Document:

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Exhibit 4.1

                              SONIC FOUNDRY, INC.

                      1995 STOCK OPTION PLAN, AS AMENDED

                               TABLE OF CONTENTS

                                                                            Page

SECTION 1
BACKGROUND, PURPOSE AND DURATION

1.1   Effective Date and Purpose...............................................1

SECTION 2
DEFINITIONS

2.1  "1934 Act"................................................................1
2.2  "Affiliate"...............................................................1
2.3  "Board"...................................................................1
2.4  "Code"....................................................................1
2.5  "Committee"...............................................................1
2.6  "Company".................................................................1
2.7  "Director"................................................................2
2.8  "Disability"..............................................................2
2.9  "Employee"................................................................2
2.10 "Exercise Price"..........................................................2
2.11 "Fair Market Value".......................................................2
2.12 "Fiscal Year".............................................................2
2.13 "Grant Date"..............................................................2
2.14 "Incentive Stock Option"..................................................2
2.15 "Nonqualified Stock Option"...............................................2
2.16 "Option"..................................................................2
2.17 "Option Agreement"........................................................2
2.18 "Participant".............................................................2
2.19 "Plan"....................................................................3
2.20 "Rule 16b-3"..............................................................3
2.21 "Section 16 Person".......................................................3
2.22 "Shares"..................................................................3
2.23 "Subsidiary"..............................................................3
2.24 "Termination of Service"..................................................3

SECTION 3
ADMINISTRATION

3.1  The Committee.............................................................3
3.2  Authority of the Committee................................................3
3.3  Delegation by the Committee...............................................4
3.4  Decisions Binding.........................................................4

                                     (ii)
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SECTION 4
SHARES SUBJECT TO THE PLAN

4.1 Number of Shares...........................................................4
4.2 Lapsed Options.............................................................4
4.3 Adjustments in Options and Authorized Shares...............................4

SECTION 5
STOCK OPTIONS

5.1 Grant of Option............................................................4
5.2 Option Agreement...........................................................4
5.3 Exercise Price.............................................................5
    5.3.1 Nonqualified Stock Options...........................................5
    5.3.2 Incentive Stock options..............................................5
    5.3.3 Substitute Options...................................................5
5.4 Expiration of Options......................................................5
    5.4.1 Expiration Dates.....................................................5
    5.4.2 Death of Participant.................................................6
    5.4.3 Committee Discretion.................................................6
5.5 Exercisability of Options..................................................6
5.6 Payment....................................................................6
5.7 Restrictions on Share Transferability......................................6
5.8 Certain Additional Provisions for Incentive Stock Options..................6
    5.8.1 Exercisability.......................................................6
    5.8.2 Termination of Service...............................................7
    5.8.3 Company and Subsidiaries Only........................................7
    5.8.4 Expiration...........................................................7
5.9 Grant of Reload Options....................................................7

SECTION 6
MISCELLANEOUS

6.1 No Effect on Employment or Service.........................................9
6.2 Participation..............................................................9
6.3 Indemnification............................................................9
6.4 Successors.................................................................9
6.5 Beneficiary Designations...................................................9
6.6 Nontransferability of Options.............................................10
6.7 No Rights as Shareholder..................................................10
6.8 Withholding Requirements..................................................10
6.9 Withholding Arrangements..................................................10

                                     (iii)

<PAGE>

SECTION 7
AMENDMENT, TERMINATION, AND DURATION

7.1  Amendment, Suspension, or Termination....................................10
7.2  Duration of the Plan.....................................................10

SECTION 8
LEGAL CONSTRUCTION

8.1 Gender and Number.........................................................11
8.2 Severability..............................................................11
8.3 Requirements of Law.......................................................11
8.4 Compliance with Rule 16b-3................................................11
8.5 Governing Law.............................................................11
8.6 Captions..................................................................11

                                     (iv)

<PAGE>

                              SONIC FOUNDRY, INC.
                      1995 STOCK OPTION PLAN, AS AMENDED

                                   SECTION 1
                       BACKGROUND, PURPOSE AND DURATION

     1.1  Effective Date and Purpose. The Plan is effective as of January 1,
1995. The Plan is intended to increase incentive and to encourage Share
ownership on the part of (1) employees of the Company and its Affiliates, and
(2) consultants who provide significant services to the Company and its
Affiliates. The Plan also is intended to further the growth and profitability of
the Company.

                                   SECTION 2
                                  DEFINITIONS

     The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:

     2.1  "1934 Act" means the Securities Exchange Act of 1934, as amended.
Reference to a specific section of the 1934 Act or regulation thereunder shall
include such section or regulation, any valid regulation promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.

     2.2  "Affiliate" means any corporation or any other entity (including, but
not limited to, partnerships and joint ventures) controlling, controlled by, or
under common control with the Company.

     2.3  "Board" means the Board of Directors of the Company.

     2.4  "Code" means the Internal Revenue Code of 1986, as amended. Reference
to a specific section of the Code or regulation thereunder shall include such
section or regulation, any valid regulation promulgated under such section, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.

     2.5  "Committee" means the executive compensation committee appointed by
the Board (pursuant to Section 3.1) to administer the Plan.

     2.6  "Company" means Sonic Foundry, Inc., a Maryland corporation, or any
successor thereto.

     2.7  "Director" means any individual who is a member of the Board.

                                       1
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     2.8  "Disability" means a permanent and total disability within the meaning
of Code section 22(e)(3), provided that in the case of Options other than
Incentive Stock Options, the Committee in its discretion may determine whether a
permanent and total disability exists in accordance with uniform and non-
discriminatory standards adopted by the Committee from time to time.

     2.9  "Employee" means any employee of the Company or of an Affiliate,
whether such employee is so employed at the time the Plan is adopted or becomes
so employed subsequent to the adoption of the Plan, and whether or not such
employee is a Director.

     2.10 "Exercise Price" means the price at which a Share may be purchased by
a Participant pursuant to the exercise of an Option.

     2.11 "Fair Market Value" means the last quoted per share selling price for
Shares on the relevant date, or if there were no sales on such date, the
arithmetic mean of the highest and lowest quoted selling prices on the nearest
day before and the nearest day after the relevant date, as determined by the
Committee. Notwithstanding the preceding, with respect to Options granted on the
date of the initial public offering of Shares, fair market value means the price
at which each Share is sold in such offering, as determined by the Committee.

     2.12 "Fiscal Year" means the fiscal year of the Company.

     2.13 "Grant Date" means, with respect to an Option, the date that the
Option was granted.

     2.14 "Incentive Stock Option" means an Option to purchase Shares which is
designated as an Incentive Stock Option and is intended to meet the requirements
of section 422 of the Code.

     2.15 "Nonqualified Stock Option" means an option to purchase Shares which
is not intended to be an Incentive Stock Option.

     2.16 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option.

     2.17 "Option Agreement" means the written agreement setting forth the terms
and provisions applicable to each Option granted under the Plan.

     2.18 "Participant" means an Employee, Consultant, or Director who has an
outstanding Option.

     2.19 "Plan" means Sonic Foundry, Inc. 1995 Stock Option Plan, as set forth
in this instrument and as hereafter amended from time to time.

     2.20 "Rule 16b-3" means Rule 16b-3 promulgated under the 1934 Act, as
amended, and any future regulation amending, supplementing or superseding such
regulation.

                                       2
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     2.21 "Section 16 Person" means a person who, with respect to the Shares,
is subject to section 16 of the 1934 Act.

     2.22 "Shares" means the shares of the Company's common stock, $.01 par
value.

     2.23 "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

     2.24 "Termination of Service" means (a) in the case of an Employee, a
cessation of the employee-employer relationship between an Employee and the
Company or an Affiliate for any reason, including, but not by way of limitation,
a termination by resignation, discharge, death, Disability, retirement, or the
disaffiliation of an Affiliate, but excluding any such termination where there
is a simultaneous reemployment by the Company or an Affiliate.

                                   SECTION 3
                                ADMINISTRATION

     3.1  The Committee. The Plan shall be administered by the Committee. The
members of the Committee shall be appointed from time to time by, and shall
serve at the pleasure of, the Board.

     3.2  Authority of the Committee. It shall be the duty of the Committee to
administer the Plan in accordance with the Plan's provisions. The Committee
shall have all powers and discretion necessary or appropriate to administer the
Plan and to control its operation, including, but not limited to, the power to
(a) determine which Employees shall be granted Options, (b) prescribe the terms
and conditions of the Options, (c) interpret the Plan and the Options, (d) adopt
such procedures and subplans as are necessary or appropriate to permit
participation in the Plan by Employees who are foreign nationals or employed
outside of the United States, (e) adopt rules for the administration,
interpretation and application of the Plan as are consistent therewith, and (f)
interpret, amend or revoke any such rules.

     3.3  Delegation by the Committee. The Committee, in its sole discretion and
on such terms and conditions as it may provide, may delegate all or any part of
its authority and powers under the Plan to one or more directors or officers of
the Company; provided, however, that unless otherwise determined by the Board,
the Committee may not delegate its authority and powers in any way which would
jeopardize the Plan's qualification under section 162(m) of the Code or
Rule 16b-3.

     3.4  Decisions Binding. All determinations and decisions made by the
Committee, the Board, and any delegate of the Committee pursuant to the
provisions of the Plan shall be final, conclusive, and binding on all persons,
and shall be given the maximum deference permitted by law.

                                       3
<PAGE>

                                   SECTION 4
                          SHARES SUBJECT TO THE PLAN

     4.1  Number of Shares. Subject to adjustment as provided in Section 4.3,
the total number of Shares available for grant under the Plan shall not exceed
four million (4,000,000). Shares granted under the Plan may be either authorized
but unissued Shares or treasury Shares.

     4.2  Lapsed Options. If an Option terminates, expires, or lapses for any
reason, any Shares subject to such Option again shall be available to be the
subject of an Option.

     4.3  Adjustments in Options and Authorized Shares. In the event of any
merger, reorganization, consolidation, recapitalization, separation,
liquidation, stock dividend, split-up, Share combination, or other change in the
corporate structure of the Company affecting the Shares, the Committee shall
adjust the number and class of Shares which may be delivered under the Plan, the
number, class, and price of Shares subject to outstanding Options, and the
numerical limit of Section 4.1 in such manner as the Committee (in its sole
discretion) shall determine to be appropriate to prevent the dilution or
diminution of such Options. Notwithstanding the preceding, the number of Shares
subject to any Option always shall be a whole number.

                                   SECTION 5
                                 STOCK OPTIONS

     5.1  Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Employees at any time and from time to time as
determined by the Committee in its sole discretion. The Committee, in its sole
discretion, shall determine the number of Shares subject to each Option. The
Committee may grant Incentive Stock Options, Nonqualified Stock Options, or a
combination thereof.

     5.2  Option Agreement. Each Option shall be evidenced by an Option
Agreement that shall specify the Exercise Price, the expiration date of the
Option, the number of Shares to which the Option pertains, any conditions to
exercise of the Option, and such other terms and conditions as the Committee, in
its discretion, shall determine. The Option Agreement shall specify whether the
Option is intended to be an Incentive Stock Option or a Nonqualified Stock
Option.

     5.3  Exercise Price. Subject to the provisions of this Section 5.3, the
Exercise Price for each Option shall be determined by the Committee in its sole
discretion.

          5.3.1 Nonqualified Stock Options. In the case of a Nonqualified Stock
Option, the Exercise Price shall be not less than one hundred percent (100%) of
the Fair Market Value of a Share on the Grant Date.

                                       4
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          5.3.2  Incentive Stock Options. In the case of an Incentive Stock
Option, the Exercise Price shall be not less than one hundred percent (100%) of
the Fair Market Value of a Share on the Grant Date; provided, however, that if
on the Grant Date, the Employee (together with persons whose stock ownership is
attributed to the Employee pursuant to section 424(d) of the Code) owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any of its Subsidiaries, the Exercise Price shall be not
less than one hundred and ten percent (110%) of the Fair Market Value of a Share
on the Grant Date.

          5.3.3  Substitute Options. Notwithstanding the provisions of Sections
5.3.1 and 5.3.2, in the event that the Company or an Affiliate consummates a
transaction described in section 424(a) of the Code (e.g., the acquisition of
property or stock from an unrelated corporation), persons who become Employees
on account of such transaction may be granted Options in substitution for
options granted by their former employer. If such substitute Options are
granted, the Committee, in its sole discretion and consistent with section
424(a) of the Code, shall determine the exercise price of such substitute
Options.

     5.4  Expiration of Options.

          5.4.1  Expiration Dates. Each Option shall terminate no later than the
first to occur of the following events:

          (a) The date for termination of the Option set forth in the written
     Option Agreement; or

          (b) The expiration of ten (10) years from the Grant Date; or

          (c) The expiration of three (3) months from the date of the
     Participant's Termination of Service for a reason other than the
     Participant's death, Disability or Retirement; or

          (d) The expiration of one (1) year from the date of the Participant's
     Termination of Service by reason of Disability.

          5.4.2  Death of Participant. Notwithstanding Section 5.4.1, if a
Participant dies prior to the expiration of his or her options, the Committee,
in its discretion, may provide that his or her options shall be exercisable for
up to one (1) year after the date of death.

          5.4.3  Committee Discretion. The Committee, in its sole discretion,
(a) shall provide in each Option Agreement when each Option expires and becomes
unexercisable, and (b) may, after an Option is granted, extend the maximum term
of the Option (subject to Section 5.4.1(b) (regarding the maximum term of
Options) and Section 5.8.4 (regarding Incentive Stock Options)).

     5.5  Exercisability of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall determine in
                                       5
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its sole discretion. After an Option is granted, the Committee, in its sole
discretion, may accelerate the exercisability of the Option.

     5.6  Payment.  Options shall be exercised by the Participant's delivery of
a written notice of exercise to the Secretary of the Company (or its designee),
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares. Upon the exercise of any
Option, the Exercise Price shall be payable to the Company in full in cash or
its equivalent. The Committee, in its sole discretion, also may permit exercise
(a) by tendering previously acquired Shares having an aggregate Fair Market
Value at the time of exercise equal to the total Exercise Price, or (b) by any
other means which the Committee, in its sole discretion, determines to both
provide legal consideration for the Shares, and to be consistent with the
purposes of the Plan, including by execution and delivery of a promissory note.

     As soon as practicable after receipt of a written notification of exercise
and full payment for the Shares purchased, the Company shall deliver to the
Participant (or the Participant's designated broker), Share certificates (which
may be in book entry form) representing such Shares.

     5.7  Restrictions on Share Transferability.  The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option as it
may deem advisable, including, but not limited to, restrictions related to
applicable Federal securities laws, the requirements of any national securities
exchange or system upon which Shares are then listed or traded, or any blue sky
or state securities laws.

     5.8  Certain Additional Provisions for Incentive Stock Options.

          5.8.1  Exercisability.  The aggregate Fair Market Value (determined on
the Grant Date(s)) of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by any Employee during any calendar year
(under all plans of the Company and its Subsidiaries) shall not exceed $100,000.

          5.8.2  Termination of Service.  No Incentive Stock Option may be
exercised more than three (3) months after the Participant's Termination of
Service for any reason other than Disability or death, unless (a) the
Participant dies during such three-month period, and (b) the Option Agreement or
the Committee permits later exercise.

          5.8.3  Company and Subsidiaries Only.  Incentive Stock Options may be
granted only to persons who are employees of the Company or a Subsidiary on the
Grant Date.

          5.8.4  Expiration.  No Incentive Stock Option may be exercised after
the expiration of ten (10) years from the Grant Date; provided, however, that if
the Option is granted to an Employee who, together with persons whose stock
ownership is attributed to the Employee pursuant to section 424(d) of the Code,
owns stock possessing more than 10% of the total combined voting power of all
classes of the stock of the Company or any of its Subsidiaries, the Option may
not be exercised after the expiration of five (5) years from the Grant Date.

                                       6
<PAGE>

     5.9  Grant of Reload Options.  The Committee may provide in an Option
Agreement that a Participant who exercises all or part of an Option by payment
of the Exercise Price with already-owned Shares, shall be granted an additional
option (a "Reload Option") for a number of shares of stock equal to the number
of Shares tendered to exercise the previously granted Option plus, if the
Committee so determines, any Shares withheld or delivered in satisfaction of any
tax withholding requirements. As determined by the Committee, each Reload Option
shall: (a) have a Grant Date which is the date as of which the previously
granted Option is exercised, and (b) be exercisable on the same terms and
conditions as the previously granted Option, except that the Exercise Price
shall be determined as of the Grant Date.

                                   SECTION 6
                                 MISCELLANEOUS

     6.1  No Effect on Employment or Service.  Nothing in the Plan shall
interfere with or limit in any way the right of the Company to terminate any
Participant's employment or service at any time, with or without cause. For
purposes of the Plan, transfer of employment of a Participant between the
Company and any one of its Affiliates (or between Affiliates) shall not be
deemed a Termination of Service. Employment or service with the Company and its
Affiliates is on an at-will basis only.

     6.2  Participation.  No Employee shall have the right to be selected to
receive an Option under this Plan, or, having been so selected, to be selected
to receive a future Option.

     6.3  Indemnification.  Each person who is or shall have been a member of
the Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from (a) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any Option Agreement, and (b) from any and all
amounts paid by him or her in settlement thereof, with the Company's approval,
or paid by him or her in satisfaction of any judgment in any such claim, action,
suit, or proceeding against him or her, provided he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or Bylaws, by contract, as a matter of law, or
otherwise, or under any power that the Company may have to indemnify them or
hold them harmless.

     6.4  Successors.  All obligations of the Company under the Plan, with
respect to Options granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business or assets of the Company.

                                       7
<PAGE>

     6.5  Beneficiary Designations.  If permitted by the Committee, a
Participant under the Plan may name a beneficiary or beneficiaries to whom any
vested but unpaid Option shall be paid in the event of the Participant's death.
Each such designation shall revoke all prior designations by the Participant and
shall be effective only if given in a form and manner acceptable to the
Committee. In the absence of any such designation, any vested benefits remaining
unpaid at the Participant's death shall be paid to the Participant's estate and,
subject to the terms of the Plan and of the applicable Option Agreement, any
unexercised vested Option may be exercised by the administrator or executor of
the Participant's estate.

     6.6  Nontransferability of Options.  No Option granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will, by the laws of descent and distribution, or to the limited
extent provided in Section 6.5. All rights with respect to an Option granted to
a Participant shall be available during his or her lifetime only to the
Participant.

     6.7  No Rights as Shareholder.  No Participant (nor any beneficiary) shall
have any of the rights or privileges of a shareholder of the Company with
respect to any Shares issuable pursuant to an Option, unless and until
certificates representing such Shares shall have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
the Participant (or beneficiary).

     6.8  Withholding Requirements.  Prior to the delivery of any Shares or cash
pursuant to an Option, the Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes (including the
Participant's FICA obligation) required to be withheld with respect to such
Option (or exercise thereof).

     6.9  Withholding Arrangements.  The Committee, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit or
require a Participant to satisfy all or part of the tax withholding obligations
in connection with an Option by (a) having the Company withhold otherwise
deliverable Shares, or (b) delivering to the Company already-owned Shares having
a Fair Market Value equal to the amount required to be withheld. The amount of
the withholding requirement shall be deemed to include any amount which the
Committee determines, not to exceed the amount determined by using the maximum
federal, state or local marginal income tax rates applicable to the Participant
with respect to the Option on the date that the amount of tax to be withheld is
to be determined. The Fair Market Value of the Shares to be withheld or
delivered shall be determined as of the date that the taxes are required to be
withheld.

                                   SECTION 7
                     AMENDMENT, TERMINATION, AND DURATION

     7.1  Amendment, Suspension, or Termination.  The Board, in its sole
discretion, may amend or terminate the Plan, or any part thereof, at any time
and for any reason. The amendment, suspension, or termination of the Plan shall
not, without the consent of the

                                       8
<PAGE>

Participant, alter or impair any rights or obligations under any Option
theretofore granted to such Participant. No Option may be granted during any
period of suspension or after termination of the Plan.

     7.2  Duration of the Plan.  The Plan shall commence on the date specified
herein, and subject to Section 7.1 (regarding the Board's right to amend or
terminate the Plan), shall remain in effect thereafter. However, without
shareholder approval, no Incentive Stock Option may be granted under the Plan
after January 1, 2005.

                                   SECTION 8
                              LEGAL CONSTRUCTION

     8.1  Gender and Number.  Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

     8.2  Severability.  In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

     8.3  Requirements of Law.  The granting of Options and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

     8.4  Compliance with Rule 16b-3.  Transactions under this Plan with respect
to Section 16 Persons are intended to comply with all applicable conditions of
Rule 16b-3. To the extent any provision of the Plan, Option Agreement or action
by the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.

     8.5  Governing Law.  The Plan and all Option Agreements shall be construed
in accordance with and governed by the laws of the State of Maryland.

     8.6  Captions.  Captions are provided herein for convenience only, and
shall not serve as a basis for interpretation or construction of the Plan.

                                       9
<PAGE>

                                   EXECUTION

     IN WITNESS WHEREOF, Sonic Foundry, Inc., by its duly authorized officer,
has executed the Plan on the date indicated below.

SONIC FOUNDRY, INC.

By: /s/ Monty R. Schmidt
    ---------------------------
    Monty R. Schmidt
    President

Dated as of: December 1, 1995
Effective as of: January 1, 1995<PAGE>

Exhibit 4.1

                              SONIC FOUNDRY, INC.

                      1999 NON-QUALIFIED STOCK OPTION PLAN

                               TABLE OF CONTENTS

                                                                            Page

SECTION 1
BACKGROUND, PURPOSE AND DURATION

1.1  Effective Date and Purpose................................................1

SECTION 2
DEFINITIONS

2.1  "1934 Act"................................................................1
2.2  "Affiliate"...............................................................1
2.3  "Board"...................................................................1
2.4  "Code"....................................................................1
2.5  "Committee"...............................................................1
2.6  "Company".................................................................1
2.7  "Director"................................................................1
2.8  "Disability"..............................................................2
2.9  "Employee"................................................................2
2.10 "Exercise Price"..........................................................2
2.11 "Fair Market Value".......................................................2
2.12 "Fiscal Year".............................................................2
2.13 "Grant Date"..............................................................2
2.14 "Nonqualified Stock Option"...............................................2
2.15 "Option"..................................................................2
2.16 "Option Agreement"........................................................2
2.17 "Participant".............................................................2
2.18 "Plan"....................................................................2
2.19 "Rule 16b-3"..............................................................2
2.20 "Section 16 Person".......................................................2
2.21 "Shares"..................................................................2
2.22 "Subsidiary"..............................................................2
2.23 "Termination of Service"..................................................3

SECTION 3
ADMINISTRATION

3.1  The Committee.............................................................3
3.2  Authority of the Committee................................................3
3.3  Delegation by the Committee...............................................3
3.4  Decisions Binding.........................................................3

                                     (ii)

<PAGE>

SECTION 4
SHARES SUBJECT TO THE PLAN

4.1  Number of Shares..........................................................3
4.2  Lapsed Options............................................................4
4.3  Adjustments in Options and Authorized Shares..............................4

SECTION 5
STOCK OPTIONS

5.1  Grant of Options..........................................................4
5.2  Option Agreement..........................................................4
5.3  Exercise Price............................................................4
   5.3.1 Substitute Options....................................................4
5.4  Expiration of Options.....................................................4
   5.4.1  Expiration Dates.....................................................5
   5.4.2  Death of Participant.................................................5
   5.4.3  Committee Discretion.................................................5
5.5  Exercisability of Options.................................................5
5.6  Payment...................................................................5
5.7  Restrictions on Share Transferability.....................................6
5.8 Grant of Reload Options....................................................6

SECTION 6
MISCELLANEOUS

6.1  No Effect on Employment or Service........................................6
6.2  Participation.............................................................6
6.3  Indemnification...........................................................6
6.4  Successors................................................................7
6.5  Beneficiary Designations..................................................7
6.6  Nontransferability of Options.............................................7
6.7  No Rights as Shareholder..................................................7
6.8  Withholding Requirements..................................................7
6.9  Withholding Arrangements..................................................7

SECTION 7
AMENDMENT, TERMINATION, AND DURATION

7.1  Amendment, Suspension, or Termination.....................................8
7.2  Duration of the Plan......................................................8
<PAGE>

SECTION 8
LEGAL CONSTRUCTION

8.1  Gender and Number.........................................................8
8.2  Severability..............................................................8
8.3  Requirements of Law.......................................................8
8.4  Compliance with Rule 16b-3................................................8
8.5  Governing Law.............................................................8
8.6  Captions..................................................................8

<PAGE>

                              SONIC FOUNDRY, INC.
                     1999 NON-QUALIFIED STOCK OPTION PLAN

                                   SECTION 1
                       BACKGROUND, PURPOSE AND DURATION

     1.1  Effective Date and Purpose. The Plan is effective as of September 1,
1999. The Plan is intended to increase incentive and to encourage Share
ownership on the part of (1) employees of the Company and its Affiliates, and
(2) consultants who provide significant services to the Company and its
Affiliates. The Plan also is intended to further the growth and profitability of
the Company.

                                   SECTION 2
                                  DEFINITIONS

     The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:

     2.1  "1934 Act" means the Securities Exchange Act of 1934, as amended.
Reference to a specific section of the 1934 Act or regulation thereunder shall
include such section or regulation, any valid regulation promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.

     2.2  "Affiliate" means any corporation or any other entity (including, but
not limited to, partnerships and joint ventures) controlling, controlled by, or
under common control with the Company.

     2.3  "Board" means the Board of Directors of the Company.

     2.4  "Code" means the Internal Revenue Code of 1986, as amended. Reference
to a specific section of the Code or regulation thereunder shall include such
section or regulation, any valid regulation promulgated under such section, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.

     2.5  "Committee" means the stock option committee appointed by the Board
(pursuant to Section 3.1) to administer the Plan.

     2.6  "Company" means Sonic Foundry, Inc., a Maryland corporation, or any
successor thereto.

     2.7  "Director" means any individual who is a member of the Board.

                                       1
<PAGE>

     2.8  "Disability" means a permanent and total disability within the meaning
of Code section 22(e)(3).

     2.9  "Employee" means any employee of the Company or of an Affiliate,
whether such employee is so employed at the time the Plan is adopted or becomes
so employed subsequent to the adoption of the Plan, and whether or not such
employee is a Director.

     2.10 "Exercise Price" means the price at which a Share may be purchased by
a Participant pursuant to the exercise of an Option.

     2.11 "Fair Market Value" means the last quoted per share selling price for
Shares on the relevant date, or if there were no sales on such date, the
arithmetic mean of the highest and lowest quoted selling prices on the nearest
day before and the nearest day after the relevant date, as determined by the
Committee. Notwithstanding the preceding, with respect to Options granted on the
date of the initial public offering of Shares, fair market value means the price
at which each Share is sold in such offering, as determined by the Committee.

     2.12 "Fiscal Year" means the fiscal year of the Company.

     2.13 "Grant Date" means, with respect to an Option, the date that the
Option was granted.

     2.14 "Nonqualified Stock Option" means an option to purchase Shares which
is not intended to be an Incentive Stock Option.

     2.15 "Option" means a Nonqualified Stock Option.

     2.16 "Option Agreement" means the written agreement setting forth the terms
and provisions applicable to each Option granted under the Plan.

     2.17 "Participant" means an Employee, Consultant, or Director who has an
outstanding Option.

     2.18 "Plan" means Sonic Foundry, Inc. 1999 Non-Qualified Stock Option Plan,
as set forth in this instrument and as hereafter amended from time to time.

     2.19 "Rule 16b-3" means Rule 16b-3 promulgated under the 1934 Act, as
amended, and any future regulation amending, supplementing or superseding such
regulation.

     2.20 "Section 16 Person" means a person who, with respect to the Shares, is
subject to section 16 of the 1934 Act.

     2.21 "Shares" means the shares of the Company's common stock, $.01 par
value.

     2.22 "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the
                                       2
<PAGE>

unbroken chain then owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

     2.23 "Termination of Service" means (a) in the case of an Employee, a
cessation of the employee-employer relationship between an Employee and the
Company or an Affiliate for any reason, including, but not by way of limitation,
a termination by resignation, discharge, death, Disability, retirement, or the
disaffiliation of an Affiliate, but excluding any such termination where there
is a simultaneous reemployment by the Company or an Affiliate.

                                   SECTION 3
                                ADMINISTRATION

     3.1  The Committee. The Plan shall be administered by the Committee. The
members of the Committee shall be appointed from time to time by, and shall
serve at the pleasure of, the Board.

     3.2  Authority of the Committee. It shall be the duty of the Committee to
administer the Plan in accordance with the Plan's provisions. The Committee
shall have all powers and discretion necessary or appropriate to administer the
Plan and to control its operation, including, but not limited to, the power to
(a) determine which Employees shall be granted Options, (b) prescribe the terms
and conditions of the Options, (c) interpret the Plan and the Options, (d) adopt
such procedures and subplans as are necessary or appropriate to permit
participation in the Plan by Employees who are foreign nationals or employed
outside of the United States, (e) adopt rules for the administration,
interpretation and application of the Plan as are consistent therewith, and (f)
interpret, amend or revoke any such rules.

     3.3  Delegation by the Committee. The Committee, in its sole discretion and
on such terms and conditions as it may provide, may delegate all or any part of
its authority and powers under the Plan to one or more directors or officers of
the Company; provided, however, that unless otherwise determined by the Board,
the Committee may not delegate its authority and powers in any way which would
jeopardize the Plan's qualification under section 162(m) of the Code or
Rule 16b-3.

     3.4  Decisions Binding. All determinations and decisions made by the
Committee, the Board, and any delegate of the Committee pursuant to the
provisions of the Plan shall be final, conclusive, and binding on all persons,
and shall be given the maximum deference permitted by law.

                                   SECTION 4
                           SHARES SUBJECT TO THE PLAN

     4.1  Number of Shares.  Subject to adjustment as provided in Section 4.3,
the total number of Shares available for grant under the Plan shall not exceed
four hundred thousand

                                       3
<PAGE>

(400,000). Shares granted under the Plan may be either authorized but unissued
Shares or treasury Shares.

     4.2  Lapsed Options. If an Option terminates, expires, or lapses for any
reason, any Shares subject to such Option again shall be available to be the
subject of an Option.

     4.3  Adjustments in Options and Authorized Shares. In the event of any
merger, reorganization, consolidation, recapitalization, separation,
liquidation, stock dividend, split-up, Share combination, or other change in the
corporate structure of the Company affecting the Shares, the Committee shall
adjust the number and class of Shares which may be delivered under the Plan, the
number, class, and price of Shares subject to outstanding Options, and the
numerical limit of Section 4.1 in such manner as the Committee (in its sole
discretion) shall determine to be appropriate to prevent the dilution or
diminution of such Options. Notwithstanding the preceding, the number of Shares
subject to any Option always shall be a whole number.

                                   SECTION 5
                                 STOCK OPTIONS

     5.1  Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Employees at any time and from time to time as
determined by the Committee in its sole discretion. The Committee, in its sole
discretion, shall determine the number of Shares subject to each Option.

     5.2  Option Agreement. Each Option shall be evidenced by an Option
Agreement that shall specify the Exercise Price, the expiration date of the
Option, the number of Shares to which the Option pertains, any conditions to
exercise of the Option, and such other terms and conditions as the Committee, in
its discretion, shall determine.

     5.3  Exercise Price. Subject to the provisions of this Section 5.3, the
Exercise Price for each Option shall be determined by the Committee in its sole
discretion, provided, however, that except as set forth in Section 5.3.1 below,
the Exercise Price shall be not less than one hundred percent (100%) of the Fair
Market Value of a Share on the Grant Date.

          5.3.1  Substitute Options. Notwithstanding the provisions of Section
5.3, in the event that the Company or an Affiliate consummates a transaction
described in section 424(a) of the Code (e.g., the acquisition of property or
stock from an unrelated corporation), persons who become Employees on account of
such transaction may be granted Options in substitution for options granted by
their former employer. If such substitute Options are granted, the Committee, in
its sole discretion and consistent with section 424(a) of the Code, shall
determine the exercise price of such substitute Options.

     5.4  Expiration of Options.

                                       4
<PAGE>

          5.4.1  Expiration Dates.  Each Option shall terminate no later than
the first to occur of the following events:

          (a) The date for termination of the Option set forth in the written
     Option Agreement; or

          (b) The expiration of ten (10) years from the Grant Date; or

          (c) The expiration of three (3) months from the date of the
     Participant's Termination of Service for a reason other than the
     Participant's death, Disability or Retirement; or

          (d) The expiration of one (1) year from the date of the Participant's
     Termination of Service by reason of Disability.

          5.4.2  Death of Participant.  Notwithstanding Section 5.4.1, if a
Participant dies prior to the expiration of his or her options, the Committee,
in its discretion, may provide that his or her options shall be exercisable for
up to one (1) year after the date of death.

          5.4.3  Committee Discretion.  The Committee, in its sole discretion,
(a) shall provide in each Option Agreement when each Option expires and becomes
unexercisable, and (b) may, after an Option is granted, extend the maximum term
of the Option (subject to Section 5.4.1(b) (regarding the maximum term of
Options).

     5.5  Exercisability of Options.  Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall determine in its sole discretion.  After an Option is
granted, the Committee, in its sole discretion, may accelerate the
exercisability of the Option.

     5.6  Payment.  Options shall be exercised by the Participant's delivery of
a written notice of exercise to the Secretary of the Company (or its designee),
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares.  Upon the exercise of any
Option, the Exercise Price shall be payable to the Company in full in cash or
its equivalent. The Committee, in its sole discretion, also may permit exercise
(a) by tendering previously acquired Shares having an aggregate Fair Market
Value at the time of exercise equal to the total Exercise Price, or (b) by any
other means which the Committee, in its sole discretion, determines to both
provide legal consideration for the Shares, and to be consistent with the
purposes of the Plan, including by execution and delivery of a promissory note.

     As soon as practicable after receipt of a written notification of exercise
and full payment for the Shares purchased, the Company shall deliver to the
Participant (or the Participant's designated broker), Share certificates (which
may be in book entry form) representing such Shares.

                                       5

<PAGE>

     5.7  Restrictions on Share Transferability.  The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option as it
may deem advisable, including, but not limited to, restrictions related to
applicable Federal securities laws, the requirements of any national securities
exchange or system upon which Shares are then listed or traded, or any blue sky
or state securities laws.

     5.8  Grant of Reload Options.  The Committee may provide in an Option
Agreement that a Participant who exercises all or part of an Option by payment
of the Exercise Price with already-owned Shares, shall be granted an additional
option (a "Reload Option") for a number of shares of stock equal to the number
of Shares tendered to exercise the previously granted Option plus, if the
Committee so determines, any Shares withheld or delivered in satisfaction of any
tax withholding requirements.  As determined by the Committee, each Reload
Option shall: (a) have a Grant Date which is the date as of which the previously
granted Option is exercised, and (b) be exercisable on the same terms and
conditions as the previously granted Option, except that the Exercise Price
shall be determined as of the Grant Date.

                                   SECTION 6
                                 MISCELLANEOUS

     6.1  No Effect on Employment or Service.  Nothing in the Plan shall
interfere with or limit in any way the right of the Company to terminate any
Participant's employment or service at any time, with or without cause.  For
purposes of the Plan, transfer of employment of a Participant between the
Company and any one of its Affiliates (or between Affiliates) shall not be
deemed a Termination of Service. Employment or service with the Company and its
Affiliates is on an at-will basis only.

     6.2  Participation.  No Employee shall have the right to be selected to
receive an Option under this Plan, or, having been so selected, to be selected
to receive a future Option.

     6.3  Indemnification.  Each person who is or shall have been a member of
the Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from (a) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any Option Agreement, and (b) from any and all
amounts paid by him or her in settlement thereof, with the Company's approval,
or paid by him or her in satisfaction of any judgment in any such claim, action,
suit, or proceeding against him or her, provided he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own behalf.  The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or Bylaws, by contract, as a matter of law, or
otherwise, or under any power that the Company may have to indemnify them or
hold them harmless.

                                       6

<PAGE>

     6.4  Successors.  All obligations of the Company under the Plan, with
respect to Options granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business or assets of the Company.

     6.5  Beneficiary Designations.  If permitted by the Committee, a
Participant under the Plan may name a beneficiary or beneficiaries to whom any
vested but unpaid Option shall be paid in the event of the Participant's death.
Each such designation shall revoke all prior designations by the Participant and
shall be effective only if given in a form and manner acceptable to the
Committee. In the absence of any such designation, any vested benefits remaining
unpaid at the Participant's death shall be paid to the Participant's estate and,
subject to the terms of the Plan and of the applicable Option Agreement, any
unexercised vested Option may be exercised by the administrator or executor of
the Participant's estate.

     6.6  Nontransferability of Options.  No Option granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will, by the laws of descent and distribution, or to the limited
extent provided in Section 6.5. All rights with respect to an Option granted to
a Participant shall be available during his or her lifetime only to the
Participant.

     6.7  No Rights as Shareholder.  No Participant (nor any beneficiary) shall
have any of the rights or privileges of a shareholder of the Company with
respect to any Shares issuable pursuant to an Option, unless and until
certificates representing such Shares shall have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
the Participant (or beneficiary).

     6.8  Withholding Requirements.  Prior to the delivery of any Shares or cash
pursuant to an Option, the Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes (including the
Participant's FICA obligation) required to be withheld with respect to such
Option (or exercise thereof).

     6.9  Withholding Arrangements.  The Committee, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit or
require a Participant to satisfy all or part of the tax withholding obligations
in connection with an Option by (a) having the Company withhold otherwise
deliverable Shares, or (b) delivering to the Company already-owned Shares having
a Fair Market Value equal to the amount required to be withheld.  The amount of
the withholding requirement shall be deemed to include any amount which the
Committee determines, not to exceed the amount determined by using the maximum
federal, state or local marginal income tax rates applicable to the Participant
with respect to the Option on the date that the amount of tax to be withheld is
to be determined.  The Fair Market Value of the Shares to be withheld or
delivered shall be determined as of the date that the taxes are required to be
withheld.

                                       7

<PAGE>

                                   SECTION 7
                      AMENDMENT, TERMINATION, AND DURATION

     7.1  Amendment, Suspension, or Termination.  The Board, in its sole
discretion, may amend or terminate the Plan, or any part thereof, at any time
and for any reason.  The amendment, suspension, or termination of the Plan shall
not, without the consent of the Participant, alter or impair any rights or
obligations under any Option theretofore granted to such Participant.  No Option
may be granted during any period of suspension or after termination of the Plan.

     7.2  Duration of the Plan.  The Plan shall commence on the date specified
herein, and subject to Section 7.1 (regarding the Board's right to amend or
terminate the Plan), shall remain in effect thereafter.

                                   SECTION 8
                               LEGAL CONSTRUCTION

     8.1  Gender and Number.  Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

     8.2  Severability.  In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

     8.3  Requirements of Law.  The granting of Options and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

     8.4  Compliance with Rule 16b-3.  Transactions under this Plan with respect
to Section 16 Persons are intended to comply with all applicable conditions of
Rule 16b-3.  To the extent any provision of the Plan, Option Agreement or action
by the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.

     8.5  Governing Law.  The Plan and all Option Agreements shall be construed
in accordance with and governed by the laws of the State of Maryland.

     8.6  Captions.  Captions are provided herein for convenience only, and
shall not serve as a basis for interpretation or construction of the Plan.

                                       8

<PAGE>

                                   EXECUTION

     IN WITNESS WHEREOF, Sonic Foundry, Inc., by its duly authorized officer,
has executed the Plan on the date indicated below.

SONIC FOUNDRY, INC.

By: /s/ Monty R. Schmidt
    ---------------------
      Monty R. Schmidt
      President

Dated as of: October 1, 1999
Effective as of: October 1, 1999

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