As filed with the Securities and Exchange Commission on December 09, 1996
Registration No. 333-___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EUPHONIX, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 77-0189481
(State of incorporation) (I.R.S. Employer Identification No.)
220 Portage Avenue
Palo Alto, California 94306
(Address, including zip code, of principal executive offices)
1990 STOCK PLAN
(Full Title of the Plan)
James Dobbie
Euphonix, Inc.
220 Portage Avenue
Palo Alto, CA 94306
(Name and address of agent for service)
(415) 855-0400
(Telephone number, including area code, of agent for service)
Copies to:
JOHN V. ROOS, ESQ.
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
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CALCULATION OF REGISTRATION FEE
Title of Amount Proposed Proposed Amount of
Securities to to be Maximum Offering Maximum Aggregate Registra-
be Registered Registered(1) Price Per Share(2) Offering Price(2) tion
$.001 par value 500,000 $ 4.625 $2,312,500.00 $ 700.76
Pursuant to Rule 429 of the Securities Act of 1933, as amended (the
"Securities Act"), the prospectus delivered to participants under the
registrant's 1990 Stock Plan (the "Plan") also relates to 934,586 shares
initially registered under registration statement on Form S-8 No. 33-98130.
(2) Estimated solely for the purpose of calculating the amount of the regis-
tration fee on the basis of the average of the high and low prices of the
Common Stock reported in the Nasdaq National Market on December 5, 1996.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
There are hereby incorporated by reference in this Registration
Statement the following documents and information heretofore filed with the
Securities and Exchange Commission:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, filed pursuant to Section 13 of the Securities Act
of 1934 (the "Exchange Act").
(b) The Registrant's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996, June 30, 1996, and September 30, 1996, filed pursuant
to Section 13 of the Exchange Act.
(c) The Registrant's Current Report on Form 8-K dated February 7,
1996, as amended April 25, 1996.
(d) The description of the Registrant's Common Stock to be offered
hereby is contained in the Registrant's Registration Statement on Form 8-A
filed with the Securities and Exchange Commission on July 24, 1995 pursuant
to Section 12(g) of the Exchange Act, including any amendment or report filed
for the purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to Sec-
tions 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this registration statement and to
be part hereof from the date of filing such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Registrant has adopted provisions in its Amended and Restated
Articles of Incorporation which (i) eliminate the personal liability of its
directors to the Registrant and its shareholders for monetary damages arising
from a breach of their fiduciary duties in certain circumstances; and (ii)
authorize the Registrant to indemnify its directors and officers to the
fullest extent permitted by law. Such limitation of liability does not affect
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the availability of equitable remedies, such as injunctive relief or rescis-
sion. In addition, the Registrant's bylaws provide that the Registrant shall
indemnity its directors and officers to the fullest extent permitted by Cali-
fornia law.
The Registrant has entered into separate indemnification agreements
with each of its officers and directors that contain provisions which are in
some respects broader than the specific indemnification provisions contained
in the California Corporations Code. The indemnification agreements may
require the Registrant, among other things, to indemnify such officers and
directors against certain liabilities that may arise by reason of their sta-
tus or service as directors or officers (other than liabilities arising from
willful misconduct of a culpable nature), to advance their expenses incurred
as a result of any proceeding against them as to which they could be indem-
nified, and to obtain director's and officer's insurance, if available on
reasonable terms.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
Number
4.1 1990 Stock Plan and forms of stock option and restricted
stock purchase agreement thereunder.
5.1 Opinion of Wilson, Sonsini, Goodrich & Rosati, P.C., as
to legality of securities being registered
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (contained in Exhibit 5.1)
24.1 Power of Attorney (See Page II-4)
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement to
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
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(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Regis-
trant's annual report pursuant to Sec-tion 13(a) or Section 15(d) of the Ex-
change Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is incorpo-
rated by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling per-
sons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expres-
sed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or control-
ling person in connection with the securities being registered, the Regis-
trant will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as ex-
pressed in the Securities Act and will be governed by the final adjudication
of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Regis-
trant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registra-
tion statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Palo Alto, State of California, on December 9, 1996.
EUPHONIX, INC.
By: /s/ JAMES DOBBIE
--------------------------------
James Dobbie, Chairman of the
Board and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James Dobbie and Scott W. Silfvast,
jointly and severally, his attorneys-in-fact, each with the power of substi-
tution, for him in any and all capacities, to sign any amendments to this re-
gistration statement on Form S-8, and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said attorney-in
- -fact, or his substitute or substitutes, may do or cause to be done by virtue
hereof.
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Pursuant to the requirements of the Securities Act of 1933, this regis-
tration statement has been signed by the following persons in the capacities
and on the dates indicated.
SIGNATURE TITLE DATE
/s/ JAMES DOBBIE Chairman of the Board and December 09, 1996
- ------------------ (James Dobbie) Chief Executive
(James Dobbie) Officer (Principal Executive
Officer)
/s/ SCOTT W. SILFVAST President and Director December 09, 1996
- ---------------------
(Scott W. Silfvast)
/s/ JEFFREY A. CHEW Vice President of Finance December 09, 1996
- ------------------- and Chief Financial Officer
(Jeffrey A. Chew) (Principal Financial and
Accounting Officer)
/s/ MILTON CHANG Director December 09, 1996
- -------------------
(Milton Chang)
/s/ YESHWANT KAMATH Director December 09, 1996
- -------------------
(Yeshwant Kamath)
/s/ ROBERT F. KUHLING Director December 09, 1996
- ---------------------
(Robert F. Kuhling, Jr.)
/s/ GUY PAUL NOHRA Director December 09, 1996
- -------------------
(Guy Paul Nohra)
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EUPHONIX, INC.
REGISTRATION STATEMENT ON FORM S-8
INDEX TO EXHIBITS
Exhibit
Number Description
4.1 1990 Stock Plan and forms of stock option and restricted stock
purchase agreement thereunder.
5.1 Opinion of Wilson, Sonsini, Goodrich & Rosati, P.C., as to legal-
ity of securities being registered.
23.1 Consent of Independent Auditors.
23.2 Consent of Counsel (contained in Exhibit 5.1).
24.1 Power of Attorney (See Page II-4).
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EXHIBIT 4.1
EUPHONIX, INC.
1990 STOCK PLAN
(as amended and restated October 3, 1996)
1. Purposes of the Plan. The purposes of this Stock Plan are:
* to attract and retain the best available personnel for
positions of substantial responsibility,
* to provide additional incentive to Employees, Directors and
Consultants, and
* to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the admin-
istration of stock option plans under U. S. state corporate laws, U.S. fed-
eral and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws
of any foreign country or jurisdiction where Options or Stock Purchase Rights
are, or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Euphonix, Inc., a California corporation.
(h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.
(i) "Director" means a member of the Board.
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(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Ser-
vice Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety
days, unless reemployment upon expiration of such leave is guaranteed by sta-
tute or contract. If reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, on the 181st day of such leave
any Incentive Stock Option held by the Optionee shall cease to be treated as
an Incentive Stock Option and shall be treated for tax purposes as a Nonsta-
tutory Stock Option. Neither service as a Director nor payment of a direc-
tor's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system
for the last market trading day prior to the time of determination, as re-
ported in The Wall Street Journal or such other source as the Administrator
deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value
of a Share of Common Stock shall be the mean between the high bid and low
asked prices for the Common Stock on the last market trading day prior to the
day of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the Admin-
istrator.
(n) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
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(p) "Notice of Grant" means a written or electronic notice evidenc-
ing certain terms and conditions of an individual Option or Stock Purchase
Right grant. The Notice of Grant is part of the Option Agreement.
(q) "Officer" means a person who is an officer of the Company with-
in the meaning of Section 16 of the Exchange Act and the rules and regula-
tions promulgated thereunder.
(r) "Option" means a stock option granted pursuant to the Plan.
(s) "Option Agreement" means an agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the
Plan.
(t) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(u) "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.
(v) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(w) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(x) "Plan" means this 1990 Stock Plan.
(y) "Restricted Stock" means shares of Common Stock acquired pursu-
ant to a grant of Stock Purchase Rights under Section 11 below.
(z) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted
Stock Purchase Agreement is subject to the terms and conditions of the Plan
and the Notice of Grant.
(aa) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(bb) "Section 16(b)" means Section 16(b) of the Exchange Act.
(cc) "Service Provider" means an Employee, Director or Consultant.
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(dd) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(ee) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 2,042,281 Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an
Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the
Plan has terminated); provided, however, that Shares that have actually been
issued under the Plan, whether upon exercise of an Option or Right, shall not
be returned to the Plan and shall not become available for future distribu-
tion under the Plan, except that if Shares of Restricted Stock are repur-
chased by the Company at their original purchase price, such Shares shall
become available for future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be administered
by different Committees with respect to different groups of Service Providers.
(ii) Section 162(m). To the extent that the Administrator deter-
mines it to be desirable to qualify Options granted hereunder as "performance
- -based compensation" within the meaning of Section 162(m) of the Code, the
Plan shall be administered by a Committee of two or more "outside directors"
within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.
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(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties dele-
gated by the Board to such Committee, the Administrator shall have the author-
ity, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option or Stock Purchase Right granted here-
under. Such terms and conditions include, but are not limited to, the exer-
cise price, the time or times when Options or Stock Purchase Rights may be
exercised (which may be based on performance criteria), any vesting acceler-
ation or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Option or Stock Purchase Right or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option or Stock Purchase
Right to the then current Fair Market Value if the Fair Market Value of the
Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations relat-
ing to the Plan, including rules and regulations relating to sub-plans estab-
lished for the purpose of qualifying for preferred tax treatment under for-
eign tax laws;
(x) to modify or amend each Option or Stock Purchase Right (sub-
ject to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exer-
cise of an Option or Stock Purchase Right that number of Shares having a Fair
Market Value equal to the amount required to be withheld.
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The Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined. All elec-
tions by an Optionee to have Shares withheld for this purpose shall be made
in such form and under such conditions as the Administrator may deem neces-
sary or advisable;
(xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option or Stock Purchase
Right previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary or advis-
able for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's deci-
sions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights
may be granted to Service Providers. Incentive Stock Options may be granted
only to Employees.
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However, notwith-
standing such designation, to the extent that the aggregate Fair Market Value
of the Shares with respect to which Incentive Stock Options are exercisable
for the first time by the Optionee during any calendar year (under all plans
of the Company and any Parent or Subsidiary) exceeds $100,000, such Options
shall be treated as Nonstatutory Stock Options. For purposes of this Section
6(a), Incentive Stock Options shall be taken into account in the order in
which they were granted. The Fair Market Value of the Shares shall be deter-
mined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere
in any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of
the Company, Options to purchase more than 150,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 75,000 Shares
which shall not count against the limit set forth in subsection (i) above.
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(iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 13.
(iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 13), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect
for a term of ten (10) years unless terminated earlier under Section 15 of
the Plan.
8. Term of Option. The term of each Option shall be stated in the
Option Agreement. In the case of an Incentive Stock Option, the term shall
be ten (10) years from the date of grant or such shorter term as may be pro-
vided in the Option Agreement. Moreover, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Incentive Stock Option shall be five (5) years from the date of
grant or such shorter term as may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee des-
cribed in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based compen-
sation" within the meaning of Section 162(m) of the Code, the per Share exer-
cise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
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(iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price of less than 100% of the Fair Market Value
per Share on the date of grant pursuant to a merger or other corporate tran-
saction.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied
before the Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the Adminis-
trator shall determine the acceptable form of consideration at the time of
grant. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the date
of surrender equal to the aggregate exercise price of the Shares as to which
said Option shall be exercised;
(v) consideration received by the Company under a cashless exer-
cise program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participa-
tion in any Company-sponsored deferred compensation program or arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and
at such times and under such conditions as determined by the Administrator
and set forth in the Option Agreement. Unless the Administrator provides
otherwise, vesting of Options granted hereunder shall be tolled during any
unpaid leave of absence. An Option may not be exercised for a fraction of a
Share.
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An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by
the Administrator and permitted by the Option Agreement and the Plan. Shares
issued upon exercise of an Option shall be issued in the name of the Optionee
or, if requested by the Optionee, in the name of the Optionee and his or her
spouse. Until the Shares are issued (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding
the exercise of the Option. The Company shall issue (or cause to be issued)
such Shares promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the Shares are issued, except as provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number
of Shares thereafter available, both for purposes of the Plan and for sale
under the Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than upon the Optionee's death or Dis-
ability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option
is vested on the date of termination (but in no event later than the expira-
tion of the term of such Option as set forth in the Option Agreement). In
the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option within the time specified by the Administrator, the Option
shall terminate, and the Shares covered by such Option shall revert to the
Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise
his or her Option within such period of time as is specified in the Option
Agreement to the extent the Option is vested on the date of termination (but
in no event later than the expiration of the term of such Option as set forth
in the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months follow-
ing the Optionee's termination. If, on the date of termination, the Optionee
is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termina-
tion, the Optionee does not exercise his or her Option within the time speci-
fied herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service Pro-
vider, the Option may be exercised within such period of time as is specified
-9-
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<PAGE>
in the Option Agreement (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant), by the Optionee's
estate or by a person who acquires the right to exercise the Option by be-
quest or inheritance, but only to the extent that the Option is vested on
the date of death. In the absence of a specified time in the Option Agree-
ment, the Option shall remain exercisable for twelve (12) months following the
Optionee's termination. If, at the time of death, the Optionee is not vested
as to his or her entire Option, the Shares covered by the unvested portion of
the Option shall immediately revert to the Plan. The Option may be exercised
by the executor or administrator of the Optionee's estate or, if none, by
the person(s) entitled to exercise the Option under the Optionee's will or
the laws of descent or distribution. If the Option is not so exercised with-
in the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted based on
such terms and conditions as the Administrator shall establish and communi-
cate to the Optionee at the time that such offer is made.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under
the Plan and/or cash awards made outside of the Plan. After the Adminis-
trator determines that it will offer Stock Purchase Rights under the Plan, it
shall advise the offeree in writing or electronically, by means of a Notice
of Grant, of the terms, conditions and restrictions related to the offer,
including the number of Shares that the offeree shall be entitled to pur-
chase, the price to be paid, and the time within which the offeree must
accept such offer. The offer shall be accepted by execution of a Restricted
Stock Purchase Agreement in the form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines other-
wise, the Restricted Stock Purchase Agreement shall grant the Company a repur-
chase option exercisable upon the voluntary or involuntary termination of the
purchaser's service with the Company for any reason (including death or Dis-
ability). The purchase price for Shares repurchased pursuant to the Restrict-
ed Stock purchase agreement shall be the original price paid by the purchaser
and may be paid by cancellation of any indebtedness of the purchaser to the
Company. The repurchase option shall lapse at a rate determined by the Admin-
istrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent
with the Plan as may be determined by the Administrator in its sole discre-
tion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a share-
holder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is exercised, except as
provided in Section 13 of the Plan.
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<PAGE>
12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right
may not be sold, pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or by the laws of descent or distribution
and may be exercised, during the lifetime of the Optionee, only by the
Optionee. If the Administrator makes an Option or Stock Purchase Right trans-
ferable, such Option or Stock Purchase Right shall contain such additional
terms and conditions as the Administrator deems appropriate.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option and Stock Purchase Right, and the number of shares
of Common Stock which have been authorized for issuance under the Plan but as
to which no Options or Stock Purchase Rights have yet been granted or which
have been returned to the Plan upon cancellation or expiration of an Option
or Stock Purchase Right, as well as the price per share of Common Stock
covered by each such outstanding Option or Stock Purchase Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be
deemed to have been "effected without receipt of consideration." Such adjust-
ment shall be made by the Board, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no issu-
ance by the Company of shares of stock of any class, or securities convert-
ible into shares of stock of any class, shall affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed dis-
solution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee
to have the right to exercise his or her Option until ten (10) days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option would not otherwise be exercisable. In addi-
tion, the Administrator may provide that any Company repurchase option appli-
cable to any Shares purchased upon exercise of an Option or Stock Purchase
Right shall lapse as to all such Shares, provided the proposed dissolution or
liquidation takes place at the time and in the manner contemplated. To the
extent it has not been previously exercised, an Option or Stock Purchase
Right will terminate immediately prior to the consummation of such proposed
action.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the
assets of the Company, each outstanding Option and Stock Purchase Right shall
be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the
event that the successor corporation refuses to assume or substitute for the
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<PAGE>
Option or Stock Purchase Right, the Optionee shall fully vest in and have the
right to exercise the Option or Stock Purchase Right as to all of the Optioned
Stock, including Shares as to which it would not otherwise be vested or exer-
cisable. If an Option or Stock Purchase Right becomes fully vested and exer-
cisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee in writing or
electronically that the Option or Stock Purchase Right shall be fully vested
and exercisable for a period of fifteen (15) days from the date of such
notice, and the Option or Stock Purchase Right shall terminate upon the expir-
ation of such period. For the purposes of this paragraph, the Option or
Stock Purchase Right shall be considered assumed if, following the merger or
sale of assets, the option or right confers the right to purchase or receive,
for each Share of Optioned Stock subject to the Option or Stock Purchase Right
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale
of assets by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of considera-
tion, the type of consideration chosen by the holders of a majority of the
outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the suc-
cessor corporation, provide for the consideration to be received upon the exer-
cise of the Option or Stock Purchase Right, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right, to be solely common stock of
the successor corporation or its Parent equal in fair market value to the per
share consideration received by holders of Common Stock in the merger or sale
of assets.
14. Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes
the determination granting such Option or Stock Purchase Right, or such other
later date as is determined by the Administrator. Notice of the determina-
tion shall be provided to each Optionee within a reasonable time after the
date of such grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to com-
ply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exer-
cise the powers granted to it hereunder with respect to options granted under
the Plan prior to the date of such termination.
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<PAGE>
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right and the issuance and delivery of such Shares
shall comply with Applicable Laws and shall be further subject to the approval
of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of
an Option or Stock Purchase Right, the Company may require the person exerci-
sing such Option or Stock Purchase Right to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment
and without any present intention to sell or distribute such Shares if, in
the opinion of counsel for the Company, such a representation is required.
17. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which author-
ity is deemed by the Company's counsel to be necessary to the lawful issuance
and sale of any Shares hereunder, shall relieve the Company of any liability
in respect of the failure to issue or sell such Shares as to which such re-
quisite authority shall not have been obtained.
18. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall
be sufficient to satisfy the requirements of the Plan.
19. Shareholder Approval. The Plan shall be subject to approval by
the shareholders of the Company within twelve (12) months after the date the
Plan is adopted. Such shareholder approval shall be obtained in the manner
and to the degree required under Applicable Laws.
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<PAGE>
1990 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number _________________________
Date of Grant _________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares Granted _________________________
Total Exercise Price $_________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
[__% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and ____ of the Shares subject to the Option
shall vest each month thereafter, subject to the Optionee continuing to be a
Service Provider on such dates.]
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<PAGE>
Termination Period:
This Option may be exercised for _____ [days/months] after Optionee
ceases to be a Service Provider. Upon the death or Disability of the
Optionee, this Option may be exercised for such longer period as provided in
the Plan. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby
grants to the Optionee named in the Notice of Grant attached as Part I of
this Agreement (the "Optionee") an option (the "Option") to purchase the number
of Shares, as set forth in the Notice of Grant, at the exercise price per
share set forth in the Notice of Grant (the "Exercise Price"), subject to the
terms and conditions of the Plan, which is incorporated herein by reference.
Subject to Section 15(c) of the Plan, in the event of a conflict between the
terms and conditions of the Plan and the terms and conditions of this Option
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option
under Section 422 of the Code. However, if this Option is intended to be an
Incentive Stock Option, to the extent that it exceeds the $100,000 rule of
Code Section 422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares
in respect of which the Option is being exercised (the "Exercised Shares"),
and such other representations and agreements as may be required by the Com-
pany pursuant to the provisions of the Plan. The Exercise Notice shall be
completed by the Optionee and delivered to Jeffrey A. Chew of the Company.
The Exercise Notice shall be accompanied by payment of the aggregate Exercise
Price as to all Exercised Shares. This Option shall be deemed to be exercised
upon receipt by the Company of such fully executed Exercise Notice accom-
panied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming
such compliance, for income tax purposes the Exercised Shares shall be con-
sidered transferred to the Optionee on the date the Option is exercised with
respect to such Exercised Shares.
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<PAGE>
3. Method of Payment. Payment of the aggregate Exercise Price shall
be by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
(b) check[; or
(c) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan][; or
(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares][; or
(e) with the Administrator's consent, delivery of Optionee's promis-
sory note (the "Note") in the form attached hereto as Exhibit C, in the amount
of the aggregate Exercise Price of the Exercised Shares together with the execu-
tion and delivery by the Optionee of the Security Agreement attached hereto
as Exhibit B. The Note shall bear interest at the "applicable federal rate"
prescribed under the Code and its regulations at time of purchase, and shall
be secured by a pledge of the Shares purchased by the Note pursuant to the
Security Agreement].
4. Non-Transferability of Option. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribu-
tion and may be exercised during the lifetime of Optionee only by the
Optionee. The terms of the Plan and this Option Agreement shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.
5. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. Tax Consequences. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUM-
MARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS
OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may incur regular
federal income tax liability upon exercise of a NSO. The Optionee will be
treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the Fair Market Value of the Exer-
cised Shares on the date of exercise over their aggregate Exercise Price. If
the Optionee is an Employee or a former Employee, the Company will be required
-3-
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<PAGE>
to withhold from his or her compensation or collect from Optionee and pay to
the applicable taxing authorities an amount in cash equal to a percentage of
this compensation income at the time of exercise, and may refuse to honor
the exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
(ii) Incentive Stock Option. If this Option qualifies as an ISO,
the Optionee will have no regular federal income tax liability upon its exer-
cise, although the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to alternative minimum taxable income for federal
tax purposes and may subject the Optionee to alternative minimum tax in the
year of exercise. In the event that the Optionee ceases to be an Employee
but remains a Service Provider, any Incentive Stock Option of the Optionee
that remains unexercised shall cease to qualify as an Incentive Stock Option
and will be treated for tax purposes as a Nonstatutory Stock Option on the
date three (3) months and one (1) day following such change of status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least one
year, any gain realized on disposition of the Shares will be treated as long-
term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one
year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise
and the aggregate Exercise Price, or (B) the difference between the sale price
of such Shares and the aggregate Exercise Price. Any additional gain will be
taxed as capital gain, short-term or long-term depending on the period that
the ISO Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant
to an ISO on or before the later of (i) two years after the grant date, or (ii)
one year after the exercise date, the Optionee shall immediately notify the
Company in writing of such disposition. The Optionee agrees that he or she
may be subject to income tax withholding by the Company on the compensation
income recognized from such early disposition of ISO Shares by payment in cash
or out of the current earnings paid to the Optionee.
7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee
with respect to the subject matter hereof, and may not be modified adversely
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<PAGE>
to the Optionee's interest except by means of a writing signed by the Company
and Optionee. This agreement is governed by the internal substantive laws,
but not the choice of law rules, of California.
8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT,
THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH
HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee
has reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agree-
ment. Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions relating
to the Plan and Option Agreement. Optionee further agrees to notify the
Company upon any change in the residence address indicated below.
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<PAGE>
OPTIONEE: EUPHONIX, INC.
___________________________________ _______________________________________
Signature By
____________________________________ ______________________________________
Print Name Title
____________________________________
Residence Address
____________________________________
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<PAGE>
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Option Agreement. In consideration
of the Company's granting his or her spouse the right to purchase Shares as
set forth in the Plan and this Option Agreement, the undersigned hereby agrees
to be irrevocably bound by the terms and conditions of the Plan and this
Option Agreement and further agrees that any community property interest shall
be similarly bound. The undersigned hereby appoints the undersigned's spouse
as attorney-in-fact for the undersigned with respect to any amendment or exer-
cise of rights under the Plan or this Option Agreement.
_______________________________________
Spouse of Optionee
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<PAGE>
EXHIBIT A
1990 STOCK PLAN
EXERCISE NOTICE
Euphonix, Inc.
220 Portage Road
Palo Alto, California 94306
Attention: Jeffrey A. Chew
1. Exercise of Option. Effective as of today, ________________, 199__, the
undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Euphonix, Inc. (the "Company") under and
pursuant to the 1990 Stock Plan (the "Plan") and the Stock Option Agreement
dated , 19___ (the "Option Agreement"). The purchase price for
the Shares shall be $ , as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the full
purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of
the Company) of the Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Optioned Stock, notwith-
standing the exercise of the Option. The Shares so acquired shall be issued
to the Optionee as soon as practicable after exercise of the Option. No adjust-
ment will be made for a dividend or other right for which the record date is
prior to the date of issuance, except as provided in Section 13 of the Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse
tax consequences as a result of Purchaser's purchase or disposition of the
Shares. Purchaser represents that Purchaser has consulted with any tax consul-
tants Purchaser deems advisable in connection with the purchase or disposi-
tion of the Shares and that Purchaser is not relying on the Company for any
tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are incor-
porated herein by reference. This Agreement, the Plan and the Option Agree-
ment constitute the entire agreement of the parties with respect to the sub-
ject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except
Page 29 of 50
<PAGE>
by means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
Submitted by: Accepted by:
PURCHASER: EUPHONIX, INC.
__________________________________ _____________________________________
Signature By
__________________________________ _____________________________________
Print Name Its
Address: Address:
_________________________________ 220 Portage Road
_________________________________ Palo Alto, California 94306
_____________________________________
Date Received
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<PAGE>
EXHIBIT B
SECURITY AGREEMENT
This Security Agreement is made as of __________, 19___ between
Euphonix, Inc., a California corporation ("Pledgee"), and _____________
____________ ("Pledgor").
Recitals
Pursuant to Pledgor's election to purchase Shares under the Option Agree-
ment dated ________ (the "Option"), between Pledgor and Pledgee under Pledgee's
1990 Stock Plan, and Pledgor's election under the terms of the Option to pay
for such shares with his promissory note (the "Note"), Pledgor has purchased
_________ shares of Pledgee's Common Stock (the "Shares") at a price of
$________ per share, for a total purchase price of $__________. The Note
and the obligations thereunder are as set forth in Exhibit C to the Option.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In consideration of
the transfer of the Shares to Pledgor under the Option Agreement, Pledgor,
pursuant to the California Commercial Code, hereby pledges all of such Shares
(herein sometimes referred to as the "Collateral") represented by certificate
number ______, duly endorsed in blank or with executed stock powers, and here-
with delivers said certificate to the Secretary of Pledgee ("Pledgeholder"),
who shall hold said certificate subject to the terms and conditions of this
Security Agreement.
The pledged stock (together with an executed blank stock assignment for
use in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and any extensions or renewals there-
of, to be executed by Pledgor pursuant to the terms of the Option, and the
Pledgeholder shall not encumber or dispose of such Shares except in accordance
with the provisions of this Security Agreement.
2. Pledgor's Representations and Covenants. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:
a. Payment of Indebtedness. Pledgor will pay the principal sum of
the Note secured hereby, together with interest thereon, at the time and in
the manner provided in the Note.
b. Encumbrances. The Shares are free of all other encumbrances,
defenses and liens, and Pledgor will not further encumber the Shares without
the prior written consent of Pledgee.
c. Margin Regulations. In the event that Pledgee's Common Stock is
now or later becomes margin-listed by the Federal Reserve Board and Pledgee
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<PAGE>
is classified as a "lender" within the meaning of the regulations under Part
207 of Title 12 of the Code of Federal Regulations ("Regulation G"), Pledgor
agrees to cooperate with Pledgee in making any amendments to the Note or provid-
ing any additional collateral as may be necessary to comply with such regula-
tions.
3. Voting Rights. During the term of this pledge and so long as all pay-
ments of principal and interest are made as they become due under the terms of
the Note, Pledgor shall have the right to vote all of the Shares pledged here-
under.
4. Stock Adjustments. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and addi-
tional shares or other securities issued by reason of any such change shall
be delivered to and held by the Pledgee under the terms of this Security Agree-
ment in the same manner as the Shares originally pledged hereunder. In the
event of substitution of such securities, Pledgor, Pledgee and Pledgeholder
shall cooperate and execute such documents as are reasonable so as to provide
for the substitution of such Collateral and, upon such substitution, references
to "Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.
5. Options and Rights. In the event that, during the term of this
pledge, subscription Options or other rights or options shall be issued in con-
nection with the pledged Shares, such rights, Options and options shall be the
property of Pledgor and, if exercised by Pledgor, all new stock or other securi-
ties so acquired by Pledgor as it relates to the pledged Shares then held by
Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.
6. Default. Pledgor shall be deemed to be in default of the Note and
of this Security Agreement in the event:
a. Payment of principal or interest on the Note shall be delinquent
for a period of 10 days or more; or
b. Pledgor fails to perform any of the covenants set forth in the
Option or contained in this Security Agreement for a period of 10 days after
written notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the Cali-
fornia Commercial Code.
7. Release of Collateral. Subject to any applicable contrary rules
under Regulation G, there shall be released from this pledge a portion of the
pledged Shares held by Pledgeholder hereunder upon payments of the principal
-2-
Page 32 of 50
<PAGE>
of the Note. The number of the pledged Shares which shall be released shall
be that number of full Shares which bears the same proportion to the initial
number of Shares pledged hereunder as the payment of principal bears to the
initial full principal amount of the Note.
8. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.
9. Term. The within pledge of Shares shall continue until the payment
of all indebtedness secured hereby, at which time the remaining pledged stock
shall be promptly delivered to Pledgor, subject to the provisions for prior
release of a portion of the Collateral as provided in paragraph 7 above.
10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency pro-
ceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of cred-
itors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
11. Pledgeholder Liability. In the absence of willful or gross negli-
gence, Pledgeholder shall not be liable to any party for any of his acts, or
omissions to act, as Pledgeholder.
12. Invalidity of Particular Provisions. Pledgor and Pledgee agree
that the enforceability or invalidity of any provision or provisions of this
Security Agreement shall not render any other provision or provisions herein
contained unenforceable or invalid.
13. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective succes-
sors and assigns, and that the term "Pledgor" and the term "Pledgee" as used
herein shall be deemed to include, for all purposes, the respective desig-
nees, successors, assigns, heirs, executors and administrators.
14. Governing Law. This Security Agreement shall be interpreted and
governed under the internal substantive laws, but not the choice of law rules,
of California.
-3-
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"PLEDGOR" _________________________________
Signature
_________________________________
Print Name
Address: _________________________________
_________________________________
"PLEDGEE" Euphonix, Inc.,
a California corporation
________________________________
Signature
________________________________
Print Name
________________________________
Title
"PLEDGEHOLDER" ________________________________
Secretary of
Euphonix, Inc.
-4-
Page 34 of 50
<PAGE>
EXHIBIT C
NOTE
$_______________ [City, State]
______________, 19___
FOR VALUE RECEIVED, _______________ promises to pay to Euphonix, Inc.,
a California corporation (the "Company"), or order, the principal sum of
________________________________ ($_____________), together with interest on
the unpaid principal hereof from the date hereof at the rate of _______________
percent (____%) per annum, compounded semiannually.
Principal and interest shall be due and payable on __________, 19___.
Should the undersigned fail to make full payment of principal or interest for
a period of 10 days or more after the due date thereof, the whole unpaid
balance on this Note of principal and interest shall become immediately due
at the option of the holder of this Note. Payments of principal and interest
shall be made in lawful money of the United States of America.
The undersigned may at any time prepay all or any portion of the prin-
cipal or interest owing hereunder.
This Note is subject to the terms of the Option, dated as of ________
________. This Note is secured in part by a pledge of the Company's Common
Stock under the terms of a Security Agreement of even date herewith and is
subject to all the provisions thereof.
The holder of this Note shall have full recourse against the under-
signed, and shall not be required to proceed against the collateral securing
this Note in the event of default.
In the event the undersigned shall cease to be an employee, director
or consultant of the Company for any reason, this Note shall, at the option
of the Company, be accelerated, and the whole unpaid balance on this Note of
principal and accrued interest shall be immediately due and payable.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by
the undersigned.
____________________________________
____________________________________
Page 35 of 50
<PAGE>
1990 STOCK PLAN
NOTICE OF GRANT OF STOCK PURCHASE RIGHT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Notice of Grant.
[Grantee's Name and Address]
You have been granted the right to purchase Common Stock of the Company,
subject to the Company's Repurchase Option and your ongoing status as a Ser-
vice Provider (as described in the Plan and the attached Restricted Stock Pur-
chase Agreement), as follows:
Grant Number _________________________
Date of Grant _________________________
Price Per Share $________________________
Total Number of Shares Subject _________________________
to This Stock Purchase Right
Expiration Date: _________________________
YOU MUST EXERCISE THIS STOCK PURCHASE RIGHT BEFORE THE EXPIRATION
DATE OR IT WILL TERMINATE AND YOU WILL HAVE NO FURTHER RIGHT TO PURCHASE
THE SHARES. By your signature and the signature of the Company's representa-
tive below, you and the Company agree that this Stock Purchase Right is granted
under and governed by the terms and conditions of the 1990 Stock Plan and the
Restricted Stock Purchase Agreement, attached hereto as Exhibit A-1, both of
which are made a part of this document. You further agree to execute the
attached Restricted Stock Purchase Agreement as a condition to purchasing any
shares under this Stock Purchase Right.
GRANTEE: EUPHONIX, INC.
___________________________ ________________________________
Signature By
___________________________ ________________________________
Print Name Title
Page 36 of 50
<PAGE>
EXHIBIT A-1
1990 STOCK PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Restricted Stock Purchase Agreement.
WHEREAS the Purchaser named in the Notice of Grant, (the "Purchaser")
is an Service Provider, and the Purchaser's continued participation is consid-
ered by the Company to be important for the Company's continued growth; and
WHEREAS in order to give the Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for the Purchaser to partici-
pate in the affairs of the Company, the Administrator has granted to the
Purchaser a Stock Purchase Right subject to the terms and conditions of
the Plan and the Notice of Grant, which are incorporated herein by reference,
and pursuant to this Restricted Stock Purchase Agreement (the "Agreement").
NOW THEREFORE, the parties agree as follows:
1. Sale of Stock. The Company hereby agrees to sell to the Purchaser
and the Purchaser hereby agrees to purchase shares of the Company's Common
Stock (the "Shares"), at the per Share purchase price and as otherwise described
in the Notice of Grant.
2. Payment of Purchase Price. The purchase price for the Shares may
be paid by delivery to the Company at the time of execution of this Agreement
of cash, a check, or some combination thereof.
3. Repurchase Option.
(a) In the event the Purchaser ceases to be a Service Provider for
any or no reason (including death or disability) before all of the Shares are
released from the Company's Repurchase Option (see Section 4), the Company
shall, upon the date of such termination (as reasonably fixed and determined
by the Company) have an irrevocable, exclusive option (the "Repurchase Option")
for a period of sixty (60) days from such date to repurchase up to that num-
ber of shares which constitute the Unreleased Shares (as defined in Section 4)
at the original purchase price per share (the "Repurchase Price"). The Repur-
chase Option shall be exercised by the Company by delivering written notice
to the Purchaser or the Purchaser's executor (with a copy to the Escrow Holder)
AND, at the Company's option, (i) by delivering to the Purchaser or the Purc-
haser's executor a check in the amount of the aggregate Repurchase Price, or
(ii) by cancelling an amount of the Purchaser's indebtedness to the Company
equal to the aggregate Repurchase Price, or (iii) by a combination of (i) and
(ii) so that the combined payment and cancellation of indebtedness equals the
aggregate Repurchase Price. Upon delivery of such notice and the payment of
Page 37 of 50
<PAGE>
the aggregate Repurchase Price, the Company shall become the legal and benefi-
cial owner of the Shares being repurchased and all rights and interests therein
or relating thereto, and the Company shall have the right to retain and trans-
fer to its own name the number of Shares being repurchased by the Company.
(b) Whenever the Company shall have the right to repurchase Shares
hereunder, the Company may designate and assign one or more employees,
officers, directors or shareholders of the Company or other persons or organi-
zations to exercise all or a part of the Company's purchase rights under this
Agreement and purchase all or a part of such Shares. If the Fair Market Value
of the Shares to be repurchased on the date of such designation or assignment
(the "Repurchase FMV") exceeds the aggregate Repurchase Price of such Shares,
then each such designee or assignee shall pay the Company cash equal to the
difference between the Repurchase FMV and the aggregate Repurchase Price of
such Shares.
4. Release of Shares From Repurchase Option.
(a) _______________________ percent (______%) of the Shares shall
be released from the Company's Repurchase Option [one year] after the
Date of Grant and __________________ percent (______%) of the Shares [at the
end of each month thereafter], provided that the Purchaser does not cease to
be a Service Provider prior to the date of any such release.
(b) Any of the Shares that have not yet been released from the Repur-
chase Option are referred to herein as "Unreleased Shares."
(c) The Shares that have been released from the Repurchase Option
shall be delivered to the Purchaser at the Purchaser's request (see Section 6).
5. Restriction on Transfer. Except for the escrow described in Sec-
tion 6 or the transfer of the Shares to the Company or its assignees contemp-
lated by this Agreement, none of the Shares or any beneficial interest there-
in shall be transferred, encumbered or otherwise disposed of in any way
until such Shares are released from the Company's Repurchase Option in accor-
dance with the provisions of this Agreement, other than by will or the laws
of descent and distribution.
6. Escrow of Shares.
(a) To ensure the availability for delivery of the Purchaser's Unre-
leased Shares upon repurchase by the Company pursuant to the Repurchase Option,
the Purchaser shall, upon execution of this Agreement, deliver and deposit
with an escrow holder designated by the Company (the "Escrow Holder") the share
certificates representing the Unreleased Shares, together with the stock
assignment duly endorsed in blank, attached hereto as Exhibit A-2. The Unre-
leased Shares and stock assignment shall be held by the Escrow Holder, pursu-
ant to the Joint Escrow Instructions of the Company and Purchaser attached
hereto as Exhibit A-3, until such time as the Company's Repurchase Option
-2-
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<PAGE>
expires. As a further condition to the Company's obligations under this Agree-
ment, the Company may require the spouse of Purchaser, if any, to execute and
deliver to the Company the Consent of Spouse attached hereto as Exhibit A-4.
(b) The Escrow Holder shall not be liable for any act it may do or
omit to do with respect to holding the Unreleased Shares in escrow while
acting in good faith and in the exercise of its judgment.
(c) If the Company or any assignee exercises the Repurchase Option
hereunder, the Escrow Holder, upon receipt of written notice of such exercise
from the proposed transferee, shall take all steps necessary to accomplish
such transfer.
(d) When the Repurchase Option has been exercised or expires unexer-
cised or a portion of the Shares has been released from the Repurchase Option,
upon request the Escrow Holder shall promptly cause a new certificate to be
issued for the released Shares and shall deliver the certificate to the Company
or the Purchaser, as the case may be.
(e) Subject to the terms hereof, the Purchaser shall have all the
rights of a shareholder with respect to the Shares while they are held in
escrow, including without limitation, the right to vote the Shares and to
receive any cash dividends declared thereon. If, from time to time during
the term of the Repurchase Option, there is (i) any stock dividend, stock
split or other change in the Shares, or (ii) any merger or sale of all or sub-
stantially all of the assets or other acquisition of the Company, any and all
new, substituted or additional securities to which the Purchaser is entitled
by reason of the Purchaser's ownership of the Shares shall be immediately sub-
ject to this escrow, deposited with the Escrow Holder and included thereafter
as "Shares" for purposes of this Agreement and the Repurchase Option.
7. Legends. The share certificate evidencing the Shares, if any,
issued hereunder shall be endorsed with the following legend (in addition to
any legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE COMPANY.
8. Adjustment for Stock Split. All references to the number of
Shares and the purchase price of the Shares in this Agreement shall be appro-
priately adjusted to reflect any stock split, stock dividend or other change
in the Shares which may be made by the Company after the date of this Agree-
ment.
9. Tax Consequences. The Purchaser has reviewed with the Purchaser's
own tax advisors the federal, state, local and foreign tax consequences of
-3-
Page 39 of 50
<PAGE>
this investment and the transactions contemplated by this Agreement. The Pur-
chaser is relying solely on such advisors and not on any statements or represen-
tations of the Company or any of its agents. The Purchaser understands that the
Purchaser (and not the Company) shall be responsible for the Purchaser's own tax
liability that may arise as a result of the transactions contemplated by this
Agreement. The Purchaser understands that Section 83 of the Internal Revenue
Code of 1986, as amended (the "Code"), taxes as ordinary income the difference
between the purchase price for the Shares and the Fair Market Value of the
Shares as of the date any restrictions on the Shares lapse. In this context,
"restriction" includes the right of the Company to buy back the Shares pursu-
ant to the Repurchase Option. The Purchaser understands that the Purchaser
may elect to be taxed at the time the Shares are purchased rather than when and
as the Repurchase Option expires by filing an election under Section 83(b) of
the Code with the IRS within 30 days from the date of purchase. The form for
making this election is attached as Exhibit A-5 hereto.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER
SECTION 83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON THE PURCHASER'S BEHALF.
10. General Provisions.
(a) This Agreement shall be governed by the internal substantive
laws, but not the choice of law rules of California. This Agreement, subject
to the terms and conditions of the Plan and the Notice of Grant, represents
the entire agreement between the parties with respect to the purchase of the
Shares by the Purchaser. Subject to Section 15(c) of the Plan, in the event
of a conflict between the terms and conditions of the Plan and the terms and
conditions of this Agreement, the terms and conditions of the Plan shall pre-
vail. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Agreement.
(b) Any notice, demand or request required or permitted to be given
by either the Company or the Purchaser pursuant to the terms of this Agree-
ment shall be in writing and shall be deemed given when delivered personally
or deposited in the U.S. mail, First Class with postage prepaid, and addres-
sed to the parties at the addresses of the parties set forth at the end of
this Agreement or such other address as a party may request by notifying the
other in writing.
Any notice to the Escrow Holder shall be sent to the Company's add-
ress with a copy to the other party hereto.
(c) The rights of the Company under this Agreement shall be trans-
ferable to any one or more persons or entities, and all covenants and agree-
ments hereunder shall inure to the benefit of,
and be enforceable by the Company's successors and assigns. The rights and
obligations of the Purchaser under this Agreement may only be assigned with
the prior written consent of the Company.
-4-
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<PAGE>
(d) Either party's failure to enforce any provision of this Agree-
ment shall not in any way be construed as a waiver of any such provision, nor
prevent that party from thereafter enforcing any other provision of this Agree-
ment. The rights granted both parties hereunder are cumulative and shall not
constitute a waiver of either party's right to assert any other legal remedy
available to it.
(e) The Purchaser agrees upon request to execute any further docu-
ments or instruments necessary or desirable to carry out the purposes or intent
of this Agreement.
(f) PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS A SER-
VICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING
HIRED OR PURCHASING SHARES HEREUNDER). PURCHASER FURTHER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE
VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED
PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD,
FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH PURCHASER'S RIGHT OR
THE COMPANY'S RIGHT TO TERMINATE PURCHASER'S RELATIONSHIP AS A SERVICE PROVIDER
AT ANY TIME, WITH OR WITHOUT CAUSE.
By Purchaser's signature below, Purchaser represents that he or she is
familiar with the terms and provisions of the Plan, and hereby accepts this
Agreement subject to all of the terms and provisions thereof. Purchaser has
reviewed the Plan and this Agreement in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Agreement and fully
understands all provisions of this Agreement. Purchaser agrees to accept as
binding, conclusive and final all decisions or interpretations of the Adminis-
trator upon any questions arising under the Plan or this Agreement. Purchaser
further agrees to notify the Company upon any change in the residence indicated
in the Notice of Grant.
DATED: _____________________
PURCHASER: EUPHONIX, INC.
______________________________ __________________________________
Signature By
______________________________ __________________________________
Print Name Title
-5-
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<PAGE>
EXHIBIT A-2
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, __________________________, hereby sell, assign
and transfer unto (__________) shares of the Common Stock of Euphonix, Inc.
standing in my name of the books of said corporation represented by Certifica-
te No. _____ herewith and do hereby irrevocably constitute and appoint to trans-
fer the said stock on the books of the within named corporation with full power
of substitution in the premises.
This Stock Assignment may be used only in accordance with the Restric-
ted Stock Purchase Agreement (the "Agreement") between________________________
and the undersigned dated ______________, 19__.
Dated: _______________, 19
Signature:______________________________
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise the Repur-
chase Option, as set forth in the Agreement, without requiring additional signa-
tures on the part of the Purchaser.
Page 42 of 50
<PAGE>
EXHIBIT A-3
JOINT ESCROW INSTRUCTIONS
, 19
------ --
Corporate Secretary
Euphonix, Inc.
220 Portage Road
Palo Alto, California 94306
Dear :
-----------------
As Escrow Agent for both Euphonix, Inc., a California corporation (the
"Company"), and the undersigned purchaser of stock of the Company (the "Purc-
haser"), you are hereby authorized and directed to hold the documents delivered
to you pursuant to the terms of that certain Restricted Stock Purchase Agree-
ment ("Agreement") between the Company and the undersigned, in accordance with
the following instructions:
1. In the event the Company and/or any assignee of the Company (refer-
red to collectively as the "Company") exercises the Company's Repurchase Option
set forth in the Agreement, the Company shall give to Purchaser and you a writ-
ten notice specifying the number of shares of stock to be purchased, the pur-
chase price, and the time for a closing hereunder at the principal office of
the Company. Purchaser and the Company hereby irrevocably authorize and direct
you to close the transaction contemplated by such notice in accordance with the
terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate evi-
dencing the shares of stock to be transferred, to the Company or its assignee,
against the simultaneous delivery to you of the purchase price (by cash, a
check, or some combination thereof) for the number of shares of stock being
purchased pursuant to the exercise of the Company's Repurchase Option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement. Pur-
chaser does hereby irrevocably constitute and appoint you as Purchaser's attor-
ney-in-fact and agent for the term of this escrow to execute with respect to
such securities all documents necessary or appropriate to make such securities
negotiable and to complete any transaction herein contemplated, including but
not limited to the filing with any applicable state blue sky authority of any
required applications for consent to, or notice of transfer of, the securi-
ties. Subject to the provisions of this paragraph 3, Purchaser shall exercise
all rights and privileges of a shareholder of the Company while the stock is
held by you.
Page 43 of 50
<PAGE>
4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's Repurchase Option has been exercised, you
shall deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's Repurchase Option.
Within 90 days after Purchaser ceases to be a Service Provider, you shall deli-
ver to Purchaser a certificate or certificates representing the aggregate num-
ber of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's Repurchase
Option.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in rely-
ing or refraining from acting on any instrument reasonably believed by you to
be genuine and to have been signed or presented by the proper party or parties.
You shall not be personally liable for any act you may do or omit to do here-
under as Escrow Agent or as attorney-in-fact for Purchaser while acting in good
faith, and any act done or omitted by you pursuant to the advice of your own
attorneys shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation, excep-
ting only orders or process of courts of law, and are hereby expressly author-
ized to comply with and obey orders, judgments or decrees of any court. In case
you obey or comply with any such order, judgment or decree, you shall not be
liable to any of the parties hereto or to any other person, firm or corpora-
tion by reason of such compliance, notwithstanding any such order, judgment or
decree being subsequently reversed, modified, annulled, set aside, vacated or
found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under the
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your obliga-
tions hereunder, may rely upon the advice of such counsel, and may pay such
counsel reasonable compensation therefor.
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<PAGE>
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer or agent of the Company or if you shall resign
by written notice to each party. In the event of any such termination, the
Company shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in connec-
tion with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with res-
pect to the delivery and/or ownership or right of possession of the securities
held by you hereunder, you are authorized and directed to retain in your posses-
sion without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the par-
ties concerned or by a final order, decree or judgment of a court of competent
jurisdiction after the time for appeal has expired and no appeal has been per-
fected, but you shall be under no duty whatsoever to institute or defend any
such proceedings.
15. Any notice required or permitted hereunder shall be given in writ-
ing and shall be deemed effectively given upon personal delivery or upon depo-
sit in the United States Post Office, by registered or certified mail with post-
age and fees prepaid, addressed to each of the other parties thereunto entitled
at the following addresses or at such other addresses as a party may designate
by ten days' advance written notice to each of the other parties hereto.
COMPANY: Euphonix, Inc.
220 Portage Road
Palo Alto, California 94306
PURCHASER:
----------------------------------
----------------------------------
----------------------------------
ESCROW AGENT: Corporate Secretary
Euphonix, Inc.
220 Portage Road
Palo Alto, California 94306
16. By signing these Joint Escrow Instructions, you become a party here-
to only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
-3-
Page 45 of 50
<PAGE>
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the internal substantive laws, but not the
choice of law rules, of California.
Very truly yours,
EUPHONIX, INC.
_____________________________________
By
_____________________________________
Title
PURCHASER:
_____________________________________
Signature
_____________________________________
Print Name
ESCROW AGENT:
_____________________________________
Corporate Secretary
-4-
Page 46 of 50
<PAGE>
EXHIBIT A-4
CONSENT OF SPOUSE
I, ____________________, spouse of ___________________, have read and
approve the foregoing Restricted Stock Purchase Agreement (the "Agreement").
In consideration of the Company's grant to my spouse of the right to purchase
shares of Euphonix, Inc., as set forth in the Agreement, I hereby appoint my
spouse as my attorney-in-fact in respect to the exercise of any rights under the
Agreement and agree to be bound by the provisions of the Agreement insofar as I
may have any rights in said Agreement or any shares issued pursuant thereto
under the community property laws or similar laws relating to marital property
in effect in the state of our residence as of the date of the signing of the
foregoing Agreement.
Dated: _______________, 19
__________________________________________
Signature of Spouse
Page 47 of 50
<PAGE>
EXHIBIT A-5
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross
income for the current taxable year the amount of any compensation taxable
to taxpayer in connection with his or her receipt of the property described
below:
1. The name, address, taxpayer identification number and taxable year of
the undersigned are as follows:
NAME: TAXPAYER: SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described
as follows: shares (the "Shares") of the Common Stock of
------------
of Euphonix, Inc. (the "Company").
3. The date on which the property was transferred is:_________ , 19__.
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, upon
certain events. This right lapses with regard to a portion of the Shares
based on the continued performance of services by the taxpayer over time.
5. The fair market value at the time of transfer, determined without regard
to any restriction other than a restriction which by its terms will never
lapse, of such property is:
$_______________.
6. The amount (if any) paid for such property is:
$_______________.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person per-
forming the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.
Dated: ___________________, 19___ __________________________________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: ___________________, 19____ ___________________________________________
Spouse of Taxpayer
Page 48 of 50
<PAGE>
EXHIBIT 5.1
December 09, 1996
Euphonix, Inc.
220 Portage Avenue
Palo Alto, CA 94306
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by
you with the Securities and Exchange Commission on or about December 09, 1996
(the "Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of 500,000 shares of your Common Stock
(the "Shares") reserved for issuance under the 1990 Stock Plan (the "Plan").
As your legal counsel, we have examined the proceedings taken and proposed
to be taken in connection with the issuance, sale and payment of consideration
for the Shares to be issued under the Plan.
It is our opinion that, when issued and sold in compliance with appli-
cable prospectus delivery requirements and in the manner referred to in the
Plan and pursuant to the agreements which accompany the Plan, the Shares will
be legally and validly issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registra-
tion Statement and further consent to the use of our name wherever appearing
in the Registration Statement and any amendments thereto.
Sincerely,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/Wilson Sonsini Goodrich & Rosati
Page 49 of 50
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration State-
ment (Form S-8) pertaining to the 1990 Stock Option Plan of Euphonix,
Inc. of our report dated February 12, 1996, with respect to the finan-
cial statements and schedule of Euphonix, Inc. included in its Annual
Report (Form 10-K) for the year ended December 31, 1995, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
/s/ Ernst & Young LLP
San Jose, California
December 04, 1996
Page 50 of 50
