Exhibit 10.1

March 25, 2008

Sonic Foundry, Inc.

Sonic Foundry Media Systems, Inc.

222 W. Washington Avenue, Suite 775

Madison, Wisconsin 53703

Attn: Mr. Ken Minor

Re: Modification to Financial Covenant

Dear Ken:

This letter is written in connection with that certain Loan and Security
Agreement by and among Silicon Valley Bank, as lender (“Bank”), and Sonic
Foundry, Inc. and Sonic Foundry Media Systems, Inc., as borrowers (collectively,
“Borrower”), dated May 2, 2007, as amended by that certain First Loan
Modification Agreement dated December 17, 2007 (collectively, and may be further
amended from time to time, the “Loan Agreement”). Capitalized terms used but not
otherwise defined herein shall have the meaning set forth in the Loan Agreement.

Pursuant to the terms of Section 6.7(b) of the Loan Agreement, beginning
December 31, 2007, and as of the last day of each quarter thereafter, Borrower
is required to maintain a Tangible Net Worth of at least (a) Five Million Five
Hundred Thousand Dollars ($5,500,000), plus (b) fifty percent (50%) of
Borrower’s Net Income or new equity or Subordinated Debt, on a quarterly basis
(the “TNW Covenant”). Borrower has requested that Bank modify the TNW Covenant.
Bank and Borrower desire to amend and restate Section 6.7(b) of the Loan
Agreement in its entirety as follows:

(b) Tangible Net Worth. Beginning March 31, 2008, and as of the last day of each
quarter thereafter, Borrower is required to maintain a Tangible Net Worth of at
least (a) Two Million Eight Hundred Thousand Dollars ($2,800,000), plus
(b) fifty percent (50%) of Borrower’s Net Income or new equity or Subordinated
Debt, on a quarterly basis

By signing below and returning a copy of this letter to Bank, Borrower
acknowledges that the Loan Agreement is hereby modified in accordance with the
provisions set forth above. Borrower further understands and agrees that in
modifying the Loan Agreement, Bank is relying upon Borrower’s representations,
warranties and agreement, as set forth in the Loan Agreement. Except as
expressly set forth herein, the terms of the Loan Agreement shall remain
unchanged and in full force and effect. Bank’s agreement to this modification
shall in no way obligate Bank to make any future waivers or modifications to the
Loan Agreement. Nothing in this letter shall

 

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March 25, 2008

Mr. Ken Minor

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constitute satisfaction of the Borrower’s indebtedness to Bank. It is the
intention of Bank and Borrower to retain as liable parties all makers and
endorsers of the Loan Agreement, unless the party is expressly released by Bank
in writing. Unless expressly released herein, no maker, endorser or guarantor
will be released by virtue of this letter. The terms of this paragraph apply not
only to this letter, but to all subsequent loan modification agreements.

The provisions of this letter shall not be deemed effective until such time as
Borrower shall have returned, a countersigned copy to Bank.

 

Very truly yours, SILICON VALLEY BANK By:  

/s/ Adam Glick

  Adam Glick, Relationship Manager

 

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March 25, 2008

Mr. Ken Minor

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By executing below, the undersigned acknowledges and confirms the effectiveness
of this letter.

 

BORROWER:

SONIC FOUNDRY, INC.,

a Maryland corporation

By:  

/s/ Kenneth A. Minor

Name:   Kenneth A. Minor Its:   CFO SONIC FOUNDRY MEDIA SYSTEMS, INC., a
Maryland corporation By:  

/s/ Kenneth A. Minor

Name:   Kenneth A. Minor Its:   Secretary

 

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