Exhibit 10.16

 

PROMISSORY NOTE

 

 

Borrower:

 

Lender:

Indraneel Paul

 

Digimarc Corporation

c/o Digimarc ID Systems, LLC

 

19801 SW 72nd Ave, Suite 100

201 Burlington Road

 

Tualatin, OR  97062

Bedford, Massachusetts 01730

 

 

 

Principal Amount: $100,000.00      Interest Rate: 6.75%; Default Rate: 13%   
Date of Note: July 1, 2002

 

PROMISE TO PAY. I, Indraneel Paul (“Borrower”), promise to pay to Digimarc
Corporation (“Lender”) or order, in lawful money of the United States of
America, the principal amount of One Hundred Thousand & 00/100 Dollars
($100,000.00), together with interest at the rate of 6.75% per annum on the
unpaid principal balance from July 1, 2002, until paid in full.  After maturity
or in the event of termination for cause or default, at which time all remaining
and unpaid principal shall be due, I agree to pay interest at a default rate of
thirteen percent (13%) per annum on the unpaid principal balance until paid in
full.

 

PAYMENT. This is a single payment loan, with that payment due on June 30, 2006. 
I agree to pay this loan in one principal payment of $100,000 plus all interest
that has accrued on the unpaid principal balance at the rate set forth above. 
This payment is estimated to be $130,897.38 as of June 30, 2006.  Interest on
the note is computed on a 365/365 simple interest basis; that is, by applying
the ratio of the multiplied by the actual number of days the principal balance
is outstanding.  The Note also allows “interest on interest”, in that the unpaid
interest from each prior month is added to the unpaid principal prior to the
calculation of interest for the subsequent month.  Unless otherwise agreed or
required by applicable law, payments will be applied first to any unpaid
collection costs and any late charges, then to any unpaid interest, and any
remaining amount to principal.  I will pay Lender at Lender’s address show above
or at such other place as Lender may designate in writing.

 

If Borrower voluntarily leaves the employment of Lender for any reason, or if
Borrower is terminated for “just cause”, then the outstanding balance of the
loan shall accelerate and the Borrower will be responsible for paying the
outstanding principal balance, plus any interest that is accrued and unpaid, in
full within 90 days of the date of his departure.  During the term of this loan,
interest shall be deemed to accrue in conformity with Schedule A, which is
attached to and made a part of hereof, and which shall be deemed accurate and
conclusive as to amounts of principal interest that will be due and payable at
any time.   For purposes of this Note, termination “for cause” means termination
for unlawful or unethical conduct or for any material violation of the terms of
Borrower’s employment with Lender.

 

PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due.  Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower’s obligation to continue to make payments
under the payment schedule.  Rather, early payments will reduce the principal
balance due and may result in Borrower’s making lower interest payments. 
Borrower agrees not to send Lender payments marked “paid in full”, “without
recourse”, or similar language.  If Borrower sends such a payment, Lender may
accept it without losing any of Lender’s right under this Note, and Borrower
will remain obligated to pay any further amount owed to Lender.  All written
communications concerning disputed amounts, including any check or other payment
instrument that indicates that the payment constitutes “payment in full” of the
amount owed or that is tendered with other conditions or limitations or as full
satisfaction of a disputed amount, must be mailed or delivered to: Digimarc
Corporation, 19801 SW 72nd Ave., Suite 100, Tualatin, OR  97062.

 

LATE CHARGE.  If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment.

 

INTEREST AFTER DEFAULT.  Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the interest rate on this Note to 13.00% per annum.  The interest rate
will not exceed the maximum rate permitted by applicable law.

 

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DEFAULT.  Each of the following shall constitute an event of default (“Event of
Default”) under this Note:

Payment Default. Borrower fails to make any payment when due under this Note.

 

Other Defaults. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Note or in any of the
related documents or to comply with or to perform any term, obligation, covenant
or condition contained in any other agreement between Lender and Borrower.

 

False Statements.  Any warranty, representation or statement made or furnished
to Lender by Borrower or on Borrower’s behalf under this Note or the related
documents is false or misleading in any material respect, either now or at the
time made or furnished or becomes false or misleading at any time thereafter.

 

Death or Insolvency.  The death of Borrower, the insolvency of Borrower, the
appointment of a receiver for any part of Borrower’s property, any assignment
for the benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against
Borrower.

 

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the loan.  This includes a garnishment of any of
Borrower’s accounts with Lender.  However, this Event of Default shall not apply
if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower gives Lender written notice of the creditor or
forfeiture proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in its
sole discretion, as being an adequate reserve or bond for the dispute.

 

Adverse Change.  A material adverse change occurs in Borrower’s financial
condition, or Lender believes the prospect of payment or performance of this
Note is impaired.

 

Cure Provisions.  If any default, other than a default in payment, is curable
and if Borrower has not been given a notice of a breach of the same provision of
this Note within the preceding twelve (12) months, it may be cured (and no event
of default will have occurred) if Borrower, after receiving written notice from
Lender demanding cure of such default: (1) cures the default within fifteen (15)
days; or (2) if the cure requires more than fifteen (15) days, immediately
initiates steps which Lender deems in Lender’s sole discretion to be sufficient
to cure the default and thereafter continues and completes all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably
practical.

 

LENDER’S RIGHTS.  Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, and then
Borrower will pay that amount.

 

ATTORNEYS’ FEES; EXPENSES.  Lender may hire or pay someone else to help collect
this Note if Borrower does not pay.  Borrower will pay Lender that amount.  This
includes, subject to any limits under applicable law, Lender’s attorneys’ fees
and Lender’s legal expenses, whether or not there is a lawsuit, including
attorneys’ fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals.  If not
prohibited by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law.

 

GOVERNING LAW.  This Note will be governed by, construed and enforced in
accordance with federal law and the law of the State of Oregon.  This Note has
been accepted by Lender in the State of Oregon.

 

CHOICE OF VENUE.  If there is a lawsuit, Borrower agrees upon Lender’s request
to submit to the jurisdiction of the courts of Multnomah County, State of
Oregon.

 

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a
right of setoff in all amounts that Lender may owe Borrower, including salary or
reimbursements, in the event that this loan remains unpaid after termination of
cause or payment default.  However, this right does not include any IRA or any
trust accounts, for

 

 

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which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
debt against any and all such owed by Lender or Borrower.

 

SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon Borrower, and
upon Borrower’s heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.

 

GENERAL PROVISIONS.  Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them.  Borrower and any other person who
signs, guarantees, or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, and notice of dishonor.  Upon any change in the
terms of this Note, and unless otherwise expressly stated in writing, no party
who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability.  All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan or release
any party or guarantor or collateral; or impair, fail to realize upon or perfect
Lender’s security interest in the collateral; and take any other action deemed
necessary by Lender without the consent of or notice to anyone other than the
party with whom the modification is made.  The obligations under this Note are
joint and several.  This means that the words “I”, “me”, and “my” mean each and
all of the persons signing below.

 

UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US (LENDER)
AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT
FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER’S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED TO BE
ENFORCEABLE.

 

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE.  BORROWER AGREES TO THE TERMS OF THE NOTE.

 

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

 

BORROWER:

 

 

 

X   /s/ Indraneel Paul                          

    Indraneel Paul, Individually

 

 

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