<SEC-DOCUMENT>0001248915-13-000153.txt : 20131203
<SEC-HEADER>0001248915-13-000153.hdr.sgml : 20131203
<ACCEPTANCE-DATETIME>20131203114328
ACCESSION NUMBER:		0001248915-13-000153
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20131127
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Unregistered Sales of Equity Securities
ITEM INFORMATION:		Changes in Control of Registrant
ITEM INFORMATION:		Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20131203
DATE AS OF CHANGE:		20131203

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SPATIALIZER AUDIO LABORATORIES INC
		CENTRAL INDEX KEY:			0000890821
		STANDARD INDUSTRIAL CLASSIFICATION:	SEMICONDUCTORS & RELATED DEVICES [3674]
		IRS NUMBER:				954484725
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-26460
		FILM NUMBER:		131253660

	BUSINESS ADDRESS:	
		STREET 1:		2025 GATEWAY PLACE
		STREET 2:		SUITE 365
		CITY:			SAN JOSE
		STATE:			CA
		ZIP:			95110
		BUSINESS PHONE:		3102273370

	MAIL ADDRESS:	
		STREET 1:		2625 TOWNSGATE ROAD
		STREET 2:		SUITE 330
		CITY:			WESTLAKE VILLAGE
		STATE:			CA
		ZIP:			91361
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">CURRENT REPORT</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Date of Report (Date of earliest event reported): November 27, 2013</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">SPATIALIZER AUDIO LABORATORIES, INC.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Item 1.01. Entry into a Material Definitive Agreement</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">On November 27, 2013, Spatializer Audio Laboratories, Inc. A (the &#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Company</font>&#8221;) sold and issued 6,515,912 shares of the Company&#8217;s common stock (the &#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Control Shares</font>&#8221;), $0.01 par value per share, to Lone Star Value Investors, LP, a Delaware limited partnership (&#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Lone Star LP</font>&#8221;), with a primary business address at 53 Forest Avenue, First Floor, Old Greenwich, Connecticut 06870, for an aggregate purchase price of $100,000 pursuant to that certain Stock Purchase Agreement<font style="DISPLAY: inline; FONT-WEIGHT: bold"> </font>by and between the Company and Lone Star LP dated as of November 27, 2013 (the &#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Stock Purchase Agreement</font>&#8221;). A copy of the Stock Purchase Agreement is attached as <font style="DISPLAY: inline; FONT-WEIGHT: bold">Exhibit 10.1</font> hereto and incorporated by reference herein.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Also on November 27, 2013, and immediately after issuance of the Control Shares, the Company acquired (i) 2,334,516 shares of the Company&#8217;s common stock, representing approximately 19.23% of the then issued and outstanding shares of common stock, for $35,828 (approximately $0.0153 per share) from Greggory Schneider, and (ii) 4,181,396 shares of the Company&#8217;s common stock, representing approximately 34.44% of the then issued and outstanding shares of common stock, for $64,172 (approximately $0.0153 per share) from Jay Gottlieb (collectively, the &#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Company Redemptions</font>&#8221;) pursuant to that certain Stock Redemption Agreement<font style="DISPLAY: inline; FONT-WEIGHT: bold"> </font>by and between the Company and Mr. Schneider dated as of November 27, 2013 and that certain Stock Redemption Agreement by and between the Company and Mr. Gottlieb dated as of November 27, 2013 (together, the &#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Stock Redemption Agreements</font>&#8221;) respectively. A copy of each Stock Redemption Agreement is attached as <font style="DISPLAY: inline; FONT-WEIGHT: bold">Exhibits 10.2</font> and <font style="DISPLAY: inline; FONT-WEIGHT: bold">10.3</font> hereto and incorporated by reference herein. As a result of the Company Redemptions, the Company repurchased a total of 6,515,912 shares of the Company&#8217;s common stock for an aggregate purchase price of $100,000.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">As further disclosed under Item 5.02 of this Form 8-K, in connection with the transactions described in the Stock Purchase Agreement, Michael Pearce and Joshua Krom each resigned from the Company&#8217;s board of directors effective as of November 27, 2013 and Jeffrey E. Eberwein and Kyle Hartley were each appointed to the Company&#8217;s board of directors effective as of November 27, 2013. Additionally, also in connection with the transactions described in the Stock Purchase Agreement, Mr. Gottlieb resigned from his executive positions as President, Chief Executive Officer, Secretary and Treasurer of the Company and Mr. Schneider resigned from his executive position as Chief Financial Officer of the Company. Immediately following the resignations of Messrs. Gottlieb and Schneider Mr. Eberwein was appointed to the executive positions of President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer of the Company.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Item 3.02.</font> <font style="DISPLAY: inline; FONT-WEIGHT: bold">Unregistered Sales of Equity Securities</font>.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Pursuant to the Stock Purchase Agreement described under Item 1.01 of this Form 8-K, on November 27, 2013 the Company issued 6,515,912 shares of its common stock, $0.01 par value, to Lone Star for an aggregate purchase price of $100,000. All of the shares of the Company&#8217;s common stock issued pursuant to the Stock Purchase Agreement were issued pursuant to Section 4(2) or Regulation D of the Securities Act of 1933, as amended (the &#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Securities Act</font>&#8221;). Lone Star LP is an accredited investor, as defined under Rule 501 of the Securities Act. None of the securities issued is convertible.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Item 5.01. Change in Control of Registrant.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">As disclosed under Item 1.01 of this Form 8-K, the Company entered into those certain Stock Redemption Agreements and that certain Stock Purchase Agreement on November 27, 2013.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Lone Star LP purchased the Control Shares for cash consideration of $100,000 pursuant to the terms of the Stock Purchase Agreement. As a result of the Company Redemptions and Lone Star LP&#8217;s purchase of the Control Shares, Lone Star LP now owns approximately 53.66% of the Company&#8217;s issued and outstanding common stock. As a result, there has been a change in control of the Company.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Lone Star LP may, at a future date, transfer the Control Shares to an entity affiliated with Lone Star LP.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Except as otherwise described above and in Item 1.01, there are no arrangements or understandings among the members of both the former and new control groups and their associates with respect to election of directors or other matters. We are not aware of any other arrangements that might result in a change of control in the future.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">As the Company was a &#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">shell company</font>&#8221; as that term is defined in Rule 12b-2 of the Securities Exchange Act of 1934 (the &#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Exchange Act</font>&#8221;) immediately prior to this change of control, we are required to provide the additional information that would be required if we were filing a general form for registration of securities on Form 10 under the Exchange Act as a smaller reporting company.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Because the Company was a shell company immediately prior to the change in control described in Item 5.01 of this Form 8-K, the Company is providing the following information that would be required if the Company were filing a general form for registration of securities on Form 10.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Item 1. Business.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Following the change of control, the Company remains a &#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">shell company</font>&#8221; as that term is defined in the Exchange Act. Additional information about the Company including a description of our business and a history of the Company appears in our Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on February 28, 2013 (the &#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">2012 Annual Report</font>&#8221;).</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Employees</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">As of the date hereof, we have no employees.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Item 1A. Risk Factors.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">This information appears in our 2012 Annual Report.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Item 2. Financial Information.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">This information appears in our 2012 Annual Report and in our Form 10-Q for the quarter ended September 30, 2013, as filed with the Securities and Exchange Commission on November 6, 2013 (the &#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">September 10-Q</font>&#8221;).</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Item 3. Properties.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">This information appears in our 2012 Annual Report.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Item 4. Security Ownership of Certain Beneficial Owners and Management.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Principal shareholders</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The information in Item 3.02 of this Form 8-K, &#8220;Unregistered Sales of Equity Securities&#8221; and Item 1.01 of this Form 8-K, &#8220;Entry into a Material Definitive Agreement&#8221; is incorporated herein by reference.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Based on information available to the Company through filings with the Securities and Exchange Commission and information known to the Company, each of the following persons or groups beneficially owned 5% or more of the 12,142,025 shares of common stock outstanding as of November 27, 2013.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">On November 27, 2013 the Company acquired (i) 2,334,516 shares of the Company&#8217;s common stock, representing approximately 19.23% of the then issued and outstanding shares of common stock from Greggory Schneider, and (ii) 4,181,395 shares of the Company&#8217;s common stock, representing approximately 34.44% of the then issued and outstanding shares of common stock, from Jay Gottlieb (collectively, the &#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Company Redemptions</font>&#8221;) pursuant to those certain Stock Redemption Agreements<font style="DISPLAY: inline; FONT-WEIGHT: bold"> </font>further<font style="DISPLAY: inline; FONT-WEIGHT: bold"> </font>described under Item 1.01 of this Form 8-K.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Also on November 27, 2013, and immediately after the Company Redemptions, the Company sold and issued 6,515,912 shares of the Company&#8217;s common stock, $0.01 par value per share, to Lone Star LP, for an aggregate purchase price of $100,000 (the &#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Stock Purchase</font>&#8221;) pursuant to that certain Stock Purchase Agreement<font style="DISPLAY: inline; FONT-WEIGHT: bold"> </font>further<font style="DISPLAY: inline; FONT-WEIGHT: bold"> </font>described under Item 1.01 of this Form 8-K.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Following the consummation of the Company Redemptions and the Stock Purchase, the number of shares outstanding of the Company&#8217;s common stock as of November 27, 2013 was 12,142,025, based on information available to the Company through filings with the Securities and Exchange Commission and information known to the Company.</font></div>

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<table cellpadding="0" cellspacing="0" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr>
<td align="left" valign="top" width="37%" style="BORDER-BOTTOM: black 2px solid; BORDER-TOP: black 0.5pt solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Name and Address of Beneficial Owner</font></div>
</td>
<td align="left" valign="top" width="25%" style="BORDER-BOTTOM: black 2px solid; BORDER-TOP: black 0.5pt solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Amount and Nature of Beneficial Ownership</font></div>
</td>
<td align="left" valign="top" width="17%" style="BORDER-BOTTOM: black 2px solid; BORDER-TOP: black 0.5pt solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Percent of Class</font></div>
</td>
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<td align="left" valign="top" width="37%" style="PADDING-BOTTOM: 2px">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Lone Star Value Investors, LP(1)</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">53 Forest Avenue, First Floor</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Old Greenwich, CT 06870</font></div>
</td>
<td align="left" valign="top" width="25%">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">6,515,912</font></div>
</td>
<td align="left" valign="top" width="17%">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">53.66%</font></div>
</td>
</tr></table>
</div>

<div>
<table cellpadding="0" cellspacing="0" id="list" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
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<div><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(1) </font></div>
</td>
<td>
<div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Lone Star Value Investors GP, LLC, a Delaware limited liability company (&#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Lone Star GP</font>&#8221;), serves as the general partner of Lone Star LP. Lone Star Value Management, LLC, a Connecticut limited liability company (&#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Lone Star Management</font>&#8221;), serves as the investment manager of Lone Star LP. Jeffrey E. Eberwein serves as the manager of Lone Star GP and sole member of Lone Star Management. As general partner of Lone Star LP, Lone Star GP may be deemed to be a beneficial owner of the shares held by Lone Star LP. As investment manager of Lone Star LP, Lone Star Management may be deemed to be a beneficial owner of the shares held by Lone Star LP. As manager of Lone Star GP and sole member of Lone Star Management, Mr. Eberwein may be deemed to be a beneficial owner of the shares held by Lone Star LP.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Security Ownership of Management</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The information in Item 5.02 of this Form 8-K &#8220;Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers&#8221; is incorporated herein by reference.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">As of November 27, 2013, the amount of common stock owned by the directors of the Company was:</font></div>

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<div>
<table cellpadding="0" cellspacing="0" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr>
<td align="left" valign="top" width="37%" style="BORDER-BOTTOM: black 2px solid; BORDER-TOP: black 0.5pt solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Name of Individual or Group</font></div>
</td>
<td align="left" valign="top" width="25%" style="BORDER-BOTTOM: black 2px solid; BORDER-TOP: black 0.5pt solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Amount and Nature of Beneficial Ownership</font></div>
</td>
<td align="left" valign="top" width="17%" style="BORDER-BOTTOM: black 2px solid; BORDER-TOP: black 0.5pt solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Percent of Class</font></div>
</td>
</tr><tr>
<td align="left" valign="top" width="37%" style="BORDER-BOTTOM: black 2px solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Jeffrey E. Eberwein (1)</font></div>
</td>
<td align="left" valign="top" width="25%" style="BORDER-BOTTOM: black 2px solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">6,515,912</font></div>
</td>
<td align="left" valign="top" width="17%" style="BORDER-BOTTOM: black 2px solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">53.66%</font></div>
</td>
</tr><tr>
<td align="left" valign="top" width="37%" style="BORDER-BOTTOM: black 2px solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Greggory Schneider</font></div>
</td>
<td align="left" valign="top" width="25%" style="BORDER-BOTTOM: black 2px solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">427,250</font></div>
</td>
<td align="left" valign="top" width="17%" style="BORDER-BOTTOM: black 2px solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">3.52%</font></div>
</td>
</tr><tr>
<td align="left" valign="top" width="37%" style="BORDER-BOTTOM: black 2px solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Jay Gottlieb</font></div>
</td>
<td align="left" valign="top" width="25%" style="BORDER-BOTTOM: black 2px solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">486,649</font></div>
</td>
<td align="left" valign="top" width="17%" style="BORDER-BOTTOM: black 2px solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">4.01%</font></div>
</td>
</tr><tr>
<td align="left" valign="top" width="37%" style="BORDER-BOTTOM: black 2px solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">All executive officers and directors as a group</font></div>
</td>
<td align="left" valign="top" width="25%" style="BORDER-BOTTOM: black 2px solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">7,429,811</font></div>
</td>
<td align="left" valign="top" width="17%" style="BORDER-BOTTOM: black 2px solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">61.19%</font></div>
</td>
</tr></table>
</div>

<div>
<table cellpadding="0" cellspacing="0" id="list" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr valign="top">
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<div><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(1) </font></div>
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<td>
<div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Lone Star LP holds title to the 6,515,912 shares disclosed above. Lone Star Value Investors GP, LLC, a Delaware limited liability company (&#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Lone Star GP</font>&#8221;), serves as the general partner of Lone Star LP. Lone Star Value Management, LLC, a Connecticut limited liability company (&#8220;<font style="FONT-STYLE: italic; DISPLAY: inline">Lone Star Management</font>&#8221;), serves as the investment manager of Lone Star LP. Jeffrey E. Eberwein serves as the manager of Lone Star GP and sole member of Lone Star Management. As general partner of Lone Star LP, Lone Star GP may be deemed to be a beneficial owner of the shares held by Lone Star LP. As investment manager of Lone Star LP, Lone Star Management may be deemed to be a beneficial owner of the shares held by Lone Star LP. As manager of Lone Star GP and sole member of Lone Star Management, Mr. Eberwein may be deemed to be a beneficial owner of the shares held by Lone Star LP.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Item 5. Directors and Executive Officers.</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block"><br>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The information in Item 5.02 of this Form 8-K &#8220;Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers&#8221; is incorporated herein by reference</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block"><br>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The following table sets forth the name, age and position with the Company of (i) each of the persons appointed to the Company&#8217;s Board of Directors and (ii) each of the persons appointed as Executive Officer(s) of the Company as described herein as of the date hereof:</font></div>

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<td align="left" valign="top" width="20%" style="BORDER-BOTTOM: black 2px solid; BORDER-TOP: black 0.5pt solid">
<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">NAME</font></div>
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<td align="left" valign="top" width="7%" style="BORDER-BOTTOM: black 2px solid; BORDER-TOP: black 0.5pt solid">
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Jeffrey E. Eberwein has 20 years of Wall Street experience and is the Founder and CEO of Lone Star Value Management, LLC, an investment firm. Prior to founding Lone Star Value Management, LLC in January 2013, Mr. Eberwein was a Portfolio Manager at Soros Fund Management from January 2009 to December 2011 and Viking Global Investors from March 2005 to September 2008. Mr. Eberwein is Chairman of the Board of Digirad Corporation, a medical imaging company; Chairman of the Board of Crossroads Systems, Inc., a data storage company; and Chairman of the Board of Aetrium Incorporated, a semiconductor company. Mr. Eberwein also serves on the Boards of NTS, Inc. and On Track Innovations Ltd. Mr. Eberwein served on the Board of The Goldfield Corporation from May 2012 until May 2013. Mr. Eberwein is the Treasurer and serves on the Executive Committee of the Board of Hope for New York, a 501(c)3 organization dedicated to serving the poor in New York City. Mr. Eberwein earned an MBA from The Wharton School, University of Pennsylvania and a BBA with High Honors from The University of Texas at Austin.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Jay A. Gottlieb is a private investor in various companies since 1998. He is involved in analysis and investment in undervalued special situations and shell corporations. He presently owns between 5% and 25% of several public companies and from 2008 to 2010 was a member of the Board of Directors of Golf Trust of America, Inc. (NYSE Amex: GTA). From 1992 to 1998 he was the editor of an investment service that analyzed and published extensive data on companies planning initial public offerings. From 1977 to 1991, Mr. Gottlieb was the President and Chairman of the Board of The Computer Factory, Inc. (NYSE), a nationwide organization involved in retail and direct sales, servicing and leasing of personal computers. From 1969 to 1988, he was President of National Corporate Sciences, Inc., a registered investment advisory service. Mr. Gottlieb holds a Bachelor of Arts degree from New York University.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Greggory Schneider is a private investor who specializes in undervalued publicly traded securities. During the past seventeen years, Mr. Schneider has been an active dealer in numismatic items, specializing in U.S. rare coins and currency. Mr. Schneider attended two years of courses at UCLA and is involved in several charitable organizations.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Kyle Hartley is the chief operating officer of Lone Star Value Management, LLC. Mr. Hartley has over 15 years of experience in the investment industry, including more than 11 years in senior management positions at alternative investment firms. Prior to joining Lone Star Value Management, LLC in May 2013, Mr. Hartley was the CFO/COO of Greenheart Capital Partners, a global emerging market long/short equity hedge fund firm spun out of Shumway Capital. From March 2008 through November 2011, Mr. Hartley was the CFO/COO/CCO of Apis Capital Advisors, a $750 million (peak AUM) global long/short equity hedge fund firm investing primarily in small cap value equities. From April 2006 through March 2008, Mr. Hartley served as the head of Marketing and Client Services at Mercury Partners, a $1 billion+ global long/short equity hedge fund firm focused on the real estate sector. From June 2004 to March 2006, Mr. Hartley was a Managing Director, the head of operational due diligence and a member of the Investment Committee of Taylor Investment Advisors, a hedge fund investment firm founded by the late Tommy Taylor. Mr Hartley&#8217;s initial position in the hedge fund industry was as the CFO/COO of CQ Capital, a long/short equity, technology-media- telecom sector hedge fund firm from 2002 to 2004. Prior to CQ Capital, Mr. Hartley served as a Director of Business Development at Greenwich Associates, a financial industry market-research and consulting firm, and as a Vice President in the Investment Banking division of Forum Capital Markets prior to its acquisition by First Union Securities. Mr. Hartley started his career at Clarion Marketing and Communications where he earned four promotions to Account Supervisor from 1992 to 1997. Mr. Hartley earned an MBA with Distinction from New York University&#8217;s Leonard N. Stern School of Business, and a BA from Dartmouth College.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">As set forth under Item 4 above, the Company and Messrs. Gottlieb, Schneider and Lone Star are parties to those certain Stock Redemption Agreements and Stock Purchase Agreement, respectively, which Stock Redemption Agreements and Stock Purchase Agreement are attached as <font style="DISPLAY: inline; FONT-WEIGHT: bold">Exhibits 10.1, 10.2</font> and <font style="DISPLAY: inline; FONT-WEIGHT: bold">10.3</font> to this Form 8-K.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Article IX of the Company&#8217;s Certificate of Incorporation, as amended, and Article VI of the Company&#8217;s bylaws, as amended, provide that the Company shall indemnify and hold harmless its officers and directors to the fullest extent allowed by law. In addition, Article X of the Company&#8217;s Certificate of Incorporation, provides that, to the fullest extent permitted by Delaware law, a director of the Company shall not be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 145 of the DGCL empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. Depending on the character of the proceeding, a corporation may indemnify against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person identified acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Section 145 further provides that to the extent a present or former director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter herein, he or she shall be indemnified against expense (including attorneys&#8217; fees) actually and reasonably incurred by him or her in connection therewith. The statute provides that indemnification pursuant to its provisions is not exclusive of other rights of indemnification to which a person may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Item 5.02.</font> <font style="DISPLAY: inline; FONT-WEIGHT: bold">Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In connection with the Stock Purchase Agreement described under Item 1.01 of this Form 8-K, Michael Pearce and Joshua Krom each resigned from the Company&#8217;s board of directors effective as of November 27, 2013. Effective as of November 27, 2013 and as permitted under Delaware law and specific provisions of the Company&#8217;s bylaws, each of Jeffrey E. Eberwein and Kyle Hartley were appointed to the Company&#8217;s board of directors to fill the vacancies resulting from Messrs. Pearce and Krom&#8217;s resignations. None of the resigning directors had any disagreements with the Company or any other member of the board of directors.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In addition, also in connection with the Stock Purchase Agreement, Mr. Gottlieb resigned from his executive positions as President, Chief Executive Officer, Secretary and Treasurer of the Company and Mr. Schneider resigned from his position as Chief Financial Officer of the Company. In addition, Mr. Gottlieb resigned as Chairman of the board of directors, but shall remain a member of the board of directors.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Mr. Eberwein was appointed, immediately following the effectiveness of Mr. Gottlieb&#8217;s and Mr. Schneider&#8217;s resignation, to the executive positions of President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer of the Company. In addition, Mr. Eberwein was appointed Chairman of the board of directors.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-WEIGHT: bold">THIS STOCK PURCHASE AGREEMENT </font>(the &#8220;Agreement&#8221;) is entered into and effective as of November 27, 2013 by and between SPATIALIZER AUDIO LABORATORIES, INC., a Delaware corporation with a business address at 410 Park Avenue &#8211; 15<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">th</font> floor, New York, New York 10022 (the &#8220;Company&#8221;), and LONE STAR VALUE INVESTORS, LP, a Delaware limited partnership, with a primary business address at 53 Forest Avenue, First Floor, Old Greenwich, Connecticut 06870 (the &#8220;Purchaser&#8221;). The Company and the Purchaser are sometimes referred to collectively herein as the &#8220;Parties&#8221; and individually as a &#8220;Party&#8221;.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-WEIGHT: bold">WHEREAS</font>, the Company desires to sell to Purchaser 6,515,912 shares (the &#8220;Shares&#8221;) of common stock of the Company, $0.01 par value per share (the &#8220;Common Stock&#8221;), on the terms and conditions hereinafter set forth, and the Purchaser desires to acquire the Shares;</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-WEIGHT: bold">NOW, THEREFORE</font>, for and in consideration of the premises and the mutual covenants hereinafter set forth, the Parties do hereby agree as follows:</font></div>

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<div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">1. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Subscription/Purchase of Shares</font>. Subject to the terms and conditions hereinafter set forth, the Purchaser hereby subscribes for and agrees to purchase from the Company the Shares, at an aggregate purchase price of $100,000.00 (the &#8220;Purchase Price&#8221;), and the Company agrees to sell and issue the Shares to the Purchaser for the Purchase Price. The Purchaser has hereby delivered and paid to the Company concurrently herewith the Purchase Price by wire transfer of immediately available funds to an account or accounts designated by the Company. Promptly after the date hereof, the certificate for the Shares will be delivered by the Company to the Purchaser.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Representations, Warranties and Covenants of Purchaser</font>. The Purchaser hereby acknowledges, represents and warrants to, and agrees with the Company as follows:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(a) The Purchaser is an &#8220;accredited investor&#8221; as defined by Rule 501 under the Securities Act of 1933, as amended (the &#8220;Act&#8221;), and the Purchaser is capable of evaluating the merits and risks of the Purchaser&#8217;s investment in the Company and has the capacity to protect the Purchaser&#8217;s own interests.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(b) The Purchaser understands that the Shares to be purchased have not been, and will not be, registered under the Act or the securities laws of any state by reason of a specific exemption from the registration provisions of the Act and the applicable state securities laws, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser&#8217;s representations as expressed herein.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(c) Purchaser acknowledges and understands that the Shares are being purchased for Purchaser&#8217;s own account for investment purposes and not with a view to distribution or resale, nor with the intention of selling, transferring or otherwise disposing of all or any part of the Shares for any particular price, or at any particular time, or upon the happening of any particular event or circumstances, except selling, transferring, or disposing the Shares made in full compliance with all applicable provisions of the Act, the rules and regulations promulgated by the Securities and Exchange Commission (&#8220;SEC&#8221;) thereunder, and applicable state securities laws; and that the Shares are not liquid investments.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(e) The Purchaser acknowledges that the Purchaser has had the opportunity to ask questions of, and receive answers from the Company or any person acting on its behalf concerning the Company and its business and to obtain any additional information, to the extent possessed by the Company (or to the extent it could have been provided by the Company without unreasonable effort or expense) necessary to verify the accuracy of the information received by the Purchaser. In connection therewith, the Purchaser acknowledges that the Purchaser has had the opportunity to discuss the Company&#8217;s business, management and financial affairs with the Company&#8217;s management or any person acting on its behalf. The Purchaser has received and reviewed all the information, both written and oral, that it desires. Without limiting the generality of the foregoing, the Purchaser has been furnished with or has had the opportunity to acquire, and to review, (i) copies of the Company&#8217;s most recent Annual Report on Form 10-K filed with the SEC and any Form 10-Q and Form 8-K filed thereafter (the &#8220;SEC Filings&#8221;), and other publicly available documents, and (ii) all information, both written and oral, that it desires with respect to the Company&#8217;s business, management, financial affairs and prospects. In determining whether to make this investment, the Purchaser has relied solely on the Purchaser&#8217;s own knowledge and understanding of the Company and its business based upon the Purchaser&#8217;s own due diligence investigations and the information furnished pursuant to this paragraph. The Purchaser understands that no person has been authorized to give any information or to make any representations which were not furnished pursuant to this paragraph and the Purchaser has not relied on any other representations or information.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(f) The Purchaser has all requisite legal and other power and authority to execute and deliver this Agreement and to carry out and perform the Purchaser&#8217;s obligations under the terms of this Agreement. This Agreement constitutes a valid and legally binding obligation of the Purchaser, enforceable in accordance with its terms, and subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other general principals of equity, whether such enforcement is considered in a proceeding in equity or law.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(g) The Purchaser has not, and will not, incur, directly or indirectly, as a result of any action taken by the Purchaser, any liability for brokerage or finders&#8217; fees or agents&#8217; commissions or any similar charges in connection with this Agreement.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(i) There are no actions, suits, proceedings or investigations pending against the Purchaser or the Purchaser&#8217;s properties before any court or governmental agency (nor, to the Purchaser&#8217;s knowledge, is there any threat thereof) which would impair in any way the Purchaser&#8217;s ability to enter into and fully perform the Purchaser&#8217;s commitments and obligations under this Agreement or the transactions contemplated hereby.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(j) The execution, delivery and performance of and compliance with this Agreement, and the issuance of the Shares will not result in any material violation of, or conflict with, or constitute a material default under, any of the Purchaser&#8217;s material agreements nor result in the creation of any mortgage, pledge, lien, encumbrance or charge against any of the assets or properties of the Purchaser or the Shares.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(k) Purchaser acknowledges that the Shares are speculative and involve a high degree of risk and that the Purchaser can bear the economic risk of the purchase of the Shares, including a total loss of his investment.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(l) The Purchaser recognizes that no federal, state or foreign agency has recommended or endorsed the purchase of the Shares.</font></div>

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<div align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#8220;The securities represented by this certificate have not been registered under the Securities Act of 1933. The securities have been acquired for investment and may not be sold, transferred or assigned in the absence of an effective registration statement for these securities under the Securities Act of 1933 or an opinion of the Company&#8217;s counsel that registration is not required under said Act.&#8221;</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(n) In addition, the certificates representing the Shares, and any and all securities issued in replacement thereof or in exchange therefor, shall bear such legend as may be required by the securities laws of the jurisdiction in which the Purchaser resides.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(o) Purchaser acknowledges that Purchaser has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Shares and of making an informed investment decision.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(p) Purchaser represents that (i) Purchaser could be reasonably assumed to have the capacity to protect his/her/its own interests in connection with this subscription; or (ii) Purchaser has a pre-existing personal or business relationship with either the Company or an affiliate thereof of such duration and nature as would enable a reasonably prudent purchaser to be aware of the character, business acumen and general business and financial circumstances of the Company or such affiliate and is otherwise personally qualified to evaluate and assess the risks, nature and other aspects of this subscription.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>3. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Representations and Warranties of the Company</font>. The Company hereby acknowledges, represents and warrants to, and agrees with the Purchaser as follows: </font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(a) The Company has been duly organized, is validly existing and is in good standing under the laws of the State of Delaware. The Company has full corporate power and authority to enter into this Agreement and this Agreement has been duly and validly authorized, executed and delivered by the Company and is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforcement may be limited by the United States Bankruptcy Code and laws effecting creditors rights, generally.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(c) The execution and delivery by the Company of, and the performance by the Company of its obligations under this Agreement in accordance with the terms of this Agreement will not contravene any provision of applicable law or the charter documents of the Company or any agreement or other instrument binding upon the Company, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement in accordance with the terms of this Agreement.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(d) The Common Stock is registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the &#8220;Exchange Act&#8221;), and, as such, the Company is required to file periodical and other reports under Section 13 of the Exchange Act (the &#8220;Exchange Act Reports&#8221;).</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt">(f) </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">The Company&#8217;s existing indebtedness, payables and/or other accrued financial obligations are specifically set forth in </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Schedule A </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">annexed hereto. Except as set forth in therein, the Company is not subject to any liability (including, to the Company&#8217;s knowledge, unasserted claims), absolute or contingent, which i</font>s not shown or which is in excess of amounts shown therein.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(i) All of the outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid, non-assessable and free of preemptive or similar rights. As of the date hereof, 300,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock, $0.01 par value per share (the &#8220;Preferred Stock&#8221;) are authorized, of which 12,142,025 shares of Common Stock (excluding treasury shares) and no shares of Preferred Stock are issued and outstanding. The Company does not have any class of authorized stock other than Common Stock and Preferred Stock. The Shares have been duly authorized and, when issued and delivered as provided by this Agreement, will be validly issued and fully paid and non-assessable, and the Shares are not subject to any preemptive or similar rights. Subject to </font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(m) The financial statements set forth in the SEC Filings fairly present the financial position and the results of operations of the Company, at the dates and periods therein specified. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the respective periods involved and are complete and accurate and are in accordance with the books and records of the Company. Since September 30, 2013 and except as otherwise reflected in the SEC Filings, the Company: (a) has not entered into any transaction outside of the ordinary course of business except pursuant to this Agreement; or (b) suffered any material adverse change in its financial condition or results of operations, except as set forth in <font style="DISPLAY: inline; FONT-WEIGHT: bold">Schedule A</font>.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Use of Proceeds</font>. Upon receipt by the Company, the proceeds obtained by the Company in connection with the sale of securities contemplated by this Agreement shall immediately be applied as required to redeem the shares of Common Stock as provided for in Section 5(d) hereof.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(b) Greggory Schneider is resigning, effective immediately, from his executive position as Chief Financial Officer of the Company, Mr. Schneider shall remain a director on the Board of Directors;</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(d) Each of Michael Pearce and Joshua Krom is resigning, effective immediately, from the Board of Directors, and two designees of the Purchaser shall be appointed, effective immediately, to the Board to fill two of such vacancies;</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>8. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Further Assurances</font>. Following the date hereof, each of the Parties hereto shall execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.<a name="a767302"><!--EFPlaceholder--></a></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>13. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Amendment and Modification; Waiver</font>. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party hereto. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.<a name="a501199"><!--EFPlaceholder--></a></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>14. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Severability</font>. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.<a name="a674691"><!--EFPlaceholder--></a></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>15. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Governing Law; Submission to Jurisdiction</font>. This Agreement shall be governed by and construed in accordance with the internal laws of Delaware without giving effect to any choice or conflict of law provision or rule (whether of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of Delaware. Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States or the courts of Delaware in each case located in Delaware, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by mail to such Party&#8217;s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.</font></div>

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<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>exhibit10-2.htm
<DESCRIPTION>STOCK REDEMPTION AGREEMENT (GOTTLIEB)
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-WEIGHT: bold">THIS STOCK REDEMPTION AGREEMENT</font> (the &#8220;Agreement&#8221;) is entered into and effective as of November 27, 2013 by and between SPATIALIZER AUDIO LABORATORIES, INC., a Delaware corporation with a business address at 410 Park Avenue &#8211; 15<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">th</font> floor, New York, New York 10022 (the &#8220;Company&#8221;), and JAY GOTTLIEB, an individual residing 30 Stonygate Oval, New Rochelle, New York 10804 (the &#8220;Redeeming Stockholder&#8221;). The Company and the Redeeming Stockholder are sometimes referred to collectively herein as the &#8220;Parties&#8221; and individually as a &#8220;Party&#8221;.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-WEIGHT: bold">WHEREAS</font>, the Company desires to acquire from the Redeeming Stockholder 4,181,396 shares (the &#8220;Shares&#8221;) of the common stock of the Company, $0.01 par value per share, on the terms and conditions hereinafter set forth, and the Redeeming Stockholder desires to have the Shares redeemed;</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-WEIGHT: bold">NOW, THEREFORE</font>, for and in consideration of the premises and the mutual covenants hereinafter set forth, the Parties do hereby agree as follows:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>1. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Redemption of Shares</font>. Subject to the terms and conditions hereinafter set forth, the Company hereby agrees to acquire from the Redeeming Stockholder the Shares, at a price in cash equal to $64,172 in the aggregate (or approximately $0.0153 per share) (the &#8220;Redemption Price&#8221;), <font style="FONT-STYLE: italic; DISPLAY: inline">less</font> an amount equal to 32.1% of the legal fees incurred by the Company in connection with the transactions contemplated by this Agreement and the Stock Purchase Agreement by and between the Company and Lone Star Value Investors, LP dated as of the date hereof (the &#8220;Expense Adjustment&#8221;), and the Redeeming Stockholder agrees to sell the Shares to the Company for such Redemption Price less the Expense Adjustment. The certificates reflecting the Shares will be surrendered and delivered by the Redeeming Stockholder contemporaneously herewith, along with a duly executed stock power with Medallion Guarantee, in exchange for the Redemption Price (less the Expense Adjustment) which shall be paid by wire transfer of immediately available funds contemporaneously therewith to an account or accounts designated by the Redeeming Stockholder.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Representations and Warranties of the Company</font>. The Company represents and warrants to the Redeeming Stockholder as follows:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(a) The Company has all requisite corporate power and authority to execute and deliver this Agreement, to carry out its obligations hereunder, and to consummate the transactions contemplated hereby. The Company has obtained all necessary approvals for the execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and (assuming due execution and delivery by the Redeeming Stockholder) constitutes the Company&#8217;s legal, valid and binding obligation, enforceable against the Company in accordance with its terms.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(b) The Shares have been duly authorized, are validly issued, fully paid and non-assessable, and are owned of record and beneficially by the Redeeming Stockholder, free and clear of all liens, pledges, security interests, charges, claims, encumbrances, agreements, options, voting trusts, proxies and other arrangements or restrictions of any kind (the &#8220;Encumbrances&#8221;).</font></div>

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<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>exhibit10-3.htm
<DESCRIPTION>STOCK REDEMPTION AGREEMENT (SCHNEIDER)
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-WEIGHT: bold">THIS STOCK REDEMPTION AGREEMENT</font> (the &#8220;Agreement&#8221;) is entered into and effective as of November 27, 2013 by and between SPATIALIZER AUDIO LABORATORIES, INC., a Delaware corporation with a business address at 410 Park Avenue &#8211; 15<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">th</font> floor, New York, New York 10022 (the &#8220;Company&#8221;), and GREGGORY SCHNEIDER, an individual residing 21516 Pacific Coast Highway, Malibu, California 90265 (the &#8220;Redeeming Stockholder&#8221;). The Company and the Redeeming Stockholder are sometimes referred to collectively herein as the &#8220;Parties&#8221; and individually as a &#8220;Party&#8221;.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-WEIGHT: bold">WHEREAS</font>, the Company desires to acquire from the Redeeming Stockholder 2,334,516 shares (the &#8220;Shares&#8221;) of the common stock of the Company, $0.01 par value per share, on the terms and conditions hereinafter set forth, and the Redeeming Stockholder desires to have the Shares redeemed;</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>1. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Redemption of Shares</font>. Subject to the terms and conditions hereinafter set forth, the Company hereby agrees to acquire from the Redeeming Stockholder the Shares, at a price in cash equal to $35,828.00 in the aggregate (or approximately $0.0153 per share) (the &#8220;Redemption Price&#8221;), <font style="FONT-STYLE: italic; DISPLAY: inline">less</font> an amount equal to 17.9% of the legal fees incurred by the Company in connection with the transactions contemplated by this Agreement and the Stock Purchase Agreement by and between the Company and Lone Star Value Investors, LP dated as of the date hereof (the &#8220;Expense Adjustment&#8221;), and the Redeeming Stockholder agrees to sell the Shares to the Company for such Redemption Price less the Expense Adjustment. The certificates reflecting the Shares will be surrendered and delivered by the Redeeming Stockholder contemporaneously herewith, along with a duly executed stock power with Medallion Guarantee, in exchange for the Redemption Price (less the Expense Adjustment) which shall be paid by wire transfer of immediately available funds contemporaneously therewith to an account or accounts designated by the Redeeming Stockholder.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(e) No broker, finder or investment banker is entitled to any brokerage, finder&#8217;s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>3. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Representations and Warranties of the Redeeming Stockholder</font>. The Redeeming Stockholder represents and warrants to the Company as follows:</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(a) The Redeeming Stockholder has all requisite power and authority to execute and deliver this Agreement, to carry out his obligations hereunder, and to consummate the transactions contemplated hereby. The Redeeming Stockholder has obtained all necessary approvals for the execution and delivery of this Agreement, the performance of his obligations hereunder, and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Redeeming Stockholder and (assuming due execution and delivery by the Company) constitutes the Redeeming Stockholder&#8217;s legal, valid and binding obligation, enforceable against the Redeeming Stockholder in accordance with its terms.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>5. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Indemnification</font>. Each Party shall indemnify the other and hold the other Party harmless against and in respect of any and all losses, liabilities, damages, obligations, claims, costs and expenses (including, without limitation, reasonable attorneys&#8217; fees) incurred by either Party resulting from any breach of any representation, warranty, covenant or agreement made by the other Party herein or in any instrument or document delivered by the other Party pursuant hereto.<a name="a472718"><!--EFPlaceholder--></a></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>6. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Further Assurances</font>. Following the date hereof, each of the Parties hereto shall execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.<a name="a767302"><!--EFPlaceholder--></a></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><a name="a785549"><!--EFPlaceholder--></a>7. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Notices</font>. All notices, requests, consents, claims, demands, waivers and other communications hereunder (each, a <font style="DISPLAY: inline; FONT-WEIGHT: bold">&#8220;</font>Notice&#8221;)<font style="DISPLAY: inline; FONT-WEIGHT: bold"> </font>shall be in writing and addressed to the Parties at the addresses set forth on the first page of this Agreement (or to such other address that may be designated by the receiving Party from time to time in accordance with this section). All Notices shall be delivered by personal delivery, nationally recognized overnight courier (with all fees pre-paid), facsimile or e-mail of a PDF document (with confirmation of transmission) or certified or registered mail (in each case, return receipt requested, postage prepaid). Except as otherwise provided in this Agreement, a Notice is effective only (a) upon receipt by the receiving Party, and (b) if the Party giving the Notice has complied with the requirements of this Section.<a name="a447792"><!--EFPlaceholder--></a></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>13. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Governing Law; Submission to Jurisdiction</font>. This Agreement shall be governed by and construed in accordance with the internal laws of Delaware without giving effect to any choice or conflict of law provision or rule (whether of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of Delaware. Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States or the courts of Delaware in each case located in Delaware, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by mail to such Party&#8217;s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.<a name="a685372"><!--EFPlaceholder--></a></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>14. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Counterparts</font>. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>15. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Legal Counsel</font>. Each of the Parties hereto represents, warrants and covenants that it has had ample opportunity to consider entering into this Agreement and has had an opportunity to consult with counsel regarding this Agreement prior to executing the same. The Redeeming Stockholder understands and agrees that Kaye Cooper Kay &amp; Rosenberg, LLP, the draftsperson of this Agreement, has prepared this Agreement on behalf of the Company and is not representing the Redeeming Stockholder in an individual capacity in the negotiation and consummation of the transactions hereunder. The Parties further agree that any rule that provides that an ambiguity within a document will be interpreted against the Party drafting such document shall not apply.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 216pt"></font>By: <font style="TEXT-DECORATION: underline">/s/ Jay Gottlieb<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font></font><font id="TAB2" style="LETTER-SPACING: 9pt"> </font><font id="TAB2" style="LETTER-SPACING: 9pt"></font></font></font></div>

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