in order to qualify or register the Common Shares for sale under (or obtain exemptions from the application of) the Blue Sky or Canadian securities laws of such jurisdictions as you designate, will comply with such laws and will continue such qualifications, registrations and exemptions in effect so long as reasonably required for the distribution of the Common Shares. The Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any Securities held by Subscriber remain outstandingsuch jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise you promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Common Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company, with your cooperation, will use its best efforts to obtain the withdrawal thereof. (g) During the period of five years hereafter, the Company acknowledgeswill furnish to the Representatives and, representsupon request of the Representatives, warrants and agrees as followsto each of the other Underwriters: (i) The Company shall use its best efforts to reserveas soon as practicable after the end of each fiscal year, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all copies of the outstanding Warrants. The Annual Report of the Company is currently organizing a stockholder meeting to increase containing the number balance sheet of authorized shares the Company as of Common Stock the close of such fiscal year and statements of income, shareholders' equity and cash flows for the year then ended and the opinion thereon of the Company's independent public accountants; (ii) as soon as practicable after the filing thereof, and has copies of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other report filed by the Company with the SEC prior Commission, the NASD or any securities exchange; and (iii) as soon as available, copies of any report or communication of the Company mailed generally to the date hereof a preliminary proxy statement in connection with such stockholder meetingholders of its Common Stock. (iih) It will maintain During the listing period of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business 180 days after the Exercise Date if first date that any of the Company has received the original Notice of Exercise and Warrant being exercised Common Shares are released by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect you for sale to the Company whereupon public, without the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery written consent of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇Mont▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇urities (which consent may be withheld at the sole discretion of Mont▇▇▇▇▇▇ ▇▇▇▇▇Securities), ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: the Company will not other than pursuant to outstanding stock options and warrants disclosed in the Prospectus issue, offer, sell, grant options to purchase or otherwise dispose of any of the Company's equity securities or any other securities convertible into or exchangeable with its Common Stock or other equity security. (▇▇▇i) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇The Company will apply the net proceeds of the sale of the Common Shares sold by it substantially in accordance with its statements under the caption "Use of Proceeds" in the Prospectus. (j) The Company will use its best efforts to qualify or register its Common Stock for sale in non- issuer transactions under (or obtain exemptions from the application of) the Blue Sky laws of the State of California (and thereby permit market making transactions and secondary trading in the Company's Common Stock in California), will comply with such Blue Sky laws and will continue such qualifications, registrations and exemptions in effect for a period of five years after the date hereof. (k) The Company will use its best efforts to designate the Common Stock for quotation as a national market system security on The Nasdaq Stock Market. ▇▇▇▇▇▇▇You, Interim Chief Executive Officeron behalf of the Underwriters, may, in your sole discretion, waive in writing the performance by the Company of any one or more of the foregoing covenants or extend the time for their performance.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith the Underwriter that: (ia) The Company shall will use its best efforts to reservecause the Registration Statement to be declared effective. If required, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of Company will file the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, Prospectus and has filed any amendment or supplement thereto with the SEC Commission in the manner and within the time period required by Rule 424(b) under the Act. Upon notification from the Commission that the Registration Statement has become effective, the Company will so advise the Underwriter and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement to the Prospectus of which the Underwriter shall not previously have been advised and furnished with a copy or to which the Underwriter or its counsel shall have reasonably objected in writing or which is not in compliance with the Act and the Rules and Regulations. At any time prior to the later of (A) the completion by the Underwriter of the distribution of the Units contemplated hereby (but in no event more than nine months after the date hereof a preliminary proxy statement on which the Registration Statement shall have been declared effective) and (B) 25 days after the date on which the Registration Statement shall have been declared effective, the Company will prepare and file with the Commission, promptly upon the Underwriter's request, any amendments or supplements to the Registration Statement or Prospectus which, in connection with such stockholder meeting. (ii) It will maintain the listing opinion of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise counsel to the Company and delivering the original Notice Underwriter, may be reasonably necessary or advisable in connection with the distribution of Exercise the Units. As soon as the Company is advised thereof, the Company will advise the Underwriter, and provide the original Warrant Underwriter with copies of any written advice, of the receipt of any comments of the Commission, of the effectiveness of any post-effective amendment to the Company by overnight courier. Each business date on which a Notice Registration Statement, of Exercise is telecopied the filing of any supplement to and received the Prospectus or any amended Prospectus, of any request made by the Company Commission for an amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order or threat thereof suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Units for offering in accordance with any jurisdiction, or of the provisions hereof shall be deemed an "Exercise Date"institution of any proceedings for any of such purposes, and will use its best efforts to prevent the issuance of any such order, and, if issued, to obtain as soon as possible the lifting thereof. The Company will transmit has caused to be delivered to the certificates representing shares Underwriter copies of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express couriereach Preliminary Prospectus, by electronic transfer or otherwise within three (3) business days after the Exercise Date if and the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerhas

Covenants of the Company. For so long as The Company covenants and agrees with the Underwriter that: (a) The Company will file the Prospectus and any Securities held amendment or supplement thereto with the Commission in the manner and within the time period required by Subscriber remain outstandingRule 424(b) under the Act. The Company will not at any time after the Effective Date, file any amendment to the Registration Statement or supplement the Prospectus unless you have previously been furnished with a copy and to which you or your counsel shall have reasonably objected in writing or which is not in compliance with the Act and the Rules and Regulations. At any time prior to the completion by the Underwriter of the distribution of the securities contemplated hereby (but in no event more than nine months after the date on which the Registration Statement shall have become or been declared effective under the Act), the Company acknowledgeswill prepare and file with the Commission, representspromptly upon your request, warrants any amendments or supplements to the Registration Statement or Prospectus which, in the opinion of counsel to the Company and agrees the Underwriter, may be reasonably necessary or advisable in connection with the distribution of the Securities contemplated hereby and as follows: (i) The mutually agreed by the Company shall and the Underwriter. As soon as the Company is advised thereof, the Company will advise the Underwriter, and provide the Underwriter copies of any written advice, of the receipt of any comments of the Commission, of the effectiveness under the Act of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for an amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order or threat thereof suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus or Pricing Prospectus, or of the suspension of the qualification of the Securities for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to reserveprevent the issuance of any such order, prior and, if issued, to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit obtain as soon as possible the exercise in full of all of the outstanding Warrantslifting thereof. The Company has caused to be delivered to the Underwriter copies of each Preliminary Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and dealers to use the Prospectus in connection with the sale of the Securities for such period as in the opinion of counsel to the Underwriter and the Company the use thereof is currently organizing required to comply with the Act and the Rules and Regulations. In case of the occurrence, at any time within such period as a stockholder meeting Prospectus is required under the Act to increase be delivered in connection with sales by the number Underwriter or dealers, of authorized shares any event of Common Stock which the Company has knowledge and which materially affects the Company or the securities of the Company, and has filed or which in the opinion of counsel for the Company or counsel for the Underwriter should be set forth in an amendment to the Registration Statement or a supplement to the Prospectus in order to make the statements therein not then misleading, or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the SEC prior Rules and Regulations, the Company will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the date hereof Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a preliminary proxy statement material fact or omit to state any material fact necessary in order to make the statements in the Prospectus not misleading in light of the circumstances under which they were made. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be without expense to the Underwriter, except that in case the Underwriter is required, in connection with such stockholder meeting. (iithe sale of the Securities to deliver a Prospectus nine months or more after the Effective Date, the Company will, upon request of the Underwriter, amend or supplement the Registration Statement and Prospectus and furnish the Underwriter with reasonable quantities of prospectuses complying with Section 10(a)(3) It of the Act at the Company’s expense. The Company represents and agrees that it has not made and will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise not, hereof, make any offer relating to the Company Securities that would constitute an “issuer writing prospectus” as defined in Rule 433 of the Rules and delivering Regulations or that would otherwise constitute a “free writing prospectus” as defined in Rule 405 of the original Notice of Exercise Rules and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date"Regulations. The Company will transmit comply in all material respects with the certificates representing shares Act, the Rules and Regulations and the Exchange Act and the rules and regulations promulgated thereunder in connection with the offering and issuance of the Securities. Until the Underwriter shall notify the Company of the completion of the Offering, the Company will not, and will cause its affiliated purchasers (as defined in Regulation M under the Exchange Act) not to, either alone or with one or more other persons, bid for or purchase, for any account in which it or any of its affiliated purchasers has a beneficial interest, any Common Stock issuable upon exercise Stock, or attempt to induce any person to purchase any Common Stock; and not to, and to cause its affiliated purchasers not to, make bids or purchase for the purpose of creating actual, or apparent, active trading in or of raising the price of the Common Stock. (b) The Company will furnish such information as may be required and to otherwise cooperate and use its best efforts to qualify or register the Securities for sale under the securities or “blue sky” laws of such jurisdictions as you may reasonably designate and will make such applications and furnish such information as may be required for that purpose and to comply with such laws, provided the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent of service of process in any Warrants jurisdiction in any action other than one arising out of the offering or sale of the Securities. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long a period as you may reasonably request. (c) For so long as the Company is a reporting company under either Section 12 or 15(d) of the Exchange Act, the Company, at its expense and in reasonable detail, will furnish to its shareholders an annual report (including financial statements audited by independent public accountants as required by the Act), and will furnish to the Underwriter during the period ending three years from the Effective Date hereof, (i) as soon as practicable after the end of each fiscal year, but no earlier than the filing of such information with the Commission, a balance sheet of the Company as at the end of such fiscal year, together with statements of income, and cash flow of the certificates representing Company for such fiscal year, all in reasonable detail and accompanied by a copy of the Warrants not so exercisedcertificate or report thereon of independent accountants; (ii) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days as soon as practicable after the Exercise Date if end of each of the first three fiscal quarters of each fiscal year, but no earlier than the filing of such information with the Commission, consolidated summary financial information of the Company has received for such quarter in reasonable detail; (iii) as soon as they are publicly available, a copy of all reports (financial or other) mailed to shareholders; (iv) as soon as they are available, a copy of all non-confidential reports and financial statements furnished to or filed with the original Notice Commission or any securities exchange or automated quotation system on which any class of Exercise securities of the Company is listed; (v) copies of each press release, news item and Warrant being exercised article with respect to the Company’s affairs released by the Company; and (vi) such dateother information as you may from time to time reasonably request. In addition to any other remedies which To the extent that the information required by this Section 3(c) may be available to Subscriber, in filed with the event that Commission via the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇electronic filing system, the filing of such information via the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇electronic filing system shall satisfy the Company’s obligations under this Section 3(c). (d) In the event the Company has an active subsidiary or subsidiaries, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇such financial statements referred to in subsection (c) above will be on a consolidated basis to the extent the accounts of the Company and its subsidiary or subsidiaries are consolidated in reports furnished to its shareholders generally. (e) Subject to this Section 3(e), ▇▇ ▇▇▇▇▇on or prior to the Effective Date, all officers and directors of the Company as of the Effective Date shall agree in writing (in the form annexed hereto as Exhibit A), not to sell, transfer or otherwise dispose of (in any manner whatsoever, including public dispositions pursuant to Rule 144 under the Act) any Common Stock or securities exercisable or convertible into Common Stock for a period of ninety (90) days from the Effective Date, or any longer period required by any state securities commission or the American Stock Exchange (“Amex”), without the prior written consent of the Underwriter and, if applicable, the securities commission of such states or the Amex. The Company further agrees not to permit, cause, suffer or assist in any such sales, dispositions or transfers. In addition, without the prior written consent of the Underwriter, the Company shall not sell or offer for sale any of its securities for a period of ninety (90) days following the Effective Date except pursuant to options, warrants and convertible securities issued and outstanding on the date of filing of the Registration Statement or pursuant to any employee stock option plan. (f) On the Effective Date, the Company shall have taken the necessary action to register the Securities and the Company will make all filings required to, and will have obtained approval for the listing of the Shares and the Underlying Shares (other than those issuable upon exercise of the Underwriter’s Warrant) on the Amex and, so long as the Company remains a reporting company under the Exchange Act, it will use its best efforts to maintain such listing or a listing on the Nasdaq Stock Market, American Stock Exchange or New York Stock Exchange, or any similar national exchange or quotation system, for at least five years from the Effective Date. (g) For a period of at least five years from the Effective Date the Company will engage an independent registered public accounting firm as its auditor. (h) On the Effective Date, the terms and conditions of all material transactions and proposed transactions between the Company and each of its subsidiaries, on the one hand, and any of the Company’s officers, directors, affiliates or the beneficial owners of five percent or more of any class of the Company’s equity securities (including, by way of example, but not limitation, employment agreements, loans, leases, license and service agreements), on the other hand, shall be reasonably satisfactory to the Underwriter. (i) Until the Offering has been terminated or concluded, as the case may be, the Company will not issue a press release or engage in any publicity, other than promotion by the Company of its products and services and other press releases in the ordinary course of its business, without the Underwriter’s prior written consent, which consent shall not be unreasonably withheld or delayed. (j) For a period of three years from the Effective Date, the Underwriter may appoint an observer reasonably acceptable to the Company’s Board of Directors who will be able to attend all meetings of the Board of Directors and who need not be the same person from meeting to meeting. The Underwriter shall also have the right to written notice of, and agendas with respect thereto, no later than notice to other directors of each meeting and to obtain copies of the minutes, if requested, from all Board of Directors meetings for three years following the Effective Date, whether or not an observer attends or participates in any such Board meeting. The Company agrees to reimburse the Underwriter immediately upon the Underwriter’s request therefor for any reasonable and documented food, travel and lodging expenses directly incurred by the Underwriter in connection with its designee or observer attending Company Board of Directors meetings. Nothing in this Section 3(j) shall require the Company or its Board of Directors to waive its attorney-▇▇▇▇ Faxclient privilege with respect to deliberations and meetings and materials with respect thereto. (k) The Company shall direct the Depository Trust Company, or such other depository of the Company’s securities, to deliver a “special security position report” to the Underwriter on a daily basis for the first 30 days after the Effective Date and on a weekly basis for the first six months after the Effective Date, each at the Company’s sole expense. (l) For a period of five years following the Effective Date, the Company will maintain registration with the Commission pursuant to Sections 12(b) or 12(g) of the Exchange Act. In the event the Company fails to maintain registration with the Commission pursuant to Sections 12(b) or 12(g) during such five year period, the Company will provide reasonable access to an independent accountant designated by the Underwriter, to all books, records and other documents or statements that reflect the Company’s financial status at least once each quarter, at the Company’s reasonable expense. (m) For a period of one year from the Effective Date, so long as the Company is a reporting company under either Sections 12 or 15(d) of the Exchange Act, the Company shall: (▇▇▇i) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇retain a transfer agent reasonably acceptable to the Underwriter for the securities of the Company; and (ii) direct such transfer agent to furnish, at the Company’s sole expense, the Underwriter with weekly transfer sheets as to each of the Company’s securities as prepared by the Company’s transfer agent and copies of lists of shareholders when requested by the Underwriter. (n) The Company will deliver to the Underwriter two manually executed copies of the Registration Statement including all financial statements and exhibits filed therewith, and of all amendments thereto when filed with the Commission, and will deliver to the Underwriter such number of conformed copies of the Registration Statement, including such financial statements and of all amendments thereto, as the Underwriter may reasonably request. ▇▇▇▇▇▇▇The Company will deliver to or upon the Underwriter’s order, Interim Chief Executive Officerfrom time to time until the Effective Date, as many copies of any Preliminary Prospectus filed with the Commission prior to the Effective Date as the Underwriter may reasonably request. The Company will deliver to the Underwriter on the Effective Date and thereafter for so long as a Prospectus is required to be delivered under the Act, from time to time, as many copies of the Prospectus, in final form, or as thereafter amended or supplemented, as the Underwriter may from time to time reasonably request. (o) If at any time during the three year period following the Effective Date, the Company’s securities are no longer listed for trading on the Amex or another national securities market or exchange, the Company shall, at its own expense, undertake to list the Company’s securities in the appropriate recognized securities manual or manuals published by Standard & Poor’s Corporation and such other manuals as the Underwriter may designate, such listings to contain the information required by such manuals and the Uniform Securities Act (the “Manuals”) and maintain such listing during said three year period, the Company shall take such action as may be reasonably requested by the Underwriter to obtain a secondary market trading exemption in such states as may be reasonably requested by the Underwriter. (p) At the First Closing Date, the Company shall

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith the Underwriter that: (ia) The Company shall will use its best efforts to reservecause the Registration Statement to become effective under the Act. If required, the Company will file the Prospectus and any amendment or supplement thereto with the Commission in the manner and within the time period required by Rule 424(b) under the Act. Upon notification from the Commission that the Registration Statement has become effective under the Act, the Company will so advise you and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement the Prospectus unless you have previously been furnished with a copy and to which you or your counsel shall have reasonably objected in writing or which is not in compliance with the Act and the Rules and Regulations. At any time prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all completion by the Underwriter of the outstanding Warrantsdistribution of the securities contemplated hereby (but in no event more than nine months after the date on which the Registration Statement shall have become or been declared effective under the Act) the Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus which, in the opinion of counsel to the Company and the Underwriter, may be reasonably necessary or advisable in connection with the distribution of the Shares contemplated hereby and as mutually agreed by the Company and the Underwriter. As soon as the Company is advised thereof, the Company will advise the Underwriter, and provide the Underwriter copies of any written advice, of the receipt of any comments of the Commission, of the effectiveness under the Act of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for an amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order or threat thereof suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, or of the suspension of the qualification of the Shares for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to prevent the issuance of any such order, and, if issued, to obtain as soon as possible the lifting thereof. The Company has caused to be delivered to the Underwriter copies of each Preliminary Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and dealers to use the Prospectus in connection with the sale of the Shares for such period as in the opinion of counsel to the Underwriter and the Company the use thereof is currently organizing required to comply with the Act and the Rules and Regulations. In case of the happening, at any time within such period as a stockholder meeting Prospectus is required under the Act to increase be delivered in connection with sales by the number Underwriter or dealers, of authorized shares any event of Common Stock which the Company has knowledge and which materially affects the Company or the securities of the Company, and has filed or which in the opinion of counsel for the Company or counsel for the Underwriter should be set forth in an amendment to the Registration Statement or a supplement to the Prospectus in order to make the statements therein not then misleading, or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the SEC prior Rules and Regulations, the Company will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the date hereof Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a preliminary proxy statement material fact or omit to state any material fact necessary in order to make the statements in the Prospectus not misleading in light of the circumstances under which they were made. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be without expense to the Underwriter, except that in case the Underwriter is required, in connection with such stockholder meeting. (iithe sale of the Shares to deliver a Prospectus nine months or more after the Effective Date, the Company, will upon request of the Underwriter, amend or supplement the Registration Statement and Prospectus and furnish each of the Underwriter with reasonable quantities of prospectuses complying with Section 10(a)(3) It will maintain of the listing of its Common Stock on Act at the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date"Company's expense. The Company will transmit comply in all material respects with the certificates representing shares Act, the Rules and Regulations and Securities and Exchange Act of Common Stock issuable upon exercise 1934, as amended (the "Exchange Act") and the rules and regulations thereunder in connection with the offering and issuance of the Shares. (b) The Company will furnish such information as may be required and to otherwise cooperate and use its best efforts to qualify or register the Shares for sale under the securities or "blue sky" laws of such jurisdictions as you may designate and will make such applications and furnish such information as may be required for that purpose and to comply with such laws, provided the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent of service of process in any Warrants jurisdiction in any action other than one arising out of the offering or sale of the Shares. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long a period as you may reasonably request. (c) For so long as the Company is a reporting company under either Sections 12 or 15(d) of the Exchange Act, the Company, at its expense, will furnish to its shareholders an annual report (including financial statements audited by independent public accountants as required by the Act), in reasonable detail and at its expense, will furnish to the Underwriter during the period ending three years from the Effective Date hereof, (i) as soon as practicable after the end of each fiscal year, but no earlier than the filing of such information with the Commission, a balance sheet of the Company as at the end of such fiscal year, together with statements of income, and cash flow of the certificates representing Company for such fiscal year, all in reasonable detail and accompanied by a copy of the Warrants certificate or report thereon of independent accountants; (ii) as soon as practicable after the end of each of the first three fiscal quarters of each fiscal year, but no earlier than the filing of such information with the Commission, consolidated summary financial information of the Company for such quarter in reasonable detail; (iii) as soon as they are publicly available, a copy of all reports (financial or other) mailed to shareholders; (iv) as soon as they are available, a copy of all non-confidential reports and financial statements furnished to or filed with the Commission or any securities exchange or automated quotation system on which any class of securities of the Company is listed; (v) copies of each press release, news item and article with respect to the Company's affairs released by the Company; and (vi) such other information as you may from time to time reasonably request. To the extent that the information required by this Section 3(e) may be filed with the Commission via the ▇▇▇▇▇ electronic filing system, the filing of such information via the ▇▇▇▇▇ electronic filing system shall satisfy the Company's obligations under this Section 3(e). (d) In the event the Company has an active subsidiary or subsidiaries, such financial statements referred to in subsection (c) above will be on a consolidated basis to the extent the accounts of the Company and its subsidiary or subsidiaries are consolidated in reports furnished to its shareholders generally. (e) On or prior to the Effective Date, all officers, directors, employees and 5% shareholders of the Company as of the Effective Date shall agree in writing (in the form annexed hereto as Exhibit A), not so exercised) to Subscriber via express couriersell, by electronic transfer or otherwise within dispose of (in any manner whatsoever, including public dispositions pursuant to Rule 144 under the Act) any common stock or securities exercisable or convertible into common stock for a period of 12 months from the Effective Date, or any longer period required by any state securities commission or the American Stock Exchange, Inc. ("AMEX"), without the prior written consent of the Underwriter and, if applicable, the securities commission of such states or the AMEX. On or prior to the Effective Date, each holder of shares of the Company's Series A Convertible Preferred Stock (the "Preferred Stock") who is not an officer, director or 5% shareholder of the Company as of the Effective Date shall agree in writing (in the form annexed hereto as Exhibit B), not to sell, transfer or otherwise dispose of (in any manner whatsoever, including public dispositions pursuant to Rule 144 under the Act) any Common Stock underlying the Preferred Stock for a period of 12 months from the Effective Date; provided, however, that such holders of the Preferred Stock may sell the Common Stock underlying the Preferred Stock (i) in the event the average closing price of the Common Stock exceeds $10.00 per share for a period of 15 consecutive trading days during the 12-month period, or (ii) with the prior written consent of the Underwriter. The Company further agrees not to permit, cause, suffer or assist in any such sales, dispositions or transfers. In addition, without consent of the Underwriter, the Company shall not sell or offer for sale any of its securities for a period of 13 months following the Effective Date except pursuant to options, warrants and convertible securities issued and outstanding on the date of filing of the Registration Statement or pursuant to any employee stock option plan. (f) On the Effective Date, the Company shall have taken the necessary action to register the Shares and to become a reporting company under Section 12 of the Exchange Act, and the Company will make all filings required to, and will have obtained approval for the listing of the Shares on AMEX and, so long as the Company remains a reporting company under the Exchange Act, will use its best efforts to maintain such listing or a listing on the Nasdaq National Market ("NMS"), Nasdaq SmallCap Market or New York Stock Exchange, or any similar national exchange or quotation system, for at least five years from the Effective Date. (g) On or prior to the Effective Date, the Company will have engaged a firm of independent chartered accountants, reasonably acceptable to the Underwriters. For the purposes of this Agreement, the chartered accounting firm of Ernst & Young LLP, shall be deemed acceptable to the Underwriter. Additionally, for a period of at least five years from the Effective Date the Company will engage a firm of independent public accountants permitted to practice before the Commission. (h) On the Effective Date, the terms and conditions of all transactions and proposed transactions between the Company and each of its subsidiaries, on the one hand, and any of the Company's officers, directors, affiliates or the beneficial owners of five percent or more of any class of the Company's equity securities (including, by way of example, but not limitation, employment agreements, loans, leases, license and service agreements), on the other hand, shall be reasonably satisfactory to the Underwriter. (i) Until the Offering has been terminated or concluded, as the case may be, the Company will not issue a press release or engage in any publicity, other than promotion by the Company of its products and services and other press releases in the ordinary course of its business, without the Underwriters' prior written consent, which consent shall not be unreasonably withheld or delayed. (j) For a period of three years from the Effective Date, the Company may appoint an observer reasonably acceptable to the Company's Board of Directors who will be able to attend all meetings of the Board of Directors and who need not be the same person from meeting to meeting. The Underwriter shall also have the right to written notice of and agendas with respect thereto, no later than notice to other directors of each meeting and to obtain copies of the minutes, if requested, from all Board of Directors meetings for three years following the Effective Date, whether or not an observer attends or participates in any such Board meeting. The Company agrees to reimburse the Underwriter immediately upon the Underwriter's request therefor for any reasonable and documented food, travel and lodging expenses directly incurred by the Underwriter in connection with its designee or observer attending Company Board meetings. Nothing in this Section 3(k) shall require the Company or its Board of Directors to waive its attorney-client privilege with respect to deliberations and meetings and materials with respect thereto. (3k) business The Company shall direct the Depository Trust Company, or such other depository of the Company's securities, to deliver a "special security position report" to the Underwriter on a daily basis for the first 30 days after the Exercise Effective Date if and on and weekly basis for the first six months after the Effective Date, each at the Company's sole expense. (l) For a period of five years following the Effective Date, the Company has received will maintain registration with the original Notice Commission pursuant to Sections 12(b) or 12(g) of Exercise and Warrant being exercised by such datethe Exchange Act. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of maintain registration with the Commission pursuant to Sections 12(b) or 12(g) during such shares of Common Stock within such three (3) business day five year period, Subscriber the Company will be entitled provide reasonable access for an independent accountant designated by the Underwriter, to revoke all books, records and other documents or statements that reflect the relevant Notice Company's financial status at least once each quarter, at the Company's reasonable expense. (m) For a period of Exercise by delivering one year from the Effective Date, so long as the Company is a notice to such effect reporting company under either Sections 12 or 15(d) of the Exchange Act, the Company shall: (i) retain a transfer agent reasonably acceptable to the Underwriter for the securities of the Company, and (ii) direct such transfer agent to furnish, at the Company's sole expense, the Underwriter with weekly transfer sheets as to each of the Company's securities as prepared by the Company's transfer agent and copies of lists of shareholders when requested by the Underwriter. (n) The Company whereupon will deliver to the Underwriter two manually executed copies of the Registration Statement including all financial statements and exhibits filed therewith, and of all amendments thereto when filed with the Commission, and will deliver to the Underwriter such number of conformed copies of the Registration Statement, including such financial statements and of all amendments thereto, as the Underwriter may reasonably request. The Company will deliver to or upon the Underwriter's order, from time to time until the Effective Date, as many copies of any Preliminary Prospectus filed with the Commission prior to the Effective Date as the Underwriter may reasonably request. The Company will deliver to the Underwriter on the Effective Date and thereafter for so long as a Prospectus is required to be delivered under the Act, from time to time, as many copies of the Prospectus, in final form, or as thereafter amended or supplemented, as the Underwriter may from time to time reasonably request. (o) If at any time during the three year period following the Effective Date, the Company's securities are no longer listed for trading on the AMEX, another national securities exchange or NMS, the Company and Subscriber shall each be restored shall, at its own expense, undertake to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To list the Company: Spatializer Audio Laboratories's securities in the appropriate recognized securities manual or manuals published by Standard & Poor's Corporation and such other manuals as the Underwriter may designate, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officersuch listings to

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants hereby covenants and agrees with the Underwriter as follows: (a) If the Registration Statement has not already been declared effective by the SEC, the Company will use its best efforts to cause the Registration Statement and any post-effective amendments thereto to become effective as promptly as possible; the Company will notify the Underwriter promptly of the time when the Registration Statement or any post-effective amendment to the Registration Statement has become effective or any supplement to the Prospectus has been filed and of any request by the SEC for any amendment or supplement to the Registration Statement or Prospectus or additional information; if the Company has elected to rely on Rule 430A of the Rules and Regulations, the Company will file a Prospectus containing the information omitted therefrom pursuant to such Rule 430A with the SEC within the time period required by, and otherwise in accordance with the provisions of, Rules 424(b) and 430A of the Rules and Regulations; the Company will prepare and file with the SEC, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus that, in the opinion of the Company and the Underwriter, may be necessary or advisable in connection with the distribution of the Units by the Underwriter; and the Company will not file any amendment or supplement to the Registration Statement or Prospectus to which the Underwriter shall reasonably object by notice to the Company after having been furnished a copy a reasonable time prior to the filing. (b) The Company will advise the Underwriter promptly after it shall receive notice or obtain knowledge thereof of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement, of the suspension of the qualification of the Units for offering or sale in any jurisdiction or of the initiation or threatening of any proceeding for any such purpose; and the Company will promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued. (c) Within the time during which a prospectus relating to the Units is required to be delivered under the Securities Act, the Company will comply as far as it is able with all requirements imposed upon it by the Securities Act, as now and hereafter amended, and by the Rules and Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Units as contemplated by the provisions hereof and the Prospectus. If, during such period, any event occurs as a result of which the Prospectus would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if, during such period, it is necessary to amend the Registration Statement or supplement the Prospectus to comply with the Securities Act, the Company will promptly notify the Underwriter and will amend the Registration Statement or supplement the Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance. (d) The Company will use its best efforts to arrange for the qualification of the Units for offering and sale under the securities laws of such jurisdictions as the Underwriter may designate and to continue such qualifications in effect for so long as may be required for purposes of the distribution of the Units; provided, however, that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to the service of process in suits, other than those arising out of the offering or sale of the Units, in any jurisdiction where it is not now so subject. In each jurisdiction in which the Units shall have been qualified as herein provided, the Company will use its best efforts to make and file such statements and reports in each year as are or may be reasonably required by the laws of such jurisdiction. (e) The Company will furnish to the Underwriter copies of the Registration Statement (two of which will be signed and will include all exhibits), each Preliminary Prospectus, the Prospectus, and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Underwriter may from time to time reasonably request. (f) For a period of five years from the Effective Date, the Company will furnish directly to the Underwriter as soon as the same shall be sent to its shareholders generally copies of all annual or interim shareholder reports of the Company and will, for the same period, also furnish the Underwriter with the following: (i) One copy of any report, application or document (other than exhibits, which, however, will be furnished on your request) filed by the Company with the SEC, The Nasdaq Stock Market, the National Association of Securities Dealers, Inc. ("NASD") or any securities exchange; (ii) As soon as the same shall be sent to shareholders generally, copies of each communication sent to shareholders; and (iii) From time to time, such other information concerning the Company as the Underwriter may reasonably and specifically request, provided that the Company shall not be required to furnish any information pursuant hereto that is not furnished to its shareholders or not otherwise made publicly available. (g) The Company will, for a period of two (2) years from the Effective Date, furnish directly to the Underwriter quarterly profit and loss statements, reports of the Company's cash flow and statements of application of the proceeds of the offering of the Units by the Company in such reasonable detail as the Underwriter may request. (h) The Company will make generally available to its security holders as soon as practicable, but in any event not later than the fifteen (15) months after the end of the Company's current fiscal quarter, an earnings statement (which will be in reasonable detail but need not be audited) complying with the provisions of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations and covering a twelve (12)-month period beginning after the Effective Date of the Registration Statement. (i) After completion of the offering of the Units, the Company will make all filings and take all actions required to maintain the quotation or listing of the Units on The Nasdaq SmallCap Market, The Nasdaq National Market or any national stock exchange. The Company shall make all filings and take all actions required to have the Common Stock and the Redeemable Warrants constituting the Units to be quoted on the same automated quotations system or listed on the same national stock exchange on which the Units are being quoted or listed, which quotation or listing shall be effective eighteen (18) months from the Effective Date, when the Units become separable. After the Units become separable, the Company will make all filings and take all actions required to maintain the quotation or listing of the Common Stock and the Redeemable Warrants on such quotations system or national stock exchange. (j) The Company will apply the net proceeds from the sale of the Units substantially in the manner set forth under the caption "Use of Proceeds" in the Prospectus. (k) For a period of six months after the Second Closing Date, the Company will not, without the prior written consent of the Underwriter, directly or indirectly, offer to sell, contract to sell, sell, pledge, hypothecate, transfer or otherwise dispose of or grant any rights with respect to (collectively, a "Disposition") of any Securities including, without limitation, any Securities that are convertible into or exchangeable or exercisable for Common Stock, and shall not accelerate the exercisability of any Securities that are convertible into or exchangeable or exercisable for Common Stock, except that the Company may take the following actions: (i) sell Units pursuant to this Agreement; (ii) grant options under the Company's Stock Plans in the ordinary course, but only if the per share exercise price or conversion price of any such options is equal to or greater than the market price of the Common Stock on the date of grant; (iii) issue shares of Common Stock upon the exercise of options granted under the Stock Plans and upon the exercise of warrants outstanding on the date of this Agreement; and (iv) issue the Company's Securities in connection with the Company's acquisition of any business entity or property when approved by the Company's board of directors or shareholders, if such approval is required. (l) For a period of six months from the Effective Date, the Company will not, without the prior written consent of the Underwriter, file a registration statement with the SEC or any state securities or "Blue Sky" law authority relating to any of the Company's Securities, whether such shares are to be offered and sold by the Company or by its shareholders, except for a Registration Statement on Form S-4 or Form S-8 (or any successor or replacement forms of such registration statements) relating only to shares of Common Stock subject to options granted under the Stock Plans with respect to a Form S-8 or any successor or replacement form, or Securities of the Company issued in connection with an acquisition with respect to a Form S-4 or any successor or replacement form. (m) The Company will not take, and will use its best efforts to cause each of its officers and directors not to take, directly or indirectly, any action designed to or which might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Units. (n) The Company will inform the Florida Department of Banking and Finance at any time prior to the consummation of the distribution of the Units by the Underwriter if it commences engaging in business with the government of Cuba or with any person or affiliate located in Cuba. Such information shall be provided within ninety (90) days after the commencement thereof or after a change occurs with respect to previously reported information. (o) The Company will cause the Common Stock, the Redeemable Warrants and the Units to be registered under the Exchange Act, which registrations shall be effective concurrently with the effectiveness of the Registration Statement. (p) The Company hereby grants to the Underwriter the right to nominate a representative to serve on the Company's Board of Directors during the period of three (3) years following the Effective Date of the Registration Statement, and the Company shall use its best efforts to reservesecure the election of such representative to the Company's Board of Directors; provided, prior to February 15, 2000, a sufficient number that any compensation received by such representative or the Underwriter in connection with the representative serving on the Company's Board of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock Directors shall not exceed any compensation received by any other member of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting's Board of Directors. (iiq) It will maintain Unless the listing of its Company's Common Stock and Redeemable Warrants are listed on The Nasdaq National Market or other suitable secondary trading exemptions are available, or if for any reason state Blue Sky or securities laws do not apply to secondary trading of the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed Common Stock and completed Notice of Exercise to Redeemable Warrants, the Company will seek to become listed in Standard & Poors or another recognized securities manual as soon as practicable after the Effective Date and delivering shall pay all filing fees in connection therewith, for the original Notice purpose of Exercise facilitating secondary trading in the Common Stock and Redeemable Warrants; and the original Warrant Company shall also agree to make appropriate filings to qualify the Common Stock and Redeemable Warrants for secondary trading in states in which such filings are necessary to cause the Common Stock and Redeemable Warrants to be qualified, provided that such qualification may be obtained without causing the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer extraordinary cost or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerhardship.

Covenants of the Company. For The Company covenants and agrees with each of the Underwriters that: (a) The Company will use its best efforts to cause the Registration Statement, if not effective at the time of execution of this Agreement, and any amendments thereto to become effective as promptly as possible. If required, the Company will file the Prospectus or any Term Sheet that constitutes a part thereof and any amendment or supplement thereto with the Commission in the manner and within the time period required by Rule 434 and 424(b) under the Act. During any time when a prospectus relating to the Securities is required to be delivered under the Act and the Company (i) will comply with all requirements imposed upon it by the Act, the Exchange Act and the respective rules and regulations of the Commission thereunder to the extent necessary to permit the continuance of sales of or dealings in the Securities in accordance with the provisions hereof and the Prospectus, as then amended or supplemented, and (ii) will not file with the Commission the Prospectus or any amendment or supplement to such prospectus or any amendment to the Registration Statement or any Rule 462(b) Registration Statement of which the Representatives shall not previously have been advised and furnished with a copy for a reasonable period of time prior to the proposed filing and as to which filing the Representatives shall not have given their consent. The Company will prepare and file with the Commission, in accordance with the rules and regulations of the Commission, promptly upon request by the Representatives or counsel for the Underwriters, any amendments to the Registration Statement or amendments or supplements to the Prospectus that may be necessary or advisable in connection with the distribution of the Securities by the several Underwriters, and will use its best efforts to cause any such amendment to the Registration Statement to be declared effective by the Commission as promptly as possible. The Company will advise the Representatives, promptly after receiving notice thereof, of the time when the Registration Statement or any amendment thereto has been filed or declared effective or the Prospectus or any amendment or supplement thereto has been filed and will provide evidence satisfactory to the Representatives of each such filing or effectiveness. (b) The Company will advise the Representatives, promptly after receiving notice or obtaining knowledge thereof, of (i) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration Statement or any post-effective amendment thereto or any order directed at any document incorporated by reference in the Registration Statement or the Prospectus or any amendment or supplement thereto or any order preventing or suspending the use of any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, (ii) the suspension of the qualification of the Securities for offering or sale in any jurisdiction, (iii) the institution, threatening or contemplation of any proceeding for any such purpose or (iv) any request made by the Commission for amending the Registration Statement or any Rule 462(b) Registration Statement, for amending or supplementing any Preliminary Prospectus, and any Prospectus or for additional information. The Company will use its best efforts to prevent the issuance of any such stop order and, if any such stop order is issued, to obtain the withdrawal thereof as promptly as possible. (c) The Company will arrange for the qualification of the Securities for offering and sale under the securities or blue sky laws of such jurisdictions as the Representatives may designate and will continue such qualifications in effect for as long as may be necessary to complete the distribution of the Securities, PROVIDED, HOWEVER, that in connection therewith the Company shall not be required to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction. (d) If, at any time prior to the later of (i) the final date when a prospectus relating to the Securities is required to be delivered under the Act or (ii) the Option Closing Date, any event occurs as a result of which the Prospectus, as then amended or supplemented, would include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if for any other reason it is necessary at any time to amend or supplement the Prospectus to comply with the Act, the Exchange Act or the respective rules or regulations of the Commission thereunder, the Company will promptly notify the Representatives thereof and, subject to Section 5(a) hereof, will prepare and file with the Commission, at the Company's expense, an amendment to the Registration Statement, an amendment or supplement to the Prospectus or any Prospectus that corrects such statement or omission or effects such compliance. (e) The Company will, without charge, provide (i) to the Representatives and to counsel for the Underwriters a conformed copy of the registration statement originally filed with respect to the Securities and each amendment thereto (in each case including exhibits thereto), (ii) to each other Underwriter, a conformed copy of such registration statement or any Rule 462(b) Registration Statement and each amendment thereto (in each case without exhibits thereto) and (iii) so long as any a prospectus relating to the Securities held by Subscriber remain outstandingis required to be delivered under the Act, as many copies of each Preliminary Prospectus, the Prospectus or any amendment or supplement thereto as the Representatives may reasonably request; without limiting the application of clause (iii) of this sentence, the Company, not later than (A) 6:00 p.m., New York City time, on the date of determination of the public offering price, if such determination occurred at or prior to 10:00 a.m., New York City time on such date of (B) 2:00 p.m., New York City time, on the business day following the date of determination of the public offering price, if such determination occurred after 10:00 a.m., New York City time, on such date, will deliver to the Underwriters, without charge, as many copies of the Prospectus and any amendment or supplement thereto as the Representatives may reasonably request for purposes of confirming orders that are expected to settle on the Firm Closing Date. (f) The Company, as soon as practicable, will make generally available to its securityholders and to the Representatives a consolidated earnings statement of the Company acknowledgesand its subsidiaries that satisfies the provisions of Section 11(a) of the Act and Rule 158 thereunder. (g) The Company will apply the net proceeds from the sale of the Securities as set forth under "Use of Proceeds" in the Prospectus. (h) The Company will not, representsdirectly or indirectly, warrants without the prior written consent of Prudential Securities Incorporated, on behalf of the Underwriters, offer, sell, offer to sell, contract to sell, pledge, grant any option to purchase or otherwise sell or dispose (or announce any offer, sale, offer of sale, contract of sale, pledge, grant of any option to purchase or other sale or disposition) of any shares of Common Stock or any securities convertible into, or exchangeable or exercisable for, shares of Common Stock for a period of 120 days after the date hereof, except pursuant to this Agreement and agrees as follows:except for issuances pursuant to the exercise of employee stock options outstanding on the date hereof. (i) The Company will not, directly or indirectly, (i) take any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or (ii) (A) sell, bid for, purchase, or pay anyone any compensation for soliciting purchases of, the Securities or (B) pay or agree to pay to any person any compensation for soliciting another to purchase any other securities of the Company. (j) The Company will obtain the agreements described in Section 7(f) hereof prior to the Firm Closing Date. (k) If at any time during the 25-day period after the Registration Statement becomes effective or the period prior to the Option Closing Date, any rumor, publication or event relating to or affecting the Company shall occur as a result of which in your opinion the market price of the Common Stock has been or is likely to be materially affected (regardless of whether such rumor, publication or event necessitates a supplement to or amendment of the Prospectus), the Company will, after notice from you advising the Company to the effect set forth above, consult with you concerning the substance of a press release or other public statement, reasonably satisfactory to you, responding to or commenting on such rumor, publication or event. (l) If the Company elects to rely on Rule 462(b), the Company shall, as promptly as practicable, both file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) and pay the applicable fees in accordance with Rule 111 promulgated under the Act. (m) The Company will use its best efforts to reserve, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit ensure that the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing of its Common Stock Securities remain included for quotation on the OTC Bulletin BoardNasdaq National Market following the Firm Closing Date. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officer

Covenants of the Company. For The Company covenants and agrees with the Underwriters that: (i) If the Registration Statement has not yet been declared effective on the date of this Agreement, the Company will use its best efforts to cause the Registration Statement and any amendments thereto to become effective as promptly as possible, and if Rule 430A is used or the filing of the Prospectus is otherwise required under Rule 424(b) or Rule 434, the Company will file the Prospectus (properly completed if Rule 430A has been used) pursuant to Rule 424(b) or Rule 434 within the prescribed time period and will provide evidence satisfactory to the Underwriters of such timely filing. If the Company elects to rely on Rule 434, the Company will prepare and file a term sheet that complies with the requirements of Rule 434. (ii) The Company will notify the Underwriters immediately (A) when the Registration Statement and any amendments thereto become effective, (B) of any request by the Commission for any amendment of or supplement to the Registration Statement or the Prospectus or for any additional information, (C) of the mailing or the delivery to the Commission for filing of any amendment of or supplement to the Registration Statement or the Prospectus, (D) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or of the initiation, or the threatening, of any proceedings therefor, (E) of the receipt of any comments from the Commission and (F) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for that purpose. If the Commission shall propose or enter a stop order at any time, the Company will use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain the lifting of such order as soon as possible. The Company will not file any amendment to the Registration Statement or any amendment of or supplement to the Prospectus (including the prospectus required to be filed pursuant to Rule 424(b)or Rule 434) that differs from the prospectus on file at the time of the effectiveness of the Registration Statement before or after the effective date of the Registration Statement to which the Underwriters shall reasonably object in writing after being timely furnished in advance a copy thereof. (b) If at any time when a prospectus relating to the Shares is required to be delivered under the Securities Act any event shall have occurred as a result of which the Prospectus as then amended or supplemented would, in the judgment of the Underwriters or the Company, include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it shall be necessary at any time to amend or supplement the Prospectus or Registration Statement to comply with the Securities Act or the Securities Act Regulations, the Company will notify the Underwriters, promptly and prepare and file with the Commission an appropriate amendment or supplement (in form and substance satisfactory to the Company and the Underwriters) which will correct such statement or omission and use its best efforts to have any amendment to the Registration Statement declared effective as soon as possible. (c) The Company will promptly deliver to the Underwriters two signed copies of the Registration Statement, including exhibits and all amendments thereto, and such number of copies of any Preliminary Prospectus, the Prospectus, the Registration Statement, and all amendments of and supplements to such documents, if any, as the Underwriters may reasonably request. (d) The Company will endeavor in good faith, in cooperation with the Underwriters, at or prior to the time of effectiveness of the Registration Statement, to qualify, if necessary, the Shares for offering and sale under the securities laws relating to the offering or sale of the Shares of such jurisdictions as the Underwriters may designate and to maintain such qualification in effect for so long as any required for the distribution thereof; except that in no event shall the Company be obligated in connection therewith to qualify as a foreign corporation or to execute a general consent to service of process. (e) The Company will make generally available (within the meaning of Section 11(a) of the Securities held by Subscriber remain outstandingAct) to its security holders and to the Underwriters as soon as practicable, but not later than 45 days after the end of its fiscal quarter in which the first anniversary date of the effective date of the Registration Statement occurs, an earnings statement (in form complying with the provisions of Rule 158 of the Securities Act Regulations) covering a period of at least twelve consecutive months beginning after the effective date of the Registration Statement. (f) During a period of three years from the effective date of the Registration Statement, the Company acknowledgeswill furnish to the Underwriters copies of all reports to its stockholders and all reports, representsfinancial statements and proxy or information statements filed by the Company with the Commission or any national securities exchange. (g) The Company will apply the net proceeds of the sale of the Shares in accordance with its statements under the caption "Use of Proceeds" in the Prospectus. (h) The Company will use its best efforts to effect and maintain for a period of three years after the date of this Agreement the listing of the Shares on the American Stock Exchange or other national securities exchange and will comply with all listing standards, warrants listing agreements and agrees as follows:rules and regulations of, including the filing of all documents and notices required by the American Stock Exchange or such other national securities exchange. (i) The Company will refrain, during a period of 180 days from the date of the Prospectus, without the prior written consent of the Representatives, from (i) offering, pledging, selling, contracting to sell, selling any option or contract to purchase, purchasing any option or contract to sell, granting any option for the sale of, or otherwise disposing of or transferring, directly or indirectly, any share of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, or filing any registration statement under the Securities Act with respect to any of the foregoing, or (ii) entering into any swap or other arrangement that transfers all or a portion of the economic consequence of ownership of the Common Stock or other securities (regardless of whether any of the transactions described in clause (i) or (ii) above is to be settled by the delivery of Common Stock or such other securities, in cash or otherwise). The foregoing sentence shall not apply to (A) the Shares to be sold hereunder, (B) options granted under stock option plans approved by the Company’s Board of Directors, (C) securities of the Company sold in a subsequent transaction in which I-Bankers Securities participates in the placement of such securities, or (D) any shares of Common Stock issued by the Company upon the exercise of an option or other convertible security outstanding on the date hereof and referred to in the Prospectus. (j) The Company will not itself and to use its best efforts to reservecause its officers, directors and affiliates not to, (i) take, directly or indirectly prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all termination of the outstanding Warrants. The Company is currently organizing a stockholder meeting underwriting syndicate contemplated by this Agreement, any action designed to increase stabilize or manipulate the number price of authorized shares of Common Stock any security of the Company, and has filed with or which may cause or result in, or which might in the SEC prior future reasonably be expected to cause or result in, the date hereof a preliminary proxy statement in connection with such stockholder meeting. stabilization or manipulation of the price of any security of the Company, to facilitate the sale or resale of any of the Shares, (ii) It will maintain sell, bid for, purchase or pay anyone any compensation for soliciting purchases of the listing of its Common Stock on the OTC Bulletin Board. Shares or (iii) It will permit Subscriber pay or agree to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition pay to any person any compensation for soliciting any order to purchase any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion securities of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officer.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, The Company agrees with each of the Company acknowledges, represents, warrants and agrees as followsUnderwriters: (ia) The Company shall use its best efforts To prepare the Prospectus in a form approved by the Underwriters and to reservefile such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement, prior to February 15or, 2000if applicable, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit such earlier time as may be required by the exercise in full of all rules and regulations of the outstanding Warrants. The Company is currently organizing a stockholder meeting Commission under the Act, to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior make no further amendment or any supplement to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain Registration Statement, the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on Pricing Prospectus or Prospectus which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, reasonably disapproved by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇Wedbush ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇Securities Inc. promptly giving reasonable notice thereof; to advise Wedbush ▇▇▇▇▇▇ Securities Inc., promptly after it receives notice thereof, of the time when the Registration Statement, or any amendment thereto, has been filed or becomes effective or any supplement to the Pricing Prospectus or the Prospectus or any amended Pricing Prospectus or Prospectus has been filed and to furnish Wedbush ▇▇▇▇▇, ▇▇ Securities Inc. copies thereof; to advise Wedbush ▇▇▇▇▇-▇ Securities Inc., promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Issuer Free Writing Prospectus, Preliminary Prospectus or Prospectus, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement, the Pricing Prospectus or Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Issuer Free Writing Prospectus, Preliminary Prospectus or Prospectus or suspending any such qualification, to use promptly its best efforts to obtain its withdrawal; (b) The Company will file promptly all material required to be filed by the Company with the Commission pursuant to Rule 433(d) under the Act; (c) Promptly, from time to time, to take such action as Wedbush ▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. Securities Inc. may reasonably request to qualify the Shares for offering and sale under the securities laws of such jurisdictions as Wedbush ▇▇▇▇▇▇ Securities Inc. may request and to comply with such laws so as to permit the continuance of sales and dealings in such jurisdictions for as long as may be necessary to complete the distribution of the Shares, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction; (d) To furnish the Underwriters with copies of each Issuer Free Writing Prospectus, any Preliminary Prospectus and the Prospectus in such quantities as the Underwriters may from time to time reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required at any time prior to the expiration of nine months after the time of issuance of the Prospectus in connection with the offering or sale of the Shares and if at such time any events shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus in order to comply with the Act, to notify Wedbush ▇▇▇▇▇▇ Securities Inc. and upon Wedbush ▇▇▇▇▇▇ Securities Inc.'s request to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Underwriters may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance, Interim Chief Executive Officerand in case any Underwriter is required by law to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) in connection with sales of any of the Shares at any time nine months or more after the time of issue of the Prospectus, upon the Underwriters request but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many copies as the Underwriters may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act; (e) To make generally available to its security holders as soon as practicable, but in any event not later than the forty-fifth (45th) day following the end of the full fiscal quarter first occurring after the first anniversary of the effective date of the Registration Statement (as defined in Rule 158(c)), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158); (f) During the period beginning from the date hereof and continuing to and including the 180 days after the date of the Prospectus (the "Lock-Up Period"), will not, without the prior written consent of Wedbush ▇▇▇▇▇▇ Securities Inc., (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act and the rules and regulations of the Commission promulgated thereunder, with respect to any Common Stock or securities convertible into or exchangeable or exercisable for Common Stock, (ii) file or cause to be declared effective a registration statement under the Act relating to the offer and sale of any shares of Common Stock or securities convertible into or exercisable for Common Stock, (iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, whether any such transaction is to be settled by delivery of Common Stock or any such securities, in cash or otherwise, or (iv) publicly announce an intention to effect any transaction specified in clause (i), (ii) or (iii) above. The foregoing sentence shall not apply to (A) the registration of Shares and the sale of Shares to the Underwriters pursuant to this Agreement, (B) the issuance of Common Stock upon the exercise of options or warrants disclosed as outstanding in the Registration Statement, (C) other than the grant of options described in the Prospectus, the issuance and registration of employee stock options not exercisable during the Lock-Up Period pursuant to stock option or warrant plans described in the Registration Statement and (D) the issuance and registration of shares pursuant to the 2006 Employee Stock Purchase Plan; provided, however, that if (I) during the period that begins on the date that is 17 calendar days before the last day of the Lock-Up Period and ends on the last day of the Lock-Up Period, the Company issues an earnings release or material news or a material event relating to the Company occurs, or (II) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the Lock-Up Period, then the restrictions imposed by this clause (f) shall continue to apply until the expiration of the date that is 18 calendar days after the date of such issuance of the earnings release or the material news or the material event occurs; (g) To furnish to its stockholders as soon as practicable after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders' equity and cash flow of the Company and its consolidated subsidiaries certified by independent public accountants) and to make available (within the meaning of Rule 158(b) under the Act) as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail; (h) During a period of three years from the effective date of the Registration Statement, to furnish to the Underwriters upon request copies of all reports or other communications (financial or other) furnished to stockholders generally, and deliver to the Underwriters as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission, the Nasdaq Global Market or any national securities exchange on which any class of securities of the Company is listed (such financial statements to be on a combined or consolidated basis to the extent the accounts of the Company and its subsidiaries are combined or consolidated in reports furnished to its stockholders generally or to the Commission); provided that the Company may satisfy each of the requirements of this subsection by making any such reports or other communications generally available on its website; (i) To use the net proceeds acquired by it from the sale of the Shares in the manner specified in the Pricing Prospectus and the Prospectus under the caption "Use of Proceeds" and in a manner such that the Company will not become an "investment company" as that term is defined in the Investment Company Act; (j) Not to accelerate the vesting of any option issued under any stock option plan such that any such option may be exercised during the Lock-Up Period; (k) To use its best efforts to list for quotation, subject to notice of issuance, the Shares on the Nasdaq Global Market System; (l) To file with the Commission such information on Form 10-Q or Form 10-K as may be required by Rule 463 under the Act; (m) To give prompt notice to Wedbush ▇▇▇▇▇▇ Securities Inc. if at any time following issuance of an Issuer Free Writing Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus would conflict with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances then prevailing, not misleading, and, if requested by Wedbush ▇▇▇▇▇▇ Securities Inc., to prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or omission; and (n) If the Company elects to rely upon rule 462(b), to file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M. (Eastern Time), on the date of this Agreement, and at the time of filing to either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Act.

Covenants of the Company. For The Company covenants and agrees that: (a) The Company will use its best efforts to cause the Registration Statement and any amendment thereof, if not effective at the time and date that this Agreement is executed and delivered by the parties hereto, to become effective. If the Registration Statement has become or becomes effective pursuant to Rule 430A of the Rules and Regulations, or the filing of the Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations, the Company will file the Prospectus, properly completed, pursuant to the applicable paragraph of Rule 424(b) of the Rules and Regulations within the time period prescribed and will provide evidence satisfactory to you of such timely filing. The Company will promptly advise you in writing (i) of the receipt of any comments of the Commission, (ii) of any request of the Commission for amendment of or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus or for additional information, (iii) when the Registration Statement shall have become effective and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the institution of any proceedings for that purpose. If the Commission shall enter any such stop order at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible moment. The Company will not file any amendment or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus of which you have not been furnished with a copy a reasonable time prior to such filing or to which you reasonably object or which is not in compliance with the Act and the Rules and Regulations. (b) The Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or the Prospectus which in your judgment may be necessary or advisable to enable the several Underwriters to continue the distribution of the Common Shares and will use its best efforts to cause the same to become effective as promptly as possible. The Company will fully and completely comply with the provisions of Rule 430A of the Rules and Regulations with respect to information omitted from the Registration Statement in reliance upon such Rule. (c) If at any time within the nine-month period referred to in Section 10(a)(3) of the Act during which a prospectus relating to the Common Shares is required to be delivered under the Act any event occurs, as a result of which the Prospectus, including any amendments or supplements, would include an untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or if it is necessary at any time to amend the Prospectus, including any amendments or supplements, to comply with the Act or the Rules and Regulations, the Company will promptly advise you thereof and will promptly prepare and file with the Commission, at its own expense, an amendment or supplement which will correct such statement or omission or an amendment or supplement which will effect such compliance and will use its best efforts to cause the same to become effective as soon as possible; and, in case any Underwriter is required to deliver a prospectus after such nine-month period, the Company upon request, but at the expense of such Underwriter, will promptly prepare such amendment or amendments to the Registration Statement and such Prospectus or Prospectuses as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Act. (d) As soon as practicable, but not later than 45 days after the end of the first quarter ending after one year following the "effective date of the Registration Statement" (as defined in Rule 158(c) of the Rules and Regulations), the Company will make generally available to its security holders an earnings statement (which need not be audited) covering a period of 12 consecutive months beginning after the effective date of the Registration Statement which will satisfy the provisions of the last paragraph of Section 11(a) of the Act. (e) During such period as a prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, the Company, at its expense, but only for the nine-month period referred to in Section 10(a)(3) of the Act, will furnish to you or mail to your order copies of the Registration Statement, the Prospectus, the Preliminary Prospectus and all amendments and supplements to any such documents in each case as soon as available and in such quantities as you may request, for the purposes contemplated by the Act. (f) The Company shall cooperate with you and your counsel in order to qualify or register the Common Shares for sale under (or obtain exemptions from the application of) the Blue Sky laws of such jurisdictions as you designate, will comply with such laws and will continue such qualifications, registrations and exemptions in effect so long as reasonably required for the distribution of the Common Shares. The Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any Securities held by Subscriber remain outstandingsuch jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise you promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Common Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company, with your cooperation, will use its best efforts to obtain the withdrawal thereof. (g) During the period of five years hereafter, the Company acknowledgeswill furnish to the Representatives and, representsupon request of the Representatives, warrants and agrees as followsto each of the other Underwriters: (i) The Company shall use its best efforts to reserveas soon as practicable after the end of each fiscal year, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all copies of the outstanding Warrants. The Annual Report of the Company is currently organizing a stockholder meeting to increase containing the number balance sheet of authorized shares the Company as of Common Stock the close of such fiscal year and statements of income, shareholders' equity and cash flows for the year then ended and the opinion thereon of the Company's independent public accountants; (ii) as soon as practicable after the filing thereof, and has copies of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other report filed by the Company with the SEC prior Commission, the NASD or any securities exchange; and (iii) as soon as available, copies of any report or communication of the Company mailed generally to the date hereof a preliminary proxy statement in connection with such stockholder meetingholders of its Common Stock. (iih) It will maintain During the listing period of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business 90 days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion date of the Warrant exercised shall be delivered as follows: To Prospectus, without the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ prior written consent of ▇▇▇▇▇▇▇▇▇, ▇ Securities (which consent may be withheld at the sole discretion of ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇Securities), ▇▇ ▇▇▇▇▇the Company will not issue, offer, sell, grant options to purchase or otherwise dispose of any of the Company's equity securities or any other securities convertible into or exchangeable with its Common Stock or other equity security ("Securities") other than (i) pursuant to outstanding stock options and warrants, (ii) pursuant to stock option and employee benefit plans in effect as of the date hereof and (iii) Securities issued as consideration for an acquisition (A) if the party being issued such Securities agrees to similar lock-▇▇▇▇ Fax: up provisions or (▇▇▇B) ▇▇▇if such Securities are "restricted securities" under the Act, provided that the Company agrees that it will not register such Securities under the Act during the period of 90 days after the date of the Prospectus. (i) The Company will apply the net proceeds of the sale of the Common Shares sold by it substantially in accordance with its statements under the caption "Use of Proceeds" in the Prospectus. (j) The Company will use its best efforts to qualify or register its Common Stock for sale in non-▇▇▇▇ Attn: ▇▇▇▇▇ ▇issuer transactions under (or obtain exemptions from the application of) the Blue Sky laws of the State of California (and thereby permit market making transactions and secondary trading in the Company's Common Stock in California), will comply with such Blue Sky laws and will continue such qualifications, registrations and exemptions in effect for a period of five years after the date hereof. (k) The Company will maintain a transfer agent and, if necessary under the jurisdiction of incorporation of the Company, a registrar (which may be the same entity as the transfer agent) for its Common Stock. (l) If at any time during the period after the Registration Statement becomes effective that a Prospectus is required to be delivered, any rumor, publication or event relating to or affecting the Company shall occur as a result of which in your opinion the market price of the Common Stock has been or is likely to be materially affected (regardless of whether such rumor, publication or event necessitates a supplement to or amendment of the Prospectus), the Company will, after written notice from you advising the Company to the effect set forth above, forthwith prepare, consult with you concerning the substance of, and disseminate a press release or other public statement, reasonably satisfactory to you, responding to or commenting on such rumor, publication or event. (m) The Company further agrees that, if it commences engaging in business with the government of Cuba or with any person or affiliate located in Cuba after the date the Registration Statement becomes or has become effective with the Commission or with the Florida Department of Banking and Finance (the "Department"), whichever date is later, or if the information reported in the Prospectus, if any, concerning the Company's business with Cuba or with any person or affiliate located in Cuba changes in any material way, the Company will provide the Department notice of such business or change, as appropriate, in a form acceptable to the Department. ▇▇▇▇▇▇▇You, Interim Chief Executive Officeron behalf of the Underwriters, may, in your sole discretion, waive in writing the performance by the Company of any one or more of the foregoing covenants or extend the time for their performance.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees with the Underwriter as follows: (ia) The Company shall use its best efforts will endeavor to reservecause the Registration Statement to become effective and will advise you promptly and, prior to February 15if requested by you, 2000will confirm such advice in writing (i) when the Registration Statement has become effective and when any amendment thereto thereafter becomes effective, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain of any request by the listing of its Common Stock on Commission for amendments or supplements to the OTC Bulletin Board. Registration Statement or the Prospectus or for additional information, (iii) It will permit Subscriber to exercise its right to exercise of the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received issuance by the Company Commission of any stop order suspending the effectiveness of the Registration Statement or of the suspension of qualification of the Shares for offering or sale in accordance any jurisdiction, or the initiation or contemplation of any proceeding for such purposes and (iv) within the period of time referred to in Section 6(e) below, of the happening of any event that makes any statement made in the Registration Statement or the Prospectus (as then amended or supplemented) untrue in any material respect or that requires the making of any addition to or change in the Registration Statement or the Prospectus (as then amended or supplemented) to state a material fact required to be stated therein or necessary to make the statements therein not misleading or of the necessity to amend or supplement the Prospectus (as then amended or supplemented) to comply with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer Securities Act or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exerciselaw. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ If at any ▇▇▇▇▇▇▇▇ ▇▇▇▇▇& Company, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: Inc. , 2010 time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, the Company will make every reasonable effort to obtain the withdrawal of such order at the earliest possible time. (▇▇▇b) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇The Company will furnish you, without charge, three signed copies of the Registration Statement as originally filed with the Commission and of each amendment to it, including financial statements and all exhibits thereto, and will also furnish to you such number of conformed copies of the Registration Statement (without exhibits) as originally filed and of each amendment thereto as you may reasonably request. (c) The Company will not file any amendment to the Registration Statement or make any amendment or supplement to the Prospectus of which you shall not have been advised previously or to which you shall reasonably object in writing promptly after being so advised. (d) On the effective date of the Registration Statement and thereafter from time to time, for such period as in the opinion of counsel for the Underwriter a prospectus is required by law to be delivered in connection with sales by an Underwriter or a dealer, the Company will deliver to you and each dealer through whom Shares may be sold without charge (except as provided below) as many copies of the Prospectus (and of any amendment or supplement thereto) as they may reasonably request. The Company consents to the use of such Prospectus (and of any amendment or supplement thereto) in accordance with the provisions of the Securities Act and with the securities or Blue Sky laws of the jurisdictions in which the Shares are offered by the Underwriter and by selected dealers through whom Shares may be sold, both in connection with the offering or sale of the Shares and for such period of time thereafter as the Prospectus is required by law to be delivered in connection therewith. If during such period of time any event shall occur that in the judgment of the Company, or in the opinion of counsel for the Underwriter, requires that a material fact be stated in the Prospectus (as then amended or supplemented) in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary to amend or supplement the Prospectus to comply with the Securities Act or any other law, the Company at its own expense (except as provided below) will forthwith prepare and file with the Commission an appropriate amendment or supplement thereto, and will furnish to the Underwriter and each dealer through whom Shares may be sold without charge (except as provided below), a reasonable number of copies thereof. (e) The Company will cooperate with you and your counsel in connection with the registration or qualification of the Shares for offer and sale by you and by selected dealers through whom Shares may be sold under the securities or Blue Sky laws of such jurisdictions as you may reasonably designate and will file such consents to service of process or other documents as may be necessary in order to effect such registration or qualification; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action that would subject it to the service of process in suits, other than those arising out of the offer and sale of the Shares, in any jurisdiction where it is not now so subject. ▇▇▇▇▇▇▇▇ & Company, Interim Chief Executive OfficerInc. , 2010 (f) The Company will make generally available to its security holders an earnings statement, which need not be audited, covering a 12-month period commencing after the effective date of the Registration Statement and ending no later than 15 months thereafter, as soon as practicable after the end of such period, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and any applicable regulation, including Rule 158 under the Securities Act. (g) During the period of five years hereafter, the Company will furnish to you without charge (i) as soon as available, a copy of each report of the Company mailed to shareholders or filed with the Commission and (ii) from time to time such other proper information concerning the business and financial condition of the Company as you may reasonably request. (h) The Company will use its best efforts to have the Shares qualified for listing on the NASDAQ Global Market, subject to official notice of issuance of the Shares being sold by the Company, immediately after the Closing Date or as soon as practicable thereafter and, upon such issuance, the Company will be in compliance with the designation and maintenance criteria applicable to NASDAQ Global Market issuers.

Covenants of the Company. For so long The Company covenants and agrees with you that: (a) It will cooperate in all respects in making the Prospectus effective and will not at any time, whether before or after the effective date, file any amendment to or supplement to the Prospectus of which you shall not previously have been advised and furnished with a copy or to which you or your counsel shall have reasonably objected or which is not in material compliance with the Act and the Rules and Regulations or applicable state law. As soon as any Securities held by Subscriber remain outstandingthe Company is advised thereof, the Company acknowledgeswill advise you, representsand confirm the advice in writing, warrants and agrees as follows: (i) The Company shall use its best efforts to reserve, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting receipt of any comments of the Commission or any state securities department, when the Registration Statement becomes effective if the provisions of Rule 430A promulgated under the Act will be relied upon, when the Prospectus has been filed in accordance with said Rule 430A, of the effectiveness of any post-effective amendment to increase the number Registration Statement or Prospectus, or the filing of authorized shares any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission or any state securities department for amendment of the Prospectus or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance of any stop order suspending the effectiveness of the Prospectus or any order preventing or suspending the use of any Prospectus or any order suspending trading in the Common Stock of the Company, or of the suspension of the qualification of the Securities, the Option Securities or the Underwriters' Securities for offering in any jurisdiction, or of the institution of any proceedings for any such purposes, and will use its best efforts to prevent the issuance of any such order and, if issued, to obtain as soon as possible the lifting or dismissal thereof. The Company has filed with caused to be delivered to you copies of such Prospectus, and the SEC prior Company has consented and hereby consents to the date hereof a preliminary proxy statement use of such copies for the purposes permitted by law. The Company authorizes you and the dealers to use the Prospectus and such copies of the Prospectus in connection with the sale of the Securities, the Option Securities and the Underwriters' Securities for such stockholder meetingperiod as in the opinion of your counsel and our counsel the use thereof is required to comply with the applicable provisions of the Act and the Rules and Regulations. The Company will prepare and file with the states, promptly upon your request, any such amendments or supplements to the Prospectus, and take any other action, as, in the opinion of your counsel, may be necessary or advisable in connection with the initial sale of the Securities, the Option Securities and the Underwriters' Securities and will use its best efforts to cause the same to become effective as promptly as possible. The Company shall file the Prospectus (in form and substance satisfactory to the Underwriter) or transmit the Prospectus by a means reasonably calculated to result in filing with the Commission pursuant to rule 424(b)(1) or pursuant to Rule 424(b)(3) not later than the Commission's close of business on the earlier of (i) the second business day following the execution and delivery of this Agreement, and (ii) the fifth business day after the effective date of the Registration Statement. In case of the happening, at any time within such period as a Prospectus is required under the Act to be delivered in connection with the initial sale of the Securities, the Option Securities and the Underwriters' Securities, of any event of which the Company has knowledge and which materially affects the Company, or the securities thereof, and which should be set forth in an amendment of or a supplement to the Prospectus in order to make the statements therein not then misleading, in light of the circumstances existing at the time the Prospectus is required under the Act to be delivered, or in case it shall be necessary to amend or supplement the Prospectus to comply with the Act, the Rules and Regulations or any other law, the Company will forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they are made. The preparation and furnishing of any such amendment or supplement to the Prospectus or supplement to be attached to the Prospectus shall be without expense to you. The Company will to the best of its ability comply with the Act, the Exchange Act and applicable state securities laws so as to permit the initial offer and sales of the Securities, the Option Securities and the Underwriters' Securities under the Act, the Rules and Regulations, and applicable state securities laws. (iib) It will maintain cooperate to qualify the listing Securities and the Option Securities and the Underwriters' Securities for initial sale under the securities laws of its Common Stock on such jurisdictions as you may designate and will make such applications and furnish such information as may be required for that purpose, provided the OTC Bulletin BoardCompany shall not be required to qualify as a foreign corporation or a dealer in securities. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long as the Underwriter may reasonably request. (iiic) So long as any of the Securities, the Option Securities or the Underwriters' Securities remain outstanding in the hands of the public, the Company, at its expense, will annually furnish to its shareholders a report of its operations to include financial statements audited by independent public accountants, and will furnish to the Underwriter as soon as practicable after the end of each fiscal year, a balance sheet of the Company as at the end of such fiscal year, together with statements of operations, shareholders' equity, and changes in cash flow of the Company for such fiscal year, all in reasonable detail and accompanied by a copy of the certificate or report thereon of independent public accountants. (d) It will permit Subscriber deliver to exercise you at or before the Initial Closing Date three signed copies of the Registration Statement including all financial statements and exhibits filed therewith, whether or not incorporated by reference. The Company will deliver to you, from time to time until the effective date of the Prospectus, as many copies of the Prospectus as you may reasonably request. The Company will deliver to you on the effective date of the Prospectus and thereafter for so long as a Prospectus is required to be delivered under the Act and the Rules and Regulations as many copies of the Prospectus, in final form, or as thereafter amended or supplemented, as you may from time to time reasonably request. (e) The Company will apply the net proceeds from the sale of the Securities and the Option Securities substantially in the manner set forth under "Use of Proceeds" in the Prospectus. No portion of the proceeds shall be used, directly or indirectly, to acquire any securities issued by the Company, without the prior written consent of the Underwriter. (f) As soon as it is practicable, but in any event not later than the first (1st) day of the fifteenth (15th) full calendar month following the effective date of the Registration Statement, the Company will make available to its right to exercise security holders and the Warrants by telecopying Underwriter an executed earnings statement (which need not be audited) covering a period of at least twelve (12) consecutive months beginning after the effective date of the Registration Statement, which shall satisfy the requirements of Section 11(a) of the Act and completed Notice Rule 158(a) of Exercise the Rules and Regulations. (g) Non-Accountable Expense Allowance and other Costs and Expenses. The Company shall pay to the Company Underwriter at each closing date, and delivering to be deducted from the original Notice of Exercise purchase price for the Securities and the original Warrant Option Securities, an amount equal to three percent (3%) of the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and gross proceeds received by the Company from the sale of the Securities and the Option Securities at such closing date less in accordance the case of the Initial Closing Date, the sum of $50,000 previously paid by the Company. If the sale of the Securities by the Underwriter is not consummated for any reason not attributable to the Underwriter, or if (i) the Company withdraws the Registration Statement from the Commission or does not proceed with the provisions public offering, or (ii) the representations in Section 3 hereof shall are not correct or the covenants cannot be deemed an "Exercise Date". The Company will transmit complied with, or (iii) there has been a 10 11 materially adverse change in the certificates representing shares condition, prospects or obligations of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received or a materially adverse change in stock market conditions from current conditions, all as determined by the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to SubscriberUnderwriter, in the event that then the Company fails shall reimburse the Underwriter for its out of pocket expenses including without limitation, its legal fees and disbursements all on an accountable basis but not to effect delivery of exceed $75,000 (less the $50,000 previously paid by the Company), and if any excess remains from the advance previously paid, such shares of Common Stock within such three (3) business day period, Subscriber excess will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect returned to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officer.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith the ------------------------ Underwriter that: (ia) The Company shall will use its best efforts to reservecause the Registration Statement to become effective. If required, the Company will file the Prospectus and any amendment or supplement thereto with the Commission in the manner and within the time period required by Rule 424(b) under the Act. Upon notification from the Commission that the Registration Statement has become effective, the Company will so advise you and will not at any time, whether before or after the effective date, file any amendment to the Registration Statement or supplement to the Prospectus of which you shall not previously have been advised and furnished with a copy or to which you or your counsel shall have objected in writing or which is not in compliance with the Act and the Rules and Regulations. At any time prior to February 15, 2000, a sufficient number the later of shares of Common Stock from its authorized but unissued shares of Common Stock to permit (A) the exercise in full of all completion by the Underwriter of the outstanding Warrantsdistribution of the Stock contemplated hereby (but in no event more than nine months after the date on which the Registration Statement shall have become or been declared effective) and (B) 25 days after the date on which the Registration Statement shall have become or been declared effective (the "Minimum Period"), the Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus which, in your opinion, may be necessary or advisable in connection with the distribution of the Stock. As soon as the Company is advised thereof, the Company will advise you, and confirm the advice in writing, of the receipt of any comments of the Commission, of the effectiveness of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order or threat thereof suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Stock for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to prevent the issuance of any such order, and, if issued, to obtain as soon as possible the lifting thereof. The Company has caused to be delivered to you copies of each Preliminary Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and dealers to use the Prospectus in connection with the sale of the Stock for such period as in the opinion of counsel to the Underwriter the use thereof is currently organizing required to comply with the applicable provisions of the Act and the Rules and Regulations. In case of the happening, at any time within such period as a stockholder meeting Prospectus is required under this Act to increase be delivered in connection with sales by the number Underwriter of authorized shares any event of Common Stock which the Company has knowledge and which materially affects the Company or the securities of the Company, and has filed or which in the opinion of counsel for the Company or counsel for the Underwriter should be set forth in an amendment of the Registration Statement or a supplement to the Prospectus in order to make the statements therein not then misleading, in light of the circumstances existing at the time the Prospectus is required to be delivered to a purchaser of the Stock or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed Rules and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courierRegulations, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officer

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees with the Underwriter as follows: (ia) The Company shall use its best efforts to reservecause the Registration Statement and any amendments thereto to become effective as promptly as practicable and will not at any time, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit whether before or after the exercise in full of all effective date of the outstanding Warrants. The Company is currently organizing a stockholder meeting Registration Statement, file any amendment to increase the number of authorized shares of Common Stock Registration Statement or supplement to the Prospectus or file any document under the Act or Exchange Act before termination of the Companyoffering of the Shares by the Underwriter of which the Underwriter shall not previously have been advised and furnished with a copy, and has filed or to which the Underwriter shall have objected or which is not in compliance with the SEC prior to Act, the date hereof a preliminary proxy statement in connection with such stockholder meetingExchange Act or the Regulations. (b) As soon as the Company is advised or obtains knowledge thereof, the Company will advise the Underwriter and confirm the notice in writing, (i) when the Registration Statement, as amended, becomes effective, if the provisions of Rule 430A promulgated under the Act will be relied upon, when the Prospectus has been filed in accordance with said Rule 430A and when any post-effective amendment to the Registration Statement becomes effective, (ii) It will maintain of the listing issuance by the Commission of its Common Stock on any stop order or of the OTC Bulletin Board. initiation, or the threatening, of any proceeding, suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of the Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto, or the institution of proceedings for that purpose, (iii) It will permit Subscriber to exercise its right to exercise of the Warrants issuance by telecopying an executed the Commission or by any state securities commission of any proceedings for the suspension of the qualification of any of the Registered Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose, (iv) of the receipt of any comments from the Commission; and completed Notice (v) of Exercise any request by the Commission for any amendment to the Company and delivering the original Notice of Exercise and the original Warrant Registration Statement or any amendment or supplement to the Company by overnight courierProspectus or for additional information. Each business date on which If the Commission or any state securities commission authority shall enter a Notice of Exercise is telecopied to and received by stop order or suspend such qualification at any time, the Company in accordance with will use its best efforts to obtain promptly the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery lifting of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerorder.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding(a) Until the Closing Date or the earlier termination of the Standby Purchaser’s obligations under Section 2 of this Agreement, the Company acknowledges, represents, warrants covenants and agrees as follows: (i) The Company shall As contemplated by Section 203 of the DGCL, to use its best commercially reasonable efforts to reserve, prior have the Board recommend to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all stockholders of the outstanding WarrantsCompany to approve the sale of the New Shares to the Standby Purchaser; (ii) To as soon as reasonably practicable (A) seek the Company Stockholder Approval and (B) file with the Commission the Rights Offering Registration Statement and the Proxy Statement and pay the applicable fees in accordance with the Securities Act; (iii) To use commercially reasonable efforts to cause the Rights Offering Registration Statement, and any amendments thereto to become effective as promptly as possible, and to cause the Proxy Statement to be cleared by the Commission as promptly and practicable; (iv) To use commercially reasonable efforts to effectuate the Rights Offering; (v) As soon as reasonably practicable after the Company is advised or obtains knowledge thereof, to advise the Standby Purchaser with a confirmation in writing, of (A) the time when the Rights Offering Registration Statement, or any amendments thereto has been filed or declared effective or the Prospectus or any amendment or supplement thereto has been filed, (B) the issuance by the Commission of any stop order, or of the initiation or threatening of any order preventing or suspending the use of any preliminary prospectus or the Prospectus or any amendment or supplement thereto, (C) the issuance by any state securities commission of any notice of any proceedings for the suspension of the qualification of the New Shares for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose, (D) the receipt of any comments from the Commission, and (E) any request by the Commission for any amendment to the Rights Offering Registration Statement, any amendment or supplement to the Prospectus or for additional information. The Company will use its commercially reasonable efforts to prevent the issuance of any such order or the imposition of any such suspension and, if any such order is currently organizing a stockholder meeting issued or suspension is imposed, to increase obtain the withdrawal thereof as promptly as possible; (vi) To notify, or to cause the subscription agent for the Rights Offering (the “Subscription Agent”) to notify the Standby Purchaser, on each Friday during the exercise period of the Rights, or more frequently if reasonably requested by the Standby Purchaser, of the aggregate number of authorized Rights known by the Company or the Subscription Agent to have been exercised pursuant to the Rights Offering as of the close of business on the preceding Business Day or the most recent practicable time before such request, as the case may be; (vii) Not to issue any shares of Common Stock capital stock of the Company, and has filed with or options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, securities convertible into or exchangeable for capital stock of the SEC prior Company, or other agreements or rights to purchase or otherwise acquire capital stock of the date hereof a preliminary proxy statement in connection with such stockholder meeting. Company, except for (iiA) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants the Company’s presently outstanding stock options, (together with B) new stock options and other awards granted to employees of the certificates representing Company after the Warrants not so exerciseddate hereof under the Company’s incentive plans; (C) to Subscriber via express courier, InterWest Partners pursuant to that certain Purchase Agreement by electronic transfer or otherwise within three (3) business days after the Exercise Date if and between the Company has received and InterWest Partners dated as of April 3, 2009 (the original Notice “InterWest Purchase Agreement”) and (D) pursuant to the Rights Offering; (viii) Not to authorize any stock split, stock dividend, stock combination or similar transaction affecting the number of Exercise issued and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such outstanding shares of Common Stock; (ix) Not to declare or pay any dividends on its Common Stock within such three or repurchase any shares of Common Stock, other than ordinary quarterly dividends, regularly declared and paid in accordance with past practice; (3x) Not to incur any indebtedness or guarantees thereof, other than borrowings in the ordinary course of business day periodand consistent with past practice; and (xi) On or before the Closing Date, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect deliver to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion Standby Purchaser a copy of the Warrant exercised shall Prospectus and any “issuer free writing prospectus” as defined in Rule 433 of the Securities Act relating to the New Shares that (A) is required to be delivered as follows: To filed with the Commission by the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇or (B) is exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a description of the terms of the New Shares or the offering of the New Shares that does not reflect the final terms, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerand to give the Standby Purchaser the opportunity to review and comment on any disclosure in the Prospectus and any “issuer free writing prospectus” relating to the Standby Purchaser.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants and agrees covenants with you as follows: (a) It will notify you immediately and confirm the notice in writing (i) when the Registration Statement and any amendment thereto shall have become effective, (ii) of the receipt of any comments from the Commission with respect to the Registration Statement, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information relating thereto, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any proceedings for that purpose. The Company will make every reasonable effort to prevent the issuance by the Commission of any stop order and, if any such stop order shall at any time be issued, to obtain the lifting thereof at the earliest possible moment. (b) It will give you notice of its intention to file or prepare any amendment to the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus (including any revised prospectus which the Company proposes for use its best efforts by the Agent in connection with the offering of the Units which differs from the prospectus on file at the Commission at the time the Registration Statement became or becomes effective, whether or not such revised prospectus is required to reserve, be filed pursuant to Rule 424(b)) and will furnish you with copies of any such amendment or supplement a reasonable amount of time prior to February 15such proposed filing or use, 2000as the case may be, a sufficient and will not file any such amendment or supplement or use any such prospectus to which you shall reasonably object in writing. (c) It will deliver to you, as soon as available, one signed copy of the Registration Statement as originally filed and of each amendment thereto and one set of exhibits thereto. (d) It will deliver to you from time to time, before the Registration Statement becomes effective, such number of shares copies of Common Stock the Registration Statement as originally filed and any amendments thereto and as soon as the Registration Statement initially becomes effective and thereafter from time to time during the period when the Prospectus is required to be delivered under the Act, such number of copies of the Prospectus (as amended or supplemented) as you may reasonably request for the purposes contemplated by the Act or the Regulations, and such number of copies of the Subscription Agreement and the LLC Agreement as you may reasonably request. (e) During the period when the Prospectus is required to be delivered pursuant to the Act, the Company will comply, so far as it is able and at its authorized but unissued shares of Common Stock own expense, with all requirements imposed upon it by the Act, as now and hereafter amended, and by the Regulations, as from time to time in force, so far as necessary to permit the exercise in full continuance of all sales of or dealings in, the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with Units during such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company period in accordance with the provisions hereof herein and as set forth in the Prospectus. (f) If any event relating to or affecting the Company shall be deemed an "Exercise Date". The occur as a result of which it is necessary, in your view, to amend or supplement the Prospectus in order to make the Prospectus not misleading in the light of the circumstances existing at the time it is delivered to a subscriber, the Company will transmit forthwith prepare and furnish to you, without expense to you, a reasonable number of copies of an amendment or amendments of, or a supplement or supplements to, the certificates representing shares Prospectus (in form and substance satisfactory to you) which amend or supplement the Prospectus so that as amended or supplemented it will not contain an untrue statement of Common Stock issuable upon exercise a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Prospectus is delivered to a subscriber, not misleading. For the purposes of this Section 3(f), the Company will furnish such information with respect to themselves as you may from time to time reasonably request. (g) It will comply with all applicable registration, filing and reporting requirements of the Exchange Act. (h) It will endeavor in good faith, in cooperation with you, to qualify the Units for offering and sale under the applicable securities or "blue sky" laws of such jurisdictions as you may designate; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify to do business or to qualify as a dealer in securities in any jurisdiction in which it is not so qualified. It will give you notice of any Warrants correspondence received from any state securities commission regarding the Offering and will give you notice of its intention to file, or prepare for filing, any materials related to the Offering with any state securities commission; it will furnish you copies of any of the foregoing promptly upon receipt or prior to filing, as applicable, and will not file any such materials to which you shall reasonably object in writing. In each jurisdiction where the Units shall have been qualified as above provided, the Company will make and file such statements and reports in each year as are or may be required by the laws of such jurisdiction. (together with i) It will make generally available to the certificates representing Company's security holders (i.e., the Warrants holders of Units) as soon as practicable, but not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business later than 120 days after the Exercise Date if close of the period covered thereby, an earnings statement of the Company has received (in form complying with the original Notice provisions of Exercise Section 11(a) of the Act and Warrant being exercised Rule 158 promulgated thereunder, which need not be certified by independent public accountants unless required by the Act or the Regulations) covering the twelve-month period, or such dateearlier period since the Company's inception, beginning not later than the first day of the Company's fiscal quarter following the effective date of the Registration Statement. In addition As used in this subsection, the terms "earnings statement" and "made generally available to the Company's security holders" shall have the meanings contained in Rule 158 promulgated under the Act. (j) It will for a period of two years following the Offering Termination Date or the earlier expiration or termination of this Agreement pursuant to Section 10 below, furnish directly to you the following: (i) as soon as practicable after the end of each fiscal year, one copy of the Company's annual report, including therein the accountants' report, the balance sheet, the related statements of profit and loss and cash flows for the Company, together with such accountants' comments and notations with respect thereto in such detail as the Company may customarily receive from such accountants; (ii) as soon as practicable after the end of each fiscal quarterly period, one copy of a balance sheet of the Company as at the end of such period, setting forth in reasonable detail its financial position, together with related statements of profit and loss and cash flows, none of which statements need be audited, but shall be certified as correct by the Company; (iii) copies of any report, application or document which the Company shall file with the Commission; and (iv) as soon as the same shall be sent to holders of Units, each communication which shall be sent to the holders of Units, including any other remedies which may annual or interim report of the Company. (k) It will deliver to you, from time to time, all supplemental sales material (whether designated solely for broker-dealer use or otherwise) proposed to be available used or delivered by the Company in connection with the offering of Units. (l) It intends to Subscriber, source funds and to use funds in the event that manner specified in the Company fails Prospectus. (m) It will use the net proceeds received by it from the sale of the Units being sold by it in the manner specified in the Prospectus. (n) It will maintain adequate books and records setting forth a true and accurate account of all business transactions arising out of and in connection with the conduct of the Company. You or your designated representative shall have the right, at any reasonable time, to effect delivery have access to and inspect and copy the contents of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company books and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerrecords.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants and agrees covenants with each Underwriter as follows: (a) To furnish to you, without charge, a signed copy of the Registration Statement (without exhibits thereto and documents incorporated by reference therein) and to deliver to each of the Underwriters as many copies of the Time of Sale Prospectus, the Prospectuses, any documents incorporated by reference therein and any supplements and amendments thereto or to the Registration Statement as you may reasonably request. (b) All sums payable by the Company under this Agreement shall be paid free and clear of and without deductions or withholdings of any present or future taxes, levies, imposts, charges or duties, unless the deduction or withholding is required by law, in which case the Company shall pay such additional amount as will result in the receipt by each Underwriter of the full amount that would have been received had no deduction or withholding been made. No such additional amount shall be paid if (a) such deduction or withholding results from an Underwriter having rendered services in Canada or in the Province of Ontario, (b) such deduction or withholding results from a connection of an Underwriter with the taxing jurisdiction other than the mere entering into of this Agreement or receipt of payments or performance of obligations hereunder or (c) such deduction or withholding would not have been required but for the failure of an Underwriter to comply with any reasonable certification, identification or other reporting requirements concerning the nationality, residence, identity or connection with the taxing jurisdiction of such Underwriter. (c) Before amending or supplementing the Registration Statement, the Time of Sale Prospectus or the Prospectuses or the Canadian Base Prospectus, to furnish to you a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement without your prior consent, which consent shall not be unreasonably withheld, and to file (i) the Canadian Final Prospectus with the Reviewing Authority and each of the other Canadian Securities Commissions in accordance with the Canadian Shelf Procedures not later than the Reviewing Authority’s close of business on the business day following the execution and delivery of this Agreement and (ii) U.S. Final Prospectus with the Commission within the applicable period specified in General Instruction II.L. of Form F-10 under the Securities Act. (d) To furnish to you a copy of each proposed free writing prospectus to be prepared by or on behalf of, used by, or referred to by the Company and not to use or refer to any proposed free writing prospectus to which you reasonably object; provided that, if in the reasonable opinion of counsel for the Company, any such amendment or supplement shall be required by law or regulation to be used, the Company shall be permitted to file such amendment or supplement after taking into account such comments as you may reasonably make on the content, form or other aspects of such amendment or supplement. (e) To prepare, in consultation with the Managers, and approve in writing, prior to such time any marketing materials are provided to potential investors in Shares, a template version of any marketing materials reasonably requested to be provided by the Underwriters to any such potential investor, such marketing materials to comply with Canadian Securities Laws and U.S. securities laws and to be acceptable in form and substance to the Company and the Underwriters, acting reasonably, and to file or deliver any such marketing materials to the Canadian Securities Commissions in compliance with Canadian Securities Laws. (f) Not to take any action that would result in an Underwriter or the Company being required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not have been required to file thereunder. (g) During the period from the date of this Agreement to the later of the Closing Date and the date of completion of distribution of the Shares, the Company shall, promptly after receiving notice or obtaining knowledge, notify the Underwriters and their counsel in writing of the full particulars of: (a) the issuance by any securities commission, stock exchange or comparable authority of any order suspending or preventing the use of any of the Registration Statement, Preliminary Prospectuses, Time of Sale Prospectus, marketing materials, Prospectuses or any amendments or supplements thereto (“Offering Documents”), (b) the suspension of the qualification of the Common Shares for offering or sale in any of the Canadian Qualifying Jurisdictions or in the United States, (c) the institution or, to the Company’s knowledge, threatening of any proceeding for any of those purposes, or (d) any requests made by any securities commission, stock exchange or comparable authority for amending or supplementing any of the Offering Documents, or for additional information, and will use its reasonable best efforts to prevent the issuance of any such order and, if any such order is issued, to obtain the withdrawal of the order promptly; (ii) any Material Adverse Effect relating to the Company; (iii) any material fact that has arisen or has been discovered and would have been required by Canadian Securities Law or U.S. securities laws to have been stated in the Offering Documents or any Offering Document Amendment had the fact arisen or been discovered on, or prior to, the date of such document; and (iv) any change in any fact (which for the purposes of this Agreement shall be deemed to include the disclosure of any previously undisclosed material fact) contained in the Offering Documents or whether any event or state of facts has occurred after the date of this Agreement, which fact or change is, or may be, in any case, of such a nature as to render any statement in the Offering Documents misleading or untrue in any material respect or which would result in a misrepresentation in the Offering Documents or which would result in the Offering Documents not complying (to the extent that such compliance is required) with Canadian Securities Laws or U.S. securities laws, in each case, as at any time up to and including the later of the Closing Date and the date of completion of the distribution of the Shares. (h) The Company covenants and agrees with the Underwriters that it will: (i) promptly provide to the Underwriters via email or otherwise, and will cause each of its Subsidiaries to provide to the Underwriters, during the period commencing on the date hereof and until completion of the distribution of the Shares, copies of any filings made by the Company or its Subsidiaries of information relating to the Offering with any securities exchange or any applicable securities regulatory body in Canada or the United States or any other jurisdiction; and (ii) promptly provide to the Underwriters via email or otherwise, during the period commencing on the date hereof and until completion of the distribution of the Shares, drafts of any press releases (other than press releases which do not contain material facts and relate to promotion of the Company’s services, sponsorship of events or similar press releases issued with a view to market the services of the Company as opposed to disclosing material facts or other material information) of the Company relating to the Company or the Offering contemplated by this Agreement for review by the Underwriters and the Underwriters’ counsel prior to issuance, provided that the Company may issue such press releases immediately without prior Underwriters’ counsel review to the extent immediate release is required to comply with applicable Canadian Securities Laws or U.S. securities laws or other legislation or the rules and regulations of the TSX or Nasdaq and provided, further, that the consent of the Underwriters shall not be required for the issuance of any such press releases. (i) If the Time of Sale Prospectus is being used to solicit offers to buy the Shares at a time when the U.S. Final Prospectus is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if any event shall occur or condition exist as a result of which the Time of Sale Prospectus conflicts with the information contained in the Registration Statement then on file, or if, in the reasonable opinion of counsel for the Underwriters, it is necessary to amend or supplement the Time of Sale Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and the Canadian Securities Commissions and furnish, at its own expense, to the Underwriters and to any dealer (whose names and addresses you shall furnish to the Company) upon request, either amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale Prospectus as so amended or supplemented will not, in the light of the circumstances when the Time of Sale Prospectus is delivered to a prospective purchaser, be misleading or so that the Time of Sale Prospectus, as amended or supplemented, will no longer conflict with the Registration Statement, or so that the Time of Sale Prospectus, as amended or supplemented, will comply in material respects with applicable law. (j) If any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Canadian Preliminary Prospectus to make the statements therein, in the light of the circumstances, not misleading or to correct any misrepresentation contained therein, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Canadian Preliminary Prospectus to comply with Canadian Securities Laws (including, as applicable, so as to constitute full, true and plain disclosure of all material facts relating to the Shares), forthwith to prepare, file or deliver, as applicable, with the Canadian Securities Commissions and furnish, at its own expense, to the Underwriters and to any dealer upon request, either amendments or supplements to the Canadian Preliminary Prospectus so that the statements in the Canadian Preliminary Prospectus as so amended or supplemented will not, in the light of the circumstances when the Canadian Preliminary Prospectus is delivered to a prospective purchaser, be misleading or contain a misrepresentation, or so that the Canadian Preliminary Prospectus, as amended or supplemented, will comply with Canadian Securities Laws (including, as applicable, so as to constitute full, true and plain disclosure of all material facts relating to the Shares). (k) If any event shall occur or condition exist as a result of which it is necessary to amend or supplement any marketing materials in order to make the statements therein, in the light of the circumstances, not misleading or to correct any misrepresentation contained therein, or if, in the reasonable opinion of counsel for the Underwriters, it is necessary to amend or supplement the marketing materials to comply with Canadian Securities Laws (including, as applicable, so as to constitute full, true and plain disclosure of all material facts relating to the Shares), forthwith to prepare, file or deliver, as applicable, with the Canadian Securities Commissions and furnish, at its own expense, to the Underwriters and to any dealer upon request, either amendments or supplements to the marketing materials so that the statements in the marketing materials as so amended or supplemented will not, in the light of the circumstances when the marketing materials are delivered to a prospective purchaser, be misleading or contain a misrepresentation, or so that the marketing materials, as amended or supplemented, will comply with Canadian Securities Laws (including, as applicable, so as to constitute full, true and plain disclosure of all material facts relating to the Shares). (l) If any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectuses (or one of them) in order to make the statements therein, in the light of the circumstances, not misleading or to correct any misrepresentation contained therein, or if, in the reasonable opinion of counsel for the Underwriters, it is necessary to amend or supplement the Prospectuses (or one of them) to comply with U.S. securities laws and Canadian Securities Laws (including, as applicable, so as to constitute full, true and plain disclosure of all material facts relating to the Shares), forthwith to prepare, file or deliver, as applicable, with the Commission and the Canadian Securities Commissions and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses you will furnish to the Company) to which Shares may have been sold by you on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectuses (or one of them) so that the statements in the Prospectuses (or one of them) as so amended or supplemented will not, in the light of the circumstances be misleading or contain a misrepresentation or so that the Prospectuses, as amended or supplemented, will comply with U.S. securities laws and Canadian Securities Laws (including, as applicable, so as to constitute full, true and plain disclosure of all material facts relating to the Shares). (m) If at any time following the distribution of any Written Testing-the-Waters Communication and prior to the distribution of the Prospectuses there occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company will promptly notify the Managers and will promptly amend or supplement, at its own expense, such Written Testing-the-Waters Communication to eliminate or correct such untrue statement or omission. (n) To endeavor to qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request; provided that the Company shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction where it is not presently qualified or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject. (o) The Company shall pay, and shall indemnify and hold the Underwriters harmless against, any stamp, issue, registration, documentary, sales, transfer or other similar taxes, governmental charges or duties, including any interest and penalties with respect thereto, imposed under the laws of Canada or any political sub-division or taxing authority thereof or therein that is payable in connection with (i) the execution, delivery, consummation or enforcement of this Agreement, (ii) the creation, allotment and issuance of the Shares, (iii) the sale and delivery of the Shares to the Underwriters or purchasers procured by the Underwriters, or (iv) the resale and delivery of the Shares by the Underwriters in the manner contemplated herein. (p) To make generally available to the Company’s security holders and to you (it being understood that filings on SEDAR or ▇▇▇▇▇ satisfy this requirement) as soon as practicable earnings statements covering four fiscal quarters of the Company occurring after the date of this Agreement which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder. (q) To use its best efforts to reserve, prior have the Shares accepted for listing on Nasdaq and the TSX and to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection file with such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed exchanges all documents and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised notices required by such date. In addition to any other remedies which may be available to Subscriber, in the event exchanges of issuers that the Company fails to effect delivery of have securities that are listed on such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerexchange

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees with the Underwriter as follows: (ia) The Company shall use its best efforts to reservecause the Registration Statement and any amendments thereto to become effective as promptly as practicable and will not at any time, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit whether before or after the exercise in full of all effective date of the outstanding Warrants. The Company is currently organizing a stockholder meeting Registration Statement, file any amendment to increase the number of authorized shares of Common Stock Registration Statement or supplement to the Prospectus or file any document under the Act or Exchange Act before termination of the Companyoffering of the Shares by the Underwriter of which the Underwriter shall not previously have been advised and furnished with a copy, and has filed or to which the Underwriter shall have objected or which is not in compliance with the SEC prior to Act, the date hereof a preliminary proxy statement in connection with such stockholder meetingExchange Act or the Regulations. (b) As soon as the Company is advised or obtains knowledge thereof, the Company will advise the Underwriter and confirm the notice in writing, (i) when the Registration Statement, as amended, becomes effective, if the provisions of Rule 430A promulgated under the Act will be relied upon, when the Prospectus has been filed in accordance with said Rule 430A and when any post-effective amendment to the Registration Statement becomes effective, (ii) It of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding, suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of the Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto, or the institution of proceedings for that purpose, (iii) of the issuance by the Commission or by any state securities commission of any proceedings for the suspension of the qualification of any of the Registered Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose, (iv) of the receipt of any comments from the Commission, and (v) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information. If the Commission or any state securities commission authority shall enter a stop order or suspend such qualification at any time, the Company will maintain use its best efforts to obtain promptly the listing lifting of its Common Stock on the OTC Bulletin Boardsuch order. (iiic) It will permit Subscriber to exercise its right to exercise The Company shall file the Warrants by telecopying an executed Prospectus (in form and completed Notice of Exercise substance satisfactory to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company Underwriter) in accordance with the provisions hereof shall be deemed an "Exercise Date". requirements of the Act. (d) The Company will transmit give the certificates representing shares Underwriter notice of Common Stock issuable upon exercise its intention to file or prepare any amendment to the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus (including any revised prospectus which the Company proposes for use by the Underwriter in connection with the offering of the Registered Securities which differs from the corresponding prospectus on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the Regulations), and will furnish the Underwriter with copies of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer such amendment or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice supplement a reasonable amount of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice time prior to such effect proposed filing or use, as the case may be, and will not file any such amendment or supplement to which the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇Underwriter or ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇& ▇▇▇▇▇▇▇ ▇▇▇▇▇LLP ("Underwriter's Counsel") shall reasonably object. (e) The Company shall endeavor in good faith, ▇▇ ▇▇▇▇▇in cooperation with the Underwriter, at or prior to the time the Registration Statement becomes effective, to qualify the Registered Securities for offering and sale under the securities laws of such jurisdictions as the Underwriter may reasonably designate to permit the continuance of sales and dealings therein for as long as may be necessary to complete the distribution, and shall make such applications, file such documents and furnish such information as may be required for such purpose; provided, however, the Company shall not be required to qualify as a foreign corporation or become subject to service of process in any such jurisdiction. In each jurisdiction where such qualification shall be effected, the Company will, unless the Underwriter agrees that such action is not at the time necessary or advisable, use all reasonable efforts to file and make such statements or reports at such times as are or may reasonably be required by the laws of such jurisdiction to continue such qualification. (f) During the time when a prospectus is required to be delivered under the Act, the Company shall use all reasonable efforts to comply with all requirements imposed upon it by the Act, as now and hereafter amended, and by the Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Registered Securities in accordance with the provisions hereof and the Prospectus, or any amendments or supplements thereto. If at any time when a prospectus relating to the Registered Securities is required to be delivered under the Act, any event shall have occurred as a result of which, in the opinion of counsel for the Company or Underwriter's Counsel, the Prospectus, as then amended or supplemented, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the Prospectus to comply with the Act, the Company will notify the Underwriter promptly and prepare and file with the Commission an appropriate amendment or supplement in accordance with Section 10 of the Act, each such amendment or supplement to be satisfactory to Underwriter's Counsel, and the Company will furnish to the Underwriter copies of such amendment or supplement as soon as available and in such quantities as the Underwriter may request. (g) As soon as practicable, but in any event not later than 45 days after the end of the 12-▇▇▇▇ Fax: month period beginning on the day after the end of the fiscal quarter of the Company during which the effective date of the Registration Statement occurs (▇▇▇90 days in the event that the end of such fiscal quarter is the end of the Company's fiscal year), the Company shall make generally available to its security holders, in the manner specified in Rule 158(b) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇of the Regulations, Interim Chief Executive Officerand to the Underwriter, an earnings statement which will be in the detail required by, and will otherwise comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Regulations, which statement need not be audited unless required by the Act, covering a period of at least 12 consecutive months after the effective date of the Registration Statement. (h) During a period of five (5) years after the date hereof if required by law or the applicable rules of the Commission, any securities exchange or the NASD, the Company will furnish to its stockholders, as soon as practicable after the end of each respective period, annual reports (including financial statements audited by independent public accountants) and unaudited quarterly reports of operations for each of the first three quarters of the fiscal year, and will furnish to the Underwriter: (i) concurrently, if required (when available if not), with furnishing such reports to its stockholders, statements of operations of the Company for each of the first three quarters in the form furnished to the Company's stockholders; (ii) concurrently with furnishing to its stockholders, an annual report; (iii) as soon as they are available, copies of all other reports (financial or other) mailed to the Company's stockholders; (iv) as soon as they are available, copies of all reports and financial statements furnished to or filed with the Commission, any securities exchange or the NASD; (v) every material press release in respect of the Company or its affairs which was released or prepared by the Company; and

Covenants of the Company. For The Company covenants and agrees that: (a) The Company will use its best efforts to cause the Registration Statement and any amendment thereof, if not effective at the time and date that this Agreement is executed and delivered by the parties hereto, to become effective. If the Registration Statement has become or becomes effective pursuant to Rule 430A of the Rules and Regulations, or the filing of the Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations, the Company will file the Prospectus, properly completed, pursuant to the applicable paragraph of Rule 424(b) of the Rules and Regulations within the time period prescribed and will provide evidence satisfactory to you of such timely filing. The Company will promptly advise you in writing (i) of the receipt of any comments of the Commission, (ii) of any request of the Commission for amendment of or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus or for additional information, (iii) when the Registration Statement shall have become effective, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the institution of any proceedings for that purpose. If the Commission shall enter any such stop order at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible moment. The Company will not file any amendment or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus (including any amendment or supplement through incorporation by reference of any report filed under the Exchange Act) of which you have not been furnished with a copy a reasonable time prior to such filing or to which you reasonably object or which is not in compliance with the Act and the Rules and Regulations. (b) The Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or the Prospectus which in your judgment may be necessary or advisable to enable the several Underwriters to continue the distribution of the Common Shares and will use its best efforts to cause the same to become effective as promptly as possible. The Company will fully and completely comply with the provisions of Rules 424(b), 430A and 434, as applicable, of the Rules and Regulations with respect to information omitted from the Registration Statement in reliance upon such Rule. (c) If at any time within the nine-month period referred to in Section 10(a)(3) of the Act during which a prospectus relating to the Common Shares is required to be delivered under the Act any event occurs, as a result of which the Prospectus, including any amendments or supplements, would include an untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or if it is necessary at any time to amend the Prospectus, including any amendments or supplements, to comply with the Act or the Rules and Regulations, the Company will promptly advise you thereof and will promptly prepare and file with the Commission, at its own expense, an amendment or supplement which will correct such statement or omission or an amendment or supplement which will effect such compliance and (d) As soon as practicable, but not later than 45 days after the end of the first quarter ending after one year following the "effective date of the Registration Statement" (as defined in Rule 158(c) of the Rules and Regulations), the Company will make generally available to its security holders an earning statement (which need not be audited) covering a period of 12 consecutive months beginning after the effective date of the Registration Statement which will satisfy the provisions of the last paragraph of Section 11(a) of the Act. (e) During such period as a prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, the Company, at its expense, but only for the nine-month period referred to in Section 10(a)(3) of the Act, will furnish to you or mail to your order copies of the Registration Statement, the Prospectus, the Preliminary Prospectus and all amendments and supplements to any such documents (including any documents incorporated or deemed incorporated by reference therein) in each case as soon as available and in such quantities as you may request, for the purposes contemplated by the Act. (f) The Company shall cooperate with you and your counsel in order to qualify or register the Common Shares for sale under (or obtain exemptions from the application of) the Blue Sky laws of such jurisdictions as you designate (including those of Canada) and under the applicable securities laws of such other nations as you may designate, will comply with such laws and will continue such qualifications, registrations and exemptions in effect so long as reasonably required for the distribution of the Common Shares. The Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any Securities held by Subscriber remain outstandingsuch jurisdiction where it is not presently qualified. The Company will advise you promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Common Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company, with your cooperation, will use its best efforts to obtain the withdrawal thereof. (g) During the period of five years hereafter, the Company acknowledgeswill furnish to the Representatives and, representsupon request of the Representatives, warrants and agrees as followsto each of the other Underwriters: (i) The Company shall use its best efforts to reserveas soon as practicable after the end of each fiscal year, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all copies of the outstanding Warrants. The Annual Report of the Company is currently organizing a stockholder meeting to increase containing the number balance sheet of authorized shares the Company as of Common Stock the close of such fiscal year and statements of income, shareholders' equity and cash flows for the year then ended and the opinion thereon of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. 's independent public accountants; (ii) It will maintain as soon as practicable after the listing filing thereof, copies of its Common Stock each proxy statement, Annual Report on the OTC Bulletin Board.Form 10-K, Quarterly (iiih) It will permit Subscriber to exercise its right to exercise During the Warrants by telecopying an executed and completed Notice period of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business 90 days after the Exercise Date if first date that any of the Company has received the original Notice of Exercise and Warrant being exercised Common Shares are released by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect you for sale to the Company whereupon public, without the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery written consent of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇either Mont▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇urities or each of the Representatives (which consent may be withheld at the sole discretion of Mont▇▇▇▇▇▇ ▇▇▇▇▇urities or the Representatives, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: as the case may be), the Company will not issue, offer, sell, grant options to purchase or otherwise dispose of any of the Company's equity securities or any other securities convertible into or exchangeable with its Ordinary Shares or other equity security, other than pursuant to outstanding stock options and warrants disclosed in the Prospectus and other than the grant of options or the issuance of the Company's equity securities pursuant to the Company's employee share option plans described in the Prospectus or the issuance of Ordinary Shares in connection with acquisitions. (▇▇▇i) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇The Company will apply the net proceeds of the sale of the Common Shares sold by it substantially in accordance with its statements under the caption "Use of Proceeds" in the Prospectus. (j) During such period as a prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, the Company will file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act in the manner and within the time periods required by the Exchange Act. ▇▇▇▇▇▇▇The Representatives, Interim Chief Executive Officeron behalf of the Underwriters, may, in their sole discretion, waive in writing the performance by the Company of any one or more of the foregoing covenants set forth in Section 5 herein or extend the time for their performance.

Covenants of the Company. For The Company covenants and agrees with each of the Underwriters that: (a) If the Registration Statement has not become effective, the Company will promptly file the Final Amendment with the Commission and use its best efforts to cause the Registration Statement to become effective; if the Registration Statement has become effective, the Company will prepare the Rule 430A Prospectus in a form approved by you and will file such Rule 430A Prospectus with the Commission pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Act; the Company will make no further amendment to the Registration Statement or supplement to the Prospectus of which you and counsel for the Underwriters shall not previously have been advised and furnished a copy, or to which you or counsel for the Underwriters shall object; the Company will advise you promptly, after the Company receives notice thereof, of the time when the Registration Statement, or any amendment thereto, has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and will furnish you and counsel for the Underwriters with copies thereof; the Company will advise you, promptly after it receives notice thereof, of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, of the suspension of the qualification of the Stock for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose or of any request by the Commission to amend or supplement the Registration Statement or the Prospectus or for additional information; in the event of the issuance of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or suspending the qualification of the Stock for offering or sale in any jurisdiction, the Company will promptly use its best efforts to obtain as soon as possible the withdrawal of such order; and the Company will use its best efforts to prevent the issuance of any such stop order or of any such order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or suspending the qualification of the Stock for offering or sale in any jurisdiction. (b) The Company will comply with the Act and the Rules and Regulations so as to permit the continuance of offerings, sales and dealings in the Stock under the Act for such period as may be required by the Act. Promptly from time to time, the Company will take such action as you may request to register and qualify the Stock for offering and sale under the securities laws of such jurisdictions as you may request and to comply with such laws so as to permit the continuance of offerings, sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Stock, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction. The Company consents to use of the Preliminary Prospectus, in accordance with the provisions of the Act and with the securities or Blue Sky laws of the jurisdictions in which the Stock is offered by the Underwriters and any dealers, prior to the Effective Date. (c) The Company will furnish the Representative and counsel for the Underwriters, without charge, two signed and conformed copies of the Registration Statement as originally filed with respect to the Stock and each amendment thereto (in each case including all consents and exhibits filed therewith) and to each other Underwriter, without charge, one signed and conformed copy of such Registration Statement and each amendment thereto (in each case without the consents and exhibits filed therewith) and, so long as a prospectus relating to the Stock is required to be delivered under the Act or the Rules and Regulations, such number of copies of each Preliminary Prospectus, the Prospectus and all amendments or supplements thereto as you may from time to time reasonably request. If at any Securities held by Subscriber remain outstandingtime when the delivery of a prospectus relating to the Stock is required under the Act or the Rules and Regulations, an event shall have occurred the result of which would cause the Prospectus as then amended or supplemented to include an untrue statement of a material fact or omit to state any material fact necessary in order to make statements therein, in the light of the circumstances under which they were made when such Prospectus was or is delivered, not misleading, or if for any other reason it shall be necessary to amend or supplement the Prospectus in order to comply with the Act or the Rules and Regulations, the Company acknowledgeswill forthwith prepare and, representssubject to the provisions of Section 5(a) hereof, warrants file with the Commission an appropriate supplement or amendment thereto, and agrees will furnish to each Underwriter and to any dealer in securities, without charge, such number of copies as follows:you may from time to time reasonably request of an amended Prospectus that will correct such statement or omission or effect such compliance in accordance with the requirements of Section 10 of the Act. The Company consents to use of the Prospectus (and of any amendments or supplements thereto), in accordance with the provisions of the Act and with the securities or Blue Sky laws of the jurisdictions in which the Stock is offered by the Underwriters and any dealers, both in connection with the offering or sale of the Stock and for such period of time thereafter as the Prospectus is required to be delivered in connection therewith. (d) Not later than forty-five (45) days following the end of the fiscal quarter first occurring after the first anniversary of the Effective Date, or such other later date that the Commission may permit or establish by rule, regulation, release or other action, the Company will deliver to you and generally make available to its shareholders an earnings statement in form complying with the provisions of Section 11(a) of the Act (including, without limitation, Rule 158 of the Rules and Regulations) covering a period of at least twelve (12) consecutive months beginning after the Effective Date. (e) The Company will promptly file with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, in the judgment of you or the Company, be required by the Act or requested by the Commission. (f) The Company will, subsequent to the Effective Date and during any period when the Prospectus is required to be delivered under the Act, promptly file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time periods required by the Exchange Act and the Exchange Act Rules and Regulations. (g) For a period of five (5) years from the Effective Date, the Company will furnish to its shareholders as soon as practicable after the end of each fiscal year, an annual report (including a balance sheet, statement of income, statement of cash flow and statement of changes in shareholders' equity of the Company and its consolidated subsidiaries certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarterly periods in each fiscal year, summary financial information of the Company and its consolidated subsidiaries for such quarter in reasonable detail. (h) For a period of five (5) years from the Effective Date, the Company will deliver to you: (i) as soon as sent or made available to its shareholders, all such proxy statements, financial statements and reports as the Company shall send or make available to its shareholders, (ii) as soon as filed with the Commission, copies of all annual or periodic reports as the Company shall file with the Commission as required by the Act, the Rules and Regulations, the Exchange Act and the Exchange Act Rules and Regulations, that are available for public inspection at the Commission, or any material reports filed in connection with the Company's listing on any stock exchange, and (iii) such additional publicly available information prepared by the Company concerning the business and financial condition of the Company as you may from time to time reasonably request. (i) The Company shall use its best efforts to reserve, prior to February 15, 2000, a sufficient number of shares of Common Stock will apply the net proceeds from its authorized but unissued shares of Common Stock to permit the exercise in full of all sale of the outstanding Warrants. Stock sold by it in the manner set forth in the Prospectus under the caption "Use of Proceeds." (j) The Company is currently organizing will not, and will cause its directors, officers, agents, employees and affiliates (as defined in the Act and the Rules and Regulations) to not, take, directly or indirectly, any action designed to stabilize or manipulate or that constitutes, or might reasonably be expected to cause or result in, the stabilization or manipulation of the price of any security of the Company in order to facilitate the sale or resale of the Stock or otherwise. (k) Prior to the respective Closing Dates, except as set forth in the Prospectus (i) there will not be any change (on a stockholder meeting to increase pro forma basis or otherwise) in the number of authorized shares of Common Stock capital stock or short-term or long-term debt of the Company, or any material adverse change, or any development involving a prospective material adverse change, in or affecting the business, prospects, properties, assets, results of operations or condition (financial or other) of the Company, (ii) neither the Company nor any Subsidiary will incur any material liability or obligation, direct or contingent, or enter into any material transaction, and has filed (iii) there will not be any dividend of any kind declared, paid or made by the Company on its capital stock other than dividends declared, paid or made in accordance with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingpast practices. (iil) It The Company will maintain file with Nasdaq all documents and notices required by Nasdaq of companies that have issued securities that are traded on Nasdaq, in the listing of its Common Stock on the OTC Bulletin Boardover-the-counter market and quotations for which are reported by Nasdaq. (iiim) It For a period of ninety (90) days from the date of the Prospectus, the Company will permit Subscriber not, without the prior written consent of McDonald Investments Inc., directly or indirectly, sell, offer to exercise its sell, contract to sell, grant any option for the sale of, transfer, distribute or otherwise dispose of by any means (or publicly announce any intention to do the foregoing) any Preferred Shares or Common Shares or any securities convertible into or exchangeable or exercisable for Preferred Shares or Common Shares that the Company has or will have the right to exercise issue and sell through options, warrants, subscription or other rights; provided, however, that the Warrants by telecopying an executed Company may, within such 180 day period, issue up to _______ Common Shares pursuant to options outstanding under the Company's Stock Incentive Plan and completed Notice of Exercise issue Common Shares pursuant to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". Company's Employee Stock Purchase Plan. (n) The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together comply with the certificates representing the Warrants not so exercisedfinancial record-keeping requirements and internal accounting control requirements of Section 13(b)(2) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerExchange Act.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants hereby covenants and agrees with each of the Underwriters as follows: (ia) The If the Registration Statement has not already been declared effective by the SEC, the Company shall will use its best efforts to reserve, prior cause the Registration Statement and any post-effective amendments thereto to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit become effective as promptly as possible; the exercise in full of all Company will notify the Representative promptly of the outstanding Warrants. The time when the Registration Statement or any post-effective amendment to the Registration Statement has become effective or any supplement to the Prospectus has been filed and of any request by the SEC for any amendment or supplement to the Registration Statement or Prospectus or additional information; if the Company is currently organizing a stockholder meeting has elected to increase the number of authorized shares of Common Stock rely on Rule 430A of the CompanyRules and Regulations, and has filed the Company will file a Prospectus containing the information omitted therefrom pursuant to such Rule 430A with the SEC prior to within the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed time period required by, and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company otherwise in accordance with the provisions of, Rules 424(b) and 430A of the Rules and Regulations; the Company will prepare and file with the SEC, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus that, in your opinion, may be necessary or advisable in connection with the distribution of the Shares by the Underwriters; and the Company will not file any amendment or supplement to the Registration Statement or Prospectus to which the Representative shall reasonably object by notice to the Company after having been furnished a copy a reasonable time prior to the filing. (b) The Company will advise the Representative, promptly after it shall receive notice or obtain knowledge thereof, of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and the Company will promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued. (c) Within the time during which a prospectus relating to the Shares is required to be delivered under the Securities Act, the Company will comply as far as it is able with all requirements imposed upon it by the Securities Act, as now and hereafter amended, and by the Rules and Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Shares as contemplated by the provisions hereof and the Prospectus. If, during such period, any event occurs as a result of which the Prospectus would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if, during such period, it is necessary to amend the Registration Statement or supplement the Prospectus to comply with the Securities Act, the Company will promptly notify the Representative and will amend the Registration Statement or supplement the Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance. (d) The Company will use its best efforts to arrange for the qualification of the Shares for offering and sale under the securities laws of such jurisdictions as the Representative may designate and to continue such qualifications in effect for so long as may be required for purposes of the distribution of the Shares; provided, however, that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to the service of process in suits, other than those arising out of the offering or sale of the Shares, in any jurisdiction where it is not now so subject. In each jurisdiction in which the Shares shall have been qualified as herein provided, the Company will make and file such statements and reports in each year as are or may be reasonably required by the laws of such jurisdiction. (e) The Company will furnish to the Underwriters copies of the Registration Statement (one of which will be signed and will include all exhibits), each Preliminary Prospectus, the Prospectus, and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Representative may from time to time reasonably request. (f) For a period of five years from the Effective Date, the Company will furnish directly to the Representative as soon as the same shall be deemed an "Exercise Date"sent to its shareholders generally copies of all annual or interim shareholder reports of the Company and will, for the same period, also furnish the Representative with the following: (i) Two copies of any report, application or document (other than exhibits, which, however, will be furnished on your request) filed by the Company with the SEC, Nasdaq, the NASD or any securities exchange; (ii) As soon as the same shall be sent to shareholders generally, copies of each communication sent to shareholders; and (iii) From time to time, such other information concerning the Company as the Representative may reasonably request. The Company will, for a period of five (5) years from the Effective Date, and as soon as practicable following the close of each applicable period, furnish directly to the Representative detailed quarterly and annual profit and loss statements, reports of the Company's cash flow, other financial statements, and statements of application of the proceeds of the offering of the Shares by the Company. (g) The Company will transmit make generally available to its security holders as soon as practicable, but in any event not later than the certificates representing shares fifteen (15) months after the end of the Company's current fiscal quarter, an earnings statement (which will be in reasonable detail but need not be audited) complying with the provisions of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations and covering a twelve (12)- month period beginning after the Effective Date of the Registration Statement. (h) If required by the Securities Act or the Rules and Regulations thereunder, the Company will prepare and file with the SEC reports on Form SR in accordance with the Securities Act and the Rules and Regulations. (i) After completion of the offering of the Shares, the Company will make all filings required to maintain the quotation of the Common Stock issuable upon exercise on The Nasdaq SmallCap Market or any national stock exchange. (j) The Company will apply the net proceeds from the sale of the Shares being sold by it substantially in the manner set forth under the caption "Use of Proceeds" in the Prospectus. (k) During the Lock-Up Period, and except for the sale of Shares by the Company pursuant to this Agreement, the Company will not, without the prior written consent of the Representative, effect the Disposition of, directly or indirectly, any Securities including, without limitation, any Securities that are convertible into or exchangeable or exercisable for Common Stock, and shall not accelerate the exercisability of any Warrants Securities that are convertible into or exchangeable or exercisable for Common Stock. (together l) The Company will not take, and will use its best efforts to cause each of its officers and directors not to take, directly or indirectly, any action designed to or which might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares. (m) The Company will inform the Florida Department of Banking and Finance at any time prior to the consummation of the distribution of the Shares by the Underwriters if it commences engaging in business with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer government of Cuba or otherwise with any person or affiliate located in Cuba. Such information shall be provided within three (3) business 90 days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition commencement thereof or after a change occurs with respect to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerpreviously reported information.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, The Company covenants with the Company acknowledges, represents, warrants and agrees Agent as follows: (ia) The Company shall will prepare the Prospectus in a form approved by the Agent and will file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than the SEC’s close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by applicable SEC rules. The Company will not make any further amendment or any supplement to the Registration Statement or Prospectus which is not approved by the Agent promptly after reasonable notice thereof. The Company will advise the Agent, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Agent with copies thereof, and will advise the Agent, promptly after it receives notice thereof, of the issuance by the SEC or any state securities regulator of any stop order or of any order preventing or suspending the use of any Issuer Represented Free Writing Prospectus or Prospectus, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the SEC or any state securities regulator for the amending or supplementing of the Registration Statement or the Prospectus, or for additional information. In the event of the issuance of any stop order or of any order preventing or suspending the use of any Prospectus or suspending any qualification of the Securities for offering or sale, the Company will promptly use its best efforts to reserveobtain the withdrawal of such order; (b) If at any time following issuance of an Issuer Represented Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Represented Free Writing Prospectus conflicted or would conflict in any material respect with the information contained in the Registration Statement or Prospectus or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit in the exercise in full of all light of the outstanding Warrants. circumstances prevailing at that subsequent time, not misleading, the Company will notify promptly the Agent that any use of such Issuer Represented Free Writing Prospectus may cease until it is amended or supplemented, and the Company will promptly amend or supplement such Issuer Represented Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission; (c) The Company is currently organizing a stockholder meeting to increase represents and agrees that, unless it obtains the number prior written consent of authorized shares of Common Stock the Agent, and the Agent represents and agrees that, unless it obtains prior written consent of the Company, it has not made and has will not make any offer relating to the Securities that would constitute an “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405 under the Securities Act, required to be filed with the SEC. Any such free writing prospectus consented to by the Company and the Agent is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company represents that it has treated or agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely filing with the SEC where required, legending and record keeping. The Company represents that it has satisfied the conditions in Rule 433 to avoid a requirement to file with the SEC any electronic road show; (d) The Company will promptly take such action as may be necessary to qualify the Securities for offering and sale under the securities laws of the States of or jurisdictions in which any of the Company’s shareholders reside, and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Securities; (e) The Company will promptly furnish the Agent with copies of the Prospectus in such quantities as the Agent may from time to time reasonably request, and, if the delivery of a Prospectus is required at any time prior to the date hereof a preliminary proxy statement expiration of nine months after the time of issue of the Prospectus in connection with the Offering or sale of the Securities and if at such stockholder meeting.time any event has occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it will be necessary during such period to amend or supplement the Prospectus in order to comply with the Securities Act or applicable state securities laws, the Company will notify the Agent and, upon the Agent’s request, will prepare and furnish without charge to the Agent and to any dealer in securities as many copies as the Agent may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance, and in case the Agent is required to deliver a prospectus in connection with sales of any of the Securities at any time nine months or more after the time of issue of the Prospectus, upon its request but at the expense of the Agent, to prepare and deliver to the Agent as many copies as the Agent may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Securities Act; (iif) It The Company will maintain make generally available to its security holders as soon as practicable, but in any event not later than 18 months after the listing effective date of its Common Stock on the OTC Bulletin Board. Registration Statement (iiias defined in Rule 158(c) It will permit Subscriber to exercise its right to exercise under the Warrants by telecopying Securities Act), an executed and completed Notice earnings statement of Exercise to the Company and delivering its subsidiaries (which need not be audited) complying with Section 11(a) of the original Notice of Exercise Securities Act and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to rules and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". regulations thereunder; (g) The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) furnish to Subscriber via express courierits shareholders, by electronic transfer or otherwise within three (3) business days as soon as practicable after the Exercise Date if the Company has received the original Notice end of Exercise each fiscal year, an annual report (including a balance sheet and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriberstatements of income, in the event that the Company fails to effect delivery stockholders’ equity and cash flows of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall its consolidated subsidiaries certified by an independent registered public accounting firm) and, as soon as practicable after the end of each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), to make available to its shareholders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail (for the avoidance of doubt, the Company will satisfy its obligation with respect to the quarterly information to be delivered as follows: To made available to its shareholders for each of the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ first three quarters of a fiscal year by filing a Form 10-Q with the SEC through ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇); (h) To use the net proceeds received by it from the sale of the Securities pursuant to this Agreement in the manner specified in the Prospectus under the caption “Use of Proceeds”; (i) To file with the SEC such information on Form 10-K or Form 10-Q as may be required by Rule 463 under the Securities Act; and (j) The Company will comply, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇and use its best efforts to cause its directors and officers, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇in their capacities as such, Interim Chief Executive Officerto comply, in all material respects, with all effective applicable provisions of federal and state securities laws and the rules and regulations thereunder.

Covenants of the Company. For The Company covenants and agrees with the several Underwriters that: (a) The Company will advise the Representatives promptly of any proposal to amend or supplement the Registration Statement or the Prospectus and prior to the completion of the distribution of the Offered Debt Securities provide the Representatives with a reasonable opportunity to review such proposed amendment or supplement prior to any filing thereof (other than any filing required to be made pursuant to the Exchange Act) and will not make any such amendment or supplement between the date hereof and the Closing Date which shall be reasonably disapproved by the Representatives promptly after reasonable notice thereof; prior to the completion of the distribution of the Offered Debt Securities, the Company will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed with, or transmitted for filing to, the Commission (other than any filing required to be made pursuant to the Exchange Act ), of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Offered Debt Securities, of the suspension of the qualification of the Offered Debt Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amendment or supplement of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any such stop order or of any such order preventing or suspending the use of any such prospectus or suspending any such qualification, will use promptly its best efforts to obtain its withdrawal; (b) If at any time when a prospectus relating to any Offered Debt Securities is required to be delivered under the Securities Act any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or if it is necessary at any time to amend or supplement the Registration Statement or Prospectus to comply with the Securities Act or the Trust Indenture Act, the Company promptly will prepare and cause to be filed promptly with the Commission an amendment or supplement to the Registration Statement or the Prospectus as then amended or supplemented that will correct such statement or omission or effect such compliance. The expense of complying with the requirements of this Section 5(b) shall be borne (i) during the period of six months after the first date of the public offering of the Offered Debt Securities by the Company, and (ii) after the expiration of such six-month period, by those Underwriters on whose behalf the Representatives may request copies of the Prospectus or of an amendment or amendments of or a supplement or supplements to the Prospectus. (c) The Company will timely file such reports pursuant to the Exchange Act as are necessary in order to make generally available to its security holders as soon as practicable an earnings statement or statements of the Company and its subsidiaries (which need not be audited) for the purposes of, and to provide the benefits contemplated by, the last paragraph of Section 11(a) of the Securities Act. (d) The Company will furnish to the Representatives copies of the Registration Statement (one of which will include all exhibits), each related preliminary prospectus, the Prospectus, and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Representatives reasonably request. (e) The Company will arrange for the qualification of the Offered Debt Securities for offering and sale and the determination of their eligibility for investment under the applicable securities and insurance laws of such jurisdictions as the Representatives reasonably designate and will continue such qualifications in effect so long as any Securities held by Subscriber remain outstandingrequired for the distribution; provided, however, that in connection therewith the Company acknowledges, represents, warrants and agrees shall not be required to qualify as followsa foreign corporation or to file a general consent to service of process in any jurisdiction. (f) The Company will pay or cause to be paid the following: (i) The Company shall use its best efforts to reservethe fees, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock disbursements and expenses of the Company, 's counsel and has filed accountants in connection with the SEC prior registration of the Offered Debt Securities under the Securities Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any preliminary prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the date hereof a preliminary proxy statement Underwriters and dealers; (ii) the cost of printing, word processing or reproducing this Agreement, the Indenture, any Delayed Delivery Contracts, any Blue Sky and Legal Investment Memoranda and any other documents in connection with the offering, purchase, sale and delivery of the Offered Debt Securities; (iii) all expenses in connection with the qualification of the Offered Debt Securities for offering and sale under state securities or insurance laws as provided in Section 5(e) hereof, including fees and disbursements of the Representatives' counsel in connection with such stockholder meetingqualification and in connection with any Blue Sky and Legal Investment Memoranda; (iv) any fees charged by securities rating services for rating the Offered Debt Securities; (v) any filing fees incident to any required review by the Corporate Financing Department of NASD Regulation, Inc. (NASDR) of the terms of the sale of the Offered Debt Securities; (vi) the cost of preparing the Offered Debt Securities, including any fees and expenses relating to the use of book-entry securities; (vii) the fees and expenses of any Trustee and any agent of any Trustee and the fees and disbursements of counsel for any Trustee in connection with the Indenture and the Offered Debt Securities; and (viii) all other costs and expenses incident to the performance of its obligations hereunder and under any Delayed Delivery Contracts which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, Section 7 and Section 13 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Offered Debt Securities by them, and any advertising expenses connected with any offers they may make. (iig) It will maintain During the listing of its Common Stock period beginning on the OTC Bulletin Board. date hereof and continuing to and including the earlier of (iiii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice termination of Exercise to the Company and delivering trading restrictions for the original Notice of Exercise and the original Warrant Offered Debt Securities, as notified to the Company by overnight courierthe Representatives, and (ii) the Closing Date, the Company will not, without the prior written consent of the Representatives, offer, sell, contract to sell or otherwise dispose of any debt securities of the Company that mature more than nine (9) months after the Closing Date and that are substantially similar to the Offered Debt Securities. Each business date The foregoing restriction shall not apply to an issue of debt securities denominated in a currency other than U.S. dollars or to an issue of debt securities at least 90% of which is offered and sold outside the United States. (h) The Company will advise the Representatives in writing not later than 3:30 p.m., New York City time, on the second Business Day prior to the Closing Date of the names of any investors with which a Notice the making of Exercise is telecopied to and received Delayed Delivery Contracts has been approved by the Company in accordance and the principal amount of any Contract Offered Debt Securities to be covered by each such Delayed Delivery Contract. (i) If the Company elects to rely upon Rule 462(b) under the Securities Act, the Company shall file a Rule 462(b) Registration Statement with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit Commission in compliance with Rule 462(b) under the certificates representing shares Securities Act by 10:00 P.M., Washington, D.C. time, on the date of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courierthis Agreement, by electronic transfer or otherwise within three (3) business days after the Exercise Date if and the Company has received shall at the original Notice time of Exercise and Warrant being exercised by such date. In addition filing either pay to any other remedies which may be available to Subscriber, in the event that Commission the Company fails to effect delivery filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such shares of Common Stock within such three (3fee pursuant to Rule 111(b) business day period, Subscriber will be entitled to revoke under the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerSecurities Act.

Covenants of the Company. For The Company acknowledges, covenants and agrees with the Underwriters that: (a) The Registration Statement and any amendments thereto have been declared effective, and if Rule 430A is used or the filing of the Prospectus is otherwise required under Rule 424(b), the Company will file the Prospectus (properly completed if Rule 430A has been used) pursuant to Rule 424(b) within the prescribed time period and will provide evidence satisfactory to the Underwriters of such timely filing. (b) During the period beginning on the date hereof and ending on the later of the Closing Date or such date as, in the reasonable opinion of Underwriters’ Counsel, the Prospectus is no longer required by law to be delivered (or in lieu thereof the notice referred to in Rule 173(a) under the Act is no longer required to be provided) in connection with sales by an underwriter or dealer (the “Prospectus Delivery Period”), prior to amending or supplementing the Registration Statement, the Disclosure Materials or the Prospectus, the Company shall furnish to the Underwriters and Underwriters’ Counsel for review a copy of each such proposed amendment or supplement, and the Company shall not file any such proposed amendment or supplement to which the Underwriters reasonably object within 36 hours of delivery thereof to Underwriters’ Counsel. (c) After the date of this Agreement, the Company shall promptly advise the Underwriters in writing of: (i) the receipt of any comments of, or requests for additional or supplemental information from, the Commission; (ii) the time and date of any filing of any post-effective amendment to the Registration Statement or any amendment or supplement to any prospectus, the Disclosure Materials or the Prospectus; (iii) the time and date that any post-effective amendment to the Registration Statement becomes effective; and (iv) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or of any order preventing or suspending its use or the use of the Disclosure Materials, the Prospectus, or the initiation of any proceedings to remove, suspend or terminate from listing the Securities from any securities exchange upon which the Securities are listed for trading, or of the threatening of initiation of any proceedings for any of such purposes. If the Commission shall enter any such stop order at any time, the Company will use its reasonable efforts to obtain the lifting of such order at the earliest possible moment. Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b), 430A and 430B, as applicable, under the Act and will use its reasonable efforts to confirm that any filings made by the Company under Rule 424(b) or Rule 433 were received in a timely manner by the Commission (without reliance on Rule 424(b)(8) or Rule 164(b)). (i) During the Prospectus Delivery Period, the Company will comply with all requirements imposed upon it by the Act, as now and hereafter amended, and by the Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Securities as contemplated by the provisions hereof, the Registration Statement, the Disclosure Materials, and the Prospectus. If during such period any event or development occurs as a result of which the Prospectus (or if the Prospectus is not yet available to prospective purchasers, the Disclosure Materials) would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if during such period it is necessary or appropriate in the opinion of the Company or its counsel or the Underwriters or Underwriters’ Counsel to amend the Registration Statement or supplement the Prospectus (or if the Prospectus is not yet available to prospective purchasers, the Disclosure Materials) to comply with the Act, the Company will promptly notify the Underwriters and will promptly amend the Registration Statement or supplement the Prospectus (or if the Prospectus is not yet available to prospective purchasers, the Disclosure Materials) or file such document (at the expense of the Company) so as to correct such statement or omission or effect such compliance. (ii) If at any time following the issuance of an Issuer Free Writing Prospectus there occurs an event or development as a result of which such Issuer Free Writing Prospectus would conflict with the information contained in the Registration Statement or the Prospectus or would include an untrue statement of a material fact or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances there existing, not misleading, the Company will promptly notify the Underwriters and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission. (e) The Company will deliver to the Underwriters and Underwriters’ Counsel a copy of the Registration Statement, as initially filed, and all amendments thereto, including all consents and exhibits filed therewith, and will maintain in the Company’s files manually signed copies of such documents for at least five (5) years after the date of filing thereof. The Company will promptly deliver to each of the Underwriters such number of copies of any Preliminary Prospectus, the Prospectus, the Registration Statement, and all amendments of and supplements to such documents, if any, and all documents which are exhibits to the Registration Statement and any Preliminary Prospectus or Prospectus or any amendment thereof or supplement thereto, as the Underwriters may reasonably request. On the Business Day next succeeding the date of this Agreement, and from time to time thereafter, the Company will furnish to the Underwriters copies of the Prospectus in such quantities as the Underwriters may reasonably request. (f) The Company consents to the use and delivery of the Preliminary Prospectus by the Underwriters in accordance with Rule 430 and Section 5(b) of the Act. (g) If the Company elects to rely on Rule 462(b) under the Act, the Company shall both file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by the earlier of: (i) 10:00 P.M., Eastern Time, on the date of this Agreement, and (ii) the time that confirmations are given or sent, as specified by Rule 462(b)(2), and pay the applicable fees in accordance with Rule 111 of the Act. (h) The Company will use its best efforts, in cooperation with the Underwriters, at or prior to the time of effectiveness of the Registration Statement, to qualify the Securities for offering and sale under the securities laws relating to the Offering or sale of the Securities of such jurisdictions as the Underwriters may designate and to maintain such qualifications in effect for so long as any Securities held by Subscriber remain outstanding, required for the distribution thereof; except that in no event shall the Company acknowledges, represents, warrants and agrees be obligated in connection therewith to qualify as follows:a foreign corporation or to execute a general consent to service of process or to subject itself to taxation if it is otherwise not so subject. (i) The Company shall use its best efforts to reserve, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior will make generally available (which includes filings pursuant to the date hereof a preliminary proxy statement in connection with such stockholder meeting. Exchange Act made publicly through the Electronic Data Gathering, Analysis and Retrieval (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ “▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇”) system) to its security holders as soon as practicable, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇but in any event not later than 15 months after the end of the Company’s current fiscal quarter, ▇▇ ▇▇▇▇▇an earnings statement (which need not be audited) covering a 12-▇▇▇▇ Fax: (▇▇▇month period that shall satisfy the provisions of Section 11(a) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerof the Act and Rule 158 of the Regulations.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees with ------------------------ each of the Underwriters as follows: (ia) The Company shall use its best efforts to reservecause the Registration Statement and any amendments thereto to become effective as promptly as practicable and will not at any time, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit whether before or after the exercise in full of all effective date of the outstanding Warrants. The Company is currently organizing a stockholder meeting Registration Statement, file any amendment to increase the number of authorized shares of Common Stock Registration Statement or supplement to the Prospectus or file any document under the Act or Exchange Act before termination of the Companyoffering of the Shares and the Warrants by the Underwriters of which the Representatives shall not previously have been advised and furnished with a copy, and has filed or to which the Representatives shall have objected or which is not in compliance with the SEC prior to Act, the date hereof a preliminary proxy statement in connection with such stockholder meetingExchange Act or the Regulations. (b) As soon as the Company is advised or obtains knowledge thereof, the Company will advise the Representatives and confirm the notice in writing, (i) when the Registration Statement, as amended, becomes effective, if the provisions of Rule 430A promulgated under the Act will be relied upon, when the Prospectus has been filed in accordance with said Rule 430A and when any post-effective amendment to the Registration Statement becomes effective, (ii) It of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding, suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any preliminary prospectus or the Prospectus, or any amendment or supplement thereto, or the institution of proceedings for that purpose, (iii) of the issuance by the Commission or by any state securities commission of any proceedings for the suspension of the qualification of any of the Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose, (iv) of the receipt of any comments from the Commission; and (v) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information. If the Commission or any state securities commission shall enter a stop order or suspend such qualification at any time, the Company will maintain use its best efforts to obtain promptly the listing lifting of its Common Stock on the OTC Bulletin Boardsuch order. (iiic) It will permit Subscriber to exercise its right to exercise The Company shall file the Warrants by telecopying an executed Prospectus (in form and completed Notice of Exercise substance satisfactory to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company Representatives) in accordance with the provisions hereof shall be deemed an "Exercise Date". requirements of the Act. (d) The Company will transmit give the certificates representing shares Representatives notice of Common Stock issuable upon exercise its intention to file or prepare any amendment to the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus (including any revised prospectus which the Company proposes for use by the Underwriters in connection with the offering of the Securities which differs from the corresponding prospectus on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the Regulations), and will furnish the Representatives with copies of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer such amendment or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice supplement a reasonable amount of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice time prior to such effect proposed filing or use, as the case may be, and will not file any such amendment or supplement to which the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. Representatives or Camhy ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP ("Underwriters' Counsel") shall reasonably object. (e) The Company shall endeavor in good faith, in cooperation with the Representatives, at or prior to the time the Registration Statement becomes effective, to qualify the Securities for offering and sale under the securities laws of such jurisdictions as the Representatives may reasonably designate to permit the sales and dealings therein for as long as may be necessary to complete the distribution, and shall make such applications, file such documents and furnish such information as may be required for such purpose; provided, however, the Company shall not be required to qualify as a foreign -------- ------- corporation or become subject to service of process in any such jurisdiction. In each jurisdiction where such qualification shall be effected, the Company will, unless the Representatives agree that such action is not at the time necessary or advisable, use all reasonable efforts to file and make such statements or reports at such times as are required by the laws of such jurisdiction to continue such qualification. (f) During the time when a prospectus is required to be delivered under the Act, the Company shall use all reasonable efforts to comply with all requirements imposed upon it by the Act, as now and hereafter amended, and by the Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Securities in accordance with the provisions hereof and the Prospectus, or any amendments or supplements thereto. If at any time when a prospectus relating to the Securities is required to be delivered under the Act, any event shall have occurred as a result of which, in the opinion of counsel for the Company or Underwriters' Counsel, the Prospectus, as then amended or supplemented, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the Prospectus to comply with the Act, the Company will notify the Representatives promptly and prepare and file with the Commission an appropriate amendment or supplement in accordance with Section 10 of the Act, each such amendment or supplement to be satisfactory to Underwriters' Counsel, and the Company will furnish to the Underwriters copies of such amendment or supplement as soon as available and in such quantities as the Underwriters may request. (g) As soon as practicable, but in any event not later than 45 days after the end of the 12-month period beginning on the day after the end of the fiscal quarter of the Company during which the effective date of the Registration Statement occurs (90 days in the event that the end of such fiscal quarter is the end of the Company's fiscal year), the Company shall make generally available to its security holders, in the manner specified in Rule 158(b) of the Regulations, and to the Representatives, an earnings statement which will be in the detail required by, and will otherwise comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Regulations, which statement need not be audited unless required by the Act, covering a period of at least 12 consecutive months after the effective date of the Registration Statement. (h) During a period of five (5) years after the date hereof, until and including the like day and month in 2001, the Company will furnish to its stockholders, as soon as practicable, annual reports (including consolidated financial statements of the Company and its consolidated subsidiaries audited by independent public accountants) and will make available to its stockholders consolidated unaudited quarterly reports (except for the last quarter of each fiscal year) of earnings of the Company and its consolidated subsidiaries, and will deliver to the Representatives: (i) concurrently with furnishing such quarterly reports to its stockholders, a consolidated statement of income of the Company and its consolidated subsidiaries for each quarter in the form furnished to the Company's stockholders; (ii) concurrently with furnishing such annual reports to its stockholders, a consolidated balance sheet of the Company and its consolidated subsidiaries as at the end of the preceding fiscal year, together with statements of consolidated operations, stockholders' equity, and cash flows of the Company and its consolidated subsidiaries for such fiscal year, accompanied by a copy of the report thereon of independent certified public accountants; (iii) as soon as they are available, copies of all other reports (financial or other) mailed to stockholders; (iv) as soon as they are available, copies of all reports and financial statements furnished to or filed with the Commission, Nasdaq or any securities exchange; (v) every press release and every material news item or article of interest to the financial community in respect of the Company or its affairs which was released or prepared by or on behalf of the Company; and (vi) any additional information of a public nature concerning the Company and its Businesses which the Representatives may reasonably request. During such five-year period, the foregoing financial statements will be accompanied by similar financial statements for any significant subsidiary which is not consolidated. (i) The Company will maintain a transfer agent (the "Transfer Agent") and, if necessary under the jurisdiction of incorporation of the Company, a registrar (which may be the same entity as the transfer agent) for the Securities and the Representatives' Warrants. (j) The Company will furnish to the Representatives, without charge, at such place as the Representatives may designate, copies of each preliminary prospectus, the Registration Statement, the Prospectus and any pre- effective or post-effective amendments thereto (two of which copies will be signed and will include all financial statements and exhibits), in each case as soon as available and in such quantities as the Representatives may reasonably request. (k) On or before the effective date of the Registration Statement, the Company shall provide the Representatives with true copies of duly executed Lock-up Agreements. On or before the Closing Date, the Company shall deliver instructions to the Transfer Agent authorizing it to place appropriate stop transfer orders on the Company's ledgers. (l) The Company shall use its best efforts to cause its officers, directors, stockholders or affiliates (within the meaning of the Regulations) not to take, directly or indirectly, any action designed to, or which might in the future reasonably be expected to cause or result in, unlawful stabilization or manipulation of the price of any securities of the Company. (m) The Company shall apply the net proceeds from the sale of the Securities substantially in the manner, and subject to the conditions, set forth under "Use of Proceeds" in the Prospectus. (n) The Company shall timely file all such reports, forms or other documents as may be required (including, but not limited to, a Form SR as may be required pursuant to Rule 463 under the Act) from time to time, under the Act, the Exchange Act, and the Regulations, and all such reports, forms and documents filed will comply as to form and substance with the applicable requirements under the Act, the Exchange Act, and the Regulations. (o) The Company shall use its best efforts to cause the Securities to be quoted on the Nasdaq SmallCap Market, and for a period of two (2) years from the date hereof shall use its best efforts to maintain the quotation of the Securities to the extent outstanding. (p) For a period of two (2) years from the Closing Date, the Company shall furnish to the Representatives, at the Company's sole expense, monthly transfer sheets relating to the Common Stock and Warrants. (q) For a period of five (5) years after the effective date of the Registration Statement the Company shall, at the Company's sole expense, take all reasonable and appropriate actions to qualify the Common Stock and Warrants in all jurisdictions of the United States which do not require the Company to qualify as a foreign corporation or to file a general consent to service of process in order to permit secondary sales of such securities pursuant to the Blue Sky laws of those jurisdictions. (r) The Company (i) prior to the effective date of the Registration Statement has filed a Form 8-A with the Commission providing for the registration of the Common Stock and Warrants under the Exchange Act and (ii) as soon as practicable will use its best efforts to take all necessary and appropriate actions to be included in Standard and Poor's Corporation Descriptions or ▇▇▇▇▇'▇ OTC Manual and to continue such inclusion for a period of not less than five (5) years (or, if sooner, the date on which the Common Stock and Warrants are listed on the New York Stock Exchange, American Stock Exchange, or Nasdaq National Market). (s) The Company agrees that for a period of twelve (12) months following the effective date of the Registration Statement it will not, without the prior written consent of Pryor, McClendon, offer, issue, sell, contract to sell, grant any option for the sale of or otherwise dispose of any Common Stock or securities convertible into Common Stock, except for the issuance of shares of Common Stock registered under the Act pursuant to the Registration Statement, or except pursuant to incentive or benefit plans approved by the Board of Directors of the Company, pursuant to options or warrants outstanding on the Closing Date, or in connection with acquisitions of companies, products or technologies. (t) Until the completion of the distribution of the Securities in connection with the initial public offering of the Securities, the Company shall not without the prior written consent of ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or Underwriters' Counsel, issue, directly or indirectly any press release or other communication or hold any press conference with respect to the Company or its activities or the offering contemplated hereby, other than trade releases issued in the ordinary course of the Company's business consistent with past practices. (u) For a period equal to the lesser of (i) five (5) years from the date hereof, and (ii) the sale to the public of the Representative's Securities (or the shares of Common Stock issuable upon exercise of the Representative's Securities), the Company will not take any action or actions which may prevent or disqualify the Company's use of an appropriate form for the registration under the Act of the Representative's Securities (or the shares of Common Stock issuable upon exercise of the Representative's Securities). (v) The Company agrees that it shall use its best efforts, which shall include, but shall not be limited to, the solicitation of proxies, to elect one (1) designee agreed-upon by ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and National to the Company's Board of Directors for a period of five (5) years following the Closing Date, provided that such designee is reasonably acceptable to the Company and that such director may be excluded from consideration of certain confidential matters which, in the good faith judgment of a majority of the other directors, make such director's presence not appropriate. (w) The Company agrees that within forty-five (45) days after the Closing Date it shall retain a public relations firm which is reasonably acceptable to ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and National. Provided that such public relations firm performs in a commercially reasonable and satisfactory manner, Interim Chief Executive Officerthe Company shall keep such public relations firm and any replacement for a total period of two (2) years from the Closing Date. Any replacement public relations firm shall be retained only with the consent of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and National, which shall not be unreasonably withheld. (x) The Company agrees that any and all future transactions between the Company and any of its officers, directors, principal stockholders and the affiliates of the foregoing persons will be on terms no less favorable to the Company than could reasonably be obtained in arm's length transactions with independent third parties, and that any such transactions also be approved by a majority of the Company's outside independent directors disinterested in the transaction. (y) The Company shall prepare and deliver, at the Company's sole expense, to ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and National within the one hundred and twenty (120) day period after the later of the effective date of the Registration Statement and the latest Option Closing Date, as the case may be, one bound volume each containing all correspondence with regulatory officials, agreements, documents and all other materials in connection with the offering to which such Registration Statement relates as requested by the Underwriters' Counsel

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees with each Underwriter as follows: 4.1 If the Registration Statement has not yet been declared effective, the Company shall use its best efforts to cause the Registration Statement and any amendment thereto to become effective under the Act and, upon notification from the Commission that the Registration Statement or any amendment thereto has become effective, shall so advise you immediately, in writing. The Company shall comply with the provisions of and make all requisite filings with the Commission pursuant to Rule 430A and Rule 424(b) under the Act and notify you in writing of all such filings. The Company shall notify you promptly of any request by the Commission for any amendment of or supplement to the Registration Statement or the Prospectus or for additional information; the Company shall carefully prepare and file with the Commission promptly upon your request, any amendment of or supplement to the Registration Statement or Prospectus which, in your reasonable opinion, may be necessary or advisable in connection with the distribution of the Securities; and the Company shall not file or make any amendment of or supplement to the Registration Statement or the Prospectus which is not approved by you after reasonable notice from the Company to you, which approval shall not be unreasonably withheld or delayed. The Company shall advise you immediately of the issuance by the Commission, any state securities commission or any other regulatory body of any stop order or other order suspending the effectiveness of the Registration Statement, suspending or preventing the use of any Preliminary Prospectus or the Prospectus or suspending the qualification of the Securities for offering or sale in any jurisdiction, or of the institution of any proceedings for any such purpose; and the Company shall use its best efforts to prevent the issuance of any stop order or other such order and, should a stop order or other such order be issued, to obtain as soon as possible the lifting thereof. 4.2 The Company shall cooperate with you and your counsel in connection with the registration or qualification of the Securities for sale under the securities or "Blue Sky" laws of such jurisdictions as the Representative shall designate and the continuance of such qualification in effect for so long a period as the Representative may reasonably request, except the Company shall not be required to qualify as a foreign corporation in any jurisdiction where it is not already so qualified or to execute a general consent to service of process in actions other then those arising out of the offer and sale of the Securities or take any action which would subject it to taxation in any jurisdiction where it is not now so subject. 4.3 Within the time during which a prospectus relating to the Securities is required to be delivered under the Act, the Company shall comply with all requirements imposed upon it by the Act and the Exchange Act, as now and hereafter amended, and by the Rules and Regulations, as from time to time in force, so far as is necessary to permit the continuance of sales of or dealings in the Securities as contemplated by the provisions hereof and the Prospectus. If during such period any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or would omit to state a material fact necessary to make the statements therein, in light of the circumstances then existing, not misleading, or if during such period it is otherwise necessary, in the opinion of the Company or in your opinion, to amend the Registration Statement or supplement the Prospectus to comply with the Act, the Company or you, as the case may be, shall promptly notify the other party and the Company shall amend the Registration Statement or supplement the Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance. 4.4 The Company shall make generally available to its security holders (and shall deliver to you), in the manner contemplated by Rule 158(b) under the Act, as soon as practicable but in any event not later then 45 days after the end of its fiscal quarter in which the first anniversary date of the effective date of Registration Statement occurs, an earnings statement satisfying the requirements of Section 11(a) of the Act covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement; and will advise you in writing when such statement has been made available. 4.5 For a period of five years from the Firm Closing Date, the Company will deliver to you on a timely basis (i) a copy of each report, including, without limitation, reports on Form 8-K, 10-C, 10-K (or 10-KSB) and 10-Q (or 10-QSB) or any successor form and exhibits thereto filed with or furnished by the Company to the Commission, any securities exchange or the National Association of Securities Dealers, Inc. ("NASD") on the date each such report or document is so filed or furnished; (ii) as soon as practicable, copies of any reports or communications (financial or other) of the Company mailed to its security holders; (iii) as soon as practicable, a copy of any Schedule 13D, 13G, 14D-1, 13E-3 or 13E-4 (or any successor form) received or prepared by the Company from time to time; and (iv) such additional information concerning the business and financial condition of the Company as you may from time to time reasonably request and which can be prepared or obtained by the Company without unreasonable effort or expense. 4.6 The Company shall furnish or cause to be furnished to the Representative or on the Representative's order, without charge, at such place as the Representative may designate, copies of each Preliminary Prospectus, the Registration Statement and any pre-effective or post- effective amendments thereto, the Prospectus, and all amendments and supplements thereto, including any Prospectus prepared after the effective date of the Registration Statement, in each case as soon as available and in such quantities as the Representative may request. The Company will deliver to the Representative, at or before the Firm Closing Date, two signed copies of the Registration Statement and all pre-effective or post- effective amendments thereto including all exhibits filed therewith. 4.7 The Company shall not, during the 180 day period following the Firm Closing Date, except with the Representative's prior written consent, offer for sale, contract to sell, issue, distribute, grant any option, right or warrant to purchase any shares of Common Stock or other equity securities of the Company or any securities convertible into shares of Common Stock or such other equity securities, except the Securities, the Representative's Securities, those options to purchase shares of Common Stock issued under the Company's Equity Incentive Plan and those other options to purchase shares of Common Stock (collectively the "Options") and shares of Common Stock issued upon exercise of the Options, as those Options are described in the Prospectus. 4.8 The Company shall cause (i) each officer and director of the Company and each holder of 5% or more of the Company's Common Stock (or securities convertible into shares Common Stock) to furnish to the Representative, prior to the date of this Agreement, in form and substance satisfactory to Representative's counsel, whereby each such person shall agree not to offer for sale, contract to sell, sell, distribute, grant any option or other right to purchase or otherwise dispose of or contract to dispose of any of their shares of the Company's Common Stock (or any security convertible into shares of the Company's Common Stock) without the Representative's prior written consent during the 12 month period following the effective date of the Registration Statement; and (ii) each other holder of the Company's Common Stock (or other security convertible into Common Stock) to furnish to the Representative, prior to the date of this Agreement, a written agreement, in form and substance satisfactory to Representative's counsel whereby each such person shall agree not to offer for sale, contract to sell, sell, distribute, grant any option or other right to purchase or otherwise dispose of or contract to dispose of any of their shares of the Company's Common Stock (or any security convertible into shares of the Company's Common Stock) for a period of 9 months from the effective date of the Registration Statement without the Representative's prior written consent. Except as the Representative may consent, in it sole discretion, the foregoing agreements shall also provide that any sale of shares of the Company's Common Stock by any such person during the 18 month period from the effective date of the Registration Statement, and which sale is made pursuant to Rule 144 under the Act (or comparable provision under the Act) shall be made only in a transaction or transactions by or directly with the Representative, providing the compensation charged by the Representative is competitive with other broker-dealers. 4.9 The Company shall not take, or permit any of its officers of directors or shareholders or any affiliate (within the meaning of the term "affiliate" in the Rules and Regulations) to take, directly or indirectly, any action designed to or which has constituted or might reasonably be expected to cause or result, under the Exchange Act or otherwise, in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities; and has not effected any sales of shares of Common Stock or other securities that are required to be disclosed in response to Item 26 of Part II of the Registration Statement. 4.10 The Company shall apply the net proceeds from the sale of the Securities in the manner, and subject to the conditions, set forth under "Use of Proceeds" in the Prospectus. No portion of the net proceeds will be used, directly or indirectly, to acquire any securities issued by the Company. 4.11 The Company shall timely file all such reports, forms and other documents as may be required (including, without limitation, a Form SR as may be required pursuant to Rule 463 under the Act) from time to time under the Act, the Exchange Act, and the Rules and Regulations, and all such reports, forms and documents filed shall comply as to form and substance with the applicable requirements under the Act, the Exchange Act, and the Rules and Regulations. 4.12 The Company shall use its best efforts to reserve, prior to February 15, 2000, a sufficient number maintain the inclusion of shares of the Common Stock for quotation on the SmallCap Market of NASDAQ. 4.13 For a period of three years from its authorized but unissued shares of the Firm Closing Date, the Company shall (i) retain American Securities Transfer & Trust, Inc., Denver, Colorado as the transfer agent for the Common Stock and shall instruct the transfer agent to permit furnish to the exercise in full Representative, as and to the extent reasonably requested by the Representative, at the Company's sole expense, with copies of the Company's stock transfer sheets relating to the Company's securities, including a current list of the holders of all of the outstanding Warrants. Company's securities and a list of the beneficial owners of securities held by Depository Trust Company; (ii) retain such accounting firm as the Company's independent public accountants as shall be reasonably acceptable to the Representative; and (iii) retain such financial public relations firm as shall be reasonably acceptable to the Representative for consecutive 6 month terms; provided, however, that any renewal of such firm's engagement shall be subject to NTB's approval. 4.14 The Company shall take all necessary action, on an expedited basis, to be included effective with the First Closing Date in Standard and Poor's Corporate Records, Stock Quotes and Stock Guide published by Standard and Poor's Corporation and to continue such inclusion for a period of not less than seven years from the Firm Closing Date. 4.15 Until that date which is currently organizing a stockholder meeting 90 days after the Firm Closing Date, the Company shall not, without the prior written approval of the Representative, issue, directly or indirectly, any press release or other communication or hold any press conference with respect to increase the number of authorized shares of Common Stock Company or its activities or the offering contemplated hereby, other than trade releases issued in the ordinary course of the Company, and has filed 's business consistent with the SEC prior past practices with respect to the date hereof a preliminary proxy statement in connection Company's operations or such releases as counsel for the Representative and the Company have advised are necessary to comply with such stockholder meetingapplicable law. 4.16 For a period of two years from the Firm Closing Date, the Company agrees that NTB shall have the right to designate one person as an advisor to the Company's Board of Directors. Such advisor will be reimbursed for his or her expenses in attending meetings of the Board of Directors and will receive cash compensation equal to that received by any other outside director but will have no power to vote as a director. Such person shall be indemnified by the Company against any claim arising out of his or her participation in meetings of the Board of Directors to the same extent as directors. During the stated two year period, NTB's advisor to the Company's Board of Directors will be (i) invited to attend all meetings of the Company's Board of Directors; (ii) It will maintain provided with a copy of all Actions by Unanimous Written Consent of the listing Board of its Common Stock on the OTC Bulletin Board. Directors in Lieu of an Actual Meeting; (iii) It will permit Subscriber furnished with a copy of all public filings by the Company and Company press releases as released; (iv) updated by the Company's management, on at least a quarterly basis, regarding the Company's activities, prospects and financial condition; and (v) advised immediately of material events to exercise the extent consistent with applicable law. During the subject two year period, the Company shall hold meetings of its right Board of Directors at intervals of not less than once each calendar quarter. Any advisor to exercise the Warrants Company's Board of Directors designated by telecopying an executed NTB shall be acceptable to the Company, which acceptance shall not be unreasonably withheld. 4.17 For a period of 12 months from the Firm Closing Date, the Company shall not authorize or otherwise effect any change in the compensation to any officer and/or director of the Company without 30 days' prior written notice to the Representative. 4.18 On the Firm Closing Date, the Company shall enter into a consulting agreement, retaining NTB, individually, and completed Notice not as Representative of Exercise the Underwriters, as financial consultant to the Company for a period of 24 months at a fee of $48,000 payable in full on the Firm Closing Date. As financial consultant, the Representative will advise the Company as to market conditions, financial alternatives, resource allocation and delivering the original Notice of Exercise and the original Warrant similar investment banking services. Such consulting agreement shall also provide for compensation to the Company by overnight courier. Each business date on which a Notice Representative as follows: 5% of Exercise is telecopied to the first $3 million, 2.5% of any consideration between $3 million and $5 million; 2% of any consideration between $5 million and $10 million; and 1% of any consideration greater than $10 million paid or received by the Company (or its shareholders) in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants transaction (together with the certificates representing the Warrants not so exercisedincluding mergers, assets sales and acquisitions) to Subscriber via express courier, accepted by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received (or its shareholders) within 36 months from the original Notice of Exercise and Warrant being exercised by such date. In addition to any Firm Closing Date, provided the Representative introduced the other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect party to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officer.

Covenants of the Company. For The Company covenants and agrees with the several Underwriters that: 10 11 (a) The Company, upon notification from the Commission that the Registration Statement has become effective, will so long advise you and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement to the Prospectus of which you shall not previously been advised and furnished with a copy or to which you or your counsel shall have objected in writing, acting reasonably, or which is not in compliance with the Act and the Rules and Regulations. At any time prior to the later of (i) the completion by the Underwriters of the distribution of the Securities as any Securities held by Subscriber remain outstandingcontemplated hereby; or (ii) 25 days after the date on which the Registration Statement shall have become or been declared effective, the Company acknowledgeswill prepare and file with the Commission, representspromptly upon your request, warrants any amendments or supplements to the Registration Statement or Prospectus which may be necessary or advisable in connection with the distribution of the Securities and agrees as follows: (i) The mutually agreed to by the Company shall and the Representative. After the Effective Date and as soon as the Company is advised thereof, the Company will advise you, and confirm the advice in writing, of the receipt of any comments of the Commission, of the effectiveness of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, or of the suspension of the qualification of the Securities for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to reserveprevent the issuance of any such order, prior and, if issued, to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit obtain as soon as possible the exercise in full of all of the outstanding Warrantslifting thereof. The Company has caused to be delivered to you copies of each Preliminary Prospectus and Definitive Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriters and Selected Dealers to use the Prospectus in connection with the sale of the Securities for such period as in the opinion of counsel to the Underwriters the use thereof is currently organizing required to comply with the applicable provisions of the Act and the Rules and Regulations. In case of the happening, at any time within such period as a stockholder meeting Prospectus is required under the Act to increase be delivered in connection with sales by the number Underwriters or Selected Dealers, of authorized shares any event of Common Stock which the Company has knowledge and which materially affects the Company or the securities of the Company, and has filed or which in the opinion of counsel for the Company or counsel for the Underwriters, should be set forth in an amendment to the Registration Statement or a supplement to the Prospectus, in order to make the statements therein not then misleading, in light of the circumstances existing at the time the Prospectus is required to be delivered to a purchaser of the Securities, or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the SEC prior Act and the Rules and Regulations, the Company will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the date hereof Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a preliminary proxy statement material fact required to be stated therein or omit to state any material facts necessary in connection with such stockholder meeting. (ii) It will maintain order to make the listing of its Common Stock on statements in the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to SubscriberProspectus, in the event that light of the Company fails to effect delivery circumstances under which they are made, not misleading. The preparation and furnishing of any such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect amendment or supplement to the Company whereupon Registration Statement or amended Prospectus or supplement to be attached to the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised Prospectus shall be delivered as follows: To without expense to the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerUnderwriters.

Covenants of the Company. For The Company hereby covenants and agrees with the Underwriter as follows: (a) If the Registration Statement has not already been declared effective by the SEC, the Company will use its best efforts to cause the Registration Statement and any post-effective amendments thereto to become effective as promptly as possible; the Company will notify the Underwriter promptly of the time when the Registration Statement or any post-effective amendment to the Registration Statement has become effective or any supplement to the Prospectus has been filed and of any request by the SEC for any amendment or supplement to the Registration Statement or Prospectus or additional information; if the Company has elected to rely on Rule 430A of the Rules and Regulations, the Company will file a Prospectus containing the information omitted therefrom pursuant to such Rule 430A with the SEC within the time period required by, and otherwise in accordance with the provisions of, Rules 424(b) and 430A of the Rules and Regulations; the Company will prepare and file with the SEC, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus that, in your opinion, may be necessary or advisable in connection with the distribution of the Units by the Underwriter; and the Company will not file any amendment or supplement to the Registration Statement or Prospectus to which the Underwriter shall reasonably object by notice to the Company after having been furnished a copy a reasonable time prior to the filing. (b) The Company will advise the Underwriter, promptly after it shall receive notice or obtain knowledge thereof, of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement, of the suspension of the qualification of the Units for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and the Company will promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued. (c) Within the time during which a prospectus relating to the Units is required to be delivered under the Securities Act, the Company will comply as far as it is able with all requirements imposed upon it by the Securities Act, as now and hereafter amended, and by the Rules and Regulations, (d) The Company will use its best efforts to arrange for the qualification of the Units for offering and sale under the securities laws of such jurisdictions as the Underwriter may designate and to continue such qualifications in effect for so long as may be required for purposes of the distribution of the Units; provided, however, that in no event shall the Company be obligated to qualify to do business in any Securities held by Subscriber remain outstandingjurisdiction where it is not now so qualified or to take any action which would subject it to the service of process in suits, other than those arising out of the offering or sale of the Units, in any jurisdiction where it is not now so subject. In each jurisdiction in which the Units shall have been qualified as herein provided, the Company acknowledgeswill make and file such statements and reports in each year as are or may be reasonably required by the laws of such jurisdiction. (e) The Company will furnish to the Underwriter copies of the Registration Statement (two of which will be signed and will include all exhibits), representseach Preliminary Prospectus, warrants the Prospectus, and agrees all amendments and supplements to such documents, in each case as follows:soon as available and in such quantities as the Underwriter may from time to time reasonably request. (f) For a period of five years from the Effective Date, the Company will furnish directly to the Underwriter as soon as the same shall be sent to its shareholders generally copies of all annual or interim shareholder reports of the Company and will, for the same period, also furnish the Underwriter with the following: (i) One copy of any report, application or document (other than exhibits, which, however, will be furnished on your request) filed by the Company with the SEC, Nasdaq, the NASD or any securities exchange; (ii) As soon as the same shall be sent to shareholders generally, copies of each communication sent to shareholders; and (iii) From time to time, such other information concerning the Company as the Underwriter may reasonably and specifically request, provided that the Company shall not be required to furnish any information pursuant hereto that is not furnished to its shareholders or not otherwise made publicly available. (g) The Company will, for a period of two (2) years from the Effective Date, furnish directly to the Underwriter quarterly profit and loss statements, reports of the Company's cash flow and statements of application of the proceeds of the offering of the Units by the Company in such reasonable detail as the Underwriter may request. (h) The Company will make generally available to its security holders as soon as practicable, but in any event not later than the fifteen (15) months after the end of the Company's current fiscal quarter, an earnings statement (which will be in reasonable detail but need not be audited) complying with the provisions of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations and covering a twelve (12)- month period beginning after the Effective Date of the Registration Statement. (i) The Company shall use its best efforts to reserve, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, will prepare and has filed file with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing of its Common Stock any required reports on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company Form SR in accordance with the provisions hereof shall be deemed an "Exercise Date"Securities Act and the Rules and Regulations. (j) After completion of the offering of the Units, the Company will make all filings required to maintain the quotation of the Common Stock and the Redeemable Warrants on The Nasdaq SmallCap Market, The Nasdaq National Market, or any national stock exchange. (k) The Company will transmit apply the certificates representing shares net proceeds from the sale of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, Units substantially in the event that manner set forth under the Company fails to effect delivery caption "Use of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke Proceeds" in the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerProspectus.

Covenants of the Company. The Company covenants and agrees with the Underwriter that: (a) The Company will use its best efforts to cause the Registration Statement to become effective and, upon notification from the Commission that the Registration Statement has become effective, will so advise you and will not at any time, whether before or after the effective date, file any amendment to the Registration Statement or supplement to the Prospectus of which you shall not previously have been advised and furnished with a copy or to which you or your counsel shall have objected in writing or which is not in compliance with the Act and the Rules and Regulations. At any time prior to the later of (i) the completion by the Underwriter of the distribution of the Shares contemplated hereby (but in no event more than nine months after the date on which the Registration Statement shall have become or been declared effective) and (ii) 25 days after the Effective Date, the Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus which, in your reasonable opinion, may be necessary or advisable in connection with the distribution of the Shares. (i) Promptly after you or the Company is advised thereof, you will advise the Company or the Company will advise you, as the case may be, and confirm the advice in writing, of the receipt of any comments of the Commission, of the effectiveness of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop orders or other order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, or of the suspension of the qualification of the Shares for offering in any jurisdiction, or the institution of any proceedings for any of such purposes, and the Company will use its reasonable efforts to prevent the issuance of any such order and, if issued, to obtain as soon as possible the lifting thereof. (ii) The Company has caused to be delivered to you copies of each Preliminary Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and selected dealers to use the Prospectus in connection with the sale of the Units for such period as in the opinion of counsel of the Underwriter (whether general, special, patent or otherwise) the use thereof is required to comply with the applicable provisions of the Act and the Rules and Regulations. In case of the happening, at any time within such period as a Prospectus is required under the Act to be delivered in connection with sales by an underwriter or dealer, of any event of which the Company has knowledge and which materially affects the Company or the Securities, or which, in the opinion of counsel for the Company or counsel for the Underwriter, should be set forth in an amendment to the Registration Statement or a supplement to the Prospectus in order to make the statements therein not then misleading, in light of the circumstances existing at the time the Prospectus is required to be delivered to a purchaser of the Units, or in case it shall be necessary to amend or supplement the Prospectus to comply with the Act or with the Rules and Regulations, the Company will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state any material facts necessary in order to make the statements in the Prospectus, in the light of the circumstances under which they are made, not misleading. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be without expense to the Underwriter, except that in case the Underwriter is required, in connection with the sale of the Shares, to deliver a Prospectus nine months or more after the effective date of the Registration Statement, the Company will upon your request and at your expense, amend or supplement the Registration Statement and Prospectus or file a new registration statement on Form ▇▇-▇, ▇-▇ or S-3, if necessary, and furnish the Underwriter with reasonable quantities of prospectuses complying with Section 10(a)(3) of the Act. (iii) The Company will comply with the Act, the Rules and Regulations and the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations thereunder in connection with the offering and issuance of the Shares. (b) The Company will use its best efforts and shall pay all costs and expenses to qualify or register ("Blue Sky") the Firm Units and Option Units for sale under the securities or "blue sky" laws of such jurisdictions as you may designate and will make such applications and furnish such information to counsel for the Company as may be required for that purpose and to comply with such laws, provided that the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent of service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Firm Units and Option Units. Blue Sky applications shall be prepared by the Company's counsel, ▇▇▇▇ ▇. Agron, at the Company's expense. On the Effective Date of this Agreement as defined in Section 9 below, counsel for the Company shall deliver to Underwriter's counsel a Blue Sky Memorandum describing, among other things, all states wherein the Offering has been qualified or registered for sale, the number of Units registered in each such state and the period of effectiveness of such qualification or registration. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long a period as you may reasonably request. (c) If the sale of the Units provided for herein is not consummated for any reason caused by the Company, the Company shall pay all costs and expenses incident to the performance of the Company's obligations hereunder, including but not limited to, all of the expenses itemized in Section 8, including your accountable expenses, as provided in Section 8(b). (d) The Company will use its best efforts to cause a Registration Statement under the Exchange Act to be declared effective concurrently with the completion of the offering of the Shares or promptly thereafter, but in no event later than three days after the date of the Prospectus. (e) For so long as any Securities held by Subscriber remain outstandingthe Company is a reporting company under either Section 12(g) or 15(d) of the Exchange Act, the Company, at its expense, will furnish to the holders of its Common Stock, Units and Warrants an annual report (including financial statements audited by independent public accountants), in reasonable detail and at its expense, will furnish to you during the period ending five years from the date hereof, (i) within 90 days of the end of each fiscal year, a balance sheet of the Company acknowledgesand any subsidiaries as at the end of such fiscal year, representstogether with statements of income, warrants stockholders' equity and agrees cash flows of the Company and any subsidiaries as follows:at the end of such fiscal year, all in reasonable detail and accompanied by a copy of the certificate or report thereon of independent auditors; (ii) as soon as they are available, a copy of all reports (financial or other) mailed to security holders; (iii) as soon as they are available, a copy of all non-confidential reports and financial statements furnished to or filed with the Commission; and (iv) such other information as you may from time to time reasonably request. (f) In addition to the information and reports set forth in Section 3(e) above, for a period of two years from the Effective Date, the Company, at its expense, shall furnish to you (i) unaudited quarterly financial statements on a timely basis, and (ii) monthly shareholder lists prepared by the Company's transfer agent. (g) In the event the Company has an active subsidiary or subsidiaries, such financial statements referred to in subsection (e) above will be on a consolidated basis to the extent the accounts of the Company and its subsidiary or subsidiaries are consolidated in reports furnished to its stockholders generally. (h) The Company will deliver to you at or before the First Closing Date two signed copies of the Registration Statement including all financial statements and exhibits filed therewith, and of all amendments thereto. The Company will deliver to or upon order of the Underwriter, from time to time until the Effective Date, as many copies of any Preliminary Prospectus filed with the Commission prior to the Effective Date as the Underwriter may reasonably request. The Company will deliver to the Underwriter on the Effective Date and thereafter for so long as a Prospectus is required to be delivered under the Act, from time to time, as many copies of the Prospectus, in final form, or as thereafter amended or supplemented, as the Underwriter may from time to time reasonably request. (i) The Company will make generally available to its security holders and deliver to you as soon as it is practicable to do so, but in no event later than 90 days after the end of 12 months after its current fiscal quarter, an earnings statement (which need not be audited) covering a period of at least 12 consecutive months beginning after the Effective Date, which shall use its best efforts to reserve, prior to February 15, 2000, a sufficient number satisfy the requirements of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all Section ll(a) of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingAct. (iij) It The Company will maintain apply the listing net proceeds from the sale of its Common Stock on the OTC Bulletin BoardFirm Units substantially for the purposes set forth under "Use of Proceeds" in the Prospectus, and will file such reports with the Commission with respect to the sale of the Units and the application of the proceeds therefrom as may be required pursuant to Rule 463 of the Rules and Regulations. (iiik) It will permit Subscriber to exercise its right to exercise The Company will, promptly upon your request, prepare and file with the Warrants by telecopying an executed and completed Notice of Exercise Commission any amendments or supplements to the Company Registration Statement, preliminary Prospectus or Prospectus and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to take any other remedies action, which may be available to Subscriber, in the event that the Company fails to effect delivery reasonable opinion of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officercounsel to the Underwriter, may be reasonably necessary or advisable in connection with the distribution of the Shares and will use its reasonable efforts to cause the same to become effective as promptly as possible. (l) Each of the existing stockholders owning 5% or more of the Company's outstanding securities and all officers and directors, including to the extent such stockholders, officers and directors are holders of any Common Stock, options, warrants or convertible securities, of the Company at the date hereof (the "Existing Stockholders"), will execute agreements ("Lock Up Agreements"), in the form previously delivered, to the effect that (i) for a period of 12 months from the date of the Prospectus, they will not sell, assign, hypothecate, pledge or otherwise dispose of, directly or indirectly, any shares of Common Stock of the Company owned prior to the date hereof without your prior written consent, (ii) for a period commencing 12 months and ending 24 months from the date of the Prospectus, they will not sell, assign, hypothecate, pledge or otherwise dispose of, directly or indirectly, more than 50% of any shares of Common Stock of the Company owned as of the date hereof without your prior written consent, and (iii) will agree to permit all certificates evidencing their shares to be endorsed with the appropriate restrictive legends, and consent to the placement of appropriate stop transfer orders with the transfer agent for the Company. The Company further agrees that for a period of 12 months from the date hereof, it will not register any shares of Common Stock underlying any existing stock purchase warrants. (m) The Company shall immediately make all filings required to seek approval for the quotation of the Common Stock and Units on the NASDAQ National Market and the Warrants for quotation on the Nasdaq Small Cap and will use its reasonable efforts to effect and maintain the aforesaid approval for at least five years from the date of this Agreement. Within 10 days after the Effective Date, the Company shall cause the Company to be listed in Standard & Poor's Financial Relations Program (including S&P Corporate Records, Stock Guide, OTC Stock Reports and Market Guide) and cause such listing to be maintained for five years from the date of this Agreement. (n) The Company and the Existing Stockholders represent that it or they have not taken, and agree that it or they will not take, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result in the stabilization or manipulation of the price of the Units to facilitate the sale or resale of the Units. (o) For a period of twenty-four (24) months from the Closing, the Company shall, at your option, appoint a non-voting advisor to the Company's Board of Directors, designated by you and such advisor shall receive notice of and be entitled to attend all meetings of the Board of Directors. For a period of no less than five (5) years from the Closing, the Company shall hold at least four (4) meetings of its Board of Directors each year, and such advisor shall be entitled to attend all such meetings as well as all other meetings of the Board of Directors. The Company agrees it shall fully indemnify, defend and hold harmless such advisor to the fullest extent permitted by law with respect to all acts and omissions as an advisor to the Company's Board of Directors. (p) For a period of two (2) years from the date of the Prospectus, the Company shall maintain in full force a $1,000,000 face amount policy of life insurance on the life of the Company's President issued by a licensed insurer not affiliated with the Company or Underwriter. The Company shall be the sole beneficiary of the life insurance policy. (q) The Company will reserve and keep available that maximum number of its authorized but unissued Shares which are issuable upon exercise of the Warrants and the Underwriter's Warrant (as defined in Section 11). (r) For a period of thirty-six (36) months from the Effective Date, you shall have the right to provide a competitive 401k program to management and all employees of the Company. (s) The Company shall select Common Stock and Warrant certificates and utilize a stock transfer agent satisfactory to you. (t) So long as any Warrants are outstanding, the Company shall use its best efforts to cause post-effective amendments to the Registration Statement to become effective in compliance with the 1933 Act and without any lapse of time between the effectiveness of any such post-effective amendments and cause a copy of each Prospectus, as then amended, to be delivered to each holder of record of a Warrant and to furnish to the Underwriters and each dealer as many copies of each such Prospectus as the Underwriters or dealer may reasonably request.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees with each of the Underwriters as follows: (ia) The Company shall use its best efforts to reservecause the Registration Statement and any amendments thereto to become effective as promptly as practicable and will not at any time, whether before or after the effective date of the Registration Statement, file any amendment to the Registration Statement or supplement to the Prospectus or file any document under the Act or Exchange Act before termination of the offering of the Shares by the Underwriters of which the Representative shall not previously have been advised and furnished with a copy, or to which the Representative shall have objected or which is not in compliance with the Act, the Exchange Act or the Regulations. (b) As soon as the Company is advised or obtains knowledge thereof, the Company will advise the Representative and confirm the notice in writing, (i) when the Registration Statement, as amended, becomes effective, if the provisions of Rule 430A promulgated under the Act will be relied upon, when the Prospectus has been filed in accordance with said Rule 430A and when any post-effective amendment to the Registration Statement becomes effective, (ii) of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding, suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of the Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto, or the institution of proceedings for that purpose, (iii) of the issuance by the Commission or by any state securities commission of any proceedings for the suspension of the qualification of any of the Registered Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose, (iv) of the receipt of any comments from the Commission; and (v) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information. If the Commission or any state securities commission authority shall enter a stop order or suspend such qualification at any time, the Company will use its best efforts to obtain promptly the lifting of such order. (c) The Company shall file the Prospectus (in form and substance satisfactory to the Representative) in accordance with the requirements of the Act. (d) The Company will give the Representative notice of its intention to file or prepare any amendment to the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus (including any revised prospectus which the Company proposes for use by the Underwriters in connection with the offering of the Registered Securities which differs from the corresponding prospectus on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the Regulations), and will furnish the Representative with copies of any such amendment or supplement a reasonable amount of time prior to February 15such proposed filing or use, 2000as the case may be, a sufficient number and will not file any such amendment or supplement to which the Representative or Camhy Karl▇▇▇▇▇ & ▇tei▇ ▇▇▇ ("Underwriters' Counsel") shall reasonably object. (e) The Company shall endeavor in good faith, in cooperation with the Representative, at or prior to the time the Registration Statement becomes effective, to qualify the Registered Securities for offering and sale under the securities laws of shares of Common Stock from its authorized but unissued shares of Common Stock such jurisdictions as the Representative may reasonably designate to permit the exercise in full continuance of all of sales and dealings therein for as long as may be necessary to complete the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Companydistribution, and has filed with shall make such applications, file such documents and furnish such information as may be required for such purpose; provided, however, the SEC prior Company shall not be required to qualify as a foreign corporation or become subject to service of process in any such jurisdiction. In each jurisdiction where such qualification shall be effected, the date hereof a preliminary proxy statement in connection with Company will, unless the Representative agree that such stockholder meetingaction is not at the time necessary or advisable, use all reasonable efforts to file and make such statements or reports at such times as are or may reasonably be required by the laws of such jurisdiction to continue such qualification. (iif) It will maintain During the listing of its Common Stock on time when a prospectus is required to be delivered under the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to Act, the Company and delivering the original Notice of Exercise and the original Warrant shall use all reasonable efforts to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received comply with all requirements imposed upon it by the Company Act, as now and hereafter amended, and by the Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Registered Securities in accordance with the provisions hereof and the Prospectus, or any amendments or supplements thereto. If at any time when a prospectus relating to the Registered Securities is required to be delivered under the Act, any event shall have occurred as a result of which, in the opinion of counsel for the Company or Underwriters' Counsel, the Prospectus, as then amended or supplemented, includes an untrue statement of a material fact or omits to state any material fact required to be deemed an "Exercise Date". The stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the Prospectus to comply with the Act, the Company will transmit notify the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together Representative promptly and prepare and file with the certificates representing Commission an appropriate amendment or supplement in accordance with Section 10 of the Warrants Act, each such amendment or supplement to be satisfactory to Underwriters' Counsel, and the Company will furnish to the Underwriters copies of such amendment or supplement as soon as available and in such quantities as the Underwriters may request. (g) As soon as practicable, but in any event not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business later than 45 days after the Exercise Date if end of the 12-month period beginning on the day after the end of the fiscal quarter of the Company has received during which the original Notice effective date of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, the Registration Statement occurs (90 days in the event that the Company fails to effect delivery end of such fiscal quarter is the end of the Company's fiscal year), the Company shall make generally available to its security holders, in the manner specified in Rule 158(b) of the Regulations, and to the Representative, an earnings statement which will be in the detail required by, and will otherwise comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Regulations, which statement need not be audited unless required by the Act, covering a period of at least 12 consecutive months after the effective date of the Registration Statement. (h) During a period of five (5) years after the date hereof, the Company will furnish to its stockholders, as soon as practicable, annual reports (including financial statements audited by independent public accountants) and will make available to its stockholders unaudited quarterly reports of earnings, and will deliver to the Representative: (i) concurrently with furnishing such quarterly reports to its stockholders, statements of income of the Company for each quarter in the form furnished to the Company's stockholders; (ii) concurrently with furnishing such annual reports to its stockholders, a balance sheet of the Company as at the end of the preceding fiscal year, together with statements of operations, stockholders' equity, and cash flows of the Company for such fiscal year, accompanied by a copy of the certificate thereon of independent certified public accountants; (iii) as soon as they are available, copies of all reports (financial or other) mailed to stockholders; (iv) as soon as they are available, copies of all reports and financial statements furnished to or filed with the Commission, the Nasdaq National Market or any securities exchange; (v) every press release and every material news item or article of interest to the financial community in respect of the Company or its affairs which was released or prepared by or on behalf of the Company; and (vi) any additional information of a public nature concerning the Company (and any future subsidiaries) or its businesses which the Representative may reasonably request. During such five-year period, if the Company has active subsidiaries, the foregoing financial statements will be on a consolidated basis to the extent that the accounts of the Company and its subsidiaries are consolidated, and will be accompanied by similar financial statements for any significant subsidiary which is not so consolidated. (i) The Company will maintain a transfer agent (the "Transfer Agent") and, if necessary under the jurisdiction of incorporation of the Company, a registrar (which may be the same entity as the transfer agent) for the Common Stock and the Representative's Warrants. (j) The Company will furnish to the Representative or on the Representative's order, without charge, at such place as the Representative may designate, copies of each Preliminary Prospectus, the Registration Statement and any pre-effective or post-effective amendments thereto (two of which copies will be signed and will include all financial statements and exhibits), each Preliminary Prospectus, the Prospectus, and all amendments and supplements thereto, including any prospectus prepared after the effective date of the Registration Statement, in each case as soon as available and in such quantities as the Representative may reasonably request. (k) On or before the effective date of the Registration Statement, the Company shall provide the Representative with true copies of duly executed, legally binding and enforceable Lock-up Agreements. On or before the Closing Date, the Company shall deliver instructions to the Transfer Agent authorizing it to place appropriate stop transfer orders on the Company's ledgers. (l) The Company shall use its best efforts to cause its officers, directors, stockholders or affiliates (within the meaning of the Regulations) not to take, directly or indirectly, any action designed to, or which might in the future reasonably be expected to cause or result in, stabilization or manipulation of the price of any securities of the Company. (m) The Company shall apply the net proceeds from the sale of the Registered Securities substantially in the manner, and subject to the conditions, set forth under "Use of Proceeds" in the Prospectus. (n) The Company shall timely file all such reports, forms or other documents as may be required (including, but not limited to, a Form SR as may be required pursuant to Rule 463 under the Act) from time to time, under the Act, the Exchange Act, and the Regulations, and all such reports, forms and documents filed will comply as to form and substance with the applicable requirements under the Act, the Exchange Act, and the Regulations. (o) The Company shall cause the Registered Securities to be quoted on the Nasdaq National Market, and for a period of two (2) years from the date hereof shall use its best efforts to maintain the quotation of the Registered Securities to the extent outstanding. (p) For a period of two (2) years from the Closing Date, the Company shall furnish to the Representative, at the Company's sole expense, daily consolidated transfer sheets relating to the Common Stock. (q) For a period of five (5) years after the effective date of the Registration Statement the Company shall, at the Company's sole expense, take all necessary and appropriate actions to further qualify the Company's securities in all jurisdictions of the United States in order to permit secondary sales of such securities pursuant to the Blue Sky laws of those jurisdictions which do not require the Company to qualify as a foreign corporation or to file a general consent to service of process. (r) The Company (i) prior to the effective date of the Registration Statement, has filed a Form 8-A with the Commission providing for the registration of the Common Stock under the Exchange Act and (ii) as soon as practicable, will use its best efforts to take all necessary and appropriate actions to be included in Standard and Poor's Corporation Descriptions and Mood▇'▇ ▇▇▇ Manual and to continue such inclusion for a period of not less than five (5) years. (s) The Company agrees that for a period of nine (9) months following the effective date of the Registration Statement it will not, without the prior written consent of National, offer, issue, sell, contract to sell, grant any option for the sale of or otherwise dispose of any Common Stock, or securities convertible into Common Stock, except for the issuance of the Option Shares, the Representative's Warrants, and shares of Common Stock issued upon the exercise of currently outstanding warrants or options issued under any stock option plan in effect on the Closing Date, shares of Common Stock automatically granted pursuant to any stock option plan in effect on the Closing Date, or shares of Common Stock issued pursuant to any employee stock purchase plan in effect on the Closing Date. (t) Until the completion of the distribution of the Registered Securities, the Company shall not without the prior written consent of National or Underwriters' Counsel, issue, directly or indirectly any press release or other communication or hold any press conference with respect to the Company or its activities or the offering contemplated hereby, other than trade releases issued in the ordinary course of the Company's business consistent with past practices with respect to the Company's operations. (u) For a period equal to the lesser of (i) five (5) years from the date hereof, and (ii) the sale to the public of the Representative's Shares, the Company will not take any action or actions which may prevent or disqualify the Company's use of Form 1 (or other appropriate form) for the registration under the Act of the Representative's Shares. (v) The Company agrees that it shall use its best efforts, which shall include, but shall not be limited to, the solicitation of proxies, to elect one (1) designee of National to the Company's Board of Directors for a period of five (5) years following the Closing, provided that such designee is reasonably acceptable to the Company. (w) The Company agrees that within forty-five (45) days after the Closing it shall retain a public relations firm which is acceptable to National. The Company shall keep such public relations firm, or any replacement, for a period of three (3) business day periodyears from the Closing. Any replacement public relations firm shall be retained only with the consent of National. (x) The Company agrees that any and all future transactions between the Company and its officers, Subscriber directors, principal stockholders and the affiliates of the foregoing persons will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect on terms no less favorable to the Company whereupon the Company than could reasonably be obtained in arm's length transactions with independent third parties, and Subscriber shall each that any such transactions also be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion approved by a majority of the Warrant exercised Company's outside independent directors disinterested in the transaction. (y) The Company shall be delivered as follows: To prepare and deliver, at the Company: Spatializer Audio Laboratories's sole expense, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇to National within the one hundred and twenty (120) day period after the later of the effective date of the Registration Statement or the latest Option Closing Date, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇as the case may be, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇one bound volume containing all correspondence with regulatory officials, Interim Chief Executive Officeragreements, documents and all other materials in connection with the offering as requested by the Underwriters' Counsel.

Covenants of the Company. For The Company covenants and agrees with each of the Underwriters as follows: (a) The Company will use its best efforts to cause the Registration Statement, if not effective at the Representation Date, and any amendment thereof, to become effective, as promptly as practicable after the date hereof. Subject to the foregoing, if the Registration Statement has become or becomes effective pursuant to Rule 430A, or filing of the Prospectus or supplement to the Prospectus is otherwise required under Rule 424(b) or Rule 434, the Company will cause the Prospectus, properly completed, or such supplement thereto to be filed with the Commission pursuant to the applicable paragraph of Rule 424(b) or Rule 434 within the time period prescribed and will provide evidence satisfactory to you of such timely filing. If the Company elects to rely on Rule 434, the Company will prepare and file a term sheet that complies with the requirements of Rule 434. The Company will promptly advise you (i) when the Registration Statement shall have become effective, (ii) when the Prospectus, and any supplement thereto, shall have been filed (if required) with the Commission pursuant to Rule 424(b) or Rule 434, (iii) when any amendment or supplement is required as provided in Section 3(c) hereof, (iv) when any amendment to the Registration Statement shall have been filed or becomes effective, (v) of any request by the Commission for any amendment of the Registration Statement or supplement to any Prospectus or for any additional information, (vi) of the receipt by the Company of any notification of, or if the Company otherwise has knowledge of, the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any (b) The Company will give the Representatives notice of its intention to file or prepare any amendment to the Registration Statement (including any filing under Rule 462(b)) or any amendment, supplement or revision to either the prospectus included in the Registration Statement at the time it became effective or to the Prospectus, whether pursuant to the Act or otherwise, will furnish the Representatives with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Representatives shall reasonably object. (c) The Company will comply with the Act and the Act Regulations so as to permit the completion of the distribution of the Shares as contemplated by this Agreement and in the Prospectus. If, at any time when a prospectus relating to the Shares is required to be delivered under the Act or the Act Regulations, any event occurs as a result of which the Prospectus as then amended or supplemented would contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it shall be necessary to amend the Registration Statement or amend or supplement the Prospectus to comply with the Act, the Act Regulations, or any other applicable law the Company promptly will prepare and file with the Commission, subject to paragraph (b) of this Section 3, an amendment or supplement that will correct such statement or omission or effect such compliance. Neither your consent to nor your delivery of any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 5. (d) The Company consents to the use of the Prospectus in accordance with the provisions of the Act and with the Blue Sky laws of the jurisdictions in which the Shares are offered by the Underwriters and by all dealers to whom Shares may be sold, both in connection with the offering and sale of the Shares and for such period of time thereafter as the Prospectus is required by the Act to be delivered in connection with the sales by any Underwriter or dealer. The Company will comply with all requirements imposed upon it by the Act, as now and hereafter amended, and any Blue Sky laws to which it may be subject so far as necessary to permit the continuance of sales of or dealing in the Shares in accordance with the provisions hereof and the Prospectus. (e) As soon as practicable, the Company will make generally available to its security holders and to the Underwriters a consolidated earnings statement of the Company and the Subsidiaries covering a twelve-month period beginning after the Effective Date that will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act Regulations and shall advise you in writing when such statement has been made so available. (f) The Company will furnish to you, without charge, three signed copies of the Registration Statement (including exhibits thereto and each amendment thereto) and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Act, the Act Regulations or any Securities held other applicable law, as many copies of the Prospectus and all amendments and supplements thereto as the Underwriters may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGA▇, ▇▇cept to the extent permitted by Subscriber remain outstandingRegulation S-T of the Commission. (g) During the period of five years hereafter, the Company acknowledgeswill furnish to you, representsas soon as practicable after the end of each fiscal year, warrants a copy of its annual report to stockholders for such year; and the Company will furnish to you (i) as soon as available, a copy of each report or definitive proxy statement of the Company filed with the Commission under the Exchange Act or mailed to stockholders and (ii) from time to time, such other information concerning the Company as you may reasonably request. (h) Except as provided in this Agreement, the Company will not, and will cause each of its officers, directors and current stockholders and each person or entity receiving shares of Common Stock in connection with the Acquisitions to enter into agreements with the Underwriters in the form set forth in Exhibit A hereto ("Lockup Agreements") to the effect that they will not, for a period of one year following the date of the Prospectus, without prior written consent of Jeff▇▇▇▇▇ & ▇ompany, Inc., directly or indirectly, offer to sell, assign, pledge, issue, distribute, sell, contract to sell, grant any option or enter into any contract for the sale of, or otherwise voluntarily transfer or dispose of, or announce any offer, sale, grant of any option to purchase or other transfer or disposition of, any shares of Common Stock, or any other securities of the Company or any security or other instrument which by its terms is convertible into or exercisable or exchangeable for shares of Common Stock or other securities of the Company, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition, including, without limitation, any shares of Common Stock issuable under any employee stock options or warrants; provided, however, that the Company may (i) issue shares of Common Stock in connection with the Acquisitions, (ii) issue shares of restricted common stock, par value $.001 per share, of the Company ("Restricted Common Stock") in exchange for shares of Common Stock or issue shares of Common Stock on conversion of shares of Restricted Common Stock, in each case as contemplated in the Prospectus, (iii) issue shares of Common Stock on exercise of presently outstanding stock options under the Company's 1997 Stock Option Plan, (iv) issue up to 50,000 shares of Common Stock on exercise of the presently outstanding warrant described in the Prospectus and (v) issue up to 2,000,000 shares of Common Stock in connection with future acquisitions, so long as, in the case of any issuance described in clause (iii), (iv) or (v) of this sentence, the recipient of those shares agrees to be bound by an agreement in form and substance substantially the same as follows:the form set forth in Exhibit A. Any certificate representing shares of Common Stock or Restricted Common Stock subject to the transfer restrictions set forth in this Section 3(h) shall bear a legend appropriately reflecting such restrictions. (i) The Company shall use its best efforts will comply with all the provisions of any undertakings contained in the Registration Statement and this Agreement. (j) The Company will not at any time, directly or indirectly, take any action intended, or that might reasonably be expected, to reservecause or result in, prior to February 15or that will cause, 2000, a sufficient number stabilization of shares the price of Common Stock from its authorized but unissued the shares of Common Stock to permit facilitate the exercise in full sale or resale of all any of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingShares. (iik) It The Company will maintain apply the listing net proceeds from the offering and sale of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company Shares in accordance with the provisions hereof description set forth in the "Use of Proceeds" section of the Prospectus and shall file such reports with the Commission with respect to the sale of the Shares and the application of the proceeds therefrom as may be deemed an "Exercise Date"required under the Act, the Act Regulations, the Exchange Act or the rules and regulations thereunder. The Company shall provide you a draft of each such report prior to its filing for your approval, and shall furnish you with a signed copy of each such report. (l) The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together cooperate with the certificates representing Underwriters and their counsel in connection with endeavoring to obtain and maintain the Warrants not so exercised) to Subscriber via express courierqualification or registration, by electronic transfer or otherwise within three (3) business days after exemption from qualification, of the Exercise Date if Shares for offer and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Underwriters may designate; provided, that in no event shall the Company has received the original Notice be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action that would subject it to taxation or general service of Exercise and Warrant being exercised by such dateprocess in any jurisdiction where it is not now so subject. In addition to any other remedies each jurisdiction in which the Shares are so qualified, the Company will file all such statements and reports as may be available to Subscriber, in required by the event that the Company fails to effect delivery laws of such shares jurisdictions to continue such qualifications in effect for a period of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke not less than one year from the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion Effective Date of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇Registration Statement and any Rule 462(b) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerRegistration Statement.

Covenants of the Company. For The Company covenants and agrees with the Underwriter that: (a) The Company, upon notification from the Commission that the Registration Statement has become effective, will so long advise you and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement to the Prospectus of which you shall not previously been advised and furnished with a copy or to which you or your counsel shall have objected in writing, acting reasonably, or which is not in compliance with the Act and the Rules and Regulations. At any time prior to the later of (i) the completion by the Underwriter of the distribution of the Securities as any Securities held by Subscriber remain outstandingcontemplated hereby; or (ii) 25 days after the date on which the Registration Statement shall have become or been declared effective, the Company acknowledgeswill prepare and file with the Commission, representspromptly upon your request, warrants any amendments or supplements to the Registration Statement or Prospectus which may be necessary or advisable in connection with the distribution of the Securities and agrees as follows: (i) The mutually agreed by the Company shall and the Underwriter. After the Effective Date and as soon as the Company is advised thereof, the Company will advise you, and confirm the advice in writing, of the receipt of any comments of the Commission, of the effectiveness of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, or of the suspension of the qualification of the Securities for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to reserveprevent the issuance of any such order, and, if issued, to obtain as soon as possible the lifting thereof. The Company has caused to be delivered to you copies of each Preliminary Prospectus and Definitive Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and Selected Dealers to use the Prospectus in connection with the sale of the Securities for such period as in the opinion of counsel to the Underwriter the use thereof is required to comply with the applicable provisions of the Act and the Rules and Regulations. In case of the happening, at any time within such period as a Prospectus is required under the Act to be delivered in connection with sales by the Underwriter or Selected Dealers, of any event of which the Company has knowledge and which in the opinion of counsel for the Company or counsel for the Underwriter should be set forth in an amendment to the Registration Statement or a supplement to the Prospectus, in order to make the statements therein not then misleading, in light of the circumstances existing at the time the Prospectus is required to be delivered to a purchaser of the Securities, or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the Act and the Rules and Regulations, the Company will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state any material facts necessary in order to make the statements in the Prospectus, in the light of the circumstances under which they are made, not misleading. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be without expense to the Underwriter. The Company will comply with the Act, the Rules and Regulations thereunder, and the provisions of the Securities Exchange Act of 1934 (the "1934 Act"), and the rules and regulations thereunder in connection with the offering and issuance of the Securities. (b) The Company will act in good faith and use its best efforts and cooperate with you and your counsel to qualify to register the Securities for sale under the securities or "blue sky" laws of such jurisdictions as the Underwriter may designate and will make such applications and furnish such information as may be required for that purpose and to comply with such laws, provided the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent to service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Securities. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long a period as the Underwriter may reasonably request. (c) If the sale of the Securities provided for herein is not consummated, the Company shall pay all costs and expenses incident to the performance of the Company's obligations hereunder, including, but not limited to, all such expenses itemized in Section 8(a) and 8(c) hereof, and either (i) the out-of-pocket expenses of the Underwriter, not to exceed the $50,000 previously paid if the Underwriter elects to terminate the offering for any reason; or (ii) the out-of-pocket expenses of the Underwriter if the Company elects to terminate the offering for any reason. For the purposes of this sub-section, the Underwriter shall be deemed to have assumed such expenses when they are billed or incurred, regardless of whether such expenses have been paid. The Underwriter shall not be responsible for any expenses of the Company or others, or for any charges or claims relative to the proposed public offering if it is not consummated. (d) The Company will deliver to you at or before the Closing Date two signed copies of the Registration Statement, including all financial statements and exhibits filed therewith, and of each amendment or supplement thereto. The Company will deliver to or upon the order of the Underwriter, from time to time until the Effective Date of the Registration Statement, as many copies of any Preliminary Prospectus filed with the Commission prior to February 15the Effective Date of the Registration Statement as the Underwriter may reasonably request. The Company will deliver to the Underwriter on the Effective Date of the Registration Statement and thereafter for so long as a Prospectus is required to be delivered under the Act, 2000from time to time, as many copies of the Definitive Prospectus, or as thereafter amended or supplemented, as the Underwriter may from time to time reasonably request. (e) For so long as the Company is a reporting company under either Section 12 or 15 of the 1934 Act, the Company, at its expense, will furnish to the Underwriter during the period ending five (5) years from the Effective Date, (i) as soon as practicable after the end of each fiscal year, a sufficient balance sheet of the Company and any of its subsidiaries as at the end of such fiscal year, together with statements of income, surplus and cash flow of the Company and any subsidiaries for such fiscal year, all in reasonable detail and accompanied by a copy of the certificate or report thereon of independent accountants; (ii) as soon as they are available, a copy of all reports (financial or other) mailed to security holders; (iii) as soon as they are available, a copy of all non-confidential documents, including annual reports, periodic reports and financial statements, furnished to or filed with the Commission under the Act and the 1934 Act; (iv) copies of each press release, news item and article with respect to the Company's affairs released by the Company; and (v) such other information as you may from time to time reasonably request. (f) In the event the Company has an active subsidiary or subsidiaries, such financial statements referred to in subsection (e) above will be on a consolidated basis to the extent the accounts of the Company and its subsidiary or subsidiaries are consolidated in reports furnished to its stockholders generally. (g) The Company will make generally available to its stockholders and to the registered holders of its Warrants and deliver to the Underwriter as soon as it is practicable, but in no event later than the first day of the sixteenth full calendar month following the Effective Date, an earnings statement (which need not be audited) covering a period of at least twelve consecutive months beginning with the Effective Date of the Registration Statement, which shall satisfy the requirements of Section 11(a) of the Act. (h) On the Closing Date, the Company shall have taken the necessary action to become a reporting company under Section 12 of the 1934 Act, and the Company will make all filings required to and will have obtained approval for the listing of the Shares and Warrants on The Nasdaq SmallCap Market System, and will use its best efforts to maintain such listing for at least seven (7) years from the date of this Agreement. (i) For a period of seven (7) years following the Effective Date, the Company will hold an annual meeting of stockholders for the election of Directors within 180 days after the end of each of the Company's fiscal years and, within nine (9) months after the end of each of the Company's fiscal years will provide the Company's stockholders with the audited financial statements of the Company as of the end of the fiscal year just completed prior thereto. Such financial statements shall be those required by Rule 14a-3 under the 1934 Act and shall be included in an annual report pursuant to the requirements of such Rule. (j) The Company will apply the net proceeds from the sale of the Securities substantially in accordance with its statement under the caption "Use of Proceeds" in the Prospectus, and will file such reports with the Commission with respect to the sale of the Securities and the application of the proceeds therefrom as may be required by Sections 12, 13 and/or 15 of the 1934 Act and pursuant to Rule 463 under the Act. (k) The Company will, promptly upon your request, prepare and file with the Commission any amendments or supplements to the Registration Statement, Preliminary Prospectus or Prospectus and take any other action, which in the reasonable opinion of counsel to the Underwriter and the Company may be reasonably necessary or advisable in connection with the distribution of the Securities and will use its best efforts to cause the same to become effective as promptly as possible. (l) On the Closing Date, the Company shall execute and deliver to you the Underwriter's Warrant Agreement. The Underwriter's Warrant Agreement and Warrant Certificates will be substantially in the form of the Underwriter's Warrant Agreement filed as an exhibit to the Registration Statement. (m) The Company will reserve and keep available for issuance that maximum number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the securities which are issuable upon exercise in full of all of the Underwriter's Warrants outstanding Warrants. The Company is currently organizing a stockholder meeting from time to increase time. (n) All existing beneficial owners of the number of authorized shares of Common Company's securities (including warrants, options and Preferred Stock of the Company) as of the Effective Date shall agree in writing, and has filed with the SEC prior in a form satisfactory to the date hereof Underwriter, not to sell, transfer or otherwise dispose of any of such securities (or underlying securities) of the Company for a preliminary proxy statement period of twenty-four (24) months or fourteen (14) months from the Effective Date, as described in connection with such stockholder meetingthe Prospectus, or any longer period required by the NASD, Nasdaq or any State, without the written consent of the Underwriter. For a period of four (4) years following the Effective Date, all sales of the Company's securities by officers and/or directors of the Company shall be through the Underwriter. (iio) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit obtain, on or before the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with Closing Date, key person life insurance on the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. lives of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ in an amount of not less than $2,000,000 each, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇and will use its best efforts to maintain such insurance for a period of at least five (5) years from the Effective Date. (p) Prior to the Closing Date, ▇▇ ▇▇▇▇▇the Company shall, at its own expense, undertake to list the Company's securities in the appropriate recognized securities manual or manuals published by Standard & Poor's Corporation and such other manuals as the Underwriter may designate, such listings to contain the information required by such manuals and the Uniform Securities Act. The Company hereby agrees to use its best efforts to maintain such listing for a period of not less than five (5) years. The Company shall take such action as may be reasonably requested by the Underwriter to obtain a secondary market trading exemption in such states as may be reasonably requested by the Underwriter. (q) During the one (1) year day period commencing on the Closing Date, the Company will not, without the prior written consent of the Underwriter, grant options or warrants to purchase the Company's Common Stock at a price less than the initial per share public offering price. (r) Prior to the Closing Date, neither the Company nor any subsidiary will issue, directly or indirectly, without your prior consent, any press release or other communication or hold any press conference with respect to the Company or its activities or the offering of the Securities other than routine customary advertising of the Company's products and services, and except as required by any applicable law or the directives of any relevant regulatory authority in any relevant jurisdiction. (s) At the Closing Date, the Company will engage the Underwriter as a non-▇▇▇▇ Fax: exclusive financial advisor to the Company for a period of twelve (▇▇▇12) ▇▇▇months commencing on the first day of the month following the Company's receipt of the proceeds of this offering, at an aggregate fee of $108,000, all of which shall be payable to the Underwriter on the Closing Date. The financial advisory agreement will provide that the Underwriter shall, at the Company's request, provide advice and consulting services to the Company concerning potential merger and acquisition proposals and the obtaining of short or long-▇▇▇▇ Attn: ▇▇▇▇▇ ▇term financing for the Company, whether by public financing or otherwise. (t) The Company shall employ the services of a firm of independent certified public accountants in connection with the preparation of the financial statements to be included in any registration statement or similar disclosure document to be filed by the Company hereunder, or any amendment or supplement thereto. ▇▇▇▇▇▇▇For a period of five (5) years from the Effective Date, Interim Chief Executive Officerthe Company, at its expense, shall cause its regularly engaged independent certified public accountants to review (but not audit) the Company's financial statements for each of the first three (3) fiscal quarters prior to the announcement of quarterly financial information, the filing of the Company's quarterly report and the mailing of quarterly financial information to stockholders. (u) The Company shall retain ChaseMellon Shareholder Services, Inc. as the transfer agent for the securities of the Company, or such other transfer agent as you may agree to in writing. In addition, the Company shall direct such transfer agent to furnish the Underwriter with daily transfer sheets as to each of the Company's securities as prepared by the Company's transfer agent and copies of lists of stockholders and warrantholders as reasonably requested by the Underwriter, for a five (5) year period commencing from the Closing Date. (v) The Company shall cause the Depository Trust Company, or such other depository of the Company's securities, to furnish security position reports and special DTC Tracking Reports to the Underwriter on a daily and weekly basis at the expense of the Company, for a five (5) year period from the Effective Date. The DTC Tracking Reports will be furnished for the ini

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith the Underwriter that: (ia) The Company shall will use its best efforts to reservecause the Registration Statement to become effective under the Act. If required, the Company will file the Prospectus and any amendment or supplement thereto with the Commission in the manner and within the time period required by Rule 424(b) under the Act. Upon notification from the Commission that the Registration Statement has become effective under the Act, the Company will so advise you and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement the Prospectus unless you have previously been furnished with a copy and to which you or your counsel shall have reasonably objected in writing or which is not in compliance with the Act and the Rules and Regulations. At any time prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all completion by the Underwriter of the outstanding Warrantsdistribution of the securities contemplated hereby (but in no event more than nine months after the date on which the Registration Statement shall have become or been declared effective under the Act), the Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus which, in the opinion of counsel to the Company and the Underwriter, may be reasonably necessary or advisable in connection with the distribution of the Units contemplated hereby and as mutually agreed by the Company and the Underwriter. As soon as the Company is advised thereof, the Company will advise the Underwriter, and provide the Underwriter copies of any written advice, of the receipt of any comments of the Commission, of the effectiveness under the Act of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for an amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order or threat thereof suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, or of the suspension of the qualification of the Units for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to prevent the issuance of any such order, and, if issued, to obtain as soon as possible the lifting thereof. The Company has caused to be delivered to the Underwriter copies of each Preliminary Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and dealers to use the Prospectus in connection with the sale of the Units for such period as in the opinion of counsel to the Underwriter and the Company the use thereof is currently organizing required to comply with the Act and the Rules and Regulations. In case of the occurrence, at any time within such period as a stockholder meeting Prospectus is required under the Act to increase be delivered in connection with sales by the number Underwriter or dealers, of authorized shares any event of Common Stock which the Company has knowledge and which materially affects the Company or the securities of the Company, and has filed or which in the opinion of counsel for the Company or counsel for the Underwriter should be set forth in an amendment to the Registration Statement or a supplement to the Prospectus in order to make the statements therein not then misleading, or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the SEC prior Rules and Regulations, the Company will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the date hereof Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a preliminary proxy statement material fact or omit to state any material fact necessary in order to make the statements in the Prospectus not misleading in light of the circumstances under which they were made. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be without expense to the Underwriter, except that in case the Underwriter is required, in connection with such stockholder meeting. (iithe sale of the Units to deliver a Prospectus nine months or more after the Effective Date, the Company, will upon request of the Underwriter, amend or supplement the Registration Statement and Prospectus and furnish each of the Underwriter with reasonable quantities of prospectuses complying with Section 10(a)(3) It will maintain of the listing of its Common Stock on Act at the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date"Company’s expense. The Company will transmit comply in all material respects with the certificates representing shares Act, the Rules and Regulations and Securities and Exchange Act of Common Stock issuable upon exercise 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder in connection with the offering and issuance of the Units. (b) The Company will furnish such information as may be required and to otherwise cooperate and use its best efforts to qualify or register the Units for sale under the securities or “blue sky” laws of such jurisdictions as you may reasonably designate and will make such applications and furnish such information as may be required for that purpose and to comply with such laws, provided the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent of service of process in any Warrants jurisdiction in any action other than one arising out of the offering or sale of the Units. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long a period as you may reasonably request. (c) For so long as the Company is a reporting company under either Sections 12 or 15(d) of the Exchange Act, the Company, at its expense, will furnish to its shareholders an annual report (including financial statements audited by independent public accountants as required by the Act), in reasonable detail and at its expense, will furnish to the Underwriter during the period ending three years from the Effective Date hereof, (i) as soon as practicable after the end of each fiscal year, but no earlier than the filing of such information with the Commission, a balance sheet of the Company as at the end of such fiscal year, together with statements of income, and cash flow of the certificates representing Company for such fiscal year, all in reasonable detail and accompanied by a copy of the Warrants certificate or report thereon of independent accountants; (ii) as soon as practicable after the end of each of the first three fiscal quarters of each fiscal year, but no earlier than the filing of such information with the Commission, consolidated summary financial information of the Company for such quarter in reasonable detail; (iii) as soon as they are publicly available, a copy of all reports (financial or other) mailed to shareholders; (iv) as soon as they are available, a copy of all non-confidential reports and financial statements furnished to or filed with the Commission or any securities exchange or automated quotation system on which any class of securities of the Company is listed; (v) copies of each press release, news item and article with respect to the Company’s affairs released by the Company; and (vi) such other information as you may from time to time reasonably request. To the extent that the information required by this Section 3(c) may be filed with the Commission via the ▇▇▇▇▇ electronic filing system, the filing of such information via the ▇▇▇▇▇ electronic filing system shall satisfy the Company’s obligations under this Section 3(c). (d) In the event the Company has an active subsidiary or subsidiaries, such financial statements referred to in subsection (c) above will be on a consolidated basis to the extent the accounts of the Company and its subsidiary or subsidiaries are consolidated in reports furnished to its shareholders generally. (e) On or prior to the Effective Date, all officers, directors and employees of the Company as of the Effective Date shall agree in writing (in the form annexed hereto as Exhibit A), not so exercised) to Subscriber via express couriersell, by electronic transfer or otherwise within dispose of (in any manner whatsoever, including public dispositions pursuant to Rule 144 under the Act) any common stock or securities exercisable or convertible into common stock for a period of 13 months from the Effective Date, or any longer period required by any state securities commission or the Archipelago Exchange (the “ARCX”), without the prior written consent of the Underwriter and, if applicable, the securities commission of such states or the ARCX. The Company further agrees not to permit, cause, suffer or assist in any such sales, dispositions or transfers. In addition, without consent of the Underwriter, the Company shall not sell or offer for sale any of its securities for a period of 13 months following the Effective Date except pursuant to options, warrants and convertible securities issued and outstanding on the date of filing of the Registration Statement or pursuant to any employee stock option plan. (f) On the Effective Date, the Company shall have taken the necessary action to register the Units and to become a reporting company under Section 12 of the Exchange Act, and the Company will make all filings required to, and will have obtained approval for the listing of the Units on the ARCX and, so long as the Company remains a reporting company under the Exchange Act, will use its best efforts to maintain such listing or a listing on the Nasdaq National Market (“NMS”), Nasdaq SmallCap Market, American Stock Exchange or New York Stock Exchange, or any similar national exchange or quotation system, for at least five years from the Effective Date. (g) On or prior to the Effective Date, the Company will have engaged a firm of independent certified public accountants, reasonably acceptable to the Underwriters. For the purposes of this Agreement, the certified public accounting firm of Ernst & Young LLP, shall be deemed acceptable to the Underwriter. Additionally, for a period of at least five years from the Effective Date the Company will engage a firm of independent public accountants permitted to practice before the Commission. (h) On the Effective Date, the terms and conditions of all material transactions and proposed transactions between the Company and each of its subsidiaries, on the one hand, and any of the Company’s officers, directors, affiliates or the beneficial owners of five percent or more of any class of the Company’s equity securities (including, by way of example, but not limitation, employment agreements, loans, leases, license and service agreements), on the other hand, shall be reasonably satisfactory to the Underwriter. (i) Until the Offering has been terminated or concluded, as the case may be, the Company will not issue a press release or engage in any publicity, other than promotion by the Company of its products and services and other press releases in the ordinary course of its business, without the Underwriter's prior written consent, which consent shall not be unreasonably withheld or delayed. (j) For a period of three years from the Effective Date, the Underwriter may appoint an observer reasonably acceptable to the Company’s Board of Directors to attend all meetings of the Board of Directors and who need not be the same person from meeting to meeting. The Underwriter shall also have the right to written notice of, and agendas with respect thereto, no later than notice to other directors of each meeting and to obtain copies of the minutes, if requested, from all Board of Directors meetings for three years following the Effective Date, whether or not an observer attends or participates in any such Board meeting. The Company agrees to reimburse the Underwriter immediately upon the Underwriter’s request therefor for any reasonable and documented food, travel and lodging expenses directly incurred by the Underwriter in connection with its designee or observer attending Company Board of Directors meetings. Nothing in this Section 3(j) shall require the Company or its Board of Directors to waive its attorney-client privilege with respect to deliberations and meetings and materials with respect thereto. (3k) business The Company shall direct the Depository Trust Company, or such other depository of the Company’s securities, to deliver a “special security position report” to the Underwriter on a daily basis for the first 30 days after the Exercise Effective Date if and on a weekly basis for the first six months after the Effective Date, each at the Company’s sole expense. (l) For a period of five years following the Effective Date, the Company has received will maintain registration with the original Notice Commission pursuant to Sections 12(b) or 12(g) of Exercise and Warrant being exercised by such datethe Exchange Act. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of maintain registration with the Commission pursuant to Sections 12(b) or 12(g) during such shares of Common Stock within such three (3) business day five year period, Subscriber the Company will be entitled provide reasonable access for an independent accountant designated by the Underwriter, to revoke all books, records and other documents or statements that reflect the relevant Notice Company’s financial status at least once each quarter, at the Company’s reasonable expense. (m) For a period of Exercise by delivering one year from the Effective Date, so long as the Company is a notice to such effect reporting company under either Sections 12 or 15(d) of the Exchange Act, the Company shall: (i) retain a transfer agent reasonably acceptable to the Underwriter for the securities of the Company; and (ii) direct such transfer agent to furnish, at the Company’s sole expense, the Underwriter with weekly transfer sheets as to each of the Company’s securities as prepared by the Company’s transfer agent and copies of lists of shareholders when requested by the Underwriter. (n) The Company whereupon will deliver to the Underwriter two manually executed copies of the Registration Statement including all financial statements and exhibits filed therewith, and of all amendments thereto when filed with the Commission, and will deliver to the Underwriter such number of conformed copies of the Registration Statement, including such financial statements and of all amendments thereto, as the Underwriter may reasonably request. The Company will deliver to or upon the Underwriter’s order, from time to time until the Effective Date, as many copies of any Preliminary Prospectus filed with the Commission prior to the Effective Date as the Underwriter may reasonably request. The Company will deliver to the Underwriter on the Effective Date and thereafter for so long as a Prospectus is required to be delivered under the Act, from time to time, as many copies of the Prospectus, in final form, or as thereafter amended or supplemented, as the Underwriter may from time to time reasonably request. (o) If at any time during the three year period following the Effective Date, the Company’s securities are no longer listed for trading on the ARCX, another national securities exchange or NMS, the Company shall, at its own expense, undertake to list the Company’s securities in the appropriate recognized securities manual or manuals published by Standard & Poor’s Corporation and Subscriber such other manuals as the Underwriter may designate, such listings to contain the information required by such manuals and the Uniform Securities Act (the “Manuals”) and maintain such listing during said three year period, the Company shall each take such action as may be restored reasonably requested by the Underwriter to their respective positions immediately prior obtain a secondary market trading exemption in such states as may be reasonably requested by the Underwriter. (p) [Intentionally Omitted.] (q) As promptly as practicable after the last Closing Date, the Company will prepare, at its own expense, hard cover “bound volumes” relating to delivery of the offering, and will distribute such Notice of Exercise. volumes to the individuals designated by the Underwriter or counsel to the Underwriter. (r) The Notice of Exercise and Warrant representing Company will apply the portion net proceeds from the sale of the Warrant exercised shall be delivered as follows: To Units substantially for the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: purposes set forth under “Use of Proceeds” in the Prospectus. (▇▇▇s) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerThe Comp

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith the Underwriter that: (ia) The Company shall will use its best efforts to reservecause the Registration Statement to become effective under the Act. If required, the Company will file the Prospectus and any amendment or supplement thereto with the Commission in the manner and within the time period required by Rule 424(b) under the Act. Upon notification from the Commission that the Registration Statement has become effective under the Act, the Company will so advise you and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement the Prospectus unless you have previously been furnished with a copy and to which you or your counsel shall have reasonably objected in writing or which is not in compliance with the Act and the Rules and Regulations. At any time prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all completion by the Underwriter of the outstanding Warrantsdistribution of the securities contemplated hereby (but in no event more than nine months after the date on which the Registration Statement shall have become or been declared effective under the Act), the Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus which, in the opinion of counsel to the Company and the Underwriter, may be reasonably necessary or advisable in connection with the distribution of the Shares contemplated hereby and as mutually agreed by the Company and the Underwriter. As soon as the Company is advised thereof, the Company will advise the Underwriter, and provide the Underwriter copies of any written advice, of the receipt of any comments of the Commission, of the effectiveness under the Act of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for an amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order or threat thereof suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, or of the suspension of the qualification of the Shares for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to prevent the issuance of any such order, and, if issued, to obtain as soon as possible the lifting thereof. The Company has caused to be delivered to the Underwriter copies of each Preliminary Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and dealers to use the Prospectus in connection with the sale of the Shares for such period as in the opinion of counsel to the Underwriter and the Company the use thereof is currently organizing required to comply with the Act and the Rules and Regulations. In case of the happening, at any time within such period as a stockholder meeting Prospectus is required under the Act to increase be delivered in connection with sales by the number Underwriter or dealers, of authorized shares any event of Common Stock which the Company has knowledge and which materially affects the Company or the securities of the Company, and has filed or which in the opinion of counsel for the Company or counsel for the Underwriter should be set forth in an amendment to the Registration Statement or a supplement to the Prospectus in order to make the statements therein not then misleading, or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the SEC prior Rules and Regulations, the Company will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the date hereof Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a preliminary proxy statement material fact or omit to state any material fact necessary in order to make the statements in the Prospectus not misleading in light of the circumstances under which they were made. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be without expense to the Underwriter, except that in case the Underwriter is required, in connection with such stockholder meeting. (iithe sale of the Shares to deliver a Prospectus nine months or more after the Effective Date, the Company, will upon request of the Underwriter, amend or supplement the Registration Statement and Prospectus and furnish each of the Underwriter with reasonable quantities of prospectuses complying with Section 10(a)(3) It will maintain of the listing of its Common Stock on Act at the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date"Company’s expense. The Company will transmit comply in all material respects with the certificates representing shares Act, the Rules and Regulations and Securities and Exchange Act of Common Stock issuable upon exercise 1934, as amended (the "Exchange Act") and the rules and regulations thereunder in connection with the offering and issuance of the Shares. (b) The Company will furnish such information as may be required and to otherwise cooperate and use its best efforts to qualify or register the Shares for sale under the securities or "blue sky" laws of such jurisdictions as you may designate and will make such applications and furnish such information as may be required for that purpose and to comply with such laws, provided the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent of service of process in any Warrants jurisdiction in any action other than one arising out of the offering or sale of the Shares. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long a period as you may reasonably request. (c) For so long as the Company is a reporting company under either Sections 12 or 15(d) of the Exchange Act, the Company, at its expense, will furnish to its shareholders an annual report (including financial statements audited by independent public accountants as required by the Act), in reasonable detail and at its expense, will furnish to the Underwriter during the period ending three years from the Effective Date hereof, (i) as soon as practicable after the end of each fiscal year, but no earlier than the filing of such information with the Commission, a balance sheet of the Company as at the end of such fiscal year, together with statements of income, and cash flow of the certificates representing Company for such fiscal year, all in reasonable detail and accompanied by a copy of the Warrants certificate or report thereon of independent accountants; (ii) as soon as practicable after the end of each of the first three fiscal quarters of each fiscal year, but no earlier than the filing of such information with the Commission, consolidated summary financial information of the Company for such quarter in reasonable detail; (iii) as soon as they are publicly available, a copy of all reports (financial or other) mailed to shareholders; (iv) as soon as they are available, a copy of all non-confidential reports and financial statements furnished to or filed with the Commission or any securities exchange or automated quotation system on which any class of securities of the Company is listed; (v) copies of each press release, news item and article with respect to the Company’s affairs released by the Company; and (vi) such other information as you may from time to time reasonably request. To the extent that the information required by this Section 3(e) may be filed with the Commission via the ▇▇▇▇▇ electronic filing system, the filing of such information via the ▇▇▇▇▇ electronic filing system shall satisfy the Company’s obligations under this Section 3(e). (d) In the event the Company has an active subsidiary or subsidiaries, such financial statements referred to in subsection (c) above will be on a consolidated basis to the extent the accounts of the Company and its subsidiary or subsidiaries are consolidated in reports furnished to its shareholders generally. (e) [OPEN][On or prior to the Effective Date, all officers, directors, employees and 5% shareholders of the Company as of the Effective Date shall agree in writing (in the form annexed hereto as Exhibit A), not so exercised) to Subscriber via express couriersell, by electronic transfer or otherwise within three dispose of (3in any manner whatsoever, including public dispositions pursuant to Rule 144 under the Act) business days after any common stock or securities exercisable or convertible into common stock for a period of 15 months from the Exercise Date Effective Date, or any longer period required by any state securities commission or the American Stock Exchange, Inc. ("AMEX"), without the prior written consent of the Underwriter and, if applicable, the securities commission of such states or the AMEX. On or prior to the Effective Date, each holder of shares of the Company’s Series A 5% and Series B 10% Convertible Preferred Stock (the "Preferred Stock") who is not an officer, director or 5% shareholder of the Company has received as of the original Notice Effective Date shall agree in writing (in the form annexed hereto as Exhibit B), not to sell, transfer or otherwise dispose of Exercise and Warrant being exercised by (in any manner whatsoever, including public dispositions pursuant to Rule 144 under the Act) any Common Stock underlying the Preferred Stock for a period of six months from the Effective Date; provided, however, that such date. In addition to any other remedies which holders of the Preferred Stock may be available to Subscriber, sell the Common Stock underlying the Preferred Stock (i) in the event that the average closing price of the Common Stock exceeds $6.60 per share for a period of ten consecutive trading days during the six-month period, or (ii) with the prior written consent of the Underwriter. The Company further agrees not to permit, cause, suffer or assist in any such sales, dispositions or transfers. In addition, without consent of the Underwriter, the Company fails shall not sell or offer for sale any of its securities for a period of 13 months following the Effective Date except pursuant to effect delivery options, warrants and convertible securities issued and outstanding on the date of filing of the Registration Statement or pursuant to any employee stock option plan.] (f) On the Effective Date, the Company shall have taken the necessary action to register the Shares and to become a reporting company under Section 12 of the Exchange Act, and the Company will make all filings required to, and will have obtained approval for the listing of the Shares on AMEX and, so long as the Company remains a reporting company under the Exchange Act, will use its best efforts to maintain such shares of Common listing or a listing on the Nasdaq National Market ("NMS"), Nasdaq SmallCap Market or New York Stock within such three Exchange, or any similar national exchange or quotation system, for at least five years from the Effective Date. (3g) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect On or prior to the Company whereupon Effective Date, the Company and Subscriber shall each be restored will have engaged a firm of independent certified public accountants, reasonably acceptable to their respective positions immediately prior to delivery the Underwriters. For the purposes of such Notice this Agreement, the certified public accounting firm of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇& ▇▇▇▇▇▇▇ ▇▇▇▇▇PC, ▇▇ ▇▇▇▇▇shall be deemed acceptable to the Underwriter. Additionally, for a period of at least five years from the Effective Date the Company will engage a firm of independent public accountants permitted to practice before the Commission. (h) On the Effective Date, the terms and conditions of all transactions and proposed transactions between the Company and each of its subsidiaries, on the one hand, and any of the Company’s officers, directors, affiliates or the beneficial owners of five percent or more of any class of the Company’s equity securities (including, by way of example, but not limitation, employment agreements, loans, leases, license and service agreements), on the other hand, shall be reasonably satisfactory to the Underwriter. (i) Until the Offering has been terminated or concluded, as the case may be, the Company will not issue a press release or engage in any publicity, other than promotion by the Company of its products and services and other press releases in the ordinary course of its business, without the Underwriter's prior written consent, which consent shall not be unreasonably withheld or delayed. (j) For a period of three years from the Effective Date, the Company may appoint an observer reasonably acceptable to the Company’s Board of Directors who will be able to attend all meetings of the Board of Directors and who need not be the same person from meeting to meeting. The Underwriter shall also have the right to written notice of, and agendas with respect thereto, no later than notice to other directors of each meeting and to obtain copies of the minutes, if requested, from all Board of Directors meetings for three years following the Effective Date, whether or not an observer attends or participates in any such Board meeting. The Company agrees to reimburse the Underwriter immediately upon the Underwriter’s request therefor for any reasonable and documented food, travel and lodging expenses directly incurred by the Underwriter in connection with its designee or observer attending Company Board meetings. Nothing in this Section 3(j) shall require the Company or its Board of Directors to waive its attorney-▇▇▇▇ Faxclient privilege with respect to deliberations and meetings and materials with respect thereto. (k) The Company shall direct the Depository Trust Company, or such other depository of the Company’s securities, to deliver a "special security position report" to the Underwriter on a daily basis for the first 30 days after the Effective Date and on a weekly basis for the first six months after the Effective Date, each at the Company’s sole expense. (l) For a period of five years following the Effective Date, the Company will maintain registration with the Commission pursuant to Sections 12(b) or 12(g) of the Exchange Act. In the event that the Company fails to maintain registration with the Commission pursuant to Sections 12(b) or 12(g) during such five year period, the Company will provide reasonable access for an independent accountant designated by the Underwriter, to all books, records and other documents or statements that reflect the Company’s financial status at least once each quarter, at the Company’s reasonable expense. (m) For a period of one year from the Effective Date, so long as the Company is a reporting company under either Sections 12 or 15(d) of the Exchange Act, the Company shall: (▇▇▇i) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇retain a transfer agent reasonably acceptable to the Underwriter for the securities of the Company; and (ii) direct such transfer agent to furnish, at the Company’s sole expense, the Underwriter with weekly transfer sheets as to each of the Company’s securities as prepared by the Company’s transfer agent and copies of lists of shareholders when requested by the Underwriter. (n) The Company will deliver to the Underwriter two manually executed copies of the Registration Statement including all financial statements and exhibits filed therewith, and of all amendments thereto when filed with the Commission, and will deliver to the Underwriter such number of conformed copies of the Registration Statement, including such financial statements and of all amendments thereto, as the Underwriter may reasonably request. ▇▇▇▇▇▇▇The Company will deliver to or upon the Underwriter’s order, Interim Chief Executive Officerfrom time to time until the Effective Date, as many copies of any Preliminary Prospectus filed with the Commission prior to the Effective Date as the Underwriter may reasonably request. The Company will deliver to the Underwriter on the Effective Date and thereafter for so long as a Prospectus is required to be delivered under the Act, from time to time, as many copies of the Prospectus, in final form, or as thereafter amended or supplemented, as the Underwriter may from time to time reasonably request. (o) If at any time during the three year period following the Effective Date, the Company’s securities are no longer listed for trading on the AMEX, another national securities exchange or NMS, the Company shall, at its own expense, undertake to list the Company’s securities in the appropriate recognized securities manual or manuals published by Standard & Poor’s Corporation and such ot

Covenants of the Company. For The Company hereby covenants and agrees that: (a) The Company will use its best efforts to cause the Registration Statement and any amendment thereof, if not effective at the time and date that this Agreement is executed and delivered by the parties hereto, to become effective. If the Registration Statement has become or becomes effective pursuant to Rule 430A of the Rules and Regulations, or the filing of the Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations, the Company will file the Prospectus, properly completed, pursuant to the applicable paragraph of Rule 424(b) of the Rules and Regulations within the time period prescribed and will provide evidence satisfactory to you of such timely filing. The Company will promptly advise you in writing (i) of the receipt of any comments of the Commission, (ii) of any request of the Commission for amendment of or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus or for additional information, (iii) when the Registration Statement shall have become effective and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the institution of any proceedings for that purpose. If the Commission shall enter any such stop order at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible time. The Company will not file any amendment or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus if you have not been furnished with a copy a reasonable time prior to such filing, if you reasonably object to the Company filing of such document or if the document to be filed is not in compliance with the Act and the Rules and Regulations. (b) The Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or the Prospectus which in your judgment may be necessary or advisable to enable the Underwriters to continue the distribution of the Common Shares and will use its best efforts to cause the same to become effective as promptly as possible. The Company will fully and completely comply with the provisions of Rule 430A of the Rules and Regulations with respect to information omitted from the Registration Statement in reliance upon such Rule. (c) If at any time during which a prospectus relating to the Common Shares is required to be delivered under the Act any event occurs, as a result of which the Prospectus, including any amendments or supplements, would include an untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or if it is necessary at any time to amend the Prospectus, including any amendments or supplements, to comply with the Act or the Rules and Regulations, the Company will promptly advise you thereof and will promptly prepare and file with the Commission, at its own expense, an amendment or supplement which will correct such statement or omission or an amendment or supplement which will effect such compliance and will use its best efforts to cause the same to become effective as soon as possible. (d) During such period as a prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, the Company, at its expense, will furnish to you or mail to your order copies of the Registration Statement, the Prospectus, the Preliminary Prospectus and all amendments and supplements to any such documents in each case as soon as available and in such quantities as you may reasonably request, for the purposes contemplated in the Act. (e) As soon as practicable, but not later than 45 days after the end of the first quarter ending after the first anniversary of the effective date of the Registration Statement (as defined in Rule 158(c) of the Rules and Regulations), the Company will make generally available to its security holders an earnings statement (which need not be audited) covering a period of 12 consecutive months beginning after the effective date of the Registration Statement which will satisfy the provisions of the last paragraph of Section 11(a) of the Act. (f) The Company shall cooperate with you and your counsel in order to qualify or register the Common Shares for sale under (or obtain exemptions from the application of) the Blue Sky laws of such jurisdictions as you designate, will comply with such laws and will continue such qualifications, registrations and exemptions in effect so long as reasonably required for the distribution of the Common Shares. The Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any Securities held by Subscriber remain outstandingsuch jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise you promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Common Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company, with your cooperation, will use its best efforts to obtain the withdrawal thereof. (g) For a period of five years from the First Closing Date, the Company acknowledgeswill furnish to the Representatives: (i) as soon as practicable after the end of each fiscal year, representscopies of the Annual Report of the Company containing the consolidated balance sheet of the Company as of the close of such fiscal year and consolidated statements of income, warrants stockholders' equity and agrees cash flows for the year then ended and the opinion thereon of the Company's independent public accountants; (ii) as follows:soon as practicable after the filing thereof, copies of each proxy statement and annual and other report filed by the Company with the Commission, The Nasdaq Stock Market or any securities exchange; and (iii) as soon as available, copies of any report or communication of the Company mailed generally to holders of its Common Stock. (i) During the period beginning from the date of the Prospectus and continuing to and including the date 180 days after the date of the Prospectus, the Company will not, directly or indirectly, offer to sell, sell, contract to sell, grant any option to sell, transfer, assign or otherwise dispose of Common Stock, or other securities which are substantially similar to the Common Stock, or securities which are convertible into or exercisable or exchangeable for or any rights to purchase or acquire Common Stock or other securities which are substantially similar to the Common Stock, without your prior written consent (other than the sale of the Common Shares pursuant to this Agreement, the issuance and sale of the Representatives' Warrants pursuant to the Representatives' Warrant Agreement or the grant of options or of restricted stock awards pursuant to stock option or restricted stock plans existing on the date of this Agreement, provided such options are not exercisable within the 180-day period); and (ii) the Company will use its reasonable efforts to cause each person who has entered into a Lock-up Agreement to comply therewith, will not grant any waivers or consents to non-compliance therewith and will otherwise enforce its rights under each such agreement, in each case unless and to the extent that it shall have obtained the prior written consent of Sutro & Co. Incorporated; (i) The Company shall will apply the net proceeds of the sale of the Common Shares in the manner described under the caption "Use of Proceeds" in the Prospectus. (j) The Company will use its best efforts to reserve, prior to February 15, 2000, a sufficient number of shares of designate and maintain the Common Stock from its authorized but unissued shares of Common Stock to permit for quotation on the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingNasdaq National Market. (iik) It The Company will maintain file with the listing Commission such reports on Form SR as may be required by Rule 463 under the Act. You, on behalf of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise Underwriters, may in your sole discretion, waive in writing the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received performance by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer one or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion more of the Warrant exercised shall be delivered as follows: To foregoing covenants or extend the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officertime for their performance.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith the Underwriter that: (ia) The Company shall IAT will use its best efforts to reservecause the Registration Statement to become effective as promptly as possible. If required, prior to February 15, 2000, IAT will file the Prospectus or any Term Sheet that constitutes a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, part thereof and has filed any amendment or supplement thereto with the SEC Commission in the manner and within the time period required by Rules 434 and 424(b) under the Act. Upon notification from the Commission that the Registration Statement has become effective, IAT will so advise you and will not at any time, whether before or after the effective date, file the Prospectus, Term Sheet or any amendment to the Registration Statement or supplement to the Prospectus of which you shall not previously have been advised and furnished with a copy or to which you or your counsel shall have objected in writing or which is not in compliance with the Act and the Rules and Regulations. At any time prior to the later of (A) the completion by the Underwriter of the distribution of the Notes contemplated hereby (but in no event more than nine months after the date hereof a preliminary proxy statement on which the Registration Statement shall have become or been declared effective) and (B) 25 days after the date on which the Registration Statement shall have become or been declared effective, IAT will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus which, in your opinion, may be necessary or advisable in connection with such stockholder meeting. (ii) It the distribution of the Notes. As soon as IAT is advised thereof, IAT will maintain advise you, and confirm the listing advice in writing, of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise receipt of any comments of the Warrants by telecopying an executed and completed Notice Commission, of Exercise the effectiveness of any post-effective amendment to the Company Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order or threat thereof suspending the effectiveness of the Registration Statement or the qualification of the Trustee or any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Notes for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and delivering will use its best efforts to prevent the original Notice issuance of Exercise any such order or suspension, and, if issued, to obtain as soon as possible the lifting thereof. IAT has caused to be delivered to you copies of each Preliminary Prospectus, and IAT has consented and hereby consents to the use of such copies for the purposes permitted by the Act. IAT authorizes the Underwriter and dealers to use the Prospectus in connection with the sale of the Notes for such period as in the opinion of counsel to the Underwriter the use thereof is required to comply with the applicable provisions of the Act and the original Warrant Rules and Regulations. In case of the happening, at any time within such period as a Prospectus is required under the Act to be delivered in connection with sales by an underwriter or dealer of any event of which IAT has knowledge and which materially affects IAT and its Subsidiaries taken as a whole or the securities of IAT, or which in the opinion of counsel for IAT or counsel for the Underwriter should be set forth in an amendment to the Company by overnight courier. Each business date on which Registration Statement or a Notice supplement to the Prospectus in order to make the statements therein not then misleading, in light of Exercise the circumstances existing at the time the Prospectus is telecopied required to and received by be delivered to a purchaser of the Company Notes or in accordance case it shall be necessary to amend or supplement the Prospectus to comply with law or with the provisions hereof Rules and Regulations, IAT will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state any material facts necessary in order to make the statements in the Prospectus, in light of the circumstances under which they are made, not misleading. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be deemed an "Exercise Date"without expense to the Underwriter, except that in case any Underwriter is required, in connection with the sale of the Notes to deliver a Prospectus nine months or more after the effective date of the Registration Statement, IAT will upon request of and at the expense of the Underwriter, amend or supplement the Registration Statement and Prospectus and furnish the Underwriter with reasonable quantities of prospectuses complying with Section 10(a)(3) of the Act. The Company will transmit comply with the certificates representing Act, the Exchange Act, the Trust Indenture Act and the Rules and Regulations in connection with the offering and issuance of the Notes. (b) IAT will use its best efforts to qualify to register the Notes for sale under the securities or "blue sky" laws of such jurisdictions as the Underwriter may designate and will make such applications and furnish such information as may be required for that purpose and to comply with such laws, provided IAT shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent of service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Notes. IAT will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long a period as the Underwriter may reasonably request. (c) If the sale of the Notes provided for herein is not consummated for any reason caused by the Company, IAT shall pay all costs and expenses incident to the performance of IAT's obligations hereunder, including but not limited to, all of the expenses itemized in Section 8, including the accountable out-of-pocket expenses of the Underwriter. (d) IAT will use its best efforts to (i) cause a registration statement with respect to the Notes, the shares of Common Stock issuable upon exercise conversion of any Warrants (together with the certificates representing Notes and the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within issuable as payment of the Excess Interest Amount (as defined in the Indenture) under the Exchange Act to be declared effective concurrently with the completion of this offering and will notify the Underwriter in writing immediately upon the effectiveness of such registration statement, and, for so long as the Notes remain outstanding, the Company (a) shall cause the Registration Statement, once effective, to remain current and effective or (b) shall file a new registration statement with respect to the Notes, the Common Stock issuable upon conversion of the Notes and the Common Stock issuable as payment of the Excess Interest Amount and shall cause such new registration statement to become effective and, once effective, to remain current and effective and (ii) if requested by the Underwriter, to obtain a listing of the Notes on the Nasdaq National Market or Pacific Stock Exchange and the underlying Common Stock on the Pacific Stock Exchange and to obtain and keep current a listing in the Standard & Poors or ▇▇▇▇▇'▇ Industrial OTC Manual. (e) For so long as IAT is a reporting company under either Section 12(g) or 15(d) of the Exchange Act, IAT, at its expense, will furnish to its stockholders an annual report (including financial statements audited by independent public accountants), in reasonable detail and at its expense, will furnish to you during the period ending five (5) years from the date hereof, (i) as soon as practicable after the end of each fiscal year, a balance sheet of IAT and any of its subsidiaries as at the end of such fiscal year, together with statements of income, surplus and cash flow of IAT and any of its subsidiaries for such fiscal year, all in reasonable detail and accompanied by a copy of the certificate or report thereon of independent accountants; (ii) as soon as practicable after the end of each of the first three fiscal quarters of each fiscal year, consolidated summary financial information of IAT for such quarter in reasonable detail; (3iii) as soon as they are available, a copy of all reports (financial or other) mailed to security holders; (iv) as soon as they are available, a copy of all non-confidential reports and financial statements furnished to or filed with the Commission or any securities exchange or automated quotation system on which any class of securities of IAT is listed; and (v) such other information as you may from time to time reasonably request. (f) In the event IAT has an active subsidiary or subsidiaries, such financial statements referred to in subsection (e) above will be on a consolidated basis to the extent the accounts of IAT and its subsidiary or subsidiaries are consolidated in reports furnished to its stockholders generally. (g) IAT will deliver to you at or before the First Closing Date two signed copies of the Registration Statement including all financial statements and exhibits filed therewith, and of all amendments thereto, and will deliver to the Underwriter such number of conformed copies of the Registration Statement, including such financial statements but without exhibits, and of all amendments thereto, as the Underwriter may reasonably request. IAT will deliver to you or upon the order of the Underwriter, from time to time until the effective date of the Registration Statement, as many copies of any Preliminary Prospectus filed with the Commission prior to the effective date of the Registration Statement as the Underwriter may reasonably request. IAT will deliver to the Underwriter on the effective date of the Registration Statement and thereafter for so long as a Prospectus is required to be delivered under the Act, from time to time, as many copies of the Prospectus, in final form, or as thereafter amended or supplemented, as the Underwriter may from time to time reasonably request. IAT, not later than (i) 3:00 p.m., New York City time, on the business day periodfollowing the date of determination of the public offering price, Subscriber if such determination occurred at or prior to 12:00 noon, New York City time, on such date or (ii) 6:00 p.m., New York City time, on the business day following the date of determination of the public offering price, if such determination occurred after 12:00 noon, New York City time, on such date, will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect deliver to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion Underwriter, without charge, as many copies of the Warrant exercised Prospectus and any amendment or supplement thereto as the Underwriter may reasonably request for purposes of confirming orders that are expected to settle on the First Closing Date. (h) IAT will make generally available to its security holders and deliver to you as soon as it is practicable to do so but in no event later than 90 days after the end of twelve months after its current fiscal quarter, an earnings statement (which need not be audited) covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement, which shall satisfy the requirements of Section 11(a) of the Act. (i) IAT will apply the net proceeds from the sale of the Notes for the purposes set forth under "Use of Proceeds" in the Prospectus, and will file such reports with the Commission with respect to the sale of the Notes and the application of the proceeds therefrom as may be delivered required pursuant to Rule 463 under the Act. (j) IAT will, promptly upon your request, prepare and file with the Commission any amendments or supplements to the Registration Statement, Preliminary Prospectus or Prospectus and take any other action, which in the reasonable opinion of ▇▇▇▇▇▇▇, Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the Underwriter, may be reasonably necessary or advisable in connection with the distribution of the Notes, and will use its best efforts to cause the same to become effective as follows: To promptly as possible. (k) IAT will reserve and keep available that maximum number of its authorized but unissued securities which are issuable upon conversion of the Company: Spatializer Audio LaboratoriesNotes outstanding from time to time and which are issuable to pay the Excess Interest Amount (as defined in the Indenture). (l) The Company will deliver to the Underwriter agreements to the effect that until March 27, Inc. 1999, each of ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Messrs. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and each other officer and director of the Company, Interim Chief Executive Officerif any, who did not deliver an agreement in connection with the Company's initial public offering in March 1997, shall not directly or indirectly, offer, sell (including any short sale), grant any option for the sale of, acquire any option to dispose of, exercise any registration rights with respect to, or otherwise dispose of any securities of IAT, subject to certain exceptions contained therein, all as described in the "Underwriting" section of the Prospectus. In order to enforce this covenant, IAT shall impose stop-transfer instructions with respect to the securities owned by each of the above individuals until the end of such period. (m) Prior to completion of this offering, IAT will make all filings required, including registration under the Exchange Act, to obtain the listing of the Underlying Shares on the Nasdaq National Market (or a listing on such other market or exchange as the Underwriter consent to), and will effect and maintain such listing for as long as the Notes remain outstanding and for a period of five years thereafter. So long as the Notes remain outstanding and for a period of five years thereafter, the Company will use its best efforts to maintain the listing of its Common Stock on the Nasdaq National Market or the New York Stock Exchange or American Stock Exchange if the Common Stock is listed on such exchange. (n) IAT represents that it has not taken and agrees that it will not take, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result in the stabilization or manipulation of the price of the Notes or to facilitate the sale or resale of the Notes. (o) IAT will deliver to the Underwriter at or before the First Closing Date releases from any other investment banking firms, if any, having any prior rights to underwrite or act as placement agent for any offering of the Company's securities. (p) During the 18 month period commencing on the date of this Agreement, IAT will not, without the prior written consent of the Underwriter, grant options to purchase Common Stock at an exercise price less than the greater of (i) the Conversion Price (as defined in the Indenture) or (ii) the fair market value of the Common Stock on the date of grant. During the six month period commencing on the date of this Agreement, IAT will not, without the prior written consent of the Underwriter, grant options to any current officer of IAT. During the three year period from the First Closing Date, IAT will not, without the prior written consent of the Underwriter, offer or sell any of its securities pursuant to Regulation S under the Act. (q) IAT will not, without the prior written consent of the Underwriter, grant registration rights to any person which are exercisable sooner than 13 months from the First Closing Date. (r) Prior to the Effective Date, the Company or a Subsidiary will have entered into employment or consulting agreements with ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ and such other executive officers, individuals or entities as the Underwriter may deem necessary or appropriate in connection with the offering. IAT will have obtained key person life insurance in an amount of not less than $2 million on the life of ▇▇. ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ and such other individuals as designated by the Underwriter, and will use its best efforts to maintain such insurance during the three year period commencing with the First Closing Date. In the event that ▇▇. ▇▇▇▇'▇ employment with IAT is terminated prior to three years following the First Closing Date, IAT will obtain a comparable policy on the life o

Covenants of the Company. For The Company covenants and agrees with the ------------------------ several Underwriters that: (a) The Company, upon notification from the Commission that the Registration Statement has become effective, will so long advise you and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement to the Prospectus of which you shall not previously been advised and furnished with a copy or to which you or your counsel shall have objected in writing, acting reasonably, or which is not in compliance with the Act and the Rules and Regulations. At any time prior to the later of (i) the completion by the Underwriters of the distribution of the Securities as any Securities held by Subscriber remain outstandingcontemplated hereby; or (ii) 25 days after the date on which the Registration Statement shall have become or been declared effective, the Company acknowledgeswill prepare and file with the Commission, representspromptly upon your request, warrants any amendments or supplements to the Registration Statement or Prospectus which may be necessary or advisable in connection with the distribution of the Securities and agrees as follows: (i) The mutually agreed to by the Company shall and the Representative. After the Effective Date and as soon as the Company is advised thereof, the Company will advise you, and confirm the advice in writing, of the receipt of any comments of the Commission, of the effectiveness of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, or of the suspension of the qualification of the Securities for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to reserveprevent the issuance of any such order, and, if issued, to obtain as soon as possible the lifting thereof. The Company has caused to be delivered to you copies of each Preliminary Prospectus and Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriters and the selected dealers to use the Prospectus in connection with the sale of the Securities for such period as in the opinion of counsel to the Underwriters the use thereof is required to comply with the applicable provisions of the Act and the Rules and Regulations. In case of the happening, at any time within such period as a Prospectus is required under the Act to be delivered in connection with sales by the Underwriters or the selected dealers, of any event of which the Company has knowledge and which materially affects the Company or the Securities, or which in the opinion of counsel for the Company or counsel for the Underwriters, should be set forth in an amendment to the Registration Statement or a supplement to the Prospectus, in order to make the statements therein not then misleading, in light of the circumstances existing at the time the Prospectus is required to be delivered to a purchaser of the Securities, or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the Act and the Rules and Regulations, the Company will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state any material facts necessary in order to make the statements in the Prospectus, in the light of the circumstances under which they are made, not misleading. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be without expense to the Underwriters. The Company will comply with the Act, the Rules and Regulations thereunder, the Securities Exchange Act of 1934 (the "1934 Act"), and the rules and regulations thereunder in connection with the offering and issuance of the Securities. (b) The Company will qualify to register the Securities for sale under the securities or "blue sky" laws of such jurisdictions as the Representative may designate and will make such applications and furnish such information as may be required for that purpose and to comply with such laws, provided the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent to service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Securities. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long a period as the Underwriters may reasonably request. (c) If the sale of the Securities provided for herein is not consummated, the Company shall pay all costs and expenses incident to the performance of the Company's obligations hereunder, including, but not limited to, all such expenses itemized in Section 8 hereof, and the actual, accountable out-of-pocket expenses of the Representative if the offering for any reason is terminated. For the purposes of this sub-paragraph, the Representative shall be deemed to have assumed such expenses when they are billed or incurred, regardless of whether such expenses have been paid. The Representative shall not be responsible for any expenses of the Company or others, or for any charges or claims relative to the proposed public offering whether or not consummated. (d) The Company will deliver to you at or before the Closing Date two signed copies of the Registration Statement, including all financial statements and exhibits filed therewith, and of each amendment or supplement thereto. The Company will deliver to or upon the order of the several Underwriters, from time to time until the Effective Date of the Registration Statement, as many copies of any Preliminary Prospectus filed with the Commission prior to February 15the Effective Date of the Registration Statement as the Underwriters may reasonably request. The Company will deliver to the Underwriters on the Effective Date of the Registration Statement and thereafter for so long as a Prospectus is required to be delivered under the Act, 2000from time to time, as many copies of the Prospectus, in final form, or as thereafter amended or supplemented as the several Underwriters may from time to time reasonably request. (e) For so long as the Company is a reporting company under either Section 12 or 15 of the 1934 Act, the Company, at its expense, will furnish to the Representative during the period ending five years from the Effective Date, (i) as soon as practicable after the end of each fiscal year, a sufficient balance sheet of the Company and any of its subsidiaries as at the end of such fiscal year, together with statements of income, surplus and cash flow of the Company and any subsidiaries for such fiscal year, all in reasonable detail and accompanied by a copy of the certificate or report thereon of independent accountants; (ii) as soon as they are available, a copy of all reports (financial or other) mailed to security holders; (iii) as soon as they are available, a copy of all non- confidential documents, including annual reports, periodic reports and financial statements, furnished to or filed with the Commission under the Act and the 1934 Act; (iv) copies of each press release, news item and article with respect to the Company's affairs released by the Company; and (v) such other information as you may from time to time reasonably request. (f) In the event the Company has an active subsidiary or subsidiaries, such financial statements referred to in subsection (e) above will be on a consolidated basis to the extent the accounts of the Company and its subsidiary or subsidiaries are consolidated in reports furnished to its Stockholders generally. (g) The Company will make generally available to its stockholders and to the registered holders of its Warrants and deliver to you as soon as it is practicable, but in no event later than the first day of the sixteenth full calendar month following the Effective Date, an earnings statement (which need not be audited) covering a period of at least twelve consecutive months beginning with the Effective Date of the Registration Statement, which shall satisfy the requirements of Section 11(a) of the Act. (h) On the Closing Date, the Company shall have taken the necessary action to become a reporting company under Section 12 of the 1934 Act, and the Company will make all filings required to, and will have obtained approval for, the listing of the Shares and Warrants on The Nasdaq SmallCap Market, the Boston Stock Exchange or a listing on a national market, and will use its best efforts to maintain such listing for at least five years from the date of this Agreement. (i) For such period as the Securities are registered under the 1934 Act, the Company will hold an annual meeting of Stockholders for the election of directors within 180 days after the end of each of the Company's fiscal years and, within 150 days after the end of each of the Company's fiscal years will provide the Company's stockholders with the audited financial statements of the Company as of the end of the fiscal year just completed prior thereto. Such financial statements shall be those required by Rule 14a-3 under the 1934 Act and shall be included in an annual report pursuant to the requirements of such Rule. (j) The Company will apply the net proceeds from the sale of the Securities substantially in accordance with its statement under the caption "Use of Proceeds" in the Prospectus, and will file such reports with the Commission with respect to the sale of the Securities and the application of the proceeds therefrom as may be required by Sections 12, 13 and/or 15 of the 1934 Act and pursuant to Rule 463 under the Act. (k) The Company will, promptly upon your request, prepare and file with the Commission any amendments or supplements to the Registration Statement, Preliminary Prospectus or Prospectus and take any other action, which in the reasonable opinion of counsel to the Underwriters and the Company may be reasonably necessary or advisable in connection with the distribution of the Securities and will use its best efforts to cause the same to become effective as promptly as possible. (l) On the Closing Date the Company shall execute and deliver to you the Representative's Warrant Agreements. The Representative's Warrant Agreements and Warrant Certificates will be substantially in the form of the Representative's Warrant Agreements and Warrant Certificates filed as an exhibit to the Registration Statement. (m) The Company will reserve and keep available for issuance that maximum number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the securities which are issuable upon exercise in full of all of the warrants issuable pursuant to the Representative's Warrant Agreements outstanding from time to time. (n) Each beneficial owner of the Company's securities (including Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of , Options and Common Stock of the Company), as of the Effective Date, shall agree in writing, in a form satisfactory to the Representative and has filed Nasdaq, not to sell, transfer or otherwise dispose of any of such securities or underlying securities (except in a transaction other than on the open market with a transferee who agrees to be bound by this provision) during the SEC period of time, commencing on the Effective Date, stated for each such beneficial owner on Schedule B (the "lock-up period"), or any longer period required by any state or required by Nasdaq as a condition to listing on The Nasdaq SmallCap Market, without the prior written consent of First London and Nasdaq. Without the prior written consent of Nasdaq, the Company shall not, directly or indirectly, release any individual from his lock-up agreement or effect the transfer on its books of any shares sold in contravention of a lock-up agreement. Any of such securities that are originally registered in a name of a original beneficial owner and are subsequently registered under a different name will be subject to such original beneficial owner's lock-up period. Sales of the Company's securities by officers and/or directors of the Company prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingexpiration of their respective lock-up periods shall be effected through the Representative. (iio) It will maintain The Company shall pay to the listing Representative upon the exercise or redemption of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice a fee equal to 5% of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and gross proceeds received by the Company from the exercise of the Warrants and 5% of the aggregate redemption price for the Warrants redeemed (collectively, the "Warrant Fee"). Such fee will be paid to the Representative or their designees no sooner than 12 months after the Effective Date. The Representative will not solicit the exercise of the Warrants if the market price of the underlying security is less than the exercise price of the Warrants at the time of exercise. Additionally, as a condition to be entitled to receive the Warrant Fee, the Representative or its designees must be designated in accordance writing by the Warrant holder as having solicited the Warrant (the "Solicitation Designation") in order to receive the Warrant Fee and such Warrant Fee shall not be paid with respect to any Warrant held in a discretionary account without the provisions hereof prior written approval of such exercise by the discretionary account holder or with respect to the exercise of any Warrant for which a Solicitation Designation was not received by the Company before the exercise of such Warrant. (p) Prior to the Closing Date, the Company shall be deemed an "Exercise Date"at its own expense, undertake to list the Securities in the appropriate recognized securities manual or manuals published by Standard & Poor's Corporation and such other manuals as the Representative may designate, such listings to contain the information required by such manuals and the Uniform Securities Act. The Company hereby agrees to use its best efforts to maintain such listing for a period of not less than five years unless the Securities otherwise qualify for a secondary market trading exemption. The Company shall take such action as may be reasonably requested by the Representative to obtain a secondary market trading exemption in such states as may be reasonably requested by the Representative. (q) During the one year period commencing on the Effective Date, the Company will transmit not, without the certificates representing prior written consent of First London, which consent will not be unreasonably withheld, offer, sell, contract to sell, grant options or warrants to purchase or otherwise dispose of any shares of Common Stock issuable upon exercise of or any Warrants (together securities convertible into or exercisable or exchangeable for Common Stock except for securities issued in connection with the certificates representing the Warrants not so exercised) to Subscriber via express courier, an acquisition or merger by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received or upon the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares issuance of Common Stock within such three upon the exercise of the Warrants presently outstanding securities or securities issued in connection with the Company's employee stock option or director stock option plans. (3r) business day periodPrior to the Closing Date, Subscriber the Company will be entitled to revoke not issue, directly or indirectly, without the relevant Notice prior consent of Exercise by delivering a notice to such effect First London, any press release or other communication or hold any press conference with respect to the Company whereupon or its activities or the offering of the Securities other than routine customary advertising of the Company's products and services, and except as required by any applicable law or the directives of any relevant regulatory authority in any relevant jurisdiction. (s) The Company shall employ the services of a firm of independent certified public accountants in connection with the preparation of the financial statements to be included in any registration statement or similar disclosure document to be filed by the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery hereunder, or any amendment or supplement thereto. For a period of such Notice of Exercise. The Notice of Exercise and Warrant representing five years from the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio LaboratoriesEffective Date, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerthe

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees with the Underwriters as follows: (ia) The Company shall use its best efforts to reservecause the Registration Statement and any amendments thereto to become effective as promptly as practicable and will not at any time, whether before or after the effective date of the Registration Statement, file any amendment to the Registration Statement or supplement to the Prospectus or file any document under the Exchange Act: (i) before termination of the Offering of the Securities by the Underwriters which the Representative shall not previously have been advised and furnished with a copy; or (ii) to which the Underwriters shall have reasonably objected (except where such filing is required by law); or (iii) which is not in compliance with the Act, the Exchange Act or the Rules and Regulations. (b) As soon as the Company is advised or obtains knowledge thereof, the Company will advise the Underwriters and confirm by notice in writing: (i) when the Registration Statement, as amended, becomes effective, if the provisions of Rule 430A promulgated under the Act will be relied upon, when the Prospectus has been filed in accordance with said Rule 430A and when any post-effective amendment to the Registration Statement becomes effective; (ii) of the issuance by the Commission of any stop order or of the initiation, or the threatening of any proceeding, suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of the Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto, or the institution or proceeding for that purpose; (iii) of the issuance by any state securities commission of any proceedings for the suspension of the qualification of the Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose; (iv) of the receipt from the Commission of any comments on the Registration Statement, the Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto; and (v) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information. If the Commission or any state securities commission or regulatory authority shall enter a stop order or suspend such qualification at any time, the Company will make every reasonable effort to obtain promptly the lifting of such order. (c) The Company shall file the Prospectus (in form and substance satisfactory to the Representative) or transmit the Prospectus by a means reasonably calculated to result in filing with the Commission pursuant to Rule 424(b)(1) (or, if applicable and if consented to by the Underwriters pursuant to Rule 424(b)(4)) not later than the Commission’s close of business on the earlier of (i) the second business day following the execution and delivery of this Agreement and (ii) the fifth business day after the effective date of the Registration Statement. (d) The Company will give the Representative notice of its intention to file or prepare any amendment to the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus (including any revised prospectus which the Company proposes for use by the Underwriters in connection with the Offering of the Securities that differs from the corresponding prospectus on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the Rules and Regulations), will furnish the Underwriters with copies of any such amendment or supplement a reasonable amount of time prior to February 15such proposed filing or use, 2000as the case may be, and will not file any such prospectus to which the Representative or Underwriters’ Counsel shall reasonably object. (e) The Company shall cooperate in good faith with the Underwriters and Underwriters’ Counsel, at or prior to the time the Registration Statement becomes effective, in endeavoring to qualify the Securities for offering and sale under the securities laws of such jurisdictions as the Underwriters may reasonably designate, and shall cooperate with the Underwriters and Underwriters’ Counsel in the making of such applications and filing such documents and shall furnish such information as may be required for such purpose; provided, however, the Company shall not be required to qualify as a sufficient number foreign corporation, become subject to taxation or file a general consent to service of shares process in any such jurisdiction. In each jurisdiction where such qualification shall be effected, the Company will, unless the Underwriters agree that such action is not at the time necessary or advisable, use all reasonable efforts to file and make such statements or reports at such times as are or may reasonably be required by the laws of Common Stock such jurisdiction to continue such qualification. (f) During the time when in connection with the offer and sale of the Securities the Prospectus is required to be delivered under the Act, the Company shall use all reasonable efforts to comply with all requirements imposed upon it by the Act and the Exchange Act, as now and hereafter amended and by the Rules and Regulations, as from its authorized but unissued shares of Common Stock time to time in force, so far as necessary to permit the exercise continuance of sales of or dealings in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company Securities in accordance with the provisions hereof and the Prospectus, or any amendments or supplements thereto. If at any time when the Prospectus relating to the Securities is required to be delivered under the Act, any event shall have occurred as a result of which, in the opinion of counsel for the Company or Underwriters’ Counsel, the Prospectus, as then amended or supplemented, includes an untrue statement of a material fact or omits to state any material fact required to be deemed an "Exercise Date". The stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Prospectus to comply with the Act, the Company will transmit notify the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together Underwriters promptly and prepare and file with the certificates representing Commission an appropriate amendment or supplement in accordance with Section 10 of the Warrants Act, each such amendment or supplement to be reasonably satisfactory to Underwriters’ Counsel, and the Company will furnish to the Representatives a reasonable number of copies of such amended Prospectus or supplement. (g) As soon as practicable, but in any event not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business later than 45 days after the Exercise Date if end of the 12-month period commencing on the day after the end of the fiscal quarter of the Company has received during which the original Notice effective date of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, the Registration Statement occurs (90 days in the event that the Company fails to effect delivery end of such fiscal quarter is the end of the Company’s fiscal year), the Company shall make generally available to its security holders, in the manner specified in Rule 158(b) of the Rules and Regulations, and to the Representative, an earnings statement which will be in such form and detail required by, and will otherwise comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Rules and Regulations, which statement need not be audited unless required by the Act, covering a period of at least 12 consecutive months after the effective date of the Registration Statement. (h) During a period of five (5) years after the date hereof, and provided that the Company is required to file reports with the Commission under Section 13(a) or Section 15(d) of the Exchange Act, the Company will furnish to its stockholders, as soon as practicable, annual reports (including financial statements audited by independent public accountants) to the extent required by Section 14(a) of the Exchange Act, and will deliver to the Representative: i) as soon as they are available, copies of all reports (financial or other) mailed to stockholders; ii) as soon as they are available, copies of all reports and financial statements furnished to or filed with the Commission; iii) a copy of every press release released by the Company; and iv) any additional information publicly disseminated concerning the Company and any future subsidiaries or their respective businesses which the Underwriters may reasonably request. (i) For as long as the Company is required to file reports with the Commission under Section 13(a) or Section 15(d) of the Exchange Act, the Company will maintain as its transfer agent and registrar American Stock Transfer & Trust Company, or any successor thereto designated by the Company that is registered transfer agent under the Exchange Act (the “Transfer Agent”). (j) The Company will furnish to the Underwriters or pursuant to the Underwriters’ direction, without charge, at such place as the Underwriters may designate, copies of (i) the Preliminary Prospectus, (ii) the Registration Statement and any pre-effective or post-effective amendments thereto (one copy of which will be manually executed and delivered to the Representative), in each case including all financial statements contained therein and all exhibits filed therewith and (iii) the Prospectus, and all amendments and supplements thereto, in each case as soon as available and in such quantities as the Underwriters may reasonably request. (k) The Company will not, and insofar as it is within its control, the Company will use reasonable efforts to cause its officers, directors and affiliates of any of them (within the meaning of the Rules and Regulations) not to take, directly or indirectly, any action designed to cause or result in the stabilization or manipulation of the price of any securities of the Company. (l) The Company shall apply the net proceeds from the sale of the Securities in the manner described under the caption “Use of Proceeds” in the Prospectus. (m) The Company shall furnish to the Underwriters as early as practicable prior to each of the date hereof, the Closing Date and each Overallotment Closing Date, if any, but no later than two (2) full business days prior thereto, a copy of the latest available unaudited consolidated interim financial statements of the Company (which in no event shall be as of a date more than forty-five (45) days prior to the date of the Registration Statement) which have been read by the Company’s independent public accountants, as stated in their letters to be furnished pursuant to Section 6(k) hereof. (n) For a period of two (2) years from the Closing Date, the Company shall furnish to the Representative, at the Company’s sole expense, a list, if any, of the securities positions of participants in the Depository Trust Company upon the Representative’s request. (o) Until a date which is two (2) years from the Closing Date, the Representative shall be entitled to appoint an individual who shall be permitted to attend all meetings of the Board and to receive all notices sent by the Company to members of the Board, and copies of all minutes thereof; provided that such individual must be independent of the Representative and may not be an officer, director, employee or affiliate (within the meaning of the Rules and Regulations) of the Representative. The Representative understands and agrees that the individual so appointed may receive material non-public information in connection with his duties, and, therefore, in compliance with the Company’s policies, will comply with all rules and regulations regarding the use of such information. (p) Following the Effective Date of the Registration Statement, and until the earlier of the expiration of or exercise of the Warrants, the Company, if necessary, shall, at its sole cost and expense, prepare and file such blue sky trading applications with such jurisdictions as the Representative may reasonably request, after consultation with the Company, in order to provide for the sale in those jurisdictions of Securities upon the exercise of the Warrants. (q) From the date hereof, until the earlier of (i) completion of the distribution of the Securities (including the Overallotment Securities) and (ii) the expiration of the Overallotment Option, the Company shall not, without prior consultation with the Representative, issue, directly or indirectly, any press release or other communication or hold any press conference with respect to the Company or its activities or the offering contemplated hereby, other than trade releases issued in the ordinary course of the Company’s business consistent with past practices with respect to the Company’s operations or as required by the Rules and Regulations. (r) At or prior to the Closing Date, the Company shall enter into a financial consulting agreement with the Representative (the “Consulting Agreement”), substantially in the form filed as an exhibit to the Registration Statement, pursuant to which the Representative will provide financial consulting services to the Company on the terms set forth in the Consulting Agreement. (s) On or before the effective date of the Registration Statement, the Company shall cause to be duly executed legally binding and enforceable agreements pursuant to which (i) each of the Company’s non-employee directors has agreed not to, directly or indirectly, offer to sell, sell, grant any option for the sale of, assign, transfer, pledge, hypothecate or otherwise encumber any of their shares of Common Stock within such three or other securities (3either pursuant to Rule 144 of the Rules and Regulations or otherwise) business day periodor dispose of any beneficial interest therein for a period commencing on the Effective Date and ending nine months after the closing date of the Offering, Subscriber without the prior written consent of the Representative, and (ii) each executive officer has agreed not to, directly or indirectly, offer to sell, sell, grant any option for the sale of, assign, transfer, pledge, hypothecate or otherwise encumber any of their shares of Common Stock or other securities (either pursuant to Rule 144 of the Rules and Regulations or otherwise) or dispose of any beneficial interest therein for a period commencing on the Effective Date and ending nine months after the closing date of the Offering, without the prior written consent of the Representative. The Company will be entitled cause the Transfer Agent to revoke place “stop transfer” orders on the relevant Notice stock ledger of Exercise by delivering a notice the Company to such give effect to the foregoing restrictions. (t) The Company whereupon hereby grants to the Representative a right of first refusal on the terms and subject to the terms and conditions set forth in this paragraph, for a period of 24 months commencing on the Closing Date, to purchase for its own account, or to sell for the account of the Company, or any subsidiaries of or successor to the Company, any debt or equity securities of the Company and Subscriber shall each be restored or any such subsidiary or successor, that the Company or any such subsidiary or successor may seek to their respective positions immediately prior sell through an underwriter, placement agent or broker-dealer, whether pursuant to delivery of such Notice of Exercisean offering registered under the Act or otherwise (other than a financing associated with a strategic alliance). The Notice Company and any such subsidiary or successor, will consult with the Representative with regard to any such offering and will offer the Representative the opportunity to purchase or sell any such securities on terms not more or less favorable to the Company, any such subsidiary or successor than it or they can secure elsewhere. If the Representative fails to accept such offer within ten business days after the mailing of Exercise and Warrant representing notice containing such offer by registered mail addressed to the portion Representative, then the Representative shall have no further claim or right with respect to the financing proposal contained in such notice. If, however, the terms of the Warrant exercised financing are subsequently modified in any material respect, then such modified terms shall be delivered as follows: To constitute a new financing, and the Company: Spatializer Audio Laboratoriespreferential right referred to herein shall apply to such modified terms. The Representative’s failure to exercise its preferential right with respect to any particular proposal shall not affect its preferential rights relative to future proposals. (u) If the gross proceeds received by the Company from the sale of the Units are at least $10 million, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇then for a period of six months commencing on the Closing Date, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇except with the written consent of the Representative, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerwhich consent shall no

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith each of the Underwriters: (i) If the Registration Statement has been declared effective prior to the execution and delivery of this Agreement, the Company will file the Prospectus with the Commission pursuant to and in accordance with subparagraph (1) (or, if applicable and if consented to by you, subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the second business day following the execution and delivery of this Agreement or (B) the fifth business day after the date on which the Registration Statement is declared effective. The Company shall will advise you promptly of any such filing pursuant to Rule 424(b). (ii) The Company will not file with the Commission the prospectus or the amendment referred to in the second sentence of Section l(a)(i) hereof, any amendment or supplement to the Prospectus or any amendment to the Registration Statement unless you have received a reasonable period of time to review any such proposed amendment or supplement and consented to the filing thereof and will use its best efforts to reserve, prior cause any such amendment to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock the Registration Statement to permit be declared effective as promptly as possible. Upon the exercise in full of all request of the outstanding WarrantsRepresentatives or counsel for the Underwriters, the Company will promptly prepare and file with the Commission, in accordance with the rules and regulations of the Commission, any amendments to the Registration Statement or amendments or supplements to the Prospectus that may be necessary or advisable in connection with the distribution of the Shares by the several Underwriters and will use its best efforts to cause any such amendment to the Registration Statement to be declared effective as promptly as possible. If required, the Company will file any amendment or supplement to the Prospectus with the Commission in the manner and within the time period required by Rule 424(b) under the Act. The Company is currently organizing a stockholder meeting to increase will advise the number of authorized shares of Common Stock Representatives, promptly after receiving notice thereof, of the Company, time when the Registration Statement or any amendment thereto has been filed or declared effective or the Prospectus or any amendment or supplement thereto has been filed and has filed with the SEC prior will provide evidence to the date hereof a preliminary proxy statement in connection with Representatives of each such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Boardfiling or effectiveness. (iii) It will permit Subscriber If the Company elects to exercise its right to exercise rely upon Rule 462(b), the Warrants Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by telecopying an executed 10:00 p.m., Washington, D.C. time, on the date of this Agreement, and completed Notice the Company shall at the time of Exercise filing either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Act. (iv) The Company and delivering will advise you promptly after receiving notice or obtaining knowledge of (A) the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received issuance by the Company Commission of any stop order suspending the effectiveness of the Registration Statement or any part thereof or any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or any amendment or supplement thereto or of the initiation or threatening of any proceeding for any such purpose, (B) the suspension of the qualification of the Shares for offer or sale in accordance with any jurisdiction or of the provisions hereof shall be deemed an "Exercise Date"initiation or threatening of any proceeding for any such purpose, or (C) any request made by the Commission or any securities authority of any other jurisdiction for amending the Registration Statement, for amending or supplementing the Prospectus or for additional information. The Company will transmit use its best efforts to prevent the certificates representing issuance of any such stop order and, if any such stop order is issued, to obtain the withdrawal thereof as promptly as possible. (v) If the delivery of a prospectus relating to the Shares is required under the Act at any time prior to the expiration of nine months after the date of the Prospectus and if at such time any events have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or if for any reason it is necessary during such same period to amend or supplement the Prospectus to comply with the Act or the rules and regulations thereunder, the Company will promptly notify you and upon your request (but at the Company's expense) prepare and file with the Commission an amendment or supplement to the Prospectus that corrects such statement or omission or effects such compliance and will furnish without charge to each Underwriter and to any dealer in securities as many copies of such amended or supplemented Prospectus as you may from time to time reasonably request. If the delivery of a prospectus relating to the Shares is required under the Act at any time nine months or more after the date of the Prospectus, upon your request but at the expense of such Underwriter, the Company will prepare and deliver to such Underwriter as many copies as you may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act. Neither your consent to, nor the Underwriters' delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 7. (vi) The Company promptly from time to time will take such action as you may reasonably request to qualify the Shares for offering and sale under the securities or blue sky laws of such jurisdictions as you may request and will continue such qualifications in effect for as long as may be necessary to complete the distribution of the Shares, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction. (vii) The Company will promptly provide you, without charge, (A) three manually executed copies of the Registration Statement as originally filed with the Commission and of each amendment thereto, (B) for each other Underwriter a conformed copy of the Registration Statement as originally filed and of each amendment thereto, without exhibits, and (C) so long as a prospectus relating to the Shares is required to be delivered under the Act, as many copies of each Preliminary Prospectus or the Prospectus or any amendment or supplement thereto as you may reasonably request. (viii) As soon as practicable, but in any event not later than 45 days after the end of the Company's fiscal quarter in which the first anniversary of (ix) During the period beginning on the date hereof and continuing to and including the date 180 days after the date of the Prospectus, the Company will not, without your prior written consent, offer, pledge, issue, sell, contract to sell, grant any option for the sale of, or otherwise dispose of (or announce any of the foregoing, directly or indirectly, any shares of Common Stock issuable upon exercise or securities convertible into, exercisable or exchangeable for, shares of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courierCommon Stock, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise except as provided in Section 2 and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event except that the Company fails to effect delivery of such shares of Common Stock within such three may (3aa) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect grant options pursuant to the Company whereupon Company's stock option plans described in the Company and Subscriber shall each be restored to their respective positions immediately Registration Statement with the prior to delivery approval of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇Company, Inc.; and (bb) issue shares of Common Stock upon the exercise of any of the Company's outstanding stock options as described in the Registration Statement or stock options granted under clause (aa) above. (x) During a period of five years from the effective date of the Registration Statement, the Company will furnish to you and, upon request, to each of the other Underwriters, without charge, (A) copies of all reports or other communications (financial or other) furnished to shareholders, (B) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission, the NASD or any national securities exchange, and (C) such additional information concerning the business and financial condition of the Company and its subsidiaries, if any, as you may reasonably request. (xi) Neither the Company nor any of its officers, directors or other affiliates will (A) take, directly or indirectly, prior to the termination of the underwriting syndicate contemplated by this Agreement, any action designed to cause or to result in, or that might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares, (B) sell, bid for, purchase or pay anyone any compensation for soliciting purchases of, the Shares or (C) pay or agree to pay to any person any compensation for soliciting another to purchase any other securities of the Company. (xii) The Company will apply the net proceeds from the offering in the manner set forth under "Use of Proceeds" in the Prospectus. (xiii) The Company will cause the Shares to be listed on the Nasdaq Stock Market's National Market at each Time of Delivery and for at least one year from the date hereof. (xiv) If at any time during the period beginning on the date the Registration Statement becomes effective and ending on the later of (A) the date 30 days after such effective date and (B) the date that is the earlier of (1) the date on which the Company first files with the Commission a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K after such effective date and (2) the date on which the Company first issues a quarterly or annual financial report to shareholders after such effective date, any rumor, publication or event relating to or affecting the Company shall occur as a result of which in your reasonable opinion the market price of the Common Stock has been or is likely to be materially affected (regardless of whether such rumor, publication or event necessitates an amendment of or supplement to the Prospectus), the Company will, after written notice from you advising the Company to the effect set forth above, forthwith prepare, consult with you concerning the substance of, and disseminate a press release or other public statement, reasonably satisfactory to you, responding to or commenting on such rumor, publication or event. (xv) The Company will file timely and accurate reports on Form SR with the Commission in accordance with Rule 463 of the Commission under the Act or any successor provision or requirement. (xvi) During the initial two-year term of the Employment Agreement between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇ described in the Prospectus and filed as an exhibit to the Registration Statement (the "Employment Agreement"), the Company and ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇. ▇▇▇▇▇▇ each agree not to (i) pay or cause to be paid a cash bonus to ▇▇. ▇▇▇▇▇▇ in 1997, (ii) increase ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇'▇ compensation as set forth in the Employment Agreement, or (iii) otherwise amend ▇, Interim Chief Executive Officer▇. ▇▇▇▇▇▇'▇ Employment Agreement in order to increase any component of his compensation (including base salary or bonus).

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the (a) The Company acknowledges, represents, warrants covenants and agrees as follows: (i) The Company will use its best efforts to cause the Registration Statement, if not effective at the time of execution of this Agreement, and any amendments thereto, to become effective as promptly as possible. The Company shall prepare the Prospectus in a form approved by the Representatives and file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Securities Act. (ii) The Company shall promptly advise the Representatives in writing (i) when the Registration Statement and any amendment thereto shall have become effective, (ii) of the receipt of any comments from the Commission or of any request by the Commission for any amendment of the Registration Statement or the Prospectus or for any additional information, (iii) of the prevention or suspension of the use of any Preliminary Prospectus or the Prospectus or of the issuance by the Commission of any stop order suspending the effective ness of the Registration Statement or the suspension of qualification of the Shares for offering or sale in any jurisdiction or the institution or threatening of any proceeding for that purpose, and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company shall give notice to the Representatives of its intent to file any amendment of the Registration Statement or supplement to the Prospectus and the Company shall not file any such amendment or supplement unless the Company has furnished the Representatives a copy for its review prior to filing and shall not file any such proposed amendment or supplement to which the Representatives reasonably object. The Company shall use its best efforts to reserve, prior to February 15, 2000, a sufficient number prevent the issuance of shares of Common Stock from its authorized but unissued shares of Common Stock to permit any such stop order or order suspending the exercise in full of all qualification or exemption of the outstanding Warrants. The Company is currently organizing a stockholder meeting Shares under any state securities or Blue Sky laws and, if issued, to increase obtain as soon as possible the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Boardwithdrawal thereof. (iii) It The Company shall promptly advise the Representatives in writing if, at any time when a prospectus relating to the Shares is required to be delivered under the Securities Act and the Rules or the Exchange Act, any change, event, or occurrence which could result in such a change, in the Company's condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company or the happening of any event occurs as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it shall be necessary to amend or supplement the Prospectus to comply with the Securities Act or the Rules, the Company promptly shall prepare and file with the Commission, subject to the second sentence of paragraph (ii) of this Section 6(a), an amendment or supplement which shall correct such statement or omission or an amendment which shall effect such compliance. (iv) The Company shall make generally available to its security holders and to the Representatives as soon as practicable, but not later than 45 days after the end of the 12-month period beginning at the end of the fiscal quarter of the Company during which the Effective Date occurs (or 90 days if such 12-month period coincides with the Company's fiscal year), an earnings statement (which need not be audited) of the Company, covering such 12-month period, which shall satisfy the provisions of Section 11(a) of the Securities Act or Rule 158 of the Rules. (v) The Company shall furnish to the Representatives and counsel for the Underwriters, without charge, as many signed copies of the Registration Statement (including all exhibits thereto and amendments thereof) as the Representatives may reasonably request and to each other Underwriter a copy of the Registration Statement (without exhibits thereto) and all amendments thereof and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Securities Act or the Rules, as many copies of any Preliminary Prospectus and the Prospectus and any amendments thereof and supplements thereto as the Representatives may reasonably request. If applicable, the copies of the Registration Statement and Prospectus and each amendment and supplement thereto furnished to the Under writers will permit Subscriber be identical to exercise its right the electronically transmitted copies thereof filed with the Commission pursuant to exercise EDGAR, except to the Warrants extent permitted by telecopying an executed Regulation S-T. (vi) During the period of five years hereafter, the Company will furnish the Representatives (i) as soon as available, a copy of each report of the Company mailed to stockholders or filed with the Commission, and completed Notice (ii) from time to time such other information concerning the Company as the Representatives may reasonably request. (vii) The Company shall cooperate with the Representatives and their counsel in endeavoring to qualify the Shares for offer and sale in connection with the offering under the laws of Exercise such jurisdictions as the Representatives may designate and shall maintain such qualifications in effect so long as required for the distribution of the Shares; provided, however, that the Company shall not be required in connection therewith, as a condition thereof, to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction or subject itself to taxation as doing business in any jurisdiction. (viii) The Company, during the period when the Prospectus is required to be delivered under the Securities Act and the Rules or the Exchange Act, will file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time periods required by the Exchange Act and the regulations promulgated thereunder. (ix) Except as set forth on Schedule II hereto, without the prior written consent of CIBC World Markets Corp., for a period of 180 days after the date of the Prospectus, the Company and delivering each of its individual directors and executive officers shall not issue, sell or register with the original Notice Commission (other than on Form S-8 or on any successor form), or otherwise dispose of, directly or indirectly, any equity securities of Exercise the Company (or any securities convertible into, exercisable for or exchangeable for equity securities of the Company), except for the issuance of the Shares pursuant to the Registration Statement and the original Warrant issuance of shares pursuant to the Company by overnight courierCompany's existing stock option plans as described in the Registration Statement and the Prospectus. Each business date In the event that during this period, (i) any shares are issued pursuant to the Company's existing stock option plans that are exercis able during such 180 day period or (ii) any registration is effected on which a Notice of Exercise is telecopied Form S-8 or on any successor form relating to and received by shares that are exercisable during such 180 period, the Company in accordance shall obtain the written agreement of such grantee or purchaser or holder of such registered securities that, for a period of 180 days after the date of the Prospectus, such person will not, without the prior written consent of CIBC World Markets Corp., offer for sale, sell, distribute, grant any option for the sale of, or otherwise dispose of, directly or indirectly, or exercise any registration rights with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing respect to, any shares of Common Stock issuable upon exercise of (or any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express couriersecurities convertible into, by electronic transfer exercisable for, or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to exchangeable for any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock) owned by such person. (x) On or before completion of this offering, the Company shall make all filings required under applicable securities laws and by the Nasdaq National Market (including any required registration under the Exchange Act). (xi) The Company has furnished or will furnish to the Representatives the Lock-up Agreements, in form and substance satisfactory to the Representatives, signed by each of its current officers and directors and each of its stockholders (except for certain stockholders that own individually less than 1% and in the aggregate less than 5% of the Company's Common Stock) designated by the Representatives. (xii) For a period of 180 days from the date hereof, the Company will not waive, modify or amend or otherwise release Novartis AG from its obligations under the sale restrictions contained in Section 5 of the Stock within such three Purchase Agreement, dated as of May 11, 1990, by and between the Company and Novartis AG, without the prior written consent of CIBC World Markets Corp. (3xiii) business day periodThe Company will supply the Underwrit ers with copies of all correspondence to and from, Subscriber and all documents issued to and by, the Commission in connection with the registration of the Shares under the Securities Act. (xiv) Prior to the Closing Date, the Company shall furnish to the Underwriters, as soon as they have been prepared, copies of any unaudited interim consolidated financial statements of the Company and its subsidiaries, for any periods subsequent to the periods covered by the financial statements appearing in the Registration Statement and the Prospectus. (xv) Prior to the Closing Date, the Company will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect issue no press release or other communications directly or indirectly and hold no press conference with respect to the Company whereupon or any of its Subsidiaries, the condition, financial or otherwise, or the earnings, business affairs or business prospects of any of them, or the offering of the Shares without the prior written consent of the Representatives unless in the judgment of the Company and Subscriber shall its counsel, and after notification to the Representatives, such press release or communication is required by law. (xvi) The Company will apply the net proceeds from the offering of the Shares in the manner set forth under "Use of Proceeds" in the Prospectus. (xvii) The Company has not taken, nor will it take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipula tion of the price of the Common Stock to facilitate the sale or resale of the Shares. (xviii) The Company will use its best efforts to maintain the quotation of the Common Stock (including the Shares) on the Nasdaq National Market and will file with the Nasdaq National Market all documents and notices required by the Nasdaq National Market of companies that have shares that are traded in the over-the- counter market and quotations for which are reported by the Nasdaq National Market. (b) The Company agrees to pay, or reimburse if paid by the Representatives, whether or not the transactions contemplated hereby are consummated or this Agreement is terminated, all costs and expenses incident to the public offering of the Shares and the performance of the obligations of the Company under this Agreement including those relating to: (i) the preparation, printing, filing and distribution of the Registration Statement including all exhibits thereto, each be restored Preliminary Prospectus, the Prospectus, all amendments and supplements to their respective positions immediately prior to the Registration Statement and the Prospectus, and the printing, filing and distribution of this Agreement; (ii) the preparation and delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing certificates for the portion Shares to the Underwriters; (iii) the registration or qualification of the Warrant exercised shall Shares for offer and sale under the securities or Blue Sky laws of the various jurisdictions referred to in Section 6(a)(vi), if any, including the reasonable fees and disbursements of counsel for the Underwriters in connection with such registration and qualification and the preparation, printing, distribution and shipment of preliminary and supplementary Blue Sky memoranda; (iv) the furnishing (including costs of shipping and mailing) to the Representatives and to the Underwriters of copies of each Preliminary Prospectus, the Prospectus and all amendments or supplements to the Prospectus, and of the several documents required by this Section to be delivered so furnished, as follows: To may be reasonably requested for use in connection with the Company: Spatializer Audio Laboratoriesoffering and sale of the Shares by the Underwriters or by dealers to whom Shares may be sold; (v) the filing fees of the NASD in connection with its review of the terms of the public offering and reasonable fees and disbursements of counsel for the Underwriters in connection with such review; (vi) inclusion of the Shares for quotation on the Nasdaq National Market; and (vii) all transfer taxes, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇if any, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇with respect to the sale and delivery of the Shares by the Company to the Underwriters. Subject to the provisions of Section 9, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇the Underwriters agree to pay, Interim Chief Executive Officerwhether or not the transactions contemplated hereby are consummated or this Agreement is terminated, all costs and expenses incident to the performance of the obligations of the Underwriters under this Agreement not payable by the Company pursuant to the preceding sentence, including, without limitation, the fees and disbursements of counsel for the Underwrit ers.

Covenants of the Company. For so long as The Company covenants and agrees with you and the several Underwriters participating in the Offering of any Securities held by Subscriber remain outstandingSeries of Certificates that: (a) In connection with the execution of each Terms Agreement, the Company acknowledgeswill prepare a Prospectus Supplement to be filed under the Act setting forth the principal amount of Certificates covered thereby and their terms not otherwise specified in the Prospectus, representsthe price at which the Certificates are to be purchased by the Underwriters from the Company, warrants either the initial public offering price or the method by which the price at which the Certificates are to be sold will be determined, the selling concession and agrees reallowance, if any, any delayed delivery arrangements, and such other information as follows: you and the Company deem appropriate in connection with the offering of the Certificates, but the Company will not file any amendments to the Registration Statement or any amendments or supplements to the Prospectus, unless it shall first have delivered copies of such amendments or supplements to you, and you shall not have objected thereto promptly after receipt thereof. The Company will advise you or your counsel promptly (i) The when notice is received from the Commission that any post-effective amendment to the Registration Statement has become or will become effective, and (ii) of any order or communication suspending or preventing, or threatening to suspend or prevent, the offer and sale of the Certificates, or of any proceedings or examinations that may lead to such an order or communication, whether by or of the Commission or any authority administering any state securities or Blue Sky law, as soon as the Company shall is advised thereof, and will use its best efforts to reserveprevent the issuance of any such order or communication and to obtain as soon as possible its lifting, if issued. (b) The Company will cause any Computational Materials and any Structural Term Sheets (each as defined in Section 8 below) with respect to each Series of Certificates that are delivered by the Underwriters to the Company pursuant to Section 8 to be filed with the Commission on a Current Report on Form 8-K (a "Current Report") pursuant to Rule 13a-11 under the Securities Exchange Act of 1934, as amended (the "Exchange Act") on the business day immediately following the day on which such Computational Materials and Structural Term Sheets are delivered to counsel for the Company by any of the Underwriters prior to February 1510:30 a.m. (and will use its best efforts to cause such Computational Materials and Structural Term Sheets to be so filed prior to 2:00 p.m., 2000New York time, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrantson such business day), and will promptly advise you when such Current Report has been so filed. The Company will cause one Collateral Term Sheet (as defined in Section 9 below) with respect to an Offering of a Series that is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock delivered by any of the Company, and has filed with the SEC prior Underwriters to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall of Section 9 to be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together filed with the certificates representing Commission on a Current Report pursuant to Rule 13a-11 under the Warrants not so exercised) Exchange Act on the business day immediately following the day on which such Collateral Term Sheet is delivered to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if counsel for the Company by any of the Underwriters prior to 10:30 a.m. In addition, if at any time prior to the availability of the related Prospectus Supplement, any of the Underwriters has received the original Notice of Exercise and Warrant being exercised by such date. In addition delivered to any other remedies which may be available to Subscriberprospective investor a subsequent Collateral Term Sheet that reflects, in the event that reasonable judgment of such Underwriter and the Company, a material change in the characteristics of the Mortgage Loans for the related Series from those on which a Collateral Term Sheet with respect to the related Series previously filed with the Commission was based, the Company fails to effect delivery of will cause any such shares of Common Stock within Collateral Term Sheet that is delivered by such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect Underwriter to the Company whereupon in accordance with the provisions of Section 9 to be filed with the Commission on a Current Report on the business day immediately following the day on which such Collateral Term Sheet is delivered to counsel for the Company and Subscriber shall each be restored to their respective positions immediately by such Underwriter prior to delivery of 2:00 p.m. In each case, the Company will promptly advise you when such Notice of ExerciseCurrent Report has been so filed. The Notice of Exercise and Warrant representing Notwithstanding the portion four preceding sentences, the Company shall have no obligation to file any materials provided by any of the Warrant exercised shall Underwriters pursuant to Sections 8 and 9 which (i) in the reasonable determination of the Company are not required to be delivered as follows: To filed pursuant to the Company: Spatializer Audio Laboratories, Inc. ▇▇Kidder Letters or the PSA Letter (e▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇defined in Section 8 below), ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇or (ii) contain erroneous information or contain any untrue statement of a material fact or, ▇▇ ▇▇▇▇▇when read in conjunction with the Prospectus and Prospectus Supplement, omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; it being understood, however, that the Company shall have no obligation to review or pass upon the accuracy or adequacy of, or to correct, any Computational Materials or ABS Term Sheets (as defined in Section 9 below) provided by such Underwriter to the Company pursuant to Section 8 or Section 9 hereof. The Company shall give notice to you and such Underwriter of its determination not to file any materials pursuant to clause (i) of the preceding sentence and agrees to file such materials if such Underwriter or you reasonably object to such determination within one business day after receipt of such notice. (c) If at any time when a prospectus relating to the Certificates is required to be delivered under the Act any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Prospectus to comply with the Act, the Company promptly will prepare and file with the Commission an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance; provided, however, that the Company will not be required to file any such amendment or supplement with respect to any Computational Materials, Structural Term Sheets or Collateral Term Sheets incorporated by reference in the Prospectus other than any amendments or supplements of such Computational Materials or Structural Term Sheets that are furnished to the Company by the Underwriter pursuant to Section 8(e) hereof or any amendments or supplements of such Collateral Term Sheets that are furnished to the Company by the Underwriter pursuant to Section 9(d) hereof which are required to be filed in accordance therewith. (d) With respect to each Series of Certificates, the Company will make generally available to the holders of the Certificates and will deliver to you, in each case as soon as practicable, an earnings statement covering the twelve-▇▇▇▇ Fax: month period beginning after the date of the Terms Agreement in respect of such series of Certificates, which will satisfy the provisions of Section 11(a) of the Act with respect to the Certificates. (▇▇▇e) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇The Company will furnish to you copies of the Registration Statement (two of which will be signed and will include all documents and exhibits thereto or incorporated by reference therein), each related preliminary prospectus, the Prospectus, and all amendments and supplements to such documents, in each case as soon as available and in such quantities as you request. (f) The Company will arrange for the qualification of the Certificates for sale and the determination of their eligibility for investment under the laws of such jurisdictions as you reasonably designate and will continue such qualifications in effect so long as reasonably required for the distribution; provided, however, that the Company shall not be required to qualify to do business in any jurisdiction where it is not qualified on the date of the related Terms Agreement or to take any action which would subject it to general or unlimited service of process in any jurisdiction in which it is not, on the date of the related Terms Agreement, subject to such service of process. (g) The Company will pay all expenses incidental to the performance of its obligations under this Agreement and any Terms Agreement and will reimburse the Underwriters for any expenses (including fees and disbursements of counsel and accountants) incurred by them in connection with qualification of the Certificates and determination of their eligibility for investment under the laws of such jurisdictions as you designate and the printing of memoranda relating thereto, for any fees charged by the nationally recognized statistical rating agencies for the rating of the Certificates, for the filing fee of the National Association of Securities Dealers, Inc. relating to the Certificates, if applicable, and for expenses incurred in distributing preliminary prospectuses to the Underwriters. (h) During the period when a prospectus is required by law to be delivered in connection with the sale of the Certificates pursuant to this Agreement, the Company will file or cause to be filed, on a timely and complete basis, all documents that are required to be filed by the Company with the Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. (i) So long as the Certificates of a Series shall be outstanding, the Company will deliver to you the annual statement of compliance delivered to the Trustee pursuant to the Pooling and Servicing Agreement and the annual statement of a firm of independent public accountants furnished to the Trustee pursuant to the Pooling and Servicing Agreement as soon as such statements are furnished to the Trustee. ▇▇▇▇▇▇▇, Interim Chief Executive Officer6.

Covenants of the Company. For The Company covenants and agrees with the Underwriter that: (a) The Company, upon notification from the Commission that the Registration Statement has become effective, will so long advise you and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement to the Prospectus of which you shall not previously been advised and furnished with a copy or to which you or your counsel shall have objected in writing, acting reasonably, or which is not in compliance with the Act and the Rules and Regulations. At any time prior to the later of (i) the completion by the Underwriter of the distribution of the Securities as any Securities held by Subscriber remain outstandingcontemplated hereby; or (ii) 25 days after the date on which the Registration Statement shall have become or been declared effective, the Company acknowledgeswill prepare and file with the Commission, representspromptly upon your request, warrants any amendments or supplements to the Registration Statement or Prospectus which may be necessary or advisable in connection with the distribution of the Securities and agrees as follows: (i) The mutually agreed by the Company shall and the Underwriter. After the Effective Date and as soon as the Company is advised thereof, the Company will advise you, and confirm the advice in writing, of the receipt of any comments of the Commission, of the effectiveness of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, or of the suspension of the qualification of the Securities for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to reserveprevent the issuance of any such order, and, if issued, to obtain as soon as possible the lifting thereof. The Company has caused to be delivered to you copies of each Preliminary Prospectus and Definitive Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and Selected Dealers to use the Prospectus in connection with the sale of the Securities for such period as in the opinion of counsel to the Underwriter the use thereof is required to comply with the applicable provisions of the Act and the Rules and Regulations. In case of the happening, at any time within such period as a Prospectus is required under the Act to be delivered in connection with sales by the Underwriter or Selected Dealers, of any event of which the Company has knowledge and which in the opinion of counsel for the Company or counsel for the Underwriter should be set forth in an amendment to the Registration Statement or a supplement to the Prospectus, in order to make the statements therein not then misleading, in light of the circumstances existing at the time the Prospectus is required to be delivered to a purchaser of the Securities, or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the Act and the Rules and Regulations, the Company will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state any material facts necessary in order to make the statements in the Prospectus, in the light of the circumstances under which they are made, not misleading. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be without expense to the Underwriter. The Company will comply with the Act, the Rules and Regulations thereunder, and the provisions of the Securities Exchange Act of 1934 (the "1934 Act"), and the rules and regulations thereunder in connection with the offering and issuance of the Securities. (b) The Company will act in good faith and use its best efforts and cooperate with you and your counsel to qualify to register the Securities for sale under the securities or "blue sky" laws of such jurisdictions as the Underwriter may designate and will make such applications and furnish such information as may be required for that purpose and to comply with such laws, provided the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent to service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Securities. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long a period as the Underwriter may reasonably request. (c) If the sale of the Securities provided for herein is not consummated, the Company shall pay all costs and expenses incident to the performance of the Company's obligations hereunder, including, but not limited to, all such expenses itemized in Section 8(a) and 8(c) hereof, and either (i) the out-of-pocket expenses of the Underwriter, not to exceed the $50,000 previously paid if the Underwriter elects to terminate the offering for any reason; or (ii) the out-of-pocket expenses of the Underwriter if the Company elects to terminate the offering for any reason. For the purposes of this sub-section, the Underwriter shall be deemed to have assumed such expenses when they are billed or incurred, regardless of whether such expenses have been paid. The Underwriter shall not be responsible for any expenses of the Company or others, or for any charges or claims relative to the proposed public offering if it is not consummated. In the event the public offering is not consummated, the Underwriter will return any unaccounted for portion of the $50,000 advanced against non-accountable expenses to the Company. (d) The Company will deliver to you at or before the Closing Date two signed copies of the Registration Statement, including all financial statements and exhibits filed therewith, and of each amendment or supplement thereto. The Company will deliver to or upon the order of the Underwriter, from time to time until the Effective Date of the Registration Statement, as many copies of any Preliminary Prospectus filed with the Commission prior to February 15the Effective Date of the Registration Statement as the Underwriter may reasonably request. The Company will deliver to the Underwriter on the Effective Date of the Registration Statement and thereafter for so long as a Prospectus is required to be delivered under the Act, 2000from time to time, as many copies of the Definitive Prospectus, or as thereafter amended or supplemented, as the Underwriter may from time to time reasonably request. (e) For so long as the Company is a reporting company under either Section 12 or 15 of the 1934 Act, the Company, at its expense, will furnish to the Underwriter during the period ending five (5) years from the Effective Date, (i) as soon as practicable after the end of each fiscal year, a sufficient balance sheet of the Company and any of its subsidiaries as at the end of such fiscal year, together with statements of income, surplus and cash flow of the Company and any subsidiaries for such fiscal year, all in reasonable detail and accompanied by a copy of the certificate or report thereon of independent accountants; (ii) as soon as they are available, a copy of all reports (financial or other) mailed to security holders; (iii) as soon as they are available, a copy of all non-confidential documents, including annual reports, periodic reports and financial statements, furnished to or filed with the Commission under the Act and the 1934 Act; (iv) copies of each press release, news item and article with respect to the Company's affairs released by the Company; and (v) such other information as you may from time to time reasonably request. (f) In the event the Company has an active subsidiary or subsidiaries, such financial statements referred to in subsection (e) above will be on a consolidated basis to the extent the accounts of the Company and its subsidiary or subsidiaries are consolidated in reports furnished to its stockholders generally. (g) The Company will make generally available to its stockholders and to the registered holders of its Warrants and deliver to the Underwriter as soon as it is practicable, but in no event later than the first day of the sixteenth full calendar month following the Effective Date, an earnings statement (which need not be audited) covering a period of at least twelve consecutive months beginning with the Effective Date of the Registration Statement, which shall satisfy the requirements of Section 11(a) of the Act. (h) On the Closing Date, the Company shall have taken the necessary action to become a reporting company under Section 12 of the 1934 Act, and the Company will make all filings required to and will have obtained approval for the listing of the Shares and Warrants on The Nasdaq SmallCap Market System, and will use its best efforts to maintain such listing for at least seven (7) years from the date of this Agreement. (i) For a period of seven (7) years following the Effective Date, the Company will hold an annual meeting of stockholders for the election of Directors within 180 days after the end of each of the Company's fiscal years and, within nine (9) months after the end of each of the Company's fiscal years will provide the Company's stockholders with the audited financial statements of the Company as of the end of the fiscal year just completed prior thereto. Such financial statements shall be those required by Rule 14a-3 under the 1934 Act and shall be included in an annual report pursuant to the requirements of such Rule. (j) The Company will apply the net proceeds from the sale of the Securities substantially in accordance with its statement under the caption "Use of Proceeds" in the Prospectus, and will file such reports with the Commission with respect to the sale of the Securities and the application of the proceeds therefrom as may be required by the Act and the 1934 Act. (k) The Company will, promptly upon your request, prepare and file with the Commission any amendments or supplements to the Registration Statement, Preliminary Prospectus or Prospectus and take any other action, which in the reasonable opinion of counsel to the Underwriter and the Company may be reasonably necessary or advisable in connection with the distribution of the Securities and will use its best efforts to cause the same to become effective as promptly as possible. (l) On the Closing Date, the Company shall execute and deliver to you the Underwriter's Warrant Agreement. The Underwriter's Warrant Agreement and Warrant Certificates will be substantially in the form of the Underwriter's Warrant Agreement filed as an exhibit to the Registration Statement. (m) The Company will reserve and keep available for issuance that maximum number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the securities which are issuable upon exercise in full of all of the Underwriter's Warrants outstanding Warrants. The Company is currently organizing a stockholder meeting from time to increase time. (n) All beneficial owners of the number of authorized shares of Common Company's securities (including warrants, options and Preferred Stock of the Company) as of the Effective Date shall agree in writing, and has filed with the SEC prior in a form satisfactory to the date hereof Underwriter, not to sell, transfer or otherwise dispose of any of such securities (or underlying securities) of the Company for a preliminary proxy statement in connection with such stockholder meetingperiod of eighteen (18) months from the Effective Date, or any longer period required by the NASD, Nasdaq or any State, without the written consent of the Underwriter. (iio) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit obtain, on or before the certificates representing shares Closing Date, key person life insurance on the life of Common Stock issuable upon exercise Robert D. Arnold in an amount of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courierless than $2,000,000, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇t efforts to maintain such insurance for a period of at least five (5) years from the Effective Date. (p) Prior to the Closing Date, ▇▇ ▇▇▇▇▇the Company shall, at its own expense, undertake to list the Company's securities in the appropriate recognized securities manual or manuals published by Standard & Poor's Corporation and such other manuals as the Underwriter may designate, such listings to contain the information required by such manuals and the Uniform Securities Act. The Company hereby agrees to use its best efforts to maintain such listing for a period of not less than five (5) years. The Company shall take such action as may be reasonably requested by the Underwriter to obtain a secondary market trading exemption in such states as may be reasonably requested by the Underwriter. (q) During the one (1) year period commencing on the Closing Date, the Company will not, without the prior written consent of the Underwriter, grant options or warrants to purchase the Company's Common Stock at a price less than the initial per share public offering price. (r) Prior to the Closing Date, neither the Company nor any subsidiary will issue, directly or indirectly, without your prior consent, any press release or other communication or hold any press conference with respect to the Company or its activities or the offering of the Securities other than routine customary advertising of the Company's products and services, and except as required by any applicable law or the directives of any relevant regulatory authority in any relevant jurisdiction. (s) At the Closing Date, the Company will engage the Underwriter as a non-▇▇▇▇ Fax: exclusive financial advisor to the Company for a period of twelve (▇▇▇12) ▇▇▇months commencing on the first day of the month following the Company's receipt of the proceeds of this offering, at an aggregate fee of $108,000, all of which shall be payable to the Underwriter on the Closing Date. The financial advisory agreement will provide that the Underwriter shall, at the Company's request, provide advice and consulting services to the Company concerning potential merger and acquisition proposals and the obtaining of short or long-▇▇▇▇ Attn: ▇▇▇▇▇ ▇term financing for the Company, whether by public financing or otherwise. (t) The Company shall employ the services of a firm of independent certified public accountants in connection with the preparation of the financial statements to be included in any registration statement or similar disclosure document to be filed by the Company hereunder, or any amendment or supplement thereto. ▇▇▇▇▇▇▇For a period of five (5) years from the Effective Date, Interim Chief Executive Officerthe Company, at its expense, shall cause its regularly engaged independent certified public accountants to review (but not audit) the Company's financial statements for each of the first three (3) fiscal quarters prior to the announcement of quarterly financial information, the filing of the Company's quarterly report and the mailing of quarterly financial information to stockholders. (u) The Company shall retain American Securities Transfer & Trust, Inc. as the transfer agent for the securities of the Company, or such other transfer agent as you may agree to in writing. In addition, the Company shall direct such transfer agent to furnish the Underwriter with daily transfer sheets as to each of the Company's securities as prepared by the Company's transfer agent and copies of lists of stockholders and warrantholders as reasonably requested by the Underwriter, for a five (5) year period commencing from the Closing Date. (v) The Company shall cause the Depository Trust Company, and any other depository of the Company's securities, to furnish security position reports and special DTC Tracking Reports to the Underwriter at the expense of the Company. The security position reports shall be furnished on a weekly basis for a five (5) year period from the Effective Date, and the DTC Tracking Reports shall be furnished for the initial two (2) month period from the Effective Date, after which time the Company's obligation to furnish such tracking

Covenants of the Company. For so long The Company covenants and agrees with each Underwriter as any follows: (a) During such period beginning on the Time of Sale and ending on the later of the Closing Date or such date, as in the opinion of counsel for the Underwriters, that the Prospectus is no longer required by law to be delivered in connection with sales as contemplated by this Agreement by an Underwriter or dealer, including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities held by Subscriber remain outstandingAct (the “Prospectus Delivery Period”), prior to amending or supplementing the Registration Statement (including the Rule 462(b) Registration Statement), the Time of Sale Disclosure Package or the Prospectus, the Company acknowledgesshall furnish to the Representative for review a copy of each such proposed amendment or supplement, representsand the Company shall not file any such proposed amendment or supplement to which the Representative reasonably objects. (b) During the Prospectus Delivery Period, warrants the Company shall promptly advise the Representative in writing (A) when the Registration Statement, if not effective at the date and time this Agreement is executed and delivered to the parties, shall have become effective, (B) of the receipt of any comments of, or requests for additional or supplemental information from, the Commission with respect to the Registration Statement or the Offering, (C) of the time and date of any filing of any post-effective amendment to the Registration Statement or any amendment or supplement to any Preliminary Prospectus or the Prospectus, (D) of the time and date that any post-effective amendment to the Registration Statement becomes effective and (E) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or of any order or notice preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus, or of any proceedings to remove, suspend or terminate from listing or quotation the Securities from any securities exchange upon which they are then listed (or approved for listing) for trading or included or designated (or approved for inclusion or designation) for quotation, or of the threatening or initiation of any proceedings for any of such purposes. The Company shall use its commercially reasonable efforts to prevent the issuance of any such stop order or prevention or suspension of such use. If the Commission shall enter any such stop order or order or notice of prevention or suspension at any time, the Company will use its commercially reasonable efforts to obtain the lifting of such order at the earliest possible moment or will file a new registration statement and use its commercially reasonable efforts to have such new registration statement declared effective as soon as practicable. Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b) and 434, as follows:applicable, under the Securities Act, including with respect to the timely filing of documents thereunder, and will use its commercially reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) were received in a timely manner by the Commission. (A) If any event or development shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Disclosure Package in order to make the statements therein, in the light of the circumstances under which they were made or then prevailing, as the case may be, not misleading (in which case the Company agrees to notify the Representative of any such event or condition), or if in the reasonable opinion of the Representative it is otherwise necessary to amend or supplement the Time of Sale Disclosure Package to comply with law, the Company agrees to promptly prepare, file with the Commission and furnish to the Underwriters, at its own expense, amendments or supplements to the Time of Sale Disclosure Package, and to furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request, so that the statements in the Time of Sale Disclosure Package as so amended or supplemented will not be, in the light of the circumstances under which they were made or then prevailing, as the case may be, misleading or so that the Time of Sale Disclosure Package, as amended or supplemented, will comply with law; (B) if, during the Prospectus Delivery Period, any event or development shall occur or condition exist as a result of which it is necessary to amend or supplement the Registration Statement or the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made or then prevailing, as the case may be, not misleading (in which case the Company agrees to notify the Representative of any such event or condition), or if in the reasonable opinion of the Representative it is otherwise necessary to amend or supplement the Registration Statement or the Prospectus to comply with applicable law, including in connection with the delivery of the Prospectus, the Company agrees to promptly prepare, file with the Commission (and use its best efforts to have any amendment to the Registration Statement or any new registration statement to be declared effective) and furnish to the Underwriters, amendments or supplements to the Registration Statement or the Prospectus, or any new registration statement, and to furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request, so that the statements in the Registration Statement or the Prospectus as so amended or supplemented will not be, in the light of the circumstances under which they were made or then prevailing, as the case may be, misleading or so that the Registration Statement or the Prospectus, as amended or supplemented, will comply with applicable law. (d) The Company agrees that, until the First Closing Date, unless it obtains the prior written consent of the Representative, it will not make any offer relating to the Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 under the Securities Act) required to be filed by the Company with the Commission or retained by the Company under Rule 433 of the Securities Act; provided that the prior written consent of the Representative hereto shall be deemed to have been given in respect of any Issuer Free Writing Prospectuses included in Schedule II attached hereto. Any such free writing prospectus consented to by the Representative is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company agrees that (A) it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (B) has complied and will comply, as the case may be, with the requirements of Rules 164 and 433 of the Securities Act applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the Commission where required, legending and record keeping. (e) The Company shall furnish to the Underwriters upon request, from time to time and without charge, copies of the Registration Statement (of which a maximum of three shall be signed) and shall include exhibits and all amendments and supplements to any of such Registration Statement, in each case as soon as available and in such quantities as the Representative may from time to time reasonably request. (f) The Company shall take or cause to be taken all necessary action and furnish to whomever the Representative may direct such information as may be required in qualifying the Securities for sale under the laws of such jurisdictions which the Representative shall designate and to continue such qualifications in effect for as long as may be necessary for the distribution of the Securities; except that in no event shall the Company be obligated in connection therewith to qualify as a foreign corporation, to execute a general consent for service of process or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. (g) The Company shall make generally available to its security holders, in the manner contemplated by Rule 158(b) under the Securities Act, as soon as practicable but in any event not later than 60 days after the end of its fiscal quarter in which the first anniversary date of the effective date of the Registration Statement occurs, an earnings statement which will comply with Section 11(a) of the Securities Act covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement. (h) The Company shall apply the net proceeds of the sale of the Securities substantially in the manner specified in the Prospectus under the caption “Use of Proceeds”. (i) The Company shall will furnish to its security holders annual reports containing financial statements audited by independent public accountants and quarterly reports containing financial statements and financial information which may be unaudited. (j) The Company will use its best commercially reasonable efforts to reserveeffect the listing of the Securities on the NYSE. (k) During the period beginning on the date hereof and continuing to and including 30 days after the First Closing Date, the Company will not offer, sell, contract to sell or otherwise dispose of any of its debt securities or warrants to purchase or otherwise acquire debt securities of the Company substantially similar to the Securities (other than (i) the Securities (including any Securities sold to cover overallotments), (ii) commercial paper issued in the ordinary course of business or (iii) securities or warrants permitted with the prior written consent of the Representative). (l) The Company will not take, directly or indirectly, any action designed to February 15or that would constitute or that might reasonably be expected to cause or result in, 2000stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Securities, provided that the Company may bid for and purchase its common stock in accordance with Regulation M and Rule 10b-18 under the Exchange Act. (m) During the period of five (5) years hereafter, the Company will furnish to the Representative and, upon request, to each of the other Underwriters, as soon as practicable after the end of each fiscal year, a sufficient number copy of shares its annual report to shareholders for such year; and the Company will furnish to the Representative (A) as soon as available, a copy of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all each report and any definitive proxy statement of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior Commission under the Exchange Act or mailed to shareholders, and (B) from time to time, such other information concerning the Company as the Representative may reasonably request. However, so long as the Company is subject to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (iireporting requirements of either Section 13 or Section 15(d) It will maintain of the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed Exchange Act and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance timely filing reports with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇Commission on E▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇it is not required to furnish such reports or statements to the Underwriters. (n) The Company shall pay or cause to be paid (A) all expenses (including transfer taxes) incurred in connection with the delivery to the several Underwriters of the Securities, ▇▇ ▇▇▇▇▇(B) all fees and expenses (including, without limitation, fees and expenses of the Company’s accountants and counsel) in connection with the preparation, printing, filing, delivery and shipping of the Registration Statement (including the financial statements therein and all amendments and exhibits thereto), each Preliminary Prospectus, the Time of Sale Disclosure Package and the Prospectus as amended or supplemented, (C) any filing fee of FINRA and any applicable expenses of counsel for the Underwriters in connection with such submissions and the review of the Offering by FINRA, (D) any applicable listing fees, (E) the costs, expenses, fees and taxes incident to the authorization, preparation, issuance, execution, authentication and delivery of the Securities and the Indenture, including any expenses of the Trustees and any paying agent (including related fees and expenses of any outside counsel to such parties), (F) any fees charged by rating agencies relating to the Securities and (G) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise provided for in this Section 5. The Company, on the one hand, and the Underwriters, on the other hand, shall be responsible for their own expenses in connection with any road shows and other presentations undertaken in connection with the Offering (including all travel, hotel and food expenses for their respective personnel). The Company shall not in any event be liable to any of the Underwriters for loss of anticipated profits from the transactions covered by this Agreement. The Representative may deduct, after providing the Company with an itemized list and supporting documentation of expenses actually incurred, from the net proceeds of the Offering payable to the Company on the First Closing Date the expenses set forth above (which shall be mutually agreed upon between the Company and the Representative prior to the First Closing Date) to be paid by the Company to the Underwriters and others. (o) Unless otherwise requested by the Representative, the Company will prepare a final term sheet containing only a description of the final terms of the Securities, in the form specified in Schedule III, and will file such term sheet pursuant to Rule 433(d) under the Securities Act within the time required by such rule (such term sheet, the “Final Term Sheet”). Any such Final Term Sheet is an Issuer General-▇▇▇▇ Fax: Use Free Writing Prospectus for purposes of this Agreement. (▇▇▇p) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇The Company will use its commercially reasonable efforts, Interim Chief Executive Officerin cooperation with RBC Capital Markets, LLC, to cause the Securities to be eligible for clearance and settlement through the Depository Trust Company and use its commercially reasonable efforts to maintain such eligibility for so long as the Securities remain outstanding. (q) The Company will notify the Representative of any downgrading in the rating of the Securities or any other debt securities of the Company, or any public announcement of placement of the Securities or any other debt securities of the Company on what is commonly termed a “watch list” for possible downgrading, or any notice of a possible change in any such rating that does not indicate the direction of the possible change, in each case by any “nationally recognized statistical rating organization” (as such term is defined in Section 3(a)(62) of the Exchange Act), promptly after the Company learns of any such downgrading or public announcement.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith the several Underwriters that: (ia) The Company shall will use its best efforts to reservecause the Registration Statement to become effective as promptly as possible. If required, the Company will file the Prospectus or any Term Sheet that constitutes a part thereof and any amendment or supplement thereto with the Commission in the manner and within the time period required by Rules 434 and 424(b) under the Act. Upon notification from the Commission that the Registration Statement has become effective, the Company will so advise the Underwriters and will not at any time, whether before or after the effective date, file the Prospectus, Term Sheet or any amendment to the Registration Statement or supplement to the Prospectus of which the Underwriters shall not previously have been advised and furnished with a copy or to which the Underwriters or the Underwriters' counsel shall have objected to in writing or which is not in compliance with the Act and the Rules and Regulations. At any time prior to February 15, 2000, a sufficient number the later of shares of Common Stock from its authorized but unissued shares of Common Stock to permit (A) the exercise in full of completion by all of the outstanding Underwriters of the distribution of the Shares and Warrants contemplated hereby (but in no event more than nine months after the date on which the Registration Statement shall have become or been declared effective) and (B) 25 days after the date on which the Registration Statement shall have become or been declared effective, the Company will prepare and file with the Commission, promptly upon the Underwriters' request, any amendments or supplements to the Registration Statement or Prospectus which, in the Underwriters' opinion, may be necessary or advisable in connection with the distribution of the Shares and Warrants. As soon as the Company is advised thereof, the Company will advise the Underwriters, and confirm such advice in writing, (i) when the Registration Statement or any post-effective amendment to the Registration Statement is filed with the Commission, (ii) of the receipt of any comments of the Commission, (iii) of the effectiveness of any post-effective amendment to the Registration Statement, (iv) of the filing of any supplement to the Prospectus or any amended Prospectus, (v) of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, (vi) of the issuance by the Commission or any state or regulatory body of any stop order or other order or threat thereof suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, or (vii) of the suspension of the qualification of the Shares and Warrants for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes. The Company will use its best efforts to prevent the issuance of any such stop order or of any order preventing or suspending such use, and, if any such order is currently organizing issued, to obtain as soon as possible the lifting thereof. The Company has caused to be delivered to the Underwriters copies of each Preliminary Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the several Underwriters and dealers to use the Prospectus in connection with the sale of the Shares and Warrants for such period as in the opinion of counsel to the several Underwriters the use thereof is required to comply with the applicable provisions of the Act and the Rules and Regulations. In case of the happening, at any time within such period as a stockholder meeting Prospectus is required under the Act to increase be delivered in connection with sales by an underwriter or dealer of any event of which the number of authorized shares of Common Stock Company has knowledge and which materially affects the Company or the securities of the Company, or which in the opinion of counsel for the Company or counsel for the Underwriters should be set forth in an amendment of the Registration Statement or a supplement to the Prospectus in order to make the statements therein not then misleading, in light of the circumstances existing at the time the Prospectus is required to be delivered to a purchaser of the Shares and has filed Warrants or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the SEC prior Rules and Regulations, the Company shall notify the Underwriters promptly and forthwith prepare and furnish to the date hereof Underwriters copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as the Underwriters may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a preliminary proxy statement material fact or omit to state any material facts necessary in order to make the statements in the Prospectus, in the light of the circumstances under which they are made, not misleading. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be without expense to the Underwriters, except that in case any Underwriter is required, in connection with such stockholder meeting. (ii) It will maintain the listing sale of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber Shares and Warrants, to exercise its right to exercise deliver a Prospectus nine months or more after the Warrants by telecopying an executed and completed Notice effective date of Exercise to the Registration Statement, the Company will upon request of and delivering at the original Notice expense of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officersuch

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the 10.1 The Company acknowledges, represents, warrants hereby covenants and agrees with the Concessionaire as follows: (ia) The Company shall use its best efforts to reserve, prior to February 15, 2000, a sufficient number that during the currency of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It this Agreement it will maintain the listing of its Common Stock Property in good standing and shall pay all mining duties on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise Property under the Federal Duties Law of Mexico and, where relevant, it shall conduct exploration work on the Lots and record all assessment work reports, in the terms of the Mining Law of Mexico and its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such dateRegulations. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery pay the mining duties in respect of the Property when the same become due and owing, or fails to record the assessment work report on or before May 20 of each year, the Concessionaire may, at its option, pay such shares of Common Stock within duties and record such three (3) business day period, Subscriber will assessment work reports and the Company agrees that any amounts so paid by the Concessionaire shall be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect added to the Company whereupon purchase price and shall be paid by the Company with the next option payment, if any, or if no option payment remains, within one month of payment by the Concessionaire and Subscriber shall each to compensate the Concessionaire for any cost incurred for such recording; b) conduct all work on or with respect to the Lots in a careful and miner-like manner and in accordance with all applicable Federal, State and Municipal laws, rules orders and regulations, and indemnify and save the Concessionaire harmless from any and all claims, suits or actions made or brought against it as a result of work done by or with respect to the Lots except to the extent that such claims, suits or actions relate to issues or disputes regarding title to the Property; c) that it will properly pay all accounts of every nature and kind for wages, supplies, Workers' Compensation assessments, income tax deductions and all other accounts and indebtedness incurred by it on the Property so that no claim or lien can arise thereon or upon the ore and minerals contained therein and it will indemnify the Concessionaire and save it harmless from any and all loss, cost, actions, suits, damages or claims which may be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing made against the portion Concessionaire in respect of the Warrant exercised operations carried out upon the Lots and that it will discharge any liens or encumbrances which may arise in respect of or be recorded against the Property as a result of the operations of the Company thereon, provided however that the Company shall have the right to contest the validity of any such lien or claim of lien; d) that it will permit the Concessionaire, or the representatives of the Concessionaire duly authorized in writing, to visit and inspect at reasonable times and intervals the Lots, and any data obtained by the Company as a result of its operation thereon, and to take samples for testing purposes from any part of the Lots, provided always that the Concessionaire or its representatives shall abide by the rules and regulations laid down by the Company relating to matters of safety and efficiency in its operations and that the Company shall be delivered under no liability to the Concessionaire or its representatives for any personal injury, including death, or any damage to property other than such as follows: To might be occasioned by or through any neglect on the part of the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇its servants or agents; e) that it will keep full, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇true and accurate reference reports, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: maps and other surveys of all exploration, development and mining work done on or under the Lots; A:\ La Lajita Agr- Final.doc f) that it will keep full, true and accurate records of all ore and waste from the Lots and will take sufficient samples of ore removed and will make accurate surveys of ore removed, all in accordance with good mining practice; g) that it will save and keep the Concessionaire harmless from all claims, costs, loss or damage which may arise by reason of injury (▇▇▇including injury resulting in death) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerto any person employed by the Company in or upon the Lots or any part thereof or which may arise by reason of injury (including injury resulting in death) to any person or damage done to any property as a result of any work or operations of the Company or of its possession or occupancy of the Lots; and h) that Company shall deliver to the Concessionaire all reports of the studies made by the Company on the Lots within 180 days from the date of termination of this Agreement for whatever reason other than the exercise of the Option.

Covenants of the Company. For The Company covenants and agrees with each Underwriter that: (a) The Company shall use its best efforts to cause the Registration Statement to become effective as promptly as possible and to maintain it in effect. If the Registration Statement has become or becomes effective pursuant to Rule 430A of the Regulations, or filing of the Prospectus with the Commission is otherwise required under Rule 424(b) of the Regulations, the Company shall file the Prospectus, properly completed, with the Commission pursuant to Rule 424(b) of the Regulations within the time period therein prescribed and shall provide evidence satisfactory to you of such timely filing. The Company shall promptly advise you (and, if requested, confirm such advice in writing), (i) when the Registration Statement or any post-effective amendment thereto has become effective, (ii) of the initiation or threatening of any proceedings for, or receipt by the Company of any notice with respect to, the suspension of the qualification of the Shares for sale in any jurisdiction or the issuance by the Commission of any order suspending the effectiveness of the Registration Statement and (iii) of receipt by the Company or any representative of or attorney for the Company of any other communications from the Commission relating to the Company, the Registration Statement, any Preliminary Prospectus, the Prospectus or the transactions contemplated by this Underwriting Agreement. The Company shall make every reasonable effort to prevent the issuance of an order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto and, if any such order is issued, to obtain its lifting as soon as possible. The Company shall not file any amendment to the Registration Statement or any amendment of or supplement to the Prospectus before or after the Effective Date to which you shall reasonably object after being timely furnished in advance a copy thereof unless the Company shall conclude, upon the advice of counsel, that any such amendment must be filed at a time prior to obtaining such consent. (b) Within the time during which the Prospectus is required to be delivered under the Act, the Company shall comply with all requirements imposed upon it by the Act, as now or hereafter amended, and by the Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Shares as contemplated by the provisions hereof and by the Prospectus. If, during such period, any event shall occur as a result of which the Prospectus as then amended or supplemented include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading, or if it shall be necessary at any time to amend the Registration Statement or supplement the Prospectus to comply with the Act and the Regulations, the Company shall notify you promptly and prepare and file with the Commission an appropriate post-effective amendment to the Registration Statement or supplement to each Prospectus (in form and substance reasonably satisfactory to you) that will correct such statement or omission and shall use its best efforts to have any such post-effective amendment to the Registration Statement declared effective as soon as possible. (c) The Company shall promptly deliver to you two manually-signed copies of the Registration Statement, including exhibits and all amendments thereto, and to those persons (including your counsel) whom you identify to the Company, such number of conformed copies of the Registration Statement, with exhibits, each Preliminary Prospectus, the Prospectus and all amendments of and supplements to such documents, if any, as you may reasonably request. (d) The Company shall cooperate with the Underwriters and Weil, Gotshal & ▇▇▇▇▇▇ LLP ("Underwriters' Counsel") in connection with their efforts to qualify or register the Shares for sale under the state securities (or "Blue Sky") or foreign laws of such jurisdictions as you shall request, shall execute such applications and documents and furnish such information as reasonably may be required for such purpose and shall comply with such laws so as to continue such registrations and qualifications in effect for so long as may be required to complete the distribution of the Shares; provided, however, that in connection therewith the Company shall not be -------- ------- required to (i) qualify as a foreign corporation in any Securities held by Subscriber remain outstandingjurisdiction in which it is not so qualified as of the date hereof, (ii) file a consent to service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Shares in such jurisdiction or (iii) become subject to taxation in any jurisdiction in which it is not now so subject. (e) The Company shall make generally available (within the meaning of Section 11(a) of the Act) to its security holders and to you, in such numbers as you reasonably may request for distribution to the Underwriters, as soon as practicable but in no event later than 45 days after the end of its fiscal quarter in which the first anniversary date of the Effective Date occurs, an earnings statement, covering a period of at least twelve consecutive full calendar months commencing after the effective date of the Registration Statement, that satisfies the provisions of Section 11(a) of the Act and Rule 158 of the Regulations. (f) During a period of 180 days from the date of this Underwriting Agreement, the Company acknowledgesshall not, representswithout the prior written consent of Bear, warrants ▇▇▇▇▇▇▇, (i) issue, sell, offer or agree to sell, or otherwise dispose of, directly or indirectly, any shares of its capital stock (or any securities convertible into, exercisable for or exchangeable for shares of its capital stock) other than (a) the Company's issuance of shares of Common Stock in connection with the 275-for-one stock split, (b) the Company's issuance and agrees sale of Shares in accordance with this Underwriting Agreement and (c) the issuance of up to such number of shares of Common Stock (or options exercisable for up to such number of shares) reserved for issuance pursuant to the Company's Stock Option Plan as follows:specified in the Registration Statement, or (ii) acquire, or agree or commit to acquire or publicly announce its intention to acquire, directly or through a subsidiary, assets or securities of any other person, firm or corporation in a transaction or series of related transactions that would be material to the Company and its subsidiaries, taken as a whole. In addition, the Company has obtained and delivered to you a written undertaking from each of its directors, executive officers and principal stockholders (other than __________) that, during the period of 180 days from the date of this Underwriting Agreement, without the prior written consent of Bear, ▇▇▇▇▇▇▇, such person or entity will not sell, offer or agree to sell, or otherwise dispose of, directly or indirectly, any shares of capital stock (or any securities convertible into, exercisable for or exchangeable for shares of capital stock) of the Company or any of its subsidiaries. (g) During the three years following the Effective Date, the Company shall furnish to Bear, ▇▇▇▇▇▇▇, in such quantity as Bear, ▇▇▇▇▇▇▇ may reasonably request for distribution to the Underwriters, copies of (i) all reports of the Company to its stockholders, (ii) all reports, financial statements, and proxy or information statements filed by the Company with the Commission, any national securities exchange or the Nasdaq Stock Market and (iii) such other information concerning the Company and its affairs as Bear, ▇▇▇▇▇▇▇ may reasonably request from time to time. (h) The Company shall apply the proceeds from the sale of the Shares to be sold by it under this Underwriting Agreement in the manner set forth under "Use of Proceeds" in the Prospectus. The Company shall take such steps as shall be necessary to ensure that neither the Company nor any subsidiary shall become an "investment company" or a company "controlled" by an "investment company" within the meaning of such terms under the Investment Company Act. (i) The Company shall use its best efforts promptly to reservecause the Shares to be traded on the Nasdaq Stock Market and shall take all actions necessary to comply with the rules and regulations of the Nasdaq Stock Market in order to maintain the trading of the Shares on the Nasdaq Stock Market. (j) The Company shall comply with all registration, prior filing and reporting requirements of the Exchange Act and the rules and regulations thereunder, which may from time to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock time be applicable to permit the exercise in full Company. (k) The Company shall comply with all provisions of all undertakings contained in Part II of the outstanding Warrants. The Registration Statement. (l) Prior to the Closing Date and, if the Option is exercised, until the Additional Closing Date, the Company is currently organizing a stockholder meeting shall issue no press release or other communication or hold any press conference with respect to increase the number offering of authorized shares the Shares, or the financial condition, results of Common Stock operations, operations, business properties, assets, liabilities, or prospects of the Company, and has filed with the SEC without your prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingconsent. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officer

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants and agrees covenants with each Underwriter as follows: (a) Immediately following the execution of each Pricing Agreement, the Company will prepare a Prospectus Supplement setting forth the principal amount of Debt Securities covered thereby and their terms not otherwise specified in the applicable Indenture, whether the Debt Securities will be Senior Debt Securities or Subordinated Debt Securities, the names of the Underwriters participating in the offering and the principal amount of Debt Securities which each severally has agreed to purchase, the names of any Underwriters acting as manager or co-managers in connection with the offering (the "Representatives" which term shall include each Underwriter in the event that there be no manager or co-manager), the price at which the Securities are to be purchased by the Underwriters from the Company, the initial public offering price, the selling concession and reallowance, if any, and such other information as you and the Company deem appropriate in connection with the offering of the Securities. The Company will promptly transmit copies of the Prospectus Supplement to the Commission for filing pursuant to Rule 424 of the Regulations and will furnish to the Underwriters named therein as many copies of the Prospectus and such Prospectus Supplement as the Representatives shall reasonably request. (b) The Company will notify the Underwriters promptly, and confirm the notice in writing, of (i) the effectiveness of any amendment to the Registration Statement, of (ii) the receipt of any comments from the Commission with respect to the Registration Statement, the Prospectus or any Prospectus Supplement, (iii) any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, (iv) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose and (v) the mailing or the delivery to the Commission for filing of any supplement to the Prospectus or any document to be filed pursuant to the 1934 Act. The Company will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (c) The Company will give the Underwriters notice of its intention to file or prepare any amendment to the Registration Statement or any amendment or supplement to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the Underwriters with copies of any such amendment or supplement a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file any such amendment or supplement or use any such prospectus to which the Representatives or counsel to the Underwriters shall reasonably object, unless required to do so pursuant to the applicable federal securities laws. (d) The Company will deliver to the Representatives signed copies of the Registration Statement as initially filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein) and will also deliver to the Underwriters as many conformed copies of the Registration Statement as initially filed and of each amendment thereto (without exhibits) as the Underwriters may reasonably request. (e) If at any time when the Prospectus is required by the 1933 Act to be delivered in connection with sales of Securities any event shall occur or condition exist as a result of which it is necessary, in the opinion of counsel for the Underwriters, to further amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser or if it shall be necessary, in the view of such counsel, at any such time to amend or supplement the Registration Statement or the Prospectus in order to comply with the requirements of the 1934 Act or the 1934 Act Regulations, the Company will promptly prepare and file with the Commission such amendment or supplement, whether by filing documents pursuant to the 1934 Act or otherwise, as may be necessary to correct such untrue statement or omission or make the Registration Statement comply with such requirements. (f) The Company will endeavor, in cooperation with the Underwriters, to qualify the Securities for offering and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Representatives may designate and will maintain such qualification in effect for as long as may be required for the distribution of the Securities; provided, however, that the Company shall not be obligated to qualify as a foreign corporation in any jurisdiction in which it is not so qualified. In each jurisdiction in which the Securities have been so qualified, the Company will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for a period of not less than one year from the effective date of the Registration Statement. (g) With respect to each sale of Securities, the Company will make generally available to its security holders as soon as practicable, but not later than 60 days after the close of the period covered thereby, an earnings statement (in a form which complies with the provisions of Rule 158 under the 1933 Act Regulations) covering a twelve month period beginning not later than the first day of the Company's fiscal quarter next following the "Effective Date" (as defined in said Rule 158) of the Registration Statement. (h) The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the Prospectus under "Use of Proceeds." (i) The Company, during the period when the Prospectus is required to be delivered under the 1933 Act, will file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations. (j) Between the date of any Pricing Agreement and the later of termination of any trading restrictions or Closing Time with respect to the Securities, the Company will not, without your prior written consent, directly or indirectly, offer to sell, sell, enter into an agreement to sell, grant any option for the sale of, or otherwise dispose of, any new issue of debt securities of the Company with a maturity of more than one year, including additional Debt Securities (except for (i) any debt securities issued upon exercise of warrants, (ii) any debt securities of the Company denominated in a currency other than the currency in which the Securities subject to such Pricing Agreement shall use its best efforts be denominated) or any warrants for the purchase of debt securities of the Company with a maturity of more than one year. If the Securities designated in the applicable Pricing Agreement are convertible into Common Stock, for a period of 90 days from the date of the applicable Pricing Agreement, the Company will not, without your prior written consent, directly or indirectly, offer to reservesell, prior sell, enter into an agreement to February 15sell, 2000grant any option for the sale of, a sufficient number of or otherwise dispose of, any Common Stock, or security convertible into or exchangeable for Common Stock, other than (A) the Securities to be sold hereunder, (B) any shares of Common Stock from its authorized but unissued issued by the Company upon the exercise of an option or warrant or conversion of a security outstanding on the date hereof, (C) any shares of Common Stock or phantom stock units issued or options to permit the exercise in full of all purchase Common Stock granted pursuant to existing employee benefit plans or director compensation plans of the outstanding Warrants. The Company is currently organizing a stockholder meeting or (D) securities issued as consideration pursuant to increase acquisitions and registration statements registering resales of such securities. (k) If any Securities are designated by the number applicable Pricing Agreement to be convertible into Common Stock, the Company will reserve and keep available at all times, free of authorized preemptive rights, shares of Common Stock for the purpose of enabling the Company, and has filed with the SEC prior Company to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing satisfy any obligations to issue shares of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable stock upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion conversion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerSecurities.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees with the Underwriter as follows: (ia) The Company shall use its best efforts will endeavor to reservecause the Registration Statement to become effective and will advise you promptly and, prior to February 15if requested by you, 2000will confirm such advice in writing (i) when the Registration Statement has become effective and when any amendment thereto thereafter becomes effective, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain of any request by the listing of its Common Stock on Commission for amendments or supplements to the OTC Bulletin Board. Registration Statement or the Prospectus or for additional information, (iii) It will permit Subscriber to exercise its right to exercise of the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received issuance by the Company Commission of any stop order suspending the effectiveness of the Registration Statement or of the suspension of qualification of the Shares for offering or sale in accordance any jurisdiction, or the initiation or contemplation of any proceeding for such purposes and (iv) within the period of time referred to in Section 6(e) below, of the happening of any event that makes any statement made in the Registration Statement or the Prospectus (as then amended or supplemented) untrue in any material respect or that requires the making of any addition to or change in the Registration Statement or the Prospectus (as then amended or supplemented) to state a material fact required to be stated therein or necessary to make the statements therein not misleading or of the necessity to amend or supplement the Prospectus (as then amended or supplemented) to comply with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer Securities Act or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exerciselaw. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ If at any ▇▇▇▇▇▇▇▇ ▇▇▇▇▇& Company, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: Inc. , 2010 time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, the Company will make every reasonable effort to obtain the withdrawal of such order at the earliest possible time. (▇▇▇b) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇The Company will furnish you, without charge, three signed copies of the Registration Statement as originally filed with the Commission and of each amendment to it, including financial statements and all exhibits thereto, and will also furnish to you such number of conformed copies of the Registration Statement (without exhibits) as originally filed and of each amendment thereto as you may reasonably request. (c) The Company will not file any amendment to the Registration Statement or make any amendment or supplement to the Prospectus of which you shall not have been advised previously or to which you shall reasonably object in writing promptly after being so advised. (d) On the effective date of the Registration Statement and thereafter from time to time, for such period as in the opinion of counsel for the Underwriter a prospectus is required by law to be delivered in connection with sales by an Underwriter or a dealer, the Company will deliver to you and each dealer through whom Public Offering Shares may be sold without charge (except as provided below) as many copies of the Prospectus (and of any amendment or supplement thereto) as they may reasonably request. The Company consents to the use of such Prospectus (and of any amendment or supplement thereto) in accordance with the provisions of the Securities Act and with the securities or Blue Sky laws of the jurisdictions in which the Public Offering Shares are offered by the Underwriter and by selected dealers through whom Public Offering Shares may be sold, both in connection with the offering or sale of the Public Offering Shares and for such period of time thereafter as the Prospectus is required by law to be delivered in connection therewith. If during such period of time any event shall occur that in the judgment of the Company, or in the opinion of counsel for the Underwriter, requires that a material fact be stated in the Prospectus (as then amended or supplemented) in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary to amend or supplement the Prospectus to comply with the Securities Act or any other law, the Company at its own expense (except as provided below) will forthwith prepare and file with the Commission an appropriate amendment or supplement thereto, and will furnish to the Underwriter and each dealer through whom Shares may be sold without charge (except as provided below), a reasonable number of copies thereof. (e) The Company will cooperate with you and your counsel in connection with the registration or qualification of the Shares for offer and sale by you and by selected dealers through whom Public Offering Shares may be sold under the securities or Blue Sky laws of such jurisdictions as you may reasonably designate and will file such consents to service of process or other documents as may be necessary in order to effect such registration or qualification; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action that would subject it to the service of process in suits, other than those arising out of the offer and sale of the Public Offering Shares, in any jurisdiction where it is not now so subject. ▇▇▇▇▇▇▇▇ & Company, Interim Chief Executive OfficerInc. , 2010 (f) The Company will make generally available to its security holders an earnings statement, which need not be audited, covering a 12-month period commencing after the effective date of the Registration Statement and ending no later than 15 months thereafter, as soon as practicable after the end of such period, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and any applicable regulation, including Rule 158 under the Securities Act. (g) During the period of five years hereafter, the Company will furnish to you without charge (i) as soon as available, a copy of each report of the Company mailed to shareholders or filed with the Commission and (ii) from time to time such other proper information concerning the business and financial condition of the Company as you may reasonably request. (h) The Company will use its best efforts to have the Shares qualified for listing on the NASDAQ Global Market, subject to official notice of issuance of the Shares being sold by the Company, immediately after the Closing Date or as soon as practicable thereafter and, upon such issuance, the Company will be in compliance with the designation and maintenance criteria applicable to NASDAQ Global Market issuers.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followsthat: (ia) The Company shall will use its best efforts to reservecause the Registration Statement and any amendment thereof, prior if not effective at the time and date that this Agreement is executed and delivered by the parties hereto, to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock become effective. If the Registration Statement has become or becomes effective pursuant to permit the exercise in full of all Rule 430A of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase Rules and Regulations, or the number of authorized shares of Common Stock filing of the CompanyProspectus is otherwise required under Rule 424(b) of the Rules and Regulations, and has filed with the SEC prior Company will file the Prospectus, properly completed, pursuant to the date hereof a preliminary proxy statement in connection with applicable paragraph of Rule 424(b) of the Rules and Regulations within the time period prescribed and will provide evidence satisfactory to you of such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date"timely filing. The Company will transmit promptly advise you in writing (i) of the certificates representing shares of Common Stock issuable upon exercise receipt of any Warrants comments of the Commission, (together ii) of any request of the Commission for amendment of or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus or for additional information, (iii) when the Registration Statement shall have become effective, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the institution of any proceedings for that purpose. If the Commission shall enter any such stop order at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible moment. The Company will not file any amendment or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus of which you have not been furnished with a copy a reasonable time prior to such filing or to which you reasonably object or which is not in compliance with the certificates representing Act and the Warrants Rules and Regulations. (b) Subject to the Company's consent, which shall not so exercisedbe unreasonably withheld, the Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or the Prospectus which in your judgment may be necessary or advisable to enable the several Underwriters to continue the distribution of the Common Shares and will use its best efforts to cause the same to become effective as promptly as possible. The Company will fully and completely comply with the provisions of Rule 430A of the Rules and Regulations with respect to information omitted from the Registration Statement in reliance upon such Rule. (c) If at any time within the nine-month period referred to Subscriber via express courierin Section 10(a)(3) of the Act during which a prospectus relating to the Common Shares is required to be delivered under the Act any event occurs, by electronic transfer as a result of which the Prospectus, including any amendments or otherwise within three supplements, would include an untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or if it is necessary (3d) business As soon as practicable, but not later than 45 days after the Exercise Date if end of the first quarter ending after one year following the "effective date of the Registration Statement" (as defined in Rule 158(c) of the Rules and Regulations), the Company has received will make generally available to its security holders an earnings statement (which need not be audited) covering a period of 12 consecutive months beginning after the original Notice effective date of Exercise the Registration Statement which will satisfy the provisions of the last paragraph of Section 11(a) of the Act. (e) During such period as a prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, the Company, at its expense, but only for the nine-month period referred to in Section 10(a)(3) of the Act, will furnish to you or mail to your order copies of the Registration Statement, the Prospectus, the Preliminary Prospectus and Warrant being exercised by such date. In addition all amendments and supplements to any such documents in each case as soon as available and in such quantities as you may request, for the purposes contemplated by the Act. (f) The Company shall cooperate with you and your counsel in order to qualify or register the Common Shares for sale under (or obtain exemptions from the application of) the Blue Sky laws of such jurisdictions as you designate (including those of Canada) and under the applicable securities laws of such other remedies which nations as you may designate, will comply with such laws and will continue such qualifications, registrations and exemptions in effect so long as reasonably required for the distribution of the Common Shares. The Company shall not be available required to Subscriberqualify as a foreign corporation or to file a general consent to service of process in any such jurisdiction where it is not presently qualified. The Company will advise you promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Common Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event that of the issuance of any order suspending such qualification, registration or exemption, the Company, with your cooperation, will use its best efforts to obtain the withdrawal thereof. (g) During the period of five years hereafter, the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect furnish to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ FaxUnderwriters: (▇▇▇i) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officeras soon as practicable after the end of each fiscal

Covenants of the Company. For (a) The Registration Statement has become effective, and the Company will file the Prospectus, subject to the prior approval of the Underwriter, within the prescribed time period and will provide a copy of such filing to the Underwriter promptly following such filing. (b) The Company will not file any amendment or supplement to the Registration Statement or the Prospectus unless a copy thereof shall first have been submitted to the Underwriter within a reasonable period of time prior to the filing thereof and the Underwriter shall not have reasonably objected thereto in good faith. (c) The Company will notify the Underwriter promptly, and will, if requested, confirm such notification in writing: (1) when any amendment to the Registration Statement is filed; (2) of any request by the Commission for any amendments to the Registration Statement or any amendment or supplements to the Prospectus or for additional information; (3) of the issuance by the Commission of any stop order preventing or suspending the qualification of the Registration Statement or the Prospectus, or the initiation of any proceedings for that purpose or the threat thereof; (4) of becoming aware of the occurrence of any event that in the judgment of the Company makes any statement made in the Registration Statement or the Prospectus untrue in any material respect or that requires the making of any changes in the Registration Statement or the Prospectus in order to make the statements therein, in light of the circumstances in which they are made, not misleading; and (5) of receipt by the Company of any notification with respect to any suspension of the qualification or exemption from registration of the Shares for offer and sale in any jurisdiction. If at any time the Commission shall issue any order suspending the effectiveness of the Registration Statement in connection with the offering contemplated hereby or in connection with sales of Common Stock pursuant to market making activities by the Underwriter, the Company will make every reasonable effort to obtain the withdrawal of any such order at the earliest possible moment. If the Company has omitted any information from the Registration Statement, it will use its best efforts to comply with the provisions of and make all requisite filings with the Commission, the Securities Act and to notify the Underwriter promptly of all such filings. (d) If, at any time when the Prospectus relating to the Shares is required to be delivered under the Securities Act, the Company becomes aware of the occurrence of any event as a result of which the Prospectus, as then amended or supplemented, would, in the reasonable judgment of counsel to the Company or counsel to the Underwriter, include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or the Registration Statement, as then amended or supplemented, would, in the reasonable judgment of counsel to the Company or counsel to the Underwriter, include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading, or if for any other reason it is necessary, in the reasonable judgment of counsel to the Company or counsel to the Underwriter, at any time to amend or supplement the Prospectus or the Registration Statement to comply with the Securities Act, the Company will promptly notify the Underwriter and will promptly prepare and file with the Commission, at the Company’s expense, an amendment to the Registration Statement and/or an amendment or supplement to the Prospectus that corrects such statement and/or omission or effects such compliance and will deliver to the Underwriter, without charge, such number of copies thereof as the Underwriter may reasonably request. The Company consents to the use of the Prospectus or any amendment or supplement thereto by the Underwriter, and the Underwriter agrees to provide to each Investor, prior to the Closing Date a copy of the Prospectus and any amendments or supplements thereto. (e) The Company will furnish to the Underwriter and its counsel, without charge (i) one conformed copy of the Registration Statement as originally filed with the Commission and each amendment thereto, including financial statements and schedules, and all exhibits thereto, and (ii) so long as prospectus relating to the Shares is required to be delivered under the Securities Act, as many copies of the Prospectus or any Securities held by Subscriber remain outstandingamendment as the Underwriter may reasonably request. (f) The Company will comply with any undertakings contained in the Registration Statement. (g) Prior to the sale of the Shares to the Investors, the Company acknowledgeswill cooperate with the Underwriter and its counsel in connection with the registration or qualification, representsor exemption therefrom, warrants of the Shares for offer and agrees sale under the state securities or Blue Sky laws of such jurisdictions as follows:the Underwriter may reasonably request; provided, that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general service of process in any jurisdiction where it is not now so subject. (h) The Company will apply the net proceeds from the offering and sale of the Shares in the manner set forth in the Prospectus under the caption “Use of Proceeds.” (i) The Company shall will not at any time, directly or indirectly, take any action intended, or which might reasonably be expected, to cause or result in, or which will constitute, stabilization of the price of the Shares to facilitate the sale or resale of any of the Shares. (j) The Company will use its best efforts to reserve, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit effect the exercise in full of all listing of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase Shares on the number of authorized shares of Common Stock of the Company, NASDAQ Global Select Market as and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will when required by this Agreement and maintain the listing of its the Common Stock on the OTC Bulletin BoardNASDAQ Global Select Market. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officer

Covenants of the Company. For so long The Company hereby covenants to and with the Purchaser that: (a) the Shares to be issued will be duly and validly created and issued; (b) the Company will use its reasonable commercial efforts to obtain all necessary approvals of the TSXV for the issuance of the Shares pursuant to this Agreement subject only to the filing of required documents which cannot reasonably be filed until after the Closing Date; (c) the Company will continue to be a Qualifying Issuer as of the Closing Date; (d) the Company will duly, punctually and faithfully perform all of the obligations to be performed by it under this Agreement; (e) as soon as is reasonably practicable, and in any Securities held by Subscriber remain outstandingevent on or before the Closing Date, the Company acknowledgesshall take all such steps, representsif any, warrants as may reasonably be necessary to enable the Shares to be offered for sale and agrees sold on a private placement basis, as followsthe case may be, by way of the Exemptions; (f) the Company will use its reasonable commercial efforts to ensure the Shares will be listed for trading on the TSXV; (g) during the period commencing with the date hereof and ending on the day after the Closing Date, the Company will promptly inform the Purchaser and the Purchaser's counsel in writing of: (i) The Company shall use its best efforts to reserve, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all any request of the outstanding Warrants. The securities regulatory bodies in the jurisdiction in which the Company is currently organizing a stockholder meeting to increase reporting issuer (the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior "Securities Commissions") for any amendment to the date hereof a preliminary proxy statement in connection with such stockholder meeting.Public Record; (ii) It will maintain the listing issuance by the Securities Commissions or any other securities commission or similar regulatory authority of its Common Stock on any other jurisdiction, the OTC Bulletin Board.TSXV or by any other competent authority of any order to cease or suspend trading of any securities of the Company or of the institution or threat of institution of any proceedings for that purpose; or (iii) It the receipt by the Company of any communication from the Securities Commissions or any other securities commission or similar regulatory authority of any other jurisdiction, the TSXV or any other competent authority relating to the Public Record or the distribution of the Shares; (h) the Company will permit Subscriber promptly comply, to exercise the reasonable satisfaction of the Purchaser and the Purchaser's counsel, with the Securities Laws with respect to any change or occurrence of the nature referred to in paragraph 5(g) above; (i) the Company will use its right reasonable commercial efforts to exercise maintain its status as a reporting issuer in British Columbia, Alberta, Manitoba, Ontario and the Warrants Yukon Territory not in default of any requirement under the Securities Laws which would reasonably be expected to affect trading in the Company's securities; (j) the Company will use its reasonable commercial efforts to maintain its listed status on the TSXV; (k) the Company will issue, as required by telecopying an executed the Securities Laws, press releases regarding the issuance of the Shares; (l) the Company agrees to make available to the Purchaser, the Purchaser's counsel and completed Notice the Purchaser's other professional advisors all books and records of Exercise the Company necessary, in the Purchaser's opinion, for the Purchaser to complete a due diligence review of the Company and delivering the original Notice of Exercise its business and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company affairs, financial or otherwise, in accordance with industry practice in the provisions hereof context of a private placement of securities, and, in furtherance thereof, the Purchaser, the Purchaser's counsel and the Purchaser's other professional advisors shall be deemed an "Exercise Date". The Company will transmit have the certificates representing shares of Common Stock issuable right, acting reasonably and upon exercise of any Warrants (together written request, to meet with the certificates representing senior management and the Warrants not so exercisedauditors of the Company; (m) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise shall continue to operate its business and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, affairs in the event that normal course and shall not, without the Purchaser's consent, as of the date hereof and until the Closing Date, reserve, allot, create or issue any Shares or other securities convertible into Shares, or rights to purchase the foregoing, except in connection with the Offering, or for Shares issued and options issued under the Company's Stock Option Plans; (n) the Company fails shall take all necessary steps to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion sell all of the Warrant exercised shall be delivered as follows: To shares in the Company: Spatializer Audio Laboratories, Inc. capital stock of USSubCo to ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ for the consideration of US$10 (the "USSubCo Sale"); and (o) at the time of the USSubCo Sale, Interim Chief Executive Officerthe Company shall obtain a release by USSubCo of all claims it may have at present or in the future against the Company in a form satisfactory to the Purchaser acting reasonably for consideration paid by the Company of US$60,000.

Covenants of the Company. For The Company covenants and agrees that: (a) The Company will use its best efforts to cause the Registration Statement and any amendment thereof, if not effective at the time and date that this Agreement is executed and delivered by the parties hereto, to become effective. If the Registration Statement has become or becomes effective pursuant to Rule 430A of the Rules and Regulations, or the filing of the Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations, the Company will file the Prospectus, properly completed, pursuant to the applicable paragraph of Rule 424(b) of the Rules and Regulations within the time period prescribed and will provide evidence satisfactory to you of such timely filing. The Company will promptly advise you in writing (i) of the receipt of any comments of the Commission, (ii) of any request of the Commission for amendment of or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus or for additional information, (iii) when the Registration Statement shall have become effective and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the institution of any proceedings for that purpose. If the Commission shall enter any such stop order at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible moment. The Company will not file any amendment or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus of which you have not been furnished with a copy a reasonable time prior to such filing or to which you reasonably object or which is not in compliance with the Act and the Rules and Regulations. (b) The Company will prepare and file with the Commission, promptly upon your request, a registration statement pursuant to Rule 462(b) of the Rules and Regulations related to the Common Shares and any amendments or supplements to the Registration Statement or the Prospectus which in your judgment may be necessary or advisable to enable the several Underwriters to continue the distribution of the Common Shares and will use its best efforts to cause the same to become effective as promptly as possible. The Company will fully and completely comply with the provisions of Rule 430A of the Rules and Regulations with respect to information omitted from the Registration Statement in reliance upon such Rule. (c) The Company will immediately notify you in writing if, at any time prior to the earliest of (i) the Second Closing Date on which all remaining Optional Common Shares are purchased, (ii) the cancellation of the options to purchase the Optional Common Shares as provided herein, and (iii) of the expiration of the options to purchase the Optional Common Shares as provided herein, any representation or warranty of the Company set forth herein shall not be true and accurate in all material respects or, without limiting the foregoing, if there shall have been any material adverse change, or a development involving a material adverse change, in the condition (financial or otherwise), properties, business, results of operations or prospects of the Company. (e) As soon as practicable, but not later than 45 days after the end of the first quarter ending after one year following the "effective date of the Registration Statement" (as defined in Rule 158(c) of the Rules and Regulations), the Company will make generally available to its security holders an earnings statement (which need not be audited) covering a period of 12 consecutive months beginning after the effective date of the Registration Statement which will satisfy the provisions of the last paragraph of Section 11(a) of the Act. (f) During such period as a prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, the Company, at its expense, but only for the nine-month period referred to in Section 10(a) (3) of the Act, will furnish to you and the Selling Stockholders or mail to your order copies of the Registration Statement, the Prospectus, the Preliminary Prospectus and all amendments and supplements to any such documents in each case as soon as available and in such quantities as you and the Selling Stockholders may request, for the purposes contemplated by the Act. (g) The Company shall cooperate with you and your counsel in order to qualify or register the Common Shares for sale under (or obtain exemptions from the application of) the Blue Sky laws of such jurisdictions as you designate, will comply with such laws and will continue such qualifications, registrations and exemptions in effect so long as reasonably required for the distribution of the Common Shares. The Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any Securities held by Subscriber remain outstandingsuch jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise you promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Common Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company, with your cooperation, will use its best efforts to obtain the withdrawal thereof. (h) During the period of five years hereafter, the Company acknowledgeswill furnish to the Representatives and, representsupon the request of the Representatives, warrants and agrees as followsto each of the other Underwriters: (i) The Company shall use its best efforts to reserveas soon as practicable after the end of each fiscal year, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all copies of the outstanding Warrants. The Annual Report of the Company is currently organizing a stockholder meeting to increase containing the number balance sheet of authorized shares the Company as of Common Stock the close of such fiscal year and statements of income, stockholders' equity and cash flows for the year then ended and the opinion thereon of the Company's independent public accountants; (ii) as soon as practicable after the filing thereof, and has copies of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other report filed by the Company with the SEC prior Commission, the NASD or any securities exchange; and (iii) as soon as available, copies of any report or communication of the Company mailed generally to the date hereof a preliminary proxy statement in connection with such stockholder meetingholders of its Common Stock. (iii) It will maintain During the listing period of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business 180 days after the Exercise Date if first date that any of the Company has received the original Notice of Exercise and Warrant being exercised Common Shares are released by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect you for sale to the Company whereupon public, without the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery written consent of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇Mont▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇urities (which consent may be withheld at the sole discretion of Mont▇▇▇▇▇▇ ▇▇▇▇▇urities), ▇▇ ▇▇▇▇▇the Company will not other than pursuant to the Company's stock option plans or warrants disclosed in the Prospectus issue, offer, sell, grant options to purchase or otherwise dispose of any of the Company's equity securities or any other securities convertible into or exchangeable with its Common Stock or other equity security. (j) The Company will apply the net proceeds of the sale of the Common Shares sold by it substantially in accordance with its statements under the caption "Use of Proceeds" in the Prospectus. (k) The Company will use its best efforts to qualify or register its Common Stock for sale in non-▇▇▇▇ Fax: issuer transactions under (▇▇▇or obtain exemptions from the application of) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇the Blue Sky laws of the State of California (and thereby permit market making transactions and secondary trading in the Company's Common Stock in California), will comply with such Blue Sky laws and will continue such qualifications, registrations and exemptions in effect for a period of five years after the date hereof. (l) The Company will use its best efforts to designate the Common Stock for listing on the Nasdaq National Market. (m) The Company will maintain a transfer agent and registrar for its Common Stock. ▇▇▇▇▇▇▇You, Interim Chief Executive Officeron behalf of the Underwriters, may, in your sole discretion, waive in writing the performance by the Company of any one or more of the foregoing covenants or extend the time for their performance.

Covenants of the Company. For The Company covenants and agrees with the Underwriters that: (a) The Company will use its best efforts to cause the Registration Statement to become effective. The Company will advise you promptly of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement (and make every reasonable effort to obtain the withdrawal of such order as early as possible) or of the institution of any proceedings for that purpose, or of any notification of the suspension of qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceedings for that purpose, and will also advise you promptly of any request of the Commission for amendment or supplement of the Registration Statement, of any preliminary prospectus or of the Prospectus, or for additional information, and will not file any amendment or supplement to the Registration Statement, to any preliminary prospectus or to the Prospectus of which you have not been furnished with a copy prior to such filing or to which you reasonably object. (b) If at any time when a prospectus relating to the Shares is required to be delivered under the 1933 Act, any event occurs as a result of which the Prospectus, including any amendments or supplements, would include an untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Prospectus, including any amendments or supplements thereto and including any revised prospectus which the Company proposes for use by the Underwriters in connection with the offering of the Shares which differs from the prospectus on file with the Commission at the time of effectiveness of the Registration Statement, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) to comply with the 1933 Act, the Company promptly will advise you thereof and will promptly prepare and, if required pursuant to Rule 424(b), file with the Commission an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance. (c) Neither the Company nor any of its subsidiaries will, prior to the earlier of the Second Closing Date or termination or expiration of the related option, incur any material liability or obligation, direct or contingent, or enter into any material transaction, other than in the ordinary course of business, except as contemplated by the Prospectus. (d) The Company will not declare or pay any dividend or make any other distribution upon the Common Stock payable to shareholders of record on a date prior to the earlier of the Second Closing Date or termination or expiration of the related option, except as contemplated by the Prospectus. (e) Not later than 90 days after the close of the period covered thereby, the Company will make generally available to its security holders an earnings statement (which need not be audited) covering a period of at least 12 months beginning after the effective date of the Registration Statement, which will satisfy the provisions of the last paragraph of Section 11(a) of the 1933 Act and Rule 158 thereunder. (f) During such period as a prospectus is required by law to be delivered in connection with offers and sales of the Shares by an underwriter or dealer, the Company will furnish to you at its expense (and consents to the use thereof), subject to the provisions of subsection (b) hereof, copies of the Registration Statement, the Prospectus, each preliminary prospectus and all amendments and supplements to any such documents in each case as soon as available and in such quantities as you may reasonably request, for the purposes contemplated by the 1933 Act. (g) The Company will cooperate with the Underwriters in qualifying or registering the Shares for sale under the blue sky laws of such jurisdictions as you designate, and will continue such qualifications in effect so long as reasonably required for the distribution of the Shares. The Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any Securities held by Subscriber remain outstandingsuch jurisdiction where it is not currently qualified or where it would be subject to taxation as a foreign corporation. (h) During the period of three years after the date of the Pricing Agreement, the Company acknowledgeswill furnish to the Representative a copy (i) as soon as practicable after the filing thereof, representsof each report filed by the Company with the Commission, warrants the Amex, any other securities exchange or the NASD and agrees (ii) as follows:soon as available, of each report of the Company mailed to any class of its securityholders. (i) The Company will use the net proceeds received by it from the sale of the Shares in the manner specified in the Prospectus under the caption "Use of Proceeds." (j) If, at the time of effectiveness of the Registration Statement, any information shall use its best efforts to reservehave been omitted therefrom in reliance upon Rule 430A, prior to February 15then immediately following the execution and delivery of the Pricing Agreement, 2000the Company will prepare, and file or transmit for filing with the Commission in accordance with such Rule 430A and Rule 424(b), copies of an amended prospectus, or, if required by such Rule 430A, a sufficient number post-effective amendment to the Registration Statement (including an amended prospectus), containing all information so omitted. (k) The Company will comply with all of the provisions of each undertaking contained in the Registration Statement. (l) The Company will not, without the prior written consent of the Representative, sell, contract to sell or otherwise dispose of any equity security of the Company (including shares of Common Stock) for a period of 180 days after the effective date of the Registration Statement, other than (i) Common Stock issued and sold to the Underwriters pursuant to this Agreement, and (ii) Common Stock issued upon exercises of outstanding stock options granted under the Company's 1988 Stock Option Plan or 1995 Stock Option Plan (as such terms are defined in the Prospectus) in the aggregate not to exceed __________ shares of Common Stock. The Company will cause each of its executive officers and directors to deliver to the Representative on or before the date of this Agreement an agreement satisfactory in form and substance to the Representative and its counsel, whereby each agrees, for a period of 180 days after the effective date of the Registration Statement, not to offer, sell or otherwise dispose of any shares of Common Stock from its authorized but unissued shares of Common Stock to permit without the exercise in full of all prior written consent of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingRepresentative ("Lock-Up Letter"). (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officer

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followsthat: (ia) The Company shall will use its best efforts to reservecause the Registration Statement and any amendment thereof, prior if not effective at the time and date that this Agreement is executed and delivered by the parties hereto, to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock become effective. If the Registration Statement has become or becomes effective pursuant to permit the exercise in full of all Rule 430A of the outstanding WarrantsRules and Regulations, or the filing of the Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations, the Company will file the Prospectus, properly completed, pursuant to the applicable paragraph of Rule 424(b) of the Rules and Regulations within the time period prescribed and will provide evidence satisfactory to you of such timely filing. The Company will promptly advise you in writing (i) of the receipt of any comments of the Commission, (ii) of any request of the Commission for amendment of or supplement to the Registration Statement 12 (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus or for additional information, (iii) when the Registration Statement shall have become effective and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the institution of any proceedings for that purpose. If the Commission shall enter any such stop order at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible moment. The Company will not file any amendment or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus of which you have not been furnished with a copy a reasonable time prior to such filing or to which you reasonably object or which is currently organizing not in compliance with the Act and the Rules and Regulations. (b) The Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or the Prospectus which in your reasonable judgment may be necessary or advisable to enable the Underwriter to continue the distribution of the Common Shares and will use its best efforts to cause the same to become effective as promptly as possible. The Company will fully and completely comply with the provisions of Rule 430A of the Rules and Regulations with respect to information omitted from the Registration Statement in reliance upon such Rule. (c) If at any time within the nine-month period referred to in Section 10(a)(3) of the Act during which a stockholder meeting prospectus relating to increase the number Common Shares is required to be delivered under the Act any event occurs, as a result of authorized shares which the Prospectus, including any amendments or supplements, would include an untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances then existing, not misleading, or if it is necessary at any time to amend the Prospectus, including any amendments or supplements, to comply with the Act or the Rules and Regulations, the Company will promptly advise you thereof and will promptly prepare and file with the Commission, at its own expense, an amendment or supplement which will correct such statement or omission or an amendment or supplement which will effect such compliance and will use its best efforts to cause the same to become effective as soon as possible; and, in case you or any Underwriters are required to deliver a Prospectus after such nine-month period, the Company upon request, but at the expense of you or such Underwriters, will promptly prepare such amendment or amendments to the Registration Statement and such Prospectus or Prospectuses as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Act. (d) As soon as practicable, but not later than 45 days after the end of the first quarter ending after one year following the "effective date of the Registration Statement" (as defined in Rule 158(c) of the Rules and Regulations), the Company will make generally available to its security holders an earnings statement (which need not be audited) covering a period of 12 consecutive months beginning after the effective date of the Registration Statement which will satisfy the provisions of the last paragraph of Section 11(a) of the Act. (e) During such period as a Prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, the Company, at its expense, but only for the nine-month period referred to in Section 10(a)(3) of the Act, will furnish to you or mail to your order copies of the Registration Statement, the Prospectus, the Preliminary Prospectus and all amendments and supplements to any such documents in each case as soon as available and in such quantities as you may request, for the purposes contemplated by the Act. (f) The Company shall cooperate with you and your counsel in order to qualify or register the Common Shares for sale under (or obtain exemptions from the application of) the Blue Sky laws of such jurisdictions as you designate, will comply with such laws and will continue such qualifications, registrations and exemptions in effect so long as reasonably required for the distribution of the Common Shares. The Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise you promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Common Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company, with your cooperation, will use its best efforts to obtain the withdrawal thereof. (g) The Company shall promptly prepare and file with the Commission, from time to time, such reports as may be required to be filed by the Act and the Exchange Act including, without limitation, reports with respect to the sale of the Common Shares and the application of the proceeds thereof as may be required in accordance with Rule 463 under the Act. (h) During the period of five years hereafter, the Company will furnish to you: (i) at the same time as such are furnished to its Stockholders generally, copies of the Annual Report of the Company containing the consolidated balance sheet of the Company and the Subsidiaries as of the close of such fiscal year and consolidated statements of income, stockholders' equity and cash flows for the year then ended and the opinion thereon of the Company's independent public accountants; (ii) as soon as practicable after the filing thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report filed by the Company with the Commission, the NASD or any securities exchange; (iii) as soon as available, copies of any report or communication 14 of the Company mailed generally to holders of its Common Stock; (iv) as soon as practicable after the filing thereof, of each non-confidential report or other statement or document filed by the Company with the Commission, or with any national securities exchange or quotation system on which any securities of the Company may be listed or quoted; and (v) from time to time, such other non-confidential information concerning the Company as you may reasonably request. (i) During the period of 180 days after the date the Registration Statement is declared effective by the Commission, without your prior written consent, which consent may be withheld at your sole discretion, the Company will not, directly or indirectly, issue, offer, sell, grant options to purchase or otherwise dispose of any of the Company's equity securities or any other securities convertible into, exchangeable for or exercisable for its Class A Common Stock or other equity security of the Company, other than (i) shares of Class A Common Stock or Class B Common Stock issued upon the exercise of outstanding stock options disclosed in the Prospectus; (ii) shares of Class A Common Stock or Class B Common Stock issued upon conversion of outstanding convertible securities disclosed in the Prospectus, (iii) options to purchase Class A Common Stock or Class B Common Stock to be granted under the Company's stock option plans or approved as of September 30, 1997 by the Company's Board of Directors, as described under the caption "Capitalization" in the Prospectus, and has filed the shares of Class A Common Stock issued upon exercise of such options, and (iv) shares of Class A Common Stock or Class B Common Stock issued as fees to directors of the Company, salary to employees of the Company, dividends on the Company's stock, or bonuses under the Company's employee bonus plan. (j) The Company will apply the net proceeds of the sale of the Common Shares sold by it substantially in accordance with its statements under the SEC caption "Use of Proceeds" in the Prospectus. (k) The Company will use its best efforts to list, subject to notice of issuance, the Common Shares as a national market system security on the Nasdaq Stock Market. (l) The Bank shall continue to maintain a system of internal accounting controls as required under FDICIA. (m) The Company will not distribute prior to the date hereof a preliminary proxy statement First Closing Date any offering material in connection with such stockholder meetingthe offering and sale of the Common Shares other than the Preliminary Prospectus, the Prospectus, the Registration Statement and the other materials permitted by the Act. (iin) It The Company will maintain not take, directly or indirectly, any action designed to cause or result in, or which has constituted or which reasonably might be expected to constitute, the listing stabilization or manipulation of its the price of the Class A Common Stock on to facilitate the OTC Bulletin Boardsale or resale of the Common Shares. (iiio) It The Company will permit Subscriber to exercise its right to exercise not rely upon the Warrants by telecopying an executed and completed Notice of Exercise to Representatives or legal counsel for the Company and delivering Representatives for any legal, tax or accounting advice in connection with the original Notice of Exercise and Offering. You may, in your sole discretion, waive in writing the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received performance by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer one or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion more of the Warrant exercised shall be delivered as follows: To foregoing covenants or extend the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officertime for their performance.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, The Company covenants with the Company acknowledges, represents, warrants and agrees Agent as follows: (ia) The Company shall will prepare the Prospectus in a form approved by the Agent and will file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than the SEC’s close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by applicable SEC rules. The Company will not make any further amendment or any supplement to the Registration Statement or Prospectus which is not approved by the Agent promptly after reasonable notice thereof. The Company will advise the Agent, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Agent with copies thereof, and will advise the Agent, promptly after it receives notice thereof, of the issuance by the SEC or any state securities regulator of any stop order or of any order preventing or suspending the use of any Issuer Represented Free Writing Prospectus or Prospectus, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the SEC or any state securities regulator for the amending or supplementing of the Registration Statement or the Prospectus, or for additional information. In the event of the issuance of any stop order or of any order preventing or suspending the use of any Prospectus or suspending any qualification of the Securities for offering or sale, the Company will promptly use its best efforts to reserveobtain the withdrawal of such order. (b) If at any time following issuance of an Issuer Represented Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Represented Free Writing Prospectus conflicted or would conflict in any material respect with the information contained in the Registration Statement or Prospectus or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the Company will notify promptly the Agent that any use of such Issuer Represented Free Writing Prospectus may cease until it is amended or supplemented, and the Company will promptly amend or supplement such Issuer Represented Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission. (c) The Company represents and agrees that, unless it obtains the prior written consent of the Agent, it has not made and will not make any offer relating to February 15the Securities that would constitute an “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act, 2000or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405 under the Securities Act, required to be filed with the SEC. Any such free writing prospectus consented to by the Company and the Agent is hereinafter referred to as a sufficient number “Permitted Free Writing Prospectus.” The Company represents that it has treated or agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of shares Rule 433 applicable to any Permitted Free Writing Prospectus, including timely filing with the SEC where required, legending and record keeping. The Company represents that it has satisfied the conditions in Rule 433 to avoid a requirement to file with the SEC any electronic road show. (d) The Company will promptly take such action as may be necessary to qualify the Securities for offering and sale under the securities laws of Common Stock from its authorized but unissued shares the States of Common Stock or jurisdictions in which any of the Company’s shareholders reside, and to comply with such laws so as to permit the exercise continuance of sales and dealings therein in full such jurisdictions for as long as may be necessary to complete the distribution of the Securities; (e) The Company will promptly furnish the Agent with copies of the Prospectus in such quantities as the Agent may from time to time reasonably request, and, if the delivery of a prospectus is required at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Securities and if at such time any event has occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it will be necessary during such period to amend or supplement the Prospectus in order to comply with the Securities Act or applicable state securities laws, the Company will notify the Agent and, upon the Agent’s request, will prepare and furnish without charge to the Agent and to any dealer in securities as many copies as the Agent may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance, and in case the Agent is required to deliver a prospectus in connection with sales of any of the Securities at any time nine months or more after the time of issue of the Prospectus, upon its request but at the expense of the Agent, to prepare and deliver to the Agent as many copies as the Agent may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Securities Act; (f) The Company will make generally available to its security holders as soon as practicable, but in any event not later than 18 months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Securities Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act and the rules and regulations thereunder; (g) During the period of 180 days after the consummation of all sales of Securities in the Offering (the “Lock-Up Period”), without the Agent’s prior written consent, the Company will not, and will not allow any of its directors or executive officers to, (i) offer, sell, agree to sell, contract to sell, hypothecate, pledge, grant any option to purchase, make any short sale, or otherwise dispose of or hedge, directly or indirectly, except as provided hereunder, any securities of the outstanding WarrantsCompany that are substantially similar to the Securities, including but not limited to any securities that are convertible into or exchangeable for, or that represent the right to receive, Securities or any such substantially similar securities or (ii) enter into any swap or any other agreement or transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Securities and any securities convertible or exchangeable into the Securities, or publicly announce an intention to effect any such transaction described in the foregoing (i) or (ii). The foregoing sentence will not apply to shares issued pursuant to employee stock option plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this Agreement. Notwithstanding the foregoing, if: (1) during the last 17 days of such 180-day period the Company is currently organizing issues an earnings release or material news or a stockholder meeting material event relating to increase the number Company occurs; or (2) prior to the expiration of authorized shares such 180-day period, the Company announces that it will release earnings results during the 16-day-period beginning on the last day of Common Stock such 180-day period, the restrictions imposed by this Section 3(g) will continue to apply until the expiration of the Company18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event, unless the Agent waives, in writing, such extension; (h) The Company will furnish to its shareholders, as soon as practicable after the end of each fiscal year, an annual report (including a balance sheet and has filed statements of income, stockholders’ equity and cash flows of the Company and its consolidated subsidiaries certified by an independent registered public accounting firm) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), to make available to its shareholders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail; (i) To use the net proceeds received by it from the sale of the Securities pursuant to this Agreement in the manner specified in the Prospectus under the caption “Use of Proceeds”; (j) To file with the SEC prior to such information on Form 10-K or Form 10-Q as may be required by Rule 463 under the date hereof a preliminary proxy statement in connection with such stockholder meeting.Securities Act; and (iik) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) comply, and use its best efforts to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise cause its directors and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriberofficers, in their capacities as such, to comply, in all material respects, with all effective applicable provisions of federal and state securities laws and the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company rules and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerregulations thereunder.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstandingThe Company covenants and agrees with the several Underwriters that: (a) If the effective time of the Registration Statement is not prior to the execution and delivery of this Agreement, the Company acknowledges, represents, warrants and agrees as follows: (i) The Company shall will use its best efforts to reservecause the Registration Statement to become effective at the earliest possible time and, upon notification from the Commission that the Registration Statement has become effective, will so advise the Representatives and counsel to the Underwriters promptly. If the effective time of the Registration Statement is prior to February 15the execution and delivery of this Agreement and any information shall have been omitted therefrom in reliance upon Rule 430A, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has at the earliest possible time, will furnish the Representatives with a copy of the Prospectus to be filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date"Commission to comply with Rule 424(b) and Rule 430A under the Act and, if the Representatives do not object to the contents thereof, will comply with such Rules. Upon compliance with such Rules, the Company will so advise the Representatives promptly. The Company will transmit advise the certificates representing shares Representatives and counsel to the Underwriters and the Attorneys-in-Fact promptly of Common Stock issuable upon exercise the issuance by the Commission or any state securities commission of any Warrants stop order suspending the effectiveness of the Registration Statement or of the institution of any proceedings for that purpose, or of any notification of the suspension of qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceedings for that purpose, and will also advise the Representatives and counsel to the Underwriters and the Attorneys-in-Fact promptly of any request of the Commission for amendment or supplement of the Registration Statement, of any Preliminary Prospectus or of the Prospectus, or for additional information, and the Company will not file any amendment or supplement to the Registration Statement (together with either before or after it becomes effective), to any Preliminary Prospectus or to the certificates representing Prospectus (including a prospectus filed pursuant to Rule 424(b)), or file any document under the Warrants not so exercised) Exchange Act before the termination or completion of the public offering of the Shares by the Underwriters if such document would be deemed to Subscriber via express courierbe incorporated by reference in the Registration Statement, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received Representatives have not been furnished with a copy prior to such filing (with a reasonable opportunity to review such amendment or supplement) or if the original Notice Representatives reasonably object to such filing. (b) If, at any time when a prospectus relating to the Shares is required by law to be delivered in connection with sales by an Underwriter or dealer, any event occurs as a result of Exercise and Warrant being exercised by such date. In addition which the Prospectus would include an untrue statement of a material fact, or would omit to state any other remedies which may material fact required to be available stated therein or necessary to Subscribermake the statements therein, in the event that light of the circumstances under which they were made, not misleading, or if it is necessary at any time to supplement the Prospectus to comply with the Act or to file under the Exchange Act any document which would be deemed to be incorporated by reference in the Registration Statement to comply with the Act or the Exchange Act, the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber promptly will be entitled to revoke advise the relevant Notice of Exercise by delivering a notice to such effect Representatives and counsel to the Company whereupon Underwriters and the Company Attorneys-in-Fact thereof and Subscriber shall each be restored will promptly prepare and file with the Commission, at its expense, an amendment to their respective positions immediately prior the Registration Statement or a Current Report on Form 8-K with such documents that will correct such statement or omission or will effect such compliance; and, if any Underwriter is required to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing deliver a prospectus after the portion effective date of the Warrant exercised shall be delivered as follows: To Registration Statement, the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇upon request of the Representatives, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerwill prepare promptly such prospectus or prospectuses as may be

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants and agrees as followscovenants that it will: (a) Notify you immediately, and confirm such notice in writing, (i) when any event shall have occurred during the period commencing on the date hereof and ending on the Final Closing Date, as a result of which the Bridge Disclosure Statement or Disclosure Statement would include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (ii) of the receipt of any notification with respect to the modification, rescission, withdrawal, or suspension of the qualification or registration of the Bridge Units or Units, or of an exemption from such registration or qualification, in any jurisdiction. The Company shall will use its best efforts to reserveprevent the issuance of any such modification, prior rescission,, withdrawal, or suspension and if you so request, to February 15obtain the lifting thereof as promptly as possible. (b) Not make any supplement or amendment to the Bridge Disclosure Statement or Disclosure Statement unless such supplement or amendment complies with the requirements of the Act and Regulation D and the applicable federal and/or state securities and "blue sky" laws and unless you shall have approved of such supplement or amendment in writing. If, 2000at any time during the period commencing on the date hereof and ending on the Final Closing Date, any event shall have occurred as a sufficient result of which the Bridge Disclosure Statement or Disclosure (c) Deliver without charge to the Placement Agent such number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all copies of the outstanding WarrantsBridge Disclosure Statement or Disclosure Statement and any supplement or amendment thereto as may reasonably be requested by the Placement Agent. (d) Not, directly or indirectly, solicit any offer to buy from, or offer to sell to any person any Bridge Units or Units, except through the Placement Agent. (e) Use its best efforts to qualify or register the Bridge Units and Units for offering and sale under, or establish an exemption from such qualification or registration under, the securities or "blue sky" laws of such jurisdictions as you may reasonably request; provided, however, that the Company will not be obligated to qualify to do business as a dealer in securities in any jurisdiction in which it is not so qualified. The Company is currently organizing a stockholder meeting will not consummate any sale of the Bridge Units and Units in any jurisdiction or in any manner in which such sale may not be lawfully made; in this regard the Company shall be entitled to increase rely on the number Placement Agent's representations herein, and the representations of authorized shares Prospective Investors in the Subscription Agreement and Purchaser Questionnaire and on the Blue Sky qualifications effected by the Placement Agent's counsel. (f) At all times during the period commencing on the date hereof and ending on the Final Closing Date, provide to each Prospective Investor or his Purchaser Representative (as defined in Regulation D), if any, on request, such information (in addition to that contained in the Bridge Disclosure Statement or Disclosure Statement) concerning the Bridge Offering and Offering, the Company and any other relevant matters, as it possesses or can acquire without unreasonable effort or expense, and to extend to each Prospective Investor or his Purchaser Representative, if any, the opportunity to ask questions of, and receive answers from an officer of Common Stock the Company concerning the terms and conditions of the Bridge Offering and Offering and the business of the Company and to obtain any other additional information, to the extent it possesses the same or can acquire it without unreasonable effort or expense, as such Prospective Investor or Purchaser Representative may consider necessary in making an informed investment decision or in order to verify the accuracy of the information furnished to such Prospective Investor or Purchaser Representative, as the case may be. (g) Provide to each Prospective Investor or his Purchaser Representative any information required to be delivered by Rule 502(b) of Regulation D. (h) Disclose to each Prospective Investor, in writing, any material relationship between such Prospective Investor's Purchaser Representative, if any, or its affiliates, on the one hand, and the Company or its affiliates, on the other hand, which, to the knowledge of the Company, then exists or is understood to be contemplated or has existed at any time during the previous two years and has filed any compensation received or to be received as a result of such relationship. (i) Before accepting any subscription to purchase Bridge Units or Units from, or making any sale to, any Prospective Investor, have reasonable grounds to believe and will believe (after making reasonable inquiry as required under the -21- 22 Subscription Agreements and Investor Questionnaires) that (A) such Prospective Investor meets the suitability requirements for investing in the Bridge Units or Units as set forth respectively in the Bridge Disclosure Statement or Disclosure Statement, and (B) such Prospective Investor is an Accredited Investor (as defined in Regulation D). (j) Notify you promptly of the acceptance or rejection of any subscription. The Company shall not (i) accept subscriptions from, or make sales of the Bridge Units or Units to, any Prospective Investors who are not, to the Company's knowledge, accredited investors, or (ii) unreasonably reject any subscription for the Bridge Units or Units. (k) File five copies of a Notice of Sales of Securities on Form D with the SEC prior Securities and Exchange Commission (the "Commission") no later than 15 days after the first sale of the Bridge Units or Units and file a final notice on Form D with the Commission no later than 30 days after the last sale of the Bridge Units or Units. The Company shall file promptly such amendments to such Notice on Form D as shall become necessary and, as requested by you, shall also comply with any filing requirement imposed by the laws of any state or jurisdiction in which offers and sales are made. The Company shall furnish you with copies of all such filings. (1) Not, directly or indirectly, engage in any act or activity which may jeopardize the status of the Offering and sale of the Bridge Units or Units as exempt transactions under the Act or under the securities or "blue sky" laws of any jurisdiction in which the Bridge Offering or Offering may be made. Without limiting the generality of the foregoing, and notwithstanding anything contained herein to the contrary, the Company shall not, directly or indirectly, engage in any offering of securities which, if integrated with the Offering in the manner prescribed by Rule 502(a) of Regulation D and applicable releases of the Commission, may jeopardize the status (m) Apply the net proceeds from the sale of the Bridge Units and Units as set forth in the Bridge Disclosure Statement or Disclosure Statement. (n) Not, during the period commencing on the date hereof a preliminary proxy statement in connection and ending on the Final Closing Date, issue any press release or other communication, or hold any press conference with such stockholder meetingrespect to the Company, its financial condition, results of operations, business, properties, assets, or liabilities, Bridge Offering or the Offering, without your prior written consent, except as required by applicable securities laws. (iio) It will maintain During the listing of its Common Stock period commencing on the OTC Bulletin Boarddate hereof and ending on the Final Closing Date, the Company shall not, without prior notice to and consent of the Placement Agent subject to Schedule B of the Disclosure Statement: (A) issue any securities or incur any liability or obligation, for borrowed money; (B) enter into any transaction not in the ordinary course of business; or (C) declare or pay any dividend on its capital stock except for the regular quarterly dividend on its outstanding preferred stock. (iiip) It will permit Subscriber to exercise its right to exercise Not, under any Stock Option Plan now or hereafter in effect, grant options for the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received issuance by the Company in accordance with the provisions hereof shall be deemed any one year, on an "Exercise Date". The Company will transmit the certificates representing aggregate basis, to purchase more than (i) 200,000 shares of the Company's Common Stock issuable upon exercise during the one (1) year period commencing from the date hereof and (ii) 100,000 shares of any Warrants (together with the certificates representing Company's Common Stock for each of the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within next three (3) business days after years thereafter. (q) Not during the Exercise Date if 12-month period following the Company has received Final Closing Date, except with respect to outstanding warrants or options or warrants issued in connection with the original Notice of Exercise and Warrant being exercised by such date. In addition to Bridge Offering or Offering, offer for sale or sell any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerits

Covenants of the Company. For so long as 10.1 The Company covenants and agrees with the Underwriters that the Company: (a) will promptly provide to the Underwriters and their counsel, during the period commencing on the date hereof and until completion of the Distribution of the Units, drafts of any filings to be made with any securities exchange or regulatory body in Canada or any other jurisdiction by the Company or the Subsidiaries of information relating to the Offering or pursuant to the Company's or the Subsidiaries' continuous disclosure obligations under applicable Canadian Securities Laws for review by the Underwriters and their counsel prior to filing, and give the Underwriters and their counsel a reasonable opportunity to provide comments on such filing, subject to the Company's timely disclosure obligations under applicable Canadian Securities Laws; (b) will advise the Underwriters, promptly after receiving notice thereof, of the time when the Preliminary Prospectus, Final Prospectus and any Supplementary Material has been filed and receipts therefor from the Securities Commissions have been obtained and will provide evidence satisfactory to the Underwriters of each such filing and copies of such receipts; (c) will advise the Underwriters, promptly after receiving notice or obtaining knowledge of: (i) the issuance by any Securities held Commission of any order suspending or preventing the use of any of the Offering Documents or suspending or seeking to suspend the trading of the Offered Securities; (ii) the suspension of the qualification of the Offered Securities for Distribution in any of the Qualifying Jurisdictions; (iii) the institution, threatening or contemplation of any proceeding for any such purposes; or (iv) any requests made by Subscriber remain outstandingany Securities Commission for amending or supplementing any of the Offering Documents or for additional information, and will use its commercially reasonable efforts to prevent the issuance of any order or any suspension respectively referred to in (i) or (ii) above and, if any such order is issued, to obtain the withdrawal thereof promptly or if any such suspension occurs, to promptly remedy such suspension in accordance with this Agreement; (d) prior to the Closing Date or Option Closing Date, as applicable, make all reasonable arrangements that are within the control of the Company acknowledgesfor the electronic deposit of the Common Shares and Warrants comprising the Units and Option Units and the Corporate Finance Fee Shares and Corporate Finance Fee Warrants comprising the Corporate Finance Fee Units pursuant to the non-certificated issue system of CDS on the Closing Date or Option Closing Date, representsas applicable. All fees and expenses payable to CDS and/or the transfer agent in connection with the electronic deposit and the fees and expenses payable to CDS in connection with the initial or additional transfers as may be required in the course of the Distribution of the Units, warrants Option Units and agrees Corporate Finance Fee Units shall be borne by the Company; (e) will use its commercially reasonable efforts to remain, and to cause each of the Subsidiaries to remain, until the expiry date of the Warrants, a corporation validly subsisting under the laws of its jurisdiction of incorporation or amalgamation, and to be duly licensed, registered or qualified as followsan extra-provincial or foreign corporation or entity in all jurisdictions where the character of its properties owned or leased or the nature of the activities conducted by it make such licensing, registration or qualification necessary and to carry on its business in the ordinary course and in compliance in all material respects with all applicable Laws of each such jurisdiction (including, without limitation, Laws related to the sale, production or distribution of cannabis or psychedelic substances), provided that the foregoing is subject to the obligations of the directors to comply with their fiduciary duties to the Company; (f) will use its commercially reasonable efforts to maintain: (i) The its status as a "reporting issuer" under Canadian Securities Laws and not in default of any requirement of such Canadian Securities Laws until the expiry date of the Warrants, provided that the foregoing requirement shall not prevent the Company from completing any transaction which would result in the Company ceasing to be a “reporting issuer” so long as the holders of Common Shares receive securities of an entity which is listed on a stock exchange in Canada or cash, or the holders of Common Shares have approved the transaction in accordance with the requirements of applicable corporate and securities laws and the rules and policies of the CSE and is subject to the obligations of the directors to comply with their fiduciary duties to the Company; and (ii) the listing of the Common Shares on the CSE or such other recognized stock exchange or quotation system as the Underwriters may approve (acting reasonably), until the expiry date of the Warrants, provided the foregoing requirement shall not prevent the Company from completing any transaction which would result in the Company ceasing to be so listed so long as the holders of Common Shares receive securities of an entity which is listed on a stock exchange in Canada or cash, or the holders of Common Shares have approved the transaction in accordance with the requirements of applicable corporate and securities laws and the rules and policies of the CSE and is subject to the obligations of the directors to comply with their fiduciary duties to the Company. (g) will use its best commercially reasonable efforts to reserveensure that the Common Shares partially comprising the Offered Securities, the Warrant Shares issuable upon the exercise of the Warrants, the Compensation Shares issuable upon the exercise of the Compensation Options, the Compensation Warrant Shares issuable upon exercise of the Compensation Warrants, the Corporate Finance Fee Shares partially comprising the Corporate Finance Fee Units and the Corporate Finance Fee Warrant Shares issuable upon exercise of the Corporate Finance Fee Warrants are listed and posted for trading on the CSE on the Closing Date; (h) will apply the net proceeds from the issue and sale of the Units and the Option Units in accordance with the disclosure set out under the heading "Use of Proceeds" in the Final Prospectus, except for circumstances where, for sound business reasons, a reallocation of the net proceeds may be necessary; (i) prior to February 15the Closing Date or Option Closing Date, 2000as the case may be, will promptly do, make, execute, deliver or cause to be done, made, executed or delivered, all such acts, documents and things as the Underwriters may reasonably require from time to time for the purpose of giving effect to this Agreement and the transactions contemplated hereby, including to the Offering, and take all such steps as may be reasonably required within its power to implement to the full extent the provisions, and to satisfy the conditions, of this Agreement as it relates to the sale and issuance of Offered Securities; (j) will forthwith notify the Underwriters of the breach of any covenant of this Agreement in any material respect by the Company, or upon the Company becoming aware that any representation or warranty of the Company contained in this Agreement or any document, instrument, certificate or other agreement delivered pursuant hereto is or was untrue or inaccurate in any material respect at the time such representation or warranty was made; (k) subject to compliance with Canadian Securities Laws, will not, at any time prior to the Closing of the Offering, halt the trading of the Common Shares on the CSE without the prior written consent of the Underwriters (such consent not to be unreasonably withheld); (l) will use reasonable efforts to restrict its officers and directors from selling any securities of the Company from the date hereof until the Closing Date, without the prior written consent of the Underwriters (such consent not to be unreasonably withheld or delayed); (m) will duly execute and deliver the Warrant Indenture and the Compensation Option Certificates at the Closing Time on the Closing Date and comply with and satisfy all terms, conditions and covenants therein contained to be complied with or satisfied by the Company; (n) will ensure that at the Closing Time on the Closing Date or Option Closing Date, as applicable, the Warrants and Corporate Finance Fee Warrants are duly and validly created, authorized and issued and shall have attributes corresponding in all material respects to the description set forth in the Warrant Indenture; (o) will ensure that at the Closing Time on the Closing Date or Option Closing Date, as applicable, the Compensation Options are duly and validly created, authorized and issued and shall have attributes corresponding in all material respects to the description set forth in the Compensation Option Certificates; (p) ensure that (i) the Warrant Shares issuable upon the exercise of the Warrants; (ii) the Compensation Shares issuable upon the exercise of the Compensation Options, (iii) the Compensation Warrant Shares issuable upon the exercise of the Compensation Warrants, and (iv) the Corporate Finance Fee Warrant Shares issuable upon the exercise of the Corporate Finance Fee Warrants shall, upon issuance in accordance with terms thereof and receipt by the Company of payment therefore, be duly issued as fully paid and non-assessable Common Shares; (q) ensure that, at all times prior to the expiry date of the Warrants, Compensation Options, Compensation Warrants and Corporate Finance Fee Warrants, as applicable, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit Warrant Shares, Compensation Shares, Compensation Warrant Shares and Corporate Finance Fee Warrant Shares, as applicable, are allotted and reserved for issuance upon the exercise in full of all of the outstanding Warrants. The , Compensation Options, Compensation Warrants and Corporate Finance Fee Warrants, as applicable; (r) the Company is currently organizing a stockholder meeting and the Underwriters hereby acknowledge that the Offered Securities have not been and will not be registered under the 1933 Act or any U.S. state securities laws and may not be offered or sold to, or for the benefit or account of, any person in the United States or any U.S. person except by the Underwriters or their respective U.S. Affiliates, acting as agents, pursuant to increase the number Rule 506(b) of authorized shares of Common Stock Regulation D of the Company1933 Act or Rule 144A of the 1933 Act and similar exemptions under applicable U.S. state securities laws, and has filed with may be sold outside the SEC United States to non-U.S. persons pursuant to Rule 903 of Regulation S under the 1933 Act. Accordingly, the Company and each of the Underwriters hereby agree that offers and sales of the Offered Securities to, or for the benefit or account of, any person in the United States or any U.S. person shall be conducted only in the manner specified in Schedule "A" hereto, which terms and conditions are hereby incorporated by reference in and form a part of this Agreement; and (s) will, prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain Closing Date or Option Closing Date, as the listing case may be, make available management of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received for meetings with investors as scheduled by the Company in accordance with Underwriters at the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion discretion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerUnderwriters acting reasonably.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees with the Underwriter as follows: (ia) The Company shall use its best efforts will endeavor to reservecause the Registration Statement to become effective and will advise you promptly and, prior to February 15if requested by you, 2000will confirm such advice in writing (i) when the Registration Statement has become effective and when any amendment thereto thereafter becomes effective, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain of any request by the listing of its Common Stock on Commission for amendments or supplements to the OTC Bulletin Board. Registration Statement or the Prospectus or for additional information, (iii) It will permit Subscriber of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the suspension of qualification of the Shares for offering or sale in any jurisdiction, or the initiation or contemplation of any proceeding for such purposes, and (iv) within the period of time referred to exercise its right in Section 5(e) below, of the happening of any event that makes any statement made in the Registration Statement or the Prospectus (as then amended or supplemented) untrue in any material respect or that requires the making of any addition to exercise or change in the Warrants by telecopying an executed and completed Notice Registration Statement or the Prospectus (as then amended or supplemented) to state a material fact required to be stated therein or necessary to make the statements therein not misleading or of Exercise the necessity to amend or supplement the Prospectus (as then amended or supplemented) to comply with the Securities Act or any other law. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, the Company and delivering will make every reasonable effort to obtain the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery withdrawal of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke order at the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exerciseearliest possible time. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇& Company, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: Inc. March 6, 2006 (▇▇▇b) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇The Company will furnish you, without charge, three signed copies of the Registration Statement as originally filed with the Commission and of each amendment to it, including financial statements and all exhibits thereto, and will also furnish to you, such number of conformed copies of the Registration Statement (without exhibits) as originally filed and of each amendment thereto as you may reasonably request. (c) The Company will not file any amendment to the Registration Statement or make any amendment or supplement to the Prospectus of which you shall not have been advised previously or to which you shall reasonably object in writing promptly after being so advised. (d) Prior to the effective date of the Registration Statement, the Company has delivered or will deliver to you, without charge, in such quantities as you have requested or may hereafter reasonably request, copies of each form of preliminary prospectus. The Company consents to the use, in accordance with the provisions of the Securities Act and with the securities or Blue Sky laws of the jurisdictions in which the Shares are offered by the Underwriter and by dealers to whom Shares may be sold, prior to the effective date of the Registration Statement, of each preliminary prospectus so furnished by the Company. (e) On the effective date of the Registration Statement and thereafter from time to time, for such period as in the opinion of counsel for the Underwriter a prospectus is required by law to be delivered in connection with sales by an Underwriter or a dealer, the Company will deliver to you and each dealer through whom Shares may be sold without charge (except as provided below) as many copies of the Prospectus (and of any amendment or supplement thereto) as they may reasonably request. The Company consents to the use of such Prospectus (and of any amendment or supplement thereto) in accordance with the provisions of the Securities Act and with the securities or Blue Sky laws of the jurisdictions in which the Shares are offered by the Underwriter and by dealers through whom Shares may be sold, both in connection with the offering or sale of the Shares and for such period of time thereafter as the Prospectus is required by law to be delivered in connection therewith. If during such period of time any event shall occur that in the judgment of the Company, or in the opinion of counsel for the Underwriter, requires that a material fact be stated in the Prospectus (as then amended or supplemented) in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary to amend or supplement the Prospectus to comply with the Securities Act or any other law, the Company at its own expense (except as provided below) will forthwith prepare and file with the Commission an appropriate amendment or supplement thereto, and will furnish to the Underwriter and each dealer through whom Shares may be sold without charge (except as provided below), a reasonable number of copies thereof. (f) The Company will cooperate with you and your counsel in connection with the registration or qualification of the Shares for offer and sale by you and by dealers through whom Shares may be sold under the securities or Blue Sky laws of such jurisdictions as ▇▇▇▇▇▇▇▇ & Company, Interim Chief Executive OfficerInc. March 6, 2006 you may reasonably designate and will file such consents to service of process or other documents as may be necessary in order to effect such registration or qualification; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action that would subject it to the service of process in suits, other than those arising out of the offer and sale of the Shares, in any jurisdiction where it is not now so subject. (g) The Company will file all reports and other information that it is required to file after the Closing Date pursuant to Section 13 or Section 15(d), as the case may be, of the Exchange Act as necessary to permit the Underwriter to serve, in its sole discretion, as a market maker with respect to the Common Stock. (h) The Company will make generally available to its security holders an earnings statement, which need not be audited, covering a 12-month period commencing after the effective date of the Registration Statement and ending no later than 15 months thereafter, as soon as practicable after the end of such period, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and any applicable regulation. (i) During the period of five years after the Closing Date, the Company will furnish to you without charge (i) as soon as available, a copy of each report of the Company mailed to shareholders or filed with the Commission and (ii) from time to time such other proper information concerning the business and financial condition of the Company as you may reasonably request.

Covenants of the Company. For so long The Company covenants and agrees with each Underwriter as any follows: (a) During such period beginning on the Time of Sale and ending on the later of the Closing Date or such date, as in the opinion of counsel for the Underwriters, that the Prospectus is no longer required by law to be delivered in connection with sales as contemplated by this Agreement by an Underwriter or dealer, including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities held by Subscriber remain outstandingAct (the “Prospectus Delivery Period”), prior to amending or supplementing the Registration Statement (including the Rule 462(b) Registration Statement), the Time of Sale Disclosure Package or the Prospectus, the Company acknowledgesshall furnish to the Representative for review a copy of each such proposed amendment or supplement, representsand the Company shall not file any such proposed amendment or supplement to which the Representative reasonably objects. (b) During the Prospectus Delivery Period, the Company shall promptly advise the Representative in writing (A) when the Registration Statement, if not effective at the date and time this Agreement is executed and delivered to the parties, shall have become effective, (B) of the receipt of any comments of, or requests for additional or supplemental information from, the Commission with respect to the Registration Statement or the Offering, (C) of the time and date of any filing of any post-effective amendment to the Registration Statement or any amendment or supplement to any Preliminary Prospectus or the Prospectus, (D) of the time and date that any post-effective amendment to the Registration Statement becomes effective and (E) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or of any order or notice preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus, or of any proceedings to remove, suspend or terminate from listing or quotation the Class A Common Stock from any securities exchange upon which it is then listed (or approved for listing) for trading or included or designated (or approved for inclusion or designation) for quotation, or of the threatening or initiation of any proceedings for any of such purposes. The Company shall use its commercially reasonable efforts to prevent the issuance of any such stop order or prevention or suspension of such use. If the Commission shall enter any such stop order or order or notice of prevention or suspension at any time, the Company will use its commercially reasonable efforts to obtain the lifting of such order at the earliest possible moment or will file a new registration statement and use its commercially reasonable efforts to have such new registration statement declared effective as soon as practicable. Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b) and 434, as applicable, under the Securities Act, including with respect to the timely filing of documents thereunder, and will use its commercially reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) were received in a timely manner by the Commission. (A) If any event or development shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Disclosure Package in order to make the statements therein, in the light of the circumstances under which they were made or then prevailing, as the case may be, not misleading (in which case the Company agrees to notify the Representative of any such event or condition), or if in the reasonable opinion of the Representative it is otherwise necessary to amend or supplement the Time of Sale Disclosure Package to comply with law, the Company agrees to promptly prepare, file with the Commission and furnish to the Underwriters, at its own expense, amendments or supplements to the Time of Sale Disclosure Package, and to furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request, so that the statements in the Time of Sale Disclosure Package as so amended or supplemented will not be, in the light of the circumstances under which they were made or then prevailing, as the case may be, misleading or so that the Time of Sale Disclosure Package, as amended or supplemented, will comply with law; (B) If, during the Prospectus Delivery Period, any event or development shall occur or condition exist as a result of which it is necessary to amend or supplement the Registration Statement or the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made or then prevailing, as the case may be, not misleading (in which case the Company agrees to notify the Representative of any such event or condition), or if in the reasonable opinion of the Representative it is otherwise necessary to amend or supplement the Registration Statement or the Prospectus to comply with applicable law, including in connection with the delivery of the Prospectus, the Company agrees to promptly prepare, file with the Commission (and use its best efforts to have any amendment to the Registration Statement or any new registration statement to be declared effective) and furnish to the Underwriters, amendments or supplements to the Registration Statement or the Prospectus, or any new registration statement, and to furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request, so that the statements in the Registration Statement or the Prospectus as so amended or supplemented will not be, in the light of the circumstances under which they were made or then prevailing, as the case may be, misleading or so that the Registration Statement or the Prospectus, as amended or supplemented, will comply with applicable law. (d) The Company agrees that, until the Option Closing Date, unless it obtains the prior written consent of the Representative, it will not make any offer relating to the Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 under the Securities Act) required to be filed by the Company with the Commission or retained by the Company under Rule 433 of the Securities Act; provided that the prior written consent of the Representative hereto shall be deemed to have been given in respect of any Issuer Free Writing Prospectuses included in Schedule II attached hereto. Any such free writing prospectus consented to by the Representative is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company agrees that (A) it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (B) has complied and will comply, as the case may be, with the requirements of Rules 164 and 433 of the Securities Act applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the Commission where required, legending and record keeping. (e) The Company shall furnish to the Underwriters upon request, from time to time and without charge, copies of the Registration Statement (of which a maximum of three shall be signed) and shall include exhibits and all amendments and supplements to any of such Registration Statement, in each case as soon as available and in such quantities as the Representative may from time to time reasonably request. (f) The Company shall take or cause to be taken all necessary action and furnish to whomever the Representative may direct such information as may be required in qualifying the Securities for sale under the laws of such jurisdictions which the Representative shall designate and to continue such qualifications in effect for as long as may be necessary for the distribution of the Securities; except that in no event shall the Company be obligated in connection therewith to qualify as a foreign corporation, to execute a general consent for service of process or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. (g) The Company shall make generally available to its securityholders, in the manner contemplated by Rule 158(b) under the Securities Act, as soon as practicable but in any event not later than 60 days after the end of its fiscal quarter in which the first anniversary date of the effective date of the Registration Statement occurs, an earnings statement which will comply with Section 11(a) of the Securities Act covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement. (h) Except for (A) the issuance of the Securities to be sold hereunder, (B) the issuance of Class A Common Stock and Class A Common Stock-based awards (including but not limited to options, restricted stock and restricted stock units) to directors, officers, employees and consultants under the Company’s 2011 Long-Term Incentive Plan, and (C) the issuance of Class A Common Stock upon the conversion or exercise of previously-granted awards under the Company’s 2011 Long-Term Incentive Plan or prior employee benefit plans or the conversion of Class B common stock into Class A Common Stock, the Company will not, without the prior written consent of the Representative (which consent may be withheld in the Representative’s sole discretion), directly or indirectly, issue, sell, offer, agree to sell, contract or grant any option to sell (including, without limitation, pursuant to any short sale), pledge, make any short sale of, maintain any short position with respect to, transfer, establish or maintain an open “put equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act, enter into any swap, derivative transaction or other arrangement (whether such transaction is to be settled by delivery of common stock, other securities, cash or other consideration) that transfers to another, in whole or in part, any of the economic consequences of ownership, or otherwise dispose of any shares of common stock, options or warrants to acquire shares of common stock, or securities exchangeable or exercisable for or convertible into shares of common stock, or publicly announce an intention to do any of the foregoing, for a period commencing on the date hereof and agrees continuing through the end of the thirtieth (30th) day after the date of the Prospectus (the “Lock-Up Period”). Notwithstanding the foregoing, for the purpose of allowing the Underwriters to comply with FINRA’s NASD Rule 2711(f)(4), if (i) during the last 17 days of the initial Lock-Up Period, the Company releases earnings results or material news or a material event relating to the Company occurs or (ii) prior to the expiration of the initial Lock-Up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the initial Lock-Up Period, then in each case the Lock-Up Period will be extended until the expiration of the 18-day period beginning on the date of release of the earnings results or material news, as follows:applicable, unless the Representative waives, in writing, such extension. (i) The Company shall use maintain, at its best efforts to reserve, prior to February 15, 2000expense, a sufficient number of shares of registrar and transfer agent for the Class A Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingStock. (iij) It The Company shall apply the net proceeds of the sale of the Securities substantially in the manner specified in the Prospectus under the caption “Use of Proceeds”. (k) The Company will furnish to its securityholders annual reports containing financial statements audited by independent public accountants and quarterly reports containing financial statements and financial information which may be unaudited. (l) The Company will use its commercially reasonable efforts to maintain the listing of its Class A Common Stock on the OTC Bulletin BoardNYSE. (iiim) It The Company will permit Subscriber not take, directly or indirectly, any action designed to exercise its right or that would constitute or that might reasonably be expected to exercise cause or result in, stabilization or manipulation of the Warrants by telecopying an executed and completed Notice price of Exercise to any securities of the Company and delivering to facilitate the original Notice sale or resale of Exercise and the original Warrant to Securities, provided that the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to may bid for and received by the Company purchase its common stock in accordance with Regulation M and Rule 10b-18 under the provisions hereof shall be deemed an "Exercise Date". The Exchange Act. (n) During the period of five (5) years hereafter, the Company will transmit furnish to the certificates representing shares Representative and, upon request, to each of Common Stock issuable upon exercise the other Underwriters, as soon as practicable after the end of each fiscal year, a copy of its annual report to shareholders for such year; and the Company will furnish to the Representative (A) as soon as available, a copy of each report and any Warrants (together definitive proxy statement of the Company filed with the certificates representing Commission under the Warrants not so exercisedExchange Act or mailed to shareholders, and (B) from time to Subscriber via express couriertime, by electronic transfer or otherwise within three (3) business days after the Exercise Date if such other information concerning the Company has received as the original Notice of Exercise and Warrant being exercised by such dateRepresentative may reasonably request. In addition to any other remedies which may be available to SubscriberHowever, in the event that so long as the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect is subject to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery reporting requirements of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion either Section 13 or Section 15(d) of the Warrant exercised shall be delivered as follows: To Exchange Act and is timely filing reports with the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇Commission on ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇it is not required to furnish such reports or statements to the Underwriters. (o) The Company shall pay or cause to be paid (A) all expenses (including stock transfer taxes) incurred in connection with the delivery to the several Underwriters of the Securities, ▇▇ ▇▇▇▇▇(B) all fees and expenses (including, without limitation, fees and expenses of the Company’s accountants and counsel) in connection with the preparation, printing, filing, delivery and shipping of the Registration Statement (including the financial statements therein and all amendments and exhibits thereto), each Preliminary Prospectus, the Time of Sale Disclosure Package and the Prospectus as amended or supplemented, (C) the filing fee of FINRA and the applicable fees and expenses of counsel for the Underwriters in connection with such submissions and the review of the Offering by FINRA, (D) any applicable listing fees, (E) to the extent necessary, the cost of printing certificates representing the Securities, (F) the cost and charges of any transfer agent or registrar and (G) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise provided for in this Section. The Company, on the one hand, and the Underwriters, on the other hand, shall be responsible for their own expenses in connection with any road shows and other presentations undertaken in connection with the Offering (including all travel, hotel and food expenses for its respective personnel). The Company shall not in any event be liable to any of the Underwriters for loss of anticipated profits from the transactions covered by this Agreement. The Representative may deduct, after providing the Company with an itemized list and supporting documentation of expenses actually incurred, from the net proceeds of the Offering payable to the Company on the Closing Date the expenses set forth above (which shall be mutually agreed upon between the Company and the Representative prior to the Closing Date) to be paid by the Company to the Underwriters and others. If the Offering is not consummated for any reason whatsoever, other than a breach of this Agreement by the Underwriters, a default pursuant to Section 8 hereof or a termination of this Agreement pursuant to Section 9(b)(iii), (v), (vi), (vii) or (viii), then the Company shall reimburse the Underwriters in full for their respective out-▇▇▇▇ Fax: of-pocket accountable expenses actually incurred through such date, including, without limitation, fees of counsel to the Underwriters (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇up to a maximum of $50,000), Interim Chief Executive Officerless any amounts previously paid.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstandingThe Company covenants and agrees with the several Underwriters that: (a) If the effective time of the Registration Statement is not prior to the execution and delivery of this Agreement, the Company acknowledges, represents, warrants and agrees as follows: (i) The Company shall will use its best efforts to reservecause the Registration Statement to become effective at the earliest possible time and, upon notification from the Commission that the Registration Statement has become effective, will so advise the Representatives and counsel to the Underwriters promptly. If the effective time of the Registration Statement is prior to February 15the execution and delivery of this Agreement and any information shall have been omitted therefrom in reliance upon Rule 430A, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has at the earliest possible time, will furnish the Representatives with a copy of the Prospectus to be filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date"Commission to comply with Rule 424(b) and Rule 430A under the Act and, if the Representatives do not object to the contents thereof, will comply with such Rules. Upon compliance with such Rules, the Company will so advise the Representatives promptly. The Company will transmit advise the certificates representing shares Representatives and counsel to the Underwriters promptly of Common Stock issuable upon exercise the issuance by the Commission or any state securities commission of any Warrants stop order suspending the effectiveness of the Registration Statement or of the institution of any proceedings for that purpose, or of any notification of the suspension of qualification of the Shares for sale in any jurisdiction or the initiation or threatening of any proceedings for that purpose, and will also advise the Representatives and counsel to the Underwriters promptly of any request of the Commission for amendment or supplement of the Registration Statement, of any Preliminary Prospectus or of the Prospectus, or for additional information, and the Company will not file any amendment or supplement to the Registration Statement (together with either before or after it becomes effective), to any Preliminary Prospectus or to the certificates representing the Warrants not so exercisedProspectus (including a prospectus filed pursuant to Rule 424(b)) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received Representatives have not been furnished with a copy prior to such filing (with a reasonable opportunity to review such amendment or supplement) or if the original Notice Representatives object to such filing. (b) If, at any time when a prospectus relating to the Shares is required by law to be delivered in connection with sales by an Underwriter or dealer, any event occurs as a result of Exercise and Warrant being exercised by such date. In addition which the Prospectus would include an untrue statement of a material fact, or would omit to state any other remedies which may material fact required to be available stated therein or necessary to Subscribermake the statements therein, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion light of the Warrant exercised shall be delivered as follows: To circumstances under which they were made, not misleading, or if it is necessary at any time to supplement the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerProspectus

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants and agrees SCM hereby covenant with ▇▇▇ as follows: (a) SCM will not file any amendment to the Registration Statement without giving ▇▇▇ a reasonable period of time to review such amendment prior to filing or to which ▇▇▇ reasonably objects, unless advised by counsel that doing so is required by law. SCM will notify the ▇▇▇ immediately, (i) The Company when any amendment to the Registration Statement shall have become effective or any supplement (not including any monthly report) to the Prospectus is filed, (ii) of the receipt of any further comments from the SEC, CFTC, NFA or any other federal or state regulatory or self-regulatory body with respect to the Registration Statement, (iii) of any request by the SEC, CFTC, NFA or any other federal or state regulatory or self-regulatory body for any further amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information relating thereto, (iv) of any material criminal, civil or administrative proceedings against or involving SCM or the Company, (v) of the issuance by the SEC, CFTC, NFA or any other federal or state regulatory or self-regulatory body of any order suspending the effectiveness of the Registration Statement under the 1933 Act, the registration or NFA membership of SCM as a “commodity pool operator” or the registration of the Units under the Blue Sky or securities laws of any state or other jurisdiction or any order or decree enjoining the offering or the use its of the then current Prospectus or any Sales Information or of the institution, or notice of the intended institution, of any action or proceeding for that purpose, or (vi) of any threatened action of the type referred to in clauses (iii) through (v) of which SCM is aware. In the event any order of the type referred to in clause (v) is issued, SCM agrees to use best efforts to reserveobtain a lifting or rescinding of such order at the earliest feasible date. (b) SCM will deliver to ▇▇▇ as many conformed copies of the Registration Statement as originally filed and of each amendment thereto, prior together with exhibits, as ▇▇▇ may reasonably request, and will also deliver to February 15, 2000, a sufficient ▇▇▇ such number of shares conformed copies of Common Stock the Registration Statement as originally filed and as of each amendment thereto without exhibits as ▇▇▇ shall reasonably request. (c) SCM will deliver to ▇▇▇ as promptly as practicable from its authorized but unissued shares time to time during the period when the Prospectus is required to be delivered under the 1933 Act, such number of Common Stock copies of the Prospectus (as amended or supplemented) and of the Sales Information as ▇▇▇ may reasonably request for the purposes contemplated by the 1933 Act or the 1933 Act Regulations. (d) SCM will deliver to ▇▇▇: (i) copies of all “Blue Sky” and other state securities law clearances obtained by the Company and (ii) copies of all monthly and annual reports, and of any other communications, sent to the unitholders. (e) During the period when the Prospectus is required to be delivered pursuant to the 1933 Act, SCM and the Company will comply with all requirements imposed upon them by the 1933 Act, the 1933 Act Regulations, the CEA and the CFTC Rules, as from time to time in force, so far as necessary to permit the exercise in full continuance of all sales of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with Units during such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company period in accordance with the provisions hereof and as set forth in the Prospectus. (f) If any event shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares occur as a result of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriberit is necessary, in the event that the Company fails to effect delivery reasonable opinion of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇SCM or ▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇to amend or supplement the Prospectus in order (i) to make the Prospectus not materially misleading in the light of the circumstances existing at the time it is delivered to a subscriber, or (ii) to conform with applicable CFTC or SEC regulations, SCM shall forthwith prepare and furnish to ▇▇▇, ▇▇ at the expense of SCM, a reasonable number of copies of an amendment or amendments of, or a supplement or supplements to, the Prospectus which will amend or supplement the Prospectus so as to effect the necessary changes. No such amendment or supplement shall be filed or used without the approval of ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officer.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith each of the Underwriters: (i) If the Registration Statement has been declared effective prior to the execution and delivery of this Agreement, the Company will file the Prospectus with the Commission pursuant to and in accordance with subparagraph (1) (or, if applicable and if consented to by you, subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the second business day following the execution and delivery of this Agreement or (B) the fifth business day after the date on which the Registration Statement is declared effective. The Company shall will advise you promptly of any such filing pursuant to Rule 424(b). (ii) The Company will not file with the Commission the Prospectus or the amendment referred to in the second sentence of Section l(a)(i) hereof, any amendment or supplement to the Prospectus or any amendment to the Registration Statement unless you have received a reasonable period of time to review any such proposed amendment or supplement and consented to the filing thereof and will use its best efforts to reserve, prior cause any such amendment to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock the Registration Statement to permit be declared effective as promptly as possible. Upon the exercise in full of all request of the outstanding WarrantsRepresentatives or counsel for the Underwriters, the Company will promptly prepare and file with the Commission, in accordance with the rules and regulations of the Commission, any amendments to the Registration Statement or amendments or supplements to the Prospectus that may be necessary or advisable in connection with the distribution of the Shares by the several Underwriters and will use its best efforts to cause any such amendment to the Registration Statement to be declared effective as promptly as possible. If required, the Company will file any amendment or supplement to the Prospectus with the Commission in the manner and within the time period required by Rule 424(b) under the Act. The Company is currently organizing a stockholder meeting to increase will advise the number of authorized shares of Common Stock Representatives, promptly after receiving notice thereof, of the Company, time when the Registration Statement or any amendment thereto has been filed or declared effective or the Prospectus or any amendment or supplement thereto has been filed and has filed with the SEC prior will provide evidence to the date hereof a preliminary proxy statement in connection with Representatives of each such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Boardfiling or effectiveness. (iii) It The Company will permit Subscriber to exercise its right to exercise advise you promptly after receiving notice or obtaining knowledge of (A) the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received issuance by the Company Commission of any stop order suspending the effectiveness of the Registration Statement or any part thereof or any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or any amendment or supplement thereto, (B) the suspension of the qualification of the Shares for offer or sale in accordance with any jurisdiction or of the provisions hereof shall be deemed an "Exercise Date"initiation or threatening of any proceeding for any such purpose, or (C) any request made by the Commission or any securities authority of any other jurisdiction for amending the Registration Statement, for amending or supplementing the Prospectus or for additional information. The Company will transmit use its best efforts to prevent the certificates representing issuance of any such stop order and, if any such stop order is issued, to obtain the withdrawal thereof as promptly as possible. (iv) If the delivery of a Prospectus relating to the Shares is required under the Act at any time prior to the expiration of nine months after the date of the Prospectus and if at such time any events have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or if for any reason it is necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus to comply with the Act or the Exchange Act or the respective rules and regulations thereunder, the Company will prepare and notify you and upon your request (but at the Company's expense) prepare and file with the Commission an amendment or supplement to the Prospectus or any such incorporated document that corrects such statement or omission or effects such compliance and will furnish without charge to each Underwriter and to any dealer in securities as many copies of such amended or supplemented Prospectus as you may from time to time reasonably request. (v) The Company promptly from time to time will take such action as you may reasonably request to qualify the Shares for offering and sale under the securities or blue sky laws of such jurisdictions as you may request and will continue such qualifications in effect for as long as may be necessary to complete the distribution of the Shares, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction. (vi) The Company will promptly provide you, without charge, (i) three manually executed copies of the Registration Statement as originally filed with the Commission and of each amendment thereto, including all documents or information incorporated by reference therein, (ii) for each other Underwriter a conformed copy of the Registration Statement as originally filed and of each amendment thereto, without exhibits but including all documents or information incorporated by reference therein, and (iii) so long as a prospectus relating to the Shares is required to be delivered under Act, as many copies of each Preliminary Prospectus or the Prospectus or any amendment or supplement thereto as you may reasonably request. (vii) As soon as practicable, but in any event not later than the last day of the thirteenth month after the effective date of the Registration Statement, the Company will make generally available to its security holders an earnings statement of the Company and its subsidiaries, if any, covering a period of at least 12 months beginning after the effective date of the Registration Statement (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations thereunder. (viii) During the period beginning from the date hereof and continuing to and including the date 180 days after the date of the Prospectus, the Company will not, without your prior written consent, offer, pledge, issue, sell, contract to sell, grant any option for the sale of, or otherwise dispose of (or announce any offer, pledge, sale, grant of an option to purchase or other disposition), directly or indirectly, any shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courieror securities convertible into, by electronic transfer exercisable or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriberexchangeable for, in the event that the Company fails to effect delivery of such shares of Common Stock, except as provided in Section 2 and except for the issuance of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke upon the relevant Notice exercise of Exercise by delivering a notice to such effect stock options or warrants outstanding on the date of this Agreement to the extent that such stock options or warrants are disclosed in the Prospectus. (ix) During a period of five years from the effective date of the Registration Statement, the Company whereupon will furnish to you and, upon request, to each of the other Underwriters, without charge, (A) copies of all reports or other communications (financial or other) furnished to shareholders, (B) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange, and (C) such additional information concerning the business and financial condition of the Company and Subscriber shall each be restored to their respective positions immediately its subsidiaries, if any, as you may reasonably request. (x) Neither the Company nor any of its officers, directors or affiliates will (A) take, directly or indirectly, prior to the termination of the underwriting syndicate contemplated by this Agreement, any action designed to cause or to result in, or that might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares, (B) sell, bid for, purchase or pay anyone any compensation for soliciting purchases of, the Shares, or (C) pay or agree to pay to any person any compensation for soliciting another to purchase any other securities of the Company. (xi) The Company will apply the net proceeds from the offering in the manner set forth under "Use of Proceeds" in the Prospectus. (xii) The Company will cause the Shares to be listed on the National Association of Securities Dealers Automated Quotation National Market System at each Time of Delivery. (xiii) If at any time during the period beginning on the date the Registration Statement becomes effective and ending on the later of (A) the date 30 days after such effective date and (B) the date that is the earlier of (1) the date on which the Company first files with the Commission a Quarterly Report on Form 10-Q after such effective date and (2) the date on which the Company first issues a quarterly financial report to shareholders after such effective date, any rumor, publication or event relating to or affecting the Company shall occur as a result of which in your reasonable opinion the market price of the Common Stock has been or is likely to be materially affected (regardless of whether such rumor, publication or event necessitates an amendment of or supplement to the Prospectus), the Company will, after written notice from you advising the Company to the effect set forth above, forthwith prepare, consult with you concerning the substance of, and disseminate a press release or other public statement, reasonably satisfactory to you, responding to or commenting on such rumor, publication or event. (xiv) The Company will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of such Notice of Exercise. The Notice of Exercise a prospectus is required in connection with the offering, sale and Warrant representing the portion distribution of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerShares.

Covenants of the Company. For The Company covenants and agrees with the Underwriter that: (a) The Company, upon notification from the Commission that the Registration Statement has become effective, will so long advise you and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement to the Prospectus of which you shall not previously been advised and furnished with a copy or to which you or your counsel shall have objected in writing, acting reasonably, or which is not in compliance with the Act and the Rules and Regulations. At any time prior to the later of (i) the completion by the Underwriter of the distribution of the Securities as any Securities held by Subscriber remain outstandingcontemplated hereby; or (ii) 25 days after the date on which the Registration Statement shall have become or been declared effective, the Company acknowledgeswill prepare and file with the Commission, representspromptly upon your request, warrants any amendments or supplements to the Registration Statement or Prospectus which may be necessary or advisable in connection with the distribution of the Securities and agrees as follows: (i) The mutually agreed by the Company shall and the Underwriter. After the Effective Date and as soon as the Company is advised thereof, the Company will advise you, and confirm the advice in writing, of the receipt of any comments of the Commission, of the effectiveness of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, or of the suspension of the qualification of the Securities for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to reserveprevent the issuance of any such order, and, if issued, to obtain as soon as possible the lifting thereof. The Company has caused to be delivered to you copies of each Preliminary Prospectus and Definitive Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and Selected Dealers to use the Prospectus in connection with the sale of the Securities for such period as in the opinion of counsel to the Underwriter the use thereof is required to comply with the applicable provisions of the Act and the Rules and Regulations. In case of the happening, at any time within such period as a Prospectus is required under the Act to be delivered in connection with sales by the Underwriter or Selected Dealers, of any event of which the Company has knowledge and which materially affects the Company or the securities of the Company, or which in the opinion of counsel for the Company or counsel for the Underwriter, should be set forth in an amendment to the Registration Statement or a supplement to the Prospectus, in order to make the statements therein not then misleading, in light of the circumstances existing at the time the Prospectus is required to be delivered to a purchaser of the Securities, or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the Act and the Rules and Regulations, the Company will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state any material facts necessary in order to make the statements in the Prospectus, in the light of the circumstances under which they are made, not misleading. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be without expense to the Underwriter. The Company will comply with the Act, the Rules and Regulations thereunder, the Securities Exchange Act of 1934 (the "1934 Act"), and the rules and regulations thereunder in connection with the offering and issuance of the Securities. (b) The Company will act in good faith and use its best efforts and cooperate with you and your counsel to qualify to register the Securities for sale under the securities or "blue sky" laws of such jurisdictions as the Underwriter may designate and will make such applications and furnish such information as may be required for that purpose and to comply with such laws, provided the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent to service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Securities. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long a period as the Underwriter may reasonably request. (c) If the sale of the Securities provided for herein is not consummated, the Company shall pay all costs and expenses incident to the performance of the Company's obligations hereunder, including, but not limited to, all such expenses itemized in Section 8(a) and 8(c) hereof, and either (i) the out-of-pocket expenses of the Underwriter, not to exceed the $50,000 previously paid if the Underwriter elects to terminate the offering for any reason; or (ii) the out-of-pocket expenses of the Underwriter if the Company elects to terminate the offering for any reason. For the purposes of this sub-paragraph, the Underwriter shall be deemed to have assumed such expenses when they are billed or incurred, regardless of whether such expenses have been paid. The Underwriter shall not be responsible for any expenses of the Company or others, or for any charges or claims relative to the proposed public offering if it is not consummated. (d) The Company will deliver to you at or before the Closing Date two signed copies of the Registration Statement, including all financial statements and exhibits filed therewith, and of each amendment or supplement thereto. The Company will deliver to or upon the order of the Underwriter, from time to time until the Effective Date of the Registration Statement, as many copies of any Preliminary Prospectus filed with the Commission prior to February 15the Effective Date of the Registration Statement as the Underwriter may reasonably request. The Company will deliver to the Underwriter on the Effective Date of the Registration Statement and thereafter for so long as a Prospectus is required to be delivered under the Act, 2000from time to time, as many copies of the Prospectus, in final form, or as thereafter amended or supplemented as the Underwriter may from time to time reasonably request. (e) For so long as the Company is a reporting company under either Section 12 or 15 of the 1934 Act, the Company, at its expense, will furnish to the Underwriter during the period ending five (5) years from the Effective Date, (i) as soon as practicable after the end of each fiscal year, a sufficient balance sheet of the Company and any of its subsidiaries as at the end of such fiscal year, together with statements of income, surplus and cash flow of the Company and any subsidiaries for such fiscal year, all in reasonable detail and accompanied by a copy of the certificate or report thereon of independent accountants; (ii) as soon as they are available, a copy of all reports (financial or other) mailed to security holders; (iii) as soon as they are available, a copy of all non-confidential documents, including annual reports, periodic reports and financial statements, furnished to or filed with the Commission under the Act and the 1934 Act; (iv) copies of each press release, news item and article with respect to the Company's affairs released by the Company; and (v) such other information as you may from time to time reasonably request. (f) In the event the Company has an active subsidiary or subsidiaries, such financial statements referred to in subsection (e) above will be on a consolidated basis to the extent the accounts of the Company and its subsidiary or subsidiaries are consolidated in reports furnished to its stockholders generally. (g) The Company will make generally available to its stockholders and to the registered holders of its Warrants and deliver to you as soon as it is practicable, but in no event later than the first day of the sixteenth full calendar month following the Effective Date, an earnings statement (which need not be audited) covering a period of at least twelve consecutive months beginning with the Effective Date of the Registration Statement, which shall satisfy the requirements of Section 11(a) of the Act. (h) On the Closing Date, the Company shall have taken the necessary action to become a reporting company under Section 12 of the 1934 Act, and the Company will make all filings required to, and will have obtained approval for, the listing of the Shares and Warrants on The Nasdaq Small Cap Market System, and will use its best efforts to maintain such listing for at least seven (7) years from the date of this Agreement. (i) For such period as the Company's securities are registered under the 1934 Act, the Company will hold an annual meeting of stockholders for the election of Directors within 180 days after the end of each of the Company's fiscal years and, within nine (9) months after the end of each of the Company's fiscal years will provide the Company's stockholders with the audited financial statements of the Company as of the end of the fiscal year just completed prior thereto. Such financial statements shall be those required by Rule 14a-3 under the 1934 Act and shall be included in an annual report pursuant to the requirements of such Rule. (j) The Company will apply the net proceeds from the sale of the Securities substantially in accordance with its statement under the caption "Use of Proceeds" in the Prospectus, and will file such reports with the Commission with respect to the sale of the Securities and the application of the proceeds therefrom as may be required by Sections 12, 13 and/or 15 of the 1934 Act and pursuant to Rule 463 under the Act. (k) The Company will, promptly upon your request, prepare and file with the Commission any amendments or supplements to the Registration Statement, Preliminary Prospectus or Prospectus and take any other action, which in the reasonable opinion of counsel to the Underwriter and the Company may be reasonably necessary or advisable in connection with the distribution of the Securities and will use its best efforts to cause the same to become effective as promptly as possible. (l) On the Closing Date, the Company shall execute and deliver to you the Underwriter's Warrant Agreement. The Underwriter's Warrant Agreement and Warrant Certificates will be substantially in the form of the Underwriter's Warrant Agreement filed as an Exhibit to the Registration Statement. (m) The Company will reserve and keep available for issuance that maximum number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the securities which are issuable upon exercise in full of all of the Underwriter's Warrants outstanding Warrants. The Company is currently organizing a stockholder meeting from time to increase time. (n) All officers, directors and holders of five percent (5%) or more of the number of authorized shares of Common Company's securities (including warrants, options and Preferred Stock of the Company) as of the Effective Date shall agree in writing, and has filed with the SEC prior in a form satisfactory to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber Underwriter, not to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express couriersell, by electronic transfer or otherwise within dispose of any of such securities (or underlying securities) of the Company for a period of twenty-four (24) months from the Effective Date or any longer period required by the NASD, Nasdaq or any State, provided, however, that the three (3) business days after the Exercise Date if principal officers of the Company has received may each sell up to 8,000 shares of the original Notice Company's Common Stock (an aggregate of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, 24,000 shares) in the event that the over-allotment option is exercised by the Underwriter pursuant to paragraph 2(b) of this Agreement. (o) The Company fails to effect delivery will obtain, on or before the Closing Date, key person life insurance on the life of such shares Geoffrey W. Ramsey in an amount of Common Stock within such three (3) business day periodnot less than $2,000,000, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇an▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇t efforts to maintain such insurance for a period of at least five (5) years from the Effective Date. (p) Prior to the Closing Date, ▇▇ ▇▇▇▇▇the Company shall, at its own expense, undertake to list the Company's securities in the appropriate recognized securities manual or manuals published by Standard & Poor's Corporation and such other manuals as the Underwriter may designate, such listings to contain the information required by such manuals and the Uniform Securities Act. The Company hereby agrees to use its best efforts to maintain such listing for a period of not less than five (5) years. The Company shall take such action as may be reasonably requested by the Underwriter to obtain a secondary market trading exemption in such states as may be reasonably requested by the Underwriter. (q) During the one hundred eighty (180) day period commencing on the Closing Date, the Company will not, without the prior written consent of the Underwriter, grant options or warrants to purchase the Company's Common Stock at a price less than the initial per share public offering price. (r) Prior to the Closing Date, neither the Company nor any subsidiary will issue, directly or indirectly, without your prior consent, any press release or other communication or hold any press conference with respect to the Company or its activities or the offering of the Securities other than routine customary advertising of the Company's products and services, and except as required by any applicable law or the directives of any relevant regulatory authority in any relevant jurisdiction. (s) At the Closing Date, the Company will engage the Underwriter as a non-▇▇▇▇ Fax: exclusive financial advisor to the Company for a period of twelve (▇▇▇12) ▇▇▇months commencing on the first day of the month following the Company's receipt of the proceeds of this offering, at an aggregate fee of $108,000, all of which shall be payable to the Underwriter on the Closing Date. The financial advisory agreement will provide that the Underwriter shall, at the Company's request, provide advice and consulting services to the Company concerning potential merger and acquisition proposals and the obtaining of short or long-▇▇▇▇ Attn: ▇▇▇▇▇ ▇term financing for the Company, whether by public financing or otherwise. (t) The Company shall employ the services of a firm of independent certified public accountants in connection with the preparation of the financial statements to be included in any registration statement or similar disclosure document to be filed by the Company hereunder, or any amendment or supplement thereto. ▇▇▇▇▇▇▇For a period of five (5) years from the Effective Date, Interim Chief Executive Officerthe Company, at its expense, shall cause its regularly engaged independent certified public accountants to review (but not audit) the Company's financial statements for each of the first three (3) fiscal quarters prior to the announcement of quarterly financial information, the filing of the Company's quarterly report and the mailing of quarterly financial information to stockholders. (u) The Company shall retain American Securities Transfer , Inc. as the transfer agent for the securities of the Company, or such other transfer agent as you may agree to in writing. In addition, the Company shall direct such transfer agent to furnish the Underwriter with daily transfer sheets as to each of the Company's securities as prepared by the Company's transfer agent and copies of lists of stockholders and warrantholders as reasonably requested by the Underwriter, for a five (5) year period commencing from the Closing Date. (v) The Company shall cause the Depository Trust Company, or such other depository of the Company's securities, to furnish special security position reports ("DTC Tracking Reports") to the Underwriter on a daily and weekly basis at the expense of the Company, for a five (5) year period from the

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants hereby covenants and agrees with the Underwriter as follows: (a) If the Registration Statement has not already been declared effective by the SEC, the Company will use its best efforts to cause the Registration Statement and any post-effective amendments thereto to become effective as promptly as possible; the Company will notify the Underwriter promptly of the time when the Registration Statement or any post-effective amendment to the Registration Statement has become effective or any supplement to the Prospectus has been filed and of any request by the SEC for any amendment or supplement to the Registration Statement or Prospectus or additional information; if the Company has elected to rely on Rule 430A of the Rules and Regulations, the Company will file a Prospectus containing the information omitted therefrom pursuant to such Rule 430A with the SEC within the time period required by, and otherwise in accordance with the provisions of, Rules 424(b) and 430A of the Rules and Regulations; the Company will prepare and file with the SEC, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus that, in your opinion, may be necessary or advisable in connection with the distribution of the Units by the Underwriter; and the Company will not file any amendment or supplement to the Registration Statement or Prospectus to which the Underwriter shall reasonably object by notice to the Company after having been furnished a copy a reasonable time prior to the filing. (b) The Company will advise the Underwriter, promptly after it shall receive notice or obtain knowledge thereof, of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement, of the suspension of the qualification of the Units for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and the Company will promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued. (c) Within the time during which a prospectus relating to the Units is required to be delivered under the Securities Act, the Company will comply as far as it is able with all requirements imposed upon it by the Securities Act, as now and hereafter amended, and by the Rules and Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Units as contemplated by the provisions hereof and the Prospectus. If, during such period, any event occurs as a result of which the Prospectus would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if, during such period, it is necessary to amend the Registration Statement or supplement the Prospectus to comply with the Securities Act, the Company will promptly notify the Underwriter and will amend the Registration Statement or supplement the Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance. (d) The Company will use its best efforts to arrange for the qualification of the Units for offering and sale under the securities laws of such jurisdictions as the Underwriter may designate and to continue such qualifications in effect for so long as may be required for purposes of the distribution of the Units; provided, however, that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to the service of process in suits, other than those arising out of the offering or sale of the Units, in any jurisdiction where it is not now so subject. In each jurisdiction in which the Units shall have been qualified as herein provided, the Company will make and file such statements and reports in each year as are or may be reasonably required by the laws of such jurisdiction. (e) The Company will furnish to the Underwriter copies of the Registration Statement (two of which will be signed and will include all exhibits), each Preliminary Prospectus, the Prospectus, and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Underwriter may from time to time reasonably request. (f) For a period of five years from the Effective Date, the Company will furnish directly to the Underwriter as soon as the same shall be sent to its shareholders generally copies of all annual or interim shareholder reports of the Company and will, for the same period, also furnish the Underwriter with the following: (i) One copy of any report, application or document (other than exhibits, which, however, will be furnished on your request) filed by the Company with the SEC, The Nasdaq Stock Market, the National Association of Securities Dealers, Inc. ("NASD") or any securities exchange; (ii) As soon as the same shall be sent to shareholders generally, copies of each communication sent to shareholders; and (iii) From time to time, such other information concerning the Company as the Underwriter may reasonably and specifically request, provided that the Company shall not be required to furnish any information pursuant hereto that is not furnished to its shareholders or not otherwise made publicly available. (g) The Company will, for a period of two (2) years from the Effective Date, furnish directly to the Underwriter quarterly profit and loss statements, reports of the Company's cash flow and statements of application of the proceeds of the offering of the Units by the Company in such reasonable detail as the Underwriter may request. (h) The Company will make generally available to its security holders as soon as practicable, but in any event not later than the fifteen (15) months after the end of the Company's current fiscal quarter, an earnings statement (which will be in reasonable detail but need not be audited) complying with the provisions of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations and covering a twelve (12)-month period beginning after the Effective Date of the Registration Statement. (i) After completion of the offering of the Units, the Company will make all filings and take all actions required to maintain the quotation or listing of the Units on The Nasdaq SmallCap Market, The Nasdaq National Market, or any national stock exchange. The Company shall make all filings and take all actions required to have the Common Stock and the Redeemable Warrants constituting the Units to be quoted on the same automated quotations system or listed on the same national stock exchange on which the Units are being quoted or listed, which quotation or listing shall be effective eighteen (18) months from the Effective Date, when the Units become separable. After the Units become separable, the Company will make all filings and take all actions required to maintain the quotation or listing of the Common Stock and the Redeemable Warrants on such quotations system or national stock exchange. (j) The Company will apply the net proceeds from the sale of the Units substantially in the manner set forth under the caption "Use of Proceeds" in the Prospectus. (k) For a period of six months after the Second Closing Date, the Company will not, without the prior written consent of the Underwriter, directly or indirectly, effect the Disposition of any Securities including, without limitation, any Securities that are convertible into or exchangeable or exercisable for Common Stock, and shall not accelerate the exercisability of any Securities that are convertible into or exchangeable or exercisable for Common Stock, except that the Company may take the following actions: (i) sell Units pursuant to this Agreement; (ii) grant options under the Company's Stock Plans in the ordinary course, but only if the per share exercise price or conversion price of any such options is equal to or greater than the market price of the Common Stock on the date of grant or, if greater, $4.50 per share; and (iii) issue shares of Common Stock upon the exercise of options granted under the Stock Plan and upon the exercise of warrants outstanding on the date of this Agreement. (l) For a period of six months from the Effective Date, the Company will not, without the prior written consent of the Underwriter, file a registration statement with the SEC or any state securities or "Blue Sky" law authority relating to any of the Company's Securities, whether such shares are to be offered and sold by the Company or by its shareholders, except for a Registration Statement on Form S-8 (or any successor or replacement form of registration statement) relating only to shares of Common Stock subject to options granted under the Stock Plans. (m) The Company will not take, and will use its best efforts to cause each of its officers and directors not to take, directly or indirectly, any action designed to or which might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Units. (n) The Company will inform the Florida Department of Banking and Finance at any time prior to the consummation of the distribution of the Units by the Underwriter if it commences engaging in business with the government of Cuba or with any person or affiliate located in Cuba. Such information shall be provided within ninety (90) days after the commencement thereof or after a change occurs with respect to previously reported information. (o) The Company will cause the Common Stock, the Redeemable Warrants and the Units to be registered under the Exchange Act, which registrations shall be effective concurrently with the effectiveness of the Registration Statement. (p) The Company hereby grants to the Underwriter the right to nominate a representative to serve on the Company's Board of Directors during the period of three (3) years following the Effective Date of the Registration Statement, and the Company shall use its best efforts to reserve, prior secure the election of such representative to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting's Board of Directors. (iiq) It will maintain Unless the listing of its Company's Common Stock and Redeemable Warrants are listed on The Nasdaq National Market or other suitable secondary trading exemptions are available, or if for any reason state Blue Sky or securities laws do not apply to secondary trading of the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed Common Stock and completed Notice of Exercise to Redeemable Warrants, the Company will seek to become listed in Standard & Poors or another recognized securities manual as soon as practicable after the Effective Date and delivering shall pay all filing fees in connection therewith, for the original Notice purpose of Exercise facilitating secondary trading in the Common Stock and Redeemable Warrants; and the original Warrant Company shall also agree to make appropriate filings to qualify the Common Stock and Redeemable Warrants for secondary trading in states in which such filings are necessary to cause the Common Stock and Redeemable Warrants to be qualified, provided that such qualification may be obtained without causing the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer extraordinary cost or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerhardship.

Covenants of the Company. For The Company covenants and agrees with the Underwriter that: (a) The Company, upon notification from the Commission that the Registration Statement has become effective, will so long advise you and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement to the Prospectus of which you shall not previously been advised and furnished with a copy or to which you or your counsel shall have objected in writing, acting reasonably, or which is not in compliance with the Act and the Rules and Regulations. At any time prior to the later of (i) the completion by the Underwriter of the distribution of the Securities as any Securities held by Subscriber remain outstandingcontemplated hereby; or (ii) 25 days after the date on which the Registration Statement shall have become or been declared effective, the Company acknowledgeswill prepare and file with the Commission, representspromptly upon your request, warrants any amendments or supplements to the Registration Statement or Prospectus which may be necessas and agrees as follows: (i) The mutually agreed by the Company shall and the Underwriter. After the Effective Date and as soon as the Company is advised thereof, the Company will advise you, and confirm the advice in writing, of the receipt of any comments of the Commission, of the effectiveness of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, or of the suspension of the qualification of the Securities for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to reserveprevent the issuance of any such order, prior and, if issued, to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit obtain as soon as possible the exercise in full of all of the outstanding Warrantslifting thereof. The Company is currently organizing a stockholder meeting has caused to increase the number be delivered to you copies of authorized shares of Common Stock of the Companyeach Preliminary Prospectus and Definitive Prospectus, and the Company has filed with the SEC prior consented and hereby consents to the date hereof a preliminary proxy statement use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and Selected Dealers to use the Prospectus in connection with the sale of the Securities for such stockholder meeting. (ii) It will maintain period as in the listing opinion of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise counsel to the Company and delivering Underwriter the original Notice use thereof is required to comply with the applicable provisions of Exercise the Act and the original Warrant Rules and Regulations. In case of the happening, at any time within such period as a Prospectus is required under the Act to be delivered in connection with sales by the Underwriter or Selected Dealers, of any event of which the Company has knowledge and which in the opinion of counsel for the Company or counsel for the Underwriter, should be set forth in an amendment to the Company by overnight courier. Each business date on which Registration Statement or a Notice supplement to the Prospectus, in order to make the statements therein not then misleading, in light of Exercise the circumstances existing at the time the Prospectus is telecopied required to be delivered to a purchaser of the Securities, or in case it shall be necessary to amend or supplemmply with law or with the Act and received by the Rules and Regulations, the Company will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in accordance with such quantities as you may reasonably request, in order that the provisions hereof Prospectus, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state any material facts necessary in order to make the statements in the Prospectus, in the light of the circumstances under which they are made, not misleading. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be deemed an "Exercise Date"without expense to the Underwriter. The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together comply with the certificates representing Act, the Warrants Rules and Regulations thereunder, the Securities Exchange Act of 1934 (the "1934 Act"), and the rules and regulations thereunder in connection with the offering and issuance of the Securities. (b) The Company will act in good faith and use its best efforts and cooperate with you and your counsel to qualify to register the Securities for sale under the securities or "blue sky" laws of such jurisdictions as the Underwriter may designate and will make such applications and furnish such information as may be required for that purpose and to comply with such laws, provided the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent to service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Securities. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so exercisedlong a period as the Underwriter may reasonably request. (c) If the sale of the Securities provided for herein is not consummated, the Company shall pay all costs and expensess hereunder, including, but not limited to, all such expenses itemized in Section 8(a) and 8(c) hereof, and either (i) the out-of-pocket expenses of the Underwriter, not to Subscriber via express courier, by electronic transfer exceed the $35,000 previously paid if the Underwriter elects to terminate the offering for any reason; or otherwise within three (3ii) business days after the Exercise Date out-of-pocket expenses of the Underwriter if the Company has received elects to terminate the original Notice offering for any reason. For the purposes of Exercise and Warrant being exercised by this sub-section, the Underwriter shall be deemed to have assumed such dateexpenses when they are billed or incurred, regardless of whether such expenses have been paid. In addition to The Underwriter shall not be responsible for any other remedies which may be available to Subscriber, in the event that expenses of the Company fails to effect delivery of such shares of Common Stock within such three (3) business day periodor others, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect or for any charges or claims relative to the proposed public offering if it is not consummated. (d) The Company whereupon will deliver to you at or before the Company Closing Date two signed copies of the Registration Statement, including all financial statements and Subscriber shall exhibits filed therewith, and of each be restored to their respective positions immediately prior to delivery of such Notice of Exerciseamendment or supplement thereto. The Notice of Exercise and Warrant representing Company will deliver to or upon the portion order of the Warrant exercised shall be delivered Underwriter, from time to time until the Effective Date of the Registration Statement, as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officermany copies of any

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, The Company and the Company acknowledges, represents, warrants and agrees Bank covenant with the Agent as follows: (ia) The Company shall and the Bank will prepare and file such amendments or supplements to the Registration Statement, the Prospectus, the Connecticut Application, the Holding Company Application, the FDIC Notice and the Corporator Statement as may hereafter be required by the Securities Act Regulations or the Conversion Regulations or as may hereafter be requested by the Agent. Following completion of the Subscription and Community Offering, in the event of a Syndicated Community Offering, the Company and the Bank will (i) promptly prepare and file with the Commission a post-effective amendment to the Registration Statement relating to the results of the Subscription and Community Offering, any additional information with respect to the proposed plan of distribution and any revised pricing information or (ii) if no such post-effective amendment is required, will file with, or mail for filing to, the Commission a prospectus or prospectus supplement containing information relating to the results of the Subscription and Community Offering and pricing information pursuant to Rule 424 of the Securities Act Regulations, in either case in a form acceptable to the Agent. The Company and the Bank will notify the Agent immediately, and confirm the notice in writing, (i) of the effectiveness of any post-effective amendment of the Registration Statement, the filing of any supplement to the Prospectus and the filing of any amendment to the Connecticut Application or the FDIC Notice, (ii) of the receipt of any comments from the Department, the FRB, the FDIC or the Commission with respect to the transactions contemplated by this Agreement, the Plan, the Connecticut Bancshares Merger or the Alliance Merger, (iii) of any request by the Department, the FRB, the FDIC or the Commission for any amendment to the Registration Statement, the Connecticut Application, the Holding Company Application or the FDIC Notice or any amendment or supplement to the Prospectus or for additional information, (iv) of the issuance by the Department, the FRB or the FDIC of any order suspending the Offerings, the use of the Prospectus, the Connecticut Bancshares Merger or the Alliance Merger or the initiation of any proceedings for that purpose, (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, and (vi) of the receipt of any notice with respect to the suspension of any qualification of the Securities for offering or sale in any jurisdiction. The Company and the Bank will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (b) The Company and the Bank will give the Agent notice of its best efforts intention to reservefile or prepare any amendment to the Holding Company Application, the Connecticut Application, the FDIC Notice or the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus (including any revised prospectus which the Company proposes for use in connection with the Syndicated Community Offering of the Securities which differs from the prospectus on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the Securities Act Regulations), will furnish the Agent with copies of any such amendment or supplement a reasonable amount of time prior to February 15such proposed filing or use, 2000as the case may be, a sufficient and will not file any such amendment or supplement or use any such prospectus to which the Agent or counsel for the Agent may object. (c) The Company and the Bank will deliver to the Agent as many signed copies and as many conformed copies of the Connecticut Application, the FDIC Notice and the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein) as the Agent may reasonably request, and from time to time such number of copies of the Prospectus as the Agent may reasonably request. (d) During the period when the Prospectus is required to be delivered, the Company and the Bank will comply, at their own expense, with all requirements imposed upon them by the Department, the FRB and the FDIC, by the applicable Conversion Regulations, as from time to time in force, and by the Nasdaq Stock Market, the Securities Act, the Securities Act Regulations, the Exchange Act, and the rules and regulations of the Commission promulgated thereunder, including, without limitation, Regulation M under the Exchange Act, so far as necessary to permit the continuance of sales or dealing in shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with during such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company period in accordance with the provisions hereof and the Prospectus. (e) If any event or circumstance shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares occur as a result of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriberit is necessary, in the event opinion of counsel for the Agent, to amend or supplement the Prospectus in order to make the Prospectus not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, the Company and the Bank will forthwith amend or supplement the Prospectus (in form and substance satisfactory to counsel for the Agent) so that, as so amended or supplemented, the Prospectus will not include an untrue statement of a material factor omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a purchaser, not misleading, and the Company and the Bank will furnish to the Agent a reasonable number of copies of such amendment or supplement. For the purpose of this subsection, the Company and the Bank will each furnish such information with respect to itself as the Agent may from time to time reasonably request. (f) The Company and the Bank will take all necessary action, in cooperation with the Agent, to qualify the Securities for offering and sale under the applicable securities laws of such states of the United States and other jurisdictions as the Conversion Regulations may require and as the Agent and the Company have agreed; provided, however, that the Company fails and the Bank shall not be obligated to effect delivery file any general consent to service of such shares of Common Stock within such three (3) business day periodprocess or to qualify as a foreign corporation in any jurisdiction in which it is not so qualified. In each jurisdiction in which the Securities have been so qualified, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each the Bank will file such statements and reports as may be restored to their respective positions immediately prior to delivery required by the laws of such Notice jurisdiction to continue such qualification in effect for a period of Exercise. The Notice of Exercise and Warrant representing not less than one year from the portion effective date of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇Registration Statement. (g) The Company authorizes ▇▇▇▇ ▇▇▇▇ and any Selected Dealers to act as agent of the Company in distributing the Prospectus to persons entitled to receive subscription rights and other persons to be offered Securities having record addresses in the states or jurisdictions set forth in a survey of the securities or “blue sky” laws of the various jurisdictions in which the Offerings will be made (the “Blue Sky Survey”). (h) The Company will make generally available to its security holders as soon as practicable, but not later than 60 days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 of the Securities Act Regulations) covering a twelve month period beginning not later than the first day of the Company’s fiscal quarter next following the “effective date” (as defined in said Rule 158) of the Registration Statement. (i) During the period ending on the third anniversary of the expiration of the fiscal year during which the closing of the transactions contemplated hereby occurs, the Company will furnish to its stockholders as soon as practicable after the end of each such fiscal year an annual report (including consolidated statements of financial condition and consolidated statements of income, stockholders’ equity and cash flows, certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), consolidated summary financial information of the Company, the Bank and the Subsidiaries for such quarter in reasonable detail. In addition, such annual report and quarterly consolidated summary financial information shall be made public through the issuance of appropriate press releases at the same time or prior to the time of the furnishing thereof to stockholders of the Company. (j) During the period ending on the third anniversary of the expiration of the fiscal year during which the closing of the transactions contemplated hereby occurs, the Company will furnish to the Agent (i) as soon as publicly available, a copy of each report or other document of the Company furnished generally to stockholders of the Company or furnished to or filed with the Commission under the Exchange Act or any national securities exchange or system on which any class of securities of the Company is listed, and (ii) from time to time, such other information concerning the Company as the Agent may reasonably request. (k) The Company and the Bank will conduct the Conversion, including the formation and operation of the Foundation, in all material respects in accordance with the Plan, the Conversion Regulations and all other applicable regulations, decisions and orders, including all applicable terms, requirements and conditions precedent to the Conversion imposed upon the Company or the Bank by the Department, the FDIC or the FRB. (l) The Company and the Bank will use the net proceeds received by it from the sale of the Securities in the manner specified in the Prospectus under “How We Intend to Use the Net Proceeds from the Offering.” (m) The Company will report the use of proceeds from the Offerings on its first periodic report filed with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act and on any subsequent periodic reports as may be required pursuant to Rule 463 of the Securities Act Regulations. (n) The Company will maintain the effectiveness of the Exchange Act Registration Statement for not less than three years and will comply in all material respects with its filing obligations under the Exchange Act. The Company will use its best efforts to effect and maintain the listing of the Common Stock on the Nasdaq Stock Market and, once listed on the Nasdaq Stock Market, the Company will comply with all applicable corporate governance standards required by the Nasdaq Stock Market. (o) The Company and the Bank will take such actions and furnish such information as are reasonably requested by the Agent in order for the Agent to ensure compliance with the NASD’s “Interpretation Relating to Free-Riding and Withholding.” (p) Other than in connection with the Alliance Merger or any employee benefit plan or arrangement described in the Prospectus, the Company will not, without the prior written consent of the Agent, sell or issue, contract to sell or otherwise dispose of, any shares of Common Stock other than the Securities and the Foundation Shares for a period of 180 days following the Closing Time. (q) During the period beginning on the date hereof and ending on the later of the third anniversary of the Closing Time or the date on which the Agent receives full payment in satisfaction of any claim for indemnification or contribution to which it may be entitled pursuant to Sections 6 or 7, respectively, neither the Company nor the Bank shall, without the prior written consent of the Agent, take or permit to be taken any action that could result in the Bank Common Stock becoming subject to any security interest, mortgage, pledge, lien or encumbrance; provided, however, that this covenant shall be null and void if the FRB, by regulation, policy statement or interpretative release, or by written order or written advice addressed to the Bank or the Agent specifically addressing the provisions of Section 6(a) hereof, permits indemnification of the Agent by the Bank as contemplated by such provisions. (r) The Company and the Bank will comply with the conditions imposed by or agreed to with the FRB in connection with its approval of the Holding Company Application and with the FDIC in connection with their approval or non-objection of, or non-objection to, the Conversion, including those conditions relating to the establishment and the operation of the Foundation; the Company and the Bank shall use their best efforts to ensure that the Foundation submits within the time frames required by applicable law a request to the Internal Revenue Service to be recognized as a tax-exempt organization under Section 501(c)(3) of the Code; the Company and the Bank will take no action which will result in the possible loss of the Foundation’s tax exempt status; and neither the Company nor the Bank will contribute any additional assets to the Foundation until such time that such additional contributions will be deductible for federal and state income tax purposes. (s) The Company shall not deliver the Securities until the Company and the Bank have satisfied each condition set forth in Section 5 hereof, unless such condition is waived in writing by the Agent. (t) The Company or the Bank will furnish to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ as early as practicable prior to the Closing Time, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇but no later than two (2) full business days prior thereto, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: a copy of the latest available unaudited interim consolidated financial statements of the Bank and the Subsidiaries which have been read by PWC, as stated in their letters to be furnished pursuant to subsections (▇▇▇e) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇and (f) of Section 5 hereof. (u) The Company will promptly register as a bank holding company under the BHCA. (v) Each of the Company and the Bank will conduct its business in compliance in all material respects with all applicable federal and state laws, Interim Chief Executive Officerrules, regulations, decisions, directives and orders, including all decisions, directives and orders of the Commission, the Nasdaq Stock Market, the Department, the FDIC and the FRB. (w) The Bank will not amend the Plan in any manner that would affect the sale of the Securities or the terms of this Agreement. (x) The Company and the Bank will not, prior to the Closing Time, incur any liability or obligation, direct or contingent, or enter into any material transaction, other than in the ordinary course of business consistent with past practice, except as contemplated by the Prospectus. (y) The Company and the Bank will use all reasonable efforts to comply with, or cause to be complied with, the conditions precedent to the several obligations of the Agent specified in Section 5 hereof. (z) The Company and the Bank will provide the Agent with any information necessary to carry out the allocation of the Securities in the event of an oversubscription, and such information will be accurate and reliable in all material respects. (aa) The Company and the Bank will notify the Agent when funds have been received for the minimum number of Securities set forth in the Prospectus. (bb) Prior to the Closing Time, the Company and the Bank shall have received each approval required to consummate the Connecticut Bancshares Merger and the Alliance Merger, and all applicable waiting periods shall have expired.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants hereby covenants and agrees with the Underwriter as follows: (ia) The If the Registration Statement has not already been declared effective by the Commission, the Company shall will use its best efforts to reserve, prior cause the Registration Statement and any post-effective amendments thereto to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit become effective as promptly as possible; the exercise in full of all Company will notify the Underwriter promptly of the outstanding Warrants. The time when the Registration Statement or any post-effective amendment to the Registration Statement has become effective or any supplement to the Prospectus has been filed and of any request by the Commission for any amendment or supplement to the Registration Statement or Prospectus or additional information; if the Company is currently organizing a stockholder meeting has elected to increase the number of authorized shares of Common Stock rely on Rule 430A of the CompanyRules and Regulations, the Company will file a Prospectus containing the information omitted therefrom pursuant to such Rule 430A with the Commission within the time period required by, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company otherwise in accordance with the provisions hereof of, Rules 424(b) and 430A of the Rules and Regulations; the Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus that, in your opinion, may be necessary or advisable in connection with the distribution of the Units by the Underwriter; and the Company will not file any amendment or supplement to the Registration Statement or Prospectus to which the Underwriter shall be deemed an "Exercise Date". reasonably object by notice to the Company after having been furnished a copy a reasonable time prior to the filing. (b) The Company will transmit advise the certificates representing Underwriter, promptly after it shall receive notice or obtain knowledge thereof, of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, of the suspension of the qualification of the Units for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and the Company will promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued. (c) Within the time during which a prospectus relating to the Units is required to be delivered under the Securities Act, the Company will comply as far as it is able with all requirements imposed upon it by the Securities Act, as now and hereafter amended, and by the Rules and Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Units as contemplated by the provisions hereof and the Prospectus. If, during such period, any event occurs as a result of which the Prospectus would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if, during such period, it is necessary to amend the Registration Statement or supplement the Prospectus to comply with the Securities Act, the Company will promptly notify the Underwriter and will amend the Registration Statement or supplement the Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance. (d) The Company will use its best efforts to arrange for the qualification of the Units for offering and sale under the securities laws of such jurisdictions as the Underwriter may designate and to continue such qualifications in effect for so long as may be required for purposes of the distribution of the Units; PROVIDED, HOWEVER, that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to the service of process in suits, other than those arising out of the offering or sale of the Units, in any jurisdiction where it is not now so subject. In each jurisdiction in which the Units shall have been qualified as herein provided, the Company will make and file such statements and reports in each year as are or may be reasonably required by the laws of such jurisdiction. (e) The Company will furnish to the Underwriter copies of the Registration Statement (two of which will be signed and will include all exhibits), each Preliminary Prospectus, the Prospectus, and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Underwriter may from time to time reasonably request. (f) For a period of five years from the Effective Date, the Company will furnish directly to the Underwriter as soon as the same shall be sent to its shareholders generally copies of all annual or interim shareholder reports of the Company and will, for the same period, also furnish the Underwriter with the following: (i) One copy of any report, application or document (other than exhibits, which, however, will be furnished on your request) filed by the Company with the Commission, Nasdaq, the NASD or any securities exchange; (ii) As soon as the same shall be sent to shareholders generally, copies of each communication sent to shareholders; and (iii) From time to time, such other information concerning the Company as the Underwriter may reasonably and specifically request, provided that the Company shall not be required to furnish any information pursuant hereto that is not furnished to its shareholders or not otherwise made publicly available. (g) The Company will, for a period of two (2) years from the Effective Date, furnish directly to the Underwriter quarterly profit and loss statements, reports of the Company's cash flow and statements of application of the proceeds of the offering of the Units by the Company in such reasonable detail as the Underwriter may request. (h) The Company will make generally available to its security holders as soon as practicable, but in any event not later than the fifteen (15) months after the end of the Company's current fiscal quarter, an earnings statement (which will be in reasonable detail but need not be audited) complying with the provisions of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations and covering a twelve (12)-month period beginning after the Effective Date of the Registration Statement. (i) After completion of the offering of the Units, the Company will make all filings required to maintain the quotation of the Common Stock on The Nasdaq SmallCap Market or any national stock exchange. (j) The Company will apply the net proceeds from the sale of the Units substantially in the manner set forth under the caption "Use of Proceeds" in the Prospectus. (k) For a period of six months after the Effective Date of the Registration Statement, the Company will not, without the prior written consent of the Underwriter, directly or indirectly, effect the disposition of any securities including, without limitation, any securities that are convertible into or exchangeable or exercisable for Common Stock, and shall not accelerate the exercisability of any securities that are convertible into or exchangeable or exercisable for Common Stock, except the Company may take the following actions: (i) sell Units pursuant to this Agreement; (ii) grant options under the Option Plans in the ordinary course, provided that the exercise price or conversion price of any options shall have an exercise price or conversion price that is not less than the market price of the Common Stock at the date of grant, or if greater, $4.00 per share; (iii) issue shares of Common Stock issuable upon pursuant to the exercise of any Warrants options granted under the Option Plans; and (together iv) sell Common Stock, grant warrants to purchase Common Stock (and issue shares pursuant to the exercise of such warrant), and grant other Securities convertible into Common Stock (and issue shares pursuant to the exercise of such warrant), to the Company's strategic business partners consistent with the certificates representing past practices of the Warrants Company, provided that the exercise price or conversion price of any warrants or other convertible Security shall have an exercise price or conversion price that is not so exercisedless than the market price of the common stock at the date of grant, or if greater, $4.00 per share. (l) The Company will not take, and will use its best efforts to Subscriber via express couriercause each of its officers and directors not to take, directly or indirectly, any action designed to or which might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Units. (m) The Company will inform the Florida Department of Banking and Finance at any time prior to the consummation of the distribution of the Units by electronic transfer the Underwriter if it commences engaging in business with the government of Cuba or otherwise with any person or affiliate located in Cuba. Such information shall be provided within ninety (90) days after the commencement thereof or after a change occurs with respect to previously reported information. (n) The Company hereby grants to the Underwriter a right of first refusal to act as the sole or managing agent or underwriter, as the case may be, for any private or public offering of equity or debt securities commenced by the Company during the period of three (3) business years following the Effective Date of the Registration Statement. If the Company receives a bona fide offer from any third party to serve as sole or managing agent or underwriter in such a private or public offering which the Company is willing to accept, the Company shall promptly give written notice to the Underwriter, including all essential terms and conditions of such offer. The Underwriter shall have a period of fifteen (15) days after the Exercise Date if receipt of such written notice to elect to enter into an agreement with the Company as sole or managing agent or underwriter, as the case may be, on the same terms and conditions as set forth in the Company's written notice, after which time the Underwriter will be deemed to have declined such exercise. If the Underwriter declines to exercise its right of first refusal or fails to notify the Company within such 15-day period of an election to invoke its right of first refusal, the Company may enter into an agreement with such third party from whom it has received a bona fide offer; provided, however, that the original Notice Underwriter's right of Exercise and Warrant being exercised by such datefirst refusal with respect to other offerings shall continue until the termination of the three-year period following the Effective Date of the Registration Statement. In addition to any other remedies which may be available to Subscriber, in the event that If the Company fails to effect delivery enter into such an agreement with such third party or if the terms and conditions of such shares offer are thereafter materially changed, the right of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect first refusal granted to the Company whereupon the Company and Subscriber Underwriter shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officeronce again apply.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstandingTHE MID-TIER COMPANY, THE MHC AND THE BANK. The Company, the Company acknowledgesMid-Tier Company, represents, warrants the MHC and agrees the Bank covenant with the Agents as follows: (a) The Company, the Mid-Tier Company, the MHC and the Bank will prepare and file such amendments or supplements to the Registration Statement, the Prospectus, the Conversion Application, the Members’ Proxy Statement and the Stockholders’ Proxy Statement as may hereafter be required by the Commission Regulations or the OTS Regulations or as may hereafter be requested by the Agents. Following completion of the Subscription and Community Offering, in the event of a Syndicated Community Offering, the Company, the Mid-Tier Company, the MHC and the Bank will (i) promptly prepare and file with the Commission a post-effective amendment to the Registration Statement relating to the results of the Subscription and Community Offering, any additional information with respect to the proposed plan of distribution and any revised pricing information or (ii) if no such post-effective amendment is required, will file with the Commission a prospectus or prospectus supplement containing information relating to the results of the Subscription and Community Offering and pricing information pursuant to Rule 424 of the Securities Act Regulations, in either case in a form acceptable to the Agents. The Company, the Mid-Tier Company, the MHC and the Bank will notify the Agents immediately, and confirm the notice in writing, (i) of the effectiveness of any post-effective amendment of the Registration Statement, the filing of any supplement to the Prospectus and the filing of any amendment to the Conversion Application, (ii) of the receipt of any comments from the OTS or the Commission with respect to the transactions contemplated by this Agreement or the Plan, (iii) of any request by the Commission or the OTS for any amendment to the Registration Statement or the Conversion Application or any amendment or supplement to the Prospectus or for additional information, (iv) of the issuance by the OTS of any order suspending the Offerings or the use of the Prospectus or the initiation of any proceedings for that purpose, (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, and (vi) of the receipt of any notice with respect to the suspension of any qualification of the Securities for offering or sale in any jurisdiction. The Company, the Mid-Tier Company, the MHC and the Bank will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (b) The Company represents and agrees that, unless it obtains the prior consent of the Agents and the Agents represent and agree that, unless they obtain the prior consent of the Company, they have not made and will not make any offer relating to the offered Securities that would constitute an “issuer free writing prospectus,” as defined in Rule 433, or that would constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission. Any such free writing prospectus consented to by the Company and the Agents is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company represents that it has and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely Commission filing where required, legending and record keeping. The Company need not treat any communication as a free writing prospectus if it is exempt from the definition of prospectus pursuant to Clause (a) of Section 2(a)(10) of the 1933 Act without regard to Rule 172 or 173. (c) The Company, the Mid-Tier Company, the MHC and the Bank will give the Agents notice of its intention to file or prepare any amendment to the Conversion Application or Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus (including any revised prospectus that the Company proposes for use in connection with the Syndicated Community Offering of the Securities that differs from the prospectus on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the Securities Act Regulations), will furnish the Agents with copies of any such amendment or supplement a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file any such amendment or supplement or use any such prospectus to which the Agents or counsel for the Agents may object. (d) The Company, the Mid-Tier Company, the MHC and the Bank will deliver to the Agents as many signed copies and as many conformed copies of the Holding Company Application, the Conversion Application and the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein) as the Agents may reasonably request, and from time to time such number of copies of the Prospectus as the Agents may reasonably request. (e) During the period when the Prospectus is required to be delivered, the Company, the Mid-Tier Company, the MHC and the Bank will comply, at their own expense, with all requirements imposed upon them by the OTS, by the applicable OTS Regulations, as from time to time in force, and by the Nasdaq, Securities Act, the Securities Act Regulations, the Exchange Act, and the rules and regulations of the Commission promulgated thereunder, including, without limitation, Regulation M under the Exchange Act, so far as necessary to permit the continuance of sales or dealing in shares of Common Stock during such period in accordance with the provisions hereof and the Prospectus. (f) If any event or circumstance shall occur as a result of which it is necessary, in the reasonable opinion of counsel for the Agents, to amend or supplement the Registration Statement or Prospectus in order to make the Prospectus not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, the Company, the Mid-Tier Company, the MHC and the Bank will forthwith amend or supplement the Registration Statement or Prospectus (in form and substance satisfactory to counsel for the Agents) so that, as so amended or supplemented, the Registration Statement or Prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a purchaser, not misleading, and the Company, the Mid-Tier Company, the MHC and the Bank will furnish to the Agents a reasonable number of copies of such amendment or supplement. For the purpose of this subsection, the Company, the Mid-Tier Company, the MHC and the Bank will each furnish such information with respect to itself as the Agents may from time to time reasonably request. (g) The Company, the Mid-Tier Company, the MHC and the Bank will take all necessary action, in cooperation with the Agents, to qualify the Securities for offering and sale under the applicable securities laws of such states of the United States and other jurisdictions as the OTS Regulations may require and as the Agents and the Company have agreed; provided, however, that neither the Company, the Mid-Tier Company, the MHC nor the Bank shall be obligated to file any general consent to service of process or to qualify as a foreign corporation in any jurisdiction in which it is not so qualified. In each jurisdiction in which the Securities have been so qualified, the Company, the Mid-Tier Company, the MHC and the Bank will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for a period of not less than one year from the effective date of the Registration Statement. (h) The Company authorizes the Agents and any Selected Dealer to act as agent of the Company in distributing the Prospectus to persons entitled to receive subscription rights and other persons to be offered Securities having record addresses in the states or jurisdictions set forth in a survey of the securities or “blue sky” laws of the various jurisdictions in which the Offerings will be made (the “Blue Sky Survey”). (i) The Company will make generally available to its security holders as soon as practicable, but not later than 60 days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 of the Securities Act Regulations) covering a twelve month period beginning not later than the first day of the Company’s fiscal quarter next following the “effective date” (as defined in said Rule 158) of the Registration Statement. (j) During the period ending on the third anniversary of the expiration of the fiscal year during which the closing of the transactions contemplated hereby occurs, the Company will furnish to its stockholders as soon as practicable after the end of each such fiscal year an annual report (including consolidated statements of financial condition and consolidated statements of income, stockholders’ equity and cash flows, certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), consolidated summary financial information of the Company and the Bank for such quarter in reasonable detail. In addition, such annual report and quarterly consolidated summary financial information shall be made public through the issuance of appropriate press releases at the same time or prior to the time of the furnishing thereof to stockholders of the Company. (k) During the period ending on the third anniversary of the expiration of the fiscal year during which the closing of the transactions contemplated hereby occurs, the Company will furnish to the Agents (i) as soon as publicly available, a copy of each report or other document of the Company furnished generally to stockholders of the Company or furnished to or filed with the Commission under the Exchange Act or any national securities exchange or system on which any class of securities of the Company is listed, and (ii) from time to time, such other information concerning the Company as the Agents may reasonably request. For purposes of this paragraph, any document filed electronically with the Commission shall be deemed furnished to the Agents. (l) The Company, the Mid-Tier Company, the MHC and the Bank will conduct the Conversion in all material respects in accordance with the Plan, the OTS Regulations, the Commission Regulations and all other applicable regulations, decisions and orders, including all applicable terms, requirements and conditions precedent to the Conversion imposed upon the Company, the Mid-Tier Company, the MHC or the Bank by the OTS and the Commission. (m) The Company, the Mid-Tier Company, the MHC and the Bank will comply, at their own expense, with all requirements imposed by the Commission, the OTS, and the Nasdaq or pursuant to the applicable Commission Regulations, OTS Regulations, and Nasdaq regulations as from time to time in force. (n) The Company will promptly inform the Agents upon its receipt of service with respect to any material litigation or administrative action instituted with respect to the Conversion or the Offerings. (o) Each of the Company and the Bank will use the net proceeds received by it from the sale of the Securities in the manner specified in the Prospectus under “Use of Proceeds.” (p) The Company will report the use of proceeds from the Offerings on its first periodic report filed pursuant to Sections 13(a) and 15(d) of the Exchange Act and on any subsequent periodic reports as may be required pursuant to Rule 463 of the Securities Act Regulations. (q) The Company will maintain the effectiveness of the Exchange Act Registration Statement for not less than three years and will comply in all material respects with its filing obligations under the Exchange Act. For three years, the Company will use its best efforts to reserveeffect and maintain the listing of the Common Stock on the Nasdaq Global Market and, once listed on the Nasdaq Global Market, the Company will comply with all applicable corporate governance standards required by the Nasdaq Global Market. The Company will file with the Nasdaq Global Market all documents and notices required by the Nasdaq Global Market of companies that have issued securities that are traded in the over-the-counter market and quotations for which are reported by the Nasdaq Global Market. (r) The Company and the Bank will take such actions and furnish such information as are reasonably requested by the Agents in order for the Agents to ensure compliance with the National Association of Securities Dealers, Inc.’s “Interpretation Relating to Free-Riding and Withholding.” (s) Other than in connection with any employee benefit plan or arrangement described in the Prospectus, the Company will not, without the prior written consent of the Representative, sell or issue, contract to February 15sell or otherwise dispose of, 2000, a sufficient number of any shares of Common Stock from its authorized but unissued shares other than the Securities or Exchange Shares for a period of Common Stock to permit 180 days following the exercise in full of all Closing Time. (t) During the period beginning on the date hereof and ending on the later of the outstanding Warrants. The Company is currently organizing a stockholder meeting third anniversary of the Closing Time or the date on which the Agents receive full payment in satisfaction of any claim for indemnification or contribution to increase which it may be entitled pursuant to Sections 6 or 7 hereof, respectively, made prior to the number third anniversary of authorized shares of Common Stock of the Closing Time, neither the Company, and has filed the Mid-Tier Company, the MHC nor the Bank shall, without the prior written consent of the Agents, take or permit to be taken any action that could result in the Company Common Stock, the Mid-Tier Common Stock or the Bank Common Stock becoming subject to any security interest, mortgage, pledge, lien or encumbrance, with the SEC exception of the intended loan to the Bank’s ESOP by the Company to enable the ESOP to purchase securities in an amount up to 8.0% of the Company Common Stock that will be outstanding following the Conversion. (u) The Company, the Mid-Tier Company, the MHC and the Bank will comply with the conditions imposed by or agreed to with the OTS in connection with its approval of the Holding Company Application and the Conversion Application. (v) During the period ending on the first anniversary of the Closing Time, the Bank will comply with all applicable law and regulation necessary for the Bank to continue to be a “qualified thrift lender” within the meaning of 12 U.S.C. Section 1467a(m). (w) The Company shall not deliver the Securities or the Exchange Shares until the Company, the Mid-Tier Company, the MHC and the Bank have satisfied each condition set forth in Section 5 hereof, unless such condition is waived by the Agents. (x) The MHC, the Mid-Tier Company, the Company or the Bank will furnish to the Representative as early as practicable prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. Closing Date, but no later than two (ii2) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) full business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriberprior thereto, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion copy of the Warrant exercised shall be delivered as follows: To latest available unaudited interim financial statements of the Mid-Tier Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ which have been read by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇& Company, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇as stated in their letters to be furnished pursuant to subsections (e) and (f) of Section 5 hereof. (y) During the period in which the Prospectus is required to be delivered, ▇▇ ▇▇▇▇▇each of the Company, the Mid-▇▇▇▇ Fax: Tier Company, the MHC and the Bank will conduct its business in compliance in all material respects with all applicable federal and state laws, rules, regulations, decisions, directives and orders, including all decisions, directives and orders of the Commission, the OTS and the Nasdaq Global Market. (▇▇▇z) ▇▇▇The Bank will not amend the Plan in any manner that would affect the sale of the Securities or the terms of this Agreement without the consent of the Representative. (aa) The Company, the Mid-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇Tier Company, Interim Chief Executive Officerthe MHC and the Bank will not, prior to the Closing Time, incur any liability or obligation, direct or contingent, or ent

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith the Underwriter that: (ia) The Company shall will use its best efforts to reservecause the Registration Statement to become effective. If required, the Company will file the Prospectus and any amendment or supplement thereto with the Commission in the manner and within the time period required by Rule 424(b) under the Act. Upon notification from the Commission that the Registration Statement has become effective, the Company will so advise the Underwriter and will not at any time, whether before or after the effective date, file any amendment to the Registration Statement or supplement to the Prospectus of which the Underwriter shall not previously have been advised and furnished with a copy or to which the Underwriter or its counsel shall have reasonably objected in writing or which is not in compliance with the Act and the Rules and Regulations. At any time prior to February 15, 2000, a sufficient number the later of shares of Common Stock from its authorized but unissued shares of Common Stock to permit (A) the exercise in full of all completion by the Underwriter of the outstanding Warrantsdistribution of the Units contemplated hereby (but in no event more than nine months after the date on which the Registration Statement shall have become or been declared effective) and (B) _____ days after the date on which the Registration Statement shall have become or been declared effective, the Company will prepare and file with the Commission, promptly upon the Underwriter's request, any amendments or supplements to the Registration Statement or Prospectus which, in the opinion of counsel to the Company and the Underwriter, may be reasonably necessary or advisable in connection with the distribution of the Units. As soon as the Company is advised thereof, the Company will advise the Underwriter, and provide the Underwriter copies of any written advice, of the receipt of any comments of the Commission, of the effectiveness of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for an amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order or threat thereof suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Units for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to prevent the issuance of any such order, and, if issued, to obtain as soon as possible the lifting thereof. The Company has caused to be delivered to the Underwriter copies of each Preliminary Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and dealers to use the Prospectus in connection with the sale of the Units for such period as in the opinion of counsel to the Underwriter and the Company the use thereof is currently organizing required to comply with the applicable provisions of the Act and the Rules and Regulations. In case of the happening, at any time within such period as a stockholder meeting Prospectus is required under the Act to increase be delivered in connection with sales by the number Underwriter or dealer of authorized shares any event of Common Stock which the Company has knowledge and which materially affects the Company or the securities of the Company, and has filed with or which in the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing opinion of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to counsel for the Company and delivering counsel for the original Notice Underwriter should be set forth in an amendment of Exercise and the original Warrant Registration Statement or a supplement to the Company by overnight courier. Each business date on which Prospectus in order to make the statements therein not then misleading, in light of the circumstances existing at the time the Prospectus is required to be delivered to a Notice purchaser of Exercise is telecopied the Units or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the Rules and received by Regulations, the Company in accordance with will notify the provisions hereof shall Underwriter promptly and forthwith prepare and furnish to the Underwriter copies of such amended Prospectus or of such supplement to be deemed an "Exercise Date". The Company will transmit attached to the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to SubscriberProspectus, in such quantities as the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerUnderwriter may reasonably

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants further covenants and agrees with the Representative and the other Underwriters as follows: (a) The Company will prepare the Prospectus in a form approved by the Underwriters and will file such Prospectus pursuant to Rule 424(b) under the 1933 Act not later than the Commission’s close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430B under the 1933 Act and will make no further amendment or any supplement to the Registration Statement or the Prospectus that shall be reasonably disapproved by the Underwriters promptly after reasonable notice thereof. The Company will advise the Underwriters, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed with the Commission or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed with the Commission and furnish the Underwriters with copies thereof and will advise the Underwriters, promptly after it receives notice thereof, of the issuance by the Commission of any stop order with respect to the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus, any Issuer-Represented Free Writing Prospectus or the Prospectus, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement, any preliminary prospectus, any Issuer-Represented Free Writing Prospectus or the Prospectus or for additional information, and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any preliminary prospectus, any Issuer-Represented Free Writing Prospectus or the Prospectus or suspending any such qualification, promptly use its reasonable best efforts to obtain the withdrawal of such order. (b) The Company will give the Representative notice of its intention to file or prepare any amendment to the Registration Statement, any Term Sheet or any amendment, supplement or revision to either any preliminary prospectus (including the prospectus included in the Registration Statement at the time it became effective) or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the Representative with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Representative or counsel for the Underwriters shall reasonably object. (c) The Company has furnished or will deliver to the Representative and counsel for the Underwriters, without charge and upon request, signed copies of the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith) and signed copies of all consents and certificates of experts, and will also deliver to the Representative, without charge and upon request, a conformed copy of the Registration Statement as originally filed and of each amendment thereto (without exhibits). The copies of the Registration Statement and each amendment thereto furnished to the Representative will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T. (d) Promptly from time to time, the Company will take such action as the Underwriters may reasonably request to qualify the Securities for offering and sale under the securities laws of such states and other jurisdictions as the Underwriters may reasonably request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Securities, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction. In each state or other jurisdiction in which the Securities have been so qualified, the Company will file such statements and reports as may be required by the laws of such state or other jurisdiction to continue such qualification in effect until the completion of the distribution of the Securities. The Company will also supply the Underwriters with such information as is necessary for the determination of the legality of the Securities for investment under the laws of such jurisdiction as the Underwriters may reasonably request. (e) On the business day next succeeding the date of this Agreement and from time to time, the Company will furnish the Underwriters with copies of the Prospectus in New York City in such quantities as the Underwriters may from time to time reasonably request, and, if the delivery of a prospectus is required at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Securities and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such period to amend or supplement the Prospectus in order to comply with the 1933 Act, notify the Underwriters and upon the Underwriters’ request prepare and furnish without charge to the Underwriters and to any dealer in securities as many copies as the Underwriters may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus that will correct such statement or omission or effect such compliance, and in case an Underwriter is required to deliver a prospectus in connection with sales of any of the Securities at any time nine months or more after the time of issue of the Prospectus, upon such Underwriter’s request, but at the expense of such Underwriter, prepare and deliver to such Underwriter as many copies as it may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the 1933 Act. (f) The Company will comply with the 1933 Act and the 1933 Act Regulations, the 1939 Act and the 1939 Act Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and in the Prospectus. If at any time when a prospectus is required by the 1933 Act to be delivered in connection with sales of the Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Company, to amend the Registration Statement or amend or supplement the Prospectus in order that the Prospectus will not include any untrue statements of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the opinion of such counsel, at any such time, to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and file with the Commission, subject to Section 3(b) hereof, such amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement or the Prospectus comply with such requirements, and the Company will furnish to each Underwriter such number of copies of such amendment or supplement as such Underwriter may reasonably request. If at any time following issuance of an Issuer-Represented Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer-Represented Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the Company has promptly notified or will promptly notify the Underwriters and has promptly amended or will promptly amend or supplement, at its own expense, such Issuer-Represented Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission. (g) The Company will make generally available to its securityholders as soon as practicable, an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the 1933 Act and the 1933 Act Regulations (including, at the option of the Company, Rule 158). (h) During a period of three years from the effective date of the Registration Statement, the Company will furnish to the holders of the Securities as soon as practicable after the end of each fiscal year an annual report (including balance sheets and statements of income, shareholders’ equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), to make available to such holders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail; provided that if the Company files an annual report on Form 10-K or quarterly report on Form 10-Q by means of ▇▇▇▇▇, the Company shall be deemed to have furnished such report to such holders in compliance with the requirements of this section. (i) During a period of three years from the effective date of the Registration Statement, the Company will furnish to the Underwriters copies of all reports or other communications (financial or other) furnished to holders of the Securities, and to deliver to the Underwriters (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange on which any class of securities of the Company is listed and (ii) subject to an appropriate confidentiality agreement, such additional information concerning the business and financial condition of the Company as the Underwriters may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to its shareholders generally or to the Commission); provided that if the Company files any such reports or other communications of the type contemplated by clauses (i) or (ii) above with the Commission and such report or materials are or will become available on ▇▇▇▇▇, the Company shall be deemed to have furnished such report or other communications to the Underwriters in compliance with the requirements of this section. (j) The Company will use the net proceeds received by it from the sale of the Securities pursuant to this Agreement in the manner specified in the Registration Statement, the General Disclosure Package and the Prospectus under the caption “Use of Proceeds.” (k) Until completion of the distribution of the Securities, the Company will file (i) all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations and (ii) such information on Form 10-K or Form 10-Q as may be required by Rule 463 under the 1933 Act. (l) During the period of 180 days from the date of the Prospectus, the Company will not make any offer relating to the Securities that would constitute an Issuer-Represented Free Writing Prospectus unless it obtains the prior written consent of the Representative, which consent shall not be unreasonably withheld, conditioned or delayed, and has complied and will comply with the requirements of Rule 433 applicable to any Issuer-Represented Free Writing Prospectus, including, where and when required, timely filing with the Commission, legending and record keeping. (m) During the period beginning on the date hereof and continuing to and including the Closing Time and the latest additional time of purchase, if any, of the Securities, the Company will not, and will not permit any subsidiary to, without the prior written consent of the Representative, directly or indirectly, issue, sell, offer or contract to sell, grant any option for the sale of, or otherwise transfer or dispose of, any debt securities or nonconvertible preferred stock of the Company or any of its subsidiaries. (n) The Company will not take, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of any securities of the Company, whether to facilitate the sale or resale of the Securities or otherwise, and the Company will, and shall use its commercially reasonable efforts to cause each of its affiliates to, comply with all applicable provisions of Regulation M with respect to any securities of the Company. If the limitations of Rule 102 of Regulation M (“Rule 102”) do not apply with respect to the Securities or any other reference security pursuant to any exception set forth in Section (d) of Rule 102, then promptly upon notice from the Representative (or, if later, at the time stated in the notice), the Company will, and shall use its commercially reasonable efforts to cause each of its affiliates to, comply with Rule 102 as though such exception were not available, but the other provisions of Rule 102 (as interpreted by the Commission) did apply. (o) The Company will prepare the Final Term Sheet in form and substance satisfactory to the Representative, and the Company represents and agrees that, unless it obtains the prior consent of the Representative, it has not made and will not make any offer relating to the Securities that would constitute an “issuer free writing prospectus,” as defined in Rule 433, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission. Any such free writing prospectus consented to by the Representative and the Company is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company represents that it has treated or agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely filing with the Commission where required, legending and record keeping. Notwithstanding the foregoing, the Company consents to the use by an Underwriter of a free writing prospectus that contains only (a)(i) information describing the preliminary terms of the Securities or their offering, (ii) information meeting the requirements of Rule 134 of the 1933 Act Regulations or (iii) information that describes the final terms of the Securities or their offering and that is included in the Final Term Sheet or (b) other customary information that is neither “issuer information,” as defined in Rule 433, nor otherwise an Issuer-Represented Free Writing Prospectus. (p) The Company shall use its reasonable best efforts to reserve, prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise Securities to be eligible for clearance, settlement and trading in full book-entry-only form through the facilities of all of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingDTC. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officer

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as follows------------------------ that: (ia) The Company shall will use its best efforts to reservecause the Registration Statement and any amendment thereof, prior if not effective at the time and date that this Agreement is executed and delivered by the parties hereto, to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock become effective. If the Registration Statement has become or becomes effective pursuant to permit the exercise in full of all Rule 430A of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase Rules and Regulations, or the number of authorized shares of Common Stock filing of the CompanyProspectus is otherwise required under Rule 424(b) of the Rules and Regulations, and has filed with the SEC prior Company will file the Prospectus, properly completed, pursuant to the date hereof a preliminary proxy statement in connection with applicable paragraph of Rule 424(b) of the Rules and Regulations within the time period prescribed and will provide evidence satisfactory to you of such stockholder meeting. (ii) It will maintain the listing of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date"timely filing. The Company will transmit promptly advise you in writing (i) of the certificates representing shares receipt of any comments of the Commission, (ii) of any request of the Commission for amendment of or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus or for additional information, (iii) when the Registration Statement shall have become effective, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the institution of any proceedings for that purpose. If the Commission shall enter any such stop order at any time, the Company will use its best efforts to obtain the lifting of such order as soon as practicable. The Company will not file any amendment or supplement to the Registration Statement (either before or after it becomes effective), any Preliminary Prospectus or the Prospectus of which you have not been furnished with a copy a reasonable time prior to such filing or to which you reasonably object or which is not in compliance with the Act and the Rules and Regulations. (b) The Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or the Prospectus which in your judgment may be necessary or advisable to enable you to continue the distribution of the Common Shares and will use its best efforts to cause the same to become effective as promptly as possible. The Company will fully and completely comply with the provisions of Rule 430A of the Rules and Regulations with respect to information omitted from the Registration Statement in reliance upon such Rule. (c) Within the time during which a prospectus relating to the Common Shares is, in the opinion of counsel for the Underwriters or counsel for the Company, required under the Act to be delivered in connection with sales by an Underwriter or dealer, the Company will comply as far as it is able with all requirements imposed upon it by the Act and by the Rules and Regulations, as from time to time are in force, so far as necessary to permit the continuance of sales of or dealings in the Common Stock issuable upon exercise as contemplated by the provisions hereof and the Prospectus. If during such period any event occurs, as a result of any Warrants (together which the Prospectus, as then amended or supplemented would include an untrue statement of a material fact, or omit to state a material fact necessary to make the statements therein, in light of the circumstances then existing, not misleading, or if during such period it is necessary to amend or supplement the Registration Statement or Prospectus to comply with the certificates representing Act, the Warrants Company will promptly notify you and will amend or supplement the Registration Statement or Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such statement or omission or effect such compliance. (d) As soon as practicable, but not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business later than 45 days after the Exercise Date if end of the first quarter ending after one year following the "effective date of the Registration Statement" (as defined in Rule 158(c) of the Rules and Regulations), the Company has received will make generally available to its security holders an earnings statement (which need not be audited) covering a period of 12 consecutive months beginning after the original Notice effective date of Exercise the Registration Statement which will satisfy the provisions of the last paragraph of Section 11(a) of the Act. (e) During such period as a prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, the Company, at its expense, but only for the nine-month period referred to in Section 10(a)(3) of the Act, will furnish to you or mail to your order copies of the Registration Statement, the Prospectus, the Preliminary Prospectus and Warrant being exercised by such date. In addition all amendments and supplements to any other remedies which such documents in each case as soon as available and in such quantities as you and the Selling Shareholder may request, for the purposes contemplated by the Act. (f) The Company shall cooperate with you and your counsel in order to qualify or register the Common Shares for sale under (or obtain exemptions from the application of) the Blue Sky laws of such jurisdictions as you designate, will comply with such laws and will continue such qualifications, registrations and exemptions in effect so long as reasonably required for the distribution of the Common Shares. The Company shall not be available required to Subscriberqualify as a foreign corporation or to file a general consent to service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise you promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Common Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event that of the issuance of any order suspending such qualification registration or exemption, the Company, with your cooperation, will use its best efforts to obtain the withdrawal thereof. (g) During the period of five years hereafter, the Company fails will furnish to effect delivery the Underwriters: (i) as soon as practicable after the end of each fiscal year, copies of the Annual Report of the Company containing the balance sheet of the Company as of the close of such shares fiscal year and statements of income, stockholders' equity and cash flows for the year then ended and the opinion thereon of the Company's independent public accountants; (ii) as soon as practicable after the filing thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other report filed by the Company with the Commission, the NASD or any securities exchange; and (iii) as soon as available, copies of any report or communication of the Company mailed generally to holders of its Common Stock within such three Stock. (3h) business day period, Subscriber will be entitled to revoke During the relevant Notice period of Exercise 90 days after the first date that any of the Common Shares are released by delivering a notice to such effect you for sale to the Company whereupon public, without the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery written consent of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Securities or each of you, acting jointly, (which consent may be withheld at the sole discretion of ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇Securities or you, ▇▇ ▇▇▇▇▇as the case may be), the Company will not, other than in connection with an acquisition by the Company (provided that any securities issued in connection therewith are subject to the restrictions provided in Section 8(c)(vii) hereof for the remainder of such 90 day period) or pursuant to an exercise of outstanding stock options or the grant or issuance of options or shares pursuant to stock plans disclosed in the Prospectus, issue, offer, sell, grant options to purchase or otherwise dispose of any of the Company's equity securities or any other securities convertible into or exchangeable with its Common Stock or other equity security. (i) The Company will apply the net proceeds of the sale of the Common Shares sold by it substantially in accordance with its statements under the caption "Use of Proceeds" in the Prospectus. (j) The Company will use its best efforts to qualify or register its Common Stock for sale in non-▇▇▇▇ Fax: issuer transactions under (▇▇▇or obtain exemptions from the application of) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇the Blue Sky laws of the State of California (and thereby permit market making transactions and secondary trading in the Company's Common Stock in California), will comply with such Blue Sky laws, and will continue such qualifications, registrations and exemptions in effect for a period of five years after the date hereof. (k) The Company will use its best efforts to list the Common Stock as a national market system security on the Nasdaq National Market. ▇▇▇▇▇▇▇You may, Interim Chief Executive Officerin your sole discretion, waive in writing the performance by the Company of any one or more of the foregoing covenants or extend the time for their performance.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith each Underwriter that: (ia) The Company shall will use its best efforts to reservecause the Registration Statement to become effective and, prior upon notification from the Commission that the Registration Statement has become effective, will so advise the Representatives and will not at any time, whether before or after the Effective Date, file any amendment to February 15the Registration Statement or supplement to the Prospectus of which the Representatives shall not previously have been advised and furnished with a copy or to which the Representatives or counsel to the Representatives shall have reasonably objected in writing or which is not in compliance with the Act and the Rules and Regulations. During any time when a prospectus relating to the Shares is required to be delivered under the Act, 2000the Company will prepare and file with the Commission, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock promptly upon your request, any amendments or supplements to permit the exercise Registration Statement or Prospectus which, in full of all the Representatives' reasonable opinion, may be necessary or advisable in connection with the distribution of the outstanding WarrantsShares. Promptly after the Representatives or the Company is advised thereof, the Representatives will advise the Company or the Company will advise the Representatives, as the case may be, and confirm the advice in writing, of the receipt of any comments of the Commission, of the effectiveness of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop orders or other order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, or of the suspension of the qualification of the Shares for offering in any jurisdiction, or the institution of any proceedings for any of such purposes, and will use its best efforts to prevent the issuance of any such order and, if issued, to obtain as soon as possible the lifting thereof. The Company is currently organizing a stockholder meeting has caused to increase the number be delivered to you copies of authorized shares of Common Stock of the Companyeach Preliminary Prospectus, and the Company has filed with the SEC prior consented and hereby consents to the date hereof a preliminary proxy statement use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriters and dealers to use the Prospectus in connection with the sale of the Shares for such stockholder meeting. (ii) It will maintain period as is required to comply with the listing applicable provisions of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise Act and the original Warrant Rules and Regulations. In case of the happening, at any time within such period as a Prospectus is required under the Act to the Company be delivered in connection with sales by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise underwriter or dealer, of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if event of which the Company has received the original Notice of Exercise knowledge and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerwhich

Covenants of the Company. For The Company covenants and agrees with the Underwriter that: (a) The Company will use its best efforts to cause the Registration Statement, if not effective at the Execution Time, and any amendment thereto, to become effective as soon as reasonably practicable thereafter or, if the procedure in Rule 430A is followed, prepare and timely file with the Commission under Rule 424(b) a Final Prospectus containing information previously omitted at the time of effectiveness of the Registration Statement in reliance upon Rule 430A. Prior to the termination of the offering of the Certificates, the Company will not file any amendment of the Registration Statement or amendment or supplement (including the Final Prospectus or any Preliminary Final Prospectus) to the Base Prospectus or any Rule 462(b) Registration Statement unless the Company has furnished to the Underwriter a copy for its review prior to filing and will not file any such proposed amendment or supplement to which the Underwriter reasonably objects and which is not in compliance with the 1933 Act Regulations. The Company will promptly advise the Underwriter (i) when the Registration Statement, if not effective at the Execution Time, and any amendment thereto, shall have become effective; (ii) when the Final Prospectus, and any supplement thereto, shall have been filed with the Commission pursuant to Rule 424(b); (iii) when, prior to termination of the offering of the Certificates, any amendment to the Registration Statement shall have been filed or become effective; (iv) of any request by the Commission for any amendment of the Registration Statement or supplement to the Final Prospectus or for any other additional information; (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution of any proceeding for that purpose and (vi) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Certificates for sale in any jurisdiction or the initiation of any proceeding for such purpose. The Company will use its best efforts to prevent the issuance of any such stop order or the suspension of any such qualification and, if issued or suspended, to obtain as soon as possible the withdrawal thereof. (b) Prior to the filing thereof with the Commission, the Company will submit to the Underwriter, for its approval after reasonable notice thereof, such approval not to be unreasonably withheld or delayed, a copy of any post-effective amendment to the Registration Statement, any Rule 462(b) Registration Statement proposed to be filed or a copy of any document proposed to be filed under the 1934 Act before the termination of the offering of the Certificates by the Underwriter if such document would be deemed to be incorporated by reference into the Registration Statement or Final Prospectus. (c) The Company will deliver to, or upon the order of, the Underwriter, from time to time, as many copies of any Preliminary Final Prospectus as the Underwriter may reasonably request. The Company will deliver to, or upon the order of, the Underwriter during the period when delivery of a Final Prospectus is required under the 1933 Act, as many copies of the Final Prospectus, or as thereafter amended or supplemented, as the Underwriter may reasonably request. The Company will deliver to the Underwriter at or before the Closing Date, two copies of the Registration Statement and all amendments thereto including all exhibits filed therewith, and will deliver to the Underwriter such number of copies of the Registration Statement (including such number of copies of the exhibits filed therewith that may reasonably be requested), including documents filed under the 1934 Act and deemed to be incorporated by reference therein, and of all amendments thereto, as the Underwriter may from time to time reasonably request. (d) The Company will, and will cause the Trust to, comply with the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations, so as to permit the completion of the distribution of the Certificates as contemplated in this Agreement and the Final Prospectus. If during the period in which a prospectus is required by law to be delivered by an Underwriter or dealer in connection with the sale of any Certificates, any event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion of the Underwriter, it becomes necessary to amend or supplement the Final Prospectus in order to make the statements therein, in the light of the circumstances existing at the time the Final Prospectus is delivered to a purchaser, not misleading, or, if it is necessary at any time to amend or supplement the Final Prospectus to comply with any law or to file under the 1934 Act any document which would be deemed to be incorporated by reference in the Registration Statement to comply with the 1933 Act or the 1934 Act, the Company will promptly notify the Underwriter and will promptly either (i) prepare and file, or cause to be prepared and filed, with the Commission an appropriate amendment to the Registration Statement or supplement to the Final Prospectus or (ii) prepare and file, or cause to be prepared and filed, with the Commission (at the expense of the Company) an appropriate filing under the 1934 Act which shall be incorporated by reference in the Final Prospectus so that the Final Prospectus as so amended or supplemented will not, in the light of the circumstances when it is so delivered, be misleading, or so that the Final Prospectus will comply with applicable law. (e) The Company will cooperate with the Underwriter in endeavoring to qualify the Certificates for sale under the laws of such jurisdictions as the Underwriter may designate and will maintain such qualifications in effect so long as required for the distribution of the Certificates, except that the Company will not be obligated to qualify the Certificates in any Securities held jurisdiction in which such qualification would require the Company to qualify to do business as a foreign corporation, file a general or unlimited consent to service of process or subject itself to taxation in any such jurisdiction to which it is not subject and will arrange for the determination of the legality of the Certificates for purchase by Subscriber remain outstandinginstitutional investors. The Company will, from time to time, prepare and file such statements, reports, and other documents as are or may be required to continue such qualifications in effect for so long a period as the Underwriter may reasonably request for distribution of the Certificates. (f) The Company shall not invest, or otherwise use the proceeds received by the Company from its sale of the Certificates in such a manner as would require the Company, CPS or the Trust to register as an investment company under the 1940 Act. (g) Until the retirement of the Certificates, or until such time as the Underwriter shall cease to maintain a secondary market in the Certificates, whichever occurs first, the Company acknowledgeswill deliver to the Underwriter the annual statements of compliance and the annual independent certified public accountant's reports furnished to the Trustee pursuant to the Pooling and Servicing Agreement, representsas soon as such statements and reports are furnished to the Trustee. (h) The Company or CPS shall, warrants from the date hereof through and agrees including the Closing Date, furnish, or cause to be furnished, or make available, or cause to be made available, to the Underwriter or its counsel such additional documents and information regarding each of them and their respective affairs as follows:the Underwriter may from time to time reasonably request and which the Company or CPS possess or can acquire without unreasonable effort or expense, including any and all documentation requested in connection with the Underwriter's due diligence efforts regarding information in the Registration Statement and the Final Prospectus and in order to evidence the accuracy or completeness of any of the conditions contained in this Agreement; and all actions taken by the Company or CPS to authorize the sale of the Certificates shall be reasonably satisfactory in form and substance to the Underwriter. (i) The Company shall use its best efforts will cause the Trust to reservemake generally available to Class A Certificateholders as soon as practicable, prior but no later than sixteen months after the Effective Date, an earnings statement of the Trust covering a period of at least twelve consecutive months beginning after such Effective Date and satisfying the provisions of Section 11(a) of the 1933 Act (including Rule 158 promulgated thereunder). (j) So long as any of the Certificates are outstanding, the Company will furnish to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full Underwriter copies of all reports or other communications (financial or otherwise) furnished or made available to Class A Certificateholders, and deliver to the Underwriter during such period, (i) as soon as they are available, copies of any reports and financial statements filed by or on behalf of the outstanding Warrants. Trust or the Company with the Commission pursuant to the 1934 Act, and (ii) such additional information concerning the business and financial condition of the Company as the Underwriter may from time to time reasonably request. (k) The Company is currently organizing a stockholder meeting to increase and CPS will enter into the number of authorized shares of Common Stock of Pooling and Servicing Agreement and the Company, and has filed with the SEC other Basic Documents on or prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingClosing Date. (iil) It will maintain On or before the listing Closing Date, the Company and CPS shall cause the respective computer records of its Common Stock on the OTC Bulletin BoardCompany and CPS relating to the Receivables to be marked to show the Trustee's absolute ownership of the Receivables, and from and after the Closing Date neither the Company nor CPS shall take any action inconsistent with the Trustee's ownership of such Receivables, other than as expressly permitted by the Pooling and Servicing Agreement. (iiim) It will permit Subscriber To the extent, if any, that the ratings provided with respect to exercise its right to exercise the Warrants Certificates by telecopying an executed either of the Rating Agencies is conditional upon the furnishing of documents or the taking of any other actions by the Company or CPS, CPS shall, or shall cause the Company to, furnish such documents and completed Notice of Exercise to take any such other actions. (n) On the Closing Date, the Company and delivering CPS shall cause the original Notice of Exercise and Certificate Insurer to issue the original Warrant Policy to the Company by overnight courier. Each business date on which a Notice Trustee for the benefit of Exercise is telecopied to the holders of the Certificates in form and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such date. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect substance satisfactory to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerUnderwriter.

Covenants of the Company. For The Company covenants and agrees with the several Underwriters that: (a) The Company, upon notification from the Commission that the Registration Statement has become effective, will so long advise you and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement to the Prospectus of which you shall not previously been advised and furnished with a copy or to which you or your counsel shall have objected in writing, acting reasonably, or which is not in compliance with the Act and the Rules and Regulations. At any time prior to the later of (i) the completion by the Underwriters of the distribution of the Securities as any Securities held by Subscriber remain outstandingcontemplated hereby; or (ii) 25 days after the date on which the Registration Statement shall have become or been declared effective, the Company acknowledgeswill prepare and file with the Commission, representspromptly upon your request, warrants any amendments or supplements to the Registration Statement or Prospectus which may be necessary or advisable in connection with the distribution of the Securities and agrees as follows: (i) The mutually agreed to by the Company shall and the Representative. After the Effective Date and as soon as the Company is advised thereof, the Company will advise you, and confirm the advice in writing, of the receipt of any comments of the Commission, of the effectiveness of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, or of the suspension of the qualification of the Securities for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to reserveprevent the issuance of any such order, prior and, if issued, to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit obtain as soon as possible the exercise in full of all of the outstanding Warrantslifting thereof. The Company is currently organizing a stockholder meeting has caused to increase the number be delivered to you copies of authorized shares of Common Stock of the Companyeach Preliminary Prospectus and Definitive Prospectus, and the Company has filed with the SEC prior consented and hereby consents to the date hereof a preliminary proxy statement use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriters and Selected Dealers to use the Prospectus in connection with the sale of the Securities for such stockholder meeting. (ii) It will maintain period as in the listing opinion of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise counsel to the Company and delivering Underwriters the original Notice use thereof is required to comply with the applicable provisions of Exercise the Act and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to Rules and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after the Exercise Date if the Company has received the original Notice of Exercise and Warrant being exercised by such dateRegulations. In addition to any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery of such Notice of Exercise. The Notice of Exercise and Warrant representing the portion case of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratorieshappening, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerat any time within

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, the The Company acknowledges, represents, warrants covenants and agrees as followswith the Underwriter that: (ia) The Company shall will use its best efforts to reservecause the Registration Statement to become effective under the Act. If required, the Company will file the Prospectus and any amendment or supplement thereto with the Commission in the manner and within the time period required by Rule 424(b) under the Act. Upon notification from the Commission that the Registration Statement has become effective under the Act, the Company will so advise you and will not at any time, whether before or after the Effective Date, file any amendment to the Registration Statement or supplement the Prospectus unless you have previously been furnished with a copy and to which you or your counsel shall have reasonably objected in writing or which is not in compliance with the Act and the Rules and Regulations. At any time prior to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all completion by the Underwriter of the outstanding Warrantsdistribution of the securities contemplated hereby (but in no event more than nine months after the date on which the Registration Statement shall have become or been declared effective under the Act), the Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or Prospectus which, in the opinion of counsel to the Company and the Underwriter, may be reasonably necessary or advisable in connection with the distribution of the Shares contemplated hereby and as mutually agreed by the Company and the Underwriter. As soon as the Company is advised thereof, the Company will advise the Underwriter, and provide the Underwriter copies of any written advice, of the receipt of any comments of the Commission, of the effectiveness under the Act of any post-effective amendment to the Registration Statement, of the filing of any supplement to the Prospectus or any amended Prospectus, of any request made by the Commission for an amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the issuance by the Commission or any state or regulatory body of any stop order or other order or threat thereof suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any Preliminary Prospectus, or of the suspension of the qualification of the Shares for offering in any jurisdiction, or of the institution of any proceedings for any of such purposes, and will use its best efforts to prevent the issuance of any such order, and, if issued, to obtain as soon as possible the lifting thereof. The Company has caused to be delivered to the Underwriter copies of each Preliminary Prospectus, and the Company has consented and hereby consents to the use of such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and dealers to use the Prospectus in connection with the sale of the Shares for such period as in the opinion of counsel to the Underwriter and the Company the use thereof is currently organizing required to comply with the Act and the Rules and Regulations. In case of the happening, at any time within such period as a stockholder meeting Prospectus is required under the Act to increase be delivered in connection with sales by the number Underwriter or dealers, of authorized shares any event of Common Stock which the Company has knowledge and which materially affects the Company or the securities of the Company, and has filed or which in the opinion of counsel for the Company or counsel for the Underwriter should be set forth in an amendment to the Registration Statement or a supplement to the Prospectus in order to make the statements therein not then misleading, or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the SEC prior Rules and Regulations, the Company will notify you promptly and forthwith prepare and furnish to you copies of such amended Prospectus or of such supplement to be attached to the date hereof Prospectus, in such quantities as you may reasonably request, in order that the Prospectus, as so amended or supplemented, will not contain any untrue statement of a preliminary proxy statement material fact or omit to state any material fact necessary in order to make the statements in the Prospectus not misleading in light of the circumstances under which they were made. The preparation and furnishing of any such amendment or supplement to the Registration Statement or amended Prospectus or supplement to be attached to the Prospectus shall be without expense to the Underwriter, except that in case the Underwriter is required, in connection with such stockholder meeting. (iithe sale of the Shares to deliver a Prospectus nine months or more after the Effective Date, the Company, will upon request of the Underwriter, amend or supplement the Registration Statement and Prospectus and furnish each of the Underwriter with reasonable quantities of prospectuses complying with Section 10(a)(3) It will maintain of the listing of its Common Stock on Act at the OTC Bulletin Board. (iii) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date"Company’s expense. The Company will transmit comply in all material respects with the certificates representing shares Act, the Rules and Regulations and Securities and Exchange Act of Common Stock issuable upon exercise 1934, as amended (the “Exchange Act”) and the rules and regulations thereunder in connection with the offering and issuance of the Shares. (b) The Company will furnish such information as may be required and to otherwise cooperate and use its best efforts to qualify or register the Shares for sale under the securities or “blue sky” laws of such jurisdictions as you may reasonably designate and will make such applications and furnish such information as may be required for that purpose and to comply with such laws, provided the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent of service of process in any Warrants jurisdiction in any action other than one arising out of the offering or sale of the Shares. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long a period as you may reasonably request. (c) For so long as the Company is a reporting company under either Sections 12 or 15(d) of the Exchange Act, the Company, at its expense, will furnish to its shareholders an annual report (including financial statements audited by independent public accountants as required by the Act), in reasonable detail and at its expense, will furnish to the Underwriter during the period ending three years from the Effective Date hereof, (i) as soon as practicable after the end of each fiscal year, but no earlier than the filing of such information with the Commission, a balance sheet of the Company as at the end of such fiscal year, together with statements of income, and cash flow of the certificates representing Company for such fiscal year, all in reasonable detail and accompanied by a copy of the Warrants certificate or report thereon of independent accountants; (ii) as soon as practicable after the end of each of the first three fiscal quarters of each fiscal year, but no earlier than the filing of such information with the Commission, consolidated summary financial information of the Company for such quarter in reasonable detail; (iii) as soon as they are publicly available, a copy of all reports (financial or other) mailed to shareholders; (iv) as soon as they are available, a copy of all non-confidential reports and financial statements furnished to or filed with the Commission or any securities exchange or automated quotation system on which any class of securities of the Company is listed; (v) copies of each press release, news item and article with respect to the Company’s affairs released by the Company; and (vi) such other information as you may from time to time reasonably request. To the extent that the information required by this Section 3(c) may be filed with the Commission via the ▇▇▇▇▇ electronic filing system, the filing of such information via the ▇▇▇▇▇ electronic filing system shall satisfy the Company’s obligations under this Section 3(c). (d) In the event the Company has an active subsidiary or subsidiaries, such financial statements referred to in subsection (c) above will be on a consolidated basis to the extent the accounts of the Company and its subsidiary or subsidiaries are consolidated in reports furnished to its shareholders generally. (e) On or prior to the Effective Date, all officers, directors, employees and 5% shareholders of the Company as of the Effective Date shall agree in writing (in the form annexed hereto as Exhibit A), not so exercised) to Subscriber via express couriersell, by electronic transfer or otherwise within three dispose of (3in any manner whatsoever, including public dispositions pursuant to Rule 144 under the Act) business days after any common stock or securities exercisable or convertible into common stock for a period of 15 months from the Exercise Date Effective Date, or any longer period required by any state securities commission or the American Stock Exchange, Inc. (“AMEX”), without the prior written consent of the Underwriter and, if applicable, the securities commission of such states or the AMEX. On or prior to the Effective Date, each holder of shares of the Company’s Series A 10% and Series B 5% Convertible Preferred Stock who is not an officer, director, employee or 5% shareholder of the Company has received as of the original Notice Effective Date shall agree in writing (in the form annexed hereto as Exhibit B), not to sell, transfer or otherwise dispose of Exercise (in any manner whatsoever, including public dispositions pursuant to Rule 144 under the Act) any Common Stock underlying the Series A and Warrant being exercised by Series B Preferred Stock, as applicable, for a period of six months from the Effective Date; provided, however, that such date. In addition to any other remedies which holders of the Series A and Series B Preferred Stock may be available to Subscriber, sell the Common Stock underlying such Preferred Stock (i) in the event that the average closing price of the Common Stock exceeds $6.60 per share for a period of ten consecutive trading days during the six-month period, or (ii) with the prior written consent of the Underwriter. On or prior to the Effective Date, each holder of shares of the Company’s Series C Convertible Preferred Stock who is not an officer, director, employee or 5% shareholder of the Company fails as of the Effective Date shall agree in writing (in the form annexed hereto as Exhibit C), not to effect delivery sell, transfer or otherwise dispose of such shares of (in any manner whatsoever, including public dispositions pursuant to Rule 144 under the Act) any Common Stock within underlying such three Preferred Stock for a period of six months from the Effective Date; provided, however, that such holders of the Series C Preferred Stock may sell the Common Stock underlying such Preferred Stock (3i) business day in the event the average closing price of the Common Stock exceeds $8.00 per share for a period of 15 consecutive trading days during the six-month period, Subscriber or (ii) with the prior written consent of the Underwriter. The Company further agrees not to permit, cause, suffer or assist in any such sales, dispositions or transfers. In addition, without consent of the Underwriter, the Company shall not sell or offer for sale any of its securities for a period of 13 months following the Effective Date except pursuant to options, warrants and convertible securities issued and outstanding on the date of filing of the Registration Statement or pursuant to any employee stock option plan. (f) On the Effective Date, the Company shall have taken the necessary action to register the Shares and to become a reporting company under Section 12 of the Exchange Act, and the Company will be entitled make all filings required to, and will have obtained approval for the listing of the Shares on AMEX and, so long as the Company remains a reporting company under the Exchange Act, will use its best efforts to revoke maintain such listing or a listing on the relevant Notice of Exercise by delivering a notice to such effect Nasdaq National Market (“NMS”), Nasdaq SmallCap Market or New York Stock Exchange, or any similar national exchange or quotation system, for at least five years from the Effective Date. (g) On or prior to the Company whereupon Effective Date, the Company and Subscriber shall each be restored will have engaged a firm of independent certified public accountants, reasonably acceptable to their respective positions immediately prior to delivery the Underwriters. For the purposes of such Notice this Agreement, the certified public accounting firm of Exercise. The Notice of Exercise and Warrant representing the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇& ▇▇▇▇▇▇▇ ▇▇▇▇▇PC, ▇▇ ▇▇▇▇▇shall be deemed acceptable to the Underwriter. Additionally, for a period of at least five years from the Effective Date the Company will engage a firm of independent public accountants permitted to practice before the Commission. (h) On the Effective Date, the terms and conditions of all material transactions and proposed transactions between the Company and each of its subsidiaries, on the one hand, and any of the Company’s officers, directors, affiliates or the beneficial owners of five percent or more of any class of the Company’s equity securities (including, by way of example, but not limitation, employment agreements, loans, leases, license and service agreements), on the other hand, shall be reasonably satisfactory to the Underwriter. (i) Until the Offering has been terminated or concluded, as the case may be, the Company will not issue a press release or engage in any publicity, other than promotion by the Company of its products and services and other press releases in the ordinary course of its business, without the Underwriter's prior written consent, which consent shall not be unreasonably withheld or delayed. (j) For a period of three years from the Effective Date, the Underwriter may appoint an observer reasonably acceptable to the Company’s Board of Directors who will be able to attend all meetings of the Board of Directors and who need not be the same person from meeting to meeting. The Underwriter shall also have the right to written notice of, and agendas with respect thereto, no later than notice to other directors of each meeting and to obtain copies of the minutes, if requested, from all Board of Directors meetings for three years following the Effective Date, whether or not an observer attends or participates in any such Board meeting. The Company agrees to reimburse the Underwriter immediately upon the Underwriter’s request therefor for any reasonable and documented food, travel and lodging expenses directly incurred by the Underwriter in connection with its designee or observer attending Company Board meetings. Nothing in this Section 3(j) shall require the Company or its Board of Directors to waive its attorney-▇▇▇▇ Faxclient privilege with respect to deliberations and meetings and materials with respect thereto. (k) The Company shall direct the Depository Trust Company, or such other depository of the Company’s securities, to deliver a “special security position report” to the Underwriter on a daily basis for the first 30 days after the Effective Date and on a weekly basis for the first six months after the Effective Date, each at the Company’s sole expense. (l) For a period of five years following the Effective Date, the Company will maintain registration with the Commission pursuant to Sections 12(b) or 12(g) of the Exchange Act. In the event that the Company fails to maintain registration with the Commission pursuant to Sections 12(b) or 12(g) during such five year period, the Company will provide reasonable access for an independent accountant designated by the Underwriter, to all books, records and other documents or statements that reflect the Company’s financial status at least once each quarter, at the Company’s reasonable expense. (m) For a period of one year from the Effective Date, so long as the Company is a reporting company under either Sections 12 or 15(d) of the Exchange Act, the Company shall: (▇▇▇i) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇retain a transfer agent reasonably acceptable to the Underwriter for the securities of the Company; and (ii) direct such transfer agent to furnish, at the Company’s sole expense, the Underwriter with weekly transfer sheets as to each of the Company’s securities as prepared by the Company’s transfer agent and copies of lists of shareholders when requested by the Underwriter. (n) The Company will deliver to the Underwriter two manually executed copies of the Registration Statement including all financial statements and exhibits filed therewith, and of all amendments thereto when filed with the Commission, and will deliver to the Underwriter such number of conformed copies of the Registration Statement, including such financial statements and of all amendments thereto, as the Underwriter may reasonably request. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerThe Company will deliver to or up