The offer and sale to the Investor of the Securities shall be qualified or exempt from qualification under all applicable federal and state securities laws, which qualification or exemption the Company shall have exercised its reasonable best efforts to obtain.
(a) Subject to Section 7(b) below, the Company shall file, with respect to the shares of Common Stock included in the Units purchased under this Agreement and the Warrant Shares (collectively, the "Registrable Shares"), a registration statement on Form S–3 (or any successor form) on or before the date 60 days after the Closing Date to register such Registrable Shares held by the Investor under the Act. Any such registration statement may also include other shares of Common Stock issued to other investors by the Company. The Company shall use its best efforts to have the registration statement declared effective within 90 days after the Closing Date and to maintain the effectiveness of such registration statement (and maintain the current status of the prospectus or prospectuses contained therein) until the earliest of (i) the fifth anniversary of the Closing Date, (ii) the date all such Registrable Shares have been disposed of pursuant to such effective registration statement, (iii) the date such Registrable Shares are sold or otherwise transferred by the Investor in a transaction in which the rights under this Section 7 are not assigned in accordance with Section 8.2 hereof and (iv) the date the Investor is able to dispose of all such Registrable Shares in one three-month period pursuant to Rule 144 (or any similar provision then in force) under the Act without registration under the Act.
(b) The Company shall not be obligated to effect any such registration pursuant to Section 7(a):
(c) The Company shall notify the Investor in writing at least thirty (30) days prior to filing any registration statement under the Act for purposes of effecting a public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding registration statements relating to any registration under Section 7(a) of this Agreement or to any employee benefit plan or a corporate reorganization) and will afford the Investor an opportunity to include in such registration statement all or any part of the Registrable Shares then held by the Investor, subject to the provisions of Sections 7(d) and 7(e) below. If an Investor wants to include in any such registration statement all or any part of such Registrable Shares held by the Investor, the Investor shall within twenty (20) days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of such Registrable Shares the Investor wishes to include in such registration statement.
(d) If a registration statement under which the Company gives notice under Section 7(c) is for an underwritten offering, then the Company shall so advise the Investor. In such event, the right of an Investor to include any of the Investor's Registrable Shares in a registration pursuant to Section 7(c) shall be conditioned upon the Investor's participation in such underwriting and the inclusion of the Investor's Registrable Shares in the underwriting on the same terms and conditions as the other participants in such offering, including, without limitation, entering into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such underwriting (including a market stand-off agreement of up to 180 days if required by such underwriters). Notwithstanding any other provision of this Agreement, if the managing underwriter(s) determine(s) in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the managing underwriter(s) may exclude shares from the registration and the underwriting, and the number of shares that may be included in the registration and the underwriting shall be allocated, first, to the Company, second, to each holder of registration rights granted by the Company before the date of this Agreement that contractually require the Company to include such holder's shares on a priority basis, and third, to the Investor and any other holder of registration rights granted by the Company (excluding those covered above), on a pro rata basis based on the total number of shares of Common Stock then sought to be included by each in such offering. If an Investor disapproves of the terms of any such underwriting, the Investor may elect to withdraw therefrom by written notice to the Company and the underwriter(s), delivered at least ten (10) business days prior to the effective date of the registration statement. Any Registrable Shares excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration.
(e) Notwithstanding the foregoing, the Investor may not have any Registrable Shares registered pursuant to any registration statement initiated in connection with the Company's acquisition of the assets of Scour, Inc.
(f) The Investor shall have no right to obtain or seek, nor shall the Investor obtain or seek, an injunction restraining or otherwise delaying any registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Agreement.
(g) In the event any Registrable Shares are included in a registration statement under this Agreement or the terms of the Warrant:
(i) To the extent permitted by law, the Company will indemnify and hold harmless the Investor and each person, if any, who controls the Investor within the meaning of the Act or the Securities Exchange Act of 1934, as amended (the "1934 Act"), against any losses, claims, damages, or liabilities to which they may become subject under the Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): (A) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (B) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or (C) any violation or alleged violation by the Company of the Act, the 1934 Act, any state securities law or any rule or regulation promulgated under the Act, the 1934 Act or any state securities law in connection with such registration and sale of securities; and the Company will pay to the Investor or such controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 7(g)(i) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation that occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by the Investor or such controlling person or their respective agents.
(ii) To the extent permitted by law, the Investor will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, each agent and any underwriter, any other person or entity selling securities in such registration statement and any controlling person of any such underwriter or other person or entity, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by the Investor or its agents expressly for use in connection with such registration; and the Investor will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this subsection 7(g)(ii), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 7(g)(ii) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Investor (which consent shall not be unreasonably withheld); and, provided further, that in no event shall any indemnity under this subsection 7(g)(ii) exceed the net proceeds from the offering received by the Investor.
(iii) Promptly after receipt by an indemnified party under this Section 7(g) of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 7(g), deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with reasonable fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 7(g), but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 7(g).
(iv) To the extent the indemnification provided for in this Section 7(g) is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other, in connection with the Violation(s) that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
(v) The obligations of the Company and the Investor under this Section 7(g) shall survive the completion of any offering of Registrable Shares in a registration statement under Section 7, and otherwise.
(i) If a registration statement covering Registrable Shares pursuant to this Section 7 is not declared effective by the SEC on or before the date 180 days after the Closing Date (the "Effective Deadline"), then as relief for the damages suffered therefrom by the Investor (which remedy shall be exclusive of any other remedies available at law or in equity), the Company shall, on the Effective Deadline and on each monthly anniversary following the Effective Deadline until the earlier of (x) the date such registration statement is declared effective and (y) the first anniversary of the Closing Date, pay to the Investor an amount, in cash, as liquidated damages and not as a penalty equal to 2.0% of the purchase price paid by the Investor pursuant to this Agreement on the Closing Date for Units (the "Purchase Price"). The payments to which the Investor may be entitled pursuant to this Section 7(i) are referred to herein as "Registration Delay Payments." Registration Delay Payments shall be paid within five (5) business days of the Effective Deadline and, as applicable, each monthly anniversary thereof. If the Company fails to make Registration Delay Payments in a timely manner, such Registration Delay Payments shall bear interest at the rate of 8.0% per annum until paid in full. Notwithstanding anything to the contrary, the Company shall not be required to make any Registration Delay Payments if the registration statement is not declared effective prior to the Effective Deadline as a result of any comments by the SEC, or refusal of the SEC to accept or review the registration statement for reasons, relating to or directed at the Investor, any other purchaser of Units of the Company with shares included in such registration statement (or any affiliate of the Investor or any such other purchaser) in connection with the registration statement.
Section 8. Miscellaneous
8.1 Survival of Warranties
The warranties, representations and covenants contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing.
8.2 Successors and Assigns
The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors, permitted assigns, heirs and legal representatives of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto and their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. The rights to cause the Company to register shares of Common Stock pursuant to Section 7 may be assigned by the Investor to a transferee or assignee of such shares that acquires at least 50,000 shares (appropriately adjusted for any stock dividend, stock split, or combination applicable to the Common Stock), and who assumes the Investor's obligations hereunder; provided the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the Registrable Shares with respect to which such registration rights are being assigned; and, provided, further, that such assignment shall be effective only if immediately following such transfer the further disposition of such shares by the transferee or assignee is restricted under the Act.
8.3 Governing Law; Jurisdiction; Venue
This Agreement shall be governed by and construed under the laws of the State of Oregon as applied to agreements among persons domiciled in Oregon entered into and to be performed entirely within the State of Oregon. The parties irrevocably consent to the exclusive jurisdiction and venue of the state and federal courts located in Multnomah County, Oregon in connection with any action relating to this Agreement or the Securities.
8.4 Counterparts
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
8.5 Headings
The headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
8.6 Notices
Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or three days after deposit in the United States Mail, postage prepaid, registered or certified with return receipt requested and addressed to the party to be notified, if to the Company, at 7175 NW Evergreen Parkway, Hillsboro, Oregon 97124, Attention: Chief Financial Officer, or, if to an Investor, at the address indicated for the Investor on the signature page hereof, or at such other address as any such party may designate by ten days' advance written notice to the other parties given in the foregoing manner.
8.7 Expenses
The Company shall pay all costs and expenses incurred by it with respect to the preparation and performance of this Agreement. The Investor shall pay all costs and expenses incurred thereby with respect to the preparation and performance of this Agreement.
8.8 Amendments and Waivers
This Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Investor.
8.9 Severability
If one or more provisions of this Agreement is held to be unenforceable under applicable law, such provision shall be excluded from this Agreement, and the balance of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.
8.10 Entire Agreement
This Agreement constitutes the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and supersedes all prior agreements with respect to the subject matter hereof, other than any confidentiality agreements entered into in connection with the transactions contemplated hereby.
8.11 Limitation on Short Sales
The Investor agrees that as long as the Investor or any of its affiliates holds or beneficially owns any Securities issued in connection with this Agreement, neither the Investor nor any of the Investor's affiliates will enter into any Short Sales (as defined below). For purposes hereof, a "Short Sale" by the Investor or any affiliate thereof shall mean a short sale of Common Stock or any equivalent derivative by the Investor or any affiliate thereof that is made at a time when there is no equivalent offsetting long position in the Company's Common Stock held by the Investor or such affiliate involved in such short sale. For purposes of determining whether there is an equivalent offsetting long position in the Common Stock held by the Investor or any such affiliate, shares that could be received from the exercises of Warrants issued hereunder shall be deemed to be held long by the Investor and affiliates thereof.
