STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT made this 18th day of January, 2000 by and
between the Purchaser Sonic Foundry, Inc., ("SONIC FOUNDRY"), a Maryland
corporation having its principal place of business in Madison, Wisconsin, USA;
the Seller Jedor, Inc., a Canadian corporation, ("JEDOR"), and the JEDOR
Principals, being Xxxxxx Xxxxxxxxx, Xxxxx Jedlovsky, and Xxxxx Xxx (the "JEDOR
Principals").
Whereas, JEDOR and the JEDOR Principals have developed that certain software
product entitled "Viscosity" (the "Title") and related documentation and other
software;
Whereas, the JEDOR Principals collectively hold all of the issued and
outstanding stock of JEDOR;
Whereas, SONIC FOUNDRY wishes to purchase, and the JEDOR Principals wish to
sell, all of the issued and outstanding stock of JEDOR (the "Shares") on the
terms herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
ARTICLE I. TERMS OF PURCHASE AND SALE
1.1 Purchase and Sale of Shares of JEDOR. On the Closing Date, the JEDOR
Principals shall sell to SONIC FOUNDRY, and SONIC FOUNDRY shall purchase from
the JEDOR Principals, the Shares for the purchase price specified herein. At
the Closing, JEDOR shall deliver to SONIC FOUNDRY certificates representing all
of the Shares which are required to be delivered or are otherwise deliverable by
JEDOR pursuant hereto at the Closing duly endorsed in blank for transfer or
accompanied by duly executed stock powers assigning such Shares in blank, and
SONIC FOUNDRY shall deliver to JEDOR Principals the Purchase Price as determined
below.
1.2 Acceptance and Closing. This agreement will become effective only if
executed on behalf and all of the JEDOR Principals and delivered to Sonic
Foundry, attention Xxxxx Xxxxxxxxxxx, by JEDOR and the JEDOR Principals by 3:00
P.M. January 24, 2000 via Facsimile at (000) 000-0000. The purchase and sale of
the Shares shall take place at the offices of SONIC FOUNDRY at 10:00 a.m. on
February 1, 2000 (the "Closing Date"). In no event shall the Closing Date be
later than February 20, 2000. The Closing shall be deemed to have taken place at
5:00 P.M. on the Closing Date.
1.3 PURCHASE PRICE. The purchase price (the "Purchase Price") for the shares
shall be a total amount of $450,000.00 US to be payable as follows:
A. Cash Payable At the Closing. At the Closing, SONIC FOUNDRY shall pay
the JEDOR Principals a total cash payment of $150,000.00 US by check or
wire transfer of immediately available funds. The payment of $150,000.00
pursuant to this paragraph shall be divided equally among the JEDOR
Principals, or as indicated in a writing signed
by all of them, and shall be made to the accounts designated by each of the
JEDOR Principals, respectively.
B. Sonic Foundry Common Stock and Sonic Foundry Options Granted as
Additional Consideration. SONIC FOUNDRY shall issue shares of its common
stock valued at $300,000.00 (US), at such times and subject to the
allocation and vesting provisions in Paragraphs C. and D. below.
C. Number of Shares to be Issued. The number of SONIC FOUNDRY shares to
be issued by SONIC FOUNDRY pursuant to this paragraph 1.3 shall be
determined by dividing $300,000.00 by the average closing bid price for
SONIC FOUNDRY's common stock on the 30 days prior to the date hereof
($30.28 per common share). The resulting number of shares shall be
allocated as follows: to Xxxxxx Xxxxxxxxx, 27%, to Anton Jedlovsky, 36-
1/2%, and to Xxxxx Xxx, 36-1/2% (hereafter referred to as "Allocated
Shares"). The number of Allocated Shares due to any of them is subject to
the reduction upon termination of employment as specified in Paragraph
1.3.D below.
D. Effect of Termination of Employment for Cause or Voluntary Resignation
of any JEDOR Principal Prior to 3 Years From Closing Date. The JEDOR
Principals will be offered employment with SONIC FOUNDRY under the
Employment Agreement attached as Exhibit A hereto.
In the event that the employment of any of the JEDOR Principals is
terminated (through voluntary resignation or for cause under the
employment agreement) before the expiration of 36 months from the
Closing Date, the number of Allocated Shares to be vested with the
terminating JEDOR Principal shall be reduced as follows:
I. Reduction of Allocated Shares Upon Termination During the first
Year after the Closing Date. If the employment of a JEDOR Principal
is terminated prior to the expiration of 3 months after the Closing
Date, he shall not be entitled any of his Allocated Shares; if
terminated after 3 months but prior to the expiration of 6 months from
the Closing Date, he shall be entitled to receive 5% of his Allocated
Shares; if terminated after the expiration of 6 months but prior to
the expiration of 9 months from the Closing Date, he shall be entitled
to receive 10% of his Allocated Shares; and if terminated after the
expiration of 9 months but prior to the expiration of 12 months from
the Closing Date, he shall be entitled to receive 15% of his Allocated
Shares.
II. Reduction of Allocated Shares Upon Termination After One Year
from the Closing Date. If the employment of any JEDOR Principal is
terminated after 1 year from the Closing Date but prior to the
expiration of 2 years from the Closing Date, he shall be entitled to
receive 20% of his Allocated Shares; if terminated after 2 years from
the Closing Date but prior to the expiration of 3 years, he shall be
entitled to receive 50% of his Allocated Shares.
E. Option Rights Granted at Closing. At the Closing, each of the JEDOR
Principals shall receive option rights to purchase 5,000 shares of
SONIC FOUNDRY common stock, according to the Option Agreement attached
as Exhibit B hereto.
F. Lockup. Each of the JEDOR Principals acknowledges and agrees that he
will not sell or otherwise dispose of any Allocated Shares prior to 3 years
from the Closing Date.
G. Full Vesting of Shares and Options Under Certain Events. In the event
that SONIC FOUNDRY shall elect to relocate the office of JEDOR to a
location outside of Canada or to terminate the employment agreement of any
JEDOR Principal (other than a termination for cause), the Allocated Shares
and options of each JEDOR Principal shall vest fully. The Allocated Shares
and options of any JEDOR Principal who dies or becomes disabled prior to
the date on which they would otherwise vest under subparagraph 3.E. above
shall also vest fully.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF JEDOR
The Parties agree that JEDOR shall prepare a Disclosure Schedule (Schedule
A to be attached and incorporated herein) to be completed prior to the Closing
Date, as it may be extended by agreement.
JEDOR and the JEDOR Principals hereby represent and warrant:
2.1 Corporate Existence of JEDOR. JEDOR is a corporation duly incorporated,
validly existing and in good standing under the laws of Canada, has all
requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as presently conducted. JEDOR is duly
qualified as a corporation, and is in good standing, in Canada. Attached to
the Disclosure Schedule is a certified copy of JEDOR's Certificate of
Incorporation, as amended to date, , and JEDOR's By-Laws, as currently in
effect. This Agreement has been duly executed and delivered on behalf of JEDOR
and constitutes the valid and binding obligation of JEDOR, enforceable against
JEDOR in accordance with its terms, subject to general equitable principles and
except as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application relating to creditors' rights.
2.2 Capitalization. All the outstanding shares of JEDOR are owned by the JEDOR
Principals. All outstanding Shares have been duly authorized and validly
issued, are fully paid and non-assessable and were not issued in violation of
any preemptive rights. There is outstanding no security, option, warrant,
right, call, subscription, agreement, commitment or understanding of any nature
whatsoever, fixed or contingent, that directly or indirectly (i) calls for the
issuance, sale, pledge or other disposition of any Shares or of any other
capital stock of JEDOR or any securities convertible into, or other rights to
acquire, any such Shares or other capital stock of JEDOR or (ii) obligates JEDOR
to grant, offer or enter into any of the foregoing or (iii) relates to
the voting or control of such Shares, capital stock, securities or rights. No
person has any right to require JEDOR to register any of its securities.
2.3 Title to Shares. The sale and delivery of the Shares to SONIC FOUNDRY
pursuant to this Agreement will vest in SONIC FOUNDRY legal and valid title to
the Shares, free and clear of all liens, security interests, adverse claims or
other encumbrances of any character whatsoever ("Encumbrances") (other than
Encumbrances created by SONIC FOUNDRY and restrictions on resales of the Shares
under applicable securities laws).
2.4. [reserved]
2.5. Consents and Approvals. Except as set forth on the Disclosure Schedule,
there is no authorization, consent order or approval of, or notice to or filing
with, any governmental authority required to be obtained or given or waiting
period required to expire as a condition to the lawful consummation by Jedor of
the sale of the Shares pursuant to this Agreement.
2.6 No Conflicts. Except as set forth in the Disclosure Schedule, the
execution, delivery and performance of this Agreement by JEDOR and the
consummation by JEDOR of the transactions contemplated hereby will not conflict
with, or constitute or result in a breach, default or violation of (with or
without the giving of notice or the passage of time) any of the terms,
provisions or conditions of, (i) the Articles of Incorporation or By-Laws of
JEDOR; (ii) any law, ordinance, regulation or rule applicable to JEDOR; (iii)
any order, judgment, injunction or other decree by which JEDOR or any of their
respective assets or properties is bound; or (iv) any written or oral contract,
agreement, or commitment to which JEDOR is a party or by which they or any of
their respective assets or properties is bound; nor will such execution,
delivery and performance result in the creation of any material Encumbrance upon
any properties, assets or rights JEDOR.
2.7 Subsidiaries. JEDOR does not own any equity ownership interest, directly
or indirectly, in any person, corporation or other entity.
2.8 Financial Statements. JEDOR will supply materially true and correct
financial statements as of October 31, 1999, and will certify as of the Closing
Date that they remain materially true and correct.
2.9 Liabilities. Except as set forth in the Disclosure Schedule, neither JEDOR
nor any Subsidiary has any debts, obligations or liabilities of whatever kind or
nature, either direct or indirect, absolute or contingent, matured or unmatured,
except debts, obligations and liabilities that are fully reflected in, or
reserved against on, the Financial Statements, provided that, the reduction in
the shareholder's equity of JEDOR in the amount not greater than (CN)$15,000
from that shown on the Financial Statements shall be acceptable to the Company.
2.10 Absence of Certain Changes or Events. Except as set forth in the
Disclosure Schedule or except as otherwise contemplated by this Agreement, from
the date of the Financial Statements to the date hereof there has not been (a)
any damage, destruction or casualty loss to the physical properties of JEDOR
(whether covered by insurance or not); (b) any material change in the
business, operations or financial condition of JEDOR and the Subsidiaries; (c)
any entry into any transaction, commitment or agreement (including without
limitation any borrowing or capital expenditure) material to JEDOR and the
Subsidiaries course of business; (d) any redemption or other acquisition by
JEDOR or any Subsidiary of JEDOR's capital stock or any declaration, setting
aside or payment of any dividend or other distribution in cash, stock or
property with respect to JEDOR's capital stock; (e) any increase in the rate or
terms of compensation payable or to become payable by JEDOR or any subsidiary to
its directors, officers or employees or any increase in the rate or terms of any
bonus, pension, insurance or other employee benefit plan, payment or arrangement
made to, for or with any such directors, officers or key employees; (f) any
change in production schedules, acceleration of sales, or reduction of aggregate
administrative, marketing, advertising and promotional expenses or research and
development expenditures other than in the ordinary course of business; (g) any
sale, transfer or other disposition of any asset of JEDOR, except for payment of
third-party obligations incurred in the ordinary course of business in
accordance with JEDOR's or the Subsidiaries' regular payment practices; (h) any
termination or waiver of any rights of value to the business of JEDOR and the
Subsidiaries; or (i) any failure by JEDOR or the Subsidiaries to pay their
accounts payable or other obligations in the ordinary course of business
consistent with past practice.
2.11 Title to Properties. Except as set forth on the Disclosure Schedule, JEDOR
and the Subsidiaries have good and marketable title to all of the assets and
properties which they purport to own and which are reflected on the Interim
Balance Sheet, free and clear of all Encumbrances, except for (a) liens for
current taxes not yet due and payable or for taxes the validity of which is
being contested in good faith by appropriate proceedings, and (b) encumbrances
which individually or in the aggregate do not materially and adversely affect
the business, operations or financial condition of JEDOR and the Subsidiaries.
2.12 Patents, Trademarks, Etc. (a) Jedor makes no representation or warranty
with respect to the trade name VISCOSITY, but the right of JEDOR to use same has
not been questioned in any litigation to which JEDOR was a party, nor has any
litigation been threatened or claims of third parties made; and (b) the conduct
of the business of JEDOR as now conducted, to the best of knowledge of JEDOR and
the JEDOR Principals, does not conflict with any valid patents, trademarks,
trade names, service marks or copyrights of others. The consummation of the
transactions contemplated hereby will not result in the loss or impairment of
any patent and trademark rights.
2.13 Insurance. All insurance policies with respect to the properties, assets,
operations and business of JEDOR and the Subsidiaries (the "Insurance Policies")
are in full force and effect. Except as set forth in the Disclosure Schedule
there are no pending claims against the Insurance Policies by JEDOR or any of
the Subsidiaries as to which the insurers have denied liability and with respect
to which there is a reasonable likelihood of a settlement or determination
adverse JEDOR and the Subsidiaries. There are no circumstances existing which
would enable the insurers to avoid liability under the Insurance Policies or no
other parties having an interest under the Insurance Policies. Except as set
forth in the Disclosure Schedule (i) there exists no material claims under the
Insurance Policies that have not been properly filed by JEDOR or a Subsidiary,
(ii) no insurance company has refused to renew any material insurance policy of
JEDOR during the past 18 months, and (iii) there have been no material rate or
premium increases or written notice of prospective changes therein on general
liability, property or directors and officers liability Insurance Policies
during the past 18 months. The Disclosure Schedule contains a list that includes
all Insurance Policies.
2.14 JEDOR Contracts. The Disclosure Schedule lists the following (to the
extent any of the following exist) (such agreements, commitments, and written
summaries of oral agreements being sometimes collectively referred to herein as
the "JEDOR Contracts"):
(i) all leases of real property to which JEDOR is a party (whether as lessor or
lessee);
(ii) all machinery or equipment owned of record or beneficially by JEDOR, all
leases of machinery or equipment to which JEDOR is a party (whether as lessor or
lessee), with the annual rental, the termination date, and the conditions of
assignment and renewal being given with respect to each lease;
(iii) all rights and all licenses, leases, and other agreements relating to
rights in other tangible personal property to which JEDOR is a party.
(iv) all policies of insurance and fidelity or surety bonds in force with
respect to the directors, officers, properties, assets, liabilities, or
operations of JEDOR in each case with a notation as to the status of premiums
paid thereon;
(v) all agreements of JEDOR for the borrowing or lending of money;
(vi) all agreements granting any person a lien, security interest, or mortgage
on any property or asset of JEDOR, including any factoring agreement or
agreement for the assignment of receivables or inventory;
(vii) all agreements of JEDOR guaranteeing, indemnifying, or otherwise becoming
liable for the obligations or liabilities of another;
(viii) all agreements of JEDOR with any manufacturer or supplier with respect to
discounts or allowances or extended payment terms;
(ix) all agreements of JEDOR with any distributor, dealer, sales agent, or
representative;
(x) all agreements which restrict JEDOR from doing any kind of business or from
doing business in any jurisdiction or from competing with any person;
(xi) all agreements for the purchase of goods, materials, supplies, machinery,
capital assets or services;
(xii) all collective bargaining agreements and employee pension benefit plans
which are currently in effect and all information relating to such employee
benefit plans required to be
disclosed pursuant to Section 2.18 (b) hereof;
(xiii) all bonus, deferred compensation, profit sharing, pension, retirement,
stock option, stock purchase, hospitalization, insurance, medical, dental, or
other plans, arrangements, or practices providing employee or executive
benefits;
(xiv) all shareholders' agreements, proxies, voting trusts, or powers of
attorney to act on behalf of JEDOR or in connection with its properties or
business affairs other than such powers to so act as normally pertain to
corporate officers;
(xv) all agreements relating to the sale of assets of JEDOR;
(xvi) all joint venture or partnership agreements with any other person;
(xvii) all agreements for the construction or modification of any building or
structure or for the incurrence of any other capital expenditure;
(xviii) all advertising agreements;
(xix) all agreements giving any party the right to renegotiate or require a
reduction in price or the repayment of any amount previously paid;
(xx) all other agreements and commitments (including employment and consulting
agreements) to which JEDOR is a party, by which it is or may be bound, or from
which it does or may derive benefit, and a description of the terms thereof,
with the termination date and conditions of assignment and renewal being given
in each case;
(xxi) the name of each retired employee, officer, or director, if any, of JEDOR
who is receiving or is entitled to receive any payment; and
(xxii) the name of each bank in which any company has an account or safe deposit
box and the names of all persons authorized to draw thereon or to have access
thereto.
Except as set forth in the Disclosure Schedule, each of JEDOR Contracts is
valid, binding, and enforceable in accordance with its terms for the periods (if
any) stated therein, except to the extent enforce ability may be limited by
bankruptcy, insolvency, moratorium, or other similar laws affecting creditors'
rights generally and limitations on the availability of equitable remedies;
JEDOR has fulfilled or has taken all actions necessary to enable it to fulfill
when due all of its obligations under JEDOR Contracts, and there is not, under
any of the foregoing, any existing default or event of default or any event
which, with or without the giving of notice or the passage of time, would
constitute a default under any of JEDOR Contracts. There are no laws,
regulations, rules or decrees currently in effect or to be in effect which
adversely affect or might adversely affect JEDOR's rights under any of JEDOR
Contracts.
2.15 Litigation. Except as set forth in the Disclosure Schedule, there is no
action, proceeding or
investigation in any court or before any governmental or regulatory authority
pending or threatened in writing or orally (a) against JEDOR or against the
JEDOR Principals in connection with the conduct of the businesses of JEDOR, (b)
which seeks to enjoin or obtain damages in respect of the consummation of the
transactions contemplated hereby, or (c) render SONIC FOUNDRY unable to hold
shares in, or designate at least a majority of the members of the Board of
Directors of, or exercise control over, JEDOR. The actions or proceedings
described in clauses (a), (b) and (c) are collectively referred to as
"Litigation." Except as disclosed in the Disclosure Schedule, neither JEDOR nor
any of the Subsidiaries is subject to any outstanding order, writ, judgment or
decree. The Disclosure Schedule includes all Litigation.
2.16 Taxes. (a) Except as set forth in the Disclosure Schedule, (i) all
income, franchise, excise, sales and use tax ("Taxes") returns required to be
filed with respect to JEDOR have been filed in a timely manner (taking into
account all extensions of due dates); (ii) JEDOR has paid, or have made
sufficient provision for, or have set up adequate reserves for the payment of,
all Taxes shown as due on such returns; (iii) neither JEDOR nor any Subsidiary
has executed any presently effective waiver or extension of any statute of
limitations against assessment and collection of Taxes with respect to JEDOR or
any Subsidiary; and (iv) the proper amounts have been withheld by JEDOR from
employees with respect to all cash compensation paid to employees for all
periods in compliance in all material respects with the tax and other
withholding provisions of all applicable laws. Except as set forth in the
Disclosure Schedule, no deficiencies for any taxes have been asserted in writing
or assessed against JEDOR which remain unpaid.
2.17 Compliance with Laws. Except as set forth in the Disclosure Schedule,
JEDOR has complied in all material respects with all laws, statutes, rules,
regulations, judgments, decrees and orders applicable to their business
(including without limitation, any of the above which relate to the
environment).
2.18 Employee Benefits and Agreements. (a) The Disclosure Schedule contains a
list of (1) all material employment contracts between JEDOR and each executive
officer thereof, (2) all collective bargaining agreements between JEDOR and
employee representatives, and (3) all bonus, incentive, stock option, stock
purchase, phantom stock, stock appreciation rights, performance shares, and
similar plans either currently maintained by JEDOR, or, if terminated, under
which employees or former employees have rights that are outstanding, and all
awards and agreements under any of such plans pursuant to which any employees or
former employees hold outstanding rights.
(b) The Disclosure Schedule contains a list of each employee pension benefit
plan to which JEDOR contributes or is required to contribute on behalf of its
employees.
2.19 Consents. Except as set forth in the Disclosure Schedule, no consent,
approval or authorization of, exemption by, or filing with, any governmental or
regulatory authority is required in connection with the execution, delivery and
performance by JEDOR of this Agreement and the consummation by JEDOR of the
transactions contemplated hereby.
2.20 Licenses and Permits. JEDOR has all governmental licenses and permits and
other
governmental authorizations and approvals required for the conduct of their
businesses as presently conducted ("Material Permits"). The Disclosure Schedule
includes a list of all Material Permits.
2.21 Business Relations. JEDOR is not required to provide any bonding or other
financial security arrangements in connection with any transactions with any of
its customers or suppliers. No customer or supplier of JEDOR will cease to do
business with JEDOR after the consummation of the transactions contemplated
hereby. Except as set forth in the Disclosure Schedule, JEDOR has not
experienced any difficulties in obtaining any raw materials necessary to the
operations of its business, and, no such shortage of raw materials is
threatened.
2.22 Interest in Competitors, Suppliers, Customers, Etc. Neither JEDOR nor any
of the JEDOR Principals nor any officer or director of JEDOR or any affiliate of
any such officer or director has any ownership interest in any competitor,
supplier or customer of JEDOR accounting for more than 1% of JEDOR's purchases
from Suppliers in the most recently ended fiscal year or any property used in
the operation of the business of JEDOR.
2.23 Accounts Receivable. All accounts receivable reflected in the Financial
Statements supplied under Paragraph 2.8 above represent sales actually made or
services actually rendered in the ordinary course of business on or prior to
October 31, 1999; all accounts receivable of JEDOR as of the Closing Date will
represent sales actually made on services actually rendered in the ordinary
course of business or prior to the Closing Date.
2.24 Employee Relations. No union organizational campaign is in process or
threatened in writing. JEDOR has not incurred any work stoppages, general labor
disputes, or union strikes in the past three (3) years which have had an adverse
effect on the business operations or financial condition of JEDOR nor have any
which would have such an adverse effect been threatened in writing.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SONIC FOUNDRY
SONIC FOUNDRY hereby represents and warrants to JEDOR as follows:
3.1 Organization. SONIC FOUNDRY is a corporation duly organized, validly
existing and in good standing under the laws of Maryland and has all requisite
corporate power and authority to carry on its business as it is now being
conducted and to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby.
3.2 Corporate Power and Authority. The execution, delivery and performance by
SONIC FOUNDRY of this Agreement and the consummation by SONIC FOUNDRY of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of SONIC FOUNDRY. This Agreement has been duly and
validly executed and delivered by SONIC FOUNDRY and constitutes the valid and
binding obligation of SONIC FOUNDRY, enforceable in accordance with its terms,
except to the extent that such enforce ability (i) may be
limited by bankruptcy, insolvency or other similar laws relating to creditors'
rights generally, and (ii) is subject to general principles of equity.
3.3 No Conflicts. The execution, delivery and performance by SONIC FOUNDRY of
this Agreement and the consummation by SONIC FOUNDRY of the transactions
contemplated hereby will not, with or without the giving of notice or the lapse
of time, or both, (i) violate any provision of law, statute, rule or regulation
to which SONIC FOUNDRY is subject, (ii) violate any order, judgment or decree
applicable to SONIC FOUNDRY or (iii) conflict with, or result in a breach or
default under, any term or condition of the Certificate of Incorporation or By-
Laws of SONIC FOUNDRY or Any material agreement or other instrument to which
SONIC FOUNDRY is a party or by which any of them may be bound; except for
violations, conflicts, breaches or defaults which in the aggregate would not
materially hinder or impair the consummation of the transactions contemplated
hereby.
3.4 Investment Intent. SONIC FOUNDRY is acquiring the Shares solely for its
own account and not with a view to a sale or distribution thereof in violation
of any securities laws. SONIC FOUNDRY acknowledges that it has received, or has
had access to, all information which it considers necessary or advisable to
enable it to make a decision concerning its purchase of the Shares, provided
that the foregoing shall not limit or otherwise affect the rights or remedies of
SONIC FOUNDRY hereunder with respect to the breach of any representations,
warranties, covenants or agreements of JEDOR contained herein.
3.5 Consents. Except as set forth in the Disclosure Schedule, no consent,
approval or authorization of, exemption by, or filing with, any governmental or
regulatory authority is required in connection with the execution, delivery and
performance by SONIC FOUNDRY of this Agreement or the consummation by SONIC
FOUNDRY of the transactions contemplated hereby, excluding, however, consents,
approvals, authorizations, exemptions and filings, if any, which JEDOR is
required to obtain or make.
3.6 Title to Shares. The title of the Shares and options granted to the JEDOR
Principals contemplated by this Agreement will vest in each of them,
respectively, legal and valid title to the Shares, free and clear of all liens,
security interests, adverse claims or other encumbrances of any character
whatsoever ("Encumbrances") (other than restrictions on resales of the Shares
under applicable securities laws).
ARTICLE IV. CERTAIN COVENANTS OF THE PARTIES
JEDOR and the JEDOR Principals, on the one hand, and SONIC FOUNDRY, on the
other hand, hereby covenant to and agree with one another as follows:
4.1 Conduct of Business. Except as may be otherwise contemplated by this
Agreement or required by any of the documents listed in the Disclosure Schedule
or except as SONIC FOUNDRY may otherwise consent to in writing (which consent
shall not be unreasonably withheld), between the date hereof and the Closing
Date:
(a) JEDOR will (i) operate its businesses only in the ordinary course (for
purposes of this Agreement, the current oral agreement with Avion International
under which JEDOR or the JEDOR Principals provide Website development and
maintenance services shall be deemed to be in the ordinary course of business);
(ii) use its best efforts to preserve the business organization of JEDOR as a
whole intact; (iii) maintain its properties, machinery and equipment in
sufficient operating condition and repair to enable JEDOR to operate its
business in the manner in which it was operated immediately prior to the date
hereof, except for maintenance required by reason of fire, flood or other acts
of God (except that any insurance proceeds paid by reason of any such casualty
after the date hereof shall be applied towards such maintenance); (iv) continue
all of the Insurance Policies (or comparable insurance) in full force and
effect; (v) use its best efforts to keep available until the Closing Date the
services of their present officers and key employees; (vi) pay its accounts
payable and all other obligations in the ordinary course of business; and (vii)
use its best efforts to preserve its relationships with its material lenders,
suppliers, customers, licensors and licensees and others having material
business dealings with JEDOR such that the business will not be impaired; and
(b) JEDOR and the JEDOR Principals will cause JEDOR not to (i) make any change
in its charter of incorporation, By-Laws or similar charter documents; (ii) make
any change in its issued or outstanding capital stock, or issue any warrant,
option or other right to purchase shares of its capital stock or any security
convertible into shares of its capital stock, or redeem, purchase or otherwise
acquire any shares of its capital stock, or declare any dividends or make any
other distribution in respect of its capital stock; (iii) voluntarily incur or
assume, whether directly or by way of guarantee or otherwise, any material
obligation or liability, except obligations and liabilities incurred in the
ordinary course of business; (iv) mortgage, pledge or encumber any material part
of their properties or assets, tangible or intangible; (v) sell or transfer any
material part of their assets, property or rights, or cancel any material debts
or claims; (vi) amend or terminate any JEDOR Contract or any Material Permit to
which it is a party, except in the ordinary course of business pursuant to the
terms of such Agreement; (vii) make any material change in any JEDOR benefit
plans, except as required by law and except for changes made in the ordinary
course of business in accordance with its customary practices (including
increases in compensation and benefits after normal periodic performance
reviews); (viii) make any changes in the accounting methods, principles or
practices employed by them, except as required by generally accepted accounting
principles; (ix) make any capital expenditure or enter into any commitment
therefor; (x) incur any debt or make any borrows, or enter into any commitment
therefor; or (xi) enter into any other agreement, course of action or
transaction material to JEDOR and the Subsidiaries except in the ordinary course
of business.
4.2 Undertakings. JEDOR, the JEDOR Principals, and SONIC FOUNDRY will use
their best efforts, and will cooperate with one another, to secure all necessary
consents, approvals, authorizations and exemptions from governmental agencies
and other third parties, and to obtain the satisfaction of the conditions
specified in Articles VI and VII, as shall be required in order to enable JEDOR
and SONIC FOUNDRY to effect the transactions contemplated hereby in accordance
with the terms and conditions hereof.
4.3 Access. Subject to compliance by SONIC FOUNDRY with the provisions of
Section 4.4, from the date of this Agreement to the Closing Date, JEDOR and the
JEDOR Principals shall (i) provide SONIC FOUNDRY with such information as SONIC
FOUNDRY may from time to time request with respect to JEDOR and the transactions
contemplated by this Agreement, (ii) provide SONIC FOUNDRY and its officers,
counsel and other authorized representatives reasonable access during regular
business hours and upon reasonable notice to the properties, books, and records
of JEDOR, or as SONIC FOUNDRY may otherwise from time to time reasonably
request, and (iii) permit SONIC FOUNDRY to make such inspections thereof as
SONIC FOUNDRY may reasonably request.
4.4 Confidentiality. (a) Unless and until the Closing is consummated, SONIC
FOUNDRY or JEDOR, the JEDOR Principals or the Subsidiaries, as the case may be
(the "Recipient"), will keep confidential any information which has been
furnished to it by or on behalf of JEDOR, or by or on behalf of SONIC FOUNDRY,
as the case may be (the "Provider"), in connection with the transactions
contemplated by this Agreement ("Confidential Information"), and shall use the
Confidential Information solely in connection with the transactions contemplated
by this Agreement. If this Agreement is terminated, the Recipient will return
all Confidential Information to the Provider and either destroy any writings
prepared by or on behalf of the Recipient based on Confidential Information or
deliver such writings to the Provider. Confidential Information does not
include information which (i) is or becomes (but only when it becomes) generally
available to the public other than as a result of disclosure in violation of
this Section 4.4, or (ii) is or becomes (but only when it becomes) available to
the Recipient on a non-confidential basis from a source other than the Provider,
or any of its agents or advisors or employees, provided that such source is not
bound by a confidentiality agreement with the Provider in respect thereof.
(b) The Recipient may disclose Confidential Information to any of its directors,
officers, employees, agents, advisors and, in the case of SONIC FOUNDRY, its
prospective lenders and equity participants who need to know such Confidential
Information in connection with the transactions contemplated by this Agreement;
provided that, prior to making such disclosure, the Recipient shall inform all
such persons and entities of the confidential nature of such Confidential
Information and such persons and entities shall agree, for the benefit of the
Provider, to be bound by the terms and conditions of this Section 4.4. In any
event, the Recipient will be responsible for damages incurred by the Provider
arising from any breach of this Section 4.4 by any person or entity to whom
Confidential Information shall have been furnished. The Recipient may disclose
Confidential Information if required by legal process or by operation of
applicable law (but only to the extent so required), provided that such JEDOR
shall first promptly notify SONIC FOUNDRY thereof so that SONIC FOUNDRY may seek
an appropriate protective order and/or waive compliance by such JEDOR with the
provisions of this Section 4.4.
4.6 Exclusivity. SONIC FOUNDRY shall have the exclusive right through the
close of business on February 20, 2000 (or such later date as the term of this
Agreement may be extended by the parties hereto in writing) to consummate the
transactions contemplated herein, and during such exclusive period, neither
JEDOR nor any of their authorized representatives will solicit or accept
any other offer to purchase any of the capital stock or all or any significant
part of the assets of JEDOR or any similar transaction nor hold discussions or
negotiations with, or provide any information to, any other individual or
corporation, partnership or other entity concerning such purchase (other than
such discussions which are in furtherance of the transactions contemplated
herein).
ARTICLE V. COVENANTS RELATING TO THE SHARES
5.1 Preemptive Rights. JEDOR shall not issue to a party other than SONIC
FOUNDRY additional shares of any class of capital stock with general voting
rights for the election of directors ("Voting Stock") (other than pursuant to a
stock dividend or other distribution of its shares of its voting capital stock
to all of JEDOR's stockholders in accordance with their proportionate
shareholdings in JEDOR so that such holdings continue immediately after such
issuance to be in the same proportion), SONIC FOUNDRY shall have the right
("Preemptive Right") to purchase shares of Voting Stock so that, immediately
following its purchase and such issuance of Voting Stock, SONIC FOUNDRY shall
own the same percentage of shares of JEDOR's general voting capital stock for
the election of directors as it had owned immediately prior to the proposed
issuance.
ARTICLE VI. CONDITIONS TO SONIC FOUNDRY'S OBLIGATIONS
The obligations of SONIC FOUNDRY to consummate the transactions
contemplated hereby shall be subject to the satisfaction on or prior to the
Closing Date of all of the following conditions, except such conditions as SONIC
FOUNDRY may waive:
6.1 Representations, Warranties and Covenants of JEDOR. JEDOR shall have
complied in all material respects with all of its agreements and covenants
contained herein required to be complied with at or prior to the Closing Date,
and all the representations and warranties of JEDOR contained herein shall be
true on and as of the Closing Date with the same effect as though made on and as
of the Closing Date, except as otherwise contemplated hereby, and except to the
extent that such representations and warranties expressly make reference to a
specified date and as to such representations and warranties the same shall
continue on the Closing Date to have been true as of the specified date. All
items supplied or which should have been supplied in the Disclosure Schedule
shall be satisfactory to SONIC FOUNDRY in its sole discretion. SONIC FOUNDRY
shall have received a certificate executed by or on behalf of JEDOR, and dated
as of the Closing Date, certifying as to the fulfillment of the conditions set
forth in this Section 6.1.
6.2 Further Action. All action (including notifications and filings) that
shall be required to be taken by JEDOR in order to consummate the transactions
contemplated hereby shall have been taken and all consents, approvals,
authorizations and exemptions from third parties that shall be required in order
to enable JEDOR to consummate the transactions contemplated hereby shall have
been duly obtained (except for such actions, consents, approvals, authorizations
and exemptions, the absence of which would not prohibit consummation of such
transactions or render such consummation illegal), and, as of the Closing Date,
the transactions contemplated
hereby shall not violate any applicable law or governmental regulation.
6.3 No Governmental or Other Proceeding. No order of any court or governmental
or regulatory authority or body which restrains or prohibits the transactions
contemplated hereby shall be in effect on the Closing Date and no suit or
investigation by any government agency to enjoin the transactions contemplated
hereby or seek damages or other relief as a result thereof shall be pending or
threatened as of the Closing Date.
6.4 Opinion of JEDOR's Counsel. SONIC FOUNDRY shall have received the opinion
of JEDOR's counsel, substantially in the form of Exhibit C hereto. In
expressing such opinions, such counsel may rely (i) as to factual matters upon
the representations and warranties of the JEDOR Principals contained in this
Agreement and upon certificates or other documents furnished by JEDOR, by the
officers and directors of JEDOR or by governmental officials and (ii) upon such
other documents (including opinions of local counsel) and information as such
counsel deem appropriate and reasonable as a basis for such opinion.
6.5 Delivery of Shares. SONIC FOUNDRY shall have received certificates
representing the Shares.
6.6 Resignations. SONIC FOUNDRY shall have received the resignations of all
the officers and directors of JEDOR.
ARTICLE VII. CONDITIONS TO JEDOR'S OBLIGATIONS
The obligations of JEDOR to consummate the transactions contemplated hereby
shall be subject to the satisfaction on or prior to the Closing Date of all of
the following conditions, except such conditions as JEDOR may waive:
7.1 Representations, Warranties and Covenants of SONIC FOUNDRY. SONIC FOUNDRY
shall have complied in all material respects with all of its agreements and
covenants contained herein required to be complied with at or prior to the
Closing Date, and of the representations and warranties of SONIC FOUNDRY
contained herein shall be true in all material respects on and as of the Closing
Date with the same effect as though made on and as of the Closing Date, except
as otherwise contemplated hereby, and except to the extent that such
representations and warranties expressly make reference to a specified date and
as to such representations and warranties the same shall continue on the Closing
Date to have been true as of the specified date. JEDOR shall have received a
certificate of SONIC FOUNDRY, dated as of the Closing Date and signed by an
officer of SONIC FOUNDRY, certifying as to the fulfillment of the condition set
forth in this Section 7.1, and an opinion of counsel of SONIC FOUNDRY
substantially in the form of Exhibit D.
7.2 Further Action. All action (including notifications and filings) that
shall be required to be taken by SONIC FOUNDRY in order to consummate the
transactions contemplated hereby shall have been taken and all consents,
approvals, authorizations and exemptions from third parties that shall be
required in order to enable JEDOR to consummate the transactions contemplated
hereby shall have been duly obtained (except for such actions, consents,
approvals, authorizations and exemptions, the absence of which would not
prohibit consummation of such transactions or render such consummation illegal),
and, as of the Closing Date, the transactions contemplated hereby shall not
violate any applicable law or governmental regulation.
7.3 No Governmental or Other Proceeding. No order of any court or governmental
or regulatory authority or body which restrains or prohibits the transactions
contemplated hereby shall be in effect on the Closing Date and no suit or
investigation by any government agency to enjoin the transactions contemplated
hereby or seek damages or other relief as a result thereof shall be pending or
threatened in writing as of the Closing Date.
ARTICLE VIII. SURVIVAL AND INDEMNIFICATION
8.1 Survival. The representations, warranties, covenants and agreements
contained herein to be performed or complied with after the Closing shall
survive without limitation as to time, unless the covenant or agreement
specifies a term, in which case such covenant or agreement shall survive until
the expiration of such specified term. A claim for indemnification by a party
against the other under this Article VIII for inaccuracy in a representation or
warranty or breach of any covenants and agreements contained herein must be
asserted in writing and in accordance with Section 8.3 prior to the expiration
of the applicable time period referenced above, following which the same shall
be barred for all purposes. If written notice of a claim for indemnification is
given in accordance with Section 8.3 prior to the expiration of the applicable
time period referenced above, then the representation, warranty, covenant, or
agreement applicable to such claim shall survive until, but only for purposes
of, resolution of such claim.
8.2 Indemnification. Subject to the provisions of Section 8.1, from and after
the Closing, JEDOR, SONIC FOUNDRY, and the Jedor Principals, jointly and
severally shall indemnify and hold harmless the other (the party seeking
indemnification being referred to as the "Indemnified Party") from and against
any and all claims, losses, liabilities and damages, including, without
limitation, amounts paid in settlement, reasonable costs of investigation and
reasonable fees and disbursements of counsel, arising out of or resulting from
the inaccuracy of any representation or warranty, or the breach of any covenant
or agreement, contained herein or in any instrument or certificate delivered
pursuant hereto, by the party against whom indemnification is sought (the
"Indemnifying Party"); all of JEDOR and the JEDOR Principals being considered
one Indemnifying Party for these purposes. An Indemnified Party shall make no
claims against an Indemnifying Party for indemnification with respect to the
representations and warranties contained herein or in any Certificate or the
covenants and agreements contained in Section 4.1, (a) unless and until the
aggregate amount of such claims against the Indemnifying Party exceeds $5,000 US
(the "Deductible"), whereupon the Indemnified Party may claim indemnification
for the amounts of such claims, or any portion thereof, exceeding the
Deductible.
8.3 Notice of Claim. The Indemnified Party shall promptly notify the
Indemnifying Party in writing of any claim for indemnification, specifying in
detail the basis of such claim, the facts pertaining thereto and, if known, the
amount, or an estimate of the amount, of the liability arising
therefrom. The Indemnified Party shall provide to the Indemnifying Party as
promptly as practicable thereafter all information and documentation necessary
to support and verify the claim asserted and the Indemnifying Party shall be
given reasonable access to all books and records in the possession or control of
the Indemnified Party or any of its affiliates which the Indemnifying Party
reasonably determines to be related to such claim.
8.4 Defense. If the facts giving rise to a right to indemnification arise out
of the claim of any third party, or if there is any claim against a third party,
the Indemnifying Party may assume the defense or the prosecution thereof,
including the employment of counsel, at its cost and expense. The Indemnified
Party shall have the right to employ counsel separate from counsel employed by
the Indemnifying Party in any such action and to participate therein, but the
fees and expenses of such counsel employed by the Indemnified Party shall be at
its expense. The Indemnifying Party shall not be liable for any settlement of
any such claim effected without its prior written consent which consent shall
not be unreasonably withheld. Whether or not the Indemnifying Party does choose
to so defend or prosecute such claim, all the parties hereto shall cooperate in
the defense or prosecution thereof and shall furnish such records, information
and testimony, and attend at such conferences, discovery proceedings, hearings,
trials and appeals, as may be reasonably requested in connection therewith. The
Indemnifying Party shall be surrogate to all rights and remedies of the
Indemnified Party to the extent of any indemnification provided hereunder.
ARTICLE IX. TERMINATION PRIOR TO CLOSING
9.1 Termination of Agreement. This Agreement may be terminated at any time
prior to the Closing:
(i) By the mutual written consent of SONIC FOUNDRY and the JEDOR Principals;
or
(ii) By SONIC FOUNDRY or JEDOR in writing if the Closing shall not have
occurred on or before February 20, 2000, or such other date to which the
Agreement has been extended pursuant to Section 1.2;
(iii) By either party, against the other, if one or the other, as the case may
be, shall (x) fail to perform in any material respect its agreements contained
herein required to be performed prior to the Closing Date, or (y) materially
breach any of its representations, warranties, covenants or agreements contained
herein, which failure or breach is not cured within (five) days after the party
seeking to terminate has notified the other party of its intent to terminate
this Agreement pursuant to this clause.
(iv) By SONIC FOUNDRY in writing, if any item supplied or which should have
been supplied in the Disclosure schedule shall not be satisfactory as SONIC
FOUNDRY in its sole discretion shall determine.
(v) By Sonic Foundry, in writing, if SONIC FOUNDRY, in its sole discretion,
shall determine: that JEDOR has not materially complied with any provision of
Article II above, or
that any provision or item supplied by JEDOR in the Disclosure Schedule, or any
provision or item which should have been supplied, is not satisfactory.
9.2 Termination of Obligations. Termination of this Agreement pursuant to this
Article IX shall terminate all obligations of the parties hereunder, except for
the obligations under Sections 4.4 and 10.6; provided, however, that termination
pursuant to clause (ii) or (iii) of Section 9.1 shall not relieve the defaulting
or breaching party from any liability to the other party hereto resulting from
its willful breach of this Agreement.
ARTICLE X. MISCELLANEOUS
10.1 Entire Agreement. This Agreement (including the Disclosure Schedule)
constitutes the sole understanding of the parties with respect to the subject
matter hereof. No amendment, modification or alteration of the terms or
provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the parties hereto.
10.2 Successors and Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors of the
parties hereto; provided, however, that this Agreement may not be assigned by
any party without the prior written consent of the other party hereto, except
that SONIC FOUNDRY may, at its election and without the prior written consent of
JEDOR, assign this Agreement to any direct or indirect wholly-owned subsidiary
or any other affiliate of SONIC FOUNDRY so long as the representations and
warranties of SONIC FOUNDRY made herein are equally true of such assignee. If
this Agreement is assigned with such consent or pursuant to such exceptions, the
terms and conditions hereof shall be binding upon and shall inure to the benefit
of the parties hereto and their respective assigns; provided, however, that no
assignment of this Agreement or any of the rights or obligations hereof shall
relieve any party of its obligations under this Agreement. With the exception of
the parties to this Agreement, (except as set forth in Article V) there shall
exist no right of any person to claim a beneficial interest in this Agreement or
any rights occurring by virtue of this Agreement.
10.3 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall for all purposes be deemed to be an original and all of
which shall constitute the same instrument.
10.4 Headings. The headings of the Sections and paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction hereof.
10.5 No Waiver. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto, will be deemed to constitute
a waiver by the party taking any action of compliance with any representation,
warranty or agreement contained herein. The waiver by any party hereto of any
condition or of a breach of any other provision of this Agreement will not
operate or be construed as a waiver of any other condition or subsequent
breach. The waiver by any party of any of the conditions precedent to its
obligations under the Agreement will not preclude it from seeking redress for
breech of this Agreement other than with respect to the condition so waived.
10.6 Expenses. JEDOR, the JEDOR Principals and SONIC FOUNDRY shall each pay
all costs and expenses incurred by it or on its behalf in connection with this
Agreement and the transactions contemplated hereby, including, without limiting
the generality of the foregoing, fees and expenses of its own financial
consultants, accountants and counsel.
10.7 Notices. Any notice, request, instruction or other document (each, a
"notice") to be given hereunder by any party hereto to any other party hereto
shall be in writing and delivered personally or sent by registered or certified
mail, postage prepaid,
if to SONIC FOUNDRY, to: Sonic Foundry, Inc., 000 Xxxxxxxxxx Xxxxxx,
Xxxxxxx, XX 00000, ATTN: Xxxxx Xxxxxxxxxxx,
Chief Executive Officer.
with a copy to: Xxxxx X. Xxxxx;, Esq., XxXxxxx, XxXxxxx &
Xxxxx, 00 X. Xxxxxx Xxxxx, Xxxx 0000, Xxxxxxx
IL 60606
if to JEDOR, to: Jedor, Inc., 000 Xxxx Xx., X., Xxxxxxxx, XXX
X0X 0X0 Xxxxxx
if to the Selling Shareholders,
to them c/o: Xxxxx Xxx, Esq., Xxx, Xxxxxxx & Xxxxxxx,
000 Xxx Xx., Xxxx, Xxxxxxxx, Xxx, X0X 0X0
Telefax 519/ 884-7390
10.8 Further Assurances. From and after the Closing Date, each party, at the
request of the other party and at the requesting party's expense, will each take
all such action and deliver all such documents as shall be reasonably necessary
or appropriate to confirm and vest title to the Shares in SONIC FOUNDRY and
otherwise enable SONIC FOUNDRY and JEDOR to enjoy the respective benefits
contemplated by this Agreement.
10.9 Governing Law. The validity, performance and enforcement of this
Agreement and any agreement entered into pursuant hereto, unless expressly
provided to the contrary, will be governed by the Laws of Wisconsin, without
giving effect to the principles of conflicts of law thereof.
10.10 Consent to Jurisdiction. Each of SONIC FOUNDRY and JEDOR (a) consents
and submits to the jurisdiction of the Courts of Wisconsin and of the Courts of
the United States for a judicial district within the territorial limits of
Wisconsin for all purposes of this Agreement and any Ancillary Document to which
it is a party, including, without limitation, any action or
proceeding instituted for the enforcement of any right, remedy, obligation or
liability arising under or by reason hereof and thereof; (b) consents a submits
to the venue of such action or proceeding in Dane County, Wisconsin (or such
judicial district of a Court of the United States as will include the same); (c)
irrevocably appoints SONIC FOUNDRY as its attorney-in-fact and agent in its
name, place and stead to accept service of legal process in any such action or
proceeding; (d) consents that service of legal process in any such action or
proceeding may be made upon it by service upon SONIC FOUNDRY and by mailing a
copy thereof by certified mail, return receipt requested, postage prepaid, to
such party at its address specified in Section 10.7.
10.11 Public Announcements. JEDOR and SONIC FOUNDRY shall consult with each
other before issuing any press releases or otherwise making any public
statements with respect to this Agreement and the transactions contemplated
hereby and shall not issue any such press release or make any public statement
prior to such consultation.
10.12 Specific Performance. SONIC FOUNDRY on the one hand, and JEDOR, on the
other hand, each acknowledges that the other will be irreparably harmed and that
there will be no adequate remedy at law in the event of a violation by it of any
of its covenants or agreements which are contained in this Agreement. It is
accordingly agreed that, in addition to any other remedies which may be
available upon the breach of such covenants and agreements, JEDOR or SONIC
FOUNDRY, as the case may be, shall have the right to obtain injunctive relief to
restrain any breach or threatened breach of, or otherwise to obtain specific
performance of, the other's covenants or agreements contained in this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf as of the date first above written.
SONIC FOUNDRY:
By:___________________________
Title:________________________
JEDOR:
By:___________________________
President
The JEDOR Principals
____________________________
Xxxxxx Xxxxxxxxx
____________________________
Anton Jedlovsky
____________________________
Xxxxx Xxx
