SUBSCRIPTION AGREEMENT
Exhibit 10.3
TO: Sonic Foundry, Inc.
000 Xxxx Xxxxxxxxxx Xxx.
Xxxxxxx, XX 00000
E-mail: xxx.xxxxxx@xxxxxxxxxxxx.xxx
Attention: Xxx Xxxxxx
Ladies and Gentlemen:
The undersigned understands that Sonic Foundry Inc., a corporation organized under the laws of Maryland (the “Company”), is offering $1,200,000 of its common stock, par value $.01 per share at a price equal to the preceding five day average closing bid price of Sonic Foundry, Inc common stock on the day of closing, $1.02, yielding 1,176,471 shares, along with warrants to purchase 511,765 shares of its common stock (such shares and warrants, collectively, the “Securities”) in a private placement. The undersigned further understands that the offering is being made without registration of the Securities under the Securities Act of 1933, as amended (the “Securities Act”), or any securities law of any state of the United States (collectively referred to as the “State Securities Laws”) or of any other jurisdiction, and is being made only to “accredited investors” (as defined in Rule 501 of Regulation D under the Securities Act).
1. Subscription. Subject to the terms and conditions hereof, the undersigned hereby irrevocably subscribes for the Securities specified in Appendix A hereto for the aggregate purchase price (“Purchase Price”) also set forth in Appendix A hereto, which is payable as described in Section 4 hereof. The undersigned acknowledges that the Securities will be subject to restrictions on transfer as set forth in this subscription agreement (the “Subscription Agreement”). The form of warrant (“Warrant”) shall be entered into concurrently with the acceptance of this subscription, and are attached hereto as Exhibit 1 and 2, respectively.
2. Acceptance of Subscription and Issuance of Securities. It is understood and agreed that the Company shall have the sole right, at its complete discretion, to accept or reject this subscription, in whole or in part, for any reason and that the same shall be deemed to be accepted by the Company only when it is signed by a duly authorized officer of the Company and delivered to the undersigned. Subscriptions need not be accepted in the order received, and the Securities may be allocated among subscribers. Notwithstanding anything in this Subscription Agreement to the contrary, the Company shall have no obligation to issue any of the Securities to any person who is a resident of a jurisdiction in which the issuance of Securities to such person would constitute a violation of the securities, “blue sky” or other similar laws of such jurisdiction.
3. The Closing. The closing of the purchase and sale of the Securities (the “Closing”) shall take place at such other time as the Company may designate by notice to the undersigned.
4. Payment for Securities. Payment for the Securities shall be received by the Company from the undersigned by wire transfer of immediately available funds or other means approved by the Company at or prior to the Closing, in the amount as set forth in Appendix A hereto. The Company shall deliver certificates representing the Securities to the undersigned at the Closing bearing an appropriate legend referring to the fact that the Securities were sold in reliance upon an exemption from registration under the Securities Act.
5. Representations and Warranties of the Company. As of the Closing, the Company represents and warrants that:
(a) The Company is duly formed and validly existing under the laws of Maryland, with full power and authority to conduct its business as it is currently being conducted and to own its assets; and has secured any other authorizations, approvals, permits and orders required by law for the conduct by the Company of its business as it is currently being conducted.
(b) The Securities have been duly authorized and, when issued, delivered and paid for in the manner set forth in this Subscription Agreement, will be validly issued, fully paid and nonassessable.
(c) The Company has made available to the Investors through the XXXXX system, true and complete copies of the Company’s most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2020 (the “10-K”), and all other reports filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the “1934 Act”), since the filing of the 10-K and prior to the date hereof (collectively, the “SEC Filings”). The SEC Filings are the only filings required of the Company pursuant to the 1934 Act for such periods. The Company and its Subsidiaries are engaged in all material respects only in the business described in the SEC Filings and the SEC Filings contain a complete and accurate description in all material respects of the business of the Company and its Subsidiaries, taken as a whole.
(d) The net proceeds of the sale of the Securities hereunder shall be used by the Company for general corporate purposes.
6. Representations and Warranties of the Undersigned. The undersigned hereby represents and warrants to and covenants with the Company that:
(a) The undersigned has all requisite authority (and in the case of an individual, the capacity) to purchase the Securities, enter into this Subscription Agreement and to perform all the obligations required to be performed by the undersigned hereunder, and such purchase will not contravene any law, rule or regulation binding on the undersigned or any investment guideline or restriction applicable to the undersigned.
(b) The undersigned is a resident of the state set forth on the signature page hereto and is not acquiring the Securities as a nominee or agent or otherwise for any other person.
(c) The undersigned will comply with all applicable laws and regulations in effect in any jurisdiction in which the undersigned purchases or sells Securities and obtain any consent, approval or permission required for such purchases or sales under the laws and regulations of any jurisdiction to which the undersigned is subject or in which the undersigned makes such purchases or sales, and the Company shall have no responsibility therefor.
(d) The undersigned understands that the Securities have not been registered under the Securities Act or the securities laws of any state or any other jurisdiction and that there are certain restrictions on the transferability of the Securities as described herein.
(e) The undersigned understands that the purchase of the Securities involves a high degree of risk and should be considered only by persons who can bear the risk of the loss of their entire investment. The undersigned further understands and accepts that the purchase of the Securities involves various risks, including the risks outlined in the SEC Filings and in this Subscription Agreement. The undersigned represents that it is able to bear any loss associated with an investment in the Securities.
(f) The undersigned has such knowledge, skill and experience in business, financial and investment matters that the undersigned is capable of evaluating the merits and risks of an investment in the Securities. With the assistance of the undersigned’s own professional advisors, to the extent that the undersigned has deemed appropriate, the undersigned has made its own legal, tax, accounting and financial evaluation of the merits and risks of an investment in the Securities and the consequences of this Subscription Agreement. The undersigned has considered the suitability of the Securities as an investment in light of its own circumstances and financial condition and the undersigned is able to bear the risks associated with an investment in the Securities and its authority to invest in the Securities.
(g) The undersigned is an “accredited investor,” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. The undersigned agrees to furnish any additional information requested by the Company or any of its affiliates to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Securities. The information provided by the undersigned in the Investor Questionnaire is complete and accurate in all respects.
(h) The undersigned is acquiring the Securities solely for the undersigned’s own beneficial account, for investment purposes, and not with a view to, or for resale in connection with, any distribution of the Securities. The undersigned understands that the Securities have not been registered under the Securities Act or any State Securities Laws by reason of specific exemptions under the provisions thereof which depend in part upon the investment intent of the undersigned and of the other representations made by the undersigned in this Subscription Agreement. The undersigned understands that the Company is relying upon the representations and agreements contained in this Subscription Agreement and the Investor Questionnaire for the purpose of determining whether this transaction meets the requirements for such exemptions.
(i) The undersigned understands that the Securities are “restricted securities” under applicable U.S. federal securities laws and that the Securities Act and the rules of the U.S. Securities and Exchange Commission (the “SEC”) provide in substance that the undersigned may dispose of the Securities only pursuant to an effective registration statement under the Securities Act or an exemption therefrom, and the undersigned understands that the Company has no obligation or intention to register any of the Securities, or to take action so as to permit sales pursuant to the Securities Act (including Rule 144 thereunder). Accordingly, the undersigned understands that, under the SEC’s rules, the undersigned may dispose of the Securities principally only in “private placements” which are exempt from registration under the Securities Act, in which event the transferee will acquire “restricted securities” subject to the same limitations as in the hands of the undersigned. Consequently, the undersigned understands that the undersigned must bear the economic risks of the investment in the Securities for an indefinite period of time.
(j) The undersigned has been furnished any materials relating to the Company, the private placement of the Securities and any other related matters which the undersigned has requested; the Company and/or its agents have answered all inquiries that the undersigned has put to them relating thereto; and the undersigned has been afforded the opportunity to ask questions and obtain any additional information necessary to verify the accuracy of any representation or information set forth in the SEC Filings.
(k) The undersigned has carefully reviewed the SEC Filings. The undersigned has not been furnished any offering material or literature; and the undersigned has relied only on the information in the SEC Filings and its own investigation in determining to make an investment in the Company, irrespective of any other information or materials furnished to the undersigned in connection with such investment. The undersigned’s decision to invest in the Company is solely the decision of such investor.
(l) The undersigned confirms that it is not relying on any communication (written or oral) of the Company or any of its affiliates, as investment advice or as a recommendation to purchase the Securities. It is understood that information and explanations related to the terms and conditions of the Securities provided by the Company or any of its affiliates shall not be considered investment advice or a recommendation to purchase the Securities, and that neither the Company nor any of its affiliates is acting or has acted as an advisor to the undersigned in deciding to invest in the Securities. The undersigned acknowledges that neither the Company nor any of its affiliates has made any representation regarding the proper characterization of the Securities for purposes of determining the undersigned’s authority to invest in the Securities.
(m) The undersigned is familiar with the business and financial condition and operations of the Company, all as generally described in the SEC Filings. The undersigned has had access to such information concerning the Company and the Securities as it deems necessary to enable it to make an informed investment decision concerning the purchase of the Securities.
(n) The undersigned understands that, unless the undersigned notifies the Company in writing to the contrary at or before the Closing, each of the undersigned’s representations and warranties contained in this Subscription Agreement and the Investor Questionnaire will be deemed to have been reaffirmed and confirmed as of the Closing, taking into account all information received by the undersigned.
(o) The undersigned acknowledges that the Company has the right in its sole and absolute discretion to abandon this private placement at any time prior to the completion of the offering. This Subscription Agreement shall thereafter have no force or effect and the Company shall return the previously paid subscription price of the Securities, without interest thereon, to the undersigned.
(p) The undersigned understands that no federal, state or other agency has passed upon the merits or risks of an investment in the Securities or made any finding or determination concerning the fairness or advisability of an investment in the Securities or the Company generally.
(q) The undersigned represents that it is not relying on (and will not at any time rely on) any communication (written or oral) of the Company, as investment advice or as a recommendation to purchase the Securities, it being understood that information and explanations related to the terms and conditions of the Securities.
(r) The undersigned confirms that the Company has not (i) given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Securities or (ii) made any representation to the undersigned regarding the legality of an investment in the Securities under applicable legal investment or similar laws or regulations. In deciding to purchase the Securities, the undersigned (x) is not relying on the advice or recommendations of the Company or its directors, stockholders, officers, affiliates, agents, and/or employees and (y) has made its own independent decision that the investment in the Securities is suitable and appropriate for the undersigned.
(s) The undersigned agrees: (i) that the undersigned will not sell, assign, pledge, give, transfer or otherwise dispose of the Securities or any interest therein, or make any offer or attempt to do any of the foregoing, except pursuant to a registration of the Securities under the Securities Act and all applicable State Securities Laws, or in a transaction which is exempt from the registration provisions of the Securities Act and all applicable State Securities Laws; (ii) that the certificates representing the Securities will bear a legend making reference to the foregoing restrictions; and (iii) that the Company and its affiliates shall not be required to give effect to any purported transfer of such Securities except upon compliance with the foregoing restrictions.
(t) The undersigned acknowledges that neither the Company nor any other person offered to sell the Securities to it by means of any form of general solicitation or advertising, including, but not limited to: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio or (ii) any seminar or meeting whose attendees were invited by any general solicitation or general advertising.
(u) The undersigned represents that the funds to be invested in the Company were not derived from any activities that may contravene U.S. or non-U.S. anti-money laundering laws or regulations.
(v) The undersigned represents that the Securities are not being acquired and shall not be held in violation of any applicable laws.
(w) The undersigned represents and warrants that (i) the undersigned, (ii) any beneficial owner of the undersigned, or (iii) any other party to a Voting Agreement to which the undersigned is also a party is not subject to any “disqualifying events,” as described under Rule 506(d) of Regulation D promulgated under the Securities Act. In addition, the undersigned agrees promptly to provide any representations or information and periodically update and reaffirm such representations or information that the Company, in its discretion, reasonably determines is necessary for the Company to comply with Rule 506(d) of Regulation D promulgated under the Securities Act. The undersigned agrees to notify the Company promptly if the undersigned becomes subject to a “disqualifying event” after the date hereof.
(x) The undersigned understands and acknowledges that the Company is relying upon the representations, warranties, and agreements made by the undersigned to the Company herein and in any other document furnished by the undersigned to any of the foregoing in connection with this transaction. Thus, the undersigned hereby agrees to indemnify the Company and its directors, stockholders, officers, affiliates, agents, and employees, and hold them harmless, against any and all loss, damage, liability, or expense, including reasonable attorneys’ fees, which they or any of them may suffer, sustain or incur by reason of or in connection with or arising out of any misrepresentation or breach of warranty by the undersigned or in connection with the offer or sale of Securities or failure by the undersigned to comply with any covenant or agreement made by the undersigned herein or in any other document furnished by the undersigned to any of the foregoing in connection with this transaction.
7. Conditions to Obligations of the Undersigned and the Company. The obligation of the undersigned to purchase and pay for the Securities specified in Appendix A hereto and of the Company to sell the Securities are subject to the satisfaction at or prior to the Closing of the representations and warranties of the Company contained in Section 5 hereof. The obligation of the Company to sell and issue the Securities is subject to (i) the accuracy of the representations and warranties of the undersigned contained in Section 6 hereof, and the completion and accuracy of the Investor Questionnaire by the undersigned completed in July 2021, and that such representations and warranties are true and correct true and correct as of the Closing in all respects with the same effect as though such representations and warranties had been made as of the Closing, (ii) the execution and delivery by the undersigned of this Subscription Agreement and the Warrant attached hereto as Exhibit 1 and (iii) the delivery by the undersigned of the Purchase Price to the Company.
8. Obligations Irrevocable. The obligations of the undersigned shall be irrevocable.
9. Legend. The certificates representing the Securities sold pursuant to this Subscription Agreement will be imprinted with a legend in substantially the following form:
“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS.”
10. Waiver, Amendment. None of the provisions hereof shall be modified, changed, discharged or terminated except by an instrument in writing, signed by the party against whom any waiver, change, discharge or termination is sought.
11. Assignability. Neither this Subscription Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either the Company or the undersigned without the prior written consent of the other party.
12. Waiver of Jury Trial. THE UNDERSIGNED IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT.
13. Submission to Jurisdiction. With respect to any suit, action or proceeding relating to any offers, purchases or sales of the Securities by the undersigned (“Proceedings”), the undersigned irrevocably submits to the jurisdiction of the federal or state courts located in Madison, Wisconsin, which submission shall be exclusive unless none of such courts has lawful jurisdiction over such Proceedings.
14. Governing Law. This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of Wisconsin.
15. Section and Other Headings. The section and other headings contained in this Subscription Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Subscription Agreement.
16. Counterparts. This Subscription Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement. The signatures of all of the parties need not appear on the same counterpart, and delivery of an executed counterpart signature page by e‑mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., xxx.xxxxxxxx.xxx), or other means of electronic transmission is as effective as executing and delivering this Warrant in the presence of the other party hereto.
17. Notices. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid to the following addresses (or such other address as either party shall have specified by notice in writing to the other):
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If to the Company: |
Sonic Foundry, Inc. E-mail: xxx.xxxxxx@xxxxxxxxxxxx.xxx Attention: Xxx Xxxxxx |
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If to the Purchaser: |
Xxxx Xxxxxx E-mail: xxxxxxx@xxxxxxxxxxxx.xxx Attention: Xxxx Xxxxxx |
18. Binding Effect. The provisions of this Subscription Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.
19. Survival. All representations, warranties and covenants contained in this Subscription Agreement shall survive the acceptance of the subscription by the Company and the Closing.
20. Notification of Changes. The undersigned hereby covenants and agrees to notify the Company upon the occurrence of any event prior to the closing of the purchase of the Securities pursuant to this Subscription Agreement which would cause any representation, warranty, or covenant of the undersigned contained in this Subscription Agreement to be false or incorrect.
21. Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement this 16th OF November 2022.
INDIVIDUAL PURCHASERS: ENTITY PURCHASERS:
Xxxx Xxxxxx
Name of Individual Purchaser Name of Entity Purchaser
(Please type or print clearly) (Please type or print clearly)
/s/Xxxx Xxxxxx
Signature of Individual Purchaser Signature of Authorized Signatory
Name of Authorized Signatory
(Please type or print clearly)
Capacity of Authorized Signatory
(Please type or print clearly)
State/Country of Domicile or Formation (please fill in, if applicable):WI, Dane County
Aggregate Subscription Amount (please fill in): US$1,200,000.00
The offer to purchase the Securities as set forth above
is hereby confirmed and accepted by the Company:
Sonic Foundry, Inc.
By: /s/Xxx Xxxxx
Name: Xxx Xxxxx
Title: CFO
Date: November 16, 2022
APPENDIX A
CONSIDERATION TO BE DELIVERED
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Securities to Be Acquired |
Aggregate Purchase Price to be Paid |
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1,176,471 shares of common stock and a warrant to purchase 511,765 shares of common stock at $1.02 per share pursuant to the Warrant attached as Exhibit 1 to the Subscription Agreement. |
US$ 1,200,000 |
EXHIBIT 1
WARRANT
(attached)
