Document:

Warrant Purchase Agreement

 Exhibit 10.3 
 WARRANT PURCHASE AGREEMENT 
 Sonic Foundry, Inc. 
 222 W. Washington Avenue 
 Madison, WI 53703

 Ladies & Gentlemen: 
 This Warrant Purchase Agreement (the “Agreement”) is made as of March 5, 2010 (the “Closing Date”) by and between Sonic Foundry, Inc., a Maryland corporation, with its principal
place of business at 222 W. Washington Avenue, Madison, WI 53703 (the “Company”), and Partners For Growth II, L.P., a Delaware limited partnership (“Purchaser”). 
 1.        Authorization and Purchase of the Warrant. 
 (A) Authorization of the Warrant. As of the Closing Date, the Company’s Board of Directors has authorized the issuance by the
Company and the sale to the Purchaser of a warrant (the “Warrant”) to purchase 76,923 shares of the Company’s Common Stock, par value $0.01 per share, all as more fully described, and subject to the conditions set forth below and in
the form of Warrant annexed hereto as Exhibit 1. The Company securities issuable upon exercise of the Warrant are herein referred to as the “Warrant Stock,” and the Warrant and the Warrant Stock are sometimes together referred to as
the “Securities.” 
 (B) Purchase of Warrant. Subject to the terms and conditions set forth below and in the
Warrant, the Company shall issue to Purchaser the Warrant in consideration of the payment of $3,333, which the parties agree is fair consideration for the Warrant. 
 2.        The Closing. The closing of the purchase and sale of the Warrant to Purchaser (the “Closing”) shall be held at the offices of Partners
for Growth II, L.P., 180 Pacific Avenue, San Francisco, CA 94111, or at such other location as may be mutually agreed upon by the parties hereto. On the Closing Date, the Company shall deliver to Purchaser the Warrant registered in the name of
Purchaser. 
 3.        Representations, Warranties and Covenants of the Company.
The Company represents and warrants to, and covenants with, the Purchaser that, except to the extent disclosed with particularity in Schedule A hereto: 
 (A) Corporate Power; Authorization. The Company has all requisite corporate power and has taken all requisite corporate action to execute and deliver each of this Agreement and the Warrant, to sell
and issue the Securities and to carry out and perform all of its obligations hereunder and thereunder. Each of this Agreement and the 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

  

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or similar laws relating to or affecting the enforcement of creditors’ rights generally and (ii) as limited by equitable principles generally. The person executing this Agreement and
the Warrant 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 enter into this Agreement and to execute and deliver the Warrant.

 (B) Validity of Securities. The Warrant, when sold against the consideration therefor as provided therein, will be
validly authorized, issued and fully paid. The issuance and delivery of the Warrant is not subject to preemptive or any similar rights of the stockholders of the Company (which have not been duly waived) or any liens or encumbrances except for
restrictions on transfer provided for herein or under applicable federal and state securities laws; and when the Warrant Stock is issued upon exercise and in accordance with the terms of the Warrant, and such Warrant Stock is converted into Common
Stock, such securities will be, at each such issuance, validly issued and outstanding, fully paid and nonassessable and free of any liens or encumbrances except for restrictions on transfer provided for herein or under applicable federal and state
securities laws. 
 (C) Capitalization. The authorized capital stock of the Company consists of 11,500,000 shares. All
such issued and outstanding shares have been duly authorized and validly issued and are fully paid and nonassessable. As of the date hereof, there are: (1) 1,500,000 shares of Preferred Stock authorized, none of which are issued and
outstanding; (2) 10,000,000 shares of Common Stock authorized of which 3,628,951 shares are issued and 3,616,235 shares are issued and outstanding; (3) as of the date hereof, the Company has reserved a total of 500,000 shares of its Common
Stock for issuance under its 2009 Stock Incentive Plan, Employee Stock Purchase Plan, and Non-Employee Director Stock Option Plan, of which 75,550 shares are reserved for issuance upon exercise of outstanding options. In addition, a total of 693,627
shares are reserved for issuance under the Company’s now expired 1995 Incentive Stock Option Plan, 1999 Non-Qualified Stock Option Plan and Non-Employee Directors’ Plan and 45,247 shares are reserved for issuance under outstanding warrant
agreements. A true, correct and current copy of the Company’s Amended and Restated Articles of Incorporation is set forth in Schedule B hereto. Except as specified in this Agreement, 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 Company’s capital stock or other securities. 
 (D) No Conflict. The execution and delivery of this Agreement and the 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 its current Certificate of Incorporation or Bylaws, 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 or thereby. 
  

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 (E) Governmental and other Consents. 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 execution, delivery and performance of this Agreement and the
Warrant or the offer, 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 Closing and except any notices of sale required to be filed with the
Securities and Exchange Commission under Regulation D of the Securities Act or such post-closing filings as may be required under applicable state securities laws, all of which will be filed within applicable periods therefor. Based upon the
representations made by the Purchaser in Section 4 of this Agreement, the offer and sale of the Warrant and the Warrant Stock to the Purchaser will be exempt from the registration requirements of the Securities Act and from the qualification
requirements of any applicable state securities laws. 
 (F) Authorized and Unissued Shares of Common Stock. During the
period within which the Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the Warrant, a sufficient number of authorized but unissued shares of Common Stock
when and as required to provide for the exercise of the rights represented by the Warrant. 
 (G) Reporting. With a view
to making available to the Purchaser the benefits of Rule 144 and other rules or regulations of the SEC that may permit the Purchaser to sell Warrant Stock to the public without registration, the Company shall, to the extent it is subject to
reporting requirements under the Securities Exchange Act of 1934 (the “Exchange Act”), as a continuing obligation: (a) make and keep public information available, as those terms are understood and defined in Rule 144, at all times
after the Closing; (b) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act of 1933 (the “Securities Act”) and the Exchange Act; and (c) furnish to the Purchaser,
so long as the Purchaser owns any Securities forthwith upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144 and the Exchange Act, (ii) such other information as may be
reasonably requested in order to avail the Purchaser of any rule or regulation of the SEC that permits the selling of any such Securities without registration. If at any time the Company ceases to file reports under the Exchange Act, the Company
shall from time to time promptly provide a copy of its most recent annual, quarterly and other interim reports to Purchaser. 
 4.        Representations and Warranties of Purchaser. Purchaser hereby represents and warrants to the Company as of the Closing Date as follows: 
 (A) Investment Experience. Purchaser 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. Purchaser is aware of the Company’s business affairs

  

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and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Purchaser 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 Securities. Purchaser has had the opportunity to ask questions of the Company concerning the Company’s business
prospects and financial condition. 
 (B) Investment Intent. Purchaser 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. Purchaser 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 Purchaser’s investment intent as expressed herein. 
 (C) Authorization. Purchaser has all requisite power and has taken all requisite action to execute and deliver each of this Agreement
and to carry out and perform all of its obligations hereunder. This Agreement has been duly authorized, executed and delivered on behalf of Purchaser and constitutes the valid and binding agreement of Purchaser, 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 Purchaser’s partnership agreement or other relevant organizational documents.

 5.        Restrictions on Transfer of Securities; Registrable Securities. The
restrictions on transfer of the Securities are as set forth in the Warrant. 
 6.        Miscellaneous. 
 (A) Waivers and Amendments. This
Agreement 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. 
 (B) Governing Law; Venue. This Agreement and the Warrant shall each be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the laws of the State of Delaware without regard to conflict of laws. The parties each irrevocably submit to the exclusive jurisdiction of the U.S. state and federal courts located in San Francisco, California in
connection with any dispute arising under this Agreement or the Warrant. 
 (C) Survival. The representations,
warranties, covenants and agreements made herein shall survive any investigation made by the Company or Purchaser and the Closing. 
  

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 (D) Successors and Assigns. The provisions hereof shall inure to the benefit of, and
be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto (specifically including any person that becomes a holder of the Warrant through transfer thereof from the Purchaser, and any other successors in
interest to the Securities). In the event of any merger, consolidation or acquisition involving the Company in which the Company is not the surviving entity, the Company’s obligations hereunder and under the Warrant shall be expressly or by
operation of law assumed by the surviving entity. 
 (E) Entire Agreement; Construction. This Agreement and the Warrant
constitute the full and entire understanding and agreement between the parties with regard to the subject hereof. In the event of any conflict between the terms of this Agreement and the terms of the Warrant (including any Schedule attached
thereto), the terms of the Warrant shall prevail. The term “$” or “dollars” means United States dollars; the term “including” means “including without limitation”; “days” means business days in the
United States. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement or the Warrant. 
 (F) Notices, etc. Any notice or other communication given under this Agreement shall be sufficient if in writing and sent by personal
service, facsimile, courier service promising overnight delivery or registered or certified mail, return receipt requested, postage prepaid, to a party at its address set forth below (or at such other address as shall be designated for such purpose
by such party in a written notice to the other party hereto): 
 if to Purchaser, at 
 Partners for Growth II, L.P. 
 180 Pacific Avenue 
 San Francisco, California 94111 
 Attention: Lorraine Nield 
 Fax: (415) 781-0510 
 with a copy to 
 Benjamin Greenspan 
 Greenspan Law Corporation 
 620 Laguna Road 
 Mill Valley, CA 94941 
 Fax: (415) 738-5371 
 Email: ben@greenspan-law.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 
 or in any case at such other address as Purchaser or the Company shall have furnished to the other in
writing. The term “notify” means to give notice in writing as specified above. 
 (G) Severability of this
Agreement. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 (H) Titles and Subtitles. The titles of the paragraphs and subparagraphs of this Agreement are for convenience of
reference and shall not, by themselves, determine the construction of this Agreement. 
 (I) Counterparts. This Agreement
may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 
  

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 Please confirm that the foregoing correctly sets forth the agreement between us by signing
in the space provided below for that purpose. 
  

					
		 	PARTNERS FOR GROWTH II, L.P.	 	
			
		 	  
	 	
		 	By:                                       
          , Manager of	 	
		 	Partners for Growth II, LLC, its General	 	
		 	Partner	 	

  

			
	AGREED AND ACCEPTED,
	as of the date first above written:
	
	Sonic Foundry, Inc.
		
	By:	 	  

	Its:	 	  

  

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 Signature Page to Warrant Purchase Agreement 

 SCHEDULE A – EXCEPTIONS TO
REPRESENTATIONS AND WARRANTIES 

 SCHEDULE B – RESTATED ARTICLES 

 SCHEDULE C - CAPITALIZATION TABLE 

 EXHIBIT 1 - FORM OF WARRANTWarrant

 Exhibit 10.4 
 WARRANT 
 THIS WARRANT (THE “WARRANT”) IS ISSUED PURSUANT TO
THE TERMS OF THE PROVISIONS OF A WARRANT PURCHASE AGREEMENT (THE “AGREEMENT”) BETWEEN (THE “COMPANY”) AND THE INITIAL WARRANT HOLDER. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE SECRETARY OF THE COMPANY.
THIS SECURITY WAS SOLD IN A PRIVATE TRANSACTION, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (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, a Maryland corporation (NasdaqCM: SOFO)
	Number of Shares:	  	76,923, subject to adjustment
	Class of Shares:	  	Common, par value $0.01 per share
	Exchange Price:	  	$6.25, subject to adjustment
	Issue Date:	  	March 5, 2010
	Expiration Date:	  	March 4, 2017

 The term
“Holder” shall initially refer to Partners for Growth II, L.P., 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 Holder is subject to certain restrictions as set forth in the Agreement. 
 The Company does hereby certify and agree that, for good and valuable consideration for the Warrant, the Holder, or its permitted successors
and assigns, hereby is entitled to exchange this Warrant in Sonic Foundry, Inc. (the “Company”) for Seventy-Six Thousand Nine Hundred Twenty-Three (76,923) duly authorized, validly issued, fully paid and non-assessable shares of its
Common Stock, par value $0.01 each, upon the terms and subject to the provisions of this Warrant. The shares of Common Stock issuable upon exchange of this Warrant are referred to herein as the “Warrant Stock,” and the Warrant and the
Warrant Stock are sometimes together referred to as the “Securities.” 
  

	Section 1	Term, Price and Exchange of Warrant. 

 1.1      Term of Warrant.    This Warrant shall be exchangeable for a period of seven (7) years from the Issue Date (hereinafter referred to
as the “Expiration Date”). 
 1.2      Exchange Price.    The
price per share at which the Warrant Stock is issuable upon exchange of this Warrant shall initially be $6.25, subject to Section 1.3 (a) hereof and subject to adjustment from time to time as set forth herein, including without limitation,
Section 4.8 (the “Exchange Price”). 

 1.3       Exercise of Warrant; Exchange of Warrant.

 (a)      This Warrant may be exercised, in whole or in part, upon surrender to the Company at
its then principal offices in the United States of this Warrant to be exchanged, together with the form of election to exchange attached hereto as Exhibit A duly completed and executed, and upon payment to the Company of the Exchange 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 at its option exchange this Warrant as set forth in the remainder of this
Section 1.3 (an “Exchange”). 
 (b)      Upon an Exchange, the Holder shall
receive 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 exchanged under this Warrant
	A	  	=	    	the Fair Market Value of one share of Warrant Stock
	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 share of Warrant Stock shall be (i) if the Company’s common stock (the “Common Stock”) is or becomes listed on
a national stock exchange, the closing sale price reported on such exchange or market on the trading day prior to the day Holder delivers its Election of Exchange to the Company, or (ii) if the Common Stock is traded over-the-counter, the
highest closing bid price for the Common Stock over the 5 trading-day period immediately prior to the day Holder delivers its Election of Exchange to the Company. If the Common Stock is not traded as contemplated in clauses (i) or (ii), above,
the Fair Market Value of the Company’s Warrant Stock shall be the price per share which the Company could obtain from a willing buyer for shares of Common Stock sold by the Company from its authorized but unissued shares, as the Board of
Directors of the Company (“Board”) shall determine in its reasonable good faith judgment, but in no event less than the price at which qualified employee stock options issued at such time are exercisable. In the event that Holder elects to
convert the Warrant Stock through Exchange in connection with a transaction in which the Warrant Stock is converted into or exchanged for another security, Holder may effect a Exchange directly into such other security. 
  

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 (d)      Upon surrender of this Warrant, and the duly
completed and executed form of election to exchange, and payment of the Exchange Price or conversion of this Warrant through Exchange, the Company shall issue and deliver within 5 business days to the Holder or such other person as the Holder may
designate in writing a certificate or certificates for the number of shares of Warrant Stock so purchased upon the Exchange or exercise of this Warrant. Such certificate or certificates shall be deemed to have been issued and any person so
designated to be named therein shall be deemed to have become a holder of record of such Warrant Stock as of the date of the surrender of this Warrant, and the duly completed and executed form of election to exchange, and payment of the Exchange
Price or conversion of this Warrant through Exchange; provided, that if the date of surrender of this Warrant and payment of the Exchange Price is not a business day, the certificates for the Warrant Stock shall be deemed to have been issued as of
the next business day (whether before or after the Expiration Date). If this Warrant is exchanged or exercised in part, a new warrant of the same tenor and for the number of shares of Warrant Stock not exchanged or exercised shall be executed by the
Company. 
 1.4      Fractional Interests.    The Company shall not be
required to issue fractions of shares of Warrant Stock upon the exchange of this Warrant. If any fraction of a share of Common Stock would be issuable upon the exchange of this Warrant (or any portion thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the last reported sale price of the Common Stock on the NASDAQ or any other national securities exchange or market on which the Common Stock is then listed or traded. 
 1.5      Automatic Conversion upon Expiration.    In the event that, upon the
Expiration Date, the Fair Market Value of one share of Common Stock (or other security issuable upon the exchange hereof) as determined in accordance with Section 1.3(c) is greater than the Exchange Price in effect on such date, then this
Warrant shall automatically be deemed on and as of such date to be converted pursuant to Section 1.3 as to all Warrant Stock (or such other securities) for which it shall not previously have been exchanged or converted, and the Company shall
promptly deliver a certificate representing the Warrant Stock (or such other securities) issued upon such conversion to the Holder. 
 1.6      Treatment of Warrant Upon Acquisition of Company. 
 (a)      “Acquisition”.    For the purpose of this Warrant, “Acquisition” means (i) any sale or other disposition of all or substantially all of the assets of
the Company in whatever form, or any reorganization, consolidation, or merger of the Company (whether in a single transaction or multiple related transactions) where the holders of the Company’s securities before the transaction beneficially
own less than 50% of the outstanding voting securities of the surviving entity after the transaction(s), and (ii) any event that could be or is treated as a liquidation under the Company’s Restated Articles of Incorporation or applicable
law. 
  

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 (b)    Treatment of Warrant at
Acquisition.    Upon the closing of any Acquisition in which the consideration is cash, stock or part cash and part stock, the successor entity (if applicable in such Acquisition) shall, as a condition to such Acquisition,
either: (i) assume the obligations of this Warrant, and this Warrant shall be exercisable for the same securities as would be payable for the Warrant Stock issuable upon exchange of the unexchanged portion of this Warrant as if such Warrant
Stock were outstanding on the record date for the Acquisition (and the Warrant Price and/or number of shares of Warrant Stock shall be adjusted accordingly) or (ii) purchase this Warrant at its “Fair Value” (as such term is defined
herein). 
 For purposes of this Warrant, “Fair Value” shall mean 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 Warrant as of the date of the Acquisition, (C) an annual dividend yield equal to dividends declared on the underlying Common Stock 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 Common Stock comprised of: (1) if the Company is publicly traded on a national securities exchange, its
volatility over the one year period prior to the Acquisition, (2) 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 the increased value of such shares (including, but not limited to 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. 
  

	 	Section 2.	Exchange and Transfer of Warrant. 

 (a)      This Warrant may be transferred, in whole or in part, without restriction, subject to (i) Holder’s compliance with applicable securities laws and delivery
of an opinion of competent counsel as to the same, if so requested by the Company, and (ii) the transferee holder of the new Warrant assuming in writing the obligations of the Holder set forth in this Warrant and the Agreement. A transfer may
be registered with the Company by submission to it of this Warrant, together with the annexed Assignment Form attached hereto as Exhibit B duly completed and executed. After the Company’s receipt of this Warrant and the Assignment Form so
completed and executed, the Company will issue and deliver to the transferee a new warrant (representing the portion

  

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of this Warrant so transferred) at the same Exchange Price per share and otherwise having the same terms and provisions as this Warrant, which the Company will register in the new holder’s
name. In the event 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 purchase 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 be deemed for all purposes to have become the holder of the new warrant issued for the portion of this
Warrant so transferred, effective immediately prior to the close of business on the date of such delivery, 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 the 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
reasonably satisfactory in form and substance to the Company. In the event of the mutilation of or other damage to the Warrant, the Company shall execute and deliver an identical new warrant to the Holder in substitution therefor upon the
Company’s receipt of the mutilated or damaged warrant. 
 (c)      The Company shall pay all
reasonable costs and expenses incurred in connection with the exchange, exercise, transfer or replacement of this Warrant, including, without limitation, the costs of preparation, execution and delivery of a new warrant and of share certificates
representing all Warrant Stock. 
  

	Section 3.	Certain Covenants. 

 (a)      The Company shall at all times reserve for issuance and keep available out of its authorized and unissued Common Stock, solely for the purpose of providing for the exchange of this Warrant, such number
of shares of Common Stock as shall from time to time be sufficient therefor. 
 (b)      The
Company will not, by amendment or restatement of its Certificate of Incorporation or Bylaws 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 (i) will not increase the par value of any Warrant Stock receivable upon the exchange of this Warrant above the amount payable therefor upon such exchange and (ii) will
take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares upon the exchange of this Warrant. 
 (c)      So long as Holder holds this Warrant, the Company shall deliver to Holder such reports as it
provides to its preferred stockholders generally, as and when delivered to such stockholders. Notwithstanding the foregoing, the Company shall

  

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provide Holder quarterly and annual financial statements as and when available, so long as such statements are not otherwise publicly available. The parties shall not treat the Warrant or the
Warrant Stock as being granted or issued as property transferred in connection with the performance of services or otherwise as compensation for services rendered. 
  

	Section 4.	Adjustments to Exchange Price and Number of Shares of Warrant Stock. 

 4.1      Adjustments.    The 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, the Holder shall thereafter be entitled to acquire upon exchange, at the Exchange Price resulting from such adjustment, the number of shares of Common Stock of the Company obtainable
by multiplying the Exchange Price in effect immediately prior to such adjustment by the number of shares of Common 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, its outstanding Common Stock into a greater number of shares, or issue additional Common Stock as a dividend, bonus issue or otherwise with
respect to any Common Stock, 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 shall be proportionately
increased. Conversely, in case the outstanding Common Stock of the Company shall be 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 an amended warrant for the number
and kind of securities and property that Holder would have received for the Warrant Stock if this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event. 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 this Section 4.3 shall similarly apply to successive reclassifications, exchanges, substitutions, or other similar events. 
  

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 4.4.      Notices of Record Date,
Etc.    In the event that the Company shall: 
 (1)    declare or propose to
declare any dividend upon its Common Stock, whether payable in cash, property, stock 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 stockholders, or 
 (3)    effect or approve any reclassification, exchange, substitution or recapitalization of the capital stock of the Company, including any subdivision or combination of its outstanding capital 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), 
 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 dividend 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 (3) above, at least ten (10) days prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (1) shall also specify, in
the case of any such dividend, the date on which the holders of capital stock shall be entitled thereto and the terms of such dividend, and such notice in accordance with clause (2) shall also specify the date on which the holders of capital
stock shall be entitled to exchange their capital 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. 
 4.5      Adjustment by Board of Directors.    If any event occurs as to which, in the opinion of the Board of Directors of the Company, the
provisions of this Section 4 are not strictly applicable or if strictly applicable would not fairly protect the rights of the Holder in accordance with the essential intent and principles of such provisions, then the Board of Directors shall
make an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to protect such rights, but in no event shall any adjustment have the effect of increasing the Exchange Price as otherwise
determined pursuant to any of the provisions of this Section 4, except in the case of a combination of shares of a type contemplated in Section 4.2 and then in no event to an amount larger than the Exchange Price as adjusted pursuant to
Section 4.2. 
  

 7 

 4.6      Officers’ Statement as to
Adjustments.    Whenever the Exchange Price and/or number of shares of Warrant Stock subject to the Warrant is required to be adjusted as provided in Section 4, the Company shall forthwith file at each office designated
for the exchange of this Warrant with a copy to the Holder notice parties set forth in Section 7 hereof a statement, signed by the Chief Executive Officer or Chief Financial Officer of the Company, showing in reasonable detail the facts
requiring such adjustment, the Exchange Price and number of issuable shares that will be effective after such adjustment; provided, however, such statement shall not be required to the extent the information requested in this Section 4.6 is
available through the Company’s current reports filed with the Securities and Exchange Commission. If at any time the information described in this Section 4.6 is readily available through the Company’s reports filed with the
Securities and Exchange Commission, the Company shall not be required to provide a separate notice of adjustment to the Holder; provided, however, if such information is not readily available through the Company’s current reports filed with the
Securities Exchange Commission and made public, the Company shall cause a notice setting forth any such adjustments to be sent by mail, first class, postage prepaid, to the record Holder of this Warrant at its notice address(es) appearing in
Section 7. 
 4.7      Adjustment to Number of Shares by
Clawback.    Up to 28,846 shares of the “Number of Shares” for which this Warrant is exchangeable is subject to adjustment (reduction) to the extent the Company does not draw any funds under that certain Revolving
Loan and Security Agreement of even date herewith between the Company, as Borrower, and Holder (the “Revolving Loan”) (such shares no longer subject to this Warrant, the “Claw-Back Shares”). Holder shall not be entitled to
exercise this Warrant as to Clawback Shares until a Company borrowing under the Revolving Loan. 
 4.8      Automatic Adjustment to Exchange Price.    If the volume-weighted average closing price per share of the Company’s Common Stock for the 10-trading day period immediately
following the Company’s release of its fiscal quarter ending June 30, 2010 is less than $6.25 per share, the Exchange Price shall automatically adjust to such lower price, but not below $5.20 per share. 
 4.9      Issue of Securities other than Common Stock.    In the event that at any
time, as a result of any adjustment made pursuant to Section 4, the Holder thereafter shall become entitled to receive any securities of the Company (including derivative securities), other than Common Stock, thereafter the number of such other
shares so receivable upon exchange 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 Common Stock contained in Section 4.

  

	Section 5.	Rights and Obligations of the Warrant Holder. 

 Except as otherwise specified in this Warrant, this Warrant shall not entitle the Holder to any rights of a holder of Common Stock in the Company until such time as this Warrant is exchanged or exercised.
If during the term of this Warrant the Company proposes to file a registration statement under the Securities Act with respect to an

  

 8 

 
offering for its own account of any class of its equity securities (other than a registration statement on Form S-8 (or any successor form) or any other registration statement relating solely to
employee benefit plans or filed in connection with an exchange offer, a transaction to which Rule 145 (or any successor provision) under the Securities Act applies or an offering of securities solely to the Company’s existing shareholders),
then the Company shall in each case give written notice of such proposed filing to Holder as soon as practicable (but no later than 20 business days) before the anticipated filing date, and such notice shall offer Holder the opportunity to register
such number of shares of Warrant Stock as Holder may request. Holder shall advise the Company in writing within 10 business days after the date on which the Company’s notice is so given, setting forth the number of shares of Warrant Stock for
which registration is requested. If the Company’s offering is to be an underwritten offering, the Company shall, subject to the further provisions of this Agreement, use its reasonable best efforts to cause the managing underwriter or
underwriters to permit the Holders of the Warrant Stock requested to be included in the registration for such offering to include such Warrant Stock in such offering on the same terms and conditions as any similar securities of the Company included
therein, subject to Holder’s execution of an underwriting agreement with the managing underwriter or underwriters selected by the Company in the same manner as other holders participating in the registration. 
  

	Section 6.	Restrictive Stock Legend. 

 This Warrant and the Warrant Stock have not been registered under any securities laws. Accordingly, any share certificates issued pursuant to the exchange 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 STOCK ISSUABLE UPON EXCHANGE
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. 
  

	Section 7.	Notices. 

 Any notice or
other communication required or permitted to be given here shall be in writing and shall be effective (a) upon hand delivery or delivery by e-mail or facsimile at the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received) or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received), or (b) on the third
business day

  

 9 

 
following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such
communication shall be: 
 if to Holder, at 
   Partners for Growth II, L.P. 
   180 Pacific Avenue

   San Francisco, California 94111 
   Attention: Chief Financial Officer 
   Fax:
(415) 781-0510 
 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

 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. 
  

 10 

	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. This Warrant may
only be amended by an instrument in writing signed by both parties. 
  

	Section 9.	Applicable Law; Severability. 

 This Warrant shall be governed by and construed and enforced in accordance with the laws of the State of Delaware. 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. 

 The terms
of the Warrant Purchase Agreement to which this Warrant is attached as Exhibit 1 are incorporated by reference herein. Terms used but not defined herein have the meaning set forth in the Warrant Purchase Agreement. 
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 
  

 11 

 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:
					
		 		 		 		 	Partners for Growth II, L.P.
					
	By:	 	  
	 		 		 	

											
						
	Name:	 	  
	 		 	By:	 	  
	 	

											
		 		 		 		 	                                        
         , Manager of

	 Title:
	 	  
	 		 		 	Partners for Growth II, LLC,	 	
		 		 		 		 	Its General Partner	 	

 Warrant Signature Page 
  

 Exhibit A 
 To: 
 ELECTION TO EXCHANGE 
 1.        The undersigned hereby exercises its right to exchange its Warrant for
                                        
fully paid, validly issued and nonassessable Shares covered by the attached Warrant in accordance with the terms thereof. 
 1.        The undersigned hereby elects to exercise the attached Warrant for fully paid, validly issued and nonassessable Shares by payment of
$                     as specified in the attached Warrant. This right is exercised with respect to
                         of shares. 
 [Strike the paragraph above that does not apply.] 
 The undersigned requests that certificates for
such shares be issued in the name of, and delivered to: 
  
  

									
		  	  
	  		  		  	
		  	  
	  		  		  	
		  	  
	  		  		  	

 2.        By its execution below and for the benefit of the Company, the
undersigned hereby restates each of the representations and warranties in Section 4 of the Warrant Purchase Agreement as of the date hereof. 
  
  

									
	 Date:
	 	  
	 	        [Holder]	 	
					
		 		 	        By	 	  
	 	
		 		 		 	Name:	 	
		 		 		 	Title:	 	
		 		 		 		 	
		 		 		 		 	

 Exhibit B 
 ASSIGNMENT FORM 
 To: 
 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:	 	  
	 	  Partners for Growth II, L.P.
					
		 		 	  By	 	  
	 	
		 		 	   Name:
                                    , Manager of
   Partners for Growth II, LLC, Its General Partner

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