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                                                                   EXHIBIT 10.27

                             SUBORDINATION AGREEMENT

        This Subordination Agreement (this "Agreement") dated February 22, 2000,
is entered into by and between Taurean Investments AG and Pegasus Capital II,
L.P. (collectively, the "Creditors"), on the one hand, and Dieter Meier, Walter
Bosch, Stephen D. Jackson, Milton Chang and Onset Ventures (collectively, the
"Investors"), on the other hand.

                                    RECITALS

        A. Euphonix, Inc., a California corporation (the "Borrower") has
requested that the Investors extend credit to the Borrower as evidenced by a
Secured Promissory Note dated February 22, 2000 (the "February 22 Note"),
secured by the assets and property of Borrower.

        B. The Creditors extended credit to the Borrower pursuant to a Secured
Promissory Note dated July 30, 1999 (the "July 30 Note").

        C. To induce Investors to extend credit to the Borrower pursuant to the
February 22 Note, the Creditors agree to subordinate, under the terms and
conditions set forth herein, (i) all of the Borrower's indebtedness and
obligations to the Creditors, existing now or hereafter (the "Subordinated
Debt") to all of the Borrower's indebtedness and obligations to Investors under
the February 22 Note, in an amount not to exceed $1,500,000 plus accrued
interest thereon, exclusive of costs of collection (the "Senior Debt"); and (ii)
all of the Creditors' security interests, to all of Investors' security
interests in the Borrower's property.

THE PARTIES AGREE AS FOLLOWS:

        1. The Creditors subordinate to the Investors any security interest or
lien that they have in any property of the Borrower. Despite attachment or
perfection dates of the Creditors' security interest and the Investors' security
interest, the Investors' security interest in the Collateral, as defined in the
February 22 Note, is prior to the Creditors' security interest.

        2. All Subordinated Debt payments are subordinated to all Senior Debt,
including interest accruing after any bankruptcy, reorganization or similar
proceeding and all obligations under the February 22 Note (the "Senior Debt").
Notwithstanding the foregoing, the Creditors may (i) receive regularly scheduled
payments of interest that constitute Subordinated Debt, pursuant to the terms of
the July 30 Note, provided that no Event of Default (as defined in the February
22 Note) has occurred and is continuing or would result from such payment and
(ii) convert any Subordinated Debt into equity securities of the Borrower under
the terms and conditions set forth in the July 30 Note.

        3. Without the written consent of the Investors, such consent to be
granted in the Investors' sole discretion, the Creditors will not:
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               (a)    demand or receive from the Borrower (and the Borrower will
                      not pay), except as provided in Section 2, above, any part
                      of the Subordinated Debt, by payment, prepayment, or
                      otherwise,

               (b)    exercise any remedy against the Collateral, or

               (c)    accelerate the Subordinated Debt, or begin to or
                      participate in any action against the Borrower, until all
                      the Senior Debt is paid.

        4. The Creditors must deliver to the Investors in the form received
(except for endorsement or assignment by the Creditors) any payment,
distribution, security or proceeds it receives on the Subordinated Debt other
than according to this Agreement.

        5. This Agreement shall remain in full force and effect, despite the
Borrower's insolvency, reorganization or any case or proceeding under any
bankruptcy or insolvency law, and the Investors' claims against the Borrower and
the Borrower's estate will be fully paid, to the extent arising from sums
subordinated hereunder, before any payment is made to the Creditors.

        6. Until the Senior Debt is paid, the Creditors irrevocably appoint the
Investors as their attorney-in-fact, with power of attorney with power of
substitution, in the Creditors' names or in Investors' name, for the Investors'
use and benefit, with 5 business days notice to the Creditors, to do the
following in any bankruptcy, insolvency or similar proceeding involving the
Borrower:

               (a)    File any claims for the Subordinated Debt for the
                      Creditors if the Creditors do not do so at least 30 days
                      before the time to file claims expires, and

               (b)    Accept or reject any plan of reorganization or arrangement
                      for the Creditors and vote the Creditors' claims in
                      respect of the Subordinated Debt in any way it chooses.

        7. The Creditors will immediately put a legend on the Subordinated Debt
instruments that the instruments are subject to this Agreement. No amendment of
the Subordinated Debt documents will modify this Agreement in any way that
terminates or impairs the subordination of the Subordinated Debt or the
subordination of the security interest or lien that the Investors have in
Borrower's property. For example, instruments may not be amended to (i) increase
the interest rate of the Subordinated Debt, or (ii) accelerate payment of
principal or interest or any other portion of the Subordinated Debt.

        8. This Agreement shall remain in full force and effect so long as the
Borrower owes any portion of the Senior Debt to the Investors. If, after full
payment of the Senior Debt, the Investors must disgorge any payments made on the
Senior Debt, this Agreement and the relative rights and priorities provided in
it, will be reinstated as to all disgorged payments as though the payments had
not been made, and the Creditors will immediately pay the Investors all payments
received under the Subordinated Debt to the extent the payments would have been
prohibited under this Agreement. At any time without notice to the Creditors,
the Investors may take

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actions it considers appropriate on the Senior Debt such as terminating
advances, increasing the principal, extending the time of payment, increasing
interest rates, renewing, compromising or otherwise amending any documents
affecting the Senior Debt and any collateral securing the Senior Debt, and
enforcing or failing to enforce any rights against the Borrower or any other
person. No action or inaction will impair or otherwise affect the Investors'
rights under this Agreement. The Creditors waive any benefits of California
Civil Code Sections 2809, 2810, 2819, 2845, 2847, 2848, 2849, 2850, 2899 and
3433.

        9. This Agreement binds the Creditors, their successors or assigns, and
benefits Investors' successors or assigns. This Agreement is for the Investors'
benefit and not for the benefit of the Borrower or any other party. If the
Borrower is refinancing any of the Senior Debt with a new lender, upon the
Investors' request of Creditors, the Creditors will enter into a new
subordination agreement with the new lender on substantially the terms of this
Agreement.

        10. This Agreement may be executed in two or more counterparts, each of
which is an original and all of which together constitute one instrument.

        11. California law governs this agreement without giving effect to
conflicts of laws principles. The Creditors and the Investors submit to the
exclusive jurisdiction of the courts in Santa Clara County, California. THE
CREDITORS AND THE INVESTORS EACH WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION FROM THIS AGREEMENT.

        12. This Agreement represents is the entire agreement about this subject
matter, and supersedes prior negotiations or agreements. The Creditors are not
relying on any representations by the Investors or the Borrower in entering into
this Agreement. The Creditors will keep themselves informed of the Borrower's
financial and other conditions. This Agreement may be amended only by written
instrument signed by the Creditors and Investors.

        13. If there is an action to enforce the rights of a party under this
Agreement, the party prevailing will be entitled, in addition to other relief,
all reasonable costs and expenses, including reasonable attorneys' fees,
incurred in the action.

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<TABLE>



<S>                                                     <C>
"CREDITORS"                                             "INVESTORS"


TAUREAN INVESTMENTS AG
                                                        -----------------------------
                                                        Dieter Meier

                                                        -----------------------------
By:                                                     Walter Bosch
        ------------------------------

Title:
        ------------------------------                  -----------------------------
                                                        Stephen D. Jackson


                                                        -----------------------------
PEGASUS CAPITAL II, L.P.                                Milton Chang

By:
        ------------------------------                  -----------------------------
                                                        Onset Ventures
Title:
        ------------------------------                  -----------------------------
                                                        By:
                                                        Title:




The Borrower approves the terms of this Agreement.

                                                        The "Borrower"

                                                        EUPHONIX, INC.

                                                        By:
                                                                ----------------------
                                                                Barry Margerum

                                                        Title:  Chief Executive Officer
</TABLE>

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