-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LaTzkZOggT6YiR6jrkd5GYkfk3X1Q7iP7DWDZ8t3erjox8G9IW2OWdZbOVSPvfpe nCmpMDJmhurGki4eMnPxwA== /in/edgar/work/20000908/0000950131-00-005251/0000950131-00-005251.txt : 20000922 0000950131-00-005251.hdr.sgml : 20000922 ACCESSION NUMBER: 0000950131-00-005251 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20000908 EFFECTIVENESS DATE: 20000908 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SONIC FOUNDRY INC CENTRAL INDEX KEY: 0001029744 STANDARD INDUSTRIAL CLASSIFICATION: [7372 ] IRS NUMBER: 391783372 STATE OF INCORPORATION: MD FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-45438 FILM NUMBER: 719474 BUSINESS ADDRESS: STREET 1: 754 WILLIAMSON ST CITY: MADISON STATE: WI ZIP: 53703 BUSINESS PHONE: 6082563133 MAIL ADDRESS: STREET 1: 754 WILLIAMSON ST CITY: MADISON STATE: WI ZIP: 53703 S-8 1 0001.txt FORM S-8 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-8 Registration Statement Under The Securities Act of 1933 Commission File No._____________ SONIC FOUNDRY, INC. (Exact name of registrant as specified in its charter)
MARYLAND 39-1783372 (State or other jurisdiction of incorporation (I.R.S. Employer Identification No.) or organization) (608) 256-3133 1617 Sherman Avenue, Madison, WI 53704 (Issuer's telephone number) (Address of principal executive offices)
1999 Non-Qualified Stock Option Plan (400,000 shares) (Full title of plan) Rimas P. Buinevicius Chief Executive Officer 1617 Sherman Avenue Madison, WI 53704 (608) 256-3133 (Name, address, including zip code, and telephone number, including area code, of agent for service) Calculation of Registration Fee
- -------------------------------------------------------------------------------------------------------------------- Title of each class of Proposed Maximum Amount of Securities to be Offering Price Aggregate Offering Registration Registered Amount to be Registered Per Share (1) Price (1) Fee - -------------------------------------------------------------------------------------------------------------------- Common Stock, $0.01 par value per share 400,000 shares $8.845 $3,538,000 $934.03 - --------------------------------------------------------------------------------------------------------------------
(1) Computed pursuant to Rule 457(c) and (h) based on the average of the high and low prices reported on the Nasdaq Stock Market on September 1, 2000, which was $8.845. Part I INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS ITEM 1. PLAN INFORMATION The information required for this item is included in documents distributed to each Participant. ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION The information required for this item is included in documents distributed to each Participant. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The SEC allows us to "incorporate by reference" into this prospectus information that we file with the SEC in other documents. This means that we can disclose important information to you by referring to other documents that contain that information. The information incorporated by reference is considered to be part of this prospectus, and information that we file with the SEC in the future and incorporate by reference will automatically update and may supersede the information contained in this prospectus. We incorporate by reference the documents listed below and any future filing we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, prior to the sale of all the shares covered by this prospectus. - Our Annual Report on Form 10K and Form 10-K/A for the fiscal year ended September 30, 1999; - Our Quarterly Reports on Form 10-Q for the fiscal quarters ended December 31, 1999, March 31, 2000 and June 30, 2000; - Our Current Reports on Form 8-K filed on February 15, 2000, April 18, 2000, and April 20, 2000, and our current report on Form 8-K/A filed on June 19, 2000; and - The description of our common stock contained in our Exchange Act Registration Statement on Form 8-A, filed April 20, 2000. 2 You may request free copies of these filings by writing or telephoning us at the following address: Investor Relations, 1617 Sherman Avenue, Madison, Wisconsin 53704, telephone (608) 256-3133. ITEM 4. DESCRIPTION OF SECURITIES. Not required. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL The law firm of McBreen & Kopko will be furnishing an opinion as to the legality of the Common Stock registered under this Registration Statement. During fiscal 1999, we paid $135,000 to McBreen & Kopko for legal services. Frederick H. Kopko, Jr. is a partner of McBreen & Kopko. Mr. Kopko is a director of the Company and is the beneficial owner of 183,192 shares of Common Stock and holds options to purchase an additional 90,000 Shares of Common Stock. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS Our Articles of Incorporation limit the liability of our directors in their capacity as directors but not in their capacity as officers, to the fullest extent permitted by the Maryland General Corporation Law or MGCL. Accordingly, pursuant to the terms of the MGCL as presently in effect, we may indemnify any director unless it is established that: (i) the act or omission of the director was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty; (ii) the director actually received an improper personal benefit in money, property or services; or (iii) in the case of any criminal proceeding, the director had reasonable cause to believe that the act or omission was unlawful. In addition, our Bylaws require us to indemnify each person who is or was, a director, officer, employee or agent of ours to the fullest extent permitted by the laws of the State of Maryland in the event he is involved in legal proceedings by reason of the fact that he is or was a director, officer, employee or agent of ours, or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership or other enterprise. We may also advance to such persons expenses incurred in defending a proceeding to which indemnification might apply, upon terms and conditions, if any, deemed appropriate by the Board of Directors upon receipt of an undertaking by or on behalf of such director or officer to repay all such advanced amounts if it is ultimately determined that he is not entitled to be indemnified as authorized by the laws of the State of Maryland. In addition, we carry director and officer liability insurance. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED Not applicable. 3 ITEM 8. EXHIBITS Exhibit Number Description - -------------- -------------------- 4.1 Registrant's 1999 Non-Qualified Stock Option Plan 5.1 Opinion of McBreen & Kopko regarding the legality of the Common Stock registered hereby 23.1 Consent of McBreen & Kopko (included in its opinion to be filed as Exhibit 5.1 hereto) 23.2 Consent of Ernst & Young, LLP 24.1 Power of Attorney (contained within Signature Page) ITEM 9. UNDERTAKINGS (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) that, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; PROVIDED, HOWEVER, that paragraphs (a)(1(1) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the 4 offering of the securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. If a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless, in the opinion of its counsel, the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. 5 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe it meets all the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Madison, State of Wisconsin, on this 1st day of September 2000. Sonic Foundry, Inc. By: /s/ Rimas Buinevicius --------------------------- Rimas Buinevicius, Chairman and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Rimas Buinevicius and Kenneth Minor as his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitutes or substitute may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
Signature Title Dated - --------------------------- -------------------------------------- ----------------- /s/ Rimas Buinevicius Chairman of the Board, Chief Executive September 1, 2000 Officer and Treasurer (Principal Executive Officer) ____________________________ Rimas Buinevicius /s/ Kenneth Minor Chief Financial Officer September 1, 2000 (Principal Financial and Accounting Officer) ____________________________ Kenneth Minor
6 /s/ Monty Schmidt President and Director September 1, 2000 - --------------------------- Monty Schmidt /s/ Curtis Palmer Executive Vice President, September 1, 2000 - --------------------------- Chief Technology Officer Curtis Palmer and Director /s/ Frederick H. Kopko, Jr. Secretary and Director September 1, 2000 - --------------------------- Frederick H. Kopko, Jr. /s/ Arnold Pollard Director September 1, 2000 - --------------------------- Arnold Pollard /s/ David Kleinman Director September 1, 2000 - --------------------------- David Kleinman /s/ Jan Brzeski Director September 1, 2000 - --------------------------- Jan Brzeski 7 INDEX TO EXHIBITS
Page Item Number Sequentially Numbered Description - ------------ ----------------------------------------------------------------- 4.1 Registrant's 1999 Non-Qualified Stock Option Plan, as amended 5.1 Opinion of McBreen & Kopko as to the legality of the stock registered hereby 23.1 Consent of McBreen & Kopko (included in Exhibit 5) 23.2 Consent of Ernst & Young LLP 24.1 Power of Attorney (contained within Signature Page)
8 EX-4.1 2 0002.txt 1999 NON-QUALIFIED STOCK OPTION PLAN Exhibit 4.1 SONIC FOUNDRY, INC. 1999 NON-QUALIFIED STOCK OPTION PLAN TABLE OF CONTENTS Page SECTION 1 BACKGROUND, PURPOSE AND DURATION 1.1 Effective Date and Purpose................................................1 SECTION 2 DEFINITIONS 2.1 "1934 Act"................................................................1 2.2 "Affiliate"...............................................................1 2.3 "Board"...................................................................1 2.4 "Code"....................................................................1 2.5 "Committee"...............................................................1 2.6 "Company".................................................................1 2.7 "Director"................................................................1 2.8 "Disability"..............................................................2 2.9 "Employee"................................................................2 2.10 "Exercise Price"..........................................................2 2.11 "Fair Market Value".......................................................2 2.12 "Fiscal Year".............................................................2 2.13 "Grant Date"..............................................................2 2.14 "Nonqualified Stock Option"...............................................2 2.15 "Option"..................................................................2 2.16 "Option Agreement"........................................................2 2.17 "Participant".............................................................2 2.18 "Plan"....................................................................2 2.19 "Rule 16b-3"..............................................................2 2.20 "Section 16 Person".......................................................2 2.21 "Shares"..................................................................2 2.22 "Subsidiary"..............................................................2 2.23 "Termination of Service"..................................................3 SECTION 3 ADMINISTRATION 3.1 The Committee.............................................................3 3.2 Authority of the Committee................................................3 3.3 Delegation by the Committee...............................................3 3.4 Decisions Binding.........................................................3 (ii) SECTION 4 SHARES SUBJECT TO THE PLAN 4.1 Number of Shares..........................................................3 4.2 Lapsed Options............................................................4 4.3 Adjustments in Options and Authorized Shares..............................4 SECTION 5 STOCK OPTIONS 5.1 Grant of Options..........................................................4 5.2 Option Agreement..........................................................4 5.3 Exercise Price............................................................4 5.3.1 Substitute Options....................................................4 5.4 Expiration of Options.....................................................4 5.4.1 Expiration Dates.....................................................5 5.4.2 Death of Participant.................................................5 5.4.3 Committee Discretion.................................................5 5.5 Exercisability of Options.................................................5 5.6 Payment...................................................................5 5.7 Restrictions on Share Transferability.....................................6 5.8 Grant of Reload Options....................................................6 SECTION 6 MISCELLANEOUS 6.1 No Effect on Employment or Service........................................6 6.2 Participation.............................................................6 6.3 Indemnification...........................................................6 6.4 Successors................................................................7 6.5 Beneficiary Designations..................................................7 6.6 Nontransferability of Options.............................................7 6.7 No Rights as Shareholder..................................................7 6.8 Withholding Requirements..................................................7 6.9 Withholding Arrangements..................................................7 SECTION 7 AMENDMENT, TERMINATION, AND DURATION 7.1 Amendment, Suspension, or Termination.....................................8 7.2 Duration of the Plan......................................................8 SECTION 8 LEGAL CONSTRUCTION 8.1 Gender and Number.........................................................8 8.2 Severability..............................................................8 8.3 Requirements of Law.......................................................8 8.4 Compliance with Rule 16b-3................................................8 8.5 Governing Law.............................................................8 8.6 Captions..................................................................8 SONIC FOUNDRY, INC. 1999 NON-QUALIFIED STOCK OPTION PLAN SECTION 1 BACKGROUND, PURPOSE AND DURATION 1.1 Effective Date and Purpose. The Plan is effective as of September 1, 1999. The Plan is intended to increase incentive and to encourage Share ownership on the part of (1) employees of the Company and its Affiliates, and (2) consultants who provide significant services to the Company and its Affiliates. The Plan also is intended to further the growth and profitability of the Company. SECTION 2 DEFINITIONS The following words and phrases shall have the following meanings unless a different meaning is plainly required by the context: 2.1 "1934 Act" means the Securities Exchange Act of 1934, as amended. Reference to a specific section of the 1934 Act or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation. 2.2 "Affiliate" means any corporation or any other entity (including, but not limited to, partnerships and joint ventures) controlling, controlled by, or under common control with the Company. 2.3 "Board" means the Board of Directors of the Company. 2.4 "Code" means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation. 2.5 "Committee" means the stock option committee appointed by the Board (pursuant to Section 3.1) to administer the Plan. 2.6 "Company" means Sonic Foundry, Inc., a Maryland corporation, or any successor thereto. 2.7 "Director" means any individual who is a member of the Board. 1 2.8 "Disability" means a permanent and total disability within the meaning of Code section 22(e)(3). 2.9 "Employee" means any employee of the Company or of an Affiliate, whether such employee is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan, and whether or not such employee is a Director. 2.10 "Exercise Price" means the price at which a Share may be purchased by a Participant pursuant to the exercise of an Option. 2.11 "Fair Market Value" means the last quoted per share selling price for Shares on the relevant date, or if there were no sales on such date, the arithmetic mean of the highest and lowest quoted selling prices on the nearest day before and the nearest day after the relevant date, as determined by the Committee. Notwithstanding the preceding, with respect to Options granted on the date of the initial public offering of Shares, fair market value means the price at which each Share is sold in such offering, as determined by the Committee. 2.12 "Fiscal Year" means the fiscal year of the Company. 2.13 "Grant Date" means, with respect to an Option, the date that the Option was granted. 2.14 "Nonqualified Stock Option" means an option to purchase Shares which is not intended to be an Incentive Stock Option. 2.15 "Option" means a Nonqualified Stock Option. 2.16 "Option Agreement" means the written agreement setting forth the terms and provisions applicable to each Option granted under the Plan. 2.17 "Participant" means an Employee, Consultant, or Director who has an outstanding Option. 2.18 "Plan" means Sonic Foundry, Inc. 1999 Non-Qualified Stock Option Plan, as set forth in this instrument and as hereafter amended from time to time. 2.19 "Rule 16b-3" means Rule 16b-3 promulgated under the 1934 Act, as amended, and any future regulation amending, supplementing or superseding such regulation. 2.20 "Section 16 Person" means a person who, with respect to the Shares, is subject to section 16 of the 1934 Act. 2.21 "Shares" means the shares of the Company's common stock, $.01 par value. 2.22 "Subsidiary" means any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the 2 unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 2.23 "Termination of Service" means (a) in the case of an Employee, a cessation of the employee-employer relationship between an Employee and the Company or an Affiliate for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, retirement, or the disaffiliation of an Affiliate, but excluding any such termination where there is a simultaneous reemployment by the Company or an Affiliate. SECTION 3 ADMINISTRATION 3.1 The Committee. The Plan shall be administered by the Committee. The members of the Committee shall be appointed from time to time by, and shall serve at the pleasure of, the Board. 3.2 Authority of the Committee. It shall be the duty of the Committee to administer the Plan in accordance with the Plan's provisions. The Committee shall have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (a) determine which Employees shall be granted Options, (b) prescribe the terms and conditions of the Options, (c) interpret the Plan and the Options, (d) adopt such procedures and subplans as are necessary or appropriate to permit participation in the Plan by Employees who are foreign nationals or employed outside of the United States, (e) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and (f) interpret, amend or revoke any such rules. 3.3 Delegation by the Committee. The Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or any part of its authority and powers under the Plan to one or more directors or officers of the Company; provided, however, that unless otherwise determined by the Board, the Committee may not delegate its authority and powers in any way which would jeopardize the Plan's qualification under section 162(m) of the Code or Rule 16b-3. 3.4 Decisions Binding. All determinations and decisions made by the Committee, the Board, and any delegate of the Committee pursuant to the provisions of the Plan shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law. SECTION 4 SHARES SUBJECT TO THE PLAN 4.1 Number of Shares. Subject to adjustment as provided in Section 4.3, the total number of Shares available for grant under the Plan shall not exceed four hundred thousand 3 (400,000). Shares granted under the Plan may be either authorized but unissued Shares or treasury Shares. 4.2 Lapsed Options. If an Option terminates, expires, or lapses for any reason, any Shares subject to such Option again shall be available to be the subject of an Option. 4.3 Adjustments in Options and Authorized Shares. In the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up, Share combination, or other change in the corporate structure of the Company affecting the Shares, the Committee shall adjust the number and class of Shares which may be delivered under the Plan, the number, class, and price of Shares subject to outstanding Options, and the numerical limit of Section 4.1 in such manner as the Committee (in its sole discretion) shall determine to be appropriate to prevent the dilution or diminution of such Options. Notwithstanding the preceding, the number of Shares subject to any Option always shall be a whole number. SECTION 5 STOCK OPTIONS 5.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Employees at any time and from time to time as determined by the Committee in its sole discretion. The Committee, in its sole discretion, shall determine the number of Shares subject to each Option. 5.2 Option Agreement. Each Option shall be evidenced by an Option Agreement that shall specify the Exercise Price, the expiration date of the Option, the number of Shares to which the Option pertains, any conditions to exercise of the Option, and such other terms and conditions as the Committee, in its discretion, shall determine. 5.3 Exercise Price. Subject to the provisions of this Section 5.3, the Exercise Price for each Option shall be determined by the Committee in its sole discretion, provided, however, that except as set forth in Section 5.3.1 below, the Exercise Price shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date. 5.3.1 Substitute Options. Notwithstanding the provisions of Section 5.3, in the event that the Company or an Affiliate consummates a transaction described in section 424(a) of the Code (e.g., the acquisition of property or stock from an unrelated corporation), persons who become Employees on account of such transaction may be granted Options in substitution for options granted by their former employer. If such substitute Options are granted, the Committee, in its sole discretion and consistent with section 424(a) of the Code, shall determine the exercise price of such substitute Options. 5.4 Expiration of Options. 4 5.4.1 Expiration Dates. Each Option shall terminate no later than the first to occur of the following events: (a) The date for termination of the Option set forth in the written Option Agreement; or (b) The expiration of ten (10) years from the Grant Date; or (c) The expiration of three (3) months from the date of the Participant's Termination of Service for a reason other than the Participant's death, Disability or Retirement; or (d) The expiration of one (1) year from the date of the Participant's Termination of Service by reason of Disability. 5.4.2 Death of Participant. Notwithstanding Section 5.4.1, if a Participant dies prior to the expiration of his or her options, the Committee, in its discretion, may provide that his or her options shall be exercisable for up to one (1) year after the date of death. 5.4.3 Committee Discretion. The Committee, in its sole discretion, (a) shall provide in each Option Agreement when each Option expires and becomes unexercisable, and (b) may, after an Option is granted, extend the maximum term of the Option (subject to Section 5.4.1(b) (regarding the maximum term of Options). 5.5 Exercisability of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall determine in its sole discretion. After an Option is granted, the Committee, in its sole discretion, may accelerate the exercisability of the Option. 5.6 Payment. Options shall be exercised by the Participant's delivery of a written notice of exercise to the Secretary of the Company (or its designee), setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. Upon the exercise of any Option, the Exercise Price shall be payable to the Company in full in cash or its equivalent. The Committee, in its sole discretion, also may permit exercise (a) by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Exercise Price, or (b) by any other means which the Committee, in its sole discretion, determines to both provide legal consideration for the Shares, and to be consistent with the purposes of the Plan, including by execution and delivery of a promissory note. As soon as practicable after receipt of a written notification of exercise and full payment for the Shares purchased, the Company shall deliver to the Participant (or the Participant's designated broker), Share certificates (which may be in book entry form) representing such Shares. 5 5.7 Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option as it may deem advisable, including, but not limited to, restrictions related to applicable Federal securities laws, the requirements of any national securities exchange or system upon which Shares are then listed or traded, or any blue sky or state securities laws. 5.8 Grant of Reload Options. The Committee may provide in an Option Agreement that a Participant who exercises all or part of an Option by payment of the Exercise Price with already-owned Shares, shall be granted an additional option (a "Reload Option") for a number of shares of stock equal to the number of Shares tendered to exercise the previously granted Option plus, if the Committee so determines, any Shares withheld or delivered in satisfaction of any tax withholding requirements. As determined by the Committee, each Reload Option shall: (a) have a Grant Date which is the date as of which the previously granted Option is exercised, and (b) be exercisable on the same terms and conditions as the previously granted Option, except that the Exercise Price shall be determined as of the Grant Date. SECTION 6 MISCELLANEOUS 6.1 No Effect on Employment or Service. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment or service at any time, with or without cause. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Affiliates (or between Affiliates) shall not be deemed a Termination of Service. Employment or service with the Company and its Affiliates is on an at-will basis only. 6.2 Participation. No Employee shall have the right to be selected to receive an Option under this Plan, or, having been so selected, to be selected to receive a future Option. 6.3 Indemnification. Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from (a) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any Option Agreement, and (b) from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless. 6 6.4 Successors. All obligations of the Company under the Plan, with respect to Options granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company. 6.5 Beneficiary Designations. If permitted by the Committee, a Participant under the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid Option shall be paid in the event of the Participant's death. Each such designation shall revoke all prior designations by the Participant and shall be effective only if given in a form and manner acceptable to the Committee. In the absence of any such designation, any vested benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate and, subject to the terms of the Plan and of the applicable Option Agreement, any unexercised vested Option may be exercised by the administrator or executor of the Participant's estate. 6.6 Nontransferability of Options. No Option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution, or to the limited extent provided in Section 6.5. All rights with respect to an Option granted to a Participant shall be available during his or her lifetime only to the Participant. 6.7 No Rights as Shareholder. No Participant (nor any beneficiary) shall have any of the rights or privileges of a shareholder of the Company with respect to any Shares issuable pursuant to an Option, unless and until certificates representing such Shares shall have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant (or beneficiary). 6.8 Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Option, the Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, and local taxes (including the Participant's FICA obligation) required to be withheld with respect to such Option (or exercise thereof). 6.9 Withholding Arrangements. The Committee, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit or require a Participant to satisfy all or part of the tax withholding obligations in connection with an Option by (a) having the Company withhold otherwise deliverable Shares, or (b) delivering to the Company already-owned Shares having a Fair Market Value equal to the amount required to be withheld. The amount of the withholding requirement shall be deemed to include any amount which the Committee determines, not to exceed the amount determined by using the maximum federal, state or local marginal income tax rates applicable to the Participant with respect to the Option on the date that the amount of tax to be withheld is to be determined. The Fair Market Value of the Shares to be withheld or delivered shall be determined as of the date that the taxes are required to be withheld. 7 SECTION 7 AMENDMENT, TERMINATION, AND DURATION 7.1 Amendment, Suspension, or Termination. The Board, in its sole discretion, may amend or terminate the Plan, or any part thereof, at any time and for any reason. The amendment, suspension, or termination of the Plan shall not, without the consent of the Participant, alter or impair any rights or obligations under any Option theretofore granted to such Participant. No Option may be granted during any period of suspension or after termination of the Plan. 7.2 Duration of the Plan. The Plan shall commence on the date specified herein, and subject to Section 7.1 (regarding the Board's right to amend or terminate the Plan), shall remain in effect thereafter. SECTION 8 LEGAL CONSTRUCTION 8.1 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural. 8.2 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. 8.3 Requirements of Law. The granting of Options and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 8.4 Compliance with Rule 16b-3. Transactions under this Plan with respect to Section 16 Persons are intended to comply with all applicable conditions of Rule 16b-3. To the extent any provision of the Plan, Option Agreement or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. 8.5 Governing Law. The Plan and all Option Agreements shall be construed in accordance with and governed by the laws of the State of Maryland. 8.6 Captions. Captions are provided herein for convenience only, and shall not serve as a basis for interpretation or construction of the Plan. 8 EXECUTION IN WITNESS WHEREOF, Sonic Foundry, Inc., by its duly authorized officer, has executed the Plan on the date indicated below. SONIC FOUNDRY, INC. By: /s/ Monty R. Schmidt --------------------- Monty R. Schmidt President Dated as of: October 1, 1999 Effective as of: October 1, 1999 EX-5.1 3 0003.txt OPIINION OF MCBREEN & KOPKO Exhibit 5.1 OPINION OF McBREEN & KOPKO August 31, 2000 Sonic Foundry, Inc. 1617 Sherman Avenue Madison, WI 53704 Re: Sonic Foundry, Inc. Registration Statement on Form S-8 Ladies and Gentlemen: At your request, I have examined the Registration Statement on Form S-8 (the "Registration Statement") which you intend to file with the Securities and Exchange Commission in connection with the registration under the Securities Act of 1933, as amended, of 400,000 shares of common stock, par value $0.01 (the "S- 8 Shares"), of Sonic Foundry, Inc., a Maryland corporation (the "Company"), which are to be offered and sold by the Company pursuant to the 1999 Non- Qualified Stock Option Plan (hereinafter referred to as the "Plan"). I have examined the Company's Articles of Incorporation and Bylaws; the Company's minute books; the corporate records in connection with the Plan and the sale of the S-8 Shares; and such other documents of the Company as I have considered necessary or appropriate for the purposes of this opinion. On the basis of such examinations and reviews, I advise you that I am of the opinion that the S-8 Shares, when offered and sold in the manner provided in the Prospectus contained in the Registration Statement, will be validly issued, fully paid and non-assessable. This opinion is limited solely to matter as of the laws of the State of Illinois; the general corporation law of the State of Maryland; and the laws of the United States of America. We hereby advise you that Frederick H. Kopko, Jr., a partner of this law firm, is a director of the Company, beneficially owns 183,192 shares of Common Stock and holds options to purchase an additional 90,000 shares of Common Stock. We hereby consent to the use of this opinion as an exhibit to the Registration Statement. Very truly yours, McBreen & Kopko By: /s/ McBreen & Kopko ------------------------- EX-23.2 4 0004.txt CONSENT OOF ERNST & YOUNG Exhibit 23.2 CONSENT OF ERNST & YOUNG, LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in this Registration Statement (Form S-8) pertaining to the Sonic Foundry, Inc. 1999 Non-Qualified Stock Option Plan of our report dated November 5, 1999, with respect to the financial statements and schedule of Sonic Foundry, Inc. included in it's Annual Report (Form 10-K) for the year ended September 30, 1999, filed with the Securities and Exchange Commission. Milwaukee, Wisconsin August 31, 2000 -----END PRIVACY-ENHANCED MESSAGE-----