Exhibit 10.9


DIGIMARC CORPORATION
1999 STOCK INCENTIVE PLAN


1999 NON-EMPLOYEE
DIRECTOR STOCK INCENTIVE PROGRAM

Amended and Restated on April 22, 2001

Amended and Restated on March 29, 2002

Amended and Restated on April 17, 2003

Amended and Restated on May 2, 2003

Amended and Restated on March 10, 2004 

Amended and Restated on May 2, 2006


ARTICLE I

ESTABLISHMENT AND PURPOSE OF THE PROGRAM


1.01        Establishment of Program


The 1999 Non-Employee Director Stock
Incentive Program (the “Program”) is adopted pursuant to the Digimarc
Corporation 1999 Stock Incentive Plan (the “Plan”) and, in addition to the
terms and conditions set forth below, is subject to the provisions of the Plan.


1.02        Purpose of Program


The purpose of the Program is to enhance the
ability of the Company to attract and retain directors who are not Employees (“Non-Employee
Directors”) through a program of automatic grants of Options or awards of other
types stock incentive compensation under the Plan (together, “Awards”).


1.03        Effective Date of the Program


                The
Program became effective as of the Registration Date on December 1, 1999,
and was first amended and restated by the Board on April 22, 2001 to
increase the number of Shares granted pursuant to Initial Grants and Subsequent
Grants (as defined below) and to change the vesting provisions thereunder. The
Program was further amended and restated by the Board on March 29, 2002 to
increase the number of Shares granted pursuant to Initial Grants and Subsequent
Grants, to award additional Option grants to Non-Employee Directors serving on
committees of the Board, and to change the vesting provisions for all automatic
Option grants. The Program was further amended and restated by the Board on
April 17, 2003 to specify that Committee Service Grants shall be made only
to Non-Employee Directors who serve as a member of a “standing committee” of
the Board. The Program was further amended and restated by the Board on
May 2, 2003 to eliminate the requirement that a Non-Employee Director
serve as a director of the Company for at least six (6) months before
receiving a Committee Service Grant. The Program was further amended and
restated by the Board on March 10, 2004 to provide that the Board may
waive the issuance of option grants under the Program, in whole or in part, for
any particular year. The Program was further amended and restated by the Board
on May 2, 2006 to specify that the Board may elect to make the stock
compensation awards 











specified by the Program in a form other
than stock options, including any form of stock compensation authorized under
the Plan, in whole or in part, for any particular year.


ARTICLE II

DEFINITIONS


                Capitalized
terms in this Program, unless otherwise defined in this Program, have the
meaning given to them in the Plan. As used in this Program, the following
definitions shall apply:


2.01        Change in Control


                “Change in Control” means a change in
ownership or control of the Company effected through either of the following
transactions:


                (a)           the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or
by a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company’s outstanding securities pursuant to
a tender or exchange offer made directly to the Company’s stockholders which a
majority of the Continuing Directors who are not Affiliates or Associates of
the offeror do not recommend such stockholders accept, or


                (b)           a change in the composition of the Board over a period of
thirty-six (36) months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more
contested elections for Board membership, to be comprised of individuals who
are Continuing Directors.


2.02        Continuing Directors


                “Continuing Directors” means members of the
Board who either (i) have been Board members continuously for a period of
at least thirty-six (36) months or (ii) have been Board members for
less than thirty-six (36) months and were elected or nominated for election
as Board members by at least a majority of the Board members described in
clause (i) who were still in office at the time such election or
nomination was approved by the Board.


2.03        Corporate Transaction


                “Corporate Transaction” means any of the
following transactions:


                (a)           a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;











 


                (b)           the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company’s subsidiary corporations) in connection with the complete
liquidation or dissolution of the Company;


                (c)           any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company’s outstanding securities are
transferred to a person or persons different from those who held such
securities immediately prior to such merger; or


                (d)           acquisition by any person or related group of persons
(other than the Company or by a Company-sponsored employee benefit plan) of
beneficial ownership (within the meaning of Rule 13d-3 of the Exchange
Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Company’s outstanding securities (whether or not
in a transaction also constituting a Change in Control), but excluding any such
transaction that the Plan Administrator determines shall not be a Corporate
Transaction.


ARTICLE III

STOCK INCENTIVE GRANT TERMS


3.01        Date of Grant and Number of Shares


                (a)           Initial
Grant.  A Non-Qualified Stock
Option to purchase twenty thousand (20,000) shares of Common Stock shall be
granted (“Initial Grant”) to each Non-Employee Director elected or appointed to
the Board for the first time on or after March 29, 2002. Such Initial
Grant shall be made on the date each such Non-Employee Director first becomes a
Non-Employee Director.


                (b)           Subsequent
Grants.  Immediately following
each annual meeting of the Company’s stockholders commencing with the annual
meeting of the Company’s stockholders in 2002, each Non-Employee Director who
continues as a Non-Employee Director following such annual meeting shall be
granted a Non-Qualified Stock Option to purchase twelve thousand (12,000)
shares of Common Stock (a “Subsequent Grant”); provided that no Subsequent
Grant shall be made to any Non-Employee Director who has not served as a
director of the Company, as of the time of such annual meeting, for at least
six (6) months. Each such Subsequent Grant shall be made on the date of
the annual stockholders’ meeting in question.


                (c)           Committee
Service Grants.  Each
Non-Employee Director who serves as a member of a standing committee of the
Board immediately following each annual meeting of the Company’s stockholders,
commencing with the annual meeting of the Company’s stockholders in 2002, shall
be granted a Non-Qualified Stock Option to purchase three thousand (3,000) shares
of Common Stock (a “Committee Service Grant”). Non-employee directors shall
receive an additional Committee Service Grant for each individual standing
committee of the Board upon which he or she serves as a member as described
above. For purposes of this provision, the term “standing committee” of the
Board shall mean the Audit Committee, the Compensation Committee, the Corporate
Governance Committee, and the Nominating Committee. Each such Committee Service
Grant shall be made on the date of the annual stockholders’ meeting in
question.











 


                (d)           Waiver
of Option Grants.  The Board
may waive the issuance of option grants to be made pursuant to this
Section 3.01 of the Program for any particular year, in whole or in part,
provided such waiver is made prior to the date of grant of such options. Any
waiver by the Board with respect to option grants for a particular year shall
in no way affect the right of Non-Employee Directors to receive option grants
under the Program in a subsequent year.


                (e)           Discretion Regarding Form
of Awards.  Notwithstanding
the foregoing, the Board may elect to make the awards authorized by this
Section 3.1, in whole or in part, for any particular year, in any form of
stock compensation authorized under the Plan so that the total value of all
components of stock compensation granted pursuant to this Section 3.1(a),
(b) or (c), respectively, equals the value (determined using the Black-Scholes
valuation model, or any other valuation model selected by the Board) of the
stock option that would otherwise have been granted on the terms set forth in
the applicable subsection.


3.02        Vesting


                (a)           Initial
Grant.  Each Initial Grant
under the Program shall vest and become exercisable as to 1/36 of the shares of Common Stock subject to the Award on each monthly
anniversary of the date of grant, such that the Award will be fully exercisable
(or no longer subject to any risk of forfeiture) three (3) years after its
date of grant.


                (b)           Subsequent
Grants and Committee Service Grants. 
Each Subsequent Grant and each Committee Service Grant under the Program
shall vest and become exercisable as to 1/12 of the
shares of Common Stock subject to the Award on each monthly anniversary of the
date of grant, or on such other schedule as the Board may specify, such that
the Award will be fully exercisable (or no longer subject to any risk of
forfeiture) one (1) year after its date of grant.


3.03        Exercise Price


                The
exercise price per share of Common Stock of each Initial Grant and Subsequent
Grant shall be one hundred percent (100%) of the Fair Market Value per Share on
the date of grant.


3.04        Corporate Transaction/Change in Control


                (a)           In the event of a Corporate
Transaction, each Award which is at the time outstanding under the Program
automatically shall become fully vested and exercisable (or no longer subject
to any risk of forfeiture) immediately prior to the effective date of such
Corporate Transaction. Effective upon the consummation of the Corporate
Transaction, all outstanding Awards under the Program shall terminate. However,
all such Awards shall not terminate if the Awards are, in connection with the
Corporate Transaction, assumed by the successor corporation or Parent thereof.


                (b)
          In the event of a Change in
Control (other than a Change in Control which also is a Corporate Transaction),
each Award which is at the time outstanding under the Program automatically
shall become fully vested and exercisable (or no longer subject to any risk of
forfeiture), immediately prior to the specified effective date of such Change
in Control. Each 











such Option shall remain so exercisable
until the expiration or sooner termination of the applicable Option term.


3.05        Other Terms


                The
Plan Administrator shall determine the remaining terms and conditions of the
Awards awarded under the Program.