EXHIBIT 10.1

EMPLOYMENT AGREEMENT

 

 

THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into effective as of
August 10, 2020 (the "Effective Date") at Beaverton, Oregon between DIGIMARC
CORPORATION, an Oregon corporation ("Digimarc") with offices at 9405 SW Gemini
Drive, Beaverton, Oregon 97008, and BRUCE DAVIS ("Executive").

 

WITNESSETH:

 

WHEREAS, Executive is Chairman of the Board and Chief Executive Officer
of Digimarc;

 

WHEREAS, Digimarc and Executive wish to memorialize the terms of Executive's
employment in a written agreement; and

 

WHEREAS, this Agreement shall replace Executive's prior employment agreement
with Digimarc, dated September 1, 2017, which shall terminate as of the
Effective Date and as described in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and in consideration of the
mutual promises and agreements contained herein, the parties hereto agree as
follows:

 

1.DEFINITIONS.

 

For purposes of this Agreement, the following terms shall have the following
meanings:

 

a. "Affiliate" shall mean any person or entity that directly or indirectly
controls, is controlled by, or is under common control with Digimarc.  

 

b."Change of Control" shall mean: (i) any Person (as defined in Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), other than
a broker, bank, or trust company holding common stock of Digimarc for the
account of customers who are not members of a "group" (within the meaning of
Section 13(d) of the Exchange Act), becoming the record or beneficial owner of
50% or more of any class of Digimarc's voting equity securities, as disclosed by
Digimarc's stock records or in any other way, including, without limitation, any
filing with the Securities and Exchange Commission or otherwise; (ii) the
purchase of 50% or more of any class of Digimarc's voting equity securities
pursuant to any tender offer or exchange offer for shares of Digimarc's stock,
other than one made by Digimarc; (iii) any merger, consolidation, reorganization
or other transaction providing for the conversion or exchange of more than fifty
percent (50%) of the outstanding shares of Digimarc's stock into securities of a
third party, or cash, or property, or a combination of any of the foregoing; or
(iv) the sale of substantially all of the assets of Digimarc.

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c."Code" shall mean the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder.

 

d."Section 280G" shall mean Code Section 280G and the Treasury regulations
promulgated thereunder or any similar or successor provision.

 

2.PERIOD OF EMPLOYMENT.

 

Digimarc agrees to employ Executive, and Executive agrees to be so employed, on
the terms and conditions set forth herein for the period beginning on the
Effective Date and ending on the third anniversary of the Effective Date, or on
the termination date if earlier terminated as set forth herein ("Term").

 

3.DUTIES AND RESPONSIBILITIES.

 

a.Position.  Executive will serve as Chief Executive Officer of Digimarc in
conformity with general management policies, guidelines and directions issued by
the Board of Directors of Digimarc (the "Board"), and shall perform all services
appropriate to that position as designated from time to time by the
Board.  Executive will report directly to the Board, and will have general
charge and supervision of those functions and such other responsibilities as are
customary for his position.  As long as Executive serves as Chief Executive
Officer, it is the intention of Digimarc that he will continue to be nominated
to serve on the Board.  It is the current intention of the Board that Executive,
if serving on the Board, will also serve as Chairman of Board; provided,
however, that the foregoing statement of intent shall in no way derogate from
the Board's right and power to act as it deems appropriate in the future.

 

b.Duties.  Executive will work exclusively for Digimarc on a full-time basis,
devoting all of his time and attention during normal business hours to
Digimarc's business.  Executive will perform his duties and responsibilities
hereunder diligently, faithfully and loyally in order to facilitate the proper,
efficient and successful operation of Digimarc's business.

 

c.Other Activity.  Except upon the prior approval of the Board, Executive
(during the Term) shall not (i) accept any other employment; or (ii) engage,
directly or indirectly, in any other business, commercial, or professional
activity (whether or not pursued for pecuniary advantage) that is or may be
competitive with Digimarc, that might create a conflict of interest with
Digimarc, or that otherwise might interfere with the business of Digimarc or any
Affiliate or the performance of Executive's duties and obligations to
Digimarc.  So that Digimarc may be aware of the extent of any other demands upon
Executive's time and attention, Executive shall disclose in confidence to
Digimarc the nature and scope of any other business activity in which he is or
becomes engaged during the Term.

 

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4.COMPENSATION AND BENEFITS.

 

As compensation for Executive's services, Executive will receive a cash salary,
be eligible to receive an annual cash bonus, and participate in the Company's
stock-based compensation plan, subject to the terms and conditions set forth in
this Agreement.

 

a.Salary.  During the Term, Executive will be paid an initial base salary of
$785,000 per year until December 31, 2021, and for the remainder of the Term
will be paid a base salary determined annually by the Board. All salary shall be
payable in such installments as are consistent with Digimarc's general payroll
practices as they may be amended, by Digimarc in its sole discretion, during the
Term. All compensation and comparable payments to be paid to Executive under
this Agreement shall be less withholdings required by law.

 

b.Target Bonus. Beginning January 1, 2021, and in each fiscal year during the
remainder of the Term, Executive will be eligible to receive an annual cash
bonus based upon the achievement of performance goals determined by the
Compensation Committee of the Board (the "Committee") in consultation with
Executive. For the fiscal year ending December 31, 2021, the target bonus shall
be $200,000 (the "Target Bonus") and the actual amount of cash bonus earned
shall be, subject to meeting threshold performance levels (below which no bonus
shall be earned), from 50% to a maximum of 150% of the Target Bonus. Any annual
cash bonus payable under this Section 4.b will be paid within sixty (60) days
after the end of the applicable fiscal year, subject to Executive’s continued
employment with Digimarc through the end of the applicable fiscal year. The
Committee will have discretion to pay any annual cash bonus in the form of fully
vested restricted stock units, with the number of such units calculated by
dividing the cash amount of the bonus by the average price of a share of
Digimarc's common stock for the twenty trading days preceding the payment date.

 

c.Long Term Incentives.  The Committee has approved the equity grants to
Executive described in clause (i) and (ii) below, and will, within thirty (30)
days of the Effective Date, approve the equity grant to Executive described in
clause (iii) below, in each case subject to the terms and conditions of
Digimarc's 2018 Incentive Plan and the vesting and any other terms as set forth
in this Agreement.

 

i.45,000 time-based restricted stock units ("RSUs") that will vest in three
equal annual installments over a three-year vesting period, the first
installment to vest on the first anniversary of the Effective Date.

 

ii.105,000 time-based stock options that will vest in three equal annual
installments over a three-year vesting period, the first installment to vest on
the first anniversary of the Effective Date.

 

iii.A number of performance-based restricted stock units (the "PSUs") that is
the greater of (x) 88,000, and (y) the number of PSUs with an aggregate fair
value, as of the Effective Date, of approximately $1,250,000, with the specific
number of shares

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subject to the PSUs to be calculated using the valuation determined by a
third-party valuation firm. The PSUs may be earned based on the achievement of
certain increases during the Term in the ninety-trading-day average stock price
of Digimarc common stock (the "Average Stock Price") in the following tranches:
(A) Tranche 1, comprising one-quarter of the PSUs granted on the grant date, to
be earned if the Average Stock Price increases to $25.00; (B) Tranche 2,
comprising one-quarter of the PSUs granted on the grant date, to be earned if
the Average Stock Price increases to $30.00; and (C) Tranche 3, comprising
one-half of the PSUs granted on the grant date, to be earned if the Average
Stock Price increases to $35.00. If earned based on achievement of the
applicable performance goal, each tranche will then be subject to time-based
vesting as follows: (A) Tranche 1 will vest and become payable on the later of
(x) the date its performance goal is met and (y) the first anniversary of the
Effective Date; (B) Tranche 2 will vest and become payable on the later of (x)
the date its performance goal is met and (y) the second anniversary of the
Effective Date; and (C) Tranche 3 will vest and become payable, if earned, on
the third anniversary of the Effective Date. The PSUs will be deemed earned, and
subject to time-based vesting, as to each tranche if the per-share purchase
price paid in connection with a Change in Control equals or exceeds the Average
Stock Price required for the respective tranche to be earned. Any PSUs that have
not been earned by the third anniversary of the Effective Date shall be
forfeited on that date.

 

d.Flexible Time Off. Executive will be entitled to flexible time off consistent
with that generally provided to other executives of Digimarc.

 

e.Life Insurance. Digimarc shall promptly reimburse Executive for the premiums
payable during the Term for a term life insurance policy, with Executive as
beneficiary, that will pay Executive's estate a death benefit of $3,000,000,
provided Executive requests such reimbursement and provides Digimarc with
evidence reasonably satisfactory to Digimarc of the amount of such premiums and
the fact that such premiums have been paid.  Such request must be made and such
evidence provided no later than the January 31 immediately following the end of
the calendar year in which Executive pays such premium.  (In lieu of
reimbursement, Digimarc may, in its sole and absolute discretion, elect to pay
such premiums directly to the insurance company.)  Executive agrees to use his
best efforts to apply for and obtain such policy, including submitting to
physical examinations and taking such other actions as may be necessary to
obtain such policy.

 

f.Other Benefits. Except as specifically provided elsewhere in this Agreement,
Digimarc will provide Executive with the same health, disability, retirement,
death and other fringe benefits as are generally provided to other executives of
Digimarc.  The amount and extent of benefits to which Executive is entitled
shall be governed by the specific benefit plan, as it may be amended from time
to time.  Digimarc reserves the ability, in its sole discretion, to adjust
Executive's benefits under this Agreement provided that such adjustments
generally apply to all executive officers.

 

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5.TERMINATION.

 

a.Executive's employment will terminate automatically upon Executive's death.

 

b.Executive's employment will terminate automatically on the last day of the
calendar month in which Digimarc determines that Executive is permanently
disabled.  For purposes of this Agreement, "permanent disability" shall be
defined as disability due to illness, accident or otherwise that renders
Executive unable to perform his regular duties for a period of more than three
(3) months.

 

c.Digimarc may terminate Executive's employment under this Agreement at any time
(i) immediately for Cause, or (ii) without Cause upon thirty (30) days written
notice to Executive.  "Cause" means (i) any act of personal dishonesty by
Executive in connection with his responsibilities as an officer or employee of
Digimarc, (ii) Executive's conviction of a felony, (iii) any act by Executive
which constitutes gross negligence or willful misconduct, (iv) any material
violation by Executive of his employment duties provided that if such violation
is curable, it has not been cured within (30) days after delivery to Executive
of a written demand for cure, or (v) any act that would constitute a material
violation of Digimarc's code of conduct or code of ethics or a material
violation of any restrictive covenants contained in this Agreement or any other
agreement between Digimarc and Executive or any Digimarc plan or
program.  Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
him a copy of a resolution duly adopted by the affirmative vote of a majority of
the independent members of the Board (i.e., excluding Executive).

 

d.Executive may terminate his employment under this Agreement for Good Reason
(as defined below) at any time upon thirty-one (31) days prior written notice to
Digimarc.  "Good Reason" means any of the following events, if done without
Executive's prior written consent:  (i) a material reduction in Executive's
authority, duties or responsibilities; (ii) a material reduction in Executive's
salary, other than in connection with a reduction of all executive salaries in
comparable percentages or (iii) relocation of Executive's geographic work
location to a location that is more than 50 miles from the Executive's
geographic work location on the Effective Date, except for required travel in
furtherance of Digimarc's business to the extent consistent with Executive's
duties.  Notwithstanding any provision in this Agreement to the contrary,
termination of employment by Executive will not be for Good Reason unless (i)
Executive notifies Digimarc in writing of the existence of the condition which
Executive believes constitutes Good Reason within ninety (90) days of the
Executive having actual knowledge of the initial existence of such condition
(which notice specifically identifies such condition), (ii) Digimarc fails to
remedy such condition within thirty (30) days after the date on which it
receives such notice (the "Remedial Period"), and (iii) Executive actually
terminates employment during the sixty-day (60-day) period immediately following
the expiration of the Remedial Period.

 

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e.Executive may otherwise voluntarily terminate his employment at any time upon
thirty (30) days prior written notice to Digimarc.

 

6.EFFECTS OF TERMINATION.

 

a.If Executive's employment is terminated by reason of Executive's death or
permanent disability under either Section 5.a or b of this Agreement, all
Digimarc obligations under this Agreement will end except that, subject to
Section 6.g of this Agreement, (i) Executive's unvested stock options and
restricted stock units, including any PSUs earned and subject to time-based
vesting, that would have vested if Executive's employment with Digimarc had
continued for an additional twenty-four (24) months following the termination
date will immediately vest and become exercisable; (ii) Executive's right to
exercise vested stock options will expire on the earliest of (A) the second
anniversary of the date of death or termination due to disability, (B) the
latest date the particular option could have expired by its original terms under
any circumstances, or (C) the tenth anniversary of the original date of grant of
the particular option; (iii) Digimarc will pay Executive any earned but unpaid
annual cash bonus; and (iv) if Executive's employment is terminated by reason of
Executive's death and Executive has been unable to obtain the life insurance
policy on Executive's life as set forth in Section 4.e, Executive will receive
salary continuation payments (at the salary rate in effect on the termination
date) according to Digimarc's standard payroll schedule for the six (6) month
period beginning immediately after Executive's termination date (and, for
purposes of Code Section 409A, each such installment shall be treated as a
separate and distinct payment).

 

b.If Digimarc terminates Executive for Cause or Executive voluntarily terminates
his employment (except for a termination for Good Reason under Section 5.d of
this Agreement), all Digimarc obligations under this Agreement will end except
for payment of any Compensation payable under Section 4 of this Agreement for
services performed prior to termination and reimbursement of properly authorized
business expenses incurred by Executive prior to termination.

 

c.If Digimarc terminates Executive without Cause under Section 5.c of this
Agreement or Executive terminates his employment for Good Reason under Section
5.d of this Agreement, in both cases other than following a Change of Control,
all Digimarc obligations under this Agreement will end, except that, subject to
Section 6.g of this Agreement, (i) Executive's unvested stock options and
restricted stock units, including any PSUs earned and subject to time-based
vesting, that would have vested if Executive's employment with Digimarc had
continued for an additional twenty-four (24) months following the termination
date will immediately vest and become exercisable; (ii) Digimarc will continue
to pay salary to Executive for two years from the date of termination (at the
salary rate in effect on the termination date) according to Digimarc's standard
payroll schedule; (iii) Digimarc will pay Executive any earned but unpaid annual
cash bonus; and (iv) if Executive and Executive's spouse and dependent children
are eligible for and timely (and properly) elect COBRA continuation coverage
under Digimarc's group health plan(s) pursuant to COBRA, Digimarc will pay the
premium for

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such coverage for a period of twenty-four (24) months following Executive's
termination date or until Executive is no longer entitled to COBRA continuation
coverage under Digimarc's group health plan(s), whichever period is shorter;
provided, however, that Executive shall not be entitled to any of the benefits
described in this Section 6.c of this Agreement if he breaches Sections 8 or 9
of this Agreement.  Subject to Section 6.g. of this Agreement, the compensation
described in this Section 6.c (ii) will be paid according to Digimarc's standard
payroll schedule from the date of termination, as if Executive had not been
terminated, and, for purposes of Code Section 409A, each such installment shall
be treated as a separate and distinct payment.  Executive's right to exercise
vested stock options will expire on the earliest of (A) the first anniversary of
the termination date, (B) the latest date the particular option could have
expired by its original terms under any circumstances, or (C) the tenth
anniversary of the original date of grant of the particular option.  Other than
as set forth in this Section 6.c, Digimarc shall have no other obligations to
Executive under this Agreement.

 

d.If within eighteen (18) months after a Change of Control, Digimarc terminates
Executive without Cause under Section 5.c of this Agreement, or Executive
terminates his employment for Good Reason under Section 5.d of this Agreement,
then, all Digimarc obligations under this Agreement will end, except that,
subject to Section 6.g of this Agreement, (i) Executive's unvested stock options
and restricted stock units, including PSUs deemed earned and subject to
time-based vesting, will immediately and fully vest and become exercisable or
payable, (ii) Digimarc will continue to pay salary to Executive for two years
from the date of termination (at the salary rate in effect on the termination
date) according to Digimarc's standard payroll schedule, (iii) Digimarc will pay
Executive any earned but unpaid annual cash bonus, and (iv) if Executive and
Executive's spouse and dependent children are eligible for and timely (and
properly) elect COBRA continuation coverage under Digimarc's group health
plan(s) pursuant to COBRA, Digimarc will pay the premium for such coverage for a
period of twenty-four (24) months following Executive's termination date or
until Executive is no longer entitled to COBRA continuation coverage under
Digimarc's group health plan(s), whichever period is shorter; provided, however,
that Executive shall not be entitled to any of the benefits described in this
Section 6.d if  he breaches Sections 8 or 9 of this Agreement.  Subject to
Section 6.g of this Agreement, the compensation described in (ii) above will be
paid according to Digimarc's standard payroll schedule from the date of
termination, as if Executive had not been terminated, and, for purposes of Code
Section 409A, each such installment shall be treated as a separate and distinct
payment.  Executive's right to exercise vested stock options will expire on the
earliest of (A) the first anniversary of the termination date, (B) the latest
date the particular option could have expired by its original terms under any
circumstances, or (C) the tenth anniversary of the original date of grant of the
particular option.  Other than as set forth in this Section 6.d, Digimarc shall
have no other obligations to Executive under this Agreement.  Solely for
purposes of this Section 6.d, the Term shall be deemed to be extended to the
date that is eighteen (18) months after a Change of Control that occurs within
the original Term.

 

e.Digimarc makes no representations or warranties to Executive with respect to
any tax, economic or legal consequences of this Agreement or any payments or
other benefits

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provided hereunder, including without limitation under Code Section 409A, and no
provision of the Agreement shall be interpreted or construed to transfer any
liability for failure to comply with Code Section 409A from Executive or any
other individual to Digimarc or any of its affiliates.  Executive, by executing
this Agreement, shall be deemed to have waived any claim against Digimarc and
its affiliates with respect to any such tax, economic or legal
consequences.  However, the parties intend that this Agreement and the payments
and other benefits provided hereunder be exempt from the requirements of Code
Section 409A to the maximum extent possible, whether pursuant to the short-term
deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the
involuntary separation pay plan exception described in Treasury Regulation
Section 1.409A-1(b)(9)(iii), or otherwise.  To the extent Code Section 409A is
applicable to this Agreement (and such payments and benefits), the parties
intend that this Agreement (and such payments and benefits) comply with the
deferral, payout and other limitations and restrictions imposed under Code
Section 409A.  Notwithstanding any provision of this Agreement to the contrary,
this Agreement shall be interpreted, operated and administered in a manner
consistent with such intentions.  Without limiting the generality of the
foregoing, and notwithstanding any provision of this Agreement to the contrary,
with respect to any payments and benefits under this Agreement to which Code
Section 409A applies, a termination of employment will not be deemed to have
occurred for purposes of any provision of this Agreement providing for the
payment of amounts or benefits upon or following a termination of employment
unless such termination is also a "separation from service," as defined in
Treas. Reg. Section 1.409A-1(h), after giving effect to the presumptions
contained therein (and without regard to the optional alternative definitions
available therein).  In addition, if Executive is a "specified employee," within
the meaning of Code Section 409A(a)(2)(B)(i), at the time of his "separation
from service," within the meaning of Code Section 409A(a)(2)(A)(i), then to the
extent necessary to avoid subjecting Executive to the imposition of any
additional tax under Code Section 409A, amounts that would otherwise be payable
under this Agreement during the six-month period immediately following
Executive's "separation from service," shall not be paid to Executive during
such period, but shall instead be accumulated and paid to Executive (or, in the
event of Executive's death, Executive's estate) in a lump sum on the first
business day following the date that is six months after Executive's separation
from service.  Moreover, the parties intend that this Agreement be deemed to be
amended to the extent necessary to comply with the requirements of Code Section
409A and to avoid or mitigate the imposition of additional taxes under Code
Section 409A, while preserving to the maximum extent possible the essential
economics of Executive's rights under the Agreement.

 

f.If the Term ends as a result of the expiration of the Term on its scheduled
end date without renewal, all Digimarc obligations under this Agreement will end
except for payment of any Compensation payable under Section 4 of this Agreement
for services performed prior to expiration, including any earned but unpaid
annual cash bonus, and reimbursement of properly authorized business expenses
incurred by Executive prior to expiration; provided, however, that if
Executive's employment is thereafter terminated without Cause as defined in
Section 5.c of this Agreement or Executive terminates his employment for Good
Reason as defined in Section 5.d of this Agreement, in both cases

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other than following a Change of Control (which is governed by Section 6.d of
this Agreement), and subject to Section 6.g, (i) Executive's unvested stock
options and restricted stock units, including any PSUs earned and subject to
time-based vesting will immediately vest and become exercisable in full;
(ii) Executive's right to exercise vested stock options will expire on the
earliest of (A) the first anniversary of the employment termination date, (B)
the latest date the particular option could have expired by its original terms
under any circumstances, or (C) the tenth anniversary of the original date of
grant of the particular option; and (iii) Digimarc will continue to pay salary
to Executive for one year from the date of termination (at the salary rate in
effect on the termination date) according to Digimarc's standard payroll
schedule.

 

g.As a condition to receiving benefits under this Section 6 (other than Section
6.b), Executive (or, in the case of Executive’s death, Executive’s personal
representative) must sign a general waiver and release (the "Release") in the
form provided by the Digimarc, which waiver and release must become effective
(i.e., Executive must have executed the Release and any revocation period
specified in the Release must have expired without Executive revoking the
Release) within sixty (60) days (or such shorter period specified in the
Release) after the termination date, which form shall be substantially similar
in coverage to the release contained in Section 10 of this Agreement and
conditioned on Digimarc's provision of such benefits.  Digimarc shall provide
Executive with the form of Release before, or as soon as practicable after, the
termination date.  Failure of the Release to become effective within the period
specified above will result in the forfeiture of any and all benefits under this
Agreement.  The first installment of any severance benefits to which Executive
may become entitled under this Section 6 will be paid by the Company to
Executive on the first regularly scheduled payroll date following the date on
which the Release becomes effective. Such first installment will include any
severance amounts that would otherwise have been paid to Executive during the
portion of the severance period between the date of termination and such initial
installment date, with subsequent installments of the severance pay occurring as
originally scheduled. Notwithstanding the foregoing, if the maximum period
during which Executive can consider and revoke the Release begins in one
calendar year and ends in the subsequent calendar year, then the initial
installment of severance pay will not be made until the first regularly
scheduled payroll date occurring after the later of (x) the date on which the
Release becomes effective and (y) the first day of the subsequent calendar
year.  Executive shall be responsible for paying the full amount of any COBRA
premiums that become due during the portion of the severance period between the
date of termination and such initial installment date, and the Company will
reimburse Executive for such premiums on the initial installment date.

 

7.EXCISE TAXES.

 

a.Notwithstanding any other provision of this Agreement, in the event that
Executive becomes entitled to receive or receives any payments, options, awards
or benefits (including, without limitation, the monetary value of any non-cash
benefits and the accelerated vesting of stock options) under this Agreement or
under any other plan, agreement or arrangement with Digimarc, any person whose
actions result in any change

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described in Code Section 280G(b)(2)(A)(i) or any person affiliated with
Digimarc or such person (collectively, the "Payments"), that may separately or
in the aggregate constitute "parachute payments" within the meaning of Section
280G and Digimarc receives confirmation from an independent accounting firm or
independent tax counsel appointed by Digimarc (the "Tax Advisor") that, but for
this Section 7, any of the Payments will be subject to any excise tax pursuant
to Code Section 4999 or any similar or successor provision (the "Excise Tax"),
then the Company shall pay to Executive either (i) the full amount of the
Payments or (ii) an amount equal to the Payments, reduced by the minimum amount
necessary to prevent any portion of the Payments from being an "excess parachute
payment" (within the meaning of Section 280G) (the "Capped Payments"), whichever
of the foregoing amounts results in the receipt by Executive, on an after-tax
basis, of the greatest amount of Payments notwithstanding that all or some
portion of the Payments may be subject to the Excise Tax. For purposes of
determining the after-tax value of the Payments, (i) there shall be taken into
account any Excise Tax and all applicable federal, state and local taxes
required to be paid by Executive in respect of the receipt of the Payments and
(ii) Executive shall be deemed to pay income taxes at the highest rate of
federal income tax and the highest rate or rates of state and local income taxes
in the state and locality of Executive's domicile for income tax purposes for
the taxable year in which the Payments will be made, provided that the state and
local income tax rate shall be determined assuming that such taxes are fully
deductible for federal income tax purposes, and provided further that any
phase-out of itemized deductions or other items shall be ignored.

b.All calculations and determinations under this Section 7, including
application and interpretation of the Code and related regulatory,
administrative and judicial authorities, shall be made by the Tax Advisor.  All
determinations made by the Tax Advisor under this Section 7 shall be conclusive
and binding on both Digimarc and Executive, and Digimarc shall cause the Tax
Advisor to provide its determinations and any supporting calculations with
respect to Executive to Digimarc and Executive.  Digimarc shall bear all fees
and expenses charged by the Tax Advisor in connection with its services.  For
purposes of making the calculations and determinations under this Section 7,
after taking into account the information provided by Digimarc and Executive,
the Tax Advisor may make reasonable, good faith assumptions and approximations
concerning the application of Code Sections 280G and 4999.  Digimarc and
Executive shall furnish the Tax Advisor with such information and documents as
the Tax Advisor may reasonably request to assist the Tax Advisor in making
calculations and determinations under this Section 7.

c.In the event that Section 7.a above applies and a reduction is required to be
applied to the Payments thereunder, the Payments shall be reduced by the Company
in its reasonable discretion in the following order: (i) reduction of any
Payments that are subject to Code Section 409A on a pro-rata basis or such other
manner that complies with Code Section 409A, as determined by the Company, and
(ii) reduction of any Payments that are exempt from Code Section 409A.

8.TERMINATION OBLIGATIONS.

 

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a.Executive agrees that all property, including, without limitation, all
equipment, tangible Proprietary Information (as defined below), documents,
books, records, reports, notes, contracts, lists, computer disks (and other
computer-generated files and data), and copies thereof, created on any medium
and furnished to, obtained by, or prepared by Executive in the course of or
incident to his employment, belongs to Digimarc and shall be returned promptly
to Digimarc at the end of the Term.

 

b.All benefits to which Executive is otherwise entitled shall cease upon
Executive's termination, unless explicitly continued either under this Agreement
or under any specific written policy or benefit plan of Digimarc.

 

c.Effective at the end of the Term, Executive shall be deemed to have resigned
from all offices and directorships then held with Digimarc or any Affiliate.

 

d.The representations and warranties contained in this Agreement and Executive's
obligations under this Section 8 on Termination Obligations and Section 9 of
this Agreement on Proprietary Information shall survive the termination of this
Agreement.

 

e.Following any termination of this Agreement, Executive shall fully cooperate
with Digimarc in all matters relating to the winding up of pending work on
behalf of Digimarc and the orderly transfer of work to other executives of
Digimarc.  Executive shall also cooperate in the defense of any action brought
by any third party against Digimarc that relates in any way to Executive's acts
or omissions while employed by Digimarc.

 

f.Prior to beginning any employment within two (2) years following the end of
the Term, Executive shall first provide Digimarc with the name and address of
his prospective employer so that Digimarc may provide the new employer with a
copy of this Agreement.

 

9.PROPRIETARY INFORMATION AND COVENANT NOT TO

COMPETE.

 

a.Defined.  "Proprietary Information" is all information and any idea in
whatever form, tangible or intangible, pertaining in any manner to the business
of Digimarc, or any Affiliate, or its employees, clients, consultants, or
business associates, which was produced by any employee of Digimarc in the
course of his or her employment or otherwise produced or acquired by or on
behalf of Digimarc.  All Proprietary Information not generally known outside of
Digimarc's organization, and all Proprietary Information so known only through
improper means, shall be deemed "Confidential Information."  Without limiting
the foregoing definition, Proprietary and Confidential Information shall
include, but not be limited to:  (i) formulas, teaching and development
techniques, processes, trade secrets, computer programs, electronic codes,
inventions, improvements, and research projects;  (ii) information about costs,
profits, markets, sales, and lists of customers or clients;  (iii) business,
marketing, and strategic plans; and (iv) employee personnel files and
compensation information.  Executive should consult any Digimarc

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procedures instituted to identify and protect certain types of Confidential
Information, which are considered by Digimarc to be safeguards in addition to
the protection provided by this Agreement.  Nothing contained in those
procedures or in this Agreement is intended to limit the effect of the other.

 

b.General Restrictions on Use.  During the Term, Executive shall use Proprietary
Information, and shall disclose Confidential Information, only for the benefit
of Digimarc and as is necessary to carry out his responsibilities under this
Agreement.  Following termination, Executive shall neither, directly or
indirectly, use any Proprietary Information nor disclose any Confidential
Information, except as expressly and specifically authorized in writing by
Digimarc.  The publication of any Proprietary Information through literature or
speeches must be approved in advance in writing by Digimarc.

 

c.Location and Reproduction.  Executive shall maintain at his work station
and/or any other place under his control only such Confidential Information as
he has a current "need to know."  Executive shall return to the appropriate
person or location or otherwise properly dispose of Confidential Information
once that need to know no longer exists.  Executive shall not make copies of or
otherwise reproduce Confidential Information unless there is a legitimate
business need for reproduction.

 

d.Prior Actions and Knowledge.  Executive represents and warrants that from the
time of his first contact with Digimarc, he has held in strict confidence all
Confidential Information and has not disclosed any Confidential Information,
directly or indirectly, to anyone outside of Digimarc, or used, copied,
published, or summarized any Confidential Information, except to the extent
otherwise permitted in this Agreement.

 

e.Third-Party Information.  Executive acknowledges that Digimarc has received
and in the future will receive from third parties their confidential information
subject to a duty on Digimarc's part to maintain the confidentiality of this
information and to use it only for certain limited purposes.  Executive agrees
that he owes Digimarc and these third parties, during the Term and thereafter, a
duty to hold all such confidential information in the strictest confidence and
not to disclose or use it, except as necessary to perform his obligations
hereunder and as is consistent with Digimarc's agreement with third parties.

 

f.No Competition.  In the interest of preventing the use or disclosure of
Confidential Information in breach of the preceding subsections and in
consideration for Digimarc agreeing to make the post-termination payments to
Executive described in Section 6 of this Agreement,  Executive shall not, during
the Term and for a period equal to the longer of (i) one (1) year or (ii) the
period during which Executive is receiving severance payments under Section 6 of
this Agreement following the end of the Term, for any reason, perform work for
any of Digimarc's business competitors whether as an employee or as a
consultant, and shall not serve as a director, partner, agent or shareholder of
such competitor (except that Executive may hold less than 5% of the outstanding
stock of any public company for investment purposes).

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g.Misuse of Confidential Information.  Executive agrees that for a period equal
to the longer of (i) one (1) year or (ii) the period during which Executive is
receiving severance payments under Section 6 of this Agreement following the end
of the Term, he shall not, directly or indirectly, (i) divert or attempt to
divert from Digimarc (or any Affiliate) any business of any kind in which it is
engaged; or (ii) employ or recommend for employment any person employed by
Digimarc (or any Affiliate), unless Executive can prove that any action taken in
contravention of this subsection was done without the use in any way of
Confidential Information.  

 

h.Interference with Business.  In order to avoid disruption of Digimarc's
business, Executive agrees that for a period equal to the longer of (i) one (1)
year or (ii) the period during which Executive is receiving severance payments
under Section 6 of this Agreement following the end of the Term, he shall not,
directly or indirectly, (i) solicit any customer of Digimarc (or any Affiliate)
known to Executive during the Term to have been a customer; or (ii) solicit for
employment any person employed by Digimarc (or any Affiliate).

 

10.RELEASE.

 

In consideration for Digimarc agreeing to make the post-termination payments to
Executive, Executive hereby releases Digimarc and the predecessor Digimarc
Corporation from which Digimarc was spun off in 2008 ("Old Digimarc") from any
and all claims of any kind, known or unknown, arising out of or related to
Executive's employment by Digimarc or Old Digimarc, excluding worker's
compensation claims and claims for unemployment compensation, and agrees not to
bring a claim or lawsuit based on or related to the released claims.  The claims
Executive is releasing include, without limitation, all claims that Executive
may have under each and every employment agreement entered into between
Executive and each of Old Digimarc and Digimarc prior to the date of this
Agreement, for breach of contract, for "torts," (civil wrongs or injuries), or
under Title VII of the Civil Rights Act of 1964; the Age Discrimination in
Employment Act, except that this Agreement does not release any claims under
that Act that may arise after the signing of this Agreement; the Equal Pay Act;
the Americans with Disabilities Act; and all other applicable federal, state or
local laws.  The release Executive is giving releases not only all claims
Executive may have against Digimarc and Old Digimarc, but also all claims
Executive may have against their respective past and present shareholders,
officers, directors, agents, employees, representatives, attorneys, parents,
subsidiaries, affiliates, benefit plans, predecessors, successors, transferees
and assigns.  It also releases such claims of anyone else Executive can bind in
this Agreement, such as Executive's heirs and assigns.  Executive understands
that Executive is releasing potentially unknown claims, and that Executive has
limited knowledge with respect to some of the claims being released.  Executive
agree that this release is fairly and knowingly made.  Executive assumes the
risk of any mistake in entering into this Agreement.  Excluded are claims under
this Agreement and any future claims under employee benefit plans in which
Executive may have participated.  In addition, this

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Agreement is not intended to release any claims which as a matter of law or
public policy cannot be released.

11.NOTICES.

 

Any notice to be given hereunder by Digimarc to Executive will be deemed to be
given if delivered to Executive in person, or if mailed to Executive, by
certified mail, postage prepaid, return receipt requested, at his address last
shown on the records of Digimarc.  Any notice to be given by Executive to
Digimarc will be deemed to be given if delivered in person or by mail, postage
prepaid, return receipt requested to the Chief Financial Officer at Digimarc's
principal executive office, unless Executive or Digimarc will have duly notified
the other party in writing of a change of address. If mailed, notice will be
deemed to have been given when deposited in the mail as set forth above;
provided, however, that solely for purposes of Section 5.d of this Agreement,
Executive shall not be deemed to have given Digimarc notice of his termination
for Good Reason (or of the event constituting Good Reason) until such time as
Digimarc receives Executive's written notice thereof.

 

12.AMENDMENTS.

 

This Agreement will not be modified or discharged, in whole or in part, except
by an agreement in writing signed by an executive officer of Digimarc other than
Executive on the one hand, and Executive on the other hand.

 

13.ENTIRE AGREEMENT.

 

This Agreement, together with any and all other written agreement(s) made
contemporaneously herewith and applicable options, restricted stock units and
benefits plans of Digimarc, constitute the entire agreement between the parties
with respect to Executive's employment by Digimarc from and after the Effective
Date. The parties are not relying on any other representation or understanding
with respect thereto, express or implied, oral or written. As of the Effective
Date, this Agreement, as supplemented by such contemporaneous agreement(s),
supersedes any prior employment agreement, written or oral, of Digimarc with
respect to Executive, and including the Employment Agreement between Digimarc
and Executive effective as of September 1, 2017; provided that the obligations
set forth in Section 9.f of this Agreement are a continuing obligation running
from the earliest date that Executive became subject to those obligations and
any equity grants made under any prior agreement shall continue to vest
according to their terms.

 

14.CAPTIONS.

 

The captions contained in this Agreement are for convenience of reference only
and do not affect the meaning of any terms or provisions of this Agreement.

 

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15.BINDING EFFECT.

 

The rights and obligations of Digimarc hereunder will inure to the benefit of,
and will be binding upon, Digimarc and its respective successors and assigns,
and the rights and obligations of Executive hereunder will inure to the benefit
of, and will be binding upon, Executive and his heirs, personal representatives
and estate.  All references in this Agreement to "Digimarc" will be deemed to
include its successors and assigns.

 

16.SEVERABLE PROVISIONS.

 

If any provision of this Agreement, or its application to any person, place, or
circumstance, is held by an arbitrator or a court of competent jurisdiction to
be invalid, unenforceable, or void, such provision shall be enforced to the
greatest extent permitted by law, and the remainder of this Agreement and such
provision as applied to other persons, places, and circumstances shall remain in
full force and effect.

 

17.GOVERNING LAW.

 

This Agreement will be interpreted, construed, and enforced in all respects in
accordance with the laws of the State of Oregon.

 

18.INTERPRETATION.

 

This Agreement shall be construed as a whole, according to its fair meaning, and
not in favor of or against any party.  By way of example and not in limitation,
this Agreement shall not be construed in favor of the party receiving a benefit
nor against the party responsible for any particular language in this
Agreement.  Captions are used for reference purposes only and should be ignored
in the interpretation of the Agreement.

 

19.CONSIDERATION AND REVOCATION PERIODS.

 

a.Consideration Period.  In compliance with the Age Discrimination in Employment
Act and the Older Workers Benefit Protection Act, Executive has been advised to
consult with counsel and has twenty-one (21) calendar days from the date the
Agreement was given to him to consider this Agreement before signing
it.  Executive may use as much or as little of this twenty-one (21) day period
as he wishes before signing.  If Executive does not sign and return this
Agreement to Digimarc within this twenty-one (21) day period, this Agreement
will be null and void, and he will not receive any of the consideration
described in this Agreement.

 

b.Revocation Period.  Executive has seven (7) calendar days after signing this
Agreement to revoke it.  To revoke this Agreement after signing it, Executive
must deliver a written notice of revocation to Roy Tucker, Perkins Coie LLP,
1120 NW Couch Street, 10th Floor, Portland, Oregon 97209, before the seven
(7)-day revocation period expires.  If Executive revokes this Agreement during
the revocation period, this Agreement will be null and void, and he will not
receive any of the consideration

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described in this Agreement.  If Executive does not timely revoke this
Agreement, the Agreement shall become irrevocable by Executive.

 

20.EMPLOYEE ACKNOWLEDGEMENT.

 

Executive acknowledges that he has had the opportunity to consult legal counsel
in regard to this Agreement, that he has read and understands this Agreement,
that he is fully aware of its legal effect, and that he has entered into it
freely and voluntarily and based on his own judgment and not on any
representations or promises other than those contained in this Agreement.

 

 

[Signature Page Follows]

 

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement on August 10,
2020.

 

DIGIMARC CORPORATIONEXECUTIVE

 

 

/s/ Robert P. Chamness          ./s/ Bruce Davis                      
          By:  Robert P. ChamnessBRUCE DAVIS

Its:  EVP, Chief Legal Officer & Secretary

[2020 Employment Agreement]

57775-0001/149080991.4