Exhibit 10.9

 

EQUITY COMPENSATION PROGRAM
FOR NON-EMPLOYEE DIRECTORS
UNDER THE DIGIMARC CORPORATION 2008 INCENTIVE PLAN

 

The following provisions set forth the terms of the equity compensation program
(the “Program”) for non-employee directors of Digimarc Corporation (the
“Company”) under the Digimarc Corporation 2008 Incentive Plan (the “Plan”).  The
following terms are intended to supplement, not alter or change, the provisions
of the Plan, and in the event of any inconsistency between the terms contained
in this document and in the Plan, the Plan shall govern.  All capitalized terms
that are not defined in this document shall be as defined in the Plan.

 

1.             Eligibility

 

Each director of the Company elected or appointed to the Board who is not
otherwise an officer or employee of the Company or a Related Company (an
“Eligible Director”) is eligible to receive the Awards set forth in the Program.

 

2.             Initial Option Grants

 

Each Eligible Director who is first elected or appointed to the Board after the
date the Program is approved by the Board will automatically receive a
Nonqualified Stock Option to purchase 20,000 shares of Common Stock (an “Initial
Grant”).  The Grant Date for an Initial Grant to an Eligible Director is the
date of that director’s first election or appointment to the Board.  In
addition, those Eligible Directors already serving as directors on the date the
Program is approved by the Board will automatically receive a Nonqualified Stock
Option to purchase 20,000 shares of Common Stock (an “Existing Director
Grant”).  The Grant Date for Existing Director Grants will be the date the
Program is approved by the Board.

 

Each Initial Grant will vest and become exercisable over the two-year period
commencing on the Initial Option’s Grant Date, with 50% of the shares to vest
and become exercisable on the first anniversary of the Grant Date of the Initial
Grant and 1/12th of the remaining shares to vest and become exercisable monthly
thereafter.  Each Existing Director Grant will vest and become exercisable over
a two-year period commencing on the date the director was first elected or
appointed to the Board, with 50% of the shares to vest and become exercisable on
the first anniversary of the date the director was first elected or appointed to
the Board and 1/12th of the remaining shares to vest and become exercisable
monthly thereafter.

 

3.             Annual Option Grants.

 

Commencing with the 2009 annual meeting of stockholders, each Eligible Director
will automatically receive immediately following each annual meeting of
stockholders a Nonqualified Stock Option to purchase 7,500 shares of Common
Stock

 

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(an “Annual Grant”).  The Grant Date of an Annual Grant will be the date of such
annual meeting.  Each Annual Grant will vest and become exercisable in twelve
equal monthly installments beginning one month after the Grant Date for the
Annual Grant.

 

4.             Option Exercise Price

 

Initial Grants, Existing Director Grants and Annual Grants will have a per share
exercise price equal to the Fair Market Value of the Common Stock on the Grant
Date of the Option.

 

5.             Term of Options

 

Each Option expires ten years from its Grant Date, but is subject to earlier
termination as follows:

 

(A)                              In the event that an Eligible Director ceases
to be a director for any reason other than death, the unvested portion of any
Option granted to the director will terminate immediately, and the director may
exercise the vested portion of the Option only within three years after he or
she ceases to be a director or prior to the date on which the Option expires by
its terms, whichever is earlier.

 

(B)                                In the event of an Eligible Director’s death,
the unvested portion of any Option granted to the director will become fully
vested and exercisable.  The Option is exercisable only within three years after
the date of death of the director or prior to the date on which the Option
expires by its terms, whichever is earlier, and only by the personal
representative of the director’s estate, the person(s) to whom the director’s
rights under the option have passed by will or the applicable laws of descent
and distribution, or any beneficiary designated pursuant to Section 14 of the
Plan.

 

6.             Exercise of Options

 

An Eligible Director or an individual set forth in Section 5(B), as applicable,
may exercise the Options by giving notice to the Company (or a brokerage firm
designated or approved by the Company).  The notice must state the number of
shares of Common Stock exercised and be accompanied by payment in full for the
Common Stock.  Payment may be made, to the extent permitted by applicable laws
and regulations, in whole or in part: (a) in cash or check; (b) by having the
Company withhold shares of Common Stock that would otherwise be issued on
exercise of the Option that have an aggregate Fair Market Value equal to the
aggregate exercise price of the shares being purchased under the Option; (c) by
tendering (either actually or by attestation) shares of Common Stock owned by
the director that have an aggregate Fair Market Value equal to the aggregate
exercise price of the shares being purchased under the Option; (d) if and so
long as the Common Stock is registered under the Exchange Act, by delivery of a
properly executed exercise notice, together with irrevocable instructions to a
broker, to promptly deliver to the Company the amount of proceeds to pay the
exercise price, all in accordance with the regulations of the Federal Reserve
Board.

 

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7.             Change of Control

 

Upon a Change in Control or Company Transaction, all Options outstanding as of
the date of the Change of Control or Company Transaction, and which are not then
exercisable and vested, will immediately become fully exercisable and vested.

 

8.             Amendment

 

The Board may amend the provisions contained within this Program as it believes
advisable.  An amendment may not, without the consent of the Eligible Director,
impair or diminish any rights of an Eligible Director or any rights of the
Company under an Award.

 

Provisions of the Plan (including any amendments) not discussed above, to the
extent applicable to Eligible Directors, continue to govern the terms and
conditions of Awards granted to Eligible Directors.

 

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