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. 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 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 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. 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 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 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 Subsidiary of information relating to the Offering or pursuant to the Company's or the Subsidiary's 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 or the Compensation Options 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 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 and Option Units shall be borne by the Company; (e) will use its commercially reasonable efforts to remain, warrants and agrees to cause the Subsidiary 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 Laws related to the sale, production or distribution of 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 Warrants are listed and posted for trading on the CSE on the Closing Date (or as soon as reasonably practicable thereafter), subject to the Underwriters satisfying the distribution requirements of the CSE for the Warrants to be listed thereon; (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 Lead Underwriter (on behalf 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 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 Warrants issuable upon exercise of the Compensation Options, and (iv) the Compensation Warrant Shares issuable upon exercise of the Compensation Warrants shall upon issuance in accordance with terms thereof and receipt by the Company of payment therefor, 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, and Compensation 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, and Compensation Warrant Shares, as applicable, are allotted and reserved for issuance upon the exercise in full of all of the outstanding Warrants. The , Compensation Options, and Compensation Warrant Shares, 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 144A or Rule 506(b) of authorized shares of Common Stock Regulation D of the Company1933 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 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 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 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 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 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 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 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 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 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 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 will endeavor to cause the Registration Statement to become effective and will advise you promptly and, if requested by you, will confirm such advice in writing (i) when the Registration Statement has become effective and when any amendment thereto thereafter becomes effective, (ii) of any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (iii) 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 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 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 will make every reasonable effort to obtain the withdrawal of such order at the earliest possible time. (b) 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. (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 reservehave the Shares qualified for listing on the NASDAQ Global Market, prior subject to February 15, 2000, a sufficient number official notice of shares of Common Stock from its authorized but unissued shares of Common Stock to permit the exercise in full of all issuance of the outstanding Warrants. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of Shares being sold by the Company, and has filed immediately after the Closing Date or as soon as practicable thereafter and, upon such issuance, the Company will be in compliance with the SEC prior designation and maintenance criteria applicable to the date hereof a preliminary proxy statement in connection with such stockholder meetingNASDAQ Global Market issuers. (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 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 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 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 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 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 if requested by you, will confirm such advice in writing (i) when the Registration Statement has become effective and when any amendment thereto thereafter becomes effective, (ii) of any request by the Commission for amendments or supplements to February 15the Registration Statement or the Prospectus or for additional information, 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 (iii) of the outstanding Warrantsissuance 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 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 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 will make every reasonable effort to obtain the withdrawal of such order at the earliest possible time. (b) The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock will furnish you, without charge, three signed copies of the Company, and has Registration Statement as originally filed with the SEC prior 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 date hereof a preliminary proxy statement in connection with such stockholder meetingRegistration Statement (without exhibits) as originally filed and of each amendment thereto as you may reasonably request. (iic) It The Company will maintain not file any amendment to the listing Registration Statement or make any amendment or supplement to the Prospectus of its Common Stock on the OTC Bulletin Boardwhich you shall not have been advised previously or to which you shall reasonably object in writing promptly after being so advised. (iiid) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise Prior to the Company and delivering effective date of 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 courierRegistration Statement, 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 delivered or will deliver to any other remedies which may be available to Subscriberyou, without charge, 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 quantities as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ you have requested or may ▇▇▇▇▇▇▇▇ ▇▇▇▇▇& Company, ▇▇ ▇▇▇▇▇Inc. July , 2006 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 selected 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 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. (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 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. (g) The Company will make generally available to its security holders an earnings statement, which need not be audited, covering a 12-▇▇▇▇ Fax: (▇▇▇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) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇of the Securities Act and any applicable regulation. ▇▇▇▇▇▇▇▇ & Company, Interim Chief Executive OfficerInc. July , 2006 (h) 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.

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 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 as followswith the Underwriter that: (ia) The Company shall will use its best efforts to reservecause the Registration Statement to become 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 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 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 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 your 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 you, and provide you copies of any written advice, of the original Warrant 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 in accordance Commission for an amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the provisions hereof shall be deemed an "Exercise Date". The Company will transmit issuance by the certificates representing shares of Common Stock issuable upon exercise Commission or any state or regulatory body of any Warrants (together with stop order or other order or threat thereof suspending the certificates representing effectiveness of the Warrants not so exercised) to Subscriber via express courierRegistration Statement or any order preventing or suspending the use of any preliminary prospectus, by electronic transfer or otherwise within three (3) business days after of the Exercise Date if suspension of the Company has received qualification of the original Notice Units for offering in any jurisdiction, or of Exercise and Warrant being exercised by such date. In addition to the institution of any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery proceedings for any of such shares purposes, and will use its best efforts to prevent the issuance of Common Stock within any such three (3) business day periodorder, Subscriber will be entitled and, if issued, to revoke obtain as soon as possible 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 Officerlifting thereof.

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 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 (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 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, 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 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 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 Securities 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, 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 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 Securities. As soon as the Company is advised thereof, the Company will advise you, and provide you copies of any written advice, of the original Warrant 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 Securities 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 the certificates representing shares has caused to be delivered to you 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 consented and hereby consents to the original Notice use of Exercise such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and Warrant being exercised by dealers to use the Prospectus in connection with the sale of the Securities for such dateperiod as in the opinion of counsel to the Underwriter and the Company the use thereof is required to comply with the applicable provisions of the Act and the Rules and Regulations. 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

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 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, if not effective at the time of execution of this Agreement, to become effective as promptly as possible. 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) of the Rules and Regulations and, if applicable, a term sheet as described in Rule 434(b)of the Rules and Regulations. 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 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 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 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 Stock. As soon as the Company is advised thereof, the Company 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 and delivering Registration Statement, of the original Notice filing of Exercise and the original Warrant any supplement to the Company by overnight courier. Each business date on which a Notice Prospectus or any amended Prospectus, of Exercise is telecopied to and received any request made by the Company in accordance Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the provisions hereof shall be deemed an "Exercise Date". The Company will transmit issuance by the certificates representing shares of Common Stock issuable upon exercise Commission or any state or regulatory body of any Warrants (together with stop order or other order or threat thereof suspending the certificates representing effectiveness of the Warrants not so exercised) to Subscriber via express courierRegistration Statement or any order preventing or suspending the use of any preliminary prospectus, by electronic transfer or otherwise within three (3) business days after of the Exercise Date if suspension of the Company has received qualification of the original Notice Stock for offering in any jurisdiction, or of Exercise and Warrant being exercised by such date. In addition to the institution of any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery proceedings for any of such shares purposes, and will use its best efforts to prevent the issuance of Common Stock within any such three (3) business day periodorder, Subscriber will be entitled and, if issued, to revoke obtain as soon as possible 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 Officerlifting thereof.

Covenants of the Company. For so long If and to the extent the Remarketed Senior Notes are required (in the view of counsel, which need not be in the form of a written opinion, for either the Remarketing Agent or the Company) to be registered under the Securities Act as any Securities held by Subscriber remain outstandingin effect at the time of the Remarketing, the Company acknowledges, represents, warrants covenants and agrees as follows: (ia) The Company shall prepare the Registration Statement and the Prospectus, in a form approved by the Remarketing Agent, shall file any such Prospectus pursuant to the Securities Act within the period required by the Securities Act and the rules and regulations thereunder and shall use its best efforts to reserve, cause the Registration Statement to be declared effective by the Commission prior to February 15the second Business Day immediately preceding the applicable Remarketing Date. (b) The Company shall file promptly with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, 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 reasonable judgment of the outstanding Warrants. Company or the Remarketing Agent, be required by the Securities Act or requested by the Commission. (c) The Company shall advise the Remarketing 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 Remarketing Agent with copies thereof. (d) The Company shall 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 a Prospectus is currently organizing required in connection with the offering or sale of the Remarketed Senior Notes. (e) The Company shall advise the Remarketing Agent, 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 the Prospectus, of the suspension of the qualification of any of the Remarketed Senior Notes 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 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 Prospectus or suspending any such qualification, to use promptly its best efforts to obtain its withdrawal. (f) The Company shall furnish promptly to the Remarketing Agent such copies of the following documents as the Remarketing Agent shall reasonably request: (A) conformed copies of the Registration Statement as originally filed with the Commission and each amendment thereto (in each case excluding exhibits); (B) the Preliminary Prospectus and any amended or supplemented Preliminary Prospectus, (C) the Prospectus and any amended or supplemented Prospectus; and (D) any document incorporated by reference in the Prospectus (excluding exhibits thereto); and, if at any time when delivery of a stockholder meeting prospectus is required in connection with the Remarketing, any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to increase state any material fact necessary in order to make the number statements therein, in the light of authorized shares 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 same 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 Securities Act or the Exchange Act, to notify the Remarketing Agent and, upon its request, to file such document and to prepare and furnish without charge to the Remarketing Agent and to any dealer in securities as many copies as the Remarketing Agent may from time to time reasonably request of Common Stock an amended or supplemented Prospectus that will correct such statement or omission or effect such compliance. (g) Prior to filing with the Commission (A) any amendment to the Registration Statement or supplement to the Prospectus or (B) any Prospectus pursuant to Rule 424 under the Securities Act, the Company shall furnish a copy thereof to the Remarketing Agent and counsel to the Remarketing Agent; and shall not file any such amendment or supplement that shall be reasonably disapproved by the Remarketing Agent promptly after reasonable notice; (h) As soon as practicable, but in any event not later than eighteen months, after the effective date of the Registration Statement, the Company shall make “generally available to its security holders” 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 (including, at the option of the Company, Rule 158 under the Securities Act). The terms “generally available to its security holders” and has filed “earnings statement” shall have the meanings set forth in Rule 158 under the Securities Act; and (i) The Company shall take such action as the Remarketing Agent may reasonably request in order to qualify the Remarketed Senior Notes for offer and sale under the securities or “blue sky” laws of such jurisdictions as the Remarketing Agent may reasonably request; provided that in no event shall the Company be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction. (j) The Company shall furnish the Remarketing Agent with such information and documents as the Remarketing Agent may reasonably request in connection with the SEC prior transactions contemplated hereby, and to make reasonably available to the date hereof Remarketing Agent and any accountant, attorney or other advisor retained by the Remarketing Agent such information that parties would customarily require in connection with a preliminary proxy statement due diligence investigation conducted in accordance with applicable securities laws and to cause the Company’s officers, directors, employees and accountants to participate in all such discussions and to supply all such information reasonably requested by any such Person in connection with such stockholder meetinginvestigation. (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 The Company hereby covenants and agrees that, during the term of this Agreement, for so long as any Securities held by Subscriber remain outstanding, Warrants are outstanding unless Holders of outstanding Warrants issued to the Company acknowledges, represents, warrants Purchasers and agrees as followsevidencing two-thirds of the Warrants then outstanding agree otherwise in writing: (ia) Each of the Warrant Securities issued and delivered upon the exercise of the Warrants and payment of the Exercise Price will be duly and validly authorized and issued, will be fully paid and non-assessable, and will not be subject to any unpaid tax of the Company or any lien imposed on or created by the Company, whether respecting their issuance to and purchase by the Holder of the Warrants or otherwise. The Company will take all such actions as may be necessary to assure that all such Warrant Securities may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which Warrant Securities may be listed. (b) The Company shall use not take any action, including, without limitation, amending its best efforts articles of incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, to reserveavoid or seek to avoid the observance or performance of any of the terms of the Warrant or impair the ability of the Holder(s) to realize the full intended economic value thereof, prior but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to February 15protect the rights of Holders against impairment. (c) Upon the request of any Holder, 2000the Company will at any time during the period a Warrant is outstanding acknowledge in writing, a sufficient in form satisfactory to such Holder, the continuing validity of such Warrant and the obligations of the Company thereunder and hereunder. (d) The Company shall reserve and at all times keep available for issuance an authorized number of shares of Common Stock from its authorized but unissued shares of Common Stock or other Warrant Securities sufficient to permit the full and immediate exercise in of the Warrants and the full and immediate exercise, exchange and conversion 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 other securities, options, warrants and other rights issued or granted by the Company, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meeting. (iie) It will maintain The Company shall not permit the listing par value of its Common Stock on to exceed, at any time, the OTC Bulletin BoardExercise Price and shall take all such actions as may be necessary or appropriate to ensure that it does not do so. (iiif) It will permit Subscriber As soon as practicable, the Company shall, upon request deliver to exercise its right to exercise any Holder(s) 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 Securities copies, if such documents are filed with the Company by overnight courier. Each business date on which a Notice Securities and Exchange Commission (the "SEC") or other governmental agency or division or other regulatory authority, of Exercise is telecopied to (i) all annual, quarterly and received monthly financial statements made available by the Company in accordance to its shareholders, (ii) all reports, notices and proxy or information statements sent or made available generally by the Company to its shareholders, and (iii) all regular and periodic reports and all registration statements, prospectuses and other information filed by the Company with the provisions hereof shall be deemed an "Exercise Date". SEC, relevant state authorities or any securities exchange, securities quotation system or other self-regulatory organization. (g) The Company will transmit shall cooperate with the certificates representing shares Holder(s) of Common Stock issuable upon exercise the Warrants and the Warrant Securities in supplying such information as may be reasonably necessary for the Holder(s) to complete and file any information or other reporting forms from time to time required by the Commission, relevant state authorities or any securities exchange, securities quotation system or other self-regulatory organization, including, without Stations information pertaining to or required for the availability of any Warrants (together with exemption from the certificates representing securities laws for the sale, transfer or other disposition of 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 OfficerSecurities.

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, or each of the Prospectus 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, the Company (i) will comply with all requirements imposed upon it by the Act and 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 each of the Prospectus and any Integrated Prospectus, as then amended or supplemented, and (ii) will not file with the Commission the prospectus or the amendment referred to in the third sentence of Section 2(a) hereof, 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 and any Integrated 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 and any Integrated 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 Original 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, any required Integrated Prospectus, or any amendment or supplement thereto or any order preventing or suspending the use of any Preliminary Prospectus, the Prospectus, any Integrated 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 Original Registration Statement or any Rule 462(b) Registration Statement, for amending or supplementing any Preliminary Prospectus, the Prospectus and any Integrated 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 or an amendment or supplement to the Prospectus or any Integrated 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) or any Rule 462(b) Registration Statement, certified by the Secretary or an Assistant Secretary of the Company to be true and complete copies thereof as filed with the Commission by electronic transmission, (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 Integrated 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 PM, New York City time, on the date of determination of the public offering price, if such determination occurred at or prior to 10:00 AM, New York City time on such date or (B) 2:00 PM, 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 AM, 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 or any Integrated 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 one hundred and agrees as follows:eighty (180) days after the date hereof, except pursuant to this Agreement and except for issuances pursuant to the exercise of employee stock options outstanding on the date hereof or pursuant to the terms of convertible securities of the Company outstanding on the date hereof. (i) The Company shall use its best efforts will not, directly or indirectly, (i) take any action designed to reservecause or to result in, prior or that has constituted or which might reasonably be expected to February 15constitute, 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 stabilization or manipulation of the outstanding Warrants. 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 (except for the sale of Securities by the Selling Stockholders under this Agreement). (j) The Company is currently organizing a stockholder meeting to increase will obtain the number of authorized shares of Common Stock of the Company, and has filed with the SEC agreements described in Section 7(f) hereof prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingFirm Closing Date. (iik) It will maintain If at any time during the listing 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 its 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 and any Integrated Prospectus), the Company will, after 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 the OTC Bulletin Boardsuch rumor, publication or event. (iiil) It will permit Subscriber to exercise its right to exercise the Warrants by telecopying an executed and completed Notice of Exercise to If the Company and delivering the original Notice of Exercise and the original Warrant elects to rely on Rule 462(b), the Company by overnight courier. Each business date on which shall both file a Notice of Exercise is telecopied to Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) and received by pay the Company applicable fees in accordance with Rule 111 promulgated under the provisions hereof shall be deemed an "Exercise Date". Act by the earlier of (i) 10:00 P.M. Eastern time on the date of this Agreement and (ii) the time confirmations are sent or given, as specified by Rule 462(b)(2). (m) The Company will transmit cause the certificates representing shares of Common Securities to be duly included for quotation on The Nasdaq Stock issuable upon exercise of any Warrants Market's National Market (together with the certificates representing the Warrants not so exercised"Nasdaq National Market") 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 prior 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 OfficerFirm

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 (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 certificates representing Act and the Warrants 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 International Managers to continue the distribution of the International Common Shares and will use its best efforts to cause the same to (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 International 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 so exercisedmisleading, 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 International Manager is required to deliver a prospectus after such nine-month period, the Company upon request, but at the expense of such International Manager, 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) to Subscriber via express courierof the Act. (d) As soon as practicable, by electronic transfer or otherwise within three (3) business 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 earning 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 International Manager 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 (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 International 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 be available to Subscriberdesignate, will comply with such laws and will continue such qualifications, registrations and exemptions in effect so long as reasonably required for the event that distribution of the International Common Shares. The Company shall (g) During the period of five years hereafter, the Company fails will furnish to effect delivery the Lead Managers and, upon request of the Lead Managers, to each of the other International Managers: (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, 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, 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 Ordinary Shares. (h) During the period of 90 days after the first date that any of the International Common Stock within such three (3) business day period, Subscriber will be entitled to revoke the relevant Notice of Exercise 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. ▇▇▇▇▇ ▇either Mont▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇urities or each of the Lead Managers (which consent may be withheld at the sole discretion of Mont▇▇▇▇▇▇ ▇▇▇▇▇urities or the Lead Managers, ▇▇ ▇▇▇▇▇-▇▇▇▇ 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 International 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 International Manager 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 Lead Managers, Interim Chief Executive Officeron behalf of the International Managers, may, in their sole discretion, waive in writing the performance by the Company of any one or more

Covenants of the Company. For so long as any Securities held by Subscriber remain outstandingThe Company covenants and agrees with each Underwriter that: (a) If the Effective Date is on or before the date of this Agreement, the Company acknowledgesshall comply with the provisions of and make all requisite filings with the Commission pursuant to Rule 424(b) not later than the Commission's close of business on the second Business Day following the execution and delivery of this Agreement or, representsif applicable, warrants such earlier time as may be required by Rule 430A(a)(3) of the Rules and agrees Regulations. The Company shall advise you, promptly after it receives notice thereof, of the time when, if the Effective Date is on or before the date of this Agreement, 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. 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 prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or the Prospectus which, in your opinion, may be necessary or advisable in connection with the distribution of the Debentures; and the Company shall not file any amendment or supplement to the Registration Statement or the Prospectus or file any document under the Exchange Act before the termination of the offering of the Debentures by the Underwriters if such document would be deemed to be incorporated by reference into the Prospectus, which filing is not consented to by you after reasonable notice thereof, such consent not to be unreasonably withheld or delayed. The Company shall advise you promptly of the issuance by the Commission or any State 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 or the Prospectus or suspending the qualification of the Debentures 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 follows:soon as possible the lifting thereof. (b) The Company shall furnish to each of you and to counsel for the Underwriters a signed copy of the Registration Statement as originally filed and each amendment thereto filed with the Commission, including all consents and exhibits filed therewith, and shall furnish to the Underwriters such number of conformed copies of the Registration Statement, as originally filed and each amendment thereto (excluding exhibits other than this Agreement), the Prospectus and all amendments and supplements to any of such documents (including any document filed under the Exchange Act and deemed to be incorporated by reference in the Preliminary Prospectus or Prospectus), in each case as soon as available and in such quantities as you may from time to time reasonably request. (c) Within the time during which the Prospectus relating to the Debentures is required to be delivered under the Securities Act, the Company shall comply 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 is necessary to permit the continuance of sales of or dealings in the Debentures as contemplated by the provisions hereof and by 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 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 or file any document to comply with the Securities Act, the Company shall promptly notify you and shall, subject to Section 4(a) above, amend the Registration Statement or supplement the Prospectus or file any document (at the expense of the Company) so as to correct such statement or omission or to effect such compliance. (d) The Company shall take or cause to be taken all necessary action and furnish to whomever you may direct such information as may be required in qualifying the Debentures for offering and sale under the laws of such jurisdictions as you shall designate, and to continue such qualifications in effect for as long as may be necessary for the distribution of the Debentures; 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 in any jurisdiction where it is not currently so subject. (e) As soon as practicable, the Company shall make generally available to its security holders (and shall deliver to you) an earnings statement satisfying the requirements of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations. (f) Whether or not this Agreement becomes effective or is terminated or the sale of the Debentures to the Underwriters is consummated, the Company shall pay or cause to be paid (A) all fees and expenses (including, without limitation, all registration and filing fees and fees and expenses of the Company's accountants but excluding fees and expenses of counsel for the Underwriters) incurred 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 Prospectus, the Indenture, the Statement of Eligibility and Qualification of the Trustee on Form T-1 filed with the Commission (the "Form T- 1") and any amendments or supplements of the foregoing and any documents incorporated by reference into any of the foregoing and the copying, delivery and shipping of this Agreement and Blue Sky Memoranda, (B) all fees and expenses incurred in connection with the preparation and delivery to the Underwriters of the Debentures (including the cost of printing the Debentures), (C) all filing fees and fees and disbursements of counsel to the Underwriters incurred in connection with the qualification of the Debentures under state securities or Blue Sky laws as provided in Section 4(d) hereof, (D) any fees required to be paid to rating agencies incurred in connection with the rating of the Debentures, (E) the fees, costs and charges of the Trustee, including the fees and disbursements of counsel for the Trustee, and (F) all other costs and expenses incident to the performance of its obligations hereunder for which provision is not otherwise made in this Section. It is understood, however, that, except as provided in this Section, Section 6 and Section 8 hereof, the Underwriters shall pay all of their own costs and expenses, including the fees of their counsel and any advertising expenses incurred in connection with any offers they may make. If the sale of the Debentures provided for herein is not consummated by reason of acts of the Company or changes in circumstances of the Company pursuant to Section 8 hereof which prevent this Agreement from becoming effective, or by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed or because any other condition of the Underwriters' obligations hereunder is not fulfilled or if the Underwriters shall decline to purchase the Debentures for any reason permitted under this Agreement other than by reason of a default by any of the Underwriters pursuant to Section 7, the Company shall reimburse the several Underwriters for all reasonable out-of-pocket disbursements (including fees and disbursements of counsel) incurred by the Underwriters in connection with any investigation or preparation made by them in respect of the marketing of the Debentures or in contemplation of the performance by them of their obligations hereunder. (g) During the period of one year from the Closing Date, the Company shall furnish to the Underwriters, copies of all reports or other communications furnished to stockholders and copies of any reports or financial statements furnished to or filed with the Commission or the New York Stock Exchange (the "NYSE") or any other national securities exchange or association on which any class of securities of the Company is quoted or listed, and the Company shall furnish to the Underwriters copies of all reports and other communications furnished to the Noteholders. (h) Until termination of the offering of the Debentures, the Company shall timely file all documents and amendments to previously filed documents required to be filed by it pursuant to Section 12, 13, 14 or 15(d) of the Exchange Act. (i) The Company shall use its best efforts to reserve, prior to February 15, 2000, a sufficient number of shares of Common Stock 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. 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, Debentures as set forth 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 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 SUSA as follows: (a) SCM will not file any amendment to the Registration Statement without giving SUSA a reasonable period of time to review such amendment prior to filing or to which SUSA reasonably objects, unless advised by counsel that doing so is required by law. SCM will notify the SUSA 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 SUSA as many conformed copies of the Registration Statement as originally filed and of each amendment thereto, prior together with exhibits, as SUSA may reasonably request, and will also deliver to February 15, 2000, a sufficient SUSA such number of shares conformed copies of Common Stock the Registration Statement as originally filed and as of each amendment thereto without exhibits as SUSA shall reasonably request. (c) SCM will deliver to SUSA 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 SUSA may reasonably request for the purposes contemplated by the 1933 Act or the 1933 Act Regulations. (d) SCM will deliver to SUSA: (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 reasonable opinion of SCM or SUSA, to amend or supplement the Company fails 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 SUSA, 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 delivery of the necessary changes. No 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 amendment or supplement shall be delivered as follows: To filed or used without the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerapproval of SUSA.

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 consented and hereby consents to the original Notice use of Exercise such copies for the purposes permitted by the Act. The Company authorizes the Underwriter and Warrant being exercised by dealers to use the Prospectus in connection with the sale of the Units for such date. In addition to any other remedies which may be available to Subscriber, period as in the event that opinion of counsel to the Underwriter and the Company fails the use thereof is required to effect delivery of such shares of Common Stock within such three (3) business day period, Subscriber will be entitled to revoke comply with 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 applicable provisions of the Warrant exercised shall be delivered as follows: To Act and the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerRules and 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 as followswith each Underwriter that: (ia) The Company shall use its best efforts to reservecause the Registration Statement to become effective under the Securities Act and, if the procedure in Rule 430A of the Rules and Regulations is followed, comply with the provisions of and make all requisite filings with the Commission pursuant to such Rule 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 or 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 or Effective Prospectus or the Final Prospectus which, in your opinion, may be necessary or advisable in connection with the distribution of the Securities, provided that the preparation of such amendments or supplements shall be at your expense if such a request is given nine months or more after the effective date of the Registration Statement; and the Company may not file any amendment of or supplement to the Registration Statement or the Effective Prospectus or the Final Prospectus, which is not approved by you after reasonable notice thereof, provided that such approval may not be unreasonably withheld or delayed. The Company shall advise you promptly of the issuance by the Commission or any state 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 Pre-Effective Prospectus or the Effective Prospectus or Final 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. (b) The Company shall furnish to the Underwriters, from time to time and without charge, copies of the Registration Statement of which 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 you may from time to time reasonably request. (c) Within the time during which a Final Prospectus relating to the Securities is required to be delivered under the Securities Act, the Company shall comply 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 is necessary to permit the continuance of sales of or dealings in the Securities as contemplated by the provisions hereof and the Final Prospectus. If during such period any event occurs as a result of 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 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 shall promptly notify you and shall amend the Registration Statement or supplement the Final Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance; provided, however, that the expense of the preparation and delivery of any prospectus required for use nine months or more after the effective date of the Registration Statement shall be borne by the Underwriters required to deliver such prospectus. The Company will provide the Representative with copies of all such amendments, filings and other documents a sufficient time prior to February 15any filing or other publication thereof to permit the Representative a reasonable opportunity to review and comment thereon. (d) The Company shall take or cause to be taken all necessary action and furnish to whomever you may direct such information as may be required in qualifying the Securities for sale under the laws of such jurisdictions which you 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, 2000or to execute a general consent for service of process. (e) 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 earning statement which will comply with Section 11(a) of the Securities Act covering a sufficient number period of at least 12 consecutive months beginning after the effective date of the Registration Statement. (f) The Company will not, during the 180 days following the effective date of the Registration Statement, except with your prior written consent, offer for sale, contract to sell, sell, issue, distribute, grant any option, right or warrant to purchase or otherwise dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into, or exercisable or exchangeable for, shares of Common Stock or register for sale under the Securities Act any shares of Common Stock otherwise than in accordance with this Agreement or as contemplated in the Final Prospectus; provided, however, that the Company may issue, or grant options to purchase, shares of Common Stock pursuant to any option plan existing on the date hereof. (g) The Company shall use its commercially reasonable efforts to cause each officer and director of the Company and each holder of 1% of shares of Common Stock from its authorized but unissued or any securities convertible into, or exercisable or exchangeable for, shares of Common Stock, to furnish to you, on or prior to the date of this Agreement, a letter or letters, in form and substance satisfactory to counsel for the Underwriters, pursuant to which each such person shall agree not to offer for sale, contract to sell, sell, distribute, grant any option, right or warrant to purchase, pledge, hypothecate or otherwise dispose of, directly or indirectly, any 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 or any securities convertible into, or exercisable or exchangeable for, shares of Common Stock during the 180 days following the effective date of the CompanyRegistration Statement, except with your prior written consent. (h) The Company shall apply the net proceeds of the sale of the Securities in the manner specified in the Prospectus under the heading "Use of Proceeds" and shall 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 in accordance with Rule 463 under the Securities Act. (i) 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 five years from the date hereof, the Company will deliver to you and, upon request, to each of the other Underwriters, copies of each annual report of the Company and each other report or communication furnished by the Company to its securityholders and will deliver to you, 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 has as soon as they are available, copies of any reports and financial statements furnished to or filed with the SEC prior to Commission or the date hereof a preliminary proxy statement in connection with such stockholder meetingNASD. (iij) It The Company will maintain use its best efforts to have the listing of its Common Stock Securities listed on the OTC Bulletin BoardNASDAQ National Market. (iiik) It will permit Subscriber If the Company elects to exercise its right to exercise rely on Rule 462(b), the Warrants Company shall 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 of the Act by telecopying an executed the earlier of (i) 10:00 p.m., New York City time, on the date of this Agreement, and completed Notice (ii) the time that confirmations are given or sent, as specified by Rule 462(b)(2). (l) Whether or not this Agreement becomes effective or is terminated or the sale of Exercise the Securities to the Company and delivering the original Notice of Exercise and the original Warrant to Underwriters is consummated, the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied shall pay or cause to and received be paid (A) all expenses (including stock transfer taxes) incurred by the Company in accordance 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, but excluding fees and expenses of counsel for the Underwriters) 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 Pre-Effective Prospectus, the Effective Prospectus and the Final Prospectus as amended or supplemented and the printing, delivery and shipping of this Agreement and other underwriting documents, including Underwriters' Questionnaires, Underwriters' Powers of Attorney, Blue Sky Memoranda, the Agreement Among Underwriters and Selected Dealer Agreements, (C) all filing fees and fees and disbursements of counsel to the Underwriters incurred in connection with the qualification of the Securities for sale under state securities laws as provided in Section 5(d) hereof, (D) the filing fee of the NASD and any applicable expenses of counsel for the Underwriters in connection with a review of the offering by the NASD, (E) any applicable listing fees, (F) the cost of printing certificates representing the Securities, (G) the cost and charges of any transfer agent or registrar and (H) all other costs and expenses incident to the performance by the Company and the Selling Stockholder of their obligations hereunder which are not otherwise provided for in this Section 5 (including but not limited to any fees payable to the Custodian, provided, however, that (i) in no event shall such fees and expenses include the underwriting discounts and commissions applicable to such Selling Stockholder Securities; and (ii) the provisions hereof of this Section 5 shall be deemed an "Exercise Date"not affect any agreement which the Company and such Selling Stockholders may make for the allocation or sharing of such expenses and costs); and, provided further, that the legal fees payable by the Company pursuant to paragraphs (C) and (D) shall not exceed $10,000 in the aggregate. It is understood, however, that, except as provided in this Section 5 and Section 8 hereof, the Underwriters shall pay all of their own costs and expenses, including the fees of their counsel, stock transfer taxes on resale of any of the Securities by them and any advertising expenses connected with any offers they may make. If this Agreement is terminated by the Company prior to the sale of the Securities for any reason other than a breach by you of this Agreement, the Company shall reimburse the several Underwriters for all reasonable out-of-pocket disbursements (including fees and disbursements of counsel) incurred by the Underwriters in connection with their investigation, preparing to market and marketing the Securities or in contemplation of performing their obligations hereunder. 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. (m) The Company will transmit not take, and will use its commercially reasonable efforts to cause its affiliates (within the certificates representing shares meaning of Common Stock issuable upon exercise Rule 144 under the Securities Act) not to take, directly or indirectly, any action which constitutes or is designed to cause or result in, or which could reasonably be expected to constitute, cause or result in, the stabilization or manipulation of the price of any Warrants (together with security to facilitate the certificates representing the Warrants not so exercised) to Subscriber via express courier, by electronic transfer sale 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 resale 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 Company acknowledges, represents, warrants and agrees as follows: (ia) The Company hereby agrees that at all times there shall use its best efforts to reserve, prior to February 15, 2000, a sufficient be reserved for issuance and delivery upon exercise of this Warrant such number of shares of Common Stock from its authorized but unissued shares of Common Stock or other securities of the Company from time to time issuable upon exercise of this Warrant as will be sufficient to permit the exercise in full of this Warrant. All such shares shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and non-assessable, free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale and free and clear of all preemptive rights. (b) The Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the outstanding Warrantsterms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder against impairment. The Without limiting the generality of the foregoing, the Company is currently organizing a stockholder meeting to will (i) not increase the number par value of authorized any shares of Common Stock receivable upon the exercise of this Warrant above the Companyamount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and has filed with (iii) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the SEC prior Company to the date hereof a preliminary proxy statement in connection with such stockholder meetingperform its obligations under this Warrant. (iic) It will maintain Before taking any action which would cause an adjustment reducing the listing current Exercise Price below the then par value, if any, 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 courierWarrants, 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 shall take any other remedies corporate action which may be available to Subscriber, necessary in the event order that the Company fails to effect delivery may validly and legally issue fully paid and non-assessable shares of such Common Stock at such adjusted Exercise Price. (d) Before taking any action which would result in an adjustment in the number of shares of Common Stock within for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such three authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. (3e) business day periodThe Company covenants that during the period the Warrant is outstanding, Subscriber it will use its best efforts to comply with any and all reporting obligations under the Securities Exchange Act of 1934, as amended. (f) The Company will take all such reasonable action as may be entitled necessary (i) to revoke maintain a Principal Market for its Common Shares in the relevant Notice United States and (ii) to assure that such Warrant Stock may be issued as provided herein without violation of Exercise by delivering a notice to such effect any applicable law or regulation, or of any requirements of the Principal Market upon which the Common Stock may be listed. (g) The Company shall preserve and maintain its corporate existence and all licenses and permits that are material to the proper conduct of its business. (h) The Company whereupon will not close its shareholder books or records in any manner which prevents the Company and Subscriber shall each be restored to their respective positions immediately prior to delivery timely exercise 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 Officerthis Warrant.

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. 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 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 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 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 Stock. As soon as the Company is advised thereof, the Company 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 and delivering Registration Statement, of the original Notice filing of Exercise and the original Warrant any supplement to the Company by overnight courier. Each business date on which a Notice Prospectus or any amended Prospectus, of Exercise is telecopied to and received any request made by the Company in accordance Commission for amendment of the Registration Statement or for supplementing of the Prospectus or for additional information with respect thereto, of the provisions hereof shall be deemed an "Exercise Date". The Company will transmit issuance by the certificates representing shares of Common Stock issuable upon exercise Commission or any state or regulatory body of any Warrants (together with stop order or other order or threat thereof suspending the certificates representing effectiveness of the Warrants not so exercised) to Subscriber via express courierRegistration Statement or any order preventing or suspending the use of any preliminary prospectus, by electronic transfer or otherwise within three (3) business days after of the Exercise Date if suspension of the Company has received qualification of the original Notice Stock for offering in any jurisdiction, or of Exercise and Warrant being exercised by such date. In addition to the institution of any other remedies which may be available to Subscriber, in the event that the Company fails to effect delivery proceedings for any of such shares purposes, and will use its best efforts to prevent the issuance of Common Stock within any such three (3) business day periodorder, Subscriber will be entitled and, if issued, to revoke obtain as soon as possible 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 Officerlifting thereof.

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 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 to Act and 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 Regulations, the Company will notify you promptly and delivering the original Notice of Exercise forthwith prepare and the original Warrant furnish 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 you copies 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 amended Prospectus or 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 Officersupplement

Covenants of the Company. The Company covenants and agrees with you that: (a) 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 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 Shares 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 your reasonable opinion, may be necessary or advisable in connection with the distribution of the Shares. 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 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 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 you and selected dealers to use the Prospectus in connection with the sale of the Shares for such period not to exceed nine months from the Effective Date as in the reasonable opinion of counsel for you 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 Shares, or which in the opinion of counsel for the Company or counsel for you 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 Shares, 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 Underwriters, except that in case you 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 your 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 Exchange Act of 1934, as amended (the "Exchange Act") and the rules and regulations thereunder in connection with the offering and issuance of the Shares. The Company will 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 have designated in writing prior to the execution hereof and will make such applications and furnish such information to counsel for you 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 be reasonable and shall not in any event exceed $35,000.00, exclusive of filing fees (unless otherwise agreed). (c) The Company will instruct its transfer agent to provide you 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 you 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 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 deliver to you 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 your 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 you 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 you may from time to time reasonably request. (h) 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 satisfy the requirements of Section 11(a) of the Act. (i) The Company will apply the net proceeds from the sale of the Shares 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 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 opinion of Freshman, Marantz, Orlanski, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to you may be reasonably necessary or advisable in connection with the distribution of the Shares 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 all the stockholders of the Company to enter into a written agreement with you, which, among other things, shall provide that for a period of (3) months following the closing date of the offering, such stockholders will not sell, assign, hypothecate or pledge any of the shares of Common Stock 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 your prior written consent and 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 the transfer books and records of the Company. (l) The Company shall, upon the initial filing of the Registration Statement, make all filings required to obtain approval for the quotation of the Shares on the National Association of Securities Dealers, Inc. ("NASDAQ") SmallCap Market 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 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 Shares or to facilitate the sale or resale the Shares. (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 upon exercise of options or warrants or conversion of convertible securities outstanding on the Effective Date or upon exercise of options granted or the grant of options for up to ___________ shares under said plan less any options to purchase shares granted prior to the Effective Date, pursuant to the Company's Stock Option Plan) without your prior written consent, which consent shall not be unreasonably withheld. For a period of twenty-four (24) months from the Effective Date, the Company will not issue, sell or otherwise dispose of any securities of the Company pursuant to Regulation S under the Act without your prior written consent. (o) Prior to the filing of the Registration Statement, the Company shall retain a public relations firm acceptable to you, and shall continue to retain such firm, or any alternate firm acceptable to you, for a minimum period of one (1) year. (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 Warrant outstanding from time to time. (q) The Company shall deliver to you, at the Company's expense, 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 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 deliver such volumes with one hundred eighty (180) days of the outstanding WarrantsFirst Closing Date. (r) For a period of thirty-six (36) months from the First Closing Date, the Company shall allow the Underwriter to designate two (2) members to the Board of Directors which designees shall be acceptable to the Company. Such directors shall be reimbursed for all out-of-pocket expenses incurred in attending such meetings and in the event the Company establishes a policy of compensating directors in the future, such directors shall be eligible for such compensation. 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. shall hold at least four (ii4) 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 meetings per year and the original Warrant to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received directors will be indemnified by the Company in accordance with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares against any claims arising out 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 Officerparticipation at Board meetings.

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 thereto, 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) 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 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 reasonably 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 to Stockholders 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 other 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. ▇▇▇▇▇ ▇▇▇▇▇▇▇ either ▇▇▇▇▇▇▇▇▇, ▇ Securities or each of the Representatives (which consent may be withheld at the sole discretion of ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇Securities or the Representatives, ▇▇ ▇▇▇▇▇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 Common Stock or other equity security other than (i) the Company's (1) issuance of Common Stock upon the exercise of warrants and stock options that are presently outstanding and described as such in the Prospectus or which may be issued hereafter under the option plans described in the Registration Statement and the Prospectus and (2) grant of options pursuant to the option plans described in the Registration Statement and the Prospectus, (ii) the Company's issuance of Common Stock under the employee stock purchase plan described in the Registration Statement and the Prospectus and (iii) the Company's issuance of shares of Common Stock in an acquisition of another corporation or entity provided that (1) such shares represent less than 20% of the Company's then outstanding shares of Common Stock and (2) the individuals or entities to whom such shares are issued agree that such shares may not be resold during the 180 days following the first date that any of the shares of Common Stock are released by the Underwriters for sale to the public. (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 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 NASD Automated Quotation System. ▇▇▇▇▇▇▇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 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 written or oral comments of the Commission or its staff, (ii) of any written or oral request of the Commission or its staff 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 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) 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 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 which the Prospectus, including any Warrants (together amendments or supplements, would include an untrue statement of a material fact, or omit to state any 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 at any time to amend the Registration Statement, including any amendments or supplements, to comply with the certificates representing Act or the Warrants Rules and Regulations, the Company will promptly notify you thereof and will promptly prepare and file with the Commission, at its own expense, an amendment or supplement to the Registration Statement 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 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 and Warrant being exercised by such date. In addition the Selling Shareholders or mail to your order copies of the Registration Statement, the Prospectus, the Preliminary Prospectus and 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 Shareholders 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 United States and Canadian 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 consolidated balance sheet of the Company as of the close of such shares fiscal year and consolidated 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, 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 (which consent may be withheld at the sole discretion of the ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇Securities), ▇▇ ▇▇▇▇▇the Company will not other than (i) pursuant to the exercise of outstanding stock options or the grant or the issuance of options or shares pursuant to stock option or stock purchase plans (which vest or become exercisable after the expiration of such 90-▇▇▇▇ Fax: day period) disclosed in the Prospectus, or (▇▇▇ii) ▇▇▇issuances of equity securities as consideration for the acquisition of any business provided the shares so issued may not be resold within such 90-▇▇▇▇ Attn: ▇▇▇▇▇ ▇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. (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-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 cause the Common Stock to be quoted on the Nasdaq National 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 hereby covenants and agrees with the Underwriter as follows: (a) If the Registration Statement has not already been declared effective by the Commission, 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 Commission 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 Commission 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 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 Shares 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 Commission 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 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 Shares 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 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 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 Shares 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 Shares, 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 Shares 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 Shares 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 pursuant to the exercise of options granted under the Option Plans; and (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 past practices of the 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 less 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 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 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. (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) 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 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 Underwriter's right of first refusal with respect to other offerings shall continue until the termination of the three-year period following the Effective Date of the Registration Statement. If the Company fails to enter into such an agreement with such third party or if the terms and conditions of such offer are thereafter materially changed, the right of first refusal granted to the Underwriter shall once again apply. (o) 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 the Company's Board of shares of Common Stock from its authorized but unissued shares of Common Stock Directors. Such representative shall be subject 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 approval of the Company, which approval shall not be unreasonably withheld. The Underwriter's right to nominate a representative to serve on the Company's Board of Directors supersedes, and has filed with is not in addition to, the SEC prior similar right granted 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, Underwriter 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 Agency Agreement for the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officer's 1997 private placement.

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 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: (ia) The Company will cause the Prospectus to be filed as required by Section 3(a) hereof (but only if the Underwriters or their counsel have not reasonably objected thereto by notice to the Company after having been furnished a copy a reasonable time prior to filing) and will notify you promptly of such filing. During the period in which a prospectus relating to the Shares is required to be delivered under the Securities Act or such date which is 90 days after the Closing Date, whichever is later, the Company will notify the Underwriters promptly of the time when any subsequent amendment to the Registration Statement has become effective or any subsequent supplement to the Prospectus has been filed, of any request by the Commission for any amendment or supplement to the Registration Statement or Prospectus or for additional information; the Company will prepare and file with the Commission, promptly upon the request of the Underwriters, any amendments or supplements to the Registration Statement or Prospectus that, in their or their counsel's opinion, may be necessary or advisable in connection with your distribution of the Shares; and the Company will file no amendment or supplement to the Registration Statement or Prospectus to which the Underwriters or their counsel 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 Underwriters, 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 or registration of the Shares for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and it will promptly use its best efforts to reserveprevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued. (c) The Company will comply with all requirements imposed upon it by the Securities Act, the Securities Rules, the Exchange Act and the Exchange Rules 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 where a prospectus relating to the Shares is required to be delivered under the Securities Act any event occurs as a result of which, in the opinion of your counsel, the Registration Statement contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading or the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omits 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 or supplement the Registration Statement or Prospectus to comply with the Securities Act, the 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 compliance. (d) The Company shall make generally available to its security holders and to the Underwriters 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 Time occurs (or 90 days if such 12-month period coincides with the Company's fiscal year), an earning 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 Securities Rules. (e) The Company shall furnish to the Underwriters and their counsel, without charge, signed copies of the Registration Statement (including all exhibits thereto and amendments thereof) 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 Securities Rules, as many copies of the Prospectus and any amendments thereof and supplements thereto as the Underwriters may reasonably request. (f) For a period of five years after the date of this Agreement, the Company shall supply to the Underwriters, copies of such financial statements and other periodic and special reports as the Company may from time to time distribute generally to the holders of any class of its capital stock and furnish to the Underwriters a copy of each annual or other report it shall be required to file with the Commission. (g) Without the prior written consent of the Underwriters for a period of 180 days after the date of this Agreement, the Company shall not, directly or indirectly, issue, offer, sell or register with the Commission, or otherwise encumber or dispose of, directly or indirectly, any equity securities of the Company (or any securities convertible into or exercisable or exchangeable for equity securities of the Company or any rights to February 15purchase or acquire equity securities of the Company), 2000, a sufficient number except for (i) the issuance of the Shares pursuant to the Registration Statement; (ii) the issuance of shares of Common Stock from its authorized but unissued pursuant to (a) the exercise of outstanding employee and director options or the grant or issuance of options under the Company's existing stock option plans, (b) the Company's dividend reinvestment and stock purchase plan or (c) warrants and SAR's previously granted; and (iii) sales by the Company of Units exchangeable into 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 CompanyStock, and has filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingthe acquisition of a property. (iih) It will maintain On or before the listing Firm Shares Closing Date, the Company shall make all filings required under applicable securities laws and by the AMEX (including any required registration under the Exchange Act). On or before the date of its Common Stock this Agreement, the Shares shall be listed on the OTC Bulletin BoardAMEX. (i) The Company will continue to elect to qualify as a "real estate investment trust" and will use its best efforts to continue to meet the requirement to qualify as a "real estate investment trust." (j) The Company agrees to pay, or reimburse if paid by the Underwriters, whether 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 Company under this Agreement including those relating to: (i) the preparation, printing, filing and distribution of the Registration Statement including all exhibits thereto, the Prospectus, all amendments and supplements to the Registration Statement and the Prospectus, and the printing, filing and distribution of this Agreement; (ii) the preparation and delivery of certificates for the Shares to the Underwriters; (iii) It will permit Subscriber to exercise its right to exercise if applicable, the Warrants by telecopying an executed registration or qualification of the Shares for offer and completed Notice sale under the securities laws of Exercise the various jurisdictions, including the reasonable fees and disbursements of counsel for the Underwriters in connection with any such registration and qualification; (iv) the furnishing (including cost of shipping and mailing) to the Company Underwriters of copies of the Prospectus and delivering all amendments or supplements to the original Notice Prospectus, and of Exercise the several documents required by this Section to be so furnished, as may be reasonable requested for use in connection with the offering and the original Warrant 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 transactions contemplated hereby; (vi) the furnishing (including costs of shipping and mailing) to the Company Underwriters of copies of all reports and information required by overnight courier. Each business date 5(f); (vii) listing of the Shares on which a Notice the AMEX; and (viii) all transfer taxes, if any, with respect to the sale and delivery of Exercise is telecopied to and received the Shares by the Company in accordance with to the Underwriters. Subject to the provisions hereof shall be deemed an "Exercise Date". The Company will transmit of Section 8, the certificates representing shares Underwriters agree to pay, whether or not the transactions contemplated hereby are consummated or this Agreement is terminated, all costs and expenses incident to the performance of Common Stock issuable upon exercise the obligations of any Warrants (together with the certificates representing the Warrants Underwriters under this Agreement not so exercised) to Subscriber via express courier, payable 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 pursuant to the Company whereupon preceding sentence, including, without limitation, the Company fees and Subscriber shall each be restored to their respective positions immediately prior to delivery disbursements of such Notice of Exercise. The Notice of Exercise and Warrant representing counsel for the portion of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerUnderwriters.

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 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 from time to time. (n) All existing beneficial owners 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), and has filed with as of the SEC prior Effective Date, shall agree in writing, in a form satisfactory to the date hereof Underwriter, not to sell, transfer or otherwise dispose of any of such securities or underlying securities for a preliminary proxy statement in connection with such stockholder meetingperiod of twenty-four (24) months from the Effective Date, or any longer period required by the NASD, Nasdaq, or any State. (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 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: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ in an amount of not less than $3,000,000, Interim Chief Executive Officerand 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 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-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-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, the 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 Stock Transfer & Trust Company 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 (ADTC 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. It is anticipated that the DTC Tracking Reports may cost up to $10,000 for the initial two (2) month period from the Effective Date, after which time the Company=s obligation to furnish such tracking reports will be reviewed by the Company and the Underwriter. (w) Following the Effective Date, the Company shall, at its sole cost and expense, prepare and file such Blue Sky applications with such jurisdictions as the Underwriter shall designate and the Company may reasonably agree. (x) On the Effective Date and for a period of three (3) years therea

Covenants of the Company. For The Company covenants and agrees with the several Underwriters that: (a) The Company will (i) use its best efforts to cause the Registration Statement to become effective or, if the procedure in Rule 430A of the Rules and Regulations is followed, to prepare and timely file with the Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form approved by the Representatives containing information previously omitted at the time of effectiveness of the Registration Statement in reliance on Rule 430A of the Rules and Regulations and (ii) not file any amendment to the 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 shall have reasonably objected in writing or which is not in compliance with the Rules and Regulations. (b) The Company will advise the Representatives promptly (i) when the Registration Statement or any post-effective amendment thereto shall have become effective, (ii) of receipt of any comments from the Commission, (iii) of any request of the Commission for amendment of the Registration Statement or for supplement to the Prospectus or for any additional information, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the use of the Prospectus or of the institution of any proceedings for that purpose. The Company will use its best efforts to prevent the issuance of any such stop order preventing or suspending the use of the Prospectus and to obtain as soon as possible the lifting thereof, if issued. (c) 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 during the period when delivery of a Prospectus is required under the Act, as many copies of the Prospectus in final form, or as thereafter amended or supplemented, as the Representatives may reasonably request. The Company will deliver to the Representatives at or before the 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 such number of copies of the exhibits filed therewith that may reasonably be requested), and of all amendments thereto, as the Representatives may reasonably request. (d) The Company will comply with the Act and the Rules and Regulations, and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the Commission thereunder, so long as to permit the completion of the distribution of the Shares as contemplated in this Agreement and the Prospectus. If during the period in which a prospectus is required by law to be delivered by an Underwriter or dealer, any Securities held by Subscriber remain outstandingevent shall occur as a result of which, in the judgment of the Company or in the reasonable opinion of the Underwriters, it becomes necessary to amend or supplement the Prospectus in order to make the statements therein, in light of the circumstances existing at the time the Prospectus is delivered to a purchaser, not misleading, or, if it is necessary at any time to amend or supplement the Prospectus to comply with any law, the Company acknowledgespromptly will prepare and file with the Commission an appropriate amendment to the Registration Statement or supplement to the Prospectus so that the Prospectus as so amended or supplemented will not, representsin the light of the circumstances when it is so delivered, warrants be misleading, or so that the Prospectus will comply with the law. (e) The Company will make generally available to its security holders, as soon as it is practicable to do so, but in any event not later than 15 months after the effective date of the Registration Statement, an earning statement (which need not be audited) in reasonable detail, covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement, which earnings statement shall satisfy the requirements of Section 11(a) of the Act and agrees Rule 158 of the Rules and Regulations and will advise you in writing when such statement has been so made available. (f) The Company will, for a period of five years from the Closing Date, deliver to the Representatives copies of annual reports and copies of all other documents, reports and information furnished by the Company to its stockholders or filed with any securities exchange pursuant to the requirements of such exchange or with the Commission pursuant to the Act or the Exchange Act. The Company will deliver to the Representatives similar reports with respect to significant subsidiaries, as follows:that term is defined in Regulation S-X promulgated by the Commission, which are not consolidated in the Company's financial statements. (g) No offering, sale, short sale or other disposition of any shares of Common Stock of the Company or other securities convertible into or exchangeable or exercisable for shares of Common Stock or derivative of Common Stock (or agreement for such) will be made for a period of 180 days after the date of this Agreement, directly or indirectly, by the Company without the prior written consent of Deutsche Bank Securities, Inc., except for shares of Common Stock issued pursuant to the terms of the Acquisition Agreements (including, without limitation, shares issued upon exercise of options granted in accordance with the Acquisition Agreements), the grant of employee stock options (up to a maximum of __________ shares) under the 1999 Long-Term Incentive Plan, or the issuance of shares in connection with acquisitions of businesses, provided that future acquisition agreements contain lock-up arrangements prohibiting dispositions of Common Stock prior to the expiration of the aforementioned 180 day period. (h) The Company will use its best efforts to arrange for the quotation of, subject to notice of issuance, the Shares on the Nasdaq National Market. (i) The Company shall use its best efforts has caused each officer and director, certain stockholders and certain persons who will become shareholders of the Company upon the consummation of the Acquisitions to reservefurnish to you, on or prior to February 15, 2000the date of this Agreement, a sufficient number letter or letters, in form and substance satisfactory to the Underwriters, pursuant to which each such person has agreed not to offer, sell, sell short, pledge or otherwise dispose 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 any shares of Common Stock of the Company or other capital stock of the Company, and or any other securities convertible, exchangeable or exercisable for Common Shares or derivative of Common Shares owned by such person (or as to which such person has filed the right to direct the disposition of) or request the registration for the offer or sale of any of the foregoing, for a period of 180 days after the date of this Agreement, directly or indirectly, except with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingwritten consent of Deutsche Bank Securities, Inc. ("Lockup Agreements"). (j) The Company will (i) use its reasonable best efforts to close the Acquisitions in accordance with the terms of the Acquisition Agreements and (ii) It will maintain promptly notify the listing Representatives of its Common Stock the occurrence of any event which may result in the non-consummation of or material change in the terms of any of the Acquisitions on the OTC Bulletin BoardClosing Date. (iiik) It will permit Subscriber to exercise The Company shall apply the net proceeds of its right to exercise sale of the Warrants by telecopying an executed Shares as set forth in the Prospectus and completed Notice of Exercise shall file such reports with the Commission with respect to the Company and delivering sale of the original Notice of Exercise Shares and the original Warrant to application of the proceeds therefrom as may be required in accordance with Rule 463 under the Act. (l) The Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and shall not invest or otherwise use the proceeds received by the Company from its sale of the Shares in accordance with such a manner as would require the provisions hereof shall be deemed Company or any of the Acquired Companies to register as an "Exercise Date". investment company under the 1940 Act. (m) The Company will transmit maintain a transfer agent and, if necessary under the certificates representing shares jurisdiction of incorporation of the Company, a registrar for the Common Stock issuable upon exercise Stock. (n) The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price 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 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 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 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 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 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 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 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(a) and 8(c) hereof, and the out-of- pocket expenses up to $25,000 of the Representative and expenses up to $25,000 of the counsel to 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 (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 or a listing on a national market, and will use its best efforts to maintain such listing for at least five (5) 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 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 Agreement. The Representative's Warrant Agreement and Warrant Certificates will be substantially in the form of the Representative's Warrant Agreement 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 Representative's Warrants outstanding from time to time. (n) All beneficial owners 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), and has filed with as of the SEC prior Effective Date, shall agree in writing, in a form satisfactory to the date hereof Representative, not to sell, transfer or otherwise dispose of any of such securities or underlying securities (except to a preliminary proxy statement transferee who agrees to be bound by this provision) for a period of twelve (12) months from the Effective Date (the "lock-up period"), or any longer period required by any State, without the prior written consent of the Representative. Any of such securities which are originally registered in a name of a original beneficial owner and are subsequently registered under a different name will be subject to the twelve (12) month lock-up period. Sales of the Company's securities by officers and/or directors of the Company pursuant to the expiration of the lock-up period shall be effected through the Representative. (o) The Company shall pay to the representative a fee of 5% of the gross proceeds of this offering upon the conversion of all warrants issued to the public in this offering or upon redemption of any warrants by the Company. (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 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 (5) years unless the Company's 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 hundred eighty (180) day period commencing on the Closing Date, the Company will not, without the prior written consent of the Representative, grant options or warrants to purchase the Company's Common Stock at a price less than the initial per share public offering price. (r) During the twelve month period commencing on the closing Date, the Company will not, without the prior written consent of the Representative, issue any additional securities of the Company except for securities issued in connection with such stockholder meetingan acquisition or merger by the Company. (iis) It Prior to the Closing Date, neither the Company nor any subsidiary will maintain issue, directly or indirectly, without your prior consent, any press release or other communication or hold any press conference with respect to the listing Company or its activities or the offering of its Common Stock on the OTC Bulletin BoardSecurities 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. (iiit) It will permit Subscriber The Company shall employ the services of a firm of independent certified public accountants in connection with the preparation of the financial statements to exercise its right be included in any registration statement or similar disclosure document 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 be filed by the Company in accordance with hereunder, or any amendment or supplement thereto. For a period of five (5) years from the provisions hereof Effective Date, the Company, at its expense, shall be deemed an "Exercise Date". The Company will transmit cause its regularly engaged independent certified public accountants to review (but not audit) the certificates representing shares Company's financial statements for each 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 first three (3) business days after fiscal quarters prior to the Exercise Date if announcement of quarterly financial information, the filing of the Company's quarterly report and the filing of quarterly financial information to stockholders. (u) The Company shall retain American Stock Transfer & Trust Company 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 has received shall direct such transfer agent to furnish the original Notice Representative with daily transfer sheets as to each of Exercise the Company's securities as prepared by the Company's transfer agent and Warrant being exercised 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 date. In addition other depository of the Company's securities, to any other remedies which may be available deliver a "special security position report" to Subscriberthe Representative on a daily and weekly basis at the expense of the Company, in for a five (5) year period from the event that Effective Date. (w) Following the Effective Date, the Company fails to effect delivery of shall, at its sole cost and expense, prepare and file such shares of Common Stock within Blue Sky applications with such three (3) business day period, Subscriber will be entitled to revoke jurisdictions as the relevant Notice of Exercise by delivering a notice to such effect to Representative shall designate and the Company whereupon may reasonably agree. (x) On 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 OfficerEffective D

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 Company covenants to the Company acknowledges, represents, warrants and agrees as followsPlacement ------------------------ Agent that it will: (i) Notify you immediately, and confirm such notice promptly in writing, (A) when any event shall have occurred during the period commencing on the date hereof and ending on the later of the Closing Date and the last Additional Closing Date (if any) as a result of which the SEC Filings or Executive Summary 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 not misleading, and (B) of the receipt of any notification with respect to the modification, rescission, withdrawal or suspension of the qualification or registration of the Shares 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 any such modification, rescission, withdrawal or suspension is issued and you so request, to February 15, 2000, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock to permit obtain 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 meetinglifting thereof as promptly as possible. (ii) It will maintain If, at any time during the listing of its Common Stock period commencing on the OTC Bulletin Boarddate hereof and ending on the later of the Closing Date and the last Additional Closing Date (if any), any event shall have occurred as a result of which the SEC Filings contains any 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 not misleading, or if, in the opinion of counsel to the Company or counsel to the Placement Agent, it is necessary at any time to supplement or amend the SEC Filings to comply with the Act, Regulation D or any applicable securities or "blue sky" laws, the Company will promptly prepare an appropriate supplement or amendment which will correct such statement or omission or which will effect such compliance. (iii) It will permit Subscriber In this Offering, not, directly or indirectly, solicit any offer to exercise its right buy from, or offer to exercise sell to, any person any Shares and accompanying Warrants except through the Placement Agent. (iv) Not solicit any offer to buy or offer to sell Shares and accompanying Warrants by telecopying an executed and completed Notice any form of Exercise to the Company and delivering the original Notice of Exercise and the original Warrant to the Company general solicitation or advertising, including, without limitation, any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio or any seminar or meeting whose attendees have been invited 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 general solicitation 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 Officeradvertising.

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 at the earliest practicable time. 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 practicable 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 the issuance or filing of any Term Sheet) 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) The Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements to the Registration Statement or the Prospectus (including the issuance or filing of any Term Sheet) 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, at 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 so exercisedmisleading, 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) to Subscriber via express courierof the Act. (d) As soon as practicable, by electronic transfer or otherwise within three (3) business 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 stockholders 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 and Warrant being exercised by such date. In addition 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 other remedies which 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. (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 Common Stock within such three income, stockholders' equity and cash flows for the year then ended and the opinion thereon of the Company's independent public accountants; (3ii) business day periodas soon as practicable after the filing thereof, Subscriber will be entitled to revoke the relevant Notice copies of Exercise 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 delivering a notice to such effect to the Company whereupon with the Commission, the NASD or any securities exchange; and (iii) as soon as available, copies of any report or communication of the Company and Subscriber shall each be restored mailed generally to their respective positions immediately prior to delivery holders of such Notice its Common Stock. (h) During the period of Exercise. The Notice of Exercise and Warrant representing 120 days after 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, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇the Company will not (other than pursuant to the grant of stock options and awards authorized under the Company's Stock Plans (as defined in the Prospectus), ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: the exercise of outstanding stock options and warrants and the conversion of outstanding shares of Class B Common Stock, in each case as 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 use its best efforts to designate and maintain the inclusion of the Common Stock for quotation as a national market system security on the NASD Automated Quotation System. (j) 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 any Second Closing Date, as the case may be, and to satisfy all conditions precedent to the delivery of the Shares. ▇▇▇▇▇▇▇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 Underwriters that: (ia) The Company shall use its best efforts to reservecause 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 counsel for the Underwriters 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 (i) the exercise in full of all completion by the Underwriters of the outstanding Warrantsdistribution of the Securities contemplated hereby (but in no event more than nine (9) months after the Effective Date) and (ii) twenty-five (25) days after the Effective Date, the Company shall 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 Securities. 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 Securities for offering in any jurisdiction, or the institution of any proceedings for any of such purposes, and the Company 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 Prelim- inary 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 counsel for the OTC Bulletin Board. (iii) It will permit Subscriber Underwriters the use thereof is required to exercise its right to exercise comply with the Warrants by telecopying an executed and completed Notice applicable provisions 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 knowledge and which materially affects the original Notice Company or the Securities, or which in the opinion of Exercise and Warrant being exercised by such date. In addition counsel for the Company or counsel for the Underwriters should be set forth in an amend- ment to any other remedies which may be available the Registration Statement or a supplement to Subscriberthe Prospectus in order to make the statements therein not then misleading, 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 circum- stances existing at the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officertime the -11-

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 Representatives 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 Representatives shall not previously have been advised and furnished with a copy or to which the Representatives or their counsel shall have reasonably 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 WarrantsUnderwriters 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 (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 Representatives' request, any amendments or supplements to the Registration Statement or Prospectus which, in the opinion of counsel to the Representatives, is necessary under the Act in connection with the distribution of the Shares. As soon as the Company is advised thereof, the Company will advise the Representatives, 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 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 Representatives 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 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, and has filed or which in the opinion of counsel for the Company 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 or in case it shall be necessary to amend or supplement the Prospectus to comply with federal or state securities laws or with the SEC prior Rules and Regulations, the Company shall notify the Representatives promptly and forthwith prepare and furnish to the date hereof Representatives copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as the Representatives 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 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 sale of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio LaboratoriesShares, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officerto deliver a

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, (i) all officers, directors and 5% shareholders of the Company as of the Effective Date shall agree in writing (in the forms 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, and (ii) 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 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, such holders of the Preferred Stock may sell the Common Stock underlying the Preferred Stock 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 contain the information required by such ma

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. To the extent applicable, such documents shall be identical to the electronically transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T. (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 and the Selling Stockholder 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 Stockholder may request, for the purposes contemplated by the Act. To the extent applicable, such documents shall be identical to the electronically transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T. (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, 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. (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. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇ Securities (which consent may be withheld at the sole discretion of ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇Securities), ▇▇ ▇▇▇▇▇the Company will not (other than pursuant to outstanding stock options 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; provided, that the Company may grant options to purchase its Common Stock to directors or employees under stock option plans described in the Prospectus as long as such options do not become exercisable prior to the end of said 180-▇▇▇▇ Fax: day period. (▇▇▇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 use its best efforts to list, subject to official notice of issuance, on the Nasdaq National Market, the Stock to be issued and sold by the Company. (l) The Company will file Form SR in conformity with the requirements of the Act and the Rules and Regulations. ▇▇▇▇▇▇▇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. The Company covenants with the Managers, the Forward Purchasers and the Forward Sellers as follows: (a) Before making, preparing, using, authorizing, approving, referring to or filing any Permitted Free Writing Prospectus, and before filing any amendment or supplement to the Registration Statement or the Prospectus, whether before or after the time that the Registration Statement becomes effective, the Company will furnish to the Managers, the Forward Purchasers and the Forward Sellers and Managers Counsel a copy of such proposed Permitted Free Writing Prospectus, amendment or supplement for review and will not make, prepare, use, authorize, approve, refer to or file any such Permitted Free Writing Prospectus or file any such proposed amendment or supplement to which any Manager, Forward Purchaser or Forward Seller reasonably objects. 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 during the Delivery Period; and the Company will furnish copies of the Prospectus and each Permitted Free Writing Prospectus (to the extent not previously delivered) to the Managers, the Forward Purchasers and the Forward Sellers in New York City prior to 10:00 A.M., New York City time, on the third business day next succeeding the date hereof, or as promptly as practicable thereafter with respect to any Permitted Free Writing Prospectus first used after the date hereof, in such quantities as the Managers, the Forward Purchasers or the Forward Sellers may reasonably request. (b) For the duration of the Delivery Period, to include in its Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, a summary detailing, for the relevant reporting period, (i) the number of Shares sold through the Managers and the Forward Sellers pursuant to this Agreement, (ii) the number of Forward Settlement Shares delivered to the Forward Purchasers pursuant to Forward Contracts, (iii) the Net Proceeds received by the Company from such sales and any amounts received by the Company upon settlement of any Forward Contracts and (iv) the compensation paid by the Company to the Managers, the Forward Purchasers and the Forward Sellers with respect to such sales and such Forward Contracts (or alternatively, to prepare a prospectus supplement (each, an “Interim Prospectus Supplement”) with such summary information and, at least once a quarter and subject to Section 6(a) hereof, file such Interim Prospectus Supplement pursuant to Rule 424(b) under the Securities Act (and within the time periods required by Rule 424(b) and Rules 430A, 430B or 430C under the Securities Act)). (c) To file any Permitted Free Writing Prospectus to the extent required by Rule 433 under the Securities Act and to provide copies of the Prospectus and such Prospectus Supplement and each Permitted Free Writing Prospectus (to the extent not previously delivered or filed on the Commission’s Electronic Data Gathering, Analysis and Retrieval system or any successor system thereto) to the Managers, the Forward Purchasers and the Forward Sellers via electronic mail in “.pdf” format on such filing date to an electronic mail account designated by the Managers, the Forward Purchasers and the Forward Sellers and, at the request of the Managers, the Forward Purchasers or the Forward Sellers, to also furnish copies of the Prospectus and such Prospectus Supplement to the Nasdaq and each other exchange or market on which sales of the Shares were effected, in each case, as may be required by the rules or regulations of the Nasdaq or such other exchange or market. (d) During the Delivery Period, the Company will advise the Managers, the Forward Purchasers and the Forward Sellers promptly, and confirm such advice in writing, (i) when any amendment to the Registration Statement has been filed or becomes effective, (ii) when any supplement to the Prospectus or any amendment to the Prospectus or any Permitted Free Writing Prospectus has been filed, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or the receipt of any comments from the Commission relating to the Registration Statement or any other request by the Commission for any additional information, (iv) of the issuance by the Commission of any order suspending the effectiveness of the Registration Statement or preventing or suspending the use of the Prospectus or the initiation or threatening of any proceeding for that purpose or pursuant to Section 8A of the Securities Act, (v) of the occurrence of any event within the Delivery Period as a result of which the Prospectus, the General Disclosure Package or any Permitted Free Writing Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances existing when the Prospectus, the General Disclosure Package or any such Permitted Free Writing Prospectus is delivered to a purchaser, not misleading and (vi) of the receipt by the Company of any notice of objection of the Commission to the use of the Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Securities Act; and the Company will use its reasonable best efforts to prevent the issuance of any such order suspending the effectiveness of the Registration Statement, preventing or suspending the use of the Prospectus or suspending any such qualification of the Shares and, if any such order is issued, will use its reasonable best efforts to obtain as soon as possible the withdrawal thereof. (e) If, after the date hereof and during the Delivery Period, either (i) any event shall occur or condition shall exist as a result of which the General Disclosure Package 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 (ii) it is necessary to amend or supplement the General Disclosure Package to comply with law, the Company will immediately notify the Managers, the Forward Purchasers and the Forward Sellers thereof and forthwith prepare and, subject to Section 6(a) hereof, file with the Commission (to the extent required) and furnish to the Managers, the Forward Purchasers and the Forward Sellers, such amendments or supplements to the General Disclosure Package (or any document to be filed with the Commission and incorporated by reference therein) as may be necessary so that the statements in any of the General Disclosure Package as so amended or supplemented (including such documents to be incorporated by reference therein) will not, in the light of the circumstances under which they were made, be misleading or so that the General Disclosure Package will comply with law. (f) The Company will qualify the Shares and the Forward Settlement Shares for offer and sale under the securities or “blue sky” laws of such jurisdictions as the Managers, the Forward Purchasers or the Forward Sellers shall reasonably request and will continue such qualifications in effect so long as required for distribution of the Shares and delivery of the Forward Settlement Shares, 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 Securities held by Subscriber remain outstandingsuch jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject. (g) The Company will make generally available to its security holders and the Managers, the Forward Purchasers and the Forward Sellers as soon as practicable an earning statement that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder covering a period of at least 12 months beginning with the first fiscal quarter of the Company acknowledges, represents, warrants occurring after the “effective date” (as defined in such Rule 158) of the Registration Statement. (h) To apply the Net Proceeds from the sale of any Issuance Shares by the Company pursuant to this Agreement and agrees as follows:any Terms Agreement and any amounts received upon settlement of any Forward Contracts in the manner set forth under the caption “Use of Proceeds” in the Prospectus Supplement. (i) The Company shall use pay all expenses incident to the performance of its best efforts obligations under this Agreement, whether or not the transactions contemplated hereby are consummated or this Agreement is terminated, including such costs, expenses, fees and taxes in connection with (i) the preparation and filing of the Registration Statement, the Base Prospectus, the Prospectus, each Prospectus Supplement, each Permitted Free Writing Prospectus and any amendments or supplements thereto, and the printing and furnishing of copies of each thereof to reservethe Managers, the Forward Purchasers and the Forward Sellers (including costs of mailing and shipment), (ii) the registration, issue, sale and delivery of the Shares and the Forward Settlement Shares including any stock or transfer taxes and stamp or similar duties payable upon the sale, issuance or delivery of the Shares and the Forward Settlement Shares, (iii) the producing, word processing or printing of this Agreement, any Powers of Attorney and any closing documents (including compilations thereof) and the reproduction or printing and furnishing of copies of each thereof to the Managers (including costs of mailing and shipment), (iv) the qualification of the Shares and the Forward Settlement Shares for offering and sale under state laws and the determination of their eligibility for investment under state or foreign law (including the reasonable legal fees and filing fees and other disbursements of Managers Counsel or other foreign counsel for the Managers and the Forward Sellers) and the printing and furnishing of copies of any blue sky surveys, (v) the listing of the Shares and the Forward Settlement Shares on the Nasdaq and any other securities exchange and any registration thereof under the Exchange Act, (vi) any filing with, and any review of the public offering of the Shares by, the Financial Industry Regulatory Authority, Inc. (“FINRA”), including the reasonable legal fees and other reasonable disbursements of Managers Counsel relating to FINRA matters and (vii) the reasonable fees and disbursements of Outside Company Counsel, Managers Counsel and Forward Counsel and of the Auditors as further described in Section 3(b) hereof. Except as set forth in this Section 6, Section 3(b) hereof and Section 8 hereof, the Managers, the Forward Purchasers and the Forward Sellers will pay all of their other out-of-pocket costs and expenses incurred in connection with entering into the Transaction Documents and the transactions contemplated thereby, including travel and similar expenses, whether or not the transactions contemplated thereby are consummated or any such Transaction Document is terminated. (j) If the third anniversary of the initial effective date of the Registration Statement occurs before all the Shares have been sold and this Agreement remains in full force and effect, prior to February 15such third anniversary, 2000to file, subject to Section 6(a) hereof, a sufficient number of shares of Common Stock from its authorized but unissued shares of Common Stock new shelf registration statement and to take any other action necessary to permit the exercise in full of all public offering of the outstanding Warrants. The Company is currently organizing a stockholder meeting Shares to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC prior continue without interruption (references herein to the date hereof a preliminary proxy Registration Statement shall include the new registration statement in connection with such stockholder meetingdeclared effective by the Commission). (iik) It will maintain To use its commercially reasonable efforts to cause the listing of its Common Stock Shares and the Forward Settlement Shares to be listed for trading on the OTC Bulletin BoardNasdaq and to maintain such listing. (iiil) It will permit Subscriber to exercise its right to exercise On (i) the Warrants date of commencement of the offering of the Shares under this Agreement (and on any Resumption Date), (ii) each date that the Registration Statement or the Prospectus is amended or supplemented (other than 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) a Notice of Exercise is telecopied to and received prospectus supplement filed by the Company in accordance with the provisions Commission under the Securities Act relating solely to the offering of any of the Shelf Securities other than the Shares) or (B) a Current Report on Form 8-K filed by the Company with the Commission under the Exchange Act, unless the Managers, the Forward Purchasers or the Forward Sellers shall otherwise reasonably request) and (iii) any date specified in a Terms Agreement (any such date, unless it occurs during a Suspension Period, a “Representation Date”), to furnish or cause to be furnished to the Managers, the Forward Purchasers and the Forward Sellers a certificate dated and delivered as of such Representation Date, in form reasonably satisfactory to the Managers, the Forward Purchasers and the Forward Sellers, to the effect that the statements contained in the certificate referred to in Section 5(b) hereof are true and correct at the time of such commencement, recommencement, amendment, supplement or filing, as the case may be, as though made at and as of such time modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to such Representation Date. (m) On each Representation Date, the Company shall cause to be furnished to the Managers, the Forward Purchasers and the Forward Sellers (i) an opinion and negative assurance letter of Outside Company Counsel and (ii) an opinion letter of Internal Company Counsel, each dated such Representation Date and covering the matters described in Section 5(c) hereof, but modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such opinions and in form and substance satisfactory to the Managers, the Forward Purchasers and the Forward Sellers, provided that, in lieu of delivering such a letter for dates subsequent to the commencement of the offering of the Shares under this Agreement, each of Outside Company Counsel and Internal Company Counsel may furnish the Managers, the Forward Purchasers and the Forward Sellers with a letter (a “Reliance Letter”) to the effect that the Managers, the Forward Purchasers and the Forward Sellers may rely on a prior letter delivered hereunder to the same extent as if it were dated the date of such letter (except that statements in such prior letter shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented as of such subsequent date). (n) On each Representation Date, Managers Counsel shall furnish to the Managers, the Forward Purchasers and the Forward Sellers an "Exercise Date". The opinion and negative assurance letter, dated such Representation Date and in form and substance reasonably satisfactory to the Managers, the Forward Purchasers and the Forward Sellers, provided that, in lieu of delivering such a letter for dates subsequent to the commencement of the offering of the Shares under this Agreement, Managers Counsel may furnish the Managers, the Forward Purchasers and the Forward Sellers with a Reliance Letter. (o) On (i) each Representation Date and (ii) the date of filing by the Company will transmit of a Current Report on Form 8-K with the certificates representing shares Commission under the Exchange Act that contains additional or amended financial information, the Auditors shall deliver to the Managers, the Forward Purchasers and the Forward Sellers the comfort letter described in Section 5(e) hereof dated such Representation Date and in form and substance reasonably satisfactory to the Managers, the Forward Purchasers and the Forward Sellers. (p) To comply with the Due Diligence Protocol set forth on Schedule III attached hereto and any other due diligence review or call reasonably requested by any Manager, Forward Purchaser or Forward Seller, including the review by or on behalf of Common Stock issuable upon exercise the Managers, the Forward Purchasers and the Forward Sellers of any Warrants (the certificates, the opinions and the letters required by Sections 6(l), 6(m), 6(n) and 6(o) hereof, together with such other certificates, opinions, letters or documents as they or Managers Counsel may reasonably require for 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 purposes 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 outstandingIn further consideration of the agreements of the Underwriters herein contained, the Company acknowledges, represents, warrants covenants and agrees as followswith the several Underwriters that: (ia) The If the effective time of the Registration Statement is not prior to the execution and delivery of this Agreement, 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 the execution and delivery of this Agreement and any information shall have been omitted therefrom in reliance upon Rule 430A, the Company, at the earliest possible time, will furnish the Representatives with a copy of the Prospectus to be filed by the Company with the 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 advise the Representatives and counsel to the Underwriters and the Attorneys-in-Fact promptly of the issuance by the Commission or any state securities commission of any 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 (either before or after it becomes effective), to any Preliminary Prospectus or to the Prospectus (including a prospectus filed pursuant to Rule 424(b)) if the 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 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 which the Prospectus would include an untrue statement of a material fact, or would 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 supplement the Prospectus to comply with the Act, the Company promptly will advise the Representatives and counsel to the Underwriters and the Attorneys-in-Fact thereof and will promptly prepare and file with the Commission, at its expense, an amendment to the Registration Statement which will correct such statement or omission or an amendment which will effect such compliance; and, if any Underwriter is required to deliver a prospectus after the effective date of the Registration Statement, the Company, upon request of the Representatives, will prepare promptly such prospectus or prospectuses as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Act. The Company consents to the use, 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 several Underwriters and by dealers, of each Preliminary Prospectus. (c) If necessary or appropriate in connection with the offer and sale of the Shares, the Company shall file a Rule 462(b) Registration Statement in the manner prescribed by the Act so that such Rule 462(b) Registration Statement shall become effective upon filing. (d) Neither the Company nor any Subsidiary will, prior to February 15the Second Closing Date, 2000if any, incur any liability or obligation, direct or contingent, or enter into any material transaction, other than in the ordinary course of business, or enter into any transaction with an "affiliate," as defined in Rule 405 under the Act, which is required to be described in the Prospectus pursuant to Item 404 of Regulation S-K under the Act, except as described in the Prospectus. (e) Neither the Company nor any Subsidiary will, prior to the Second Closing Date, if any, acquire any of the Common Stock nor will the Company declare or pay any dividend or make any other distribution upon its Common Stock payable to shareholders of record on a sufficient number date prior to the Second Closing Date, except as described in the Prospectus. (f) The Company will make generally available to its security holders and the Representatives an earnings statement as soon as practicable, but in no event later than sixty days after the end of its fiscal quarter in which the first anniversary of the effective date of the Registration Statement occurs, covering a period of twelve consecutive calendar 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 and Rule 158 promulgated thereunder. (g) The Company will apply the net proceeds from the sale of the Shares to be sold by it hereunder for the purposes set forth in the Prospectus. (h) The Company will cooperate with the Representatives and counsel to the Underwriters in qualifying or registering the Shares for sale under the Blue Sky Laws of such jurisdictions as the Representatives designate, and will continue such qualifications or registrations in effect so long as reasonably requested by the Representatives to effect 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 such jurisdiction where it is not presently qualified. In each jurisdiction where any of the Shares shall have been qualified as provided above, the Company will file such reports and statements as may be required to continue such qualification for a period of not less than one year from the date of the Prospectus. 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, and the Company shall comply in all respects with the undertakings given by the Company in connection with the qualification or registration of the Shares for offering and sale under the Blue Sky Laws. (i) During the period of three years from the date of the Prospectus, the Company will furnish to each of the Representatives and to each of the other Underwriters who may so request, as soon as available, each report, statement or other document of the Company or its Board of Directors mailed to its shareholders, filed with the Commission or filed with Nasdaq or with any national securities exchange on which any class of securities of the Company is listed, and such other information concerning the Company as the Representatives may reasonably request. (j) The Company shall deliver the requisite notice of issuance to Nasdaq and shall take all necessary or appropriate action within its power to maintain the authorization for trading of the Common Stock as a Nasdaq National Market security, or take such action as may be necessary to authorize the Common Stock for listing on the New York Stock Exchange or the American Stock Exchange, for a period of at least thirty-six months after the date of the Prospectus. (k) The Company hereby agrees that, without the prior written consent of ▇▇▇▇▇ on behalf of the Underwriters, it will not, during the period ending 180 days after the date of the Prospectus, (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise or (3) file any registration statement with the Commission relating to the offering of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock. The restrictions contained in the preceding paragraph shall not apply to (a) the Shares to be sold hereunder, (b) the issuance by the Company of shares of Common Stock from its authorized but unissued shares upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof and disclosed as outstanding in the Prospectus, (c) the issuance by the Company of employee stock options pursuant to stock option plans described in the Prospectus, and (d) the issuance by the Company of Common Stock as consideration in connection with any future acquisitions by the Company, so long as the recipients of such Common Stock agree to permit be bound by the exercise in full provisions of all this subsection (k). Notwithstanding the foregoing, if (1) during the last 17 days of the outstanding Warrants180 day restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs; or (2) prior to the expiration of the 180 day restricted period, the Company announces that it will release earnings results during the 16 day period beginning on the last day of the 180 day period, the restrictions imposed by this agreement shall continue to apply until the expiration of the 18 day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. 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. promptly notify ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇of any earnings release, news or event that may give rise to an extension of the initial 180 day restricted period. (l) The Company will maintain a transfer agent and, if required by law or the rules of Nasdaq or any national securities exchange on which the Common Stock is listed, a registrar (which, if permitted by applicable laws and rules, may be the same entity as the transfer agent) for its Common Stock. (m) If at any time when a prospectus relating to the Shares is required to be delivered under the Act, any rumor, publication or event relating to of affecting the Company shall occur as a result of which, in the reasonable opinion of ▇▇▇▇▇, 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 the Prospectus), the Company will, after written notice from ▇▇▇▇▇ ▇▇▇ ▇▇▇advising the Company of any of the matters set forth above, promptly consult with ▇▇▇▇▇ ▇▇▇▇▇concerning the advisability and substance of, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: and, if the Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇determine that it is appropriate, Interim Chief Executive Officerdisseminate, a press release or other public statement responding to or commenting on, such rumor, publication or event. (n) The Company will furnish to its shareholders as soon as practicable after the end of each fiscal year an annual report (including a consolidated balance sheet, and statements of income, shareholders' equity and cash flows of the Company and its Subsidiaries for such fiscal year, accompanied by a copy of the report thereon of nationally recognized independent certified public accountants duly registered with the Public Company Accounting Oversight Board); (o) If the sale to the Underwriters of the Shares is not consummated for any reason other than termination of this Agreement pursuant to sections 13 or 15(a), (c) or (d) hereof, without limiting any other rights the Underwriters may have, the Company agrees to reimburse the Underwriters upon demand for all out-of-pocket expenses (including reasonable fees and expenses of counsel for the Underwriters), that shall have been incurred by the Underwriters in connection with the proposed purchase and sale of the Shares, and the provisions of sections 9 and 12 hereof shall at all times be effective and apply. (p) The Company will use its reasonable best efforts to comply or cause to be complied with the conditions to the obligations of the Underwriters in section 10 hereof.

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 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) 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 applicable period referred to in Section 10(a)(3) of the Act or Rule 174 of the Rules and Regulations 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 so exercisedmisleading, 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 applicable 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) to Subscriber via express courierof the Act and Rule 174 of the Rules and Regulations. (d) As soon as practicable, by electronic transfer or otherwise within three (3) business 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 applicable period referred to in Section 10(a)(3) of the Act and Warrant being exercised by such date. In addition Rule 174 of the Rules and Regulations, will furnish to you and the Selling Stockholder or mail to your order copies of the Registration Statement, the Prospectus, the Preliminary Prospectus and 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 Stockholder may be available request, for the purposes contemplated by the Act and the Rules and Regulations. (f) The Company shall cooperate with you and your counsel in order to Subscriber, in qualify or register the event that Common Shares for sale under (or obtain exemptions from the Company fails to effect delivery application of) the Blue Sky laws of such shares 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 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 ExerciseShares. The Notice of Exercise and Warrant representing the portion of the Warrant exercised Company shall not be delivered required to qualify as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officera foreign

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 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 Underwriter shall not previously have been advised and furnished with a copy or to which Underwriter or Underwriter’s counsel have objected in writing or which is not in compliance with the Act and the Rules and Regulations promulgated thereunder. At any time prior to the later of (A) the Underwriter’s disposition of all Shares contemplated hereunder and (B) one hundred eighty (180) days after the date on which the Registration Statement shall have become or been declared effective (or such longer period of time as a current Registration Statement must remain in effect with respect to the Share Warrants), the Company will prepare and file with the Commission, promptly upon Underwriter’s request, any amendments or supplements to the Registration Statement or prospectus which, in Underwriter’s opinion, may be reasonably necessary or advisable in connection with the distribution of the Shares, Warrants and shares of Common Stock underlying the Warrants. As soon as the Company is advised thereof, the Company will advise Underwriter, 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 other 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 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 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 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 the period that a prospectus is required under this Act to be delivered in connection with sales by an Underwriter, 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 of the Registration Statement or a supplement 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 or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the Rules and Regulations, the Company will notify Underwriter promptly and forthwith prepare and furnish to Underwriter copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as Underwriter 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 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 the sale of the Shares, to deliver a prospectus nine (9) months or more after the effective date of the Registration Statement, the Company will upon request of and at the expense of the Company, 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 comply with the applicable provisions of the Act, the Rules and Regulations and the Securities Exchange Act of 1934, and the rules and regulations thereunder in connection with the offering and issuance of the Shares. The Company will further comply with all undertakings contained in the Registration Statement. (b) The Company will use its best efforts to qualify the Shares 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 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 the Underwriter may reasonably request. (c) For so long as any the Company is a reporting company under either Section 12(g) or 15(d) of the Securities held by Subscriber remain outstandingExchange Act of 1934, the Company, at its expense, will furnish to its stockholders and warrant holders an annual report (including financial statements audited by independent public accountants), in reasonable detail, and at its expense, will furnish to Underwriter 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 the Company acknowledgesand any of its subsidiaries as at the end of such fiscal year, representstogether with statements of income, warrants surplus and agrees source and application of funds 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 follows: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 non-confidential information as Underwriter may from time to time reasonably request. In the event the Company has an active subsidiary or subsidiaries, such financial statements 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. (d) The Company will deliver to Underwriter at or before the effective date two signed copies of the Registration Statement including all financial statements and exhibits filed there with, and of all amendments thereto, and will deliver to the several Underwriters, if any, such number of copies of the Registration Statement, including such financial statements and exhibits, and of all amendments thereto and as many copies of any Preliminary prospectus filed with the Commission prior to the 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, 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. (e) The Company will make generally available to its security holders and deliver to Underwriter as soon as it is practicable to do so but in no event later than ninety (90) days after the end of twelve (12) months after its current fiscal quarter, an 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. (f) The Company will apply the net proceeds from the sale of the Shares 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 there from as may be required pursuant to Rule 419 or Rule 463 under the Act. (g) [Reserved] (h) The Company will, promptly upon 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 legal counsel to the Underwriter, may be reasonably necessary or advisable in connection with the distribution of the Shares, and will use its best efforts to cause the same to become effective as promptly as possible. (i) The Company shall use its best efforts to reserve, prior to February 15, 2000, a sufficient will reserve and keep available the maximum 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 are issuable upon exercise of any Warrants the Warrants. (together with the certificates representing the Warrants not so exercisedj) to Subscriber via express courier, by electronic transfer or otherwise within three [Reserved] (3k) Within 2 business days after following the Exercise Date Closing 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 so qualifies the Company fails will apply for listing in Standard and Poors Corporation Reports and Moodys OTC Guide and shall use its best efforts to effect delivery have the Company included in such publications for at least five (5) years from the date of such shares of Common Stock within such three this Agreement. (3l) business day period[Reserved] (m) [Reserved] (n) Prior to the Closing Date, Subscriber the Company will be entitled to revoke the relevant Notice of Exercise by delivering a notice to such effect not issue, directly or indirectly, without Underwriter’s prior consent, any press release or other communication or hold any press conference with respect to the Company whereupon or its activities or 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 offering of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: Shares. (▇▇▇o) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officer[Reserved]

Covenants of the Company. For so long The Company covenants and agrees with each Underwriter as 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 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 (the “Prospectus Delivery Period”), prior to amending or supplementing the Registration Statement (including any registration statement filed under Rule 462(b) under the Securities held by Subscriber remain outstandingAct), 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) After the date of this Agreement and through the Prospectus Delivery Period, the Company shall promptly advise the Representative 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, 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. (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 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; (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 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 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 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 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 (i) it 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 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 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 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 issuance of options or Common Stock to directors, officers, employees and consultants in the ordinary course under the Company’s 2010 Stock Incentive Plan, 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 close of trading on the date 30 days 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 (1) 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 (2) 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 Common Stock from its authorized but unissued shares of Common Stock to permit Stock. (j) The Company shall apply the exercise in full of all net proceeds of the outstanding Warrants. sale of the Securities substantially in the manner specified in the Prospectus under the heading “Use of Proceeds”. (k) The Company is currently organizing a stockholder meeting will furnish to increase 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 number period of authorized shares of Common Stock two years from the date hereof, the Company will furnish to the Representative and, upon request, to each of the Companyother 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 Representative, 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 has as soon as they are available, copies of any reports and financial statements furnished to or filed with the SEC prior to the date hereof a preliminary proxy statement in connection with such stockholder meetingCommission. (iil) It The Company will use its commercially reasonable efforts to maintain the listing of its Common Stock on the OTC Bulletin BoardNasdaq Stock Market. (iiim) 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 use its best efforts to enable the certificates representing shares Company to meet the requirements to qualify as a REIT under the Code until the Board of Common Stock issuable upon exercise 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, the Company will not take, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in, stabilization or manipulation of the price of any Warrants securities of the Company to facilitate the sale or resale of the Firm Securities. (together o) 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 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 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. (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) 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 (in an amount not to exceed $10,000), (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 Closing) 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 U.S. Underwriter that: (ia) The Company shall use its best efforts to reservecause 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 Prospectuses with the Commission is otherwise required under Rule 424(b) of the Regulations, the Company shall file the Prospectuses, 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 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 Prospectuses or the transactions contemplated by the Underwriting Agreements. 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 Prospectuses 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 February 15obtaining such consent. (b) Within the time during which the Prospectuses are required to be delivered under the Act, 2000the Company shall comply with all requirements imposed upon it by the Act, a sufficient number of shares of Common Stock as now or hereafter amended, and by the 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 the Shares as contemplated by the provisions hereof and by the Prospectuses. If, during such period, any event shall occur as a result of all which the Prospectuses 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 the light of the outstanding Warrants. 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 Prospectuses 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 is currently organizing a stockholder meeting shall promptly deliver to increase you two manually-signed copies of the number of authorized shares of Common Stock of Registration Statement, including exhibits and all amendments thereto, and to those persons (including your counsel) whom you identify to the Company, such quantity of conformed copies of the Registration Statement, with exhibits, each Preliminary Prospectus, the Prospectuses and has filed with the SEC prior all amendments of and supplements to the date hereof a preliminary proxy statement in connection with such stockholder meetingdocuments, if any, as you may reasonably request. (iid) 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 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 shall cooperate with the provisions hereof shall be deemed an "Exercise Date". The Company will transmit U.S. Underwriters, 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 courierManagers and Kramer, 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 SubscriberLevin, 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. ▇▇▇▇▇ Naftalis & ▇▇▇▇▇▇▇ ▇▇("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 reasonably 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 jurisdiction 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 U.S. 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, that satisfies the provisions of Section 11(a) of the Act and Rule 158 of the Regulations. (f) For a period of 180 days after the date of this Agreement, without the prior written consent of Bear, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇the Company shall not, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase or otherwise dispose (▇▇▇or announce any offer, sale, contract of sale or other disposition of), any shares of Common Stock or Class A Common Stock or any other shares of capital stock of the Company, or any securities convertible into or exercisable or exchangeable for, or warrants, options or rights to purchase or acquire, shares of Common Stock, Class A Common Stock or any other shares of capital stock of the Company, or any interest in the Common Stock or Class A Common Stock (including derivative interests) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. other than (A) for the stock split referred to in the Prospectuses, and (B) the Company's issuance and sale of Shares in accordance with the Underwriting Agreements, and (C) the issuance of stock options under, or the issuance of Common Stock upon the exercise of stock options granted under, any stock option plan described in the Prospectuses. (g) During the five years following the Effective Date, the Company shall furnish to Bear, ▇▇▇▇▇▇▇, Interim Chief Executive Officerin such quantity as Bear, ▇▇▇▇▇▇▇ may reasonably request for distribution to the U.S. Underwriters, copies of (i) all reports to its stockholders, (ii) all reports, financial statements, and proxy or information statements filed by the Company with the Commission, the NYSE or any national securities exchange 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 the Underwriting Agreements in the manner set forth under "Use of Proceeds" in the Prospectuses. 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

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 from the date of the applicable Pricing Agreement until the Closing Time, 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. 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. (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 Underwriter 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 satisfy the requirements of Section 11(a) of the Act. (j) The Company will apply the net proceeds from the sale of the Firm 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. (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 ▇▇▇▇▇▇▇ & Muren, S.C., counsel 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) Except as stated below, each of the existing stockholders 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 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, and 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. Further, options of Company employees shall be excluded from the Lock-Up Agreement. Excluded from the Lock- Up Agreement shall be those shares of Common Stock that certain Existing Stockholders are registering for sale as part of the Registration Statement. The Company further agrees that for (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) All officers, directors, and shareholders of the Company required to execute the Lock Up Agreement have executed the same. (o) Prior to the First Closing Date, the Company will not issue, directly or indirectly, without your prior written consent, a press release or other communication or hold any press conference with respect to the Company, its activities or the Offering. (p) 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. (q) For a period of twenty-four months from the Closing, the Company shall, at your option, appoint a non-voting observer to the Company's Board of Directors, designated by you and such observer shall receive notice of and be entitled to attend all meetings of the Board of Directors. The Company agrees it shall fully indemnify, defend and hold harmless such observer to the fullest extent permitted by law with respect to all acts and omissions as an observer to the Company's Board of Directors. (r) 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). (s) The Company will not, prior to the First Closing Date, 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 disclosed prior thereto in the Prospectus. (t) 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. (u) The Company shall select Common Stock and Warrant certificates and utilize a stock transfer agent satisfactory to you. (v) So long as any Warrants are outstanding, the Company shall use its best efforts to reserve, prior cause post-effective amendments 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 the exercise become effective 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 compliance with the SEC prior 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 date hereof a preliminary proxy statement in connection with Underwriters and each dealer as many copies of each such stockholder meetingProspectus as the Underwriters or dealer may reasonably request. (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 The Company covenants and agrees with the Underwriter as follows: (a) The Company will use its best efforts to cause the Registration Statement to become effective and will advise the Underwriter immediately and, if requested by the Underwriter, will confirm such advice in writing (i) when the Registration Statement has become effective and when any Securities held post-effective amendment thereto becomes effective, or when any supplement to the Prospectus or any amended Prospectus has been filed; (ii) of any request by Subscriber remain outstandingthe Commission for any amendments or supplements to the Registration Statement or the Prospectus or for additional information; (iii) of the issuance by the Commission of any order suspending the effectiveness of the Registration Statement for the sale of the Shares hereunder or of any order preventing or suspending the use of any Prospectus or the institution of any proceedings for any such purposes; (iv) of the happening of any event which in the judgment of the Company makes any statement in the Registration Statement or Prospectus untrue or which requires the making of any changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading; and (v) of the refusal to qualify or the suspension of the qualification of the Shares for offering or sale 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 order or of any order preventing or suspending such use, to prevent any such refusal to qualify or any such suspension, and to obtain as soon as possible a lifting of any such order, the reversal of any such refusal and the termination of any such suspension. (b) The Company will not at any time, whether before, after or on 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 copies or to which the Underwriter shall have objected in writing or which is not in compliance with the Act and the Regulations. (c) To deliver to the Underwriter, without charge, three (3) signed copies of the Registration Statement, including all financial statements and exhibits filed therewith and any amendments or supplements thereto, and to deliver without charge to the Underwriter three (3) conformed copies of the Registration Statement and any amendment or supplement thereto, including such financial statements and exhibits. (d) Prior to the Effective Date of the Registration Statement the Company will have delivered to the Underwriter, without charge, in such quantities as the Underwriter may reasonably request, copies of each form of Preliminary Prospectus. The Company consents to the use of each form of Prospectus by the Underwriter and by dealers prior to the Effective Date of the Registration Statement, if permitted under the Act. (e) To deliver to the Underwriter, without charge, as soon as practicable after the Effective Date of the Registration Statement and thereafter from time to time as many copies as it may reasonably request of the Prospectus and of any amended or supplemented Prospectus as the Underwriter may reasonably request. (f) If, during such period of time as in the opinion of the Underwriter or its counsel a Prospectus relating to this financing is required to be delivered, 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, not misleading, or if it is necessary at any time after the Effective Date of the Registration Statement to amend or supplement the Prospectus to comply with the Act, the Company acknowledgeswill forthwith notify the Underwriter thereof and prepare and file with the Commission and furnish and deliver to the Underwriter and to others whose names and addresses are designated by the Underwriter, representsall at the cost of the Company, warrants a reasonable number of the amended or supplemented Prospectus which as so amended or supplemented will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the Prospectus not misleading in the light of the circumstances when it is delivered to a purchaser or prospective purchaser, and agrees which will comply in all respects with the Act; and, in the event the Underwriter is required to deliver a Prospectus 90 days or more after the Effective Date upon request to prepare promptly such Prospectus as follows:may be necessary to permit compliance with the requirements of the Act. (g) For a period of five years after the Closing Date, the Company will, as soon as practicable and in any event within 120 days after the close of each fiscal year, deliver (i) to its security holders and to the Underwriter a copy of the annual report of the Company containing a balance sheet setting forth the financial condition of the Company as of the end of such fiscal year, together with statements of income and surplus of the Company for such fiscal year, all reasonably detailed. Such balance sheet and statements of income and surplus shall be accompanied by a copy of the accountant's report with respect thereto of independent public accountants, who may be the regular accountants for the Company; and (ii) to the Underwriter, (a) a copy of all reports which the Company shall file with the Commission or with any national securities exchange promptly after the same have been forwarded to the Commission or exchange and a copy of all financial statements and other reports which the Company shall send to its security holders, and (b) from time to time such other information as the Underwriter may reasonably request. In the event the Company shall have any subsidiaries the account of which are customarily consolidated with those of the Company, the financial statements to be furnished in this paragraph shall be the consolidated financial statements of the Company and such subsidiaries. In addition, and for a period of five (5) years after the Closing Date, the Company shall furnish unaudited quarterly financial statements to the Underwriter on a timely basis. (h) The Company will enter into employment contracts no later then the Effective Date but to begin on the Closing Date with its key personnel, which agreements shall remain in effect for at least three (3) years and provide that their compensation shall be subject to the approval of the Underwriter. (i) The Company will provide the Underwriter, on a monthly basis, at the Company's expense, with copies of its daily transfer sheets and lists of shareholders for a period of five (5) years from the Closing Date. (j) The Company will deliver to the Underwriter true and correct copies of its Articles of Incorporation and all amendments thereto, such copies to be certified by the Secretary of the Company; true and correct copies of the By-Laws of the Company and of the minutes of all meetings of the directors and stockholders of the Company held prior to the Closing Date; and true and correct copies of all contracts to which the Company is a party. (k) Prior to the Effective Date the Company will cooperate with the Underwriter and its counsel in connection with the registration or qualification of the securities being offered for offering and sale by the Underwriter and dealers under the Securities or Blue Sky laws of such states as the Underwriter 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. The Company shall bear the expenses incurred in qualifying the securities being offered under the Securities or Blue Sky laws of such states including the fees and charges of the various states, the cost of a printed memorandum with respect thereto, and reasonable legal fees and expenses. The Company shall not be required, however, to sign a general consent to service of process in any jurisdiction where it is not now subject to such service. (l) The Company will pay and bear, whether or not the transactions contemplated hereunder are consummated or this Agreement is prevented from becoming effective, or is terminated, all costs and expenses incident to the performance of its obligations under this Agreement, including all expenses incident to the authorization of the securities being offered and their issue and delivery to the Subscribers, and any original issue taxes in connection therewith, the fees and expenses of the Company's counsel and accountants; the costs and expenses incident to the issuance, sale and delivery of the Underwriter's Warrants to the Underwriter; the costs and expenses incident to the preparation, printing and filing under the Act, of the Registration Statement (including financial statements), any Preliminary Prospectus and the Prospectus and any amendments or supplements thereto, the reproduction and distribution of this Agreement, the Agreement Among Underwriters, if any, the Selected Dealers Agreement, the Underwriter's Questionnaire, the Blue Sky survey, and the Certificates for the Shares; the filing fees of the Commission and the National Association of Securities Dealers, Inc., and any state regulatory agencies, the cost of preparing and filing all exhibits to the Registration Statement; the cost of furnishing the Underwriter copies of the Registration Statement and Prospectus as herein provided; the cost and fees of qualifying the securities being offered under the Securities or Blue Sky laws as herein provided, legal fees of $10,000.00 to the Underwriter's counsel for filing in up to ten (10) states ($500.00 for each additional state) and disbursements incurred by said counsel, in connection with the Blue Sky filing of this offering; and, the costs and fees of any escrow agent referred to in Paragraph 4(a). In addition, the Company shall also bear the cost of investigative reports (such as ▇▇▇▇▇▇'▇ Reports) of the Company's principal executive officers, directors and substantial shareholders which cost shall not exceed a sum of $5,000.00. (m) Provided that at least 750,000 Shares are sold during the offering, the Company will pay to the Underwriter a non-accountable expense allowance of $.20 for each Share sold, i.e., $150,000 if the minimum Shares are sold and adjusted proportionately upwards to $375,000 if the maximum Shares are sold ($10,000 of which has been advanced to the Underwriter and shall be credited as a part payment of this allowance) if all of the securities being offered are sold for the fees and disbursements of counsel to the Underwriter, the fees due to the International Advisors and for the actual costs of advertising, traveling, postage, due diligence expenses, telephone and telegraph expenses and other miscellaneous expenses incurred by or on behalf of the Underwriter in preparation for, or in connection with, the offering and sale and distribution of the securities being offered, and the Underwriter shall not be obligated to account to the Company for such disbursements and expenses. (n) If the Underwriter is unable to attempt or complete the proposed offering and sale of the securities being offered mentioned hereinabove because of (i) any reason solely within the control of the Company or its stockholders, (ii) the Company unilaterally withdraws the proposed public offering from the Underwriter, (iii) the Company does not permit the registration statement to become effective for any reason whatsoever, (iv) any material discrepancy in any representation by the Company and/or its officers, directors, shareholders, agents, advisers or representatives, made in writing, including but not limited to the Registration Statement, to the Underwriter, then the Company will reimburse the Underwriter for any actual costs and expenses, on an accountable basis, incurred by the Underwriter relative to the offering contemplated hereby (including counsel fees of the Underwriter) up to but not exceeding $30,000 inclusive of the credit of $10,000 referred to in 6(m) hereof. (o) Prior to the Closing Date, the Company will cooperate with the Underwriter in such investigation as the Underwriter may make or cause to be made of the properties, business and operations of the Company in connection with the purchase and public offering of the securities being offered and will make available to the Underwriter in connection therewith such information in its possession as the Underwriter may request, provided the Underwriter agrees to treat any such information as confidential information. (p) The Company has appointed or shall promptly hereafter appoint Continental Stock Transfer & Trust Company as Transfer and Warrant Agent, which entity shall agree to provisions of Paragraph 9(b) of the Underwriter's Warrant, for the securities being offered. Subject to the closing, for a period of five (5) years following the Closing Date the Company will not change or terminate any such appointments without the written consent of the Underwriter, which consent shall not be unreasonably withheld. (q) The Company will use all reasonable efforts to comply or cause to be complied with, the conditions precedent to the several obligations of the Underwriter specified in this Agreement. (r) The Company will deliver to the Underwriter and its counsel bound volumes of copies of all documents and appropriate correspondence filed or received from the Commission and the NASD and all closing documents. (s) The Company will use its best efforts promptly to reserve, do and perform all things to be done and performed by it hereunder prior to February 15, 2000, a sufficient number the Closing Date and to satisfy all conditions which it is required to satisfy prior to the delivery by it of shares the securities being offered. (t) The Company will use the net proceeds to be received by it from the sale of Common Stock from its authorized but unissued shares the securities being offered in the manner and for the purposes set forth in the Prospectus and will comply with all reporting and other requirements of Common Stock the Act respecting the use of the proceeds. (u) The Company will comply with the Act and Regulations and the Securities Exchange Act of 1934 and the rules and regulations of the Commission thereunder so as to permit the exercise continuance of sales of and dealings in full the securities being offered under the Act and the Securities Exchange Act of all 1934, as and if required under said Act. (v) Prior to the Closing time the Company will not issue directly or indirectly without the Underwriter's prior written 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 outstanding Warrants. The securities. (w) If at least 750,000 Shares are sold and for a period of five (5) years commencing from the Closing Date, the Company is currently organizing shall continue to employ the services of a stockholder meeting to increase the number firm of authorized shares of Common Stock of the Company, and has filed with the SEC prior independent certified public accountants acceptable to the date hereof a preliminary proxy statement Underwriter in connection with such stockholder meeting. (ii) It will maintain the listing preparation of its Common Stock on the OTC Bulletin Board. (iii) It will permit Subscriber financial statements to exercise its right be included in any Registration Statement 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 be filed by the Company in accordance with hereunder, or any amendment or supplement thereto. For 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 purposes of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratoriesforegoing, Inc. ▇▇▇▇▇▇ & Kliegman, LLP and any "Regional" accounting firm shall be deemed to be acceptable to the Underwriter. (x) At the Closing Time, the Company shall retain the services of a financial relations firm reasonably satisfactory to the Underwriter and in that regard ▇▇▇▇▇▇▇ ▇▇▇▇, New York, New York is satisfactory to the Underwriter. (y) If at least 750,000 Shares are sold and for a period of five (5) years after the Closing Time, the Company will cause its Board of Directors to meet at (z) The Company will, within thirty (30) days after the Closing Time, apply for listing in Standard and Poor's Corporation Reports and ▇▇▇▇▇'▇ Over-the-Counter Guide, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇and will use its best efforts to have itself listed in such reports. (aa) Prior to the Effective Date, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: the Company will designate, an audit committee consisting of a majority of outside directors, which will supervise the financial affairs of the Company including but not limited to the monitoring of the application of the funds provided by the contemplated offering. (▇▇▇bb) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerWithin ten (10) days after the end of the first thre

Covenants of the Company. For so long as any Securities held by Subscriber remain outstanding, and the Initial Selling Securityholder. 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 Shares, the Warrants and Initial Selling Securityholder 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 (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 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 Shares, the Warrants and Initial Selling Securityholder Shares. 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 Shares and the Warrants 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, the Warrants and the Initial Selling Securityholder 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 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 any dealer, of authorized shares any event of Common Stock which the Company has knowledge and which has a Material Adverse Effect on the Company or the securities of the Company, or which in the opinion of counsel for the Company and has filed 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 Units or Selling Stock 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 the Underwriter promptly and forthwith prepare and furnish to the date hereof Underwriter copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as the Underwriter 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 Underwriter, except that in case the Underwriter is required, 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 sale of the Warrant exercised shall be delivered as follows: To Shares, the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive OfficerWarrants

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 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) During the Prospectus Delivery Period, the Company shall promptly advise the Representatives 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 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; (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 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 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 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 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 Representatives 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 Representatives 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 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) 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, restricted stock units and performance share units) to directors, officers, employees and consultants under the Company’s 2011 Long-Term Incentive Plan, (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, and (D) the issuance of Class A Common Stock, in an amount not more than 10% of the number of shares of the issued and outstanding Class A Common Stock of the Company immediately after the First Closing Date, pursuant to the equity distribution agreements, each dated M▇▇▇ 24, 2013, with each of RBC Capital Markets, LLC, JMP Securities LLC, Ladenburg T▇▇▇▇▇▇▇ & Co. Inc. and MLV & Co. LLC, 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, file or cause to be filed a registration statement, including any amendments, with respect to the registration of, 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 forty-fifth (45th) 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 Representatives waive, in writing, such extension; provided, however, that such extension of the Lock-Up Period shall not apply if, (i) within three (3) business days preceding the expiration of the Lock-Up Period, the Company delivers to the Representatives a certificate signed by the Chief Financial Officer or Chief Executive Officer of the Company certifying that the Class A Common Stock of the Company are “actively traded securities” (as defined in Rule 101(c)(1) of Regulation M under the Exchange Act) and (ii) the Company meets the applicable requirements of paragraph (a)(1) of Rule 139 under the Securities Act in the manner contemplated by FINRA’s NASD Rule 2711(f)(4). (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 Representatives 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 Representatives (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 dateRepresentatives 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 E▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇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, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇B) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇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 5. ▇▇▇▇▇▇▇The Company, Interim Chief Executive Officeron 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 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 Closing Date the expenses set forth above (which shall be mutually agreed upon betw

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 hereby covenants 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. ▇▇▇▇▇ S▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇& Co. as follows: (A) The Company has filed the Registration Statement with the Commission. The Company will not, ▇▇▇▇▇ ▇▇▇ ▇at any time after the date the Registration Statement is declared effective, file any amendment or supplement to the Registration Statement without providing S▇▇▇▇▇▇▇ ▇▇▇▇▇& Co. and its counsel an opportunity to review such amendment. (B) The Bank has filed the Applications with the Regulatory Agencies. The Bank will not at any time after the date of this Agreement, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. file any amendment or supplement to an application without providing S▇▇▇▇▇▇▇ & Co. and its counsel an opportunity to review such amendment or supplement. (C) The Company and the Bank, as applicable, will use their commercially reasonable efforts to cause any post-effective amendment to the Registration Statement to be declared effective by the Commission and any post-effective amendment to an Application to be approved by the Regulatory Agencies, and will immediately upon receipt of any information concerning the events listed below notify S▇▇▇▇▇▇▇ & Co. (i) when the Registration Statement, Interim Chief Executive Officeras amended, has become effective; (ii) when an Application, as amended, has been approved by the Regulatory Agencies; (iii) of the receipt of any comments from the Commission, a Regulatory Agency or any other governmental entity with respect to the Offering or the transactions contemplated by this Agreement; (iv) of any request by the Commission, a Regulatory Agency or any other governmental entity for any amendment or supplement to the Registration Statement or an Application or for additional information; (v) of the issuance by the Commission, a Regulatory Agency or any other governmental agency of any order or other action suspending the Offering or the use of the Registration Statement or the Prospectus or any other filing of the Company and the Bank under applicable regulations or other applicable law, or the threat of any such action; (vi) of the issuance by the Commission, any Regulatory Agency or any state authority of any stop order suspending the effectiveness of the Registration Statement or of the initiation or threat of initiation or threat of any proceedings for that purpose; or (vii) of the occurrence of any event mentioned in paragraph (F) below. The Company and the Bank, as applicable, will take commercially reasonable efforts to prevent the issuance by the Commission, any Regulatory Agency or any state authority of any stop order suspending the effectiveness of the Registration Statement and, if any such order shall at any time be issued, to obtain the lifting thereof at the earliest possible time. (D) The Company or the Bank, as applicable, will provide to S▇▇▇▇▇▇▇ & Co. and to its counsel full access to review any and all documentation reasonably requested in connection with its due diligence efforts, including any and all of the following documents, with all exhibits: the Applications, as originally filed and of each amendment or supplement thereto, and the Registration Statement, as originally filed and each amendment thereto. Further, the Company and the Bank will deliver such additional copies of the foregoing documents to counsel to S▇▇▇▇▇▇▇ & Co. as may be required for any NASD filings. In addition, the Company will also deliver to S▇▇▇▇▇▇▇ & Co. such number of copies of the Prospectus, as amended or supplemented, as S▇▇▇▇▇▇▇ & Co. may reasonably request. (E) The Company will comply in all material respects with any and all terms, conditions, requirements and provisions with respect to the Offering and the transactions contemplated thereby imposed by the Commission, by applicable state law and regulations, and by the 1933 Act, the Securities Exchange Act of 1934 (“1934 Act”) and the rules and regulations of the Commission promulgated under such statutes, to be complied with prior to or subsequent to the date of which the Shares are to be sold; and when the Prospectus is required to be delivered, the Company and the Bank will comply in all material respects, at their own expense, with all material requirements imposed upon them by the Regulatory Agencies, the Commission, by applicable state law and regulations and by the 1933 Act, the 1934 Act and the rules and regulations of the Commission promulgated under such statutes, in each case as from time to time in force, so far as necessary to permit the continuance of sales or dealing in the Units during such period in accordance with the provisions hereof and the Prospectus. (F) If any event relating to or affecting the Company or the Bank shall occur, as a result of which it is necessary, in the reasonable determination of counsel for the Company, to amend or supplement the Registration Statement or the Prospectus in order to make them not misleading in light of the circumstances existing at the time of its use, the Company will promptly notify S▇▇▇▇▇▇▇ & Co. and the Company and the Bank will, at their expense, forthwith prepare, file with the Commission and the Regulatory Agencies, and furnish to S▇▇▇▇▇▇▇ & Co., a reasonable number of copies of an amendment or amendments of, or a supplement or supplements to, the Registration Statement and the Prospectus (in form and substance satisfactory to counsel for S▇▇▇▇▇▇▇ & Co. after a reasonable time for review) which will amend or supplement the Registration Statement and/or the Prospectus so that as amended or supplemented it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time, not misleading. For the purpose of this subsection, the Company will furnish such information with respect to itself as S▇▇▇▇▇▇▇ & Co. may from time to time reasonably request. (G) The Company will endeavor in good faith, in cooperation with S▇▇▇▇▇▇▇ & Co., to register or to qualify the Units for offering and sale under the applicable securities laws of the jurisdictions in which the Company deems appropriate to conduct the Offering; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify to do business in any jurisdiction in which it is not so qualified. In each jurisdiction where any of the Units shall have been registered or 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 jurisdictions. (H) For the period of three years from the date of this Agreement, the Company will furnish to S▇▇▇▇▇▇▇ & Co. upon request (i) a copy of each report of the Company furnished to or filed with the Commission under the 1934 Act or any national securities exchange or system on which any class of securities of the Company is listed or quoted, (ii) a copy of each report of the Company mailed to holders of Units or non-confidential report filed with the Commission or a Regulatory Agency or any other supervisory or regulatory authority or any national securities exchange or system on which any class of the securities of the Company is listed or quoted, and (iii) from time to time, such other publicly available information concerning the Company as S▇▇▇▇▇▇▇ & Co. may reasonably request. (I) Prior to the issuance of the Units, the Company will promptly inform S▇▇▇▇▇▇▇ & Co. of any event or circumstances of which it is aware as a result of which the Registration Statement and/or Prospectus, or the Applications as then supplemented or amended, would include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading. (J) The Company will distribute the Prospectus or other offering materials in connection with the offering and sale of the Shares only as set forth in the Prospectus, and only in accordance with the 1933 Act and the 1934 Act and the rules and regulations promulgated under such statutes, and the laws of any state in which the Shares are qualified for sale. (K) The Company will maintain appropriate arrangements with the Escrow Agent for depositing all funds received from persons mailing subscriptions for or orders to purchase Shares in the Offering as described in the Prospectus until the Shares are issued and satisfaction of all conditions precedent to the release of the Company’s obligation to refund payments received from persons subscribing for or ordering Shares in the Offering as described in the Prospectus. (L) The Company will provide S▇▇▇▇▇▇▇ & Co. with reasonable access to any databases containing names and other relevant contact information about potential investors in the Company that has been compiled by, or on behalf of, the Company. (M) Upon its reasonable request, S▇▇▇▇▇▇▇ & Co. shall be permitted to use employees of the Company to assist with administrative tasks, such as providing courier services, in connection with the Offering. (N) The Company will apply the net proceeds from the sale of the Shares for the purposes set forth in the Prospectus. (O) The Company will not engage in any new offering of its capital stock within 6 months of the last sale of stock pursuant to the Offering, without the written consent of S▇▇▇▇▇▇▇ & Co. (P) Except with respect to options reserved for issuance under any stock option plan disclosed in the Prospectus, the Company shall notify S▇▇▇▇▇▇▇ & Co. prior to the reservation of any options for a period of six months following the last sale of stock pursuant to the Offering. (Q) During the term of this Agreement, the Company shall make available to S▇▇▇▇▇▇▇ & Co. the lists of potential subscribers of common stock of the Company that have been prepared or compiled on behalf of, or for the benefit of, the Company, to the extent that those lists are in the Company’s possession.

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, 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 Securities 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) 90 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 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 Securities. As soon as the Company is advised thereof, the Company will advise the Underwriter, and provide the original Warrant 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 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 Securities 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 the certificates representing shares of Common Stock issuable upon exercise of any Warrants (together with the certificates representing the Warrants not so exercised) has caused 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 Officerto the

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. 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 the later of (A) 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) 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 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 Securities. 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 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 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 and the Warrants for such period as in the opinion of counsel to the Underwriter and the Company 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 any dealer, of any event of which the Company has knowledge and which has a Material Adverse Effect on the Company or the securities of the Company, or which in the opinion of counsel for the Company and 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 Securities or in case it shall be necessary to amend or supplement the Prospectus to comply with law or with the Rules and Regulations, the Company will notify the Underwriter promptly and forthwith prepare and furnish to the Underwriter copies of such amended Prospectus or of such supplement to be attached to the Prospectus, in such quantities as the Underwriter 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 Securities to deliver a Prospectus nine months or more after the effective date of the Registration Statement, the Company 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 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 and Warrants. (b) The Company will furnish such information as may be required and to otherwise cooperate and use its best efforts to qualify to register the Shares and Warrants 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 of 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 counsel to the Company and the Underwriter deem reasonably necessary. (c) If the sale of the Securities provided for herein is not consummated as a result of the Company not performing its obligations hereunder in all material respects, the Company shall pay all costs and expenses incurred by it which are incident to the performance of the Company's obligations hereunder, including but not limited to, all of the accountable out of pocket expenses of the Underwriter up to $100,000.00 (including the reasonable fees and expenses of counsel to the Underwriter). (d) The Company will use its best efforts to (i) cause a registration statement under the Exchange Act to be declared effective concurrently with the completion of this offering and will notify you in writing immediately upon the effectiveness of such registration statement, and (ii) obtain and keep current a listing in the Standard & Poors or ▇▇▇▇▇'▇ OTC Industrial Manual. (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 of 1934, 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 Underwriter during the period ending five (5) years from the 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 acknowledgesand any of its subsidiaries as at the end of such fiscal year, representstogether with statements of income, warrants surplus and agrees 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 follows: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 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 the Company is listed; and (v) such other information as you may from time to time reasonably request. Notwithstanding the above, reports provided by the Company to the Commission shall be deemed satisfactory for the foregoing purposes. (f) So long as 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 deliver to the Underwriter 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. The Company will deliver to or upon the Underwriter's order, 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. 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, 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. (h) The Company will make generally available to its Common Stock holders and to the registered holders of its Warrants and deliver to the Underwriter 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 twelve consecutive months beginning after the effective date of the Registration Statement, which shall satisfy the requirements of Section 11(a) of the Act. (i) The Company shall 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 Securities and the application of the proceeds therefrom as may be required pursuant to Rule 463 under the Act. (j) The Company will promptly 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 counsel to the Underwriter and counsel to the Company, may be reasonably necessary or advisable in connection with the distribution of the Shares and Warrants, and will use its best efforts to reservecause the same to become effective as promptly as possible. (k) The Company will reserve and keep available that maximum number of its authorized but unissued securities which are issuable upon exercise of the Underwriter's Option outstanding from time to time. (1) For a period of eighteen (18) months from the effective date of the Registration Statement, no shareholder prior to February 15the offering will, 2000directly or indirectly, a sufficient number publicly offer, sell (including any short sale), grant any option for the sale of, acquire any option to dispose of, 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 WarrantsUnderwriter, other than as set forth in the Registration Statement. The In order to enforce this covenant, the Company is currently organizing a stockholder meeting shall impose stop-transfer instructions with respect to increase the number of authorized shares of Common Stock of the Company, and has filed with the SEC owned by every shareholder prior to the date hereof a preliminary proxy statement offering until the end of such period (subject to any exceptions to such limitation on transferability set forth in connection the Registration Statement). If necessary to comply with any applicable Blue-sky Law, the shares held by such stockholder meetingshareholders will be escrowed with counsel for the Company or otherwise as required. (ii2) It except for the issuance of shares of capital stock by (m) Upon completion of this offering, the Company will maintain make all filings required, including registration under the Securities Exchange Act of 1934, to obtain the listing of the Shares and Warrants in the NASDAQ system, and will use its best efforts to effect and maintain such listing or a listing on a national securities exchange for at least five years from the date of this Agreement to the extent that the Company has at least 300 record holders of Common Stock on the OTC Bulletin BoardStock. (iiin) It Except for the transactions contemplated by this Agreement or as otherwise permitted by law, the Company represents that it has not taken and agrees that it will permit Subscriber not take, directly or indirectly, any action designed to exercise its right or which has constituted or which might reasonably be expected to exercise cause or result in the stabilization or manipulation of the price of the Shares or the Warrants by telecopying or to facilitate the sale or resale of the Securities. (o) On the First Closing Date and simultaneously with the delivery of the Shares and Warrants, the Company shall execute and deliver to you the Underwriter's Option. The Underwriter's Option will be substantially in the form filed as an executed and completed Notice of Exercise Exhibit to the Company and delivering the original Notice of Exercise and the original Warrant Registration Statement. (p) Intentionally Omitted (q) Prior to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to and received by First Closing Date, the Company will have in accordance with force key person life insurance on the provisions hereof shall be deemed an "Exercise Date". The Company will transmit the certificates representing shares life 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: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇Hansen and other management personnel in an amount of not less than $1,000,000.00, Interim Chief Executive Officerpayable to the Company, and will use its best efforts to maintain such insurance for a three year period. (r) So long as any Warrants are outstanding and the exercise price of the Warrants is less than the market price of the Common Stock, the Company shall use its best efforts to cause post-effective amendments to the Registration Statement to become effective in compliance with the 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 Underwriter and each dealer as many copies of each such Prospectus as such Underwriter or dealer may reasonably request. The Company shall not call for redemption any of the Warrants unless a registration statement covering the securities underlying the Warrants has been declared effective by the Commission and remains current at least until the date fixed for redemption. (s) For a period of five (5) years from the Effective Date, the 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 10-Q quarterly report and the mailing of quarterly financial information to stockholders, provided that the Company shall not be required to file a report of such accountants relating to such review with the Commission.

Covenants of the Company. For so long as any Securities held by Subscriber remain outstandingthe Investment Adviser and the Administrator. In further consideration of the agreements of the Underwriters herein contained, the Company acknowledgescovenants and agrees, representsand the Investment Adviser and the Administrator covenant and agree, warrants and agrees with the Underwriters as follows: (ia) The To notify the Underwriters as soon as practicable, and confirm such notice in writing, of the occurrence of any event during the period mentioned in Section 7(f) below which in the judgment of the Company makes any statement in the Registration Statement, the Time of Sale Prospectus, any Omitting Prospectus or the Prospectus untrue in any material respect or which requires the making of any change in or addition to the Registration Statement, the Time of Sale Prospectus, any Omitting Prospectus or the Prospectus in order to make the statements therein not misleading in any material respect. If at any time the Commission shall issue any order suspending the effectiveness of the Registration Statement, the Company will use its best efforts to reserveobtain the withdrawal of such order at the earliest possible moment. (b) Prior to the termination of the offering of the Notes, to comply with the requirements of Rule 430C and to promptly notify the Representative, and confirm the notice in writing, (i) when the Registration Statement, any Rule 462(b) Registration Statement or any post-effective amendment to the Registration Statement shall be declared or become effective, or when the Preliminary Prospectus, the Prospectus or any Omitting Prospectus or any amendment or supplement to any of the foregoing shall have been filed, (ii) of the receipt of any comments from the Commission relating to the Registration Statement (and shall promptly furnish the Representative with a copy of any comment letters and any transcript of oral comments, and shall furnish the Representative with copies of any written responses thereto a reasonable amount of time prior to the proposed filing thereof with the Commission and will not file any such response to which the Representative or counsel for the Underwriters shall reasonably object), (iii) if the Company becomes the subject of a proceeding under Section 8A of the Securities Act in connection with the offering of the Notes and (iv) 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 the Preliminary Prospectus, the Prospectus or any Omitting Prospectus or any amendment or supplement to any of the foregoing, or any notice from the Commission objecting to the use of the form of the Registration Statement or any post-effective amendment thereto, or of the suspension of the qualification of the Notes for offering or sale in any jurisdiction or of the loss or suspension of any purposes. (c) To furnish to the Representative in New York City, without charge, prior to February 1510:00 A.M. (New York City time) on the business day next succeeding the date of this Agreement and during the period mentioned in Section 7(f) below, 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 as many copies of the outstanding Warrants. Preliminary Prospectus, Prospectus and any supplements and amendments thereto or to the Registration Statement as the Representative may reasonably request. (d) Prior to the termination of the offering of the Notes, before amending or supplementing the Registration Statement (other than a post-effective amendment to the Company’s shelf registration statement on Form N-2 to update the financial information included therein, to respond to comments from the staff of the Commission and to make other non-material changes), the Preliminary Prospectus or the Prospectus, to furnish to the Representative a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which the Representative reasonably objects, and to file with the Commission within the applicable period specified in Rule 497 under the Securities Act any prospectus required to be filed pursuant thereto. (e) To furnish to the Representative a copy of each proposed Omitting 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 Omitting Prospectus to which the Representative reasonably objects. (f) If (i) the Time of Sale Prospectus is being used to solicit offers to buy the Notes at a time when the Prospectus is not yet available to prospective purchasers and (ii) (A) 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, not misleading, or (B) any event shall occur or condition exist as a result of which the Time of Sale Prospectus materially conflicts with the information contained in the Registration Statement then on file, or (C) in the reasonable opinion of either counsel for the Underwriters or counsel for the Company, 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 furnish, at its own expense, to the Underwriters and to any dealer 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 delivered to a prospective purchaser, be misleading or so that the Time of Sale Prospectus, as amended or supplemented, will no longer materially conflict with the Registration Statement, or so that the Time of Sale Prospectus, as amended or supplemented, will comply with applicable law, as applicable. (g) The Company will use the net proceeds received by it from the sale of the Notes in the manner specified in the Registration Statement and the Time of Sale Prospectus. (h) The Company and the Investment Adviser will not take any action designed to cause or result in the manipulation of the price of any security of the Company to facilitate the sale of Notes in violation of the Acts or the Exchange Act and the applicable Rules and Regulations, or the securities or “blue sky” laws of the various states and foreign jurisdictions in connection with the offer and sale of Notes. (i) If, during such period after the first date of the public offering of the Notes as in the reasonable opinion of either counsel for the Underwriters or counsel for the Company, the Prospectus is currently organizing required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a stockholder meeting result of which it is necessary to increase amend or supplement the number Prospectus in order to make the statements therein, in the light of authorized shares the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if, in the reasonable opinion of Common Stock either counsel for the Underwriters or counsel for the Company, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses the Representative will furnish to the Company) to which Notes may have been sold by the Representative on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with law, as applicable. (j) To endeavor to qualify the Notes for offer and sale under the securities or “blue sky” laws of such jurisdictions as the Underwriters shall reasonably request; provided, however, that the Company shall not be obligated to file any general consent of service of process or to qualify as a foreign entity or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. (k) Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of the obligations of the Company and the Investment Adviser under this Agreement, including: (i) the fees, disbursements and expenses of the Company’s counsel and the Company’s accountants in connection with the registration and delivery of the Notes under the Securities Act and all other fees or expenses in connection with the preparation and filing of the Registration Statement, the Preliminary Prospectus, the Time of Sale Prospectus, the Prospectus, and has filed any Omitting Prospectus prepared by or on behalf of, used by, or referred to by the Company and amendments and supplements to any of the foregoing, including all printing costs associated therewith, and the mailing and delivering of copies thereof to the Underwriters and dealers, in the quantities hereinabove specified, (ii) all costs and expenses related to the preparation, issuance, execution, authentication and delivery of the Notes to the Underwriters, (iii) the cost of printing or producing any “blue sky” memorandum in connection with the SEC prior to offer and sale of the date hereof a preliminary proxy statement Notes under state securities laws and all expenses in connection with the qualification of the Notes for offer and sale under state securities laws as provided in Section 7(j) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection with such stockholder meeting. qualification and in connection with the “blue sky” memorandum, (iiiv) It will maintain all filing fees and the reasonable fees and disbursements of counsel to the Underwriters incurred in connection with the review and qualification of the offering of the Notes by FINRA in an amount not to exceed $[ ], (v) all costs and expenses incident to listing of its Common Stock the Notes on the OTC Bulletin Board. NYSE, (iiivi) It will permit Subscriber to exercise its right to exercise all costs and expenses of qualifying 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, Notes for inclusion in the event that book-entry settlement system of DTC, (vii) 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 fees 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 disbursements of the Warrant exercised shall be delivered as follows: To Trustee, (viii) the Company: Spatializer Audio Laboratories, Inc. fees paid to ▇▇▇▇-▇▇▇▇▇ Ratings Company in connection with the rating of the Notes, (ix) the document production charges and expenses associated with printing this Agreement and (x) all other costs and expenses of the Company incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section 7(k). It is understood, however, that except as provided in this Section 7 and in Section 8 entitled “Indemnity and Contribution,” the Underwriters will pay all of their costs and expenses, including fees and disbursements of their counsel, transfer taxes payable on resale of any of the Notes by them, the travel and lodging expenses of the Representative in connection with any road show presentations, and any advertising expenses connected with any offers they may make. If this Agreement shall be terminated by the Underwriters because of any failure or refusal on the part of the Company, the Investment Adviser or the Administrator to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company, the Investment Adviser or the Administrator shall be unable to perform its obligations under this Agreement, the Company, the Investment Adviser and the Administrator, jointly and severally, will reimburse the Underwriters, severally, for all out-of-pocket accountable expenses (including the reasonable fees and disbursements of their counsel) actually incurred by the Underwriters in connection with this Agreement or the offering contemplated hereunder. (l) The Company will comply in all material respects with all applicable securities and other applicable laws, rules and regulations, including, without limitation, the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇▇ Fax: (Act, and will use reasonable efforts to cause the Company’s directors and officers, in their capabilities, as such, to comply with such laws, rules and regulations, including, without limitation, the provisions of ▇▇▇) ▇▇▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇Act. (m) The Company will use reasonable best efforts to comply with the requirements of Subchapter M of the Code to qualify as a regulated investment company under the Code, Interim Chief Executive Officerwith respect to any fiscal year in which the Company is an investment company registered under the Investment Company Act. (n) The Company, the Investment Adviser and the Administrator will use their reasonable efforts to perform all of the agreements required of them by this Agreement and discharge all conditions of theirs to closing as set forth in this

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 Act and of the securities or Blue Sky laws of the jurisdictions in which the Shares 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 Shares 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 Shares or subject itself to taxation, in any jurisdiction where it is not now so subject. In each jurisdiction where any of the Shares 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 Shares 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 Shares outstanding. The Company will notify the Underwriter immediately of, and confirm in writing, the suspension of qualification of the Shares or threat of such action in any Securities held jurisdiction. The Company will use its best efforts to qualify or register the Shares 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 making transactions and secondary trading of the Shares 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 Shares remain outstanding. (f) If at any time during the period that the delivery of a Prospectus relating to the Shares 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 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 one year from the Effective Date, the Company will, as followssoon as practicable, deliver to the Underwriter, without need of request: (i) The Company shall use its best efforts Copies of each report (financial or other) or proxy solicitation material mailed 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 security holders 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 After the listing 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 Common Stock principal financial or accounting officer or, in the alternative, a report on Form 10-Q or 10-QSB, as filed with the OTC Bulletin Board.Commission; (iii) It 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) During the period that the Company is required to furnish reports pursuant to paragraph h above, the Company will permit Subscriber to exercise notify you promptly of the commencement of any litigation or proceedings against the Company or any of its right to exercise officers. (j) The Company will apply the Warrants by telecopying an executed net proceeds from the sale of the Shares in the manner set forth under the caption "Use of Proceeds" in the Prospectus. (k) The Company shall cooperate with the Underwriter and completed Notice its counsel in connection with their investigation of Exercise to the Company and delivering the original Notice of Exercise related matters and the original Warrant shall furnish to the Company by overnight courier. Each business date on which a Notice of Exercise is telecopied to Underwriter or its counsel all such information and received by the Company in accordance with the provisions hereof shall documents as may be deemed an "Exercise Date". requested. (l) 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 Shares. (together with m) 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 unreasonably withhold your consent to a replacement. (n) The Company will pay, in addition to the Underwriter Commission and discount referred to in paragraph 3(a) and investment banking fee and non- accountable expense allowance (as described in paragraph 4(c) hereof), upon the closing of the sale of any of the Shares, unless otherwise limited by this Agreement, all other expenses related to the subject matter of this Agreement including: (i) all expenses incident to the issuance and delivery of the Shares; (ii) the expenses charged by the financial printer; (iii) 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 Shares for sale under the securities or blue sky laws of such states as the Underwriter may designate; (iv) the cost of all certificates representing the Warrants not so exercisedShares; and (v) to Subscriber via express courierthe fees and expenses of the Company's independent accounts, by electronic transfer or otherwise within three including the cost of "cold comfort" review. (3o) 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 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 Subsidiary will maintain through the portion Final Closing Date insurance of the Warrant exercised shall be delivered as follows: To the Company: Spatializer Audio Laboratories, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Interim Chief Executive Officertypes 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 will not, either prior to the Effective Date or thereafter during such period as the Prospectus is required by law to be delivered in connection with sales of the Shares by an underwriter or dealer, file any amendment or supplement to the Registration Statement or the Prospectus, unless a copy thereof shall first have been submitted to you within a reasonable period of time prior to the filing thereof and you shall not have objected thereto in good faith. (b) The Company will use its best efforts to reservecause the Registration Statement to become effective, prior and will notify you promptly, and will confirm such advice in writing, (i) when the Registration Statement has become effective and when any post-effective amendment thereto becomes effective, (ii) of any request by the Commission for amendments or supplements to February 15the Registration Statement or the Prospectus or for additional information, 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 (iii) of the outstanding Warrants. 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 the threat thereof, (iv) of the happening of any event during the period mentioned in the second sentence of Section 5(e) that in the judgment of the Company is currently organizing a stockholder meeting makes any statement made in the Registration Statement or the Prospectus untrue or that requires the making of any changes in the Registration Statement or the Prospectus in order to increase make the number statements therein, in light of authorized shares the circumstances in which they are made, not misleading, and (v) of Common Stock receipt by the Company or any representatives or attorney of the Company of any other communication from the Commission relating to the Company, and has filed with the SEC prior to Registration Statement, any preliminary prospectus or the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain Prospectus. If at any time the listing Commission shall issue any order suspending the effectiveness 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 Registration Statement, the Company and delivering will make every reasonable effort to obtain the original Notice withdrawal of Exercise and such order at the original Warrant to earliest possible moment. If the Company by overnight courier. Each business date on which a Notice has omitted any information from the Registration Statement pursuant to Rule 430A of Exercise is telecopied to the Rules and received by Regulations, the Company in accordance will use its best efforts 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 and make all requisite filings 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 Officerthe

Covenants of the Company. For so long The Company and the Bank covenant with the Agent as any follows: (a) The Company and the Bank will prepare and file such amendments or supplements to the Registration Statement, the Prospectus, the Conversion Application and the Proxy Statement as may hereafter be required by the Securities held Act Regulations or the Conversion Regulations or as may hereafter be requested by Subscriber remain outstandingthe Agent. Following completion of the Subscription and Community Offering, the Company acknowledgesand 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, representsany 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, warrants will, if required, 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 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 suspending the use of the Prospectus or any Issuer-Represented Free Writing Prospectus 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) 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 notified or will notify promptly the Agent so that any use of such Issuer-Represented Free Writing Prospectus may cease until it is amended or supplemented and the Company has promptly amended or will promptly amend or supplement such Issuer-Represented Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission; provided, however, that this covenant shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by the Agent expressly for use therein. (c) The Company represents and agrees that, unless it obtains the prior written consent of the Agent, and the Agent represents and agrees that, unless it obtains the prior written consent of the Company, it has not made and will not make any offer relating to the Securities that would constitute an “issuer free writing prospectus,” as follows:defined in Rule 433 of the Security Act Regulations, or that would constitute a “free writing prospectus,” as defined in Rule 405 of the Securities Act Regulations, 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 treated or agrees that it will treat each Permitted Free Writing prospectus as an “issuer free writing prospectus,” as defined in Rule 433 of the Security Act Regulations, 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. The Company represents that it has satisfied the conditions in Rule 433 to avoid a requirement to file with the Commission any electronic road show. (d) The Company and the Bank will give the Agent notice of its intention to file or prepare any amendment to the Holding Company Application, the Conversion Application or 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 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) or (c) 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. (e) The Company 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. (f) 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 OTS, by the applicable Conversion Regulations, as from time to time in force, and by the OTC Bulletin Board, 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 during such period in accordance with the provisions hereof and the Prospectus. (g) If any event or circumstance shall occur as a result of which it is necessary, in the 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 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 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. (h) 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 and the Bank shall not 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 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. (i) The Company authorizes Sandler ▇’▇▇▇▇▇ 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”). (j) 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 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 Rule 158 of the Securities Act Regulations) of the Registration Statement that will satisfy the provisions of Section 11(a) of the Securities Act. (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 its stockholders as soon as practicable after the end of each such fiscal year an annual report (including consolidated balance sheets and consolidated statements of income, stockholders’ equity and cash flows, 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), 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. (l) 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 or quoted, 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. (m) The Company and the Bank will conduct the Conversion 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 OTS. (n) 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.” (o) 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. (p) 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 reserve, prior to February 15, 2000, a sufficient number of shares of effect and maintain the listing for quotation the Common Stock from its authorized but unissued shares of Common Stock to permit on the exercise in full of OTC Bulletin Board for not less than three years and, once listed on the OTC Bulletin Board, the Company will comply with all of applicable corporate governance standards, if any, required by the outstanding WarrantsOTC Bulletin Board. The Company is currently organizing a stockholder meeting to increase the number of authorized shares of Common Stock of the Company, and has filed will file with the SEC prior to OTC Bulletin Board all documents and notices required by the date hereof a preliminary proxy statement in connection with such stockholder meeting. (ii) It will maintain the listing OTC Bulletin Board of its Common Stock companies that have issued securities that are traded on the OTC Bulletin Board. (iiiq) It The Company and the Bank will permit Subscriber take such actions and furnish such information as are reasonably requested by the Agent in order for the Agent to exercise its right to exercise ensure compliance with Rule 2790 of the Warrants by telecopying an executed FINRA’s Conduct Rules and completed Notice of Exercise to all related rules. (r) Other than in connection with any employee benefit plan or arrangement described in the Prospectus, the Company and delivering will not, without the original Notice prior written consent of Exercise and the original Warrant Agent, sell or issue, contract 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 sell or otherwise dispose of, any shares of Common Stock issuable upon exercise other than the Securities for a period of 180 days following the Closing Time. (s) 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 Warrants 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. (together t) The Company and the Bank will comply with the certificates representing conditions imposed by or agreed to with the Warrants OTS in connection with its approval of the Holding Company Application and the Conversion Application. (u) The Company shall not so exercised) to Subscriber via express courier, by electronic transfer or otherwise within three (3) business days after deliver 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 Securities until the Company and Subscriber shall the Bank have satisfied each be restored condition set forth in Section 5 hereof, unless such condition is waived in writing by the Agent. (v) The Company or the Bank will furnish 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. Sandler ▇’▇▇▇▇▇ ▇as early as practicable prior to the Closing Date, but no later than two (2) full business days prior thereto, a copy of the latest available unaudited interim financial statements of the Bank which have been read by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇& Company, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇LLP, ▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: as stated in their letters to be furnished pursuant to subsections (▇▇▇f) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇and (g) of Section 5 hereof. (w) 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 OTC Bulletin Board and the OTS. (x) 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. (y) 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. (z) 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. (aa) 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. (bb) 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.

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 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 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