EXHIBIT 2.4
Exhibit C
to
Purchase
Agreement
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of January 25, 2002
(this "Agreement"), by and between SONIC FOUNDRY, INC., a Maryland corporation
(the "Company"), and OMICRON PARTNERS, L.P., a Bahamas limited partnership
("Omicron").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, in connection with the Purchase Agreement (such capitalized
term and all other capitalized terms used herein having the respective meanings
provided herein), the Company has agreed to provide certain registration rights
under the 1933 Act and applicable state securities laws with respect to the
Registrable Securities issuable to Omicron pursuant to the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchasers hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the terms "Agreement", "Company" and
"Omicron" shall have the respective meanings assigned to such terms in the
introductory paragraph of this Agreement.
(b) 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.
(c) 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):
"Additional Registrable Securities" means any shares of Common Stock
which are included within the definition of Registrable Securities but not
included in any Registration Statement filed pursuant to Section 2(a)(i)
below.
"Allowed Delay" shall have the meaning provided in Section 2(c)(ii).
"Approved Market" shall have the meaning provided in Section 2(c)(i).
"Availability Date" shall have the meanings provided in Section 3(l).
"Blackout Period" shall have the meaning provided in Section 2(c)(i).
"Common Stock" means the Common Stock, par value $.001 per share, of
the Company.
"Computed Market Price" means on any date 92% of the Market Price on
such date.
"Conversion Price" shall have the meaning provided in the Note.
"Initial Registrable Securities Amount" shall have the meaning
provided in Section 2(a)(i).
"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"1933 Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"NASD" means the National Association of Securities Dealers, Inc.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities or Additional Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material
incorporated by reference in such prospectus.
"Purchase Agreement" means the Purchase Agreement, dated as of
January 25, 2002, by and between the Company and Omicron.
"Purchasers" means Omicron and each subsequent holder of the Note,
the Warrant, Registrable Securities or Additional Registrable Securities,
or any portion thereof.
"register," "registered" and "registration" refer to a registration
made by preparing and filing a registration statement or similar document
in compliance with the 1933 Act (as defined below), and the declaration or
-2-
ordering of effectiveness of such registration statement or document by the
SEC.
"Registrable Securities" means (i) the Underlying Shares, the Warrant
Shares and the shares of Common Stock or other securities issued or
issuable to each Purchaser or its permitted transferee or designee (a) upon
conversion of the Note and upon exercise of the Warrant, or (b) upon any
distribution with respect to, any exchange for or any replacement of the
Note or the Warrant, or (c) upon any conversion, exercise or exchange of
any securities issued in connection with any such distribution, exchange or
replacement; (ii) securities issued or issuable upon any stock split, stock
dividend, recapitalization or similar event with respect to such shares of
Common Stock; and (iii) any other security issued as a dividend or other
distribution with respect to, in exchange for, or in replacement of, the
securities referred to in the preceding clauses.
"Registration Date" shall have the meaning provided in Section
2(c)(i).
"Registration Period" shall have the meaning provided in Section
3(a).
"Registration Statement" shall mean any registration statement of the
Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities or Additional Registrable Securities pursuant to the
provisions of this Agreement, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits
and all material incorporated by reference in such Registration Statement.
"SEC" means the U.S. Securities and Exchange Commission.
"Underlying Shares" means the shares of Common Stock issuable upon
conversion of, or otherwise in respect of, the Note.
"VWAP" shall have the meaning provided in the Note.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of, or otherwise in respect of, the Warrant.
(d) Capitalized terms used herein but not otherwise defined herein
shall have the respective meanings assigned to such terms in the Purchase
Agreement.
-3-
2. Registration.
(a) Registration Statements.
(i) Registrable Securities. Promptly following the Closing of the purchase
and sale of the Note and the Warrant contemplated by the Purchase Agreement on
the Closing Date (but, subject to Section 2(a)(iii), no later than thirty (30)
days after the Closing Date), the Company shall prepare and file with the SEC
one Registration Statement on Form S-3 (or, if Form S-3 is not then available to
the Company, on such form of registration statement as is then available to
effect a registration for resale of the Registrable Securities, subject to the
Purchaser's consent), covering the resale of the Registrable Securities in an
amount at least equal to the sum of (1) 125% of the number of Underlying Shares
that would be issuable upon conversion of the Note in full plus (2) 100% of the
number of shares of Common Stock issuable upon exercise of the Warrant in full
for cash, in each case in the preceding clauses (1) and (2), determined without
regard to any restrictions on beneficial ownership contained in the Note, the
Warrant or the Purchase Agreement (such sum the "Initial Registrable Securities
Amount"). Such Registration Statement also shall cover, to the extent allowable
under the 1933 Act and the rules promulgated thereunder (including Rule 416),
such indeterminate number of additional shares of Common Stock resulting from
stock splits, stock dividends or similar transactions with respect to the
Registrable Securities. In the Registration Statement the Purchaser shall be
identified as a selling securityholder and not as an underwriter. No securities
other than the Registrable Securities shall be included in the Registration
Statement without the consent of the Purchaser. The Registration Statement (and
each amendment or supplement thereto) shall be provided in accordance with
Section 3(c) to the Purchaser and its counsel prior to its filing or other
submission. If at any time the number of shares of Common Stock included in a
Registration Statement required to be filed as provided in this Section 2(a) and
remaining unsold thereunder shall be insufficient to cover the resale of
Registrable Securities in an amount at least equal to the sum of (x) 125% of the
number of Underlying Shares that would be issuable upon conversion in full of
the Note, plus (y) 100% of the number of shares of Common Stock issuable upon
exercise of the Warrant outstanding at such time in full for cash, in each case
in the preceding clauses (x) and (y) determined without regard to any
restrictions on beneficial ownership contained in the Note, the Warrant or the
Purchase Agreement, then promptly, but in no event later than thirty (30) days
after such insufficiency shall occur, the Company shall file with the SEC an
additional Registration Statement on Form S-3 covering such number of shares of
Common Stock as shall be sufficient to cover such amount. Except as set forth
above, the requirements with respect to a subsequent Registration Statement
shall be the same as those applicable to the initial Registration Statement.
-4-
(ii) Additional Registrable Securities. At any time and from time to time,
promptly following the written demand of the Purchaser following the issuance of
any Additional Registrable Securities, and in any event within thirty (30) days
following such demand, the Company shall prepare and file with the SEC either a
new Registration Statement or a post-effective amendment to a previously filed
Registration Statement, to the extent permitted under the 1933 Act, on Form S-3
(or, if Form S-3 is not then available to the Company, on such form of
registration statement as is then available to effect a registration for resale
of the Additional Registrable Securities) covering the resale of the Additional
Registrable Securities in an amount equal to the number of Additional
Registrable Securities. Such Registration Statement also shall cover, to the
extent allowable under the 1933 Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions with
respect to the Additional Registrable Securities. The Registration Statement
(and each amendment or supplement thereto) shall be provided in accordance with
Section 3(c) to the Purchaser and its counsel prior to its filing or other
submission.
(iii) If the Company proposes to file with the SEC a registration statement
(other than on Form S-8) relating to securities other than the Registrable
Securities or Additional Registrable Securities, then on or before the date the
Company files such other registration statement with the SEC the Company shall
file the Registration Statement required by Section 2(a)(i) with the SEC. In any
such case, the Company shall not request acceleration of effectiveness of such
other registration statement unless simultaneously therewith the Company request
acceleration of effectiveness of the Registration Statement to the same date and
time as so requested for such other registration statement.
(b) Expenses. The Company will pay all expenses associated with each
registration, including the Purchaser's reasonable expenses (including
reasonable attorneys fees) in connection with the registration but excluding
discounts, commissions, fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals.
(c) Effectiveness.
(i) The Company shall use its best efforts to have each Registration
Statement declared effective as soon as practicable after it is filed with the
SEC. If (A) the Company fails to file with the SEC a Registration Statement on
or before the date by which the Company is required to file the Registration
Statement pursuant to Section 2(a)(i) above, (B) the Company fails to file with
the SEC the Registration Statement covering Additional Registrable Securities
within thirty (30) days following demand of the Purchaser relating to the
Additional Registrable Securities to be covered thereby, (C) the Registration
Statement covering Registrable Securities is not declared effective by the SEC
within ninety (90) days following the
-5-
Closing Date, or the Registration Statement covering Additional Registrable
Securities is not declared effective by the SEC within ninety (90) days
following demand of the Purchaser relating to the Additional Registrable
Securities to be covered thereby, provided that for either of such Registration
Statements which is subject to review by the SEC staff (which shall not include
a review which is primarily a "plain English" review), such effective date shall
be within one hundred twenty (120) days following the Closing Date (in the case
of the Registration Statement required by Section 2(a)(i)) or one hundred twenty
(120) days following demand (in the case of a Registration Statement required by
Section 2(a)(ii)) (each, a "Registration Date"), (D) after a Registration
Statement has been declared effective by the SEC, sales cannot be made pursuant
to such Registration Statement for any reason (including without limitation by
reason of a stop order, or the Company's failure to update the Registration
Statement) but except as excused pursuant to subparagraph (ii) below, (E) the
Common Stock generally or the Registrable Securities (or Additional Registrable
Securities after issuance) specifically are not listed or included for quotation
on the Nasdaq, the Nasdaq Small Cap, the NYSE or the AMEX (each an "Approved
Market"), or trading of the Common Stock is suspended or halted on the Approved
Market which at the time constitutes the principal market for the Common Stock,
or (F) the Company fails, refuses or is otherwise unable timely to issue
Underlying Shares upon conversion of the Note or Warrant Shares upon exercise of
the Warrant in accordance with the terms of the Note and the Warrant, or
certificates therefor as required under the Transaction Documents, then the
Company will make payments to the Purchaser as partial liquidated damages for
the minimum amount of damages to the Purchaser by reason thereof, and not as a
penalty, at the rate of 2% per month of the sum of (x) the outstanding principal
amount of, and accrued interest on, the Note held at such time by the Purchaser
plus (y) the product of (i) the average of the daily VWAPs for all of the
Trading Days during the particular portion of a Blackout Period for which such
computation is being made times (ii) the number of Registrable Securities issued
to and held by the Purchaser plus (z) the amount, if any, by which the product
of (i) the average of the daily VWAPs for all of the Trading Days during the
particular portion of the Blackout Period for which such computation is being
made times (ii) the number of Warrant Shares issuable upon exercise of the
unexercised portion of the Warrant held at such time by the Purchaser exceeds
the aggregate Purchase Price of the number of Warrant Shares issuable upon
exercise of the unexercised portion of the Warrant held at such time by the
Purchaser, for the period following the Registration Date during which any of
the events described in clause (A), (B), (C), (D), (E) or (F) above occurs and
is continuing (the "Blackout Period"). Each such payment shall be due and
payable within five (5) days after the end of each calendar month of the
Blackout Period until the termination of the Blackout Period and within five (5)
days after such termination. Such payments shall be in partial compensation to
the Purchaser, and shall not constitute the Purchaser's exclusive remedy for
such events. The Blackout Period shall terminate upon (v) the filing of the
applicable Registration Statement
-6-
in the case of clauses (A) and (B) above; (w) the effectiveness of the
applicable Registration Statement in the case of clauses (C) and (D) above; (x)
listing or inclusion and/or trading of the Common Stock on an Approved Market,
as the case may be, in the case of clause (E) above; (y) delivery of such shares
or certificates in the case of clause (F) above; and (z) in the case of the
events described in clauses (C) or (D) above, the earlier termination of the
Registration Period (as defined in Section 3(a) below). The amounts payable as
liquidated damages pursuant to this paragraph shall be payable, at the option of
the Purchaser, in lawful money of the United States or in shares of Common Stock
valued for this purpose at the lower of the Conversion Price or the Computed
Market Price. Amounts payable as liquidated damages hereunder shall cease when
the Purchaser no longer holds the Note, the Warrant, Registrable Securities or
Additional Registrable Securities.
(ii) For not more than five (5) consecutive Trading Days or for a
total of not more than twenty (20) Trading Days in any consecutive twelve (12)
month period, the Company may delay the disclosure of material non-public
information concerning the Company, by terminating or suspending effectiveness
of any registration contemplated by this Section, the disclosure of which
information at the time is not, in the good faith opinion of the Company, in the
best interests of the Company or would be unduly detrimental to the Company's
affairs (an "Allowed Delay"); provided, that the Company shall promptly (a)
notify the Purchaser in writing of the existence of (but in no event, without
the prior written consent of the Purchaser, shall the Company disclose to the
Purchaser any of the facts or circumstances regarding) material non-public
information giving rise to an Allowed Delay, and (b) advise the Purchaser in
writing to cease all sales under the Registration Statement until the end of the
Allowed Delay.
(d) Underwritten Offering. If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an underwritten offering, the
Purchaser shall have the right to select an investment banker and manager to
administer the offering, which investment banker or manager shall be reasonably
satisfactory to the Company.
3. Company Obligations. The Company will use its best efforts to
effect the registration of the Registrable Securities and Additional Registrable
Securities in accordance with the terms hereof, and pursuant thereto the Company
will, as expeditiously as possible:
(a) use its best efforts to cause such Registration Statement to
become effective and to remain continuously effective for a period (the
"Registration Period") that will terminate upon the earlier of (i) the date on
which all Registrable Securities or Additional Registrable Securities have been
sold (and the Note and the Warrant no longer remain outstanding), (ii) the date
on which all Registrable Securities or Additional Registrable Securities, as the
case may be, may be sold
-7-
pursuant to Rule 144(k) (and the Note and Warrant no longer remain
outstanding), and (iii) the fifth anniversary of the Closing Date;
(b) prepare and file with the SEC such amendments, post-effective
amendments and prospectus supplements to the Registration Statement and the
Prospectus as may be necessary to keep the Registration Statement effective for
the period specified in Section 3(a) and to comply with the provisions of the
1933 Act and the 1934 Act with respect to the distribution of all Registrable
Securities and Additional Registrable Securities; provided that, at a time
reasonably prior to the filing of a Registration Statement or Prospectus, or any
amendments or supplements thereto, the Company will furnish to the Purchaser
copies of all documents proposed to be filed, which documents will be subject to
the comments of the Purchaser provided reasonably promptly after receipt of such
documents;
(c) permit counsel designated by the Purchaser to review each
Registration Statement and Prospectus and all amendments and supplements thereto
no fewer than seven (7) Business Days (or as many Business Days as possible if
SEC rules do not allow such time for such review) prior to their filing with the
SEC and not file any document to which such counsel reasonably objects;
(d) furnish to the Purchaser and its legal counsel (i) promptly after
the same is prepared and publicly distributed, filed with the SEC, or received
by the Company, one copy of any Registration Statement and any amendment
thereto, each preliminary prospectus and Prospectus and each amendment or
supplement thereto, and each letter written by or on behalf of the Company to
the SEC or the staff of the SEC, and each item of correspondence from the SEC or
the staff of the SEC, in each case relating to such Registration Statement
(other than any portion of any thereof which contains information for which the
Company has sought confidential treatment), and (ii) such number of copies of a
Prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as the Purchaser may reasonably
request in order to facilitate the disposition of the Registrable Securities and
Additional Registrable Securities owned by the Purchaser;
(e) in the event the Purchaser selects an underwriter for the
offering, the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriter of such offering;
(f) if required by the underwriter, or if the Purchaser is described
in the Registration Statement as an underwriter, the Company shall furnish, on
the effective date of the Registration Statement, on the date that Registrable
Securities or Additional Registrable Securities, as applicable, are delivered to
an underwriter, if any, for sale in connection with the Registration Statement
and at periodic
-8-
intervals thereafter from time to time on request, (i) an opinion, dated as of
such date, from independent legal counsel representing the Company for purposes
of such Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the underwriter and the
Purchaser and (ii) a letter, dated such date, from the Company's independent
certified public accountants in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriter and the Purchaser;
(g) to prevent the issuance of any stop order or other suspension of
effectiveness and, if such order is issued, obtain the withdrawal of any such
order at the earliest possible moment;
(h) furnish to the Purchaser at least five copies of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules by air mail or reputable courier within three (3)
Business Days after the effective date thereof;
(i) prior to any public offering of Registrable Securities or
Additional Registrable Securities, use its best efforts to register or qualify
or cooperate with the Purchaser and its counsel in connection with the
registration or qualification of the Registrable Securities or Additional
Registrable Securities, as applicable, for offer and sale under the securities
or blue sky laws of such jurisdictions requested by the Purchaser and do any and
all other reasonable acts or things necessary or advisable to enable the
distribution in such jurisdictions of the Registrable Securities or Additional
Registrable Securities covered by the Registration Statement;
(j) cause all Registrable Securities or Additional Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar
securities issued by the Company are then listed;
(k) immediately notify the Purchaser at any time when a Prospectus
relating to the Registrable Securities or Additional Registrable Securities is
required to be delivered under the 1933 Act, upon discovery that, or upon the
happening of any event as a result of which, the Prospectus included in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which made, not misleading, and at the request of any such holder,
promptly prepare and furnish to such holder a reasonable number of copies of a
supplement to or an amendment of such Prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities or
Additional Registrable Securities, as applicable, such Prospectus shall not
include an untrue statement of a
-9-
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; and
(l) otherwise to comply with all applicable rules and regulations of
the SEC under the 1933 Act and the 1934 Act, take such other actions as may be
reasonably necessary to facilitate the registration of the Registrable
Securities and Additional Registrable Securities, if applicable, hereunder; and
make available to its security holders, as soon as reasonably practicable, but
not later than the Availability Date, an earnings statement covering a period of
at least twelve months, beginning after the effective date of each Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the 1933 Act (for the purpose of this subsection 3(l), "Availability
Date" means the 45th day following the end of the fourth fiscal quarter
following the fiscal quarter that includes the effective date of such
Registration Statement, except that, if such fourth fiscal quarter is the last
quarter of the Company's fiscal year, "Availability Date" means the 90th day
after the end of such fourth fiscal quarter).
4. Due Diligence Review; Information. The Company shall make
available, during normal business hours, for inspection and review by the
Purchaser, advisors to and representatives of the Purchaser (who may or may not
be affiliated with the Purchaser and who are reasonably acceptable to the
Company), and any underwriter participating in any disposition of Common Stock
on behalf of the Purchaser pursuant to the Registration Statement or amendments
or supplements thereto or any blue sky, NASD, or other filing, all financial and
other records, all SEC Filings and other filings with the SEC, and all other
corporate documents and properties of the Company as may be reasonably necessary
for the purpose of establishing a due diligence defense under applicable
securities laws and such other reasonable purposes, and cause the Company's
officers, directors and employees, within a reasonable time period, to supply
all such information reasonably requested by the Purchaser or any such
representative, advisor or underwriter in connection with such Registration
Statement (including, without limitation, in response to all questions and other
inquiries reasonably made or submitted by any of them), prior to and from time
to time after the filing and effectiveness of the Registration Statement for the
sole purpose of enabling the Purchaser and such representatives, advisors and
underwriters and their respective accountants and attorneys to conduct initial
and ongoing due diligence with respect to the Company and the accuracy of the
Registration Statement.
The above to the contrary notwithstanding, the Company shall not
disclose material nonpublic information to the Purchaser, or to advisors to or
representatives of the Purchaser, unless prior to disclosure of such information
the Company identifies such information as being material nonpublic information
and provides the Purchaser, such advisors and representatives with the
opportunity to
-10-
accept or refuse to accept such material nonpublic information for review. The
Company may, as a condition to disclosing any material nonpublic information
hereunder, require the Purchaser's advisors and representatives to enter into a
confidentiality agreement (including an agreement with such advisors and
representatives prohibiting them from trading in Common Stock during such period
of time as they are in possession of material nonpublic information) in form
reasonably satisfactory to the Company and the Purchaser. Nothing herein shall
require the Company to disclose material nonpublic information to the Purchaser
or its advisors or representatives.
5. Obligations of the Purchaser.
(a) The Purchaser shall furnish in writing to the Company such
information regarding itself, the Registrable Securities or Additional
Registrable Securities, as applicable, held by it and the intended method of
disposition of the Registrable Securities or Additional Registrable Securities,
as applicable, held by it, as shall be required by the 1933 Act to effect the
registration of such Registrable Securities or Additional Registrable
Securities, as applicable, and shall execute such documents in connection with
such registration as the Company may reasonably request. At least ten (10)
Business Days prior to the first anticipated filing date of any Registration
Statement (or such shorter period as may be agreed to by the Purchaser), the
Company shall notify the Purchaser of the information the Company requires from
the Purchaser if the Purchaser's Registrable Securities or Additional
Registrable Securities are to be included in the Registration Statement.
(b) The Purchaser, by its acceptance of the Registrable Securities
and Additional Registrable Securities, if any, agrees to cooperate with the
Company as reasonably requested by the Company in connection with the
preparation and filing of a Registration Statement hereunder, unless the
Purchaser has notified the Company in writing of its election to exclude all of
its Registrable Securities or Additional Registrable Securities, as applicable,
from the Registration Statement.
(c) If the Purchaser determines to engage the services of an
underwriter, which underwriter is reasonably acceptable to the Company, the
Purchaser agrees to enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the dispositions of the Registrable Securities or
Additional Registrable Securities, as applicable.
(d) The Purchaser agrees that, upon receipt of any notice from the
Company of the happening of any event rendering a Registration Statement no
longer effective or available for use by the Purchaser, the Purchaser will
immediately discontinue disposition of Registrable Securities or Additional
-11-
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities or Additional Registrable Securities, until the
Purchaser's receipt of the copies of the supplemented or amended Prospectus
filed with the SEC and declared effective and, if so directed by the Company,
the Purchaser shall deliver to the Company (at the expense of the Company) or
destroy all copies in the Purchaser's possession of the Prospectus covering the
Registrable Securities or Additional Registrable Securities, as applicable,
current at the time of receipt of such notice.
(e) The Purchaser may participate in any third party underwritten
registration hereunder unless it (i) agrees to sell the Registrable Securities
or Additional Registrable Securities, as applicable, on the basis provided in
any underwriting arrangements in usual and customary form entered into by the
Purchaser, (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, and (iii) agrees to pay its
pro rata share of all underwriting discounts and commissions and any expenses in
excess of those payable by the Company pursuant to the terms of this Agreement.
6. Indemnification.
(a) Indemnification by Company. The Company agrees to indemnify and
hold harmless, to the fullest extent permitted by law, the Purchaser, each
investment advisor and investment sub-advisor of the Purchaser and each of their
respective officers, directors, partners, members and employees and each person
who controls the Purchaser (within the meaning of the ▇▇▇▇ ▇▇▇) against all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorney's fees) and expenses imposed on such person caused by (i)
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or any preliminary prospectus or any
amendment or supplement thereto or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are based upon any
information furnished in writing to the Company by the Purchaser, expressly for
use therein, or (ii) any violation by the Company of any federal, state or
common law, rule or regulation applicable to the Company in connection with any
Registration Statement, Prospectus or any preliminary prospectus, or any
amendment or supplement thereto, and shall reimburse in accordance with
subparagraph (c) below, each of the foregoing persons for any legal and any
other expenses reasonably incurred in connection with investigating or defending
any such claims. The foregoing is subject to the condition that, insofar as the
foregoing indemnities relate to any untrue statement, alleged untrue statement,
omission or alleged omission made in any preliminary prospectus or Prospectus
that is eliminated or remedied in any Prospectus or amendment or supplement
thereto, the above indemnity obligations
-12-
of the Company shall not inure to the benefit of any indemnified party if a copy
of such corrected Prospectus or amendment or supplement thereto had been
provided to such indemnified party and was not sent or given by such indemnified
party at or prior to the time such action was required of such indemnified party
by the 1933 Act and if delivery of such Prospectus or amendment or supplement
thereto would have eliminated (or been a sufficient defense to) any liability of
such indemnified party with respect to such statement or omission. Indemnity
under this Section 5(a) shall remain in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the transfer of the Registrable Securities and Additional Registrable
Securities.
(b) Indemnification by Purchaser. In connection with any registration
pursuant to the terms of this Agreement, the Purchaser will furnish to the
Company in writing such information as required by the 1933 Act concerning the
Purchaser or the proposed manner of distribution for use in connection with any
Registration Statement or Prospectus and agrees to indemnify and hold harmless,
to the fullest extent permitted by law, the Company, its directors, officers,
and each person who controls the Company (within the meaning of the ▇▇▇▇ ▇▇▇)
against any losses, claims, damages, liabilities and expense (including
reasonable attorney's fees) resulting from any untrue statement of a material
fact or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or preliminary prospectus or amendment or
supplement thereto or necessary to make the statements therein not misleading,
to the extent, but only to the extent that such untrue statement or omission is
contained in any information furnished in writing by such Purchaser to the
Company specifically for inclusion in such Registration Statement or Prospectus
or amendment or supplement thereto and that such information was substantially
relied upon by the Company in preparation of the Registration Statement or
Prospectus or any amendment or supplement thereto. In no event shall the
liability of the Purchaser be greater in amount than the dollar amount of the
proceeds (net of the cost of the Registrable Securities and Additional
Registrable Securities sold and all expenses paid by the Purchaser and not
reimbursed by the Company and the amount of any damages the Purchaser has
otherwise been required to pay by reason of such untrue statement or omission)
received by the Purchaser upon the sale of the Registrable Securities or
Additional Registrable Securities included in the Registration Statement giving
rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification, (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party and (iii) by notice to the indemnifying
party, require the indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party; provided,
-13-
however, that any person entitled to indemnification hereunder shall have the
right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of such
person unless (a) the indemnifying party has agreed to pay such fees or
expenses, or (b) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel reasonably satisfactory to such person or (c)
in the reasonable judgment of any such person, based upon written advice of its
counsel, a conflict of interest exists between such person and the indemnifying
party with respect to such claims (in which case, if the person notifies the
indemnifying party in writing that such person elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such claim on behalf of such person); and
provided, however, further, that the failure of any indemnified party to give
notice as provided herein shall not relieve the indemnifying party of its
obligations hereunder, except to the extent that such failure to give notice
shall materially adversely affect the indemnifying party in the defense of any
such claim or litigation. It is understood that the indemnifying party shall
not, in connection with any proceeding in the same jurisdiction, be liable for
fees or expenses of more than one separate firm of attorneys at any time for all
such indemnified parties. No indemnifying party will, except with the consent of
each indemnified party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for
in the preceding paragraphs (a) and (b) is unavailable to an indemnified party
or insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent misrepresentation. In
no event shall the contribution obligation of a holder of Registrable Securities
or Additional Registrable Securities be greater in amount than the dollar amount
of the proceeds (net of the cost of the Registrable Securities or Additional
Registrable Securities sold and all expenses paid by such holder and not
reimbursed by the Company and the amount of any damages such holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the sale of the
Registrable Securities or Additional Registrable Securities giving rise to such
contribution obligation.
-14-
7. Miscellaneous.
(a) Amendments and Waivers. This Agreement may be amended only by a
writing signed by the Company and the Purchaser. The Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company shall have obtained the written consent to such
amendment, action or omission to act, of the Purchaser affected by such
amendment, action or omission to act who hold, directly or indirectly, at least
80% of the Registrable Securities and Additional Registrable Securities held by
all Purchaser.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made as set forth in Section 9.4 of the Purchase
Agreement.
(c) Assignments and Transfers by Purchaser. This Agreement and the
rights and obligations of the Purchaser hereunder may be assigned or transferred
in whole to any transferee or assignee of the Note, the Warrant, the Registrable
Securities or the Additional Registrable Securities or in part to any transferee
or assignee of any portion thereof, except as otherwise set forth herein. The
Purchaser may make such assignment or transfer to any transferee or assignee of
the Note, the Warrant, the Registrable Securities or the Additional Registrable
Securities; provided, that (i) such transfer is made expressly subject to this
--------
Agreement and the transferee agrees in writing to be bound by the terms and
conditions hereof, and (ii) the Company is provided with written notice of such
assignment.
(d) Assignments and Transfers by the Company. This Agreement may not
be assigned by the Company without the prior written consent of the Purchaser
but, in any case of any successor-in-interest to the Company or any Person other
than the Company who is an issuer of Registrable Securities or Additional
Registrable Securities, such successor-in-interest or other issuer, shall
assume, jointly and severally with the Company, the rights and duties of the
Company hereunder, in the event of a merger or consolidation of the Company with
or into another corporation or the sale of all or substantially all of the
Company's assets (and it shall be a condition to any such merger, consolidation
or sale that such successor-in-interest or other issuer assume in writing all
obligations hereunder jointly and severally with the Company).
(e) Benefits of the Agreement. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective permitted successors and assigns any rights,
remedies,
-15-
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(f) 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.
(g) 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.
(h) 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 to the fullest extent permitted by law.
(i) 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.
(j) Entire Agreement. This Agreement, together with the Purchase
Agreement, the Note and the Warrant and documents contemplated thereby, is
intended by the parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This
Agreement, together with the Purchase Agreement, the Note and the Warrant and
documents contemplated thereby, supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(k) 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 law.
[Signature Page Follows]
-16-
IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
THE COMPANY:
SONIC FOUNDRY, INC.
By: ____________________________________
Name:
Title:
THE PURCHASER:
OMICRON PARTNERS, L.P.
By: OMICRON CAPITAL, L.P.,
as Sub-Advisor
By: OMICRON CAPITAL, INC.,
its General Partner
By: _____________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
-17-