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AMENDMENT NO. 1
TO
PURCHASE AGREEMENT
dated as of February __, 2002
by and between
SONIC FOUNDRY, INC.
and
OMICRON PARTNERS, L.P.
____________________
10% CONVERTIBLE NOTE DUE 2004
and
COMMON STOCK PURCHASE WARRANT
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SONIC FOUNDRY, INC.
AMENDMENT NO. 1
to
PURCHASE AGREEMENT
10% CONVERTIBLE NOTE DUE 2004
and
COMMON STOCK PURCHASE WARRANT
TABLE OF CONTENTS
Page
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1. Definitions...............................................................2
2. Purchase and Sale of the Amended Note and Warrant.........................3
2.1 Purchase and Sale...................................................3
2.2 Exchange and Payment................................................3
2.3 Second Closing......................................................3
3. Representations and Warranties of the Company.............................4
3.1 Organization, Good Standing and Qualification.......................4
3.2 Authorization.......................................................4
3.3 Capitalization......................................................4
3.4 Valid Issuance......................................................5
3.5 Consents............................................................6
3.6 Delivery of SEC Filings; Business; Non-Public Information...........6
3.7 Use of Proceeds.....................................................6
3.8 No Material Adverse Change..........................................6
3.9 Form S-3 Eligibility................................................7
3.10 No Conflict, Breach, Violation or Default...........................7
3.11 Acknowledgement of Potential Dilution...............................8
3.12 Brokers and Finders.................................................8
3.13 No Directed Selling Efforts or General Solicitation.................8
3.14 No Integrated Offering..............................................8
3.15 Disclosures.........................................................9
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4. Representations and Warranties of the Purchaser...........................9
4.1 Organization and Existence..........................................9
4.2 Purchase Entirely for Own Account...................................9
4.3 Investment Experience...............................................9
4.4 Disclosure of Information...........................................9
4.5 Restricted Securities...............................................9
4.6 Accredited Investor................................................10
4.7 No General Solicitation............................................10
4.8 Residency of Purchaser.............................................10
4.9 Brokers and Finders................................................10
4.10 Authorization......................................................10
4.11 Risk Factors.......................................................10
4.12 Reliance...........................................................10
4.13 No Representations.................................................10
4.14 Survival...........................................................11
5. Registration Rights Agreement............................................11
5.1 Registration Rights Agreement......................................11
6. Certain Covenants of the Company and the Purchaser.......................11
6.1 Press Releases.....................................................11
6.2 No Conflicting Agreements..........................................11
6.3 Form 8-K...........................................................11
6.4 Amendments to Purchase Agreement...................................12
6.5 Effect of Amendment; Confirmation..................................12
7. Conditions to the Company's Obligations to Issue and Sell................13
8. Conditions to the Purchaser's Obligations to Purchase....................13
9. Miscellaneous............................................................14
9.1 Successors and Assigns.............................................14
9.2 Counterparts.......................................................14
9.3 Titles and Subtitles...............................................15
9.4 Notices............................................................15
9.5 Expenses...........................................................15
9.6 Amendments and Waivers.............................................15
9.7 Severability.......................................................15
9.8 Entire Agreement...................................................15
9.9 Survival...........................................................15
9.10 Further Assurances.................................................16
9.11 Applicable Law.....................................................16
9.12 Remedies...........................................................16
9.13 Jurisdiction.......................................................16
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EXHIBITS
Exhibit A - Form of Amended Note
Exhibit B - Form of Warrant
Exhibit C - Form of Amended and Restated Registration Rights Agreement
Exhibit D - Form of Opinion of Legal Counsel to the Company
Exhibit E - Form of Press Release
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AMENDMENT NO. 1 TO PURCHASE AGREEMENT
-------------------------------------
THIS AMENDMENT NO. 1 TO PURCHASE AGREEMENT, dated as of February ___,
2002 (this "Agreement"), by and between SONIC FOUNDRY, Inc., a Maryland
corporation (the "Company"), and OMICRON PARTNERS, L.P., a Bahamas limited
partnership (the "Purchaser"), amends the PURCHASE AGREEMENT, dated as of
January 25, 2002, by and between the Company and the Purchaser (the "Purchase
Agreement").
W I T N E S S E T H:
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WHEREAS, the Company and the Purchaser have previously executed and
delivered, one to the other, the Purchase Agreement;
WHEREAS, the Purchaser wishes to purchase from the Company, and the
Company wishes to sell and issue to the Purchaser, upon the terms and subject to
the conditions of this Agreement, (i) an additional 10% Convertible Note due
2004 in principal amount of $1,000,000 and (ii) a Warrant (such capitalized term
and all other capitalized terms used herein having the respective meanings
provided herein) initially entitling the holder to purchase an aggregate of
163,265 shares of Common Stock for the Purchase Price, which shall be effected,
in part, by the Purchaser surrendering the Note and paying the Purchase Price to
the Company at the Second Closing as provided in this Agreement;
WHEREAS, the Company and the Purchaser wish to amend the Purchase
Agreement as provided in this Agreement; and
WHEREAS, at or before the Second Closing, the parties hereto are
amending and restating the Original Registration Rights Agreement by executing
and delivering, one to the other, the Registration Rights Agreement, pursuant to
which, among other things, the Company will agree to provide certain
registration rights under the 1933 Act, and the rules and regulations
promulgated thereunder, and applicable state securities laws for the resale of
the shares of Common Stock issuable upon conversion of the Amended Note and
issuable upon exercise of the Warrant and the Existing Warrant;
NOW THEREFORE, in consideration of the premises and the mutual
covenants made herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
1.1 As used in this Agreement, the terms "Agreement", "Company",
"Purchase Agreement" and "Purchaser" shall have the respective meanings assigned
to such terms in the introductory paragraph of this Agreement.
1.2 Capitalized terms used in this Agreement and not defined in
this Agreement shall have the respective meanings provided in the Purchase
Agreement.
1.3 All the agreements or instruments herein defined shall mean
such agreements or instruments as the same may from time to time be supplemented
or amended or the terms thereof waived or modified to the extent permitted by,
and in accordance with, the terms thereof and of this Agreement.
1.4 The following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Amended Note" means the Company's 10% Convertible Note due 2004 in
the principal amount of $4,000,000.00 in the form attached as Exhibit A.
"Event of Default" shall have the meaning to be provided or provided
in the Amended Note.
"Existing Warrant" means the Common Stock Purchase Warrant issued by
the Company pursuant to the Purchase Agreement.
"Original Registration Rights Agreement" means the Registration Rights
Agreement, dated as of January 25, 2002, by and between the Company and the
Purchaser.
"Purchase Price" means $1,000,000.00.
"Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement by and between the Company and the Purchaser in
the form attached as Exhibit C.
"Registration Statement" shall have the meaning provided in the
Registration Rights Agreement.
"Second Closing" means the closing of the issuance and sale of the
Amended Note and Warrant in exchange for the Note and payment by the Purchaser
of the Purchase Price to the Company as provided in this Agreement on the Second
Closing Date.
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"Second Closing Date" means 10 a.m., New York City time, on February_,
2002, or such other time or date as mutually agreed by the parties hereto.
"Securities" means the Amended Note, the Underlying Shares, the
Warrant and the Warrant Shares.
"Transaction Documents" means this Agreement, the Purchase Agreement,
the Registration Rights Agreement, the Amended Note and the Warrant.
"Underlying Shares" means the shares of Common Stock issued or
issuable upon conversion of the Amended Note.
"Warrant" means the Company's Common Stock Purchase Warrant in the
form attached hereto as Exhibit B.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrant.
2. PURCHASE AND SALE OF THE AMENDED NOTE AND WARRANT.
2.1 Purchase and Sale. Upon the terms and subject to the conditions
of this Agreement, the Purchaser hereby agrees to purchase from the Company, and
the Company hereby agrees to sell to the Purchaser, on the Second Closing Date,
the Amended Note and the Warrant in exchange for the Note and payment of the
Purchase Price.
2.2 Exchange and Payment. Payment by the Purchaser of the Purchase
Price to the Company at the Second Closing on the Second Closing Date shall be
made by wire transfer of immediately available funds to the following account:
State Street Bank & Trust Company
ABA #000000000
DDA #99034167
For further credit to One Group Account #707001516
2.3 Second Closing. The sale and purchase of the Amended Note and
Warrant shall occur on the Second Closing Date at the Closing Location. At the
Second Closing on the Second Closing Date, upon the terms and subject to the
conditions of this Agreement,
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(A) the Company shall issue and sell to the Purchaser the Amended
Note and the Warrant against (x) surrender of the Note to the Company, duly
endorsed in blank or accompanied by a power in blank duly executed by the
Purchaser and (y) payment by the Purchaser to the Company of an amount equal to
the Purchase Price as provided in Section 2.2, and
(B) the Purchaser shall (x) surrender the Note to the Company, duly
endorsed in blank or accompanied by a power in blank, duly executed by the
Purchaser, and (y) pay to the Company an amount equal to the Purchase Price as
provided in Section 2.2, in each such case against issuance and sale by the
Company to the Purchaser of the Amended Note and Warrant.
3. Representations and Warranties of the Company. The Company
hereby represents and warrants to, and covenants and agrees with, the Purchaser
that:
3.1 Organization, Good Standing and Qualification. The Company and
each Subsidiary is a corporation duly incorporated, validly existing and
subsisting under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now
conducted and to own its properties. The Company and each Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property makes such qualification or licensing necessary unless the
failure to so qualify would not be reasonably likely to result in a Material
Adverse Effect. The Company has no Subsidiaries other than those listed in
Schedule 3.1 to the Purchase Agreement and has no investment in any other Person
except such investments as would be classified as current assets on a balance
sheet of the Company, prepared in accordance with Generally Accepted Accounting
Principles.
3.2 Authorization. The Company has full corporate power and
authority and has taken all requisite action on the part of the Company, its
officers, directors and stockholders necessary for (i) the authorization,
execution and delivery of the Transaction Documents, (ii) authorization of the
performance of all obligations of the Company under the Transaction Documents,
and (iii) the authorization, issuance (or reservation for issuance) and delivery
of the Securities. The Transaction Documents constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability, relating to or affecting
creditors' rights generally.
3.3 Capitalization. Set forth on Schedule 3.3 hereto is (a) the
authorized capital stock of the Company on the date hereof; (b) the number of
shares of capital stock issued and outstanding on the date hereof; (c) the
number of shares of capital stock issuable pursuant to the Common Stock option,
stock
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purchase, stock award and similar plans; and (d) the number of shares of capital
stock issuable and reserved for issuance pursuant to all Common Stock
Equivalents outstanding or which the Company had agreed to issue (other than the
Amended Note, the Warrant and the Existing Warrant). All of the issued and
outstanding shares of the Company's capital stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights.
No Person is entitled to preemptive or similar statutory or contractual rights
with respect to any securities of the Company. Except as set forth on Schedule
3.3, hereto, or in the SEC filings, there are no outstanding Common Stock
Equivalents or other rights, agreements or arrangements of any character under
which the Company is or may be obligated to issue any equity securities of any
kind (other than the Note and Existing Warrant and the 10% Convertible Note due
2004 and Common Stock Purchase Warrant issued to Deephaven Private Placement
Trading Ltd, on__________, 2002 based on an investment of $750,000), and except
as contemplated by this Agreement, the Company is not currently in negotiations
for the issuance of any Common Stock Equivalents or capital stock of any kind
other than discussions the Company has held with (a) X.X. Xxxxxxxxxx and other
investment banks regarding a potential private equity transaction following the
close of the of the transaction contemplated by this Agreement, which
transaction will not be integrated with the sale of the Amended Note and Warrant
for purposes of applicable state and federal securities laws or for purposes of
the rules of Nasdaq; and (b) the potential investment by RAM Capital Resources
of funds into the Company on substantially similar terms as the Purchaser. The
Company has no knowledge of any voting agreements, buy-sell agreements, option
or right of first purchase agreements or other agreements of any kind among any
of the security holders of the Company relating to the securities of the Company
held by them. Except as set forth on Schedule 3.3 to this Agreement, and except
for registration statements currently on file, the Company has not granted any
Person the right (which is now outstanding or effective) to require the Company
to register any securities of the Company under the 1933 Act, whether on a
demand basis or in connection with the registration of securities of the Company
for its own account or for the account of any other Person.
3.4 Valid Issuance. The aggregate number of shares of Common Stock
issued, outstanding and reserved for issuance is 34,960,502. The Company does
not have any obligation to issue shares of Common Stock for which it has not
reserved an adequate number of shares of Common Stock. The Amended Note and
Warrant are duly authorized, and such Securities, and the Underlying Shares
issuable upon conversion of the Amended Note and Warrant Shares issuable upon
exercise of the Warrant, have been duly authorized and when issued in accordance
herewith and with the terms of the Amended Note and Warrant, will be validly
issued, fully paid, non-assessable and free and clear of all Encumbrances and
restrictions, except for restrictions on transfer imposed by applicable
securities laws.
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3.5 Consents. The execution, delivery and performance by the
Company of the Transaction Documents and the offer, issuance and sale of the
Securities require no consent of, action by or in respect of, or filing with,
any Person, governmental body, agency, or official other than filings that have
been or will be made pursuant to applicable state securities laws and the
requirements of the Nasdaq and other than the filing of a Form D by the Company
with the SEC, each of which the Company undertakes to file within the applicable
time periods.
3.6 Delivery of SEC Filings; Business; Non-Public Information. The
Company has timely filed all material reports and other documents required to be
filed with the SEC pursuant to the 1934 Act since December 31, 1999. At their
respective times of filing with the SEC, the SEC Filings complied in all
material respects with the requirements of the 1934 Act and did not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The Company and the Subsidiaries are
engaged only in the business described in the SEC Filings, and the SEC Filings
contain a complete and accurate description of the business of the Company and
the Subsidiaries. The Company has not provided to the Purchaser (i) any
information required to be filed under the 1934 Act that has not been so filed
or (ii) any material non-public information concerning the Company and the
Subsidiaries.
3.7 Use of Proceeds. The proceeds of the sale of the Amended Note
and the Warrant hereunder shall be used by the Company for working capital and
general corporate purposes.
3.8 No Material Adverse Change. Since the filing of the Company's
most recent Annual Report on Form 10-K or as otherwise identified and described
in the SEC Filings subsequently filed by the Company with the SEC pursuant to
the 1934 Act there has not been:
(i) any material change in the consolidated assets,
liabilities, financial condition or operating results of the Company and
the Subsidiaries from that reflected in the financial statements included
in the 2001 10-K, a copy of which has been delivered to the Purchasers,
except changes in the ordinary course of business which have not had, in
the aggregate, a Material Adverse Effect;
(ii) any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the capital stock
of the Company, or any redemption or repurchase of any securities of the
Company or any Subsidiary;
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(iii) any material damage, destruction or loss, whether or
not covered by insurance, to any assets or properties of the Company or
any Subsidiary;
(iv) any waiver by the Company or any Subsidiary of a
material right or of a material debt owed to it which waiver is adverse to
the Company or any Subsidiary;
(v) any satisfaction or discharge of any Encumbrance or
payment of any obligation by the Company or any Subsidiary, except in the
ordinary course of business and which is not material to the assets,
properties, prospects, financial condition, operating results or business
of the Company and the Subsidiaries taken as a whole (as such business is
presently conducted and the Company has publicly disclosed it is proposed
to be conducted);
(vi) any material change or amendment to a material contract
or arrangement by which the Company or any Subsidiary or any of their
respective assets or properties is bound or subject;
(vii) any material labor difficulties or labor union
organizing activities with respect to employees of or contractors to the
Company or any Subsidiary;
(viii) any transaction entered into by the Company or any
Subsidiary other than in the ordinary course of business; or
(ix) any other event or condition of any character that may
have a Material Adverse Effect.
3.9 Form S-3 Eligibility. The Company is currently eligible to
register the resale of its Common Stock in a secondary offering on a
registration statement on Form S-3 under the 1933 Act and the Company shall
maintain such eligibility at least until the Registration Statement is ordered
effective by the SEC.
3.10 No Conflict, Breach, Violation or Default. (a) The execution,
delivery and performance of the Transaction Documents by the Company and the
issuance and sale of the Securities will not conflict with or result in a breach
or violation of any of the terms and provisions of, or constitute a default
under (i) the Company's Articles of Incorporation (including any articles of
amendment or articles designating series of shares) or the Company's Bylaws,
both currently in effect (copies of which have been provided to the Purchaser
before the date hereof) and as in effect on the date of issuance of the
Securities, (ii) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Company or any Subsidiary or any
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of their respective assets or properties, or (iii) any agreement or instrument
to which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary is bound or to which any of the properties of the Company or any
Subsidiary is subject.
(b) Except where it would not have a Material Adverse Effect, the
Company and each Subsidiary (i) is not in violation of any statute, rule or
regulation applicable to the Company or any Subsidiary or its assets, (ii) is
not in violation of any judgment, order or decree applicable to the Company or
any Subsidiary or any of their respective assets, and (iii) is not in breach or
violation of any agreement, note or instrument to which it or its assets are a
party or are bound or subject. To the best of the Company's knowledge, neither
the Company nor any Subsidiary has received notice from any Person of any claim
or investigation that, if adversely determined, would render the preceding
sentence untrue or incomplete.
3.11 Acknowledgement of Potential Dilution. The Company understands
that the number of shares of Common Stock issuable pursuant to the Amended Note
and Warrant may increase substantially and that such increase may have a
dilutive effect on the Company's equity capitalization.
3.12 Brokers and Finders. The Purchaser shall have no liability or
responsibility for the payment of any commission or finder's fee to any third
party in connection with or resulting from this Agreement or the transactions
contemplated by this Agreement by reason of any agreement of or action taken by
the Company.
3.13 No Directed Selling Efforts or General Solicitation.
Notwithstanding anything contained on any schedule hereto, neither the Company
nor any Person acting on its behalf has conducted any general solicitation or
general advertising (as those terms are used in Regulation D) in connection with
the offer or sale of any of the Securities. The Company has not offered and sold
and will not offer or sell any securities similar to the Amended Note and the
Warrant as part of the offering of securities to the Purchaser pursuant to this
Agreement and the Purchase Agreement other than to a Person as to whom such
offer and sale did not and shall not constitute a general solicitation or
general advertising (as those terms are used in Regulation D).
3.14 No Integrated Offering. Neither the Company nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would (1) adversely affect reliance
by the Company on Section 4(2) of the 1933 Act for the exemption from
registration for the transactions contemplated hereby or would require
registration of the offer and sale of the Amended Note and Warrant to the
Purchaser under the 1933 Act; or (2) require the integration of the offering of
the Securities with any other offering of securities for
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purposes of determining the need to obtain stockholder approval of the
transactions contemplated hereby under the rules of the Nasdaq.
3.15 Disclosures. For purposes of this Agreement and the
transactions contemplated hereby, none of the representations or warranties made
by the Company under any of the Transaction Documents and no written information
furnished by the Company pursuant hereto, or in any other document, certificate
or written statement furnished by the Company to the Purchaser or any authorized
representative of the Purchaser, pursuant to the Transaction Documents or in
connection therewith, contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein and therein, in light of the circumstances under which they were made,
not misleading.
4. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company that:
4.1 Organization and Existence. The Purchaser is a validly existing
partnership and has all requisite partnership power and authority to invest in
the Securities pursuant to this Agreement.
4.2 Purchase Entirely for Own Account. The Securities to be
acquired by the Purchaser pursuant to this Agreement will be acquired for the
Purchaser's own account, not as nominee or agent, and not with a view to the
resale or distribution of any part thereof in violation of applicable securities
laws, and the Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same in violation of applicable
securities laws.
4.3 Investment Experience. The Purchaser acknowledges that it can
bear the economic risk and complete loss of its investment in the Securities and
has such knowledge of and experience with securities and financial or business
matters that it is capable of evaluating the merits and risks of the purchase of
the Amended Note and Warrant.
4.4 Disclosure of Information. The Purchaser has had an opportunity
to receive documents related to the Company and to ask questions of and receive
answers from the Company regarding the terms and conditions of the offering of
the Securities; provided however, that neither such inquiries nor any other
investigation conducted by the Purchaser shall modify, amend, limit or otherwise
affect the Purchaser's right to rely on the Company's representations and
warranties contained in the Transaction Documents or made pursuant to the
Transaction Documents.
4.5 Restricted Securities. The Purchaser understands that the
Amended Note and Warrant are characterized as "restricted securities" under the
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U.S. federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the 1933 Act only in certain limited circumstances.
4.6 Accredited Investor. The Purchaser is an "accredited investor"
as defined in Rule 501(a) of Regulation D.
4.7 No General Solicitation. The Purchaser did not learn of the
offering of the Amended Note and Warrant through any public advertising or
general solicitation (as these terms are used in Regulation D).
4.8 Residency of Purchaser. The Purchaser is a resident of the
state or other jurisdiction indicated below the Purchaser's name on the
signature pages to this Agreement.
4.9 Brokers and Finders. The Company shall have no liability or
responsibility for the payment of any commission or finder's fee to any third
party in connection with or resulting from this Agreement or the transactions
contemplated by this Agreement by reason of any agreement of the Purchaser.
4.10 Authorization. The Purchaser has full corporate power and
authority and has taken all requisite action on the part of the Purchaser, its
partners, officers necessary for (i) the authorization, execution and delivery
of the Transaction Documents and (ii) authorization of the performance of all
obligations of the Purchaser under the Transaction Documents. The Transaction
Documents constitute the legal, valid and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors' rights generally.
4.11 Risk Factors. Without limiting any of the Purchaser's other
representations and warranties hereunder, the Purchaser acknowledges that the
Purchaser has reviewed and is aware of the risk factors described in the SEC
Filings.
4.12 Reliance. The Purchaser has consulted its own financial, legal
and tax advisors with respect to the economic, legal and tax consequences of an
investment in the Amended Note and Warrant and has not relied on the SEC Filings
or the Company, its officers, directors or professional advisors as to such
consequences.
4.13 No Representations. No oral representations have been made by
the Company to the Purchaser in connection with the Transaction Documents;
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and no written representations have been made by the Company to the Purchaser
other than as stated in the Transaction Documents and the SEC Filings.
4.14 Survival. The Purchaser acknowledges that the representations,
warranties and agreements made by the Purchaser herein shall survive the
execution and delivery of this Agreement and the purchase of the Amended Note
and Warrant.
5. REGISTRATION RIGHTS AGREEMENT.
5.1 Registration Rights Agreement. The Company acknowledges and
agrees that the Company's execution and delivery of, and full performance of its
obligations under, the Registration Rights Agreement is a material inducement to
the Purchaser to execute and deliver this Agreement, to complete the Second
Closing and to accept the Amended Note and Warrant. The Company agrees to
execute and deliver to the Purchaser the Registration Rights Agreement at or
before the Second Closing.
6. CERTAIN COVENANTS OF THE COMPANY AND THE PURCHASER.
6.1 Press Releases. Any press release or other publicity concerning
this Agreement or the transactions contemplated by this Agreement shall be
submitted to the Purchaser for comment at least two (2) Business Days prior to
issuance, unless the release is required to be issued within a shorter period of
time by law or pursuant to the rules of the Nasdaq or a national securities
exchange. The Company shall, on the Second Closing Date or on the next
succeeding Business Day, issue a press release, in the form of Exhibit E hereto,
concerning the transactions contemplated hereby; provided, however, the Company
may coordinate such release with other financings occurring contemporaneously.
The Company's other press releases and other public information, to the extent
concerning the Transaction Documents, shall contain such information as
reasonably requested by the Purchaser and be reasonably approved by the
Purchaser in writing prior to issuance.
6.2 No Conflicting Agreements. The Company will not take any
action, enter into any agreement or make any commitment that would conflict or
interfere in any material respect with the obligations to the Purchaser under
the Transaction Documents.
6.3 Form 8-K. Within five Business Days after the Second Closing
Date, the Company will publicly report the issue and sale of the Note and
Warrant by filing with the SEC a Current Report on Form 8-K under the 1934 Act
which report shall describe the material terms and include copies of the
Transaction Documents as exhibits to such report.
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6.4 AMENDMENTS TO PURCHASE AGREEMENT.
(a) Effective at the time of the Second Closing, Section 1.3 of the
Purchase Agreement is hereby amended by deleting the following terms "Monthly
Amount", "Note", "Registration Rights Agreement" and "Warrant" and their
definitions.
(b) Effective at the time of the Second Closing, Section 1.3 of the
Purchase Agreement is hereby amended by adding the following terms and
definitions in appropriate alphabetical order:
"Additional Warrant" means the Common Stock Purchase Warrant issued by
the Company pursuant to Amendment No. 1.
"Amendment No. 1" means Amendment No. 1 to Purchase Agreement, dated
as of February __, 2002, by and between the Company and the Purchaser.
"Note" means the Company's 10% Convertible Note due 2004 in the
principal amount of $4,000,000.00 in the form attached as Exhibit A and
with respect to any time at or after the Second Closing the Company's 10%
Convertible Note due 2004 in the principal amount of $4,000,000.00 issued
pursuant to Amendment No. 1.
"Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement by and between the Company and the Purchaser
in the form attached as Exhibit C to Amendment No. 1.
"Warrant" means the Company's Common Stock Purchase Warrant in the
form attached hereto as Exhibit B and the Additional Warrant.
6.5 EFFECT OF AMENDMENT; CONFIRMATION.
(a) From and after the Second Closing on the Second Closing Date,
the rights and obligations of the Company and the Purchaser under the
Transaction Documents and all other agreements, documents and instruments
contemplated hereby and thereby shall apply with full force and effect to the
Purchase Agreement, as amended by this Agreement, and each reference to the
Purchase Agreement in the Transaction Documents shall be deemed to be a
reference to the Purchase Agreement, as amended by this Agreement. From and
after the Second Closing on the Second Closing Date, each reference in the
Transaction Documents to the Note shall be deemed to be a reference to the
Amended Note and each reference in the Transaction Documents to the Warrant
shall be deemed to be a reference to the Existing Warrant and the Warrant.
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(b) Except as amended by this Agreement, the Purchase Agreement
shall remain in full force and effect in accordance with its terms.
7. Conditions to the Company's Obligations to Issue and Sell. The
Company's obligation to issue and sell the Amended Note and Warrant to the
Purchaser pursuant to this Agreement is conditioned upon satisfaction of the
following conditions precedent on or before the Second Closing Date (any or all
of which may be waived by the Company in its sole discretion):
(a) On the Second Closing Date, no legal action, suit or proceeding
shall be pending or threatened which seeks to restrain or prohibit the
transactions contemplated by this Agreement; and
(b) The representations and warranties of the Purchaser contained
in this Agreement shall have been true and correct on the date of this Agreement
and the representations and warranties of the Purchaser contained in this
Agreement shall be true and correct on the Second Closing Date as if given on
and as of the Second Closing Date (except for representations given as of a
specific date, which representations shall be true and correct as of such date),
and on or before the Second Closing Date the Purchaser shall have performed all
covenants and agreements of the Purchaser contained herein or in any of the
other Transaction Documents required to be performed by the Purchaser on or
before the Second Closing Date.
8. Conditions to the Purchaser's Obligations to Purchase. The
Purchaser's obligation to purchase the Amended Note and Warrant is conditioned
upon satisfaction of the following conditions precedent on or before the Second
Closing Date (any or all of which may be waived by the Purchaser in its sole
discretion):
(a) On the Second Closing Date, no legal action, suit or proceeding
shall be pending or threatened which seeks to restrain or prohibit the
transactions contemplated by this Agreement;
(b) The representations and warranties of the Company contained in
this Agreement shall have been true and correct on the date of this Agreement
and the representations and warranties of the Company contained in the
Transaction Documents shall be true and correct on the Second Closing Date as if
given on and as of the Second Closing Date (except for representations given as
of a specific date, which representations shall be true and correct as of such
date), and on or before the Second Closing Date the Company shall have performed
all covenants and agreements of the Company contained herein or in any of the
other Transaction Documents required to be performed by the Company on or before
the Second Closing Date;
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(c) No event which would constitute an Event of Default under the
Note or which, with the giving of notice or the passage of time, or both, would
constitute such an Event of Default shall have occurred and be continuing;
(d) No Change in Control Transaction shall have occurred;
(e) The Company shall have delivered to the Purchaser a
certificate, dated the Second Closing Date, duly executed by its Chief Executive
Officer or Chief Financial Officer, to the effect set forth in subparagraphs
(a), (b), (c) and (d) of this Section 8;
(f) The Company shall have delivered to the Purchaser a
certificate, dated the Second Closing Date, of the Secretary of the Company
certifying (A) that there has been no change in the Articles of Incorporation or
By-Laws of the Company from the copies thereof certified to the Purchaser at the
Closing under the Purchase Agreement and (B) all resolutions of the Board of
Directors (and committees thereof) of the Company relating to this Agreement and
the other Transaction Documents and the transactions contemplated hereby and
thereby;
(g) On the Second Closing Date, the Purchaser shall have received
an opinion of XxXxxxx & Xxxxx, counsel for the Company, dated the Second Closing
Date, addressed to the Purchaser, in form, scope and substance reasonably
satisfactory to the Purchaser, substantially in the form attached as Exhibit D;
and
(h) On the Second Closing Date, (i) trading in securities on the
NYSE, the AMEX or Nasdaq shall not have been suspended or materially limited and
(ii) a general moratorium on commercial banking activities in the State of New
York shall not have been declared by either federal or state authorities, nor
shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity or crisis of such magnitude in its
effect on, or any material adverse change in any financial market which, in each
case, in the good faith judgment of the Purchaser, makes it impracticable or
inadvisable to purchase the Amended Note and Warrant.
9. MISCELLANEOUS.
9.1 Successors and Assigns. The provisions of Section 9.1 of the
Purchase Agreement shall be applicable to this Agreement as if this Agreement
were the "Agreement" referred to in Section 9.1 of the Purchase Agreement.
9.2 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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9.3 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.4 Notices. Any notice required or permitted under this Agreement
shall be given as provided in the Purchase Agreement.
9.5 Expenses. The parties hereto shall pay their own costs and
expenses in connection herewith, except that the Company shall pay or reimburse
the Purchaser, at or before the Second Closing, for its legal and due diligence
expenses incurred in connection herewith from gross proceeds of the issuance of
the Amended Note and Warrant to the extent not previously paid; provided,
however, in no event shall the Company be required to pay more than $20,000
total towards such expenses of the Purchaser, including all such expenses
payable by the Company in connection with the Purchase Agreement. The Company
shall pay all fees and expenses of any placement agents in connection with the
transactions contemplated by this Agreement pursuant to a separate agreement
between such parties.
9.6 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Purchaser;
provided, however, that any such amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any Securities purchased
under this Agreement at the time outstanding, each future holder of all such
securities, and the Company.
9.7 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
9.8 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto, the other Transaction Documents and other documents
contemplated hereby and thereby constitute the entire agreement among the
parties hereof with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof and thereof.
9.9 Survival. All representations, warranties, covenants and
agreements contained in this Agreement shall be deemed to be representations,
warranties, covenants and agreements as of the date hereof, except as expressly
provided to be made or deemed made as of another date. The representations and
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warranties shall survive the execution and delivery of, and the Second Closing
under, this Agreement.
9.10 Further Assurances. The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
9.11 Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws.
9.12 REMEDIES.
(a) The Purchaser shall be entitled to specific performance of the
Company's obligations under the Transaction Documents.
(b) The Company on the one hand and the Purchaser shall indemnify
the other and hold it harmless from any loss, cost, expense or fees (including
reasonable attorneys' fees and expenses) arising out of any breach of any of its
representations, warranties, covenants or agreements in any of the Transaction
Documents, or arising out of the enforcement of this Section 9.12.
9.13 Jurisdiction. The parties hereby agree that all actions or
proceedings arising directly or indirectly from or in connection with this
Agreement shall be litigated only in the Supreme Court of the State of New York
or the United States District Court for the Southern District of New York
located in New York County, New York. The parties consent and submit to the
jurisdiction and venue of the foregoing courts and consent that any process or
notice of motion or other application to either of said courts or a judge
thereof may be served inside or outside the State of New York or the Southern
District of New York (but with respect to any party hereto, such consent shall
not be deemed a general consent to jurisdiction and service for any third
parties) by registered mail, return receipt requested, directed to the party
being served at its address provided in or pursuant to this Agreement (and
service so made shall be deemed complete three (3) days after the same has been
posted as aforesaid) or by personal service or in such other manner as may be
permissible under the rules of said courts. The Company hereby waives any right
to a jury trial in connection with any litigation pursuant to this Agreement.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE COMPANY:
SONIC FOUNDRY, INC.
By:___________________________
Name:
Title:
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XXX XXXXXXXXX:
OMICRON PARTNERS, L.P.
By: OMICRON CAPITAL, L.P.,
as Sub-Advisor
By: OMICRON CAPITAL, INC.,
its General Partner
By:_______________________
Xxxxxxx Xxxxxx
President
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