Exhibit 10.2

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is entered into as of
September 29, 2020, by and between Digimarc Corporation, an Oregon corporation
(including its successors and permitted assigns, the “Company”), and TCM
Strategic Partners L.P., a Delaware limited partnership (including its
successors and permitted assigns, the “Investor”). Capitalized terms used but
not defined elsewhere herein are defined in Exhibit A.

The Company has entered into a Subscription Agreement, dated as of the date
hereof (as amended from time to time, the “Subscription Agreement”), with the
Investor, pursuant to which the Company is selling to the Investor, and the
Investor is purchasing from the Company, (i) 2,542,079 shares of the Company’s
common stock, par value $0.001 per share (the “Common Stock”), and (ii) 16,970
shares of the Company’s Series B Convertible Preferred Stock (the “Series B
Preferred Stock”), which is convertible into shares of Common Stock.

As a condition to each of the parties’ obligations under the Subscription
Agreement, the Company and the Investor are entering into this Agreement for the
purpose of granting certain registration and other rights to the Investor.

In consideration of the premises and the mutual representations, warranties,
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:

ARTICLE I

RESALE SHELF REGISTRATION

Section 1.1 Resale Shelf Registration Statement. Subject to the other applicable
provisions of this Agreement, the Company shall file on or before the nine
(9) month anniversary of the date hereof a registration statement covering the
sale or distribution from time to time by the Holders, on a delayed or
continuous basis pursuant to Rule 415 of the Securities Act, of all of the
Registrable Securities on Form S-3 (except if the Company is not then eligible
to register for resale the Registrable Securities on Form S-3, then such
registration shall be on Form S-1 or another appropriate form and shall provide
for the registration of such Registrable Securities for resale by such Holders
in accordance with any reasonable method of distribution elected by the Holders)
(the “Resale Shelf Registration Statement” and such registration, the “Resale
Shelf Registration”). The Company shall use its reasonable best efforts to cause
such Resale Shelf Registration Statement to be declared effective by the
Commission as promptly as practicable after the filing thereof, but in any event
prior to the date that is the one (1) year anniversary of the date of this
Agreement.

Section 1.2 Effectiveness Period. Once declared effective, the Company shall,
subject to Section 3.1(n) of this Agreement, cause the Resale Shelf Registration
Statement to be continuously effective and usable until such time as there are
no longer any Registrable Securities (the “Effectiveness Period”).

Section 1.3 Subsequent Shelf Registration. If any Shelf Registration ceases to
be effective under the Securities Act for any reason at any time during the
Effectiveness Period, the Company shall use its reasonable best efforts to
promptly cause such Shelf Registration to again become effective under the
Securities Act (including obtaining the prompt withdrawal of any order
suspending the effectiveness of such Shelf Registration), and in any event shall
within thirty (30) days of such cessation of effectiveness, amend such Shelf
Registration in a manner reasonably expected to obtain the withdrawal of any
order suspending the effectiveness of such Shelf Registration or, file an
additional registration statement (a

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“Subsequent Shelf Registration”) for an offering to be made on a delayed or
continuous basis pursuant to Rule 415 of the Securities Act registering the
resale from time to time by the Holders thereof of all securities that are
Registrable Securities as of the time of such filing. If a Subsequent Shelf
Registration is filed, the Company shall use its reasonable best efforts to
(a) cause such Subsequent Shelf Registration to become effective under the
Securities Act as promptly as is reasonably practicable after such filing, but
in no event later than the date that is ninety (90) days after such Subsequent
Shelf Registration is filed and (b) keep such Subsequent Shelf Registration (or
another Subsequent Shelf Registration) continuously effective until the end of
the Effectiveness Period. Any such Subsequent Shelf Registration shall be a
Registration Statement on Form S-3 to the extent that the Company is eligible to
use such form, and if the Company is a WKSI as of the filing date, such
Registration Statement shall be an Automatic Shelf Registration Statement.
Otherwise, such Subsequent Shelf Registration shall be on Form S-1 or another
appropriate form and shall provide for the registration of such Registrable
Securities for resale by such Holders in accordance with any reasonable method
of distribution elected by the Holders.

Section 1.4 Supplements and Amendments. The Company shall supplement and amend
any Shelf Registration if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration if required by the Securities Act or as reasonably requested by the
Holders covered by such Shelf Registration.

Section 1.5 Subsequent Holder Notice. If a Person becomes a Holder of
Registrable Securities after a Shelf Registration becomes effective under the
Securities Act, then the Company shall, as promptly as is reasonably practicable
following delivery of written notice to the Company of such Person becoming a
Holder and requesting for its name to be included as a selling securityholder in
the prospectus related to the Shelf Registration (a “Subsequent Holder Notice”):

(a)    if required and permitted by applicable law, file with the Commission a
supplement to the related prospectus or a post-effective amendment to the Shelf
Registration so that such Holder is named as a selling securityholder in the
Shelf Registration and the related prospectus in such a manner as to permit such
Holder to deliver a prospectus to purchasers of the Registrable Securities in
accordance with applicable law;

(b)    if, pursuant to Section 1.5(a), the Company shall have filed a
post-effective amendment to the Shelf Registration that is not automatically
effective, use its reasonable best efforts to cause such post-effective
amendment to become effective under the Securities Act as promptly as is
reasonably practicable, but in any event by the date that is ninety (90) days
after the date such post-effective amendment is required by Section 1.5(a) to be
filed; and

(c)    notify such Holder as promptly as is reasonably practicable after the
effectiveness under the Securities Act of any post-effective amendment filed
pursuant to Section 1.5(a).

Section 1.6 Take-Down.

(a)    Notice. Subject to the other applicable provisions of this Agreement, at
any time that any Shelf Registration Statement is effective, if a Holder
delivers a notice to the Company (a “Take-Down Notice”) stating that it intends
to effect a sale or distribution of all or part of its Registrable Securities
included by it on any Shelf Registration Statement (a “Shelf Offering”) and
stating the number of Registrable Securities to be included in such Shelf
Offering, then, subject to the other applicable provisions of this Agreement,
the Company shall amend or supplement the Shelf Registration Statement as may be
necessary in order to enable such Registrable Securities to be sold and
distributed pursuant to the Shelf Offering.

 

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(b)    Underwritten Offering. The Holders of Registrable Securities may on no
more than four (4) occasions after the Resale Shelf Registration Statement
becomes effective deliver a written notice to the Company specifying that the
sale of some or all of the Registrable Securities subject to the Shelf
Registration is intended to be conducted through an underwritten offering (the
“Underwritten Offering”); provided, however, that the anticipated gross proceeds
of any such Underwritten Offering must not be less than twenty-five million
dollars ($25,000,000) (unless the Holders are proposing to sell all of their
remaining Registrable Securities). In the event of an Underwritten Offering:

(c)    The Holders of a majority of the Registrable Securities participating in
the Underwritten Offering shall select the managing underwriter or underwriters
to administer the Underwritten Offering; provided, that the choice of such
managing underwriter or underwriters shall be subject to the consent of the
Company, which is not to be unreasonably withheld, conditioned or delayed.

(d)    Notwithstanding any other provision of this Section 1.6, if the managing
underwriter or underwriters of a proposed Underwritten Offering advises the
Board of Directors of the Company that in its or their opinion the number of
Registrable Securities requested to be included in such Underwritten Offering
exceeds the number which can be sold in such Underwritten Offering in light of
market conditions, the Registrable Securities shall be included on a pro rata
basis upon the number of securities that each Holder shall have requested to be
included in such offering. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the managing underwriter or underwriters. No Holder shall be
named as an “underwriter” in any Registration Statement without such Holder’s
prior written consent.

ARTICLE II

COMPANY REGISTRATION

Section 2.1 Piggyback Registration. If at any time or from time to time the
Company determines to file a registration statement with respect to an offering
(or to make an underwritten public offering pursuant to a previously filed
registration statement) of its Common Stock, whether or not for its own account
(other than an Excluded Registration), the Company will, at each such time:

(a)    promptly give to each Holder written notice thereof, which notice shall
be given, to the extent reasonably practicable, no later than ten (10) business
days prior to the filing or launch date (except in the case of an offering that
is an “overnight offering”, in which case such notice must given no later than
one (1) business day prior to the filing or launch date); and

(b)    subject to Section 2.2, include in such registration or underwritten
offering (and any related qualification under blue sky laws or other compliance)
all the Registrable Securities specified in a written request or requests made
within ten (10) days after receipt of such written notice from the Company by
any Holder, if the Registrable Securities requested by such Holder for inclusion
in such registration or underwritten offering have a market value of $1,000,000
or more immediately prior to the Company’s receipt of such request.

Section 2.2 Underwriting. The right of any Holder to registration pursuant to
this Article II shall be conditioned upon such Holder’s participation in such
underwriting and the inclusion of Registrable Securities in the underwriting to
the extent provided herein. Each Holder proposing to distribute its securities
through such underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into and perform
such Holder’s obligations under an underwriting agreement with the managing
underwriter selected for such underwriting by the Company (such underwriting
agreement to be in the form negotiated by the Company). Notwithstanding any
other provision of this Article II, if the managing underwriter or underwriters
of a proposed underwritten offering

 

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with respect to which Holders of Registrable Securities have exercised their
piggyback registration rights advise the Board of Directors of the Company that
in its or their opinion the number of Registrable Securities requested to be
included in the offering thereby and all other securities proposed to be sold in
the offering exceeds the number which can be sold in such underwritten offering
without being likely to have an adverse effect on the price, timing or
distribution of the Registrable Securities offered in light of market
conditions, the Registrable Securities and such other securities to be included
in such underwritten offering shall be allocated, (a) first, up to the total
number of securities that the Company has requested to be included in such
registration and (b) second, and only if all the securities referred to in
clause (a) have been included, up to the total number of securities that the
Holders and other holders of securities that have contractual rights to be
included in such registration have requested to be included in such offering
(pro rata based upon the number of securities that each of them shall have
requested to be included in such offering) and (c) third, and only if all the
securities referred to in clause (b) have been included, all other securities
proposed to be included in such offering that, in the opinion of the managing
underwriter or underwriters can be sold without having such adverse effect. If
any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the managing
underwriter or underwriters. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.

Section 2.3 Right to Terminate Registration. The Company shall have the right to
terminate or withdraw any registration under this Article II prior to the
effectiveness thereof, whether or not any Holder has elected to include
securities in such registration.

ARTICLE III

ADDITIONAL PROVISIONS REGARDING REGISTRATION RIGHTS

Section 3.1 Registration Procedures. In the case of each registration effected
by the Company pursuant to Article I or II, the Company will keep each Holder
participating in such Registration reasonably informed as to the status thereof
and, at its expense, the Company will:

(a)    prepare and file with the Commission a registration statement with
respect to such securities in accordance with the applicable provisions of this
Agreement;

(b)    prepare and file with the Commission such amendments, including
post-effective amendments, and supplements to such registration statement and
the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement
(including to permit the intended method of distribution thereof) and as may be
necessary to keep the registration statement continuously effective for the
period set forth in this Agreement;

(c)    furnish to the Holders participating in such registration and to their
legal counsel copies of the registration statement proposed to be filed, and
provide such Holders and their legal counsel the reasonable opportunity to
review and comment on such registration statement;

(d)    furnish to the Holders participating in such registration and to the
underwriters of the securities being registered such reasonable number of copies
of the registration statement, preliminary prospectus and final prospectus as
the such underwriters may reasonably request in order to facilitate the public
offering of such securities;

(e)    use reasonable best efforts to notify each Holder of Registrable
Securities covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
Company’s knowledge of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a

 

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material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or incomplete in the
light of the circumstances then existing, and, subject to Section 3.1(n), at the
request of any such Holder, prepare promptly and furnish to such Holder a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the purchaser
of such shares, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or incomplete in the
light of the circumstances then existing;

(f)    use reasonable best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions;

(g)    in the event that the Registrable Securities are being offered in an
underwritten public offering, enter into and perform its obligations under an
underwriting agreement on customary terms and in accordance with the applicable
provisions of this Agreement;

(h)    in connection with an underwritten public offering, cause its officers to
use their reasonable best efforts to support the marketing of the Registrable
Securities covered by such offering (including participation in “road shows” or
other similar marketing efforts);

(i)    if such securities are being sold through underwriters, (i) furnish, on
the date that such Registrable Securities are delivered to the underwriters, an
opinion, dated as of such date, of the legal counsel representing the Company
for the purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and a “negative assurance letter,” dated as of such date,
of the legal counsel representing the Company for purposes of such registration,
in form and substance as is customarily given to underwriters and (ii) furnish,
on the date of the underwriting agreement and on the date that the Registrable
Securities are delivered to the underwriters, a letter dated as of such date,
from the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters;
and

(j)    use reasonable best efforts to list the Registrable Securities covered by
such registration statement with any securities exchange on which the Common
Stock is then listed;

(k)    in connection with a customary due diligence review, make available for
inspection by the Holders, any underwriter participating in any such disposition
of Registrable Securities, if any, and any counsel or accountants retained by
the Holders or underwriter (collectively, the “Offering Persons”), pertinent
financial and other records, corporate documents and properties of the Company
and its subsidiaries, and cause the officers, directors and employees of the
Company and its subsidiaries to supply such information and participate in
customary due diligence sessions in each case reasonably requested by any such
representative, underwriter, counsel or accountant in connection with such
registration statement, subject to customary confidentiality obligations to be
agreed with the Offering Persons;

(l)    cooperate with the Holders and each underwriter or agent participating in
the disposition of Registrable Securities and their respective counsel in
connection with any filings required to be made with FINRA;

 

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(m)    as promptly as is reasonably practicable notify the Holders (i) when the
prospectus or any prospectus supplement or post-effective amendment has been
filed and, with respect to such registration statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the
Commission or other federal or state governmental authority for amendments or
supplements to such registration statement or related prospectus or to amend or
to supplement such prospectus or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of
such registration statement or the initiation of any proceedings for such
purpose, (iv) if at any time the Company has reason to believe that the
representations and warranties of the Company or any of its subsidiaries
contained in any agreement (including any underwriting agreement contemplated by
Section 3.1(g) above) cease to be true and correct or (v) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any proceeding for such
purpose; and

(n)    notwithstanding any other provision of this Agreement, if the Board of
Directors of the Company has determined in good faith that the disclosure
necessary for continued use of the prospectus and registration statement by the
Holders could be materially detrimental to the Company, the Company shall have
the right not to file or not to cause the effectiveness of any registration
covering any Registrable Securities and to suspend the use of the prospectus and
the registration statement covering any Registrable Security for such period of
time as its use would be materially detrimental to the Company by delivering
written notice of such suspension to all Holders listed on the Company’s
records; provided, however, that in any 12-month period the Company may exercise
the right to such suspension not more than twice. From and after the date of a
notice of suspension under this Section 3.1(n), each Holder agrees not to use
the prospectus or registration statement until the earlier of (i) notice from
the Company that such suspension has been lifted or (ii) the day following the
ninetieth (90th) day of suspension within any 12-month period.

Section 3.2 Limitation on Subsequent Registration Rights. From and after the
date hereof, the Company shall not enter into any agreement granting any holder
or prospective holder of any securities of the Company registration rights with
respect to such securities that conflict with the rights granted to the Holders
herein, without the prior written consent of Holders of a majority of the
Registrable Securities. It is agreed that the granting of pro rata registration
rights to any other investor in the Company shall not be considered to conflict
with the rights granted to the Holders herein.

Section 3.3 Expenses of Registration. All Registration Expenses incurred in
connection with any registration pursuant to Article I or II shall be borne by
the Company. All Selling Expenses relating to securities registered on behalf of
the Holders shall be borne by the Holders of the registered securities included
in such registration.

Section 3.4 Information by Holders. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and their Affiliates, the
Registrable Securities held by them and the distribution proposed by such Holder
or Holders and their Affiliates as the Company may reasonably request in writing
and as shall be required in connection with any registration, qualification or
compliance referred to in this Agreement. It is understood and agreed that the
obligations of the Company under Article I or II are conditioned on the timely
provisions of the foregoing information by such Holder or Holders and, without
limitation of the foregoing, will be conditioned on compliance by such Holder or
Holders with the following:

(a)    such Holder or Holders will, and will cause their respective Affiliates
to, cooperate with the Company in connection with the preparation of the
applicable registration statement, and for so long as the Company is obligated
to keep such registration statement effective, such Holder or Holders will and
will cause their respective Affiliates to, provide to the Company, in writing
and in a timely manner, for use in such registration statement (and expressly
identified in writing as such), all information regarding themselves and their
respective Affiliates and such other information as may be required by
applicable law

 

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to enable the Company to prepare such registration statement and the related
prospectus covering the applicable Registrable Securities owned by such Holder
or Holders and to maintain the currency and effectiveness thereof;

(b)    during such time as such Holder or Holders and their respective
Affiliates may be engaged in a distribution of the Registrable Securities, such
Holder or Holders will, and they will cause their Affiliates to, comply with all
laws applicable to such distribution, including Regulation M promulgated under
the Exchange Act, and, to the extent required by such laws, will, and will cause
their Affiliates to, among other things: (i) not engage in any stabilization
activity in connection with the securities of the Company in contravention of
such laws; (ii) distribute the Registrable Securities acquired by it solely in
the manner described in the applicable registration statement; and (iii) if
required by applicable law, cause to be furnished to each agent or broker-dealer
to or through whom such Registrable Securities may be offered, or to the offeree
if an offer is made directly by such Holder or Holders or their respective
Affiliates, such copies of the applicable prospectus (as amended and
supplemented to such date) and documents incorporated by reference therein as
may be required by such agent, broker-dealer or offeree;

(c)    such Holder or Holders shall, and they shall cause their respective
Affiliates to, permit the Company and its representatives and agents to examine
such documents and records and will supply in a timely manner any information as
they may be reasonably request to provide in connection with the offering or
other distribution of Registrable Securities by such Holder or Holders; and

(d)    on receipt of written notice from the Company of the happening of any of
the events specified in Section 3.1(m) or Section 3.1(n), or that requires the
suspension by such Holder or Holders and their respective Affiliates of the
distribution of any of the Registrable Securities owned by such Holder or
Holders, then such Holders shall, and they shall cause their respective
Affiliates to, cease offering or distributing the Registrable Securities owned
by such Holder or Holders until the offering and distribution of the Registrable
Securities owned by such Holder or Holders may recommence in accordance with the
terms hereof and applicable law.

Section 3.5 Rule 144 Reporting. With a view to making available the benefits of
Rule 144 to the Holders, the Company agrees that, for so long as a Holder owns
Registrable Securities or Series B Eligible Stock, the Company will use
reasonable best efforts to:

(a)    make and keep public information available, as those terms are understood
and defined in Rule 144;

(b)    file with the Commission in a timely manner all reports and other
documents required of the Company under the Exchange Act; and

(c)    so long as a Holder owns any Restricted Securities or Series B Eligible
Stock, furnish to the Holder forthwith upon written request a written statement
by the Company as to its compliance with the reporting requirements of the
Exchange Act.

Section 3.6 “Market Stand-Off” Agreement. The Holders shall not sell, transfer,
make any short sale of, grant any option for the purchase of, or enter into any
hedging or similar transaction with the same economic effect as a sale with
respect to, any Common Stock (or other securities of the Company) held by the
Holders (other than those included in the registration) for a period specified
by the representatives of the managing underwriter or underwriters of Common
Stock (or other securities of the Company convertible into Common Stock) not to
exceed five (5) days prior and ninety (90) days following any registered public
sale of securities by the Company in which the Company gave the Holders an
opportunity to participate in accordance with Article II. Each of the Holders
also shall execute and deliver any “lock-up” agreement reasonably requested by
the representatives of any underwriters of the Company.

 

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Section 3.7 Insider Trading Policy. So long as any designee or nominee of the
Holders or their Affiliates sits on the Board of Directors of the Company, the
Holders shall, and shall cause their Affiliates, to comply with the Company’s
insider trading policy.

ARTICLE IV

INDEMNIFICATION

Section 4.1 Indemnification by Company. To the extent permitted by applicable
law, the Company will, with respect to any Registrable Securities as to which
registration or qualification or compliance under applicable “blue sky” laws has
been effected pursuant to this Agreement, indemnify each Holder, each Holder’s
current and former officers, directors, partners and members, and each Person
controlling such Holder within the meaning of Section 15 of the Securities Act,
and each underwriter thereof, if any, and each Person who controls any such
underwriter within the meaning of Section 15 of the Securities Act
(collectively, the “Company Indemnified Parties”), against all expenses, claims,
losses, damages and liabilities, joint or several, (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, preliminary prospectus, offering circular or other document, or any
amendment or supplement thereto incident to any such registration, qualification
or compliance or based on any 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 in which they were made, not misleading,
or any violation by the Company of any rule or regulation promulgated under the
Securities Act, Exchange Act or state securities laws applicable to the Company
in connection with any such registration, and the Company will reimburse each of
the Company Indemnified Parties for any reasonable legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action, as such expenses are incurred.
The indemnity agreement contained in this Section 4.1 shall not apply to amounts
paid in settlement of any loss, claim, damage, liability or action if such
settlement is effected without the prior written consent of the Company (which
consent shall not be unreasonably withheld or delayed), nor shall the Company be
liable to a Holder 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 or
alleged violation of any state or federal law (including any claim arising out
of or based on any untrue statement or alleged untrue statement or omission or
alleged omission in the registration statement or prospectus) which occurs in
reliance upon or in conformity with written information furnished expressly for
use in connection with such registration by or on behalf of any Holder.

Section 4.2 Indemnification by Holders. To the extent permitted by applicable
law, each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration or qualification or
compliance under applicable “blue sky” laws is being effected, indemnify,
severally and not jointly, the Company, each of its directors, officers,
partners and members, each underwriter, if any, of the Company’s securities
covered by such a registration, each Person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other Holder and each of such Holder’s officers, directors, partners and members
and each Person controlling such Holder within the meaning of Section 15 of the
Securities Act (collectively, the “Holder Indemnified Parties”), against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, preliminary prospectus, offering circular or other document, or any
amendment or supplement thereto incident to any such registration, qualification
or compliance or based on any 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 in which they were made, not misleading,
or any violation by such Holder of any rule or regulation promulgated under the
Securities Act, Exchange Act or state securities law applicable to such Holder,
and will reimburse each of the Holder Indemnified Parties for any reasonable
legal or any other expenses reasonably incurred in connection with
investigating, preparing or defending

 

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any such claim, loss, damage, liability or action, as such expenses are
incurred, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon or in conformity with written information furnished to
the Company by such Holder and stated to be specifically for use therein,
provided, however, that in no event shall any indemnity under this Section 4.2
payable by a Holder exceed the amount by which the net proceeds actually
received by such Holder from the sale of Registrable Securities included in such
registration exceeds the amount of any other losses, expenses, settlements,
damages, claims and liabilities that such Holder has been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission or violation. The indemnity agreement contained in this Section 4.2
shall not apply to amounts paid in settlement of any loss, claim, damage,
liability or action if such settlement is effected without the prior written
consent of the applicable Holder (which consent shall not be unreasonably
withheld or delayed).

Section 4.3 Notification. Each party entitled to indemnification under this
Article IV (the “Indemnified Party”) shall give notice to the party required to
provide indemnification (the “Indemnifying Party”) promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided, however, that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not unreasonably be withheld or delayed), and the Indemnified Party may
participate in such defense at such party’s expense; provided, further, however,
that an Indemnified Party (together with all other Indemnified Parties) shall
have the right to retain one (1) separate counsel, with the 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 conflicting interests between such Indemnified Party and
any other party represented by such counsel in such proceeding. The failure of
any Indemnified Party to give notice as provided herein shall relieve the
Indemnifying Party of its obligations under this Article IV, only to the extent
that, the failure to give such notice is materially prejudicial or harmful to an
Indemnifying Party’s ability to defend such action. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the prior
written consent of each Indemnified Party (which consent shall not be
unreasonably withheld or delayed), consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. The indemnity agreements
contained in this Article IV shall not apply to amounts paid in settlement of
any loss, claim, damage, liability or action if such settlement is effected
without the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed. The indemnification set forth in this
Article IV shall be in addition to any other indemnification rights or
agreements that an Indemnified Party may have.

Section 4.4 Contribution. If the indemnification provided for in this Article IV
is held by a court of competent jurisdiction to be unavailable to an Indemnified
Party, other than pursuant to its terms, with respect to any claim, loss,
damage, liability or action referred to therein, then, subject to the
limitations contained in Article IV, the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such claim, loss,
damage, liability or action in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and the Indemnified
Party on the other in connection with the actions that resulted in such claims,
loss, damage, liability or action, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact related 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. The Company and the Holders agree that it would not be
just

 

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and equitable if contribution pursuant to this Section 4.4 were based solely
upon the number of entities from whom contribution was requested or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this Section 4.4. In no event shall any Holder’s
contribution obligation under this Section 4.4 exceed the amount by which the
net proceeds actually received by such Holder from the sale of Registrable
Securities included in such registration exceeds the amount of any other losses,
expenses, settlements, damages, claims and liabilities that such Holder has been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission or violation. No Person guilty of fraudulent
misrepresentation (within the meaning of the Securities Act) shall be entitled
to contribution from any Person who was not guilty of such fraudulent
misrepresentation.

ARTICLE V

TRANSFER AND TERMINATION OF REGISTRATION RIGHTS

Section 5.1 Transfer of Registration Rights. The rights to cause the Company to
register securities granted to a Holder under this Agreement may be assigned to
a Permitted Transferee in connection with any transfer or assignment of
Registrable Securities to such Permitted Transferee in accordance with the
Subscription Agreement; provided, however, that (a) such transfer is otherwise
effected in accordance with applicable securities laws, (b) prior written notice
of such assignment is given to the Company, and (c) such Permitted Transferee
agrees in writing to be bound by, and subject to, this Agreement as a “Holder”
pursuant to a written instrument in form and substance reasonably acceptable to
the Company.

Section 5.2 Termination of Registration Rights. The rights of any particular
Holder to cause the Company to register securities under Articles I and II shall
terminate with respect to such Holder upon the date upon which such Holder no
longer holds any Registrable Securities.

ARTICLE VI

MISCELLANEOUS.

Section 6.1 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
will become effective when one or more counterparts have been signed by a party
and delivered to the other parties. Copies of executed counterparts transmitted
by telecopy, telefax or other electronic transmission service shall be
considered original executed counterparts for purposes of this Section 6.1,
provided that receipt of copies of such counterparts is confirmed.

Section 6.2 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the state of New York, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the state of
New York or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the state of New York.

Section 6.3 Binding Arbitration.

(a)    The parties hereto desire and agree that any arbitration proceedings
shall be conducted before one arbitrator to be selected pursuant to the
Comprehensive Arbitration Rules (the “Arbitrator”) as expeditiously as possible
and acknowledge that expeditious arbitration is in the interest of the parties
hereto. The parties hereto agree that the arbitration must be concluded,
including the rendering of any award by the Arbitrator (the “Award”), not more
than ninety (90) days following selection of the Arbitrator. The parties hereto
further agree that the Arbitrator shall have the authority to impose any interim
deadlines, including shortening any deadlines provided in the Comprehensive
Arbitration Rules, to ensure that this ninety (90)-day deadline is met. The
Arbitrator must agree to the foregoing ninety (90) day deadline before accepting
appointment. Failure to meet the ninety (90) day deadline, however, will not
render the Award invalid, unenforceable or subject to being vacated. However,
the parties hereto may

 

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mutually agree to modify the ninety (90)-day deadline and, if they do so, the
Arbitrator shall accommodate such parties’ mutual agreement. The Arbitrator
shall have no power to alter or disregard any express language in this Agreement
and may not reform this Agreement under equitable or other principles.

(b)    The parties hereto shall maintain the confidential nature of the
arbitration proceeding, except as may be necessary in connection with a court
application for a provisional or preliminary remedy, a court action to challenge
or enforce the Award, or as otherwise required by law or judicial decision. The
parties hereto further agree that the Arbitrator shall render the Award in
writing and explain the decision which, to the extent possible, shall not
include confidential information.

(c)    The parties hereto waive to the fullest extent permitted by law any
rights to appeal or to review of the Award by any court or tribunal.

(d)    For the avoidance of doubt, in the event of a conflict between this
Section 6.3 and the Comprehensive Arbitration Rules, this Section 6.3 controls.

Section 6.4 Entire Agreement; No Third Party Beneficiary. This Agreement and the
Subscription Agreement contain the entire agreement by and among the parties
with respect to the subject matter hereof and all prior negotiations, writings
and understandings relating to the subject matter of this Agreement. Except as
provided in Article IV, this Agreement is not intended to confer upon any Person
not a party hereto (or their successors and permitted assigns) any rights or
remedies hereunder.

Section 6.5 Expenses. Except as provided in Section 3.3, all fees, costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including accounting and legal fees shall be paid by the
party incurring such expenses.

Section 6.6 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given or made as follows: (a) if sent by registered or certified mail in the
United States return receipt requested, upon receipt; (b) if sent by nationally
recognized overnight air courier, one (1) business day after mailing; (c) if
sent by e-mail transmission, upon receipt; and (d) if otherwise actually
personally delivered, when delivered, provided, that such notices, requests,
demands and other communications are delivered to the address set forth below,
or to such other address as any party shall provide by like notice to the other
Parties to this Agreement:

If to the Company, to:

Digimarc Corporation

9405 SW Gemini Drive

Beaverton, OR 97008

Attention: Robert Chamness

Email: rchamness@digimarc.com

with a copy (which shall not constitute notice) to:

Perkins Coie LLP

1120 NW Couch Street, 10th Floor

Portland, OR 97209-4128

Attention: Roy W. Tucker; Gina Eiben

Facsimile: (503) 727-2222

Email: rtucker@perkinscoie.com; geiben@perkinscoie.com

If to the Investor, to:

 

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TCM Strategic Partners L.P.

26 Tahiti Beach Island Road

Coral Gables, FL 33143

Attention: Riley McCormack

E-mail: rm@tracercap.com

with a copy (which shall not constitute notice) to:

Sidley Austin LLP

555 California Street, Suite 2000

San Francisco, California 94104

Attention: Vijay S. Sekhon and Benson Cohen

E-mail: vsekhon@sidley.com and brcohen@sidley.com

Section 6.7 Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Except as provided in Section 5.1, no assignment of this
Agreement or of any rights or obligations hereunder may be made by any party
hereto without the prior written consent of the other parties hereto. Any
purported assignment or delegation in violation of this Agreement shall be null
and void ab initio.

Section 6.8 Headings. The Section, Article and other headings contained in this
Agreement are inserted for convenience of reference only and will not affect the
meaning or interpretation of this Agreement.

Section 6.9 Amendments and Waivers. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the Company
and the Holders of a majority of the Registrable Securities outstanding at the
time of such amendment. Any party hereto may, only by an instrument in writing,
waive compliance by any other party or parties hereto with any term or provision
hereof on the part of such other party or parties hereto to be performed or
complied with. No failure or delay of any party in exercising any right or
remedy hereunder shall operate as a waiver thereof, nor will any single or
partial exercise of any right or power, or any abandonment or discontinuance of
steps to enforce such right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The waiver by any party
hereto of a breach of any term or provision hereof shall not be construed as a
waiver of any subsequent breach. The rights and remedies of the parties
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have hereunder.

Section 6.10 Interpretation; Absence of Presumption.

(a)    For the purposes hereof: (i) words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other gender as the context requires; (ii) the terms “hereof,”
“herein,” and “herewith” and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and paragraph references are
to the Sections and paragraphs in this Agreement unless otherwise specified;
(iii) the word “including” and words of similar import when used in this
Agreement shall mean “including, without limitation,” unless the context
otherwise requires or unless otherwise specified; and (iv) the word “or” shall
not be exclusive.

(b)    With regard to each and every term and condition of this Agreement, the
parties hereto understand and agree that the same have or has been mutually
negotiated, prepared and drafted, and if at any time the parties hereto desire
or are required to interpret or construe any such term or condition, no
consideration will be given to the issue of which party hereto actually
prepared, drafted or requested any term or condition of this Agreement.

 

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Section 6.11 Severability. Any provision hereof that is held to be invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
shall be ineffective only to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof,
provided, however, that the parties will attempt in good faith to reform this
Agreement in a manner consistent with the intent of any such ineffective
provision for the purpose of carrying out such intent.

(The next page is the signature page)

 

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first above written.

 

DIGIMARC CORPORATION By:  

/s/ Robert P. Chamness

  Name: Robert P. Chamness  

Title: Executive Vice President, Chief Legal

          Officer and Secretary

TCM STRATEGIC PARTNERS L.P.

 

By: TCM Strategic GP LLC, its general partner

By:  

/s/ Riley McCormack

  Name: Riley McCormack   Title: Manager

[Signature Page to Registration Rights Agreement]

 

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EXHIBIT A

DEFINED TERMS

1. The following capitalized terms have the meanings indicated:

“Affiliate” of any Person means any Person, directly or indirectly, controlling,
controlled by or under common control with such Person.

“Automatic Shelf Registration Statement” means an “automatic shelf registration
statement” as defined under Rule 405.

“Commission” means the Securities and Exchange Commission.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
similar successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.

“Excluded Registration” means (i) a registration relating to the sale or grant
of securities to employees of the Company or a subsidiary pursuant to a stock
option, stock purchase, equity incentive or similar plan; (ii) a registration
relating to an SEC Rule 145 transaction; or (iii) a registration in which the
only Common Stock being registered is Common Stock issuable upon conversion of
debt securities that are also being registered.

“Holder” means (a) the Investor and (b) any Permitted Transferee to which the
rights under this Agreement have been transferred in accordance with
Section 5.1.

“Permitted Transferee” has the meaning given to such term in the Subscription
Agreement.

“Person” means an individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization, other
legal entity, or any government or governmental agency or authority.

“register”, “registered” and “registration” refer to a registration effected by
preparing and filing a registration statement in compliance with the Securities
Act, and the declaration or ordering of the effectiveness of such registration
statement.

“Registration Expenses” means (a) all expenses incurred by the Company in
complying with Articles I and II, including, without limitation, all
registration, qualification, listing and filing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company, blue sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration; and (b) the fees and expenses of any counsel to the Holders;
provided, however, that, in the case of this clause (b), such fees and expenses
shall not exceed $25,000 with respect to any particular registration pursuant to
Article I or II.

“Registrable Securities” means (a) the Closing Shares (as defined in the
Subscription Agreement), (b) any shares of Common Stock actually issued upon
conversion of the Series B Convertible Preferred Stock, and (c) any other shares
of Common Stock issued in respect of the securities described in clauses (a) or
(b) above upon any stock split, stock dividend, recapitalization,
reclassification, merger, consolidation or similar event; provided, however,
that the securities described in clauses (a), (b) and (c) above shall only be
treated as Registrable Securities until the earliest of: (i) the date on which
such security has been registered under the Securities Act and disposed of in
accordance with an effective registration statement relating thereto; (ii) the
date on which such security may be transferred or sold without restriction
(including with respect to time, volume and manner of sale) under Rule 144; or
(iii) the date on which such security is transferred in a transaction pursuant
to which the registration rights are not also assigned in accordance with
Section 5.1.

 

A-1

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“Restricted Securities” means any Common Stock required to bear the legend set
forth in Section 4.3(a) of the Subscription Agreement.

“Rule 144” means Rule 144 promulgated under the Securities Act and any successor
provision.

“Rule 405” means Rule 405 promulgated under the Securities Act and any successor
provision.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder or any similar federal statute and the rules
and regulations of the Commission thereunder, all as the same shall be in effect
at the time.

“Selling Expenses” means all underwriting discounts, selling commissions and
stock transfer taxes applicable to the securities registered by the Holders.

“Series B Eligible Stock” means Series B Convertible Preferred Stock until the
earlier of: (i) the date on which such security may be transferred or sold
without restriction (including with respect to time, volume and manner of sale)
under Rule 144; or (ii) the date on which such security is transferred in a
transaction pursuant to which the rights under this Agreement are not also
assigned in accordance with Section 5.1.

“Shelf Registration” means the Resale Shelf Registration or a Subsequent Shelf
Registration, as applicable.

“WKSI” means a “well-known seasoned issuer” as defined under Rule 405.

2. The following terms are defined in the Sections of the Agreement indicated:

INDEX OF TERMS

 

Term

  

Section

Agreement    Preamble Arbitrator    Section 6.2(a) Award    Section 6.2(a)
Company    Preamble Company Indemnified Parties    Section 4.1 Effectiveness
Period    Section 1.2 Holder    Section 5.1 Holder Indemnified Parties   
Section 4.2 Indemnified Party    Section 4.3 Indemnifying Party    Section 4.3
Investor    Preamble Market Stand-Off    Section 3.6 Resale Shelf Registration
   Section 1.1 Resale Shelf Registration Statement    Section 1.1 Subscription
Agreement    Preamble Subsequent Holder Notice    Section 1.5 Subsequent Shelf
Registration    Section 1.3 Underwritten Offering    Section 1.6(b)

 

A-2