Sample Business Contracts


Wisconsin-Madison-613 Williamson Street Lease - The Seven J's Inc. and Sonic Foundry Inc.

Lease Forms

  • Start a state-specific lease for the rental of commercial property. Specify the term and rent due, as well as whether the landlord or tenant is responsible for property taxes, insurance, and maintenance and repairs.
  • When a tenant vacates commercial property before the lease term has expired, it may be able to rent the premises to a third party. The tenant would be the sublessor and the third party would be the sublessee. Besides preparing a sublease, both parties will want to review the provisions for assignment or subletting in the original lease agreement between the landlord and the sublessor.
  • Tenants of residential property should prepare a sublease agreement if they are seeking to sublease a room or the entire apartment or house to a third party. All parties should review the original lease agreement to see if there are any restrictions on subletting or assigning the premises.
  • Triple net leases are a type of commercial leases where the tenant has to pay for property taxes, insurance, utilities, and maintenance, in addition to the monthly rent.
  • When renting an office space, tenants should understand the amount of the rent and duration of the lease. Other important terms include whether the space can be subleased, which parties are responsible for maintenance, and whether any furniture and furnishings will be provided.

                                    L E A S E

         THIS LEASE (the "Lease") is entered into as of the 26th day of March,
1999, by and between The Seven J's, Inc., a Wisconsin Corporation ("Landlord"),
whose address is c/o Jeffrey D. Coatta, 816 Lexington Drive, Waunakee, Wisconsin
53597 and Sonic Foundry, Inc., a Maryland Corporation ("Tenant"), whose address
is 318 S. Livingston, Madison, Wisconsin  53703.

                                    ARTICLE I
                                 GRANT AND TERM

         SECTION 1.01. PREMISES. Landlord leases to Tenant, and Tenant leases
from Landlord, that portion of the office/retail building (the "Building")
located at 613 Williamson Street, Madison, Wisconsin 53703, now or hereafter to
be constructed which portion consists of an office or offices situated in the
basement, first and second floors of the Building and outlined on the site plan
attached as Exhibit A (the "Premises"), containing approximately 2,200 square
feet in the basement, 3,187 square feet on the first floor and 6,089 square feet
on the second floor, for a total of approximately Eleven Thousand Four Hundred
Seventy-Six (11,476) square feet. The Premises leased to Tenant do not include
the land under the Building or the roof or outer walls of the building or
buildings comprising the Building. Landlord reserves the right to place,
maintain, repair and replace utility lines, pipes, tunneling and the like in,
under, over, upon or through the Premises as may be reasonably necessary or
advisable for the servicing of the Premises or other existing or future portions
of the Office Building. Landlord further reserves the air rights above the
Premises and the Office Building for Landlord's use. No rights or licenses are
acquired by Tenant by implication or otherwise except as expressly set forth in
this Lease. Tenant, its employees, agents and invitees shall have access to the
Building and the Premises twenty-four (24) hours per day, and seven (7) days per
week.

         SECTION 1.02. LEASE TERM. The term of this Lease shall be for three (3)
Lease Years, unless terminated sooner pursuant to any of the provisions of this
Lease. The term of this Lease and Tenant's obligation to pay rent and other
charges due hereunder and to perform all other obligations set forth herein
shall begin on (i) July 1, 1999, or (ii) the date on which Tenant opens for
business in the Premises, whichever occurs first (the "Commencement Date").
Tenant may access the Premises for the purpose of completing its improvements
upon execution hereof. Tenant shall be responsible for all utility charges
beginning on the Commencement Date. The term of this Lease shall end on the last
day of the last full Lease Year unless terminated sooner pursuant to any of the
provisions hereof. The term "Lease Year" means a period of twelve (12)
consecutive calendar months. The first Lease Year shall begin on the
Commencement Date if that date is the first day of a calendar month, and, if
not, then on the first day of the first, full calendar month following the
Commencement Date.

                                       1
<PAGE>
 
         SECTION 1.03. SURRENDER. On the last day of the term of this Lease, or
any extension or renewal thereof, or on any sooner termination, Tenant shall
surrender the Premises in the same condition as the Premises existed on the
Commencement Date, broom clean, reasonable wear and tear excepted, and shall
surrender all keys to Landlord.

         SECTION 1.04. RIGHT OF ENTRY. Landlord and its authorized
representatives shall have the right to enter the Premises at all reasonable
times upon reasonable notice to Tenant under the circumstances then existing
(except in cases of emergencies) or at any time during or after an emergency
without notice, for any lawful purpose, as Landlord may reasonably deem
necessary, without the same constituting an eviction of Tenant in whole or in
part, and rent shall not abate as a result of such entry. Nothing herein shall
imply any duty upon the part of Landlord to do any work or perform any other act
which Tenant may be required to perform under this Lease, and the performance
thereof by Landlord shall not constitute a waiver of Tenant's default in failing
to perform it. During the six (6) months prior to the expiration of the term of
this Lease, Landlord may place upon the Premises notice "To Let" or "For Rent."
If Tenant is not present to permit entry into the Premises, Landlord may, in
case of emergency, enter by master key, or may forcibly enter, without rendering
Landlord liable therefor.

         SECTION 1.05. OPTION TO EXTEND. Provided Tenant is not in default
hereunder, Tenant shall have one (1) option to extend this Lease for an extended
term of five (5) Lease Years. The option to extend shall be exercisable by
Tenant upon written notice to Landlord given on or before one hundred twenty
(120) days prior to the expiration of the original or any extended term. Each
extended term shall be governed by the terms, covenants and conditions of this
Lease.

                                   ARTICLE II
                                SECURITY DEPOSIT

         SECTION 2.01. AMOUNT OF DEPOSIT. Tenant shall pay a security deposit
equal to zero ($0.00). No interest on the deposit shall be due and payable by
Landlord, and the deposit may be commingled by Landlord with other funds. The
deposit shall not be trust funds in the hands of the Landlord. Landlord's
delivery of the security deposit to a purchaser of Landlord's interest in the
Premises, or to any successor to Tenant's interest in the Premises, shall
discharge Landlord from liability for the deposit.

                                   ARTICLE III
                                      RENT

         SECTION 3.01. BASE RENT.

                  (a) Tenant shall, for the entire term of this Lease, pay to
Landlord, at such place as Landlord may from time to time in writing designate,
an annual minimum rent (the "Base

                                       2
<PAGE>
 
Rent") in equal monthly installments, payable in advance on the first day of
each calendar month, without any set off, counterclaim or deduction whatsoever
or any prior demand. Commencing with the Commencement Date of this Lease, and
continuing on the first day of each month during the first Lease Year, the Base
Rent shall be equal to $17.00 per square foot of Rentable Floor Area, as that
term is defined below, for the second floor premises and $16.00 per square foot
of Rentable Floor Area for the first floor premises. There shall be no rental
charged for the basement premises provided, however, that the basement premises
may only be used for limited access storage purposes.

                  (b) Base Rent for any Lease Year after the first Lease Year,
including any Lease Year of the Extended Term, if this Lease has been extended,
shall be increased by an amount equal to 3% of the previous year's Base Rent.

                  (c) For the purposes of calculating the yearly and monthly
amount of Tenant's Base Rent, the Rentable Floor Area of the Tenant's Premises
shall be calculated by Landlord's architect, in accordance with the following
definition: Rentable Floor Area shall be equal to the square foot area of all
floor space within the Tenant's Premises as measured from the dominant portion
of the interior surfaces of exterior building walls, and the exterior surface of
interior walls of the Premises. No deduction shall be made for columns, stairs
or interior construction, fixtures or equipment.

         SECTION 3.02. ADDITIONAL RENT. Tenant shall also pay to Landlord, at
such place as Landlord may from time to time in writing designate, as additional
rent (the "Additional Rent"), (i) Tenant's proportionate share of Real Estate
Taxes (as defined in subsection (b), below) and Parking Lot Rent (as defined in
subsection (c) below), and (ii) the Other Costs and Expenses (as defined in
subsection (d), below), due from or chargeable to Tenant under this Lease, at
the times herein specified, without any set off, counterclaim or deduction
whatsoever or any prior demand.

                  (a) Tenant's Proportionate Share. As used herein, Tenant's
proportionate share of Real Estate Taxes shall be the total amount of the
increase in Real Estate Taxes for any period subsequent to calendar year 2000,
or that calendar year which is subsequent to the calendar year in which Full
Occupancy, as that term is defined below, occurs, multiplied by a fraction the
numerator of which shall be the number of Rentable Floor Area of the Premises
calculated in accordance with Section 3.01(c) and the denominator of which shall
be the number of square feet of Rentable Floor Area within the entire Building.
For the Purposes of this section, the definition of "Rentable Floor Area"
contained in Section 3.01 (c), above, shall be applied to the entire area of all
floor space within the Building that is leased or leasable and that is either
occupied, or can be readied for occupancy within sixty (60) days, and shall
include floor area on all levels, including mezzanines, except the basement
space. No deduction shall be made for columns, stairs or interior construction,
fixtures or equipment. Any changes in Rentable Floor Area shall be deemed in
effect on the first day of the next succeeding month following such change. As
used herein, the term "Full

                                       3
<PAGE>
 
Occupancy" shall mean that 80% of all Rentable Floor Area of the Building has
been leased. The first payment of Tenant's proportionate share of the increase
in Real Estate Taxes shall be payable on or before fifteen (15) days after
receipt of a bill for the same from Landlord. The first tax year for which such
a bill could be generated is the year 2001.

                  (b) Real Estate Taxes. As used herein, the term "Real Estate
Taxes" shall include all taxes, charges, and assessments, general and special,
of every nature and kind whatsoever, levied, assessed, imposed, due or payable
against the land, buildings and all other improvements within the Building
including, but not limited to, those relating to or arising from the improvement
or maintenance of adjoining streets or pedestrian walkways, and all water and
sewage charges levied, assessed, imposed, due or payable during the term of the
Lease, whether such tax, charge or assessment shall be for city, county, state,
federal or any political subdivision thereof, or any other purpose whatsoever,
together with any costs and fees incurred by Landlord in contesting or
negotiating the same. Should any governmental agency or political subdivision
impose any taxes or assessments, whether or not now customary or within the
contemplation of the parties hereto, including a sales, use or other tax levy on
rental receipts, either by way of substitution for taxes or assessments
presently levied and assessed against the land, buildings, or any other
improvements within the Building, or otherwise, such taxes and assessments shall
be deemed to constitute a tax or assessment for the purposes of this section.
Copies of tax bills submitted by Landlord to Tenant shall be conclusive of the
amount levied or assessed as Real Estate Taxes.

                  (c) Parking Lot Rent. Landlord covenants and agrees to provide
Tenant with twenty-two (22) reserved parking stalls in the parking lot
immediately adjoining the Building at such location in the lot as will be
designated by Landlord. The parking lot rent shall be equal to $60.00 per month
for each of the parking stalls leased to Tenant. The parking stall rent as set
forth in the immediately preceding sentence shall be payable on a monthly basis,
in advance, commencing on the Commencement Date. On the first day of the second
Lease Year, and on the first day of each Lease Year thereafter, including any
Lease Year during any extended term, the parking lot rent shall be increased by
an amount equal to 3% of the parking lot rent for the previous Lease Year,
payable on a monthly basis. All parking stalls which are located in the parking
lot adjoining the Building shall be guaranteed available to Tenant during normal
business hours, which shall be 7:00 o'clock a.m. to 5:30 o'clock p.m.

                  (d) Other Costs and Expenses. As used herein, the term "Other
Costs and Expenses" shall include any and all amounts to be paid by Tenant to
Landlord under the terms of this Lease other than Base Rent or Tenant's
proportionate share of the increase in Real Estate Taxes. All such other costs
and expenses shall be due and payable to Landlord on or before fifteen (15) days
after written demand.

                                       4
<PAGE>
 
                                   ARTICLE IV
                            ALTERATIONS AND ADDITIONS

         SECTION 4.01. ALTERATIONS. Tenant shall not, without Landlord's prior
written consent, which shall not be unreasonably withheld, make any alterations,
improvements, additions or utility installations upon the Premises, except for
minor nonstructural alterations. The term "utility installations," as used
herein, shall include without limitation power panels, space heaters,
fluorescent fixtures, conduits and wiring.

         SECTION 4.02. LANDLORD'S WORK. Landlord shall, at its expense, perform
or cause to be performed the construction work on the Premises specifically
enumerated on the attached Exhibit B as Landlord's Work; and hereby assigns to
Tenant, effective as of the Commencement Date, any warranties that Landlord may
have procured from its contractors respecting any item of Landlord's Work.
Landlord, at its expense, shall make the foregoing improvements to the Premises
in accordance with the plans and the specifications provided by Tenant. The
improvements shall be completed in a good and workmanshiplike manner, and shall
comply with all applicable laws, ordinances, rules and regulations of
governmental authorities having jurisdiction. Landlord warrants that on the
Commencement Date, the Premises will comply with all applicable laws,
ordinances, rules and regulations of such governmental authorities with respect
to Landlord's Work and any other work which Landlord has performed with respect
to the Premises. During the term of this Lease, Landlord shall comply with all
applicable laws, rules and regulations regarding the Premises, subject to
Tenant's rights and obligations hereunder, and the Building.

         SECTION 4.03. TENANT'S WORK. With the exception of the items
specifically enumerated in Exhibit B as Landlord's Work, Tenant shall, at
Tenant's expense, perform all work and supply all installations described in
Exhibit C ("Tenant's Work") and shall fully equip the Premises with all trade
fixtures, furniture, furnishings, special equipment and other items necessary
for the completion of the Premises and the proper and efficient operation of
Tenant's business in accordance with Tenant's plans and specifications as
approved by Landlord. All materials, fixtures and furnishings installed by
Tenant shall be of first class quality, fully paid for by Tenant and shall
conform to the general design and character of the Office Building. Tenant shall
not undertake any of Tenant's Work or fixture, furnish or decorate the Premises
without Landlord's prior written consent to plans and specifications therefor, a
complete set of which shall be submitted to Landlord for review, approval and
initialing. Thereafter, no changes shall be made in Tenant's plans and
specifications without the written consent of Landlord. Commencing upon
execution hereof, Tenant may have access to the Premises for completion of
Tenant's Work, and thereafter shall diligently complete its construction in a
good and workmanlike manner as provided in accordance with all applicable
federal, state and municipal regulations. Tenant shall do nothing to create any
work stoppage, picketing or other labor disruption. Landlord reserves the right
to approve Tenant's general contractor and subcontractors, and such approval
shall not constitute a waiver of Tenant's obligations hereunder. Landlord
further reserves the right to

                                       5
<PAGE>
 
direct Tenant to locate any unusually heavy items to be located within the
Premises to such areas within the Premises that are particularly reinforced.

         SECTION 4.04. CONSTRUCTION LIENS. Any of Tenant's Work which is not
paid for out of Landlord's Allowance, as that term is defined in Exhibit "C,"
shall be paid by Tenant when due, and Tenant agrees to indemnify, defend and
hold Landlord harmless from, all claims for labor or materials furnished or
alleged to have been furnished to Tenant for use in the Premises, which claims
are or may be secured by any construction lien against the Premises or any
interest therein, arising out of such work. Tenant shall not permit any liens
under the construction lien law to be filed against the Premises or any interest
therein and shall immediately obtain a release from any lien so filed. Nothing
in the Lease shall be construed in any way as constituting the consent or
request of Landlord to any contractor, subcontractor, laborer, or materialman
for the performance of any labor or the furnishing of any materials for any
alteration, addition, improvement or repair to the Premises or any other part of
the Building nor as giving Tenant any right, power or authority to contract for
or permit the rendering of services or the furnishing of materials that would
give rise to the filing of a construction lien against the Premises or the
Building.

         SECTION 4.05. REMOVAL OF IMPROVEMENTS. All items of Landlord's Work,
all heating and air conditioning equipment and any other fixtures, trade
fixtures, improvements or equipment paid for by Landlord, and all alterations
and other improvements thereto by Tenant, shall become the property of Landlord
and shall not be removed from the Premises. All trade fixtures, furniture,
furnishings and signs installed in the Premises by Tenant and paid for by Tenant
shall remain the property of Tenant and may be removed upon the expiration or
termination of this Lease; provided that any of such items as are affixed to the
Premises and require severance may be removed only if Tenant repairs any damage
caused by such removal and that Tenant shall have fully performed all of the
terms, conditions and covenants to be performed by Tenant under this Lease. If
Tenant fails to remove such items from the Premises by the expiration of, or
earlier termination of Tenant's right to possession of the Premises, all such
trade fixtures, furniture, furnishings and signs shall become the property of
Landlord, unless Landlord elects to require their removal, in which case Tenant
shall, at its sole cost and expense, promptly remove the same and restore the
Premises to the condition existing just prior to the removal. The covenants
contained in this Section shall survive the expiration or termination of this
Lease.

                                    ARTICLE V
                             REPAIRS AND MAINTENANCE

         SECTION 5.01. LANDLORD'S OBLIGATIONS. Landlord shall keep the exterior
of the Building and the foundations, roof, and structural portions of the walls
of the Premises (except interior walls erected by Tenant or by Landlord as
Landlord's Work) and all building equipment such as elevators and plumbing,
electrical, heating and air conditioning equipment in good condition and repair
except for repairs required thereto by reason of the

                                       6
<PAGE>
 
acts or omissions of Tenant, Tenant's employees, agents, invitees, licensees or
contractors. Tenant shall give Landlord written notice of the need for any such
repairs to be made by Landlord. Except for Landlord's negligence in actually
completing, once commenced, any repairs required of Landlord hereunder, Landlord
shall have no liability whatsoever for any damage or injury, however caused,
arising out of Landlord's failure to make such repairs, if, within a reasonable
time following receipt of such notice, Landlord commences reasonable efforts to
make such repairs and diligently prosecutes the completion of the same. Landlord
shall also be responsible for the maintenance and repair of the Common Areas (as
defined in Section 6.02). As used in this section, the term "repairs" shall
include replacements and other improvements as are necessary to maintain the
property in good order and condition. If Landlord is required to make exterior
or structural repairs or repairs to equipment by reason of Tenant's acts or
omissions, Landlord shall have the right, but shall not be obligated, to make
such repairs or replacements on behalf of and for the account of Tenant. In such
event, such work shall be paid for in full by Tenant as Additional Rent in
accordance with Section 3.02. The provisions of this Section shall not apply in
the case of damage or destruction by fire or other casualty or by condemnation,
in which events the obligations of Landlord shall be controlled by Articles IX
and X, respectively.

         SECTION 5.02. TENANT'S OBLIGATIONS. Except as provided in Section 5.01,
Tenant shall keep the Premises and every part thereof and any fixtures,
facilities or equipment contained therein, in good condition and repair,
including, but not limited to, interior doors and window frames, and shall make
any replacements thereof and of all broken and cracked interior glass and of
lamps, bulbs, tubes, starters and ballasts which may become necessary during the
term of this Lease.

                                   ARTICLE VI
                                  COMMON AREAS

         SECTION 6.01. USE OF COMMON AREAS. Use by Tenant of the Premises shall
include the non-exclusive use, in common with others, of the Common Areas, as
defined herein, and subject to the provisions of Section 6.02.

         SECTION 6.02. CONTROL OF COMMON AREAS. Tenant shall have the reasonable
non-exclusive right to use, under a revocable license and not as a part of the
Premises (and in common with Landlord and other tenants of the Building and all
others to whom Landlord has or may hereafter grant rights to use the same) such
parking lots (subject to the limitation on the number of stalls Tenant may use
as contained in paragraph 3.02(c), above), sidewalks, driveways, public and
common washrooms, elevators, stairways, corridors and other common areas and
facilities as may from time to time exist and be generally available to all
occupants of the Building (the "Common Areas"). Landlord shall at all times have
full control, management and direction of the Common Areas and reserves the
right at any time and from time to time to reduce, increase, enclose or
otherwise change the size, number, location, layout and nature of the Common
Areas so as to construct additional rentable areas

                                       7
<PAGE>
 
through use and/or enclosure of the Common Areas, to place signs on the Building
and to make reasonable uniform rules for the use thereof and for the conduct of
tenants in the Building; provided, however, that Landlord shall not impair
access to the Premises or make the Premises less desirable or attractive.

                                   ARTICLE VII
                               COVENANTS OF TENANT

         SECTION 7.01. USE OF PREMISES. Tenant covenants and agrees that it
shall continuously and without interruption use and occupy the entire Premises
(and not less than one hundred percent (100%) of the Premises) solely as a
business or professional office and for no other purpose. Tenant's business in
the Premises shall be conducted under the following trade name: Sonic Foundry,
Inc..

         SECTION 7.02. OPERATION OF BUSINESS. Tenant, as a further inducement to
Landlord to enter into this Lease, covenants and agrees:

                  (a) Appearance. To keep the Premises clean and attractive in
appearance at all times and to keep any refuse in proper containers in the
interior of the Premises out of sight until the same is removed;

                  (b) Insurance. To neither do nor suffer anything to be done or
kept in or about the Premises which contravenes Landlord's insurance policies or
increases the premiums therefor;

                  (c) Sound; Odors. To permit no reproduction of sound which is
audible outside the Premises nor permit odors to be unreasonably dispelled from
the Premises provided, however, that the foregoing restriction on odors shall
not apply to any tenant which is a restaurant or food service;

                  (d) Parking. To park Tenant's vehicles and to require all
employees to park vehicles only in such places as may be designated from time to
time by Landlord for the use of Tenant and its employees;

                  (e) Loading. To load, unload and permit the loading or
unloading of merchandise, equipment or other property only from doors of the
Premises designated by Landlord for that purpose;

                  (f) Heating and Cooling. To separately pay for its own heating
and cooling service so as to adequately heat and cool the Premises;

                                       8
<PAGE>
 
                  (g) Solicitation. To solicit no business in the Common Areas,
nor distribute handbills or other advertising matter to customers, nor place the
same in or on automobiles in the Common Areas (including the Parking Facility);

                  (h) Compliance with Laws. To comply with all applicable
ordinances, rules, regulations, orders and requirements of all federal, state
and municipal governments which relate to the Premises or the business Tenant
conducts on or from the Premises, and with any direction, pursuant to law, of
any public officer which shall impose upon Tenant any duty with respect to the
Premises or the use and occupation thereof; and

                  (i) Compliance with Rules. To comply with rules, as they may
from time to time be established by Landlord for the use and care of the
Premises, the Common Areas, and other facilities and buildings that comprise the
Building and the Parking Facility.

         SECTION 7.03. SIGNS. Except provided in Section 7.07, Tenant covenants
and agrees that it shall not erect or install any sign, lettering or placards,
or place or permit to be placed any sign, advertising material or lettering upon
the interior surface of any door or window or any point inside the Premises from
which the same may be visible from outside the Premises, without Landlord's
prior, written consent, which consent shall not be unreasonably withheld.

         SECTION 7.04. UTILITIES SUPPLIED BY TENANT. Tenant covenants and agrees
that it shall be solely responsible and shall pay when due all charges for
utility meters, gas, electricity or any other utility whatsoever used in or
supplied to the Premises other than those to be provided by Landlord under
Section 7.05 hereof, beginning on the Commencement Date.

         SECTION 7.05. UTILITIES SUPPLIED BY LANDLORD. Landlord covenants and
agrees that it shall supply during normal business hours the following utility
services, at its sole cost and expense:

                  (a) Heat and air conditioning for the Common Areas sufficient
to maintain the interior temperature of the Common Areas during normal business
hours at a level that is customarily maintained in similar office buildings;

                  (b) Reasonable amounts of hot and cold water to the public
lavatories and sinks situated on each floor of the Office Building;

                  (c) Janitorial service for the Premises of such scope and
frequency as may be determined by Landlord, but in no event less than three (3)
times per week;

                                       9
<PAGE>
 
                  (d) Window washing service for the interior and exterior
surfaces of outside windows, of such frequency as may be determined by Landlord,
but in no event less than twice in each calendar year.

         If Tenant wishes to obtain any of the services described in this
Section 7.05 (with the exception of (a) and (b)) outside of normal business
hours (which shall be deemed to be from 7:00 a.m. to 5:30 p.m., Monday through
Friday, not including federal holidays), then, if such service is available
outside of such hours, Tenant must make special arrangements with Landlord
therefor and Tenant shall pay, upon demand, Landlord's standard charge for such
service. Except for Landlord's negligent acts, Landlord shall not be liable for
any damages arising out of, and Tenant shall not be entitled to any abatement or
reduction of rental by reason of, Landlord's failure to furnish, or by reason of
any interruption in, any of the services described in this Section 7.05.
Furthermore, Landlord shall not be liable for any damages arising out of the
provision of any of the services described in this Section 7.05, including
without limitation any damages to documents, files or other property damaged,
destroyed or lost through acts or omissions of the personnel providing
janitorial or cleaning service. Tenant agrees at all times to cooperate fully
with Landlord and to abide by all the regulations and requirements which
Landlord may prescribe for the proper functioning and protection of all heating,
ventilating and air conditioning systems. Wherever there are heat-generating
machines or equipment to be used in the Premises which shall affect the
temperature otherwise maintained by the air conditioning system, Landlord
reserves the right to install supplementary air conditioning units in the
Premises and the cost of installation, operation, and maintenance thereof shall
be paid by Tenant to Landlord, upon demand. Tenant will not, without the prior
written consent of Landlord, use any apparatus or device in the Premises, which
will in any way increase the amount of heat, air conditioning or water usually
furnished or supplied for use within the Premises, nor connect with electric
current, except through existing electrical wiring or water or air. If Tenant
shall require heat, air conditioning or water in excess of that usually
furnished or supplied for use of the Premises, then (a) Tenant shall first
procure the written consent of Landlord to the use thereof, which consent
Landlord may refuse, and (b) Tenant shall pay, as Additional Rent and upon
demand, an appropriate amount for the additional services expected to be
consumed by Tenant in the Premises.

         SECTION 7.06. MUNICIPAL, COUNTY, STATE OR FEDERAL TAXES. Tenant
covenants and agrees that it shall pay, before delinquency, all municipal,
county and state or federal taxes assessed against any leasehold interest of
Tenant or any fixtures, furnishings, equipment, merchandise, improvements,
alterations, stock-in-trade or other personal property of any kind owned,
installed or upon the Premises.

         SECTION 7.07. DIRECTORY AND EXTERIOR SIGNAGE. Tenant shall be entitled
to have its name shown upon the directory board of the Office Building; but the
design and style of such identification, and the location of such directory
board and allocation of the space thereon among the tenants and occupants of the
Office Building, shall be determined

                                       10
<PAGE>
 
at Landlord's sole discretion. Landlord's obligation under this Section shall be
limited to the designation of a firm or company name and location within the
Office Building. Tenant shall be responsible for all costs associated with the
designation of individual members, officers, principals or employees of such
firm or company, as they may change from time to time. Tenant shall be allowed
one (1) exterior sign near the main entrance to the Building of a size, design
and specific location, to be consented to by Landlord in the reasonable exercise
of Landlord's discretion, with the size to bear some relationship to the
percentage of Rentable Area which Tenant leases in the Building. Within the
first and second floor common areas, Tenant shall be allowed one (1) or more
directional signs for the purposes of allowing its customers and invitees to
locate Tenant's premises within the Building, of a size, design, and location,
to be pre-approved by Landlord in the reasonable exercise of Landlord's
discretion, and to be uniform in size and design with other such directional
signage in the Building. All such signs shall be installed at Tenant's sole cost
and expense.

                                  ARTICLE VIII
                            INSURANCE AND INDEMNITIES

         SECTION 8.01. INSURANCE BY TENANT. Tenant shall obtain, at Tenant's
expense, beginning on the date that Tenant exercises its right of access to the
Premises pursuant to Section 1.02, and shall maintain through the expiration or
termination of this Lease, the following insurance coverages:

                  (a) Public Liability. A policy of comprehensive public
liability insurance naming Landlord, Tenant and any other party designated by
Landlord as the insured, to insure against injury to property, person or loss of
life arising out of the ownership, use, occupancy or maintenance of the Premises
with limits of public liability not less than $1,000,000.00 combined single
limit per occurrence/aggregate. Said insurance shall be written on an occurrence
basis and not on a claims made basis. The policy shall contain, if available,
supplemental endorsements covering liability for intentional acts of the insured
and contractual liability voluntarily assumed by the insured.

                  (b) Business Interruption. A policy of business interruption
or loss-of-rent insurance, naming Landlord as the insured, in such face amount
determined by Landlord, to insure the payment of all amounts of Base Rent,
Percentage Rent, Additional Rent and any other charges, expenses and fees
whatsoever required to be paid by Tenant to Landlord for a period of not less
than twelve (12) months.

                  (c) Plate Glass. A policy of plate glass insurance in an
amount determined by the Landlord to be sufficient to cover the replacement cost
of all interior plate glass on the Premises.

                  (d) Other. All other insurance, if any, customarily maintained
by businesses of like type, or required by any ordinance, law, or governmental
regulation to be

                                       11
<PAGE>
 
carried or maintained by Tenant, as may be reasonably required by Landlord or by
any ordinance, law or governmental regulation.

         SECTION 8.02. INSURANCE BY LANDLORD. Landlord shall obtain before the
date that Tenant gains access to the Premises pursuant to Section 1.02, and
shall maintain through the expiration or termination of this Lease, the
following insurance coverages:

                  (a) Public Liability. A policy of comprehensive public
liability insurance on the Common Areas with limits of public liability of not
less than $1,000,000.00 combined single limit per occurrence aggregate.

                  (b) Comprehensive. A comprehensive policy of coverage
containing fire, extended coverage, vandalism, malicious mischief and other
endorsements deemed advisable by Landlord insuring the leasehold improvements of
the Office Building, including the Premises and all appurtenances thereto
(excluding Tenant's merchandise, trade fixtures, furnishings, equipment,
personal property and excluding plate glass) for the full insurable replacement
value thereof, with such deductibles as Landlord deems advisable. Tenant shall
be solely responsible for carrying personal property insurance sufficient to
cover the loss or damage to Tenant's personal property.

                  (c) Other. Such other insurance as Landlord may reasonably
deem necessary or advisable provided the same is reasonable and customary in the
industry.

         SECTION 8.03. INSURANCE POLICIES. Insurance required of Tenant under
Section 8.01 shall be written by companies duly qualified to do business in the
State of Wisconsin, acceptable to Landlord in its reasonably exercised
discretion, and satisfactory in all respects to the holder of any mortgage
against the Office Building. Tenant shall deliver copies of such policies or
certificates evidencing the existence and amounts of such insurance with loss
payable clauses satisfactory to Landlord. No such policy shall be cancelable or
subject to reduction of coverage or modification except after thirty (30) days
prior written notice to Landlord. At least ten (10) days prior to the expiration
of Tenant's policies, Tenant shall furnish Landlord with renewals or "binders"
thereof, or Landlord may order such insurance and charge the cost to Tenant as
Additional Rent. Tenant shall not do or permit anything to be done which will
invalidate the insurance policies furnished by Tenant or Landlord pursuant to
Sections 8.01 and 8.02. If Tenant does or permits anything to be done which
shall increase the cost of the insurance policies furnished by Landlord, Tenant
shall pay to Landlord, as Additional Rent, the amount of any such additional
premiums. Landlord may from time to time require that the policy limits of any
or all such insurance be increased to reflect the effects of inflation and
changes in normal commercial insurance practices. If Tenant fails to comply with
the requirements of this Section or Section 8.01, Landlord may obtain such
insurance and maintain it in effect, and Tenant shall pay Landlord the premium
cost and any other costs or expenses incurred by Landlord as Additional Rent.

                                       12
<PAGE>
 
         SECTION 8.04. EXEMPTION OF LANDLORD FROM LIABILITY. Tenant hereby
agrees that except for the negligent acts of Landlord, Landlord shall not be
liable for injury to Tenant's business or any loss of income or other
consequential damages or for damage to the fixtures, furnishings, improvements
or other property of Tenant, Tenant's employees, invitees, customers,
sublessees, agents, occupants, contractors, or any other person in or about the
Premises, nor shall Landlord be liable for injury to the person of Tenant,
Tenant's employees, agents, contractors, occupants, invitees, customers,
sublessees, or any other person in or about the Premises, whether such damage or
injury is caused by or results from fire, steam, electricity, gas, water or
rain, or from the breakage, leakage, obstruction or other defects of pipes,
sprinkler, wires, appliances, plumbing, air conditioning or lighting fixtures,
or from any other cause whatsoever, whether said damage or injury results from
conditions arising upon the Premises, or from other sources or places, and
regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Tenant. Landlord shall not be liable for
any damages arising from any act or neglect of any other tenant of the Office
Building.

         SECTION 8.05. INDEMNIFICATION. Except where caused by Landlord's
negligence, Tenant shall indemnify, defend and hold harmless Landlord from and
against any and all claims arising from Tenant's use of the Premises, or from
the conduct of Tenant's business or from any activity, work or things done,
permitted or suffered by Tenant in or about the Premises or elsewhere and shall
further indemnify, defend and hold harmless Landlord from and against any and
all claims arising from any breach or default in the performance of any
obligation on Tenant's part to be performed under the terms of this Lease, or
arising from any negligence of the Tenant, or any of Tenant's sublessees,
agents, customers, invitees, contractors, occupants, or employees, and from and
against all costs, attorneys' fees, expenses and liabilities incurred in the
defense of any such claim or any action or proceeding brought thereon; and in
case any action or proceeding be brought against Landlord by reason of any such
claim, Tenant upon notice from Landlord, shall defend the same at Tenant's
expense by counsel satisfactory to Landlord. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property or
injury to persons, in, upon or about the Premises arising from any cause, and
Tenant hereby waives all claims in respect thereof against Landlord.

         SECTION 8.06. WAIVER OF SUBROGATION. Nothing in this Lease shall be
construed so as to authorize or permit any insurer of Tenant to be subrogated to
any right of Tenant against Landlord arising under this Lease. Tenant hereby
releases Landlord to the extent of any perils to be insured against by Tenant
under the terms of this Lease, whether or not such insurance has actually been
secured, and to the extent of its insurance coverage for any loss or damage
caused by any such casualty, even if such incidents shall be brought about by
the fault or negligence of Landlord. Tenant shall obtain appropriate waivers of
subrogation from its insurance carrier giving effect to this paragraph.

                                       13
<PAGE>
 
                                   ARTICLE IX
                              DAMAGE OR DESTRUCTION

      In the event (i) the Premises are damaged by fire, explosion or other
casualty insured under Landlord's fire and extended coverage insurance policy
(an "Insured Casualty") to the extent of twenty-five percent (25%) or more of
the insurable value thereof immediately preceding the casualty, (ii) the
Building of which the Premises are a part is damaged by an Insured Casualty to
the extent of fifty percent (50%) or more of the insurable value thereof
immediately preceding the casualty, or (iii) the Premises are damaged by a
casualty or occurrence other than Insured Casualty, Landlord may terminate this
Lease by giving Tenant written notice of termination within sixty (60) days
after the happening of the event causing the damage. In the event the damage is
not extensive enough to give rise to Landlord's option to terminate this Lease
or Landlord does not elect to terminate this Lease, Landlord shall promptly
repair and replace the roof, exterior walls (excluding store front), foundation
and any other improvements furnished as a part of Landlord's Work or existing on
the date that Tenant was entitled to access to the Premises pursuant to Section
1.02, to the condition existing immediately preceding such fire, explosion or
other casualty. Upon completion of such repairs and replacements by Landlord,
Tenant shall promptly repair or replace all portions of the Premises not
repaired or replaced by Landlord and repair or replace all furniture, fixtures
and equipment to the condition existing immediately preceding such fire,
explosion or other casualty. During any period of reconstruction or repair of
the Premises, Tenant shall operate its business in the Premises to the extent
practicable. Rent or other sums payable under this Lease shall be abated during
the period of such repair and restoration in proportion to the area of the
Leased Premises which is not useable by Tenant in connection with its business
operations.

                                    ARTICLE X
                                  CONDEMNATION

         SECTION 10.01. TAKING OF WHOLE. In the event (i) the whole of the
Premises shall be taken or condemned for a public or quasi-public use or
condemned for a public or quasi-public use or purpose by a competent authority,
or (ii) such a portion of the Premises shall be taken so that the balance cannot
be used for the same purpose and with substantially the same utility to Tenant
as immediately prior to such taking, this Lease shall terminate upon delivery of
possession to the condemning authority, and any award, compensation or damages
(the "Award") shall be paid to and be the sole property of Landlord whether the
Award shall be made as compensation for diminution of the value of the leasehold
estate or the fee of the Premises or otherwise, and Tenant hereby assigns to
Landlord all of Tenant's right, title and interest in and to any and all of the
Award. Tenant shall have no claim against Landlord by reason of such taking or
termination and shall not have any claim or right to any portion of the Award to
be paid to Landlord. Tenant shall continue to pay rent and other charges
hereunder until the Lease is terminated.

                                       14
<PAGE>
 
         SECTION 10.02. PARTIAL TAKING. In the event only a part of the Premises
or Building is taken or condemned but the Premises or the part remaining can
still be used for the same purpose and with substantially the same utility to
Tenant as immediately prior to such taking, this Lease shall not terminate and
Landlord shall repair and restore the Premises provided the cost and expense of
such repair and restoration does not exceed the amount of the Award. If the cost
of such repair and restoration exceeds the amount of the Award, Landlord may
terminate this Lease by giving Tenant written notice of termination to Tenant
within sixty (60) days of the delivery of possession to the condemning
authority. If Landlord is obligated to repair and restore the Premises as herein
provided, there shall be no abatement or reduction in any rental because of such
taking or condemnation.

         SECTION 10.03. TENANT'S AWARD. Tenant shall have the right to claim and
recover from the condemning authority, but not from Landlord, such compensation
as may be separately awarded to Tenant for any damage to Tenant's business by
reason of such condemnation and for any cost or loss incurred by Tenant in
removing Tenant's merchandise, fixtures and furnishings.

                                   ARTICLE XI
                               DEFAULTS; REMEDIES

         SECTION 11.01. DEFAULTS. The occurrence of any one or more of the
following events shall constitute a default and breach of this Lease by Tenant:

                  (a) Abandonment. The abandonment of the Premises or the
cessation of business by Tenant, where such abandonment or cessation shall
continue for a period of twenty (20) days after written notice thereof from
Landlord or Tenant.

                  (b) Failure to Pay. The failure of Tenant to make any payment
of rent or any other payment required to be made by Tenant under this Lease,
when due, where such failure shall continue for a period of ten (10) days after
written notice thereof from Landlord to Tenant.

                  (c) Failure to Observe Other Covenants. The failure by Tenant
to repair any waste or to observe or perform any of the terms, covenants or
conditions of this Lease to be observed or performed by Tenant where such
failure shall continue for a period of twenty (20) days after written notice
thereof from Landlord to Tenant (or without notice in case of emergency or a
hazardous condition or in case any fine, penalty, interest or cost may otherwise
be imposed or incurred). Except as otherwise provided herein, in the event of a
breach of a term, covenant or condition of this Lease which requires more than
the payment of money to cure and which cannot because of the nature of such
default be cured within said twenty (20) days, then Tenant is deemed to be
complying with said notice if, promptly upon receipt of such notice, Tenant
immediately takes steps to cure the default as soon as reasonably possible and
proceeds thereafter continuously with due diligence to cure the

                                       15
<PAGE>
 
default within a period of time which, under all prevailing circumstances, shall
be reasonable. Failure to send a notice shall not be construed as a waiver of
such breach or as to any subsequent breach.

                  (d) Insolvency. (i) The making by Tenant of any general
assignment, or general arrangement for the benefit of creditors; (ii) the filing
by or against Tenant of a petition to have Tenant adjudged a bankrupt or a
petition for reorganization or arrangement under any law relating to bankruptcy
(unless, in the case of a petition filed against Tenant, the same is dismissed
within sixty (60) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where possession is not restored to Tenant
within sixty (60) days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where such seizure is not discharged within
sixty (60) days.

         SECTION 11.02. LANDLORD'S REMEDIES. If any default by Tenant shall
occur and shall continue uncured following notice of default, if any, as
required by this Lease, then Tenant's right to possession of the Premises shall
automatically terminate (without terminating this Lease) and Landlord shall be
entitled to exercise any equitable or legal remedy or remedies allowed under
applicable Wisconsin law. In the event of default by Tenant, Landlord shall be
entitled to collect from Tenant, in addition to all other damages allowed by
law, its reasonable , actual attorney fees incurred in connection with such
default, as well as all costs incurred in reletting the Premises.

         SECTION 11.03. LANDLORD MAY PERFORM. Landlord shall have the right at
any time, after ten (10) days notice to Tenant (or without notice with respect
to matters described in Article IX, and in case of emergency or a hazardous
condition or in case any fine, penalty, interest or cost may otherwise be
imposed or incurred), to make any payment or perform any act required of Tenant
under any provision in this Lease, and in exercising such right, to incur
necessary and incidental costs and expenses, including reasonable attorneys'
fees. Nothing herein shall obligate Landlord to make any payment or perform any
act required of the Tenant, and this exercise of the right to so do shall not
constitute a release of any obligation or a waiver of any default. All payments
made and all costs and expenses incurred in connection with any exercise of such
right shall be reimbursed to Landlord by Tenant as Additional Rent.

                                   ARTICLE XII
                            ASSIGNMENT AND SUBLETTING

         SECTION 12.01. ASSIGNMENT BY TENANT. Tenant shall not voluntarily or by
operation of law assign, transfer, mortgage, lease, sublet, grant license or
rights to a concessionaire or otherwise transfer or encumber all or any part of
Tenant's interest in this Lease or in the Premises, or permit the use or
occupancy of the Premises or any part thereof

                                       16
<PAGE>
 
by anyone other than Tenant, without Landlord's prior written consent. Any
attempted assignment, transfer, mortgage, use, lease, occupancy, encumbrance or
subletting without such consent shall be void and shall constitute a default
under this Lease. Notwithstanding the foregoing, Tenant may assign or sublease
part or all of the Premises, without Landlord's advance written consent, but
with advance written notice to Landlord, to: (a) any corporation, partnership or
other entity that controls, is controlled by or is under common control with,
Tenant; or (b) any corporation, partnership or other entity resulting from a
merger or consolidation with Tenant, or to any entity that acquires all of
Tenant's assets as a going concern of the business that is being conducted on
the Premises, as long as the assignee or subtenant is a bonafide entity and
assumes the obligations of Tenant.

         SECTION 12.02. NO RELEASE OF TENANT. Notwithstanding anything to the
contrary contained in this Lease, and regardless of Landlord's consent, no such
assignment, encumbrance, subletting, transfer, lease or other permission for the
use or occupancy of all or any part of the Premises shall release Tenant of
Tenant's obligation to pay the rent and to perform all other obligations to be
performed by Tenant under this Lease, and Tenant and each respective assignor
hereby waives notice of default in the payment and performance by the tenant in
possession without notice to, and without the consent of, Tenant or any such
assignor, and any and all extensions of time, modifications, or waivers shall be
deemed to be made with the consent of Tenant and any such assignor. The
acceptance of rent by Landlord from any other person shall not be deemed to be a
waiver by Landlord of any provision hereof. Consent to one assignment shall not
be deemed consent to any subsequent assignment.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

         SECTION 13.01.  ESTOPPEL CERTIFICATE.

                  (a) Tenant shall upon execution hereof at any time thereafter,
upon not less than ten (10) days after the giving of written notice by Landlord,
execute, acknowledge and deliver to Landlord or to such person designated by
Landlord, a statement in writing (i) certifying that this Lease is unmodified
and in full force and effect (or if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect) and the date to which the rent and other charges are paid in
advance, if any, (ii) acknowledging that there are not, to Tenant's knowledge,
any uncured defaults on the part of Landlord hereunder, nor any offsets,
counterclaims or defenses to the Lease on the part of Tenant, or specifying such
defaults if any are claimed, and (iii) certifying as to any other matters as may
be reasonably requested by Landlord. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of the Premises.

                  (b) If Landlord desires to sell or finance or refinance the
Office Building, or any part thereof, Tenant shall deliver to any purchaser
and/or lender designated by Landlord

                                       17
<PAGE>
 
such financial information concerning Tenant as may be reasonably required by
such purchaser and/or lender. Such statements shall include, but shall not be
limited to, the past three (3) years' financial statements of Tenant. All such
financial information shall be received by Landlord in confidence and shall be
used only for the purposes herein set forth.

         SECTION 13.02. LANDLORD'S LIABILITY. The term "Landlord" as used in
this Lease, shall mean only the owner or owners at the time in question of the
fee title or the tenant's interest in the ground lease of the Premises, if any
then exists, it being expressly acknowledged by the parties hereto that none of
the terms or conditions to be performed or observed by Landlord under this Lease
are personal to the party originally named "Landlord" hereunder. In the event of
any transfer of such title or interest, Landlord shall be released from all
liability as respects Landlord's obligations thereafter to be performed,
provided that any funds held by Landlord at the time of such transfer, in which
Tenant has an interest, shall be delivered to the grantee.

         SECTION 13.03. SEVERABILITY. The invalidity of any provision of this
Lease, or of its application to any person or circumstance as determined by a
court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof and each term, covenant, condition and provision of this
Lease shall be valid and be enforced to the fullest extent permitted by law.

         SECTION 13.04. TIME OF ESSENCE. Time is of the essence.

         SECTION 13.05. CAPTIONS. Article, section and paragraph captions are
not a part of this Lease.

         SECTION 13.06. INCORPORATION OF PRIOR AGREEMENTS. This Lease and the
attached exhibits set forth all the agreements, terms, covenants, or conditions,
oral or written, between them other than those herein contained. No amendment,
change or addition to this Lease shall be binding upon Landlord or Tenant unless
it is in writing and signed by each party.

         SECTION 13.07. TENANT'S REMEDIES. If Landlord shall fail to perform any
covenant, term or condition of this Lease required to be performed by Landlord,
if any, and if as a consequence of such default, Tenant shall recover a money
judgment against Landlord, such judgment shall be satisfied only out of the
proceeds of sale received upon execution of such judgment and levied thereon
against the right, title and interest of Landlord in the Premises and out of
rents or other income from such property receivable by Landlord, or out of the
consideration received by Landlord from the sale or other disposition of all or
any part of Landlord's right, title and interest in the Premises, and Landlord
shall not be personally liable for any deficiency.

                                       18
<PAGE>
 
         SECTION 13.08. ATTORNMENT OF TENANT. Tenant shall in the event of the
sale, assignment, or other transfer of Landlord's interest in the Premises or in
this Lease, or in the event of any proceedings brought for the foreclosure of,
or in the event of exercise of the power of sale under any mortgage made by
Landlord covering the Premises, attorn to the transferee and recognize such
transferee as Landlord under this Lease.

         SECTION 13.09. RENT COVENANT. The covenant to pay rent, whether Base or
Additional, is hereby declared to be an independent covenant on the part of
Tenant to be kept and performed, and no offset shall be permitted or allowed.
Tenant's covenant to pay such rent shall survive the expiration or earlier
termination of this Lease.

         SECTION 13.10. DELINQUENT RENT TO BEAR INTEREST; LATE PAYMENT FEE. Any
rent whether Base or Additional, or such other sums, if any, required to be paid
by Tenant pursuant to the terms of this Lease which are not paid when due shall
bear interest at the rate of eighteen percent (18%) per annum, or the maximum
rate permitted by law, whichever is less, from the date due until paid. The
payment of such interest shall not excuse or cure any default by Tenant under
this Lease. If Base or Additional Rent is not received on or before ten (10)
days after its due date, a late payment fee equal to $150.00 shall be due and
payable in addition to the Additional or Base Rent due and owing.

         SECTION 13.11. NOTICES. All notices and demands hereunder shall be in
writing, and shall be deemed given if (a) hand delivered; (b) sent by Express
Mail or a national commercial courier service (e.g., Purolator Delivery Service
or Federal Express) for next-day delivery, to be confirmed in writing by said
courier or service; or (c) when deposited in the United States Mail, certified
or registered, return receipt requested, with sufficient postage prepaid thereon
to carry it to its addressed destination; (d) when faxed to the telecopier
number appearing below, with a confirmation copy sent next business day via U.S.
Mail, postage prepaid; and when addressed as follows:

                  LANDLORD:
                                    Seven J's, Inc.
                                    Attn: Jeffrey D. Coatta
                                    816 Lexington Drive
                                    Waunakee, Wisconsin  53597

                  TENANT:
                                    Ken Minor
                                    Sonic Foundry, Inc.
                                    754 Williamson Street
                                    Madison, WI  53703

         The above names and addresses may be changed at any time or from time
to time by notice as above provided.

                                       19
<PAGE>
 
         SECTION 13.12. WAIVERS. No waiver by Landlord of any provision of this
Lease shall be deemed a waiver of any other provision hereof or of any
subsequent breach by Tenant of the same or any other provision. Landlord's
consent to or approval of any act shall not be deemed to render unnecessary the
obtaining of Landlord's consent to or approval of any subsequent act by Tenant.
The acceptance of rent hereunder by Landlord shall not constitute a waiver of
any breach by Tenant even if Landlord knows of such breach at the time of
acceptance of such rent. No payment by Tenant or receipt by Landlord of a lesser
amount than the rent then due shall be deemed to be other than on account of the
earliest rent due, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord shall accept such check or payment without prejudice
to Landlord's right to recover the balance of such rent or pursue any other
remedy in this Lease provided.

         SECTION 13.13. RECORDING. Tenant shall not record this Lease without
Landlord's prior written consent and such recordation shall, at the option of
Landlord, constitute a non-curable default of Tenant hereunder. Either party
shall, upon request of the other, execute, acknowledge and deliver to the other
a "short form" memorandum of this Lease for recording purposes.

         SECTION 13.14. HOLDING OVER. Tenant shall surrender the Premises upon
the expiration or termination of the Lease. Any holdover not consented to by
Landlord shall not result in a new tenancy or interest and, in such case,
Landlord may treat Tenant as a trespasser. If Tenant remains in possession of
the Premises or any part thereof after the expiration of the term of this Lease
without the express written consent of Landlord, Tenant shall pay rent equal to,
in the absence of proof of greater damages, the amount of twice the amount
actually paid as rent by Tenant under Article III during the final lease Year,
prorated on a daily basis for each day after the last day of the term of this
Lease.

         SECTION 13.15. CUMULATIVE REMEDIES. No remedy or election hereunder
shall be deemed exclusive but shall, wherever possible, be cumulative with all
other remedies at law or in equity. Any reference in this Lease to the recovery
of, or entitlement to, attorney fees, is hereby modified to state "reasonable
attorney fees." Any reference in this lease to the giving of any consent by
either the Landlord or the Tenant is hereby modified to the effect that any such
consent shall not be unreasonably withheld or delayed.

         SECTION 13.16. COVENANTS AND CONDITIONS. Each provision of this Lease
performable by Tenant shall be deemed both a covenant and a condition.

         SECTION 13.17. BINDING EFFECT: CHOICE OF LAW. This Lease shall bind the
parties, their heirs, personal representatives, successors and assigns. This
Lease shall be governed by and be construed and interpreted in accordance with
the laws of the State of Wisconsin.

                                       20
<PAGE>
 
         SECTION 13.18. SUBORDINATION.

                  A) This Lease is subject to and subordinate to any existing or
subsequent mortgages against the real property of which the Premise form a part.
If any mortgage is foreclosed, then:

                         (i)      This Lease shall continue;

                         (ii)     Tenant's quiet possession shall not be
disturbed if Tenant is not in default; and

                         (iii)    Tenant will attorn to and recognize the
mortgagee or purchaser at foreclosure sale (the "Successor Landlord") as
Tenant's Landlord for the remaining term; and

                         (iv)     The Successor Landlord shall not be bound by:

                                   a) Any payment of Rent or Additional Rent for
more than one month in advance; and

                                   b) Any amendment, modification or termination
of this Lease without Successor Landlord's consent after the Successor
Landlord's name is given to Tenant unless the amendment, modification, or
termination is specifically authorized by the original Lease and does not
require Landlord's prior agreement or consent; and

                                   c) Any liability for any act or omission of a
prior Landlord.

                  B) Self Operating: This Section 13.18 shall be self-operative,
and no agreement shall be necessary or required in order to effectuate its
terms. However, notwithstanding the foregoing, upon request of Landlord, Tenant
shall promptly execute and deliver any documents needed to confirm the terms of
this Section 13.18.

         SECTION 13.19. CORPORATE AUTHORITY. If Tenant is a corporation, each
individual executing this Lease on behalf of said corporation represents and
warrants that he or she is duly authorized to execute and deliver this Lease on
behalf of said corporation, in accordance with a duly adopted resolution of the
Board of Directors of said corporation, and that this Lease is binding upon said
corporation in accordance with its terms. If Tenant is a corporation, Tenant
shall, within thirty (30) days after execution of this Lease, deliver to
Landlord a certified copy of a resolution of the Board of Directors of said
corporation authorizing or ratifying the execution of this Lease.

                                       21
<PAGE>
 
         SECTION 13.20 ROOFTOP TRANSMITTER UNIT. Landlord hereby consents to the
construction and installation by Tenant on the roof of the Building of a rooftop
transmitter unit for the purpose of facilitating communications between Tenant's
existing offices and the Premises, of a size, design and function as previously
demonstrated to Landlord, at the location previously agreed upon between
Landlord and Tenant. Any changes to the design, size, utility, or location of
the rooftop transmitter unit from that previously agreed upon by Landlord and
Tenant shall be subject to Landlord's advance written consent, which consent
shall not be unreasonably withheld or delayed. Construction and installation of
the rooftop transmitter unit shall be undertaken by Tenant at Tenant's sole cost
and expense, pursuant to all applicable laws, codes, rules and ordinances
regarding the same.

                                   ARTICLE XIV
                              ENVIRONMENTAL MATTERS

         SECTION 14.01. DEFINITIONS.

                  (a) Environmental Laws: "Environmental Laws" means any
federal, state and local laws including statutes, regulations, rulings, orders,
administrative interpretations and other governmental restrictions and
requirements relating to the discharge of air pollutants, water pollutants or
process wastewater or otherwise relating to the environment or Hazardous
Substances (as defined herein) including, but not limited to, Chapters 144 and
162, Wisconsin Statutes, the Federal Toxic Substances Control Act, the Federal
Safe Drinking Water Act, the Federal Solid Waste Disposal Act, the Federal Clean
Air Act, the Federal Clean Water Act, the Federal Resource Conservation and
Recovery Act of 1976, the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, regulations of the Environmental
Protection Agency, regulations of the Nuclear Regulatory Agency, and regulations
of any state department of natural resources or state environmental protection
agency now or at any time hereafter in effect.

                  (b) Hazardous Substances: "Hazardous Substances" means any
hazardous waste or substance, asbestos or asbestos-containing material,
pollutant, solid, liquid, gaseous, or thermal irritant or contaminant (such as
smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste, including
materials to be recycled in the future, reconditioned or reclaimed),
polychlorinated biphenyl (in the form of electrical transformers, fluorescent
light fixtures with ballasts, cooling oils or any other device or form) or
urea-formaldehyde foamed-in-place insulation, all as defined or included under
Environmental Laws or otherwise, whether now or in the future.

         SECTION 14.02. TENANT'S COVENANT WITH RESPECT TO ENVIRONMENTAL MATTERS.
Tenant covenants and agrees that Tenant will not violate any Environmental Laws
or discharge Hazardous Substances in, on or about the Building or Tenant's
Premises. Tenant covenants and agrees to indemnify and hold Landlord harmless
from and against all losses, cost, expenses (including reasonable attorneys' and
witnesses' fees, deposition costs

                                       22
<PAGE>
 
and copying and telephone charges) or damages of any kind arising from a breach
of Tenant's obligations hereunder.

         SECTION 14.03. TENANTS DUTIES WITH RESPECT TO ENVIRONMENTAL LAWS AND
HAZARDOUS SUBSTANCES. In the event Tenant receives any notice or knowledge of,
or has reason to believe that Tenant or Tenant's agents, employees, contractors,
subcontractors, or invitees (collectively referred to herein and in Section
14.02 above as "Tenant"), has violated any Environmental Laws in connection with
or as a part of Tenant's use, occupancy or enjoyment of the Premises, or has
discharged or caused to be discharged any Hazardous Substance on, about or into
the Premises, or any such violation or discharge is threatened, Tenant shall as
soon as practicable thereafter comply with the following requirements:

                  (a) Provide the Landlord, immediately upon receipt thereof,
copies of any correspondence, notice, pleading, citation, indictment, complaint,
order, decree or other document from any source asserting or alleging violation
by the Tenant of any Environmental Law, or asserting or alleging a circumstance
or condition which may require a financial contribution by the Tenant or a
cleanup, remedial action or other response by or on the part of the Tenant under
Environmental Laws.

                  (b) Advise the Landlord in writing as soon as the Tenant
becomes aware of any condition or circumstance which constitutes a violation of
section 14.02, above.

                  (c) Permit the Landlord, in the event the Landlord has
reasonable cause to believe that there exists a condition or circumstance
warranting an environmental inspection or audit, at the Tenant's expense, to
retain an architect or engineer selected by the Landlord to perform an
environmental inspection and/or audit of the Leased Premises to evaluate the
Tenant's compliance with Environmental Laws, and to test for the existence of or
contamination caused by Hazardous Substances on the Leased Premises, and for
risks associated with exposure to Hazardous Substances. The Tenant shall permit
the Landlord and its employees and agents access to the Leased Premises and the
books and records of the Tenant as necessary for the performance of the
environmental inspection and/or audit. This environmental inspection and/or
audit shall be performed solely for the benefit of the Landlord and it may not
be relied upon by the Tenant for any purpose. This provision shall not relieve
the Tenant from conducting its own environmental inspections and/or audits or
taking other steps necessary to comply with Environmental Laws.

      IN WITNESS WHEREOF, this Lease has been executed by Landlord and Tenant as
of the date first above written.

                                       23
<PAGE>
 
                                  * LANDLORD *

                                  SEVEN J'S, INC., A Wisconsin Corporation

                                By:
                                   ---------------------------------------
                              Name:
                                   ---------------------------------------
                             Title:
                                   ---------------------------------------
                                  * TENANT *

                                  SONIC FOUNDRY, INC.

                                By:
                                   ---------------------------------------
                                   Name:
                                        ----------------------------------
                                   Title:
                                         ---------------------------------


                            Attest:
                                   ---------------------------------------
                                   Name:
                                        ----------------------------------
                                   Title:
                                         ---------------------------------


                                       24
<PAGE>
 
                                   EXHIBIT "A"
                                   -----------

                          Floor Plan of Leased Premises

                                [To Be Supplied.]
<PAGE>
 
                                   EXHIBIT "B"
                                   -----------

                                 Landlord's Work

         Base Building construction shall include, without limitation, metering
the Premises; janitor closets on the second floor; completed men's and women's
washroom facilities on the second floor; fire exit signs; the leveling of all
floors of the Premises so that they are ready to receive carpeting or other
covering; heating, ventilating, air conditioning brought to the Premises with
all "main loops" and major distribution lines in place; all perimeter walls and
core walls if shown in Landlord's plans, drywalled, taped and ready for
painting; all smoke detectors installed as required in the common area; and any
ADA requirements or other life safety requirements to the common areas of the
second floor including the restrooms. Additionally, other base building work in
the common area such as elevator and lobby finishes, common area ceilings,
after-hour security systems, air conditioning and lighting) shall be installed
at no expense to Tenant. Notwithstanding the foregoing and in addition to the
above, Landlord will provide sandblasted, exposed brick walls, exposed beam
ceilings, new windows and an interior premises stairway connecting the first
floor and second floor premises.
<PAGE>
 
                                   EXHIBIT "C"
                                   -----------

                       Tenant's Work and Tenant Allowance


         Landlord shall provide to Tenant an allowance (the "Allowance") in an
amount equal to $112,500.00, which shall be drawn upon by Tenant as required for
the purpose of paying for Tenant's Work as that term is defined in the Lease and
in this Exhibit. The Allowance shall be for the construction of the Premises
over and above the base building specifications described in Exhibit "B." The
Allowance may also be used to pay the costs of space planning, not to exceed
$2.00 per square foot without the express written consent of Landlord, which
consent shall not be unreasonably withheld. Any Allowance which remains unused
after completion of the Tenant's Work shall be used to offset Base Rent and
Additional Rent due Landlord under the terms of the Lease.

         Tenant's Work shall consist of readying the Premises for Tenant's
business in accordance with the plans and specifications of the Tenant to be
provided to Landlord in accordance with Section 4.03 of this Lease. The failure
of Tenant to provide Landlord with Tenant's plans and specifications in a timely
manner shall not delay the Commencement Date of the Lease, but may delay the
date on which Tenant opens the Premises for business, which delay shall be the
sole responsibility of Tenant if caused by a delay in providing the plans and
specifications. The Commencement Date shall be determined by the terms of
Section 1.02 of the Lease.

         Tenant's Work shall be constructed under the supervision of Landlord,
by a contractor or contractors approved by Landlord. Payments out of the
allowance shall be made by Landlord on a draw basis, after inspection of the
work by Landlord or Landlord's architect. Each draw shall be approved by Tenant.
Inspections of the work by Landlord shall be for purposes relating to the draw
only, and shall not constitute any approval of the work performed or a warranty
of such work.

         Tenant shall be responsible for all costs and expenses relating to
Tenant's Work which exceed the Allowance. Such costs and expenses shall be
billed to Tenant as incurred, and if Tenant shall fail to pay the same on or
before twenty (20) days after being billed, Landlord may, at its option, cause
the contractor to cease work on Tenant's Work without liability to Tenant for
delay in completion or otherwise. The Commencement Date shall not be delayed in
such event. Landlord's performance of any obligations under this Exhibit "C" are
specifically conditioned upon Tenant's payment of any costs relating to Tenant's
Work in excess of Tenant's Allowance. Landlord shall have no responsibility to
pay for any part of Tenant's Work, Landlord's responsibility being limited to
payment and performance of only that work which is described in Exhibit "B," and
to provide the Allowance.
<PAGE>
 
         Landlord shall not be liable for repair of any latent defects. Landlord
shall assign to Tenant any warranties from Landlord's general contractor,
subcontractors, or the manufacturers of any equipment installed in or about the
Premises. Tenant covenants and agrees that all of Tenant's Work shall be
performed in accordance with the plans and specifications for the same, approved
in advance by Landlord.

         If Tenant's Work consists of permanent or reusable improvements,
Landlord will increase the Allowance in an amount equal to 50% of the cost of
said improvements, up to a maximum increase of $50,000.00. As used herein, the
phase "permanent or reusable improvements" shall mean improvements paid for out
of the Allowance which will have a useful life of 8 years or more.


ClubJuris.Com