Exhibit 10.30

WARRANT

THIS WARRANT (“WARRANT”) TO PURCHASE SHARES IN THE CAPITAL OF SONIC FOUNDRY,
INC., A MARYLAND CORPORATION (THE “COMPANY”) IS ISSUED ON THE ISSUE DATE
PURSUANT TO THE TERMS OF THAT CERTAIN LOAN AND SECURITY AGREEMENT BETWEEN THE
COMPANY AND PARTNERS FOR GROWTH IV, L.P. (THE “LOAN AGREEMENT”). THIS WARRANT IS
SOLD IN A PRIVATE TRANSACTION, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND REGULATIONS PROMULGATED THEREUNDER (THE “SECURITIES ACT”)
OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED OR SOLD ONLY IF
REGISTERED UNDER THE SECURITIES ACT AND SUCH LAWS OR IF AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND SUCH LAWS IS AVAILABLE.

 

Company: Sonic Foundry, Inc., a Maryland corporation Warrant Stock: Common
Stock, par value $0.01 per share Number of Shares: Up to 2,400, subject to
adjustment Exchange Price: $9.66 per Share, subject to adjustment Issue Date:
May 14, 2015 Expiration Date: May 14, 2020

The term “Holder” shall initially refer to PFG Equity Investors, LLC, a Delaware
limited partnership, which is the initial holder of this Warrant and shall
further refer to any subsequent permitted holder of this Warrant from time to
time.

The Company does hereby certify and agree that in consideration of Holder’s
payment of $251 for this Warrant on the Issue Date (such dollar amount,
exclusive of the Exchange Price payable or creditable upon Exercise or Exchange
of this Warrant, the “Purchase Price”), Holder, or its permitted successors and
assigns, hereby is entitled, subject to Sections 1.8 and 1.9 hereof, to Exchange
or Exercise this Warrant in the Company for up to Two Thousand Four Hundred
(2,400) shares of the Company’s Common Stock, par value $0.01 per share (the
“Warrant Stock”). This Warrant is subject to adjustment as set forth in this
Warrant. Capitalized terms used but not defined in this Warrant have their
meanings as set forth in the Loan Agreement defined in the heading between the
Company and Partners for Growth IV, L.P. (“PFG”). When the term “convert” or
“conversion” in relation to the Warrant is used herein, it includes an Exchange
and an Exercise, each as defined in Section 1.3(a), below, as applicable.

Section 1. Term, Price and Exchange of Warrant.

1.1 Term of Warrant. This Warrant shall be convertible for a period of five
(5) years after the Issue Date (hereinafter referred to as the “Expiration
Date”).

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1.2 Exchange Price. The price per Share at which the shares of Warrant Stock are
issuable upon conversion of this Warrant shall be $9.66 per Warrant Share (the
“Exchange Price”).

1.3 Conversion of Warrant.

(a) This Warrant may be exercised, in whole or in part, upon surrender of this
Warrant to the Company, together with the Election to Exchange or Exercise
attached hereto as Exhibit A (the “Election”) duly completed and executed with
“Exercise” selected as the mode of conversion, and upon payment to the Company
of the Exercise Price for the number of shares of Warrant Stock in respect of
which this Warrant is then being exercised (an “Exercise”). In whole or in part
in lieu of an Exercise, Holder may convert this Warrant on a cashless basis by
so indicating in the Election and proceeding in accordance with the remainder of
this Section 1.3 (an “Exchange”). In each above case, Holder shall surrender
this Warrant to the Company at its then principal offices, together with the
Election duly completed and executed.

(b) Upon an Exchange, the Holder shall receive shares of Warrant Stock such
that, without the payment of any funds, the Holder shall surrender this Warrant
in exchange for the number of shares of Warrant Stock equal to “X” (as defined
below), computed using the following formula:

 

Y * (A-B) X  =

 

A Where X = the number of shares of Warrant Stock to be issued to Holder Y = the
number of shares of Warrant Stock to be converted under this Warrant A = the
Fair Market Value of one Warrant Share B = the Exchange Price (as adjusted to
the date of such calculations) * = multiplied by

(c) For purposes of this Warrant, the “Fair Market Value” of one Warrant Share
shall be (i) if the Company’s securities become listed on a national or
international stock exchange, the average closing sale price reported on such
exchange for such listed securities during the 90-trading day period immediately
prior to the date Holder delivers its Election to the Company, or (ii) if the
Company’s securities are traded over-the-counter, the average of bid and ask
price for such securities over the 90-trading day period immediately prior to
the day Holder delivers its Election to the Company, in each case of (i) and
(ii), above, if the shares of Warrant Stock are convertible into such listed or
over-the-counter traded securities other than on a one-to-one basis, multiplied
by the ratio at which one Warrant Share converts into such other security. If
the Company’s securities are not listed or traded as contemplated in clauses
(i) or (ii), above, the Fair Market Value of the Warrant Stock shall be the
price per Warrant Share which the

 

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Company could obtain from a willing buyer of shares of Warrant Stock sold by the
Company from its authorized but unissued Shares, initially as the Board of
Directors of the Company (“Board”) shall determine in its reasonable good faith
judgment, subject to Holder’s valuation rights below, but in no event less than
the price to which a holder of Warrant Stock would be entitled based on a
valuation of the Company as a going concern and the application of the rights,
preferences and privileges of the Company’s outstanding securities as set forth
in the Company’s Constitutional Documents, without discount for minority,
control or lack of marketability. If the Warrant is to be converted in
connection with an Acquisition, the Fair Market Value of a Warrant Share shall
be based on the enterprise value specified or implied in such Acquisition and
shall be the greater of (A) the value attributable to the Warrant Stock and
(B) the value attributable to the Company securities into which the shares of
Warrant Stock are (or may be) convertible (but subject to Holder’s conversion
directly into such other Company securities).

(b) In the event that Holder converts this Warrant in connection with a
transaction in which shares of the same class and series as the Warrant Stock
are converted into another security, Holder may effect a conversion directly
into such other security.

(c) Subject to Section 2 hereof, upon delivery of the duly completed and
executed Election, the Company shall issue and deliver within four (4) business
days to Holder or such other person as Holder may designate in writing a
certificate or certificates or other legal evidence of Holder’s ownership of the
number of shares of Warrant Stock so acquired upon the conversion of this
Warrant. Such certificate(s) or other legal evidence shall be deemed to have
been issued and any person so designated to be named therein shall be deemed to
have become a stockholder of the Company and a holder of record of such shares
of Warrant Stock as of the date the Election is delivered to the Company,
provided, however, Holder’s admission as a stockholder shall be subject to
Holder’s execution and delivery of such agreements as may be required of all
stockholders or of an accession or similar agreement by which Holder agrees to
be bound by such agreements. If this Warrant is converted in part, a new warrant
substantially identical to this Warrant for the number of Shares not converted
shall be promptly executed and delivered to Holder by the Company.

1.4 Fractional Interests. The Company shall not be required to issue fractions
of shares of Warrant Stock upon the conversion of this Warrant. If any fraction
of a Warrant Share would be issuable upon the conversion of this Warrant (or any
portion thereof), the Company shall purchase such fraction for an amount in cash
equal to the fair market value of a Warrant Share as determined by the Board in
its reasonable judgment.

1.5 Certain Definitions. For purposes of this Warrant:

“Acquisition” means, in any single transaction or series of related
transactions: (i) any sale or other disposition (including exclusive license) of
all or substantially all of the assets of the Company in whatever form and
however consummated, or (ii) any reorganization, consolidation, merger or
acquisition of the Company or a Controlling interest in the Company.

 

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An “Affiliate” of, or person “affiliated” with, a specified Person, is a Person
that directly, or indirectly through one or more intermediaries, beneficially
owns or is beneficially owned, controls or is controlled by, or is under common
control with, the Person specified, and any person or entity that owns or
controls directly or indirectly ten percent (10%) or more of the Shares of
Company shall be deemed to be an Affiliate of the Company.

“Constitutional Documents” means the Company’s Certificate of Incorporation (as
amended and restated, as applicable), Bylaws and agreements between or among the
Company and holders of any class or series of its stock.

“Control” (including the terms “controlling”, “controlled by” and “under common
control with”) means the possession, direct or indirect through one or more
Affiliates, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership or voting of voting
securities, by contract, or otherwise.

“Person” or “person” means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity of
any kind.

1.6 Automatic Conversion upon Expiration. Upon the Expiration Date, this Warrant
shall automatically be deemed on and as of such date to be Exchanged for the
cash sum set forth in Section 1.8 as to all shares of Warrant Stock (or such
other securities) for which this Warrant has become convertible and for which it
shall not previously have been converted for Warrant Stock (or if not then
outstanding, into such other class and series of securities into which the
Warrant Stock is then convertible).

1.7 Treatment of Warrant Upon Acquisition of Company. Upon the closing of any
Acquisition, without limiting or prejudicing Holder’s right to convert this
Warrant under Section 1.3 or exercise its “put” rights under Section 1.8 (in
each case with respect to the Warrant Stock that may then be converted or put)
the surviving entity shall, as a condition to the Acquisition, either (i) assume
the obligations under this Warrant, then this Warrant shall be convertible into
the same securities as would be payable for the shares of Warrant Stock issuable
upon conversion of the unconverted portion of this Warrant as if such shares of
Warrant Stock were outstanding on the record date for the Acquisition (and the
Exchange Price and/or number of shares of Warrant Stock shall be adjusted
accordingly); or (ii) the Company or other surviving entity in such Acquisition
shall, upon initial closing of such Acquisition purchase this Warrant at its
“Fair Value” (the “Purchase Price”). For purposes hereof, “Fair Value” means
that value determined by the parties using a Black-Scholes Option-Pricing Model
(the “Black-Scholes Calculation”) with the following assumptions: (A) a
risk-free interest rate equal to the risk-free interest rate at the time of the
closing of the Acquisition (or as close thereto as practicable), (B) a
contractual life of the Warrant equal to the remaining term of this

 

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Warrant as of the date of the announcement of the Acquisition, (C) an annual
dividend yield equal to dividends payable or declared on the underlying shares
of Warrant Stock (including securities into which the shares of Warrant Stock
may be convertible) during the term of this Warrant (calculated on an annual
basis), and (D) a volatility factor of the expected market price of the
Company’s Shares comprised of: (1) if the Company is publicly traded on a
national securities exchange, its volatility over the one year period ending on
the day prior to the announcement of the Acquisition, (2) if the Shares are
traded over-the-counter, its volatility over the one year period ending on the
day prior to the announcement of the Acquisition, or (3) if the Company is a
non-public company, the volatility, over the one year period prior to the
Acquisition, of an average of publicly-traded companies in the same or similar
industry to the Company with such companies having similar revenues. The
Purchase Price determined in accordance with the above shall be paid upon the
initial closing of the Acquisition and shall not be subject to any
post-Acquisition closing contingencies or adjustments; provided, however, the
parties may take such post-Acquisition closing contingencies or adjustments into
account in determining the Purchase Price, and if the parties take any
post-Acquisition closing contingencies or adjustments into account, then upon
the partial or complete removal of those post-Acquisition closing contingencies
or adjustments, a new Black-Scholes Calculation would be made using all of the
same inputs except for the value of the Company’s Shares (as determined under
subclause (D)), and any increase in Fair Value (and, correspondingly, Purchase
Price), including, without limitation, as a result of any earn-out or escrowed
consideration, would be paid in full to Holder immediately after those
post-Acquisition closing contingencies or adjustments can be determined or
achieved.

1.8 Warrant Put. Notwithstanding anything to the contrary set forth in this
Warrant, in the event of (i) any Acquisition of the Company, (ii) any
liquidation of the Company, (iii) any liquidation or deemed liquidation of the
Company under its Constitutional Documents, or (iv) the expiry of this Warrant,
Holder shall have the right (but not the obligation) to exchange this Warrant
(the “Put Right”) for the cash sum of $9,600 (the “Exchange Put Price”);
provided, however, if the Company does not draw Tranche 2 under the Loan
Agreement, the Exchange Put Price shall be $7,200. The Exchange Put Price shall
be adjusted on a relative percentage basis to the extent that Holder has
converted any part of this Warrant and later exercises its Put Right. Except as
to a put effected under Section 1.6, Holder shall exercise such Put Right by
written notice as provided in this Warrant and, upon receipt by the Company of
such notice, the Expiration Date of this Warrant shall be deemed extended until
such time as the Company has paid the Exchange Put Price to Holder. The Company
shall promptly (and in no event later than (five) 5 business days of Holder’s
notice to the Company) pay the Exchange Put Price to Holder. Notwithstanding the
foregoing, however, if the Warrant Stock (i) is publicly traded at a price that
is greater than 300% of the Exchange Price for at least twenty (20) consecutive
trading days, (ii) the Warrant Stock is freely tradable by Holder and
(iii) there is sufficient trading volume to enable Holder to sell its Warrant
Stock over a ten (10) consecutive trading day period without materially and
adversely impacting the trading price of the Company’s Common Stock, then
Holder’s right to “put” the Warrant Stock under this Section 1.8 shall
terminate. Whether the conditions set forth in clauses (i) through (iii) have
been satisfied shall be a matter of Holder’s reasonable good faith business
judgment, the basis therefor shall notified to the Company and binding on the
parties.

 

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1.9 Reduction in Number of Shares. The parties acknowledge that the loans under
the Loan Agreement are to be disbursed in two tranches (“Tranche 1” and “Tranche
2” as defined in the Loan Agreement). 1,800 shares of Warrant Stock are
immediately convertible on the Issue Date. 600 shares of Warrant Stock
automatically become convertible if and when the Company draws Tranche 2 under
the Loan Agreement.

Section 2. Exchange and Transfer of Warrant.

(a) This Warrant may be transferred, in whole or in part, without restriction,
subject only to (i) Holder’s compliance with applicable securities laws (which,
in the case of Affiliates, shall be deemed satisfied by Holder (and transferee)
certification of Affiliate status), and (ii) the transferee holder of the new
Warrant assuming the obligations of Holder set forth in this Warrant. A transfer
may be registered with the Company by submission to it of the annexed Assignment
Form attached hereto as Exhibit B duly completed and executed. After the
Company’s registration of a transfer of this Warrant, the Company will issue and
deliver to the transferee a new warrant (representing the portion of this
Warrant so transferred) upon the same terms and conditions as this Warrant and
in substantially identical form, which the Company will register in the new
holder’s name. In the event of registration of a partial transfer of this
Warrant, the Company shall concurrently issue and deliver to the transferring
holder a new warrant that entitles the transferring holder to the balance of
this Warrant not so transferred and that otherwise is upon the same terms and
conditions as this Warrant. Upon the delivery of this Warrant for transfer, the
transferee holder shall for all purposes become the holder of the new warrant
issued for the portion of this Warrant so transferred, irrespective of the date
of actual delivery of the new warrant representing the portion of this Warrant
so transferred.

(b) In the event of the loss, theft or destruction of this Warrant, the Company
shall execute and deliver an identical new warrant to Holder in substitution
therefor upon the Company’s receipt of (i) evidence reasonably satisfactory to
the Company of such event, and (ii) if requested by the Company, an indemnity
agreement in reasonable and customary form.

(c) The Company shall pay its own and all Holder’s reasonable costs and expenses
incurred in connection with the conversion, transfer or replacement of this
Warrant, including, without limitation, securities compliance, the costs of
preparation, execution and delivery of a new warrant and of certificates or
other legal evidence of all Warrant Stock.

Section 3. Certain Covenants.

(a) The Company shall ensure that any approval of its stockholders required for
issuance of this Warrant and of the shares of Warrant Stock issuable upon
conversion

 

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hereof (which shall, for the avoidance of doubt, include any securities into
which shares of Warrant Stock are or become convertible) remains in full force
and effect until the earlier of conversion or the Expiration Date.

(b) The Company will not, by amendment of its Constitutional Documents or
through reorganization, consolidation, merger, amalgamation, sale of assets or
otherwise, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant. Without limiting the foregoing, the Company will from
time to time take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue shares of Warrant Stock upon the
conversion of this Warrant.

(c) So long as Holder or any of its Affiliates holds this Warrant and/or the
Warrant Stock, the Company shall deliver to Holder such reports as it provides
to any holders of securities of the same class and series as the Warrant Stock,
as and when delivered to such holders. Notwithstanding the foregoing, the
Company will provide quarterly and annual financial statements and such other
information as such Holder may reasonably request and that the Company may
lawfully provide at such time under applicable securities laws so long as such
statements are not publicly available.

(d) The Company shall not treat the Warrant or the shares of Warrant Stock as
being granted or issued as property transferred in connection with the
performance of services or otherwise as compensation for services rendered.

(e) The Company shall not characterize the Warrant as an ownership interest in
the Company or Holder as a stockholder of the Company until such time as Holder
converts the Warrant for shares of Warrant Stock.

Section 4. Adjustments to Number of Shares of Warrant Stock, Etc.

4.1 Adjustments. In order to prevent dilution of the rights granted hereunder,
the Number of Shares and Exchange Price shall be subject to adjustment from time
to time in accordance with this Section 4. Upon each adjustment of the Exchange
Price pursuant to this Section 4, Holder shall thereafter be entitled to acquire
upon conversion, at the Exchange Price resulting from such adjustment, the
number of shares of Warrant Stock obtainable by multiplying the Exchange Price
in effect immediately prior to such adjustment by the number of shares of
Warrant Stock acquirable immediately prior to such adjustment and dividing the
product thereof by the new Exchange Price resulting from such adjustment.

4.2 Subdivisions, Combinations and Stock Dividends. If the Company shall at any
time subdivide by split-up or otherwise, the class and series of Company
securities into which the Warrant could then be converted into a greater number
of shares, or issue additional securities as a dividend, bonus issue or
otherwise with respect to such securities into which the Warrant could be
converted, then the Exchange Price in effect immediately prior to such
subdivision or share dividend or bonus issue shall be proportionately reduced
and the number of shares acquirable upon exchange hereunder

 

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shall be proportionately increased. Conversely, if the class and series of
Company securities into which the Warrant could then be converted are combined
into a smaller number of shares, the Exchange Price in effect immediately prior
to such combination shall be proportionately increased.

4.3 Reclassification, Exchange, Substitutions, Etc. Upon any reclassification,
exchange, substitution, or other event that results in a change of the number
and/or class of the securities issuable upon exchange or exercise of this
Warrant, Holder shall be entitled to receive, upon conversion of this Warrant,
the number and kind of securities and property that Holder would have received
for the Warrant Stock if this Warrant had been converted immediately before such
reclassification, exchange, substitution, or other event. Such an event shall
include any automatic conversion of the outstanding or issuable securities of
the Company of the same class or series as the Warrant Stock to Common Stock
pursuant to the Company’s Constitutional Documents upon the closing of a public
offering of the Company’s Common Stock. The Company or its successor shall
promptly issue to Holder an amendment to this Warrant setting forth the number
and kind of such new securities or other property issuable upon exchange or
exercise of this Warrant as a result of such reclassification, exchange,
substitution or other event that results in a change of the number and/or class
of securities issuable upon exchange or exercise of this Warrant. The amendment
to this Warrant shall provide for adjustments (as determined in good faith by
the Company’s Board of Directors) which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 4 including, without
limitation, adjustments to the Warrant Price and to the number of securities or
property issuable upon exchange of the new Warrant. The provisions of Sections
4.2 and 4.3 shall similarly apply to successive subdivisions, combinations,
Share dividends, distributions, reclassifications, exchanges, substitutions, and
dilutive events.

4.4 Notices of Record Date, Etc. In the event that the Company shall:

(1) declare or propose to declare any dividend upon Company securities, whether
payable in cash, property, shares or other securities and whether or not a
regular cash dividend, or

(2) offer for sale any additional shares of any class or series of the Company’s
stock or securities exchangeable for or convertible into such stock in any
transaction that would give rise (regardless of waivers thereof) to pre-emptive
rights of any class or series of shareholders, or

(3) effect or approve any reclassification, exchange, substitution or
recapitalization of the capital shares of the Company, including any subdivision
or combination of its outstanding stock, or consolidation or merger of the
Company with, or sale of all or substantially all of its assets to, another
corporation, or to liquidate, dissolve or wind up (including an assignment for
the benefit of creditors), or

(4) offer holders of registration rights the opportunity to participate in
registration of the Company’s securities, or

(5) offer stockholders the opportunity to participate in any further public
offering of the Company’s securities,

 

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then, in connection with such event, the Company shall give to Holder:

(i) at least ten (10) days prior written notice of the date on which the books
of the Company shall close or a record shall be taken for such a distribution or
offer in respect of the matters referred to in (1) or (2) above, or for
determining rights to vote in respect of the matters referred to in (3) above;
and

(ii) in the case of the matters referred to in (4) and (5) above, the greater of
(A) ten (10) days prior written notice of the date when the same shall take
place and (B) the date that notice is or is required to be given to any
stockholder.

Such notice in accordance with the foregoing clause (1) shall also specify, in
the case of any such distribution, the date on which the holders of Company
securities shall be entitled thereto and the terms of such distribution, and
such notice in accordance with clause (2) shall also specify the date on which
the holders of Company securities shall be entitled to convert their stock for
securities or other property deliverable upon such reorganization,
reclassification, exchange, substitution, consolidation, merger or sale, as the
case may be, and the terms of such exchange. Each such written notice shall be
given by first class mail, postage prepaid, addressed to the holder of this
Warrant at the address of Holder.

4.6 Adjustment for Capitalization Table Errors. The parties acknowledge their
mutual agreement that the initial Number of Shares is based on the
capitalization of the Company being in all material respects as represented to
Holder and appended hereto as Exhibit C. If the fully-diluted equity of the
Company is not, as of the Issue Date, in fact as represented in Exhibit C, the
Number of Shares and / or Exchange Price shall be equitably adjusted under
Section 4.7.

4.7 Adjustments by Board. If any event occurs as to which the provisions of this
Section 4 are not strictly applicable or if strictly applicable would not fairly
protect the rights of Holder in accordance with the essential intent and
principles of such provisions, then the Board shall make an adjustment in the
application of such provisions, in accordance with such essential intent and
principles, so as to protect such rights.

4.8 Officer’s Statement as to Adjustments. Whenever the Number of Shares subject
to this Warrant is required to be or is adjusted as provided in Section 4, the
Company shall forthwith file at the office designated for the conversion of this
Warrant a statement, signed by the chief financial officer of the Company,
showing in reasonable detail the facts requiring such adjustment and the number
of issuable shares of Warrant Stock that will be effective after such
adjustment. If such notice relates to an adjustment resulting from an event
referred to in Section 4.3, such notice shall be included as part of the notice
required to be mailed or published under the provisions of Section 4.4.

 

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4.9 Issue of Securities other than Warrant Stock. In the event that at any time,
as a result of any adjustment made pursuant to Section 4, Holder thereafter
shall become entitled to receive any securities of the Company, other than
Warrant Stock, thereafter the number of such other securities so receivable upon
conversion of this Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Warrant Stock contained in Section 4.

Section 5. Rights of the Warrant Holder.

This Warrant shall entitle Holder, upon Conversion, to the benefit of all rights
as are applicable to any stockholder of the Company holding shares that are the
same class and series as the Warrant Stock.

Section 6. Representations, Warranties and Covenants of the Company. The Company
represents and warrants to, and covenants with, Holder that:

6.1 Corporate Power; Authorization. The Company has all requisite corporate
power and has taken all requisite corporate action to execute and deliver this
Warrant, to issue the Warrant and Warrant Stock and to carry out and perform all
of its obligations hereunder. This Warrant has been duly authorized, executed
and delivered on behalf of the Company and constitutes the valid and binding
agreement of the Company, enforceable in accordance with its terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization or similar
laws relating to or affecting the enforcement of creditors’ rights generally and
(ii) as limited by equitable principles generally. Any person executing this
Warrant on behalf of the Company is a duly authorized officer of the Company
with all necessary legal authority to bind the Company generally and with the
specific legal authority to cause the Company to execute and deliver this
Warrant.

6.2 Validity of Securities. This Warrant, when sold by the Company against the
consideration therefor as provided herein, will be validly authorized, issued
and fully paid. The issuance and delivery of the Warrant is not subject to any
consent, approval, preemptive or any similar rights of the shareholders of the
Company (which has not been duly secured or waived), including without
limitation any pre-emptive rights, or any liens or encumbrances except for
restrictions on transfer provided for herein or under applicable securities
laws; and when and if shares of Warrant Stock are issued upon conversion and in
accordance with the terms hereof and this Warrant is converted for such Warrant
Stock, such securities will be, at each such issuance, validly issued shares of
Warrant Stock in the Company’s capital, in compliance with all applicable
securities laws and free of any liens or encumbrances except for restrictions on
transfer provided for herein, in the Constitutional Documents or under such
applicable securities laws.

6.3 A true, correct and current copy of the Company’s current Certificate of
Incorporation is appended as Exhibit D hereto. Except as specified in Exhibit C,
there are no other options, warrants, conversion privileges or other contractual
rights presently outstanding to purchase or otherwise acquire any authorized but
unissued shares of the

 

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Company’s capital stock or other securities. Assuming the issuance of all
Warrants issuable hereunder, Holder would own as of the Issue Date 0.0406036% of
the fully-diluted equity of the Company.

6.4 No Conflict. The execution and delivery of this Warrant do not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both), or give rise to a right of termination, cancellation
or acceleration of any obligation or to a loss of a material benefit, under, any
provision of the Company’s Constitutional Documents, as amended, or any
mortgage, indenture, lease or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company, its properties or assets, the effect of
which would have a material adverse effect on the Company or materially impair
or restrict its power to perform its obligations as contemplated hereby.

6.5 Governmental and other Consents. As at the Issue Date, no consent, approval,
order or authorization of, or registration, qualification, designation,
declaration or filing with, any governmental authority or other person or entity
is required on the part of the Company in connection with the issuance, sale and
delivery of the Warrant and the Warrant Stock, except such filings as shall have
been made prior to and shall be effective on and as of the date hereof. All
Company and stockholder consents required in connection with issuance of the
Warrant and Warrant Stock have either been obtained by the Company or no such
consents are required.

6.6 Exempt from Registration. As at the Issue Date, assuming the accuracy of the
representations and warranties of Holder in Section 7 hereof, the offer, sale
and issuance of the Warrant and the Warrant Stock will be exempt from any
registration requirements of the Securities Act, the registration and
qualification requirements of applicable state securities laws.

6.7 Delivery of Information; Accuracy. The Company acknowledges its delivery of
certain Representations and Warranties in connection with the Loan Agreement and
this Warrant (the “Representation Letter”) to PFG, which Representations and
Warranties form the basis for Holder purchasing this Warrant. As at the Issue
Date, the information contained in the Representation Letter and all documents,
instruments and other information delivered to Holder in connection therewith
are true, correct, accurate and complete in all material respects.

Section 7. Representations and Warranties of Holder. Holder hereby represents
and warrants to the Company as of the Issue Date as follows:

7.1 Investment Experience. Holder is an “accredited investor” within the meaning
of Rule 501 under the Securities Act, and was not organized for the specific
purpose of acquiring the Securities. Holder is aware of the Company’s business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Securities. Holder has such business and financial experience as is required to
give it the capacity to protect its own interests in connection with the
purchase of the Warrant and the Warrant Stock.

 

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7.2 Investment Intent. Holder is purchasing the Warrant for investment for its
own account only and not with a view to, or for resale in connection with, any
“distribution” thereof within the meaning of the Securities Act. Holder
understands that the Warrant has not been registered under the Securities Act or
registered or qualified under any state securities law in reliance on specific
exemptions therefrom, which exemptions may depend upon, among other things, the
bona fide nature of Holder’s investment intent as expressed herein.

7.3 Authorization. Holder has all requisite power and has taken all requisite
action required of it to carry out and perform all of its obligations hereunder.
The execution and delivery of this Warrant has been duly authorized, executed
and delivered on behalf of Holder and constitutes the valid and binding
agreement of Holder, enforceable in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting the enforcement of creditors’ rights generally and
(ii) as limited by equitable principles generally. The consummation of the
transactions contemplated herein and the fulfillment of the terms herein will
not result in a breach of any of the terms or provisions of Holder’s
constitutional documents or instruments. Any person executing this Warrant on
behalf of Holder is a duly authorized officer of Holder with all necessary legal
authority to bind Holder generally and with the specific legal authority to
cause Holder to execute and deliver this Warrant.

Section 8. Restrictive Securities Legend.

This Warrant and the Warrant Stock have not been registered under any securities
laws. Accordingly, any Share certificates issued pursuant to the conversion of
this Warrant shall (until receipt of an opinion of counsel in customary form
that such legend is no longer necessary) bear the following legend:

THIS WARRANT AND THE WARRANT SHARES ISSUABLE UPON CONVERSION HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”), AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OF DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN
CUSTOMARY FORM THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT.

 

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Section 9. Notices.

All notices to be given under this Warrant shall be in writing and shall be
given: (i) personally, or (ii) by reputable private delivery service, (iii) by
regular first-class mail, or certified mail return receipt requested, or (iv) by
fax, or (v) by electronic mail. If sent by fax or electronic mail, such notice
shall also be sent concurrently by one of the other methods provided herein.
Notices may be sent to the parties in accordance with their contact details
specified below or to any other address, fax number or electronic mail address
later designated in writing by a party. All notices shall be deemed to have been
given upon delivery in the case of notices personally delivered, or at the
expiration of one Business Day following delivery to the private delivery
service, or two Business Days following the deposit thereof in the United States
mail, with postage prepaid, or upon receipt during the Business Day where
received in the case of notices sent by fax or electronic mail, but subject to
reasonably concurrent transmission by another method, as specified above. The
addresses for such communications shall be:

if to Holder, at

PFG Equity Investors, LLC

150 Pacific Avenue

San Francisco, California 94111

Attention: Chief Financial Officer

Fax: (415) 781-0510

Email: Notices@pfgrowth.com

with a copy (not constituting notice) to

Greenspan Law Office

Attn: Benjamin Greenspan, Esq.

620 Laguna Road

Mill Valley, CA 94941

Fax: (415) 738-5371

Email: ben@greenspan-law.com

with the original of this Warrant and any replacement, restatement or reissue of
this Warrant to be delivered to:

Robert W. Baird & Co., Inc.

555 California Street, Suite 4900

San Francisco, CA 94104

ATTN: John Fitzgibbons

Phone # 415-627-3225

Email: JFitzgibbons@rwbaird.com

 

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or

if to the Company, at

Sonic Foundry, Inc.

222 W. Washington Avenue

Madison, WI 53703

Fax: (608) 443-1609

Email: kenm@sonicfoundry.com

Attn: Ken Minor

with a copy (not constituting notice) to:

McBreen and Kopko

20 North Wacker Dr., Suite 2520

Chicago, IL 60606

Fax: (312) 332-2657

Email: jstern@mmklaw.com

Each party hereto may from time to time change its address for notices under
this Section 7 by giving at least 10 calendar days’ notice of such changes
address to the other party hereto.

Section 8. Amendments and Waivers.

This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.

Section 9. Applicable Law; Severability.

This Warrant shall be governed by and construed and enforced in accordance with
the laws of the State of California. If any one or more of the provisions
contained in this Warrant, or any application of any provision thereof, shall be
invalid, illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and all other
applications of any provision thereof shall not in any way be affected or
impaired thereby.

Section 10. Construction.

Section headings are only used in this Agreement for convenience. The Company
and Holder each acknowledge that the headings may not describe completely the
subject matter of the applicable Section, and the headings shall not be used in
any manner to construe, limit, define or interpret any term or provision of this
Agreement. This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against either party under any rule of
construction or otherwise.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed on
the day and year first above written.

 

COMPANY: ACKNOWLEDGED AND AGREED: SONIC FOUNDRY, INC. HOLDER: PFG Equity
Investors, LLC By:

/s/ Ken Minor

By:

/s/ Lorraine Nield

Name:

Ken Minor

Name:

Lorraine Nield

Title:

Chief Financial Officer

Title:

Manager of Partners for Growth IV, LLC,

Its General Partner

PFG Equity Investors, LLC – Sonic Foundry Warrant Signature Page

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Exhibit A

 

To: SONIC FOUNDRY, INC.

ELECTION TO EXCHANGE OR EXERCISE

The undersigned hereby exercises its right to Exchange its Warrant for
                     fully paid, validly issued and nonassessable:

¨ Shares

The undersigned hereby exercises its right to Exercise its Warrant for
                     fully paid, validly issued and nonassessable:

¨ Shares

[check one box]

covered by the attached Warrant in accordance with the terms thereof.

and requests that certificates or other legal evidence of ownership of such
Shares be issued in the name of, and delivered to:

 

 

 

 

 

Date:

 

PFG Equity Investors, LLC By

 

Name:

 

Title: Manager

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Exhibit B

ASSIGNMENT FORM

 

To: SONIC FOUNDRY, INC.

The undersigned hereby assigns and transfers this Warrant to

 

 

(Insert assignee’s social security or tax identification number)

 

 

(Print or type assignee’s name, address and postal code)

 

 

and irrevocably appoints                                          to transfer
this Warrant on the books of the Company.

 

Date:

 

PFG Equity Investors, LLC By

 

Name:

 

Title: Manager

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Exhibit C - Capitalization Table

 

Shares outstanding

  4,351,203   

Options and warrants

  1,559,745   

Fully diluted

  5,910,948   

Warrants issued to PFG and designees

  50,000   

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Exhibit D – Certificate of Incorporation