Exhibit 10.5


DIGIMARC
CORPORATION


1999
EMPLOYEE STOCK PURCHASE PLAN


(Amended and
Restated on November 5, 1999)


(Amended and
Restated on February 19, 2004)


(Amended and
Restated on November 2, 2006)


The following
constitute the provisions of the 1999 Employee Stock Purchase Plan of Digimarc
Corporation.


1. Purpose.  The purpose
of the Plan is to provide employees of the Company and its Designated Parents
or Subsidiaries with an opportunity to purchase Common Stock of the Company
through accumulated payroll deductions. 
It is the intention of the Company to have the Plan qualify as an “Employee
Stock Purchase Plan” under Section 423 of the Code.  The provisions of the Plan, accordingly,
shall be construed so as to extend and limit participation in a manner consistent
with the requirements of that Section of the Code.


2. Definitions.  As used herein, the following definitions
shall apply:


(a) “Applicable Laws” means the legal
requirements relating to the administration of employee stock purchase plans,
if any, under applicable provisions of federal securities laws, state corporate
and securities laws, the Code, the rules of any applicable stock exchange or
national market system, and the rules of any foreign jurisdiction applicable to
participation in the Plan by residents therein.


(b)                                 “Board”
means the Board of Directors of the Company.


(c) “Change in Control”  means a change in ownership or control of
the Company effected through 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.


(d) “Code” means the Internal Revenue Code of 1986, as amended.


(e) “Common Stock” means the common stock of the Company.











 


(f) “Company” means Digimarc Corporation, a Delaware
corporation.


(g) “Compensation” means an Employee’s base salary, excluding
other cash payments for commissions, overtime, bonuses, annual awards, and
other cash incentive payments from the Company or one or more Designated
Parents or Subsidiaries, but including such amounts as are deferred by the
Employee (i) under a qualified cash or deferred arrangement described in
Section 401(k) of the Code, or (ii) to a plan qualified under
Section 125 of the Code. 
Compensation also does not include reimbursements or other expense
allowances, fringe benefits (cash or noncash), moving expenses, deferred
compensation, contributions (other than contributions described in the first
sentence) made on the Employee’s behalf by the Company or one or more
Designated Parents or Subsidiaries under any employee benefit or welfare plan
now or hereafter established, and any other payments not specifically
referenced in the first sentence.


(h) “Corporate Transaction”  means  any of the following transactions:


(1)          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;


(2)          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
complete liquidation or dissolution of the Company;


(3)          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


(4)          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


(i) “Designated Parents or Subsidiaries” means the Parents or
Subsidiaries which have been designated by the Plan Administrator from time to
time as eligible to participate in the Plan.


(j) “Effective Date” means the effective date of the
Registration Statement relating to the Company’s initial public offering of its
Common Stock.  However, should any
Designated Parent or Subsidiary become a participating company in the Plan
after such date, then such entity shall designate a separate Effective Date
with respect to its employee-participants.











 


(k) “Employee” means any individual, including an officer or
director, who is an employee of the Company or a Designated Parent or
Subsidiary for purposes of Section 423 of the Code.  For purposes of the Plan, the employment
relationship shall be treated as continuing intact while the individual is on
sick leave or other leave of absence approved by the individual’s
employer.  Where the period of leave
exceeds ninety (90) days and the individual’s right to reemployment is not
guaranteed either by statute or by contract, the employment relationship will
be deemed to have terminated on the ninety-first (91st) day of such leave, for
purposes of determining eligibility to participate in the Plan.


(l) “Enrollment Date” means the first day of each Offer Period.


(m)          “Exchange Act”
means the Securities Exchange Act of 1934, as amended.


(n) “Exercise Date” means the last day of each Purchase Period.


(o) “Fair Market Value” means, as of any date, the value of
Common Stock determined as follows:


(1)          Where there exists a public market for
the Common Stock, the Fair Market Value shall be (A) the closing price for
a share of Common Stock for the last market trading day prior to the time of
the determination (which will generally be the date on which the determination
is made as long as the determination is made after the close of market on that
date or, if no closing price was reported on that date, on the last trading
date on which a closing price was reported) on the stock exchange determined by
the Plan Administrator to be the primary market for the Common Stock or the
Nasdaq Stock Market, whichever is applicable or (B) if the Common Stock is
not traded on any such exchange, the average of the closing bid and asked
prices of a share of Common Stock otherwise reported for the day prior to the
time of the determination (or, if no such prices were reported on that date, on
the last date on which such prices were reported), in each case, as reported in
The Wall Street Journal or such other
source as the Plan Administrator deems reliable; or


(2)          In the absence of an established
market of the type described in (1), above, for the Common Stock, the Fair
Market Value thereof shall be determined by the Plan Administrator in good
faith.


(p) “Offer Period,” unless otherwise established by the Plan
Administrator pursuant to Section 4 hereof, means a period of
approximately three months, commencing on March 1, June 1,
September 1 and December 1 of each year and terminating on the next
following May 31, August 31, November 30 or February 28 (29 in a
leap year), respectively.Section .


(q) “Parent” means a “parent corporation,” whether now or
hereafter existing, as defined in Section 424(e) of the Code.











 


(r) “Participant” means an Employee of the Company or Designated
Parent or Subsidiary who is actively participating in the Plan.


(s) “Plan” means this Employee Stock Purchase Plan.


(t) “Plan Administrator” means either the Board or a committee
of the Board that is responsible for the administration of the Plan as is
designated from time to time by resolution of the Board.


(u) “Purchase Period,” unless otherwise established by the Plan
Administrator pursuant to Section 4 hereof, means a period of
approximately three months, commencing on March 1, June 1,
September 1 and December 1 of each year and terminating on the next
following May 31, August 31, November 30 or February 28 (29 in a
leap year), respectively.


(v)           “Purchase Price”
shall  mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.


(w)          “Reserves”
means the sum of the number of shares of Common Stock covered by each option
under the Plan which have not yet been exercised and the number of shares of
Common Stock which have been authorized for issuance under the Plan but not yet
placed under option.


(x) “Subsidiary” means a “subsidiary corporation,” whether now
or hereafter existing, as defined in Section 424(f) of the Code.


3. Eligibility.


(a) General.  Any
individual who is an Employee on a given Enrollment Date shall be eligible to
participate in the Plan for the Offer Period commencing with such Enrollment
Date.


(b) Limitations on Grant and Accrual.  Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (taking into account stock owned by
any other person whose stock would be attributed to such Employee pursuant to
Section 424(d) of the Code) would own stock and/or hold outstanding
options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or of any
Parent or Subsidiary, or (ii) which permits the Employee’s rights to purchase
stock under all employee stock purchase plans of the Company and its Parents or
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the Fair Market Value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.  The
determination of the accrual of the right to purchase stock shall be made in accordance
with Section 423(b)(8) of the Code and the regulations thereunder.


(c) Other Limits on Eligibility. 
Notwithstanding Subsection (a), above, the following Employees
shall not be eligible to participate in the Plan for any relevant Offer Period:
(i) Employees whose customary employment is fewer than 20 hours per week;
(ii) Employees 











whose
customary employment is for not more than 5 or fewer months in any calendar
year; and (iii) Employees who are subject to rules or laws of a foreign
jurisdiction that prohibit or make impractical the participation of such
Employees in the Plan.


4. Offer Periods.


(a) The Plan shall be
implemented through overlapping or consecutive Offer Periods until such time as
the Plan shall have been terminated in accordance with Section 19 or 22
hereof.  The maximum duration of an Offer
Period shall be twenty-seven (27) months.


(b) A Participant shall
be granted a separate option for each Offer Period in which he or she
participates.  The option shall be
granted on the Enrollment Date and shall be automatically exercised in
successive installments on the Exercise Dates ending within the Offer Period.


(c) An Employee may
participate in only one Offer Period at a time. 
Accordingly, except as provided in Section 4(d), an Employee who
wishes to join a new Offer Period must withdraw from the current Offer Period
in which the Employee is participating and must also enroll in the new Offer
Period prior to the Enrollment Date for that Offer Period as provided in
Section 5 hereof.


(d) If on the first day
of any Purchase Period in an Offer Period in which a Participant is
participating, the Fair Market Value of the Common Stock is less than the Fair
Market Value of the Common Stock on the Enrollment Date of the Offer Period
(after taking into account any adjustment during the Offer Period pursuant to
Section 18(a)), the Offer Period shall be terminated automatically and the
Participant shall be enrolled automatically in the new Offer Period which has
its first Purchase Period commencing on that date, provided the Participant is
eligible to participate in the Plan on that date and has not elected to
terminate participation in the Plan.


(e) Except as
specifically provided herein, the acquisition of Common Stock through
participation in the Plan for any Offer Period shall neither limit nor require
the acquisition of Common Stock by a Participant in any subsequent Offer
Period.


5. Participation.


(a) An eligible Employee
may become a Participant in the Plan by completing a subscription agreement (or
other agreement satisfactory to the Plan Administrator) authorizing payroll
deductions in the form of Exhibit A to this Plan and filing it with the
designated payroll office of the Company at least ten (10) business days prior
to the Enrollment Date for the Offer Period in which such participation will
commence, unless a later time for filing the subscription agreement is set by
the Plan Administrator for all eligible Employees with respect to a given Offer
Period.


(b) Payroll deductions
for a Participant shall commence with the first partial or full payroll period
beginning on the Enrollment Date and shall end on the last complete payroll 











period during the Offer Period, unless sooner
terminated by the Participant as provided in Section 10.


6. Payroll Deductions.


(a) At the time a
Participant files a subscription agreement, the Participant shall elect to have
payroll deductions made during the Offer Period in amounts between one percent
(1%) and not exceeding fifteen percent (15%) of the Compensation which the
Participant receives during the Offer Period.


(b) All payroll
deductions made for a Participant shall be credited to the Participant’s
account under the Plan and will be withheld in whole percentages only.  A Participant may not make any additional payments
into such account.


(c) A Participant may
discontinue participation in the Plan as provided in Section 10, or may
increase or decrease the rate of payroll deductions for a future Offer Period
by completing and filing with the Company a change of status notice in the form
of Exhibit B to this Plan authorizing an increase or decrease in the payroll
deduction rate at least ten (10) business days prior to the Enrollment Date for
the next Offer Period, unless a later time for filing the notice is set by the
Plan Administrator for all eligible Employees with respect to a given Offer
Period.  Any increase or decrease in the
rate of a Participant’s payroll deductions shall be effective with the first
full payroll period commencing during the next Offer Period.  A Participant’s subscription agreement (as
modified by any change of status notice) shall remain in effect for successive
Offer Periods unless terminated as provided in Section 10.  The Plan Administrator shall be authorized to
limit the number of payroll deduction rate changes during any Offer Period.


(d) Notwithstanding the
foregoing, to the extent necessary to comply with Section 423(b)(8) of the
Code and Section 3(b) herein, a Participant’s payroll deductions may be
decreased to 0% at such time during any Purchase Period which is scheduled to
end during the current calendar year (the “Current Purchase Period”) that the
aggregate of all payroll deductions which were previously used to purchase
stock under the Plan in a prior Purchase Period which ended during that
calendar year plus all payroll deductions accumulated with respect to the
Current Purchase Period equal $21,250. 
Payroll deductions shall recommence at the rate provided in such
Participant’s subscription agreement, as amended, at the beginning of the first
Purchase Period which is scheduled to end in the following calendar year,
unless terminated by the Participant as provided in Section 10.


7. Grant of Option.  On the Enrollment Date, each Participant
shall be granted an option to purchase a number of shares of the Common Stock
with a value equal to $6,250, subject to adjustment as provided in
Section 18 hereof; provided that such option shall be subject to the
limitations set forth in Sections 3(b), 6 and 12 hereof Section .  Exercise of the option shall occur as
provided in Section 8, unless the Participant has withdrawn pursuant to
Section 10, and the option, to the extent not exercised, shall expire on
the last day of the Offer Period.











 


8. Exercise of Option.  Unless a Participant withdraws from the Plan
as provided in Section 10, below, the Participant’s option for the
purchase of shares will be exercised automatically on each Exercise Date by
applying the accumulated payroll deductions in the Participant’s account to
purchase the number of full shares subject to the option by dividing such
Participant’s payroll deductions accumulated prior to such Exercise Date and
retained in the Participant’s account as of the Exercise Date by the applicable
Purchase Price.  No fractional shares
will be purchased; any payroll deductions accumulated in a Participant’s
account which are not sufficient to purchase a full share shall be carried over
to the next Purchase Period or Offer Period, whichever applies, or returned to
the Participant, if the Participant withdraws from the Plan.  Notwithstanding the foregoing, any amount
remaining in a Participant’s account following the purchase of shares on the
Exercise Date due to the application of Section 423(b)(8) of the Code or
Section 7, above, shall be returned to the Participant and shall not be
carried over to the next Offer Period. 
During a Participant’s lifetime, a Participant’s option to purchase
shares hereunder is exercisable only by the Participant.


9. Delivery.  Upon receipt of a request from a Participant
after each Exercise Date on which a purchase of shares occurs, the Company
shall arrange the delivery to such Participant, as promptly as practicable, of
a certificate representing the shares purchased upon exercise of the
Participant’s option, or the issuance may be effected on a noncertificated
basis, to the extent not prohibited by applicable law or the applicable rules
of any stock exchange.


10.           Withdrawal; Termination of
Employment.


(a) A Participant may
withdraw all but not less than all the payroll deductions credited to the
Participant’s account and not yet used to exercise the Participant’s option
under the Plan for the next future Offer Period at any time by giving written
notice to the Company in the form of Exhibit B to this Plan.  If the Participant elects to withdraw, all of
the Participant’s payroll deductions credited to the Participant’s account will
be paid to such Participant as promptly as practicable after receipt of notice
of withdrawal, such Participant will not be granted an option for the next
Offer Period, and no further payroll deductions for the purchase of shares will
be made.  If a Participant withdraws from
a future Offer Period, payroll deductions will not resume at the beginning of
the succeeding Offer Period unless the Participant delivers to the Company a
new subscription agreement.


(b) Upon termination of a
Participant’s employment relationship (as described in Section 2(k)) at
any time prior to the next scheduled Exercise Date, the payroll deductions
credited to such Participant’s account during the Offer Period but not yet used
to exercise the option will be returned to such Participant or, in the case of
his/her death, to the person or persons entitled thereto under Section 14,
and such Participant’s option will be automatically terminated.


11.           Interest.  No interest shall accrue on the payroll
deductions credited to a Participant’s account under the Plan.











 


12.           Stock.


(a) Subject to adjustment
upon changes in capitalization of the Company as provided in Section 18, the
maximum number of shares of Common Stock which shall be made available for sale
under the Plan shall be 625,000 shares, plus an annual increase to be added on
the first day of the Company’s fiscal year beginning in 2001 equal to the
lesser of (i) 250,000 shares, (ii) one percent (1%) of the fully-diluted number
of outstanding shares on such date, or (iii) a lesser number of shares
determined by the Plan Administrator. 
For purposes of determining the outstanding number of Shares under this
Section 12(a), all outstanding classes of securities of the Company,
convertible notes, stock options, other equity compensation arrangements
(excluding options granted under this Plan), and warrants that are convertible
or exercisable presently or in the future by the holder into Shares, shall be
deemed to have been fully converted or exercised (notwithstanding any limits on
such conversions or exercises) into the number of Shares represented by such
securities, notes, stock options, other equity compensation arrangements, and
warrants calculated using the treasury stock method.  If on a given Exercise Date the number of
shares with respect to which options are to be exercised exceeds the number of
shares then available under the Plan, the Plan Administrator shall make a pro
rata allocation of the shares remaining available for purchase in as uniform a
manner as shall be practicable and as it shall determine to be equitable.


(b) A Participant will
have no interest or voting right in shares covered by the Participant’s option
until such shares are actually purchased on the Participant’s behalf in
accordance with the applicable provisions of the Plan.  No adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date of
such purchase.


(c) Shares to be
delivered to a Participant under the Plan will be registered in the name of the
Participant or in the name of the Participant and his or her spouse.


13.           Administration.  The Plan shall be administered by the Plan
Administrator which shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the Plan.  Every finding, decision and determination
made by the Plan Administrator shall, to the full extent permitted by
Applicable Law, be final and binding upon all persons.


14.           Designation of Beneficiary.


(a) Each Participant may
file a written designation of a beneficiary who is to receive any shares and
cash, if any, from the Participant’s account under the Plan in the event of
such Participant’s death.  If a
Participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.


(b) Such designation of
beneficiary may be changed by the Participant (and the Participant’s spouse, if
any) at any time by written notice.  In
the event of the death of a Participant and in the absence of a beneficiary
validly designated under the Plan who is living (or in existence) at the time
of such Participant’s death, the Company shall deliver such shares


 















and/or cash to
the executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed (to the knowledge of the Plan
Administrator), the Plan Administrator shall deliver such shares and/or cash to
the spouse (or domestic partner, as determined by the Administrator) of the
Participant, or if no spouse (or domestic partner) is known to the Plan
Administrator, then to the issue of the Participant, such distribution to be
made per stirpes (by right of representation), or if no issue are known to the
Plan Administrator, then to the heirs at law of the Participant determined in
accordance with Section 27.


15.           Transferability.  Neither payroll deductions credited to a
Participant’s account nor any rights with regard to the exercise of an option
or to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the Participant.  Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect, except that the Plan
Administrator may treat such act as an election to withdraw funds from an Offer
Period in accordance with Section 10.


16.           Use of Funds.  All payroll deductions received or held by
the Company under the Plan may be used by the Company for any corporate
purpose, and the Company shall not be obligated to segregate such payroll
deductions.


17.           Reports.  Individual accounts will be maintained for each
Participant in the Plan.  Statements of
account will be given to Participants at least annually, which statements will
set forth the amounts of payroll deductions, the Purchase Price, the number of
shares purchased and the remaining cash balance, if any.


18.           Adjustments Upon Changes in
Capitalization; Corporate Transactions.


(a) Adjustments
Upon Changes in Capitalization. 
Subject to any required action by the stockholders of the Company, the
Reserves, the Purchase Price, as well as any other terms that the Plan
Administrator determines require adjustment shall be proportionately adjusted
for (i) any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, (ii) any other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company, or (iii) as the Plan Administrator may
determine in its discretion, any other transaction with respect to Common Stock
to which Section 424(a) of the Code applies; provided, however that
conversion of any convertible securities of the Company shall not be deemed to
have been “effected without receipt of consideration.”  Such adjustment shall be made by the Plan
Administrator and its determination shall be final, binding and
conclusive.  Except as the Plan
Administrator determines, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
Reserves and the Purchase Price.


(b) Corporate
Transactions.  In the event of a
proposed Corporate Transaction, each option under the Plan shall be assumed by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the Plan Administrator determines, in the 











exercise of its sole
discretion and in lieu of such assumption, to shorten the Offer Period then in
progress by setting a new Exercise Date (the “New Exercise Date”).  If the Plan Administrator shortens the Offer
Period then in progress in lieu of assumption in the event of a Corporate
Transaction, the Plan Administrator shall notify each Participant in writing,
at least ten (10) days prior to the New Exercise Date, that the Exercise Date
for the Participant’s option has been changed to the New Exercise Date and that
the Participant’s option will be exercised automatically on the New Exercise
Date, unless prior to such date the Participant has withdrawn from the Offer
Period as provided in Section 10. 
For purposes of this Subsection, an option granted under the Plan shall
be deemed to be assumed if, in connection with the Corporate Transaction, the
option is replaced with a comparable option with respect to shares of capital
stock of the successor corporation or Parent thereof.  The determination of option comparability
shall be made by the Plan Administrator prior to the Corporate Transaction and
its determination shall be final, binding and conclusive on all persons.


19.           Amendment or Termination.


(a) The Plan
Administrator may at any time and for any reason terminate or amend the
Plan.  Except as provided in
Section 18, no such termination can affect options previously granted,
provided that an Offer Period may be terminated by the Plan Administrator on
any Exercise Date, either prior to or after the purchase of shares, if the Plan
Administrator determines that the termination of the Offer Period is in the
best interests of the Company and its stockholders.  If previously granted options are so
terminated prior to the purchase of shares, any amount remaining in a
Participant’s account shall be returned to the Participant as soon as
administratively feasible.  Except as
provided in this paragraph and in Section 18, no amendment may make any
change in any option theretofore granted which adversely affects the rights of
any Participant without the consent of affected Participants.  To the extent necessary to comply with
Section 423 of the Code (or any successor rule or provision or any other
Applicable Law), the Company shall obtain stockholder approval in such a manner
and to such a degree as required.


(b) Without
stockholder consent and without regard to whether any Participant rights may be
considered to have been “adversely affected,” the Plan Administrator shall be
entitled to limit the frequency and/or number of changes in the amount withheld
during Offer Periods, change the length of Purchase Periods within any Offer
Period, determine the length of any future Offer Period, whether future Offer
Periods shall be consecutive or overlapping, establish the exchange ratio
applicable to amounts withheld in a currency other than U.S. dollars, establish
additional terms, conditions, rules or procedures to accommodate the rules or
laws of applicable foreign jurisdictions, permit payroll withholding in excess
of the amount designated by a Participant in order to adjust for delays or
mistakes in the Company’s processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or
accounting and crediting procedures to ensure that amounts applied toward the
purchase of Common Stock for each Participant properly correspond with amounts
withheld from the Participant’s Compensation, and establish such other
limitations or procedures as the Plan Administrator determines in its sole
discretion advisable and which are consistent with the Plan.











 


20.           Notices.  All notices or other communications by a
Participant to the Company under or in connection with the Plan shall be deemed
to have been duly given when received in the form specified by the Plan
Administrator at the location, or by the person, designated by the Plan
Administrator for the receipt thereof.


21.           Conditions Upon Issuance of Shares.  Shares shall not be issued with respect to an
option unless the exercise of such option and the issuance and delivery of such
shares pursuant thereto shall comply with all Applicable Laws and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.  As a condition to the
exercise of an option, the Company may require the Participant to represent and
warrant at the time of any such exercise that the shares are being purchased
only for investment and without any present intention to sell or distribute
such shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned Applicable Laws.  In addition, no options shall be exercised or
shares issued hereunder before the Plan shall have been approved by
stockholders of the Company as provided in Section 23.


22.           Term of Plan.  The Plan shall become effective upon the
earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company.  It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 19.


23.           Stockholder Approval.  Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted.  Such
stockholder approval shall be obtained in the degree and manner required under
Applicable Laws.


24.           No Employment Rights.  The Plan does not, directly or indirectly,
create any right for the benefit of any employee or class of employees to
purchase any shares under the Plan, or create in any employee or class of
employees any right with respect to continuation of employment by the Company
or a Designated Parent or Subsidiary, and it shall not be deemed to interfere
in any way with such employer’s right to terminate, or otherwise modify, an
employee’s employment at any time.


25.           No Effect on Retirement and Other
Benefit Plans.  Except as
specifically provided in a retirement or other benefit plan of the Company or a
Designated Parent or Subsidiary, participation in the Plan shall not be deemed
compensation for purposes of computing benefits or contributions under any
retirement plan of the Company or a Designated Parent or Subsidiary, and shall
not affect any benefits under any other benefit plan of any kind or any benefit
plan subsequently instituted under which the availability or amount of benefits
is related to level of compensation.  The
Plan is not a “Retirement Plan” or “Welfare Plan” under the Employee Retirement
Income Security Act of 1974, as amended.


26.           Effect of Plan.  The provisions of the Plan shall, in
accordance with its terms, be binding upon, and inure to the benefit of, all
successors of each Participant, including, without limitation, such Participant’s
estate and the executors, administrators or trustees thereof, heirs and
legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Participant.











 


27.           Governing Law.  The Plan is to be construed in accordance
with and governed by the internal laws of the State of Oregon without giving
effect to any choice of law rule that would cause the application of the laws
of any jurisdiction other than the internal laws of the State of Oregon to the
rights and duties of the parties, except to the extent the internal laws of the
State of Oregon are superseded by the laws of the United States.  Should any provision of the Plan be
determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.


28.           Dispute Resolution.  The provisions of this Section 28 shall
be the exclusive means of resolving disputes arising out of or relating to the
Plan.  The Company, the Grantee, and the
Grantee’s beneficiary pursuant to Section 14 (the “parties”) shall attempt
in good faith to resolve any disputes arising out of or relating to the Plan by
negotiation between individuals who have authority to settle the
controversy.  Negotiations shall be commenced
by either party by notice of a written statement of the party’s position and
the name and title of the individual who will represent the party.  Within thirty (30) days of the written
notification, the parties shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary, to resolve the
dispute.  If the dispute has not been
resolved by negotiation, the parties agree that any suit, action, or proceeding
arising out of or relating to the Plan shall be brought before the U.S.
District Court, District of Oregon, and that the parties shall submit to the
jurisdiction of such court.  If the U.S.
District Court, District of Oregon, does not have jurisdiction over the dispute,
the parties agree that any suit, action, or proceeding arising out of or
related to the Plan shall be brought before the Oregon Circuit Court, 4th
Judicial District, located in Portland, Oregon, and that the parties shall
submit to the jurisdiction of such court. 
The parties irrevocably waive, to the fullest extent permitted by law,
any objection the party may have to the laying of venue for any such suit,
action or proceeding brought in such courts. 
THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A
JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING.  If any one or more provisions of this
Section 28 shall for any reason be held invalid or unenforceable, it is
the specific intent of the parties that such provisions shall be modified to
the minimum extent necessary to make it or its application valid and
enforceable.











 


Exhibit A


Digimarc
Corporation 1999 Employee Stock Purchase Plan

SUBSCRIPTION
AGREEMENT


Effective with the
Offer Period beginning on:
   ESPP Effective Date:    March 1, 200__      June 1, 200__    September 1, 200__
or     December 1,
200__


1.               Personal Information


	
  Legal Name (Please Print)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Last)

  	
   

  	
  (First)

  	
   

  	
  (MI)

  	
   

  	
  Location

  	
   

  	
  Department

  
	
  Street Address

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Daytime Telephone

  	
   

  	
   

  
	
  City,
  State/Country, Zip

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  E-Mail Address

  	
   

  	
   

  
	
  Social Security
  No. __ __ __ — __ __ — __ __ __ __

  	
   

  	
  Employee I.D. No.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


2.               Eligibility      Any
Employee whose customary employment is more than 20 hours per week and more
than 5 months per calendar year, who is an Employee on Enrollment date and who
does not hold (directly or indirectly) five percent (5%) or more of the
combined voting power of the Company, a parent or a subsidiary, whether in
stock or options to acquire stock is eligible to participate in the Digimarc
Corporation 1999 Employee Stock Purchase Plan (the “ESPP”); provided, however,
that Employees who are subject to the rules or laws of a foreign jurisdiction
that prohibit or make impractical the participation of such Employees in the
ESPP are not eligible to participate.


3.               Definitions    Each
capitalized term in this Subscription Agreement shall have the meaning set
forth in the ESPP.


4.               Subscription     I
hereby elect to participate in the ESPP and subscribe to purchase shares of the
Company’s Common Stock in accordance with this Subscription Agreement and the
ESPP.  I have received a complete copy of
the ESPP and a prospectus describing the ESPP and understand that my
participation in the ESPP is in all respects subject to the terms of the ESPP.  The effectiveness of this Subscription Agreement
is dependent on my eligibility to participate in the ESPP.


5.               Payroll Deduction Authorization             I hereby authorize payroll deductions from my
Compensation during the Offer Period in the percentage specified below (payroll
deductions may not exceed 15% of Compensation nor $21,250 per calendar year):




	
  Percentage to be Deducted
  (circle one)

  1%          2%          3%          4%          5%          6%          7%          8%          9%          10%      11%    
  12%     13%     14%    
  15%  

  






6.               ESPP Accounts and Purchase Price       I
understand that all payroll deductions will be credited to my account under the
ESPP.  No additional payments may be made
to my account.  No interest will be
credited on funds held in the account at any time including any refund of the
account caused by withdrawal from the ESPP. 
All payroll deductions shall be accumulated for the purchase of Company
Common Stock at the applicable Purchase Price determined in accordance with the
ESPP.


7.               Withdrawal and Changes in Payroll Deduction     I understand that I may discontinue my
participation in the ESPP at any time prior to an Exercise Date as provided in
Section 10 of the ESPP, but if I do not withdraw from the ESPP, any
accumulated payroll deductions will be applied automatically to purchase
Company Common Stock.  I may increase or
decrease the rate of my payroll deductions in whole percentage increments to
not less than one percent (1%) for a future Offer Period by completing and
timely filing a Change of Status Notice at least ten (10) business days prior
to the Enrollment Date for the next Offer Period (unless a later time is set by
the Plan Administrator).  Any increase or
decrease will be effective for the full payroll period occurring during the
next Offer Period.


8.               Perpetual Subscription          I
understand that this Subscription Agreement shall remain in effect for
successive Offer Periods until I withdraw from participation in the ESPP, or
termination of the ESPP.











 


9.               Taxes     I have
reviewed the ESPP prospectus discussion of the federal tax consequences of
participation in the ESPP and consulted with tax consultants as I deemed
advisable prior to my participation in the ESPP.  I hereby agree to notify the Company in
writing within thirty (30) days of any disposition (transfer or sale) of any
shares purchased under the ESPP if such disposition occurs within two (2) years
of the Enrollment Date (the first day of the Offer Period during which the
shares were purchased) or within one (1) year of the Exercise Date (the date I
purchased such shares), and I will make adequate provision to the Company for
foreign, federal, state or other tax withholding obligations, if any, which
arise upon the disposition of the shares. 
In addition, the Company may withhold from my Compensation any amount
necessary to meet applicable tax withholding obligations incident to my
participation in the ESPP, including any withholding necessary to make
available to the Company any tax deductions or benefits contingent on such
withholding.


10.         Designation
of Beneficiary       In the
event of my death, I hereby designate the following person or trust as my
beneficiary to receive all payments and shares due to me under the ESPP:                                                                 __  I am single        __  I am married


	
  Beneficiary (please print)

  	
   

  	
   

  	
   

  	
  Relationship to
  Beneficiary (if any)

  
	
   

  	
   

  	
  (Last)                 (First)

  	
  (MI)

  	
   

  
	
  Street Address

  	
   

  	
   

  	
   

  	
   

  
	
  City,
  State/Country, Zip

  	
   

  	
   

  	
   

  	
   

  



 


11.         Termination
of ESPP          I understand
that the Company has the right, exercisable in its sole discretion, to amend or
terminate the ESPP at any time, and a termination may be effective as early as
an Exercise Date (after purchase of shares on such date) within each
outstanding Offer Period.




	
  Date:

  	
  Employee
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  spouse’s
  signature (if beneficiary is other than spouse)

  















 


Exhibit B


Digimarc
Corporation 1999 Employee Stock Purchase Plan

CHANGE OF
STATUS NOTICE


	
   

  
	
  Participant Name (Please Print)

  
	
   

  
	
  Social Security Number

  
	
   

  



__                      Withdrawal From ESPP


I hereby withdraw from the Digimarc Corporation 1999 Employee Stock
Purchase Plan (the “ESPP”) and agree that my option under the applicable Offer
Period will be automatically terminated and all accumulated payroll deductions
credited to my account will be refunded to me or applied to the purchase of
Common Stock depending on the alternative indicated below.  No further payroll deductions will be made
for the purchase of shares in the applicable Offer Period and I shall be
eligible to participate in a future Offer Period only by timely delivery to the
Company of a new Subscription Agreement.


__                       Change in Payroll Deduction


I hereby elect to change my rate of payroll deduction under the ESPP as
follows for the next Offering Period beginning on or about December 1, 200__,
March 1, 200__, June 1, 200__, or September 1, 200__ (select one):


	
  Percentage to be
  Deducted (circle one)

   

  1%          2%          3%          4%          5%          6%          7%          8%          9%          10%      11%    
  12%     13%     14%    
  15%  

  
	
   

  



 


The following rule under the ESPP applies to changing
your payroll deduction rate:


An increase or a decrease in payroll deduction will be
effective for the first full payroll period commencing during the next Offering
Period.











 


o                         Change of Beneficiary       o            I am single             o            I am married


This change of
beneficiary shall terminate my previous beneficiary designation under the
ESPP.  In the event of my death, I hereby
designate the following person or trust as my beneficiary to receive all
payments and shares due to me under the ESPP:




	
  Beneficiary (please print)

  	
   

  	
   

  	
   

  	
  Relationship to
  Beneficiary (if any)

  
	
   

  	
  (Last)

  	
  (First)

  	
  (MI)

  	
   

  
	
  Street Address

  	
   

  	
   

  	
   

  	
   

  
	
  City,
  State/Country, Zip

  	
   

  	
   

  	
   

  	
   

  






 


 


 




	
  Date:

  	
   

  	
  Employee Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  spouse’s signature (if beneficiary is other than
  spouse)