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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Sound Source Interactive, Inc.
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(Name of Issuer)
Common Stock, par value $.001
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(Title of Class of Securities)
83608K 107
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(CUSIP Number)
Allyn R. Burroughs
5075 Spyglass Hill Drive
Las Vegas, NV 89122
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(Name, address, and telephone number of Person
authorized to Receive Notices and Communications)
August 3, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. / /
Check the following box if a fee is being paid with the statement. /x/
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CUSIP No. 83608K 107 SCHEDULE 13D Page 2 of 7 Pages
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(1) NAMES OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
ASSI, Inc.
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
WC
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(5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT / /
TO ITEMS 2(d) or 2(e)
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada
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NUMBER OF SHARES (7) SOLE VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 5,156,657
PERSON WITH --------------------------------------------------
(8) SHARED VOTING POWER
None
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(9) SOLE DISPOSITIVE POWER
5,156,657
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(10) SHARED DISPOSITIVE POWER
None
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,156,657
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN / /
SHARES*
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
55.3%
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(14) TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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CUSIP No. 83608K 107 SCHEDULE 13D Page 3 of 7 Pages
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(1) NAMES OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Louis Habash
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
Not Applicable
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(5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT / /
TO ITEMS 2(d) or 2(e)
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
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NUMBER OF SHARES (7) SOLE VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING None
PERSON WITH --------------------------------------------------
(8) SHARED VOTING POWER
5,156,657
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(9) SOLE DISPOSITIVE POWER
None
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(10) SHARED DISPOSITIVE POWER
5,156,657
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,156,657
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN / /
SHARES*
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
55.3%
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(14) TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 3 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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STATEMENT ON SCHEDULE 13D
Item 1. SECURITY AND ISSUER
The title and class of equity securities to which this Schedule 13D
(the "Schedule") relates is common stock, par value $.001 per share (the "Common
Stock") of Sound Source Interactive, Inc., a Delaware corporation (the
"Company"). The address of the Company is 2985 East Hillcrest Drive, Suite A,
Westlake Village, California 91362.
Item 2. IDENTITY AND BACKGROUND
(a) ASSI, Inc., a Nevada corporation ("ASSI"), and Louis Habash
("Habash") hereby file this Schedule pursuant to Regulation 13D promulgated
under the Securities Exchange Act of 1934, as amended (the "Act"). Habash is
the sole shareholder and a director of ASSI.
The other directors of ASSI are Allyn R. Burroughs ("Burroughs") and
Mark A. James ("James"). Burroughs is also an executive officer of ASSI.
(b) The business address of ASSI and Habash is 375 East Harmon
Avenue, Las Vegas, Nevada 89109. The business address of Burroughs is 5075
Spyglass Hill Drive, Las Vegas, Nevada 89122. The business address of James is
3763 Howard Hughes Parkway, Suite 350, Las Vegas, Nevada 89109.
(c) Habash is a self-employed investor and the President of ASSI, an
investment firm. Burroughs is the Vice President, Secretary and Treasurer of
ASSI. James is a partner in the law firm of James, Driggs & Walsh.
(d)-(e) During the last five years, none of ASSI, Habash, Burroughs
or James has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or has been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
(f) Habash and James are citizens of the United States. Burroughs is
a citizen of Canada.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
ASSI beneficially owns 5,156,657 shares of Common Stock. Of this
amount, 5,116,657 are pursuant to warrants exercisable beginning October 1, 1996
and the remaining 40,000 shares are shares held of record by ASSI. The 40,000
shares were purchased from another shareholder of the Company in October 1995
for $200,000. Of the 5,116,657 warrants held by ASSI, 2,000,000 warrants were
acquired in April 1996 in exchange for consulting
Page 4 of 7 Pages
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services provided by ASSI to the Company, and the balance was purchased as
follows: (1) 1,100,000 warrants were purchased from the Company in October 1995
for $55,000 in connection with a private offering of notes and warrants by the
Company, and (ii) 2,016,657 warrants were acquired in July 1996 upon conversion
of $504,164 in principal and accrued interest on an outstanding loan by ASSI to
the Company. All funds used to purchase the 40,000 shares and the purchased
warrants were working capital funds of ASSI and it is expected that working
capital funds would be used to exercise the warrants.
Item 4. PURPOSE OF TRANSACTIONS.
The shares of Common Stock and warrants purchased by ASSI were
purchased as an investment based on the belief of ASSI that they provided an
opportunity for long-term appreciation.
(a) ASSI owns warrants to purchase 5,156,657 shares of Common Stock,
which ASSI may exercise if the market price exceeds the exercise price thereof.
(b)-(c) None.
(d) The Company is currently conducting a search for a new Chief
Executive Officer. ASSI, Habash and James are assisting in that search.
(e)- (j) None.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of the date of this Schedule, ASSI was the beneficial owner of
5,156,657 shares of Common Stock representing approximately 55.3% of the
9,324,948 shares of Common Stock (assuming shares issuable upon exercise of
ASSI's warrants are outstanding) based upon the information contained in the
Company's Registration Statement on Form SB-2 (Registration No. 33-80827). Of
this amount, 5,116,657 shares are beneficially owned pursuant to warrants
exercisable beginning October 1, 1996.
As sole shareholder of ASSI, Habash beneficially owns all of the
shares of Common Stock beneficially owned by ASSI.
Burroughs and James are not the beneficial owner of any shares of
Common Stock and specifically disclaim any beneficial ownership in the shares of
Common Stock beneficially owned by ASSI.
(b) ASSI has sole power to vote or direct the vote and to dispose or
direct the disposition of the 5,166,657 shares of Common Stock beneficially
owned by it. Habash, as sole shareholder of ASSI, shares the power to vote or
direct the vote, and to dispose or direct the disposition of, the Common Stock
held by ASSI.
Page 5 of 7 Pages
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(c) On July 8, 1996, ASSI converted $504,164 in principal and accrued
interest on an outstanding loan to the Company into a warrant to purchase
2,016,657 shares of Common Stock at $4.40 per share.
(d)-(e) Not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
ASSI is a party to a Consulting Agreement with the Company. Pursuant
to that Consulting Agreement, ASSI has provided and is continuing to provide
certain consulting services to the Company and received a warrant to purchase
2,000,000 shares of Common Stock from the Company in April 1996. Under that
Agreement, ASSI has the right to appoint one designee to the Board of Directors
of the Company. James is ASSI's designee, and he currently serves on the Board.
In connection with that Agreement, ASSI has entered into a Voting Agreement with
Vincent Bitetti and Eric Winston, under which Messrs. Bitetti and Winston agreed
to vote their shares in favor of ASSI's nominee to the Board of Directors. In
addition, under the Voting Agreement, ASSI has agreed to vote in favor of two
nominees to the Board of Directors selected by Mr. Bitetti for so long as
Mr. Bitetti owns at least 20% of the issued and outstanding shares of Common
Stock of the Company, and one nominee selected by Mr. Bitetti for so long as he
owns less than 20% but at least 10% of the issued and outstanding shares of
Common Stock of the Company. The Voting Agreement terminates on the earlier of
July 8, 2001 or such time as Messrs. Bitetti and Winston collectively are the
beneficial owners of less than 10% of the issued and outstanding Common Stock of
the Company. Messrs. Bitetti and Winston have granted irrevocable proxies to
ASSI, and ASSI has granted an irrevocable proxy to Mr. Bitetti, consistent with
the terms of the Voting Agreement.
Under the Consulting Agreement, the Note Purchase Agreement dated
May 30, 1996 between the Company and ASSI, and a letter agreement dated June 28,
1996 between the Company and ASSI, the terms of the 5,116,657 warrants held by
ASSI are identical to those of the Redeemable Warrants registered by the Company
under the Act, except that (i) the ASSI warrants are exercisable beginning
October 1, 1996, (ii) the ASSI warrants are not subject to any redemption rights
of the Company, and (iii) the ASSI warrants are subject to separate registration
rights, including one demand registration right and unlimited piggyback
registration rights. Upon a transfer of any ASSI warrants to any nonaffiliate
of ASSI, the terms of such transferred warrants will become identical to those
of the Redeemable Warrants.
James was appointed a director of the Company in July 1996. Under the
Company's 1995 Stock Option Plan, each nonemployee director automatically
receives an option to acquire 10,000 shares of Common Stock upon appointment.
James has received an option to purchase 10,000 shares of Common Stock at
$4.5625 per share, vesting 50% annually beginning July 10, 1997.
Page 6 of 7 Pages
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Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No. Description of Exhibit
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Exhibit 1: Consulting Agreement dated as of April 30, 1996 between
ASSI, Inc. and Sound Source Interactive, Inc. is
incorporated by reference to Exhibit 10.45 of the
Registration Statement on Form SB-2 (No. 33-80827)
filed with the Securities and Exchange Commission on
December 22, 1995 (the "Registration Statement")
Exhibit 2: Stockholder Voting Agreement dated as of April 30, 1996
by and among Vincent J. Bitetti, Eric H. Winston, ASSI,
Inc. and Sound Source Interactive, Inc. (incorporated
by reference to Exhibit 9.1 of the Registration
Statement)
Exhibit 3: Irrevocable Proxy of Vincent J. Bitetti to ASSI, Inc.
dated April 30, 1996 (incorporated by reference to
Exhibit 9.2 of the Registration Statement)
Exhibit 4: Irrevocable Proxy of Eric H. Winston to ASSI, Inc.
dated April 30, 1996 (incorporated by reference to
Exhibit 9.3 of the Registration Statement)
Exhibit 5: Irrevocable Proxy of ASSI, Inc. to Vincent J. Bitetti
dated April 30, 1996 (incorporated by reference to
Exhibit 9.4 of the Registration Statement)
Exhibit 6: Note Purchase Agreement dated as of May 30, 1996
between ASSI, Inc. and Sound Source Interactive, Inc.
(incorporated by reference to Exhibit 10.48 of the
Registration Statement
Exhibit 7: Letter Agreement dated June 28, 1996 between ASSI, Inc.
and Sound Source Interactive, Inc.
Exhibit 8: Stock Option Agreement dated August 1, 1996 between
Sound Source Interactive, Inc. and Mark A. James.
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this statement is true, complete
and correct.
Dated: August 12, 1996 ASSI, INC.
By: /s/ Louis Habash, President
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Louis Habash, President
/s/ Louis Habash
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Louis Habash
Page 7 of 7 Pages
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EXHIBIT 7
ASSI, INC.
5075 SPYGLASS HILL DRIVE
LAS VEGAS, NV 89122
June 28, 1996
Sound Source Interactive, Inc.
2985 East Hillcrest Drive, Suite A
Westlake Village, CA 91362
Dear Sirs:
The undersigned is payee on a convertible promissory note from Sound Source
Interactive, Inc., a Delaware corporation (the "Company"), dated May 30, 1996
and in the principal amount of $500,000 (the "Note"). The Note was issued
pursuant to a Note Purchase Agreement dated May 30, 1996 between the Company and
the undersigned (the "Agreement"). The undersigned hereby exercises its right
pursuant to, and on the terms and conditions set forth in, Section 2 of the
Agreement to convert all principal and interest on the Note into warrants (the
"Conversion Warrants") substantially the same as the warrants being sold to the
public (the "Public Warrants") in the Company's initial public offering of
securities (the "Public Offering") pursuant to registration on a Form SB-2
Registration Statement (Registration No. 33-80827).
The undersigned also is the holder of (i) a 2,000,000 share warrant dated
April 30, 1996 (the "Consulting Warrants") issued pursuant to a Consulting
Agreement dated as of April 30, 1996 between the Company and the undersigned
(the "Consulting Agreement") and (ii) a 1,100,000 share warrant issued in a 1995
private financing by the Company (the "Private Warrants"). The Consulting
Warrants and the Private Warrants are convertible into Public Warrants upon
consummation of the Public Offering.
This letter will constitute our agreement that, notwithstanding anything to
the contrary contained in the Conversion Warrants, the Public Warrants received
upon conversion of the Consulting Warrants, or the Public Warrants received upon
conversion of the Private Warrants (collectively, the "ASSI Warrants"), or the
warrant agreement governing the ASSI Warrants, the following terms shall apply
to each of the ASSI Warrants:
(i) The ASSI Warrants shall not be subject to any redemption rights
of the Company;
(ii) The ASSI Warrants will be entitled to separate registration
rights that are identical to the registration rights of the
undersigned set forth in the Consulting Warrants; and
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Sound Source Interactive, Inc.
June 28, 1996
Page 2
(iii) The ASSI Warrants shall be exercisable at any time on or after
October 1, 1996.
Please indicate your agreement with the terms of this letter agreement in
the space provided below.
Very truly yours,
ASSI, INC., a Nevada corporation
By: /s/Louis Habash
-------------------------------
Louis Habash, President
ACKNOWLEDGED AND AGREED:
SOUND SOURCE INTERACTIVE, INC.,
a Delaware corporation
By: /s/Eric Winston
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EXHIBIT 8
1995 STOCK OPTION PLAN OF SOUND SOURCE INTERACTIVE, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made by and between SOUND
SOURCE INTERACTIVE, INC., a Delaware corporation (the "Company"), and Mark A.
James (the "Optionee"), as of the date set forth on the signature page hereto.
R E C I T A L S
A. The Board of Directors of the Company (the "Board") and the
stockholders of the Company have established the 1995 Stock Option Plan of the
Company (the "Plan"), for the purpose of providing to employees and directors of
the Company and others an opportunity to acquire shares of the Company's $.001
par value common stock (the "Shares"); and
B. The Board of Directors or the Stock Option Committee of the Company's
Board of Directors (the "Committee") appointed to administer the Plan has
determined that it would be to the advantage and best interest of the Company
and its shareholders to grant the Non-Qualified Stock Option or Incentive Stock
Option provided for herein (the "Option") to the Optionee as an inducement to
remain in the service of the Company and as an incentive for increased efforts
during such service, and has advised the Company thereof and instructed it to
issue the Option.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. Capitalized terms used herein and not otherwise defined shall have
the meaning set forth in the Plan. The masculine pronoun shall include the
feminine and neuter, and the singular the plural, where the context so
indicates.
SECTION 1.1 - COMPANY
"Company" shall mean Sound Source Interactive, Inc., a Delaware
corporation. In addition, "Company" shall mean any corporation assuming, or
issuing new employee stock options in
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substitution for the options outstanding under the Plan, in a transaction to
which Section 425(a) of the Code applies.
SECTION 1.2 - OPTION
"Option" shall mean the option to purchase $.001 par value Common Stock of
the Company granted under this Agreement.
SECTION 1.3 - SECRETARY
"Secretary" shall mean the Secretary of the Company.
SECTION 1.4 - SECURITIES ACT
"Securities Act" shall mean the Securities Act of 1933, as amended.
ARTICLE II
GRANT OF OPTION
SECTION 2.1 - GRANT OF OPTION
In consideration of the Optionee's agreement to render faithful and
efficient services to the Company and for other good and valuable consideration,
on the date set forth on the Signature Page hereof (the "Date of Grant"), the
Company irrevocably grants to the Optionee the option to purchase any part or
all of an aggregate of the number of Shares set forth on the Signature Page
hereof and upon the terms and conditions set forth in this Agreement.
SECTION 2.2 - PURCHASE PRICE
The purchase price of the Shares covered by the Option shall be the amount
set forth on the Signature Page hereof and shall be without commission or other
charge (the "Purchase Price").
SECTION 2.3 - RESERVATION OF RIGHTS
Nothing in the Plan or in this or any Stock Option Agreement shall confer
upon the Optionee any right to continue in the employ of the Company or any
Subsidiary or shall interfere with or restrict in any way the rights of the
Company and its Subsidiaries, which are hereby expressly reserved, to discharge
the Optionee at any time for any reason whatsoever, with or without cause.
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SECTION 2.4 - ADJUSTMENTS IN OPTION
In the event that the outstanding Shares subject to the Option are changed
into or exchanged for a different number or kind of shares of the Company or
other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split up, stock dividend or
combination of shares, the Board of Directors or the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares as to
which the Option, or portions thereof then unexercised, shall be exercisable, to
the end that after such event the Optionee's proportionate interest shall be
maintained as before the occurrence of such event. Such adjustment in the
Option shall be made without change in the total price applicable to the
unexercised portion of the Option (except for any change in the aggregate price
resulting from rounding-off of share quantities or prices) and with any
necessary corresponding adjustment in the Purchase Price. Any such adjustment
made by the Board of Directors or the Committee shall be final and binding upon
the Optionee, the Company and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY
(a) The Option shall become exercisable in cumulative installments as set
forth on the signature page hereto.
(b) Excluding Saturdays, Sundays and nationally recognized holidays, if
the Optionee is absent from employment for any reason other than vacation for an
aggregate period exceeding 60 days during the annual period between the Date of
Grant and the First Anniversary Date or any successive Anniversary Date and the
following Anniversary Date, then the latter Anniversary Date shall be postponed
by the number of all such days of absence. This paragraph (b) shall not apply
to Optionees who are directors but not employees of the Company.
SECTION 3.2 - DURATION OF EXERCISABILITY
The installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until the expiration date set forth on the signature page of this
Agreement or until it becomes unexercisable under the Plan, whichever is sooner.
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SECTION 3.3 - ASSUMPTION OF OPTION; ACCELERATION OF
EXERCISABILITY
In the event of the merger or consolidation of the Company with or into
another corporation, or the acquisition by another corporation or person of all
or substantially all of the Company's assets or 80% or more of the Company's
then outstanding voting stock, or the liquidation or dissolution of the Company,
such Option shall be assumed or an equivalent option substituted by any
successor corporation of the Company. The Company undertakes to make reasonable
and adequate provision for such assumption or substitution of the Option upon or
in connection with such merger, consolidation, acquisition, liquidation, or
dissolution. The Committee may also, in its absolute discretion and upon such
terms and conditions as it deems appropriate, by resolution adopted prior to
such event, provide that at some time prior to the effective date of such event
this Option shall be exercisable as to all of the Shares covered hereby,
notwithstanding that this Option may not yet have become fully exercisable under
Section 3.1.
SECTION 3.4 - OPTION NOT TRANSFERABLE
Neither the Option nor any interest or right therein or part thereof shall
be liable for the debts, contracts or engagements of the Optionee or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law, by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 3.4
shall not prevent transfers of the Option upon the death of the Optionee as
provided in the Plan.
ARTICLE IV
EXERCISE OF OPTION
SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE
During the lifetime of the Optionee, only he or she may exercise the Option
or any portion thereof. After the death of the Optionee, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable, be exercised by his or her beneficiary specified on the Signature
Page hereto or, in the case of his unavailability by any person empowered to do
so under the Optionee's will or under the then applicable laws of descent and
distribution, as more fully provided in the Plan.
-4-
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SECTION 4.2 - PARTIAL EXERCISE
Any exercisable portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under the Plan;
provided, however, that each partial exercise shall be for not less than 100
Shares (or minimum installment set forth in Section 3.1, if a smaller number of
Shares) and shall be for whole Shares only.
SECTION 4.3 - MANNER OF EXERCISE
The Option, or any exercisable portion thereof, may be exercised solely by
delivery to the Secretary or the Secretary's office of all of the following
prior to the time when the Option or such portion becomes unexercisable under
the Plan:
(a) Notice in writing signed by the Optionee or the other person then
entitled to exercise the Option or portion thereof, stating that the Option or
portion thereof is thereby exercised, such notice complying with all applicable
rules established by the Committee; and
(b) (i) Full payment (in cash or by check) for the Shares with respect to
which such Option or portion is exercised; or
(ii) Shares of any class of the Company's stock owned by the Optionee
duly endorsed for transfer to the Company with a Fair Market Value on the
date of delivery equal to the aggregate Purchase Price of the Shares with
respect to which such Option or portion is thereby exercised; or
(iii) With the consent of the Committee, a full recourse promissory
note bearing interest (at least such rate as shall then preclude the
imputation of interest under the Code or any successor provision) and
payable upon such terms as may be prescribed by the Committee. The
Committee may also prescribe the form of such note and the security to be
given for such note. No Option may, however, be exercised by delivery of a
promissory note or by a loan from the Company when or where such loan or
other extension of credit is prohibited by law; or
(iv) Any combination of the consideration provided in the foregoing
subsections (i), (ii), and (iii); and
(c) Full payment to the Company of all amounts which, under federal, state
or local law, it is required to withhold upon exercise of the Option; and
-5-
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(d) In the event the Option or portion thereof shall be exercised pursuant
to Section 4.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option shall be
provided to the Company as provided in the Plan.
SECTION 4.4 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
The Shares deliverable upon the exercise of the Option, or any portion
thereof, may be either previously authorized but unissued Shares or issued
Shares which have then been reacquired by the Company. Such Shares shall be
fully paid and non-assessable. The Company shall not be required to issue or
deliver any certificate or certificates for Shares purchased upon the exercise
of the Option or portion thereof prior to fulfillment of all of the following
conditions:
(a) The completion of any registration or other qualification of such
Shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Board of Directors or Committee shall, in its absolute discretion,
deem necessary or advisable;
(b) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Board of Directors or Committee shall, in
its absolute discretion, determine to be necessary or advisable;
(c) The payment to the Company of all amounts which, under federal, state
or local law, it is required to withhold upon exercise of the Option; and
(d) The lapse of such reasonable period of time following the exercise of
the Option as the Board of Directors or Committee may from time to time
establish for reasons of administrative convenience.
SECTION 4.5 - RIGHTS AS STOCKHOLDER
The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any Shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such Shares shall have been issued by the Company to such holder.
-6-
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ARTICLE V
OTHER PROVISIONS
SECTION 5.1 - ADMINISTRATION
The Board of Directors or Committee shall have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret or revoke any such rules. All actions taken and all interpretations
and determinations made by the Board of Directors or Committee in good faith
shall be final and binding upon the Optionee, the Company and all other
interested persons. No member of the Board of Directors or Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Option. In its absolute discretion, the
Board of Directors may at any time and from time to time exercise any and all
rights and duties of the Committee under the Plan and this Agreement.
SECTION 5.2 - SHARES TO BE RESERVED
The Company shall at all times during the term of the Option reserve and
keep available such number of Shares as will be sufficient to satisfy the
requirements of this Agreement.
SECTION 5.3 - NOTICES
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to be
given to the Optionee shall be addressed to him or her at the address set forth
on the Signature Page hereof. By a notice given pursuant to this Section 5.3,
either party may hereafter designate a different address for delivery of
notices. Any notice which is required to be given to the Optionee shall, if the
Optionee is then deceased, be given to the Optionee's designated beneficiary
(or, in case of his unavailability, his personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section 5.3). Any notice shall be deemed duly given
when enclosed in a properly sealed envelope or wrapper addressed as aforesaid
and deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
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<PAGE>
SECTION 5.4 - TITLES
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
SECTION 5.5 - CONSTRUCTION
This Agreement shall be administered, interpreted, and enforced under the
laws of the State of Delaware.
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<PAGE>
SIGNATURE PAGE
1995 STOCK OPTION PLAN OF SOUND SOURCE INTERACTIVE, INC.
Incentive Option
- ---
X Non-qualified Option
- ---
Purchase Price: $4.5625 per share
Number of Shares: 10,000
Vesting: 5,000 shares on July 10, 1997; and
5,000 shares on July 10, 1998
Expiration: July 31, 2006
Designated Beneficiary: ______________
(in case of death)
I have read the Stock Option Agreement indicated above which was adopted
for use in connection with the 1995 Stock Option Plan. As Optionee, I hereby
agree to all of the terms of the Agreement.
Date of Grant: August 1, 1996 MARK JAMES
Optionee Name
_____________________________
_____________________________
Address
Optionee Social Security
Number or Taxpayer
Identification Number:
_____________________________
_____________________________
Optionee Signature
The Company hereby agrees to all of the terms of the Agreement.
SOUND SOURCE INTERACTIVE, INC.
By: __________________________
Its: _________________________
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