Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS AGREEMENT made as of October 31, 2007 by and between SONIC FOUNDRY, INC., a
Maryland corporation having its principal offices at 222 West Washington Avenue,
Suite 775, Madison, Wisconsin 53703 (hereinafter referred to as “Sonic
Foundry”), and Mr. Darrin Coulson (hereinafter referred to as “Coulson”).

WITNESSETH:

WHEREAS, Coulson has been serving is Chief Operating Officer of Sonic Foundry;
and

WHEREAS, Sonic Foundry desires to continue to employ Coulson, and Coulson
desires to continue to be employed by Sonic Foundry; and

WHEREAS, Sonic Foundry and Coulson desire to enter into an employment agreement
that will confirm and set forth the terms and conditions of Coulson’s continued
employment with Sonic Foundry.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained,
the parties agree as follows:

First: Employment

(a) Employment. Sonic Foundry hereby confirms and agrees that Coulson will
continue to serve as Chief Operating Officer of Sonic Foundry. In his capacity
as Chief Operating Officer of Sonic Foundry, Coulson shall report directly to
Sonic Foundry’s Chief Executive Officer.

(b) Coulson’s Acceptance. Coulson hereby agrees to continue to serve as Chief
Operating Officer of Sonic Foundry.

Second: Term

Subject to the provisions governing termination as hereinafter provided, the
term of this Agreement shall commence on the date hereof (the “Commencement
Date”) and shall continue until terminated pursuant to the terms hereof.

Third: Compensation

(a) Base Compensation. For all services rendered by Coulson under this
Agreement, Sonic Foundry shall pay Coulson a salary of $250,000 per year,
payable in bi-weekly installments in accordance with Sonic Foundry’s standard
payroll practices. The salary payable to Coulson may be adjusted by Sonic
Foundry at its sole discretion. Coulson’s annual salary, as from time to time
adjusted by Sonic Foundry, is hereinafter referred to as “Base Compensation”.

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(b) Bonus Plans. Coulson may receive periodic performance bonuses as may be
declared by the Board of Directors of Sonic Foundry (or a duly constituted and
empowered committee thereof).

(c) Other Benefits. Coulson shall receive such other incidental benefits of
employment, such as insurance, retirement plan, employee stock option plan
participation, and vacation, as are provided generally to Sonic Foundry’s other
salaried employees on the same terms as are applicable to such other employees.

(d) Expenses. Coulson shall also be reimbursed for all reasonable business
expenses incurred in connection with his employment, including a car allowance
in the amount of $650 per month.

Fourth: Extent of Services

Coulson agrees that he shall devote sufficient skill, labor and attention to his
employment with Sonic Foundry in order to promptly and faithfully do and perform
all services pertaining to his position that are or may hereafter be required of
him by Sonic Foundry during the term of his employment hereunder.

Fifth: Working Facilities

Coulson shall be furnished with facilities and services reasonably suitable to
his position and adequate for the performance of his duties.

Sixth: Ownership and Disclosure of Information

(a) Generally. The parties acknowledge that Sonic Foundry and its affiliates
(individually and collectively, the “Companies”), have developed and intend to
continue the development of and to formulate, acquire and use commercially
valuable technical and non-technical information, design and specification
documents, concepts, technology, know-how, improvements, proposals, patent
applications, techniques, marketing plans, strategies, forecasts, inventions
(not limited by the definition of an invention contained in the United States
Patent Laws), Trade Secrets (as defined in Sec. 3426.1(d) of the Uniform Trade
Secrets Act) and processes which are considered proprietary by the Companies,
particularly including, without limitation, software, customer and supplier
lists, books and records, computer programs, pricing information and business
plans (collectively, the “Proprietary Information”). It is necessary for the
Companies to protect the Proprietary Information by patents or copyrights or by
holding it secret and confidential.

(b) Access to Proprietary Information. The parties acknowledge that Coulson has
access to the Proprietary Information and that the disclosure or misuse of such
Proprietary Information could irreparably damage the Companies and/or their
respective clients or customers.

(c) Nondisclosure to others. Except as directed by Sonic Foundry in writing or
verbally, Coulson shall not at any time during or after the term of his
employment (the “Term”) disclose any Proprietary Information to any person
whatsoever, examine or make copies of any reports or other documents, papers,
memoranda or extracts for use other than in connection with his duties with

 

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Sonic Foundry or utilize for his own benefit or for the benefit of any other
party any such Proprietary Information and will use reasonable diligence to
maintain the confidential, secret or proprietary character of all Proprietary
Information, provided, however, that Coulson may disclose any of such
Proprietary Information if compelled to do so by a court or governmental agency,
provided further, however, that to the extent allowed by law, Coulson shall give
Sonic Foundry three business days notice prior to such disclosure.

(d) Property of Sonic Foundry. Coulson agrees that any inventions, discoveries,
improvements, or works which are conceived, first reduced to practice, made,
developed, suggested by, or created in anticipation of, in the course of or as a
result of work done under this Agreement by Coulson shall become the absolute
property of Sonic Foundry. Coulson further agrees that all such inventions,
discoveries, improvements, creations, or works, and all letters, patent or
copyrights that may be obtained therefore shall be the property of Sonic
Foundry, and Coulson agrees to do every act and thing requisite to vest said
patents or copyrights in Sonic Foundry without any other or additional
consideration to Coulson than herein expressed.

(e) Survivability. Coulson acknowledges that his obligations hereunder shall
continue beyond the Term with respect to any Proprietary Information (as defined
in Article Sixth, paragraph (a) hereof) which came into his possession during
the Term.

Seventh: Sonic Foundry’s Right to Terminate For Cause

(a) Cause. Sonic Foundry may at any time during the term of this Agreement
discharge Coulson for “cause.” The term “cause” is defined herein as Coulson’s
(i) misappropriation of corporate funds, fraud, embezzlement or other illegal
conduct to the detriment of Sonic Foundry, (ii) negligence in the execution of
his material assigned duties or Coulson’s voluntary abandonment of his job for
any reason other than disability; (iii) refusal or failure, after not less than
20 days written notice that such refusal or failure would constitute a default
hereunder, to carry out any reasonable and material direction from the Board of
Directors given to him in writing; (iv) conviction of a felony; (v) material
breach or violation of the terms of this Agreement, which breach or violation
shall not have been fully cured (as determined by the Board of Directors acting
in good faith) by Coulson within 20 days after receipt of written notice of the
same from the Board of Directors; (vi) Coulson’s death or disability (except
that, in the event of Coulson’s disability, Sonic Foundry shall, at Coulson’s
request, prior to discharge, grant Coulson a leave of absence of up to six
months or such longer period of time as may be required by law); or
(vii) Coulson’s engagement in drug or alcohol abuse. Coulson shall be terminated
only following a finding of “cause” in a resolution adopted by majority vote of
the Board of Directors of Sonic Foundry.

(b) No Rights Following Cause Termination. Following a termination of Coulson’s
employment with Sonic Foundry “for cause” pursuant to paragraph (a) of this
Article Seventh: (i) all rights and liabilities of the parties hereto shall
cease and this Agreement shall be terminated (subject to the continuing
obligations of Coulson pursuant to Article Sixth and Tenth hereof); and
(ii) Coulson shall not be entitled to receive any severance benefits, salary,
other benefits or compensation of any kind (except for health insurance
continuation as required by COBRA, salary accrued through the date of
termination and accrued vacation pay as required by law) either as consideration
for his employment or in connection with the termination of his employment. In
the event that Coulson asserts that his voluntary termination was actually a
constructive termination,

 

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Sonic Foundry shall be entitled to assert as “cause” for such termination any
grounds present at the time of such termination which the Board of Directors
could have asserted as “cause” if called upon to terminate Coulson.
Notwithstanding the above, in the event of Coulson’s death or disability Coulson
or his legal representative or estate shall have one year from the date of death
or disability to exercise all stock options which were vested upon such date of
death or disability.

Eighth: Termination Without Cause

(a) Rights Following Termination Without Cause. Should Coulson be discharged by
Sonic Foundry at any time during the term of this Agreement except as provided
in Article Seventh, Sonic Foundry hereby agrees to pay to Coulson, ratably over
a one-year period in bi-weekly installments, an amount equal to the highest cash
compensation (including Base Compensation and bonus) paid to Coulson in any of
the last three fiscal years immediately prior to his termination. In addition,
in the event Coulson is discharged by Sonic Foundry at any time during the term
of this Agreement, except as provided in Article Seventh, all of Coulson’s
unvested stock options and stock grants shall vest immediately upon such
termination.

(b) No Additional Rights. Except as set forth above in paragraph (a) of this
Article Eighth following a termination of Coulson’s employment by Sonic Foundry
other than pursuant to Article Seventh above and Article Ninth below: (i) all
rights and liabilities of the parties hereto shall cease and this Agreement
shall be terminated (subject to the continuing obligations of Coulson pursuant
to Articles Sixth and Tenth); and (ii) Coulson shall not be entitled to receive
any severance benefits, salary, other benefits or compensation of any kind
(except for health insurance continuation as required by COBRA and accrued
vacation pay as required by law) either as consideration for his employment or
in connection with the termination of his employment.

Ninth: Right to Voluntary Termination by Coulson

(a) Conditions for Termination by Coulson. In the event that:

(i) Any “person” becomes a “beneficial” owner, “directly or indirectly”, of
stock of Sonic Foundry representing 50% or more of the total voting power of
Sonic Foundry’s then outstanding stock, without the written consent of the Board
of Directors of Sonic Foundry; or

(ii) Sonic Foundry is acquired by another entity through the purchase of
substantially all of its assets, the purchase of all of its outstanding voting
securities or a combination thereof, and following such acquisition, Rimas
Buinevicius does not remain as Chief Executive Officer and Chairman of the Board
of Directors of Sonic Foundry, or the acquisition is without the written consent
of the Board of Directors of Sonic Foundry; or

(iii) Sonic Foundry is merged with another entity, consolidated with another
entity or reorganized in a manner in which any “person” is or becomes a
“beneficial” owner, “directly or indirectly”, of stock of the surviving entity
representing 50% or more of the total voting power of the surviving entity’s
then outstanding stock, and, following such merger, consolidation or
reorganization, Rimas Buinevicius does not remain as Chief Executive

 

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Officer and Chairman of the Board of Directors of Sonic Foundry or of the
resultant entity, or the merger, consolidation or reorganization is without the
written consent of the Board of Directors of Sonic Foundry;

then, if following any of the events set forth in clauses (i), (ii) or (iii),
Coulson’s duties are substantially altered or Coulson is demoted without cause,
Coulson shall have the right and option to voluntarily terminate this Agreement
upon written notice to Sonic Foundry. All terms used in quotations in clauses
(i) and (iii) shall have the meanings assigned to such terms in Section 13 of
the Securities Exchange Act of 1934 and the rules, regulations, releases and
no-action letters of the Securities and Exchange Commission promulgated
thereunder or interpreting any of the same. For purposes of clauses (i) and
(iii), the term “affiliate” shall have the meaning assigned to such term in Rule
144 promulgated by the Securities and Exchange Commission under the Securities
Act of 1933, as amended, and the releases and no-action letters interpreting the
same.

(b) Rights Following Voluntary Termination After a Change of Control. Following
any voluntary termination of employment by Coulson pursuant to paragraph (a) of
this Article Ninth, Coulson shall be entitled to be paid by Sonic Foundry,
within thirty (30) days of such termination by Coulson, an amount equal to the
highest cash compensation (including Base Compensation and bonus) paid to
Coulson in any of the last three fiscal years immediately prior to his
termination. In addition, all of Coulson’s unvested stock options and stock
grants shall vest immediately upon such termination.

(c) No Additional Rights. Except as set forth above in paragraph (b) of this
Article Ninth, if Coulson voluntarily terminates his employment with Sonic
Foundry pursuant to paragraph (a) of this Article Ninth or otherwise: (i) all
rights and liabilities of the parties hereto shall cease and this Agreement
shall be terminated (subject to the continuing obligations of Coulson pursuant
to Articles Sixth and Tenth); and (ii) Coulson shall not be entitled to receive
any severance benefits, salary, other benefits or compensation of any kind
(except for health insurance continuation as required by COBRA and accrued
vacation pay as required by law) either as consideration for his employment or
in connection with the termination of his employment.

(d) Notice by Coulson of Voluntary Termination. Coulson agrees to give Sonic
Foundry four (4) months notice of any voluntary termination of employment,
except for termination pursuant to paragraph (a) above. Upon the giving of such
notice, Sonic Foundry may elect to terminate Coulson’s employment immediately,
and such termination shall be considered a voluntary termination by Coulson
pursuant to paragraph (c) above.

Tenth: Restrictive Covenant

Coulson covenants and agrees that during the period commencing with the date
hereof and ending one (1) year from the date Coulson’s employment with Sonic
Foundry is terminated with or without “cause” or by reason of Coulson’s
voluntary termination of employment from Sonic Foundry (the “Non-Compete
Period”), employee will not compete or attempt to compete with or become
associated with any business which competes with the Companies’ automated rich
media application software and systems business, or any business activities of
the Companies existing on or developed subsequent to the date hereof. Coulson
covenants and agrees that he will not, without

 

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the prior written consent of Sonic Foundry during the Non-Compete Period:
(a) solicit any customer of the Companies; (b) solicit any contracts which were
either being solicited by, or which were under contract with, the Companies by
performing or causing to be performed any work which was either being solicited
by, or which was under contract with, Sonic Foundry; or (c) induce any sales,
operating, technical or other personnel of the Companies to leave the service,
employ or business of the Companies. Coulson agrees that he will not violate
this Article Tenth: (a) directly or indirectly; (b) in any capacity, either
individually or as a member of any firm; (c) as an officer, director,
stockholder, partner or employee of any business; or (d) through or with any
persons, relatives (either through blood or marriage), firms, corporations or
individuals controlled by or associated with him (each and every such method of
violation referred to in clauses (a) through (d) shall hereinafter be referred
to as an “indirect violation”). Coulson further agrees that doing or causing to
be done any of the actions prohibited in this Article Tenth by means of an
indirect violation shall constitute a violation of this Article Tenth as though
violated by Coulson, subject to all of the remedies to Sonic Foundry provided
for herein and as otherwise provided by law.

Eleventh: Arbitration; Governing Law.

Any controversy or claim arising out of, or relating to this Agreement or the
breach thereof, shall be settled by binding arbitration in the City of Madison
pursuant to the laws of the State of Wisconsin in accordance with the rules then
obtaining of the America Arbitration Association, and judgments upon the award
rendered my be entered in any court having jurisdiction thereof. This Agreement
shall be governed by and construed in accordance with the substantive laws of
the State of Wisconsin. The arbitrators shall have the power in their discretion
to award attorneys’ fees and other legal costs and expenses to the prevailing
party in connection with any arbitration.

Twelfth: Notices

Any notice required or permitted to be given under this Agreement shall be
sufficient if in writing and sent by certified mail to his residence, in the
case of Coulson, or to its principal office, in the case of Sonic Foundry.

Thirteenth: Waiver of Breach

The waiver by Sonic Foundry of a breach of any provision of this Agreement by
Coulson shall not operate or be construed as a waiver of any subsequent breach
by Coulson.

Fourteenth: Assignment

The rights and obligations of Sonic Foundry under this Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns of Sonic
Foundry.

Fifteenth: Entire Agreement; Written Amendment

This instrument contains the entire agreement of the parties with respect to the
subject matter hereof. This Agreement may only be amended, modified, extended or
discharged and the provisions of this Agreement may only be waived by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, extension or discharge is sought.

 

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Sixteenth: Equitable Relief; Partial Enforcement

Sonic Foundry and Coulson have agreed that violation or breach of Articles Sixth
and Tenth will result in irreparable injury to the Companies and shall entitle
the Companies to equitable relief in addition to any other remedies provided at
law. Sonic Foundry and Coulson have further agreed in the event that only a
portion of Articles Sixth or Tenth shall be deemed enforceable or valid that
portion of such Articles as shall be enforceable or valid shall be enforced.
Sonic Foundry and Coulson have further agreed that the court making a
determination of the validity or enforceability of such Articles shall have the
power and authority to rewrite the restrictions contained in such Articles to
include the maximum portion of the restrictions included within such Articles as
are enforceable, valid and consistent with the intent of the parties as
expressed in such Articles.

Seventeenth: Duties Upon Termination. In the event the employment of Coulson is
terminated for any reason whatsoever, Coulson shall deliver immediately to Sonic
Foundry all computer software, correspondence, letters, contracts, call reports,
price lists, manuals, mailing lists, customer lists, advertising materials,
ledgers, supplies, equipment, checks, petty cash, and all other materials and
records of any kind and other embodiments of information that may be in
Coulson’s possession or under his control which belong to Sonic Foundry or have
been obtained from Sonic Foundry by Coulson, including any and all copies of
such items previously described in this paragraph. Except as stated above, all
salary, commissions, benefits and rights thereto cease as of the termination
date.

Eighteenth: Payment of Legal Fees. To the extent permitted by law, the
non-prevailing party in any litigation or arbitration relating to this Agreement
or Coulson’s employment hereunder shall pay all legal fees, costs of litigation,
prejudgment interest, and other expenses incurred in good faith by such party in
the prevailing litigation or arbitration.

Nineteenth: Warranty and Indemnification. Coulson warrants that he is not a
party to an agreement or restrictive covenant which would prohibit his
employment by Sonic Foundry or restrict his activities of employment with Sonic
Foundry. Coulson further agrees to indemnify and hold Sonic Foundry harmless
from any and all suits, claims or damages which arise out of the assertion by
any other person, firm or entity that such a restrictive covenant or agreement
exists, has existed, or operates to control or restrict Coulson’s activities or
conduct of employment by Sonic Foundry.

Twentieth: Inducement or Coercion for Employment. Coulson acknowledges that this
Agreement has been executed by him without coercion by Sonic Foundry, and that
no representations or inducements of any kind have been made or provided by
Sonic Foundry to obtain Coulson’s execution of this Agreement other than those
specifically contained in this written document. Coulson represents that he has
been given the opportunity to review this Agreement with his own independent
counsel, and that McBreen & Kopko is not representing Coulson in connection with
this Agreement or in any related matter.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

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SONIC FOUNDRY, INC. By:  

/s/ Rimas Buinevicius

Its:   Chief Executive Officer  

/s/ Darrin Coulson

  Darrin Coulson

 

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