EXHIBIT 10.1


 


CONFIDENTIAL PORTIONS OMITTED 


 


TRANSITION SERVICES AGREEMENT


 


THIS
TRANSITION SERVICES AGREEMENT, dated as of August 1, 2008, but effective
pursuant to Article VII (this “Agreement”), is by and
between Digimarc Corporation, a Delaware corporation (“Digimarc”), and
DMRC Corporation (“DMRC”), a Delaware corporation and wholly owned
subsidiary of DMRC LLC, a Delaware limited liability company (“DMRC LLC”).  Digimarc and DMRC are individually referred
to herein as a “Party” and collectively as the “Parties.”  Capitalized terms used but not otherwise
defined herein shall have the meanings given to such terms in the Separation
Agreement (as defined below).


 


WHEREAS,
Digimarc entered into an Agreement and Plan of Merger, dated as of March 23,
2008 (the “Original Merger Agreement”), by and among Digimarc, L-1
Identity Solutions, Inc., a Delaware corporation (“L-1”), and
Dolomite Acquisition Co., a Delaware corporation and wholly owned subsidiary of
L-1 (“Merger Sub”), pursuant to which Digimarc would merge with and into
Merger Sub, with Digimarc continuing as a wholly owned subsidiary of L-1;


 


WHEREAS,
Digimarc, L-1 and Merger Sub have entered into an Amended and Restated
Agreement and Plan of Merger, dated as of June 29, 2008, as amended (the “Merger
Agreement”), which provides, among other things, for the Offer and the
Merger;


 


WHEREAS,
the Parties have entered into a Separation Agreement, dated as of the date
hereof (the “Separation Agreement”), pursuant to which (i) Digimarc
will transfer or cause to be transferred to DMRC LLC, all of the DMRC Assets,
which represent all assets used primarily in the operation of the Digital
Watermarking Business, and all of the DMRC Liabilities, (ii) pursuant to Section 3.04
of the Separation Agreement, the Distribution or the Trust Transfer will occur
prior to the completion of the Offer, and (iii) immediately following the
Distribution or Trust Transfer, as applicable, DMRC LLC will merge with and
into DMRC, with DMRC continuing as the surviving corporation (the “DMRC
Merger”);


 


WHEREAS,
this Agreement, the Separation Agreement, and the License Agreement between
DMRC and L-1 Identity Solutions Operating Company, dated as of the date hereof
(collectively, the “Transaction Agreements”) set forth certain
transactions that are conditions to the completion of the Offer and the Merger;
and


 


WHEREAS,
Digimarc and one or more of the Digimarc Subsidiaries or Affiliates
(collectively, the “Digimarc Group”), on the one hand, and DMRC and one
or more of the DMRC Subsidiaries (collectively, the “DMRC Group”), on
the other hand, will provide certain services (the “Services”) to each
other in accordance with the terms and subject to the conditions set forth
herein for a period described herein on and after the Distribution Date, or Trust
Transfer Date, as applicable, in order to assist in the separation and
transition of the Digital Watermarking Business and the continued operation and
transition of the Secure ID Business.


 


NOW,
THEREFORE, in consideration of the covenants and agreements set forth in this


 

















 


Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties, intending to be legally bound hereby, agree
as follows:


 


ARTICLE I


 


SERVICES


 


Section 1.1.                                   Services Provided by the Parties.  In
order to continue the operation of the Secure ID Business and to facilitate the
orderly and effective transition of the Digital Watermarking Business from
Digimarc to DMRC and to assist in the continued operation and transition of the
Secure ID Business, the DMRC Group and the Digimarc Group each shall provide to
the other the Services set forth in Sections 1.2 and 1.3, respectively
(collectively, the “Services”).


 


Section 1.2.                                   Services Provided by the DMRC Group to the
Digimarc Group.  The DMRC Group shall provide the Digimarc
Group, to the extent such Services may be requested by the Digimarc Group from
time to time for the term of this Agreement, the following Services set forth
in this Section 1.2 (“DMRC Services”).  Any additional services to be provided by the
DMRC Group but not specifically detailed in the schedules to this Section 1.2
(collectively, the “DMRC Services Schedules”), or any change in the fees
to be charged from those set forth on any DMRC Services Schedule, shall be
mutually agreed upon by the Parties as an amendment to the applicable schedule.


 


1.2.1                        Accounting and Tax Services. The DMRC Group shall provide each of the
accounting and tax services specified in Schedule 1.2.1 (the “DMRC
Accounting and Tax Services”) to the Digimarc Group, in accordance with the
terms and conditions for such DMRC Accounting and Tax Services, and at the
applicable rates, fees and charges associated with such DMRC Accounting and Tax
Services, as set forth on Schedule 1.2.1.


 


1.2.2                        Information Technology Services. The DMRC Group shall provide each of the
information technology services specified in Schedule 1.2.2 (the “DMRC
IT Services”) to the Digimarc Group, in accordance with the terms and
conditions for such DMRC IT Services, and at the applicable rates, fees and
charges associated with such DMRC IT Services, as set forth on
Schedule 1.2.2.


 


1.2.3                        Legal Services. The DMRC Group shall provide each of the
legal services specified in Schedule 1.2.3 (the “DMRC Legal
Services”) to the Digimarc Group, in accordance with the terms and
conditions for such DMRC Legal Services, and at the applicable rates, fees and
charges associated with such DMRC Legal Services, as set forth on Schedule 1.2.3.


 


1.2.4                        Human Resources Services. The DMRC Group shall provide each of the
human resources services specified in Schedule 1.2.4 (the “DMRC
Human Resources Services”) to the Digimarc Group, in accordance with the
terms and conditions for such DMRC Human Resources Services, and at the
applicable rates, fees and charges associated with such DMRC Human Resources
Services, as set forth on Schedule 1.2.4.


 


2

















 


1.2.5                        Other Services. To the extent fees for a specific DMRC
Service to be provided to the Digimarc Group are not set forth in
Schedule 1.2.1 through Schedule 1.2.4, then the DMRC Group
shall provide such additional Service in accordance with the terms and
conditions listed on Schedule 1.2.5.


 


Section 1.3.                                   Services Provided by Digimarc Group to the
DMRC Group.  The Digimarc Group shall provide the DMRC
Group, to the extent such Services may be requested by the DMRC Group from time
to time for the term of this Agreement, the following Services set forth in
this Section 1.3 (“Digimarc Services”).  Any additional services to be provided by the
Digimarc Group but not specifically detailed in the schedules to this Section 1.3
(collectively, the “Digimarc Services Schedules”), or any change in the
fees to be charged from those set forth on any Digimarc Services Schedule,
shall be mutually agreed upon by the Parties as an amendment to the applicable
schedule.


 


1.3.1 Accounting and
Tax Services. The Digimarc Group shall provide each of the accounting and
tax services specified in Schedule 1.3.1 (the “Digimarc Accounting
and Tax Services”) to the DMRC Group, in accordance with the terms and
conditions for such Digimarc Accounting and Tax Services, and at the applicable
rates, fees and charges associated with such Digimarc Accounting and Tax
Services, as set forth on Schedule 1.3.1.


 


1.3.2 Information
Technology Services. The Digimarc Group shall provide each of the
information technology services specified in Schedule 1.3.2 (the “Digimarc
IT Services”) to the DMRC Group, in accordance with the terms and
conditions for such Digimarc IT Services, and at the applicable rates, fees and
charges associated with such Digimarc IT Services, as set forth on
Schedule 1.3.2.


 


1.3.3 Legal Services.
The Digimarc Group shall provide each of the legal services specified in
Schedule 1.3.3 (the “Digimarc  Legal Services”) to the
DMRC Group, in accordance with the terms and conditions for such Digimarc Legal
Services, and at the applicable rates, fees and charges associated with such
Digimarc Legal Services, as set forth on Schedule 1.3.3.


 


1.3.4 Human
Resources Services. The Digimarc Group shall provide each of the human
resources services specified in Schedule 1.3.4 (the “Digimarc
Human Resources Services”) to the DMRC Group, in accordance with the terms
and conditions for such Digimarc Human Resources Services, and at the
applicable rates, fees and charges associated with such Digimarc Human
Resources Services, as set forth on Schedule 1.3.4.


 


1.3.5 Other Services.
To the extent fees for a specific Digimarc Service to be provided to the DMRC
Group are not set forth in Schedule 1.3.1 through
Schedule 1.3.4, then the Digimarc Group shall provide such additional
Service in accordance with the terms and conditions listed on
Schedule 1.3.5.


 


3

















 


ARTICLE II


 


PERFORMANCE OF SERVICES


 


Section 2.1.                                   Manner of Performance.  Each of the Parties agrees that it
shall provide the Services being requested herein with the degree of care,
skill, confidentiality and diligence consistent with its current practices, but
in no event less than in conformance with industry standards.  Each Party
shall ensure that its personnel providing services hereunder, shall devote
sufficient time and effort as reasonably required to perform the
Services.  If a dispute arises over the nature or quality of the Services,
the prior practice of Digimarc with respect to the Services shall be conclusive
as to the nature and quality of the Services.


 


Section 2.2.                                   Provision of Information.  Any data, information, equipment or
general directions necessary for the Digimarc Group or DMRC Group to perform
the Services shall be provided to the Party performing the Services in a timely
manner.


 


Section 2.3.                                   Termination of any Service.  The termination of any one or more of
the specific Services shall have no impact on the Digimarc Group’s or the DMRC
Group’s obligation to continue to provide any other Services.


 


Section 2.4.                                   Laws and Regulations.  The Parties agree that they will
provide and use the Services contemplated hereunder only in accordance with all
applicable federal, state and local laws and regulations, and in accordance
with the conditions, rules, regulations and specifications which may be set
forth in any manuals, materials, documents or instructions provided to the
Party performing such Services on or prior to the date of this Agreement.


 


Section 2.5.                                   Modification of Service Levels.  Prior to the end of the first
calendar month following the Distribution Date, or Trust Transfer Date, as
applicable, and prior to the end of each calendar month thereafter, the Parties
will review the Services provided to discuss whether the Services will continue
during, or terminate, the next immediately succeeding month.  Each Party
will notify the other in writing of the termination of any Services pursuant to
Article VIII.


 


Section 2.6.                                   No Representations or Warranties.


 


2.6.1.                     THE PARTIES MAKE NO EXPRESS
REPRESENTATIONS OR WARRANTIES EXCEPT THOSE EXPRESSLY STATED IN THIS AGREEMENT
OR THE SCHEDULES HERETO.


 


2.6.2.                     EXCEPT FOR THOSE EXPRESSLY
STATED IN THIS AGREEMENT OR THE SCHEDULES HERETO, EACH PARTY EXPRESSLY
DISCLAIMS ANY AND ALL WARRANTIES, REPRESENTATIONS AND CONDITIONS OF ANY KIND,
WHETHER EXPRESS OR IMPLIED, TO THE FULL EXTENT PERMISSIBLE, INCLUDING, BUT NOT
LIMITED TO, AVAILABILITY, ACCURACY, COMPLETENESS, CORRECTNESS, RELIABILITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR NON-INFRINGEMENT
WITH RESPECT TO THE SERVICES, GOODS OR PRODUCTS FURNISHED IN CONNECTION
HEREWITH.


 


4

















 


Section 2.7.                                   Employees; Use of Subcontractors. The Parties shall employ and retain the
employees necessary to enable the provider to perform the Services under the
terms of this Agreement.  If either Party
is unable to retain one or more employees necessary to provide or perform the
Services for which the Party is obligated under this Agreement, each of the
Parties may hire or engage one or more subcontractors to perform one or more of
its Services; provided, that each of the Parties will in all cases
remain responsible for its respective obligations under this Agreement,
including, without limitation, with respect to the scope of the Services, the
standard for Services and the content of the Services provided.  Under no
circumstances will DMRC be responsible for making any payments directly to any
subcontractor engaged by Digimarc, nor will Digimarc be responsible for making
any payments directly to any subcontractor engaged by DMRC.


 


ARTICLE III


 


CHARGES FOR SERVICES


 


From and after the date of
this Agreement and throughout the term of this Agreement, DMRC agrees to pay to
Digimarc on a monthly basis the service fees set forth on the Digimarc Services
Schedules, and Digimarc agrees to pay DMRC on a monthly basis the service fees
set forth on the DMRC Services Schedules.  The Parties agree that, unless
otherwise set forth in the DMRC Services Schedules or the Digimarc Services
Schedules, the amounts to be paid for Services rendered hereunder are intended
to reasonably cover each of the Digimarc Group’s and the DMRC Group’s costs in
providing the Services.


 


ARTICLE IV


 


PAYMENT OF CHARGES AND REIMBURSEMENTS


 


On or before the thirtieth
(30th) day of each month during the term of this Agreement, each
Party (or its designee) shall submit to the other Party an invoice for the
Services provided hereunder during the immediately preceding calendar month
representing amounts determined in accordance with Article III
above, if any.  Subject to Section 5.2, each Party shall remit
payment to the other Party within thirty (30) days after its receipt of such
invoice.  Unless otherwise agreed to in writing, each Party shall remit
all funds due under this Agreement to the other Party (or its designee) by wire
transfer in immediately available funds based on the instructions set forth in Exhibit A,
a copy of which is attached to and made a part of this Agreement.


 


ARTICLE V


 


RECORDS AND AUDITS


 


Section 5.1.                                   Records Maintenance and Audits.  The Parties shall, for two (2) years
after the termination of this Agreement, maintain records and other evidence
sufficient to accurately and properly calculate any amounts due pursuant to Article III
hereof.  Each of the Parties, or their
respective Representatives (as defined below), shall have reasonable access,
after requesting such access in writing, during normal business hours to such
records for the purpose


 


5

















 


of auditing and verifying
the accuracy of the invoices submitted regarding such amounts due.  Any
such audits performed by or on behalf of Digimarc or DMRC shall be at the
requesting Party’s sole cost and expense, unless
the results of such audit reveals a five percent (5%) or more discrepancy in
favor of the requesting Party, in which case the audited Party shall pay all
reasonable costs and expenses directly associated with such audit.  The
Party being audited shall reasonably cooperate with the auditing Party’s
Representatives to accomplish the audit.  Each Party shall have the right
to audit the other Party’s books for a period of one (1) year after the
month in which the Services were rendered.


 


Section 5.2.                                   Disputed Amounts.  In the event of a good faith dispute
as to the amount or propriety of any invoice or any portions thereof submitted
pursuant to Articles III and IV, the Party receiving the
Services shall pay all charges on such invoice other than disputed amounts and
shall promptly notify the other Party in writing of such disputed
amounts.  So long as the Parties are attempting in good faith and in
accordance with the terms of Section 9.1, to resolve the dispute,
neither Party shall be entitled to terminate the Services related to, or that
are the cause of, the disputed amounts. If it is determined, pursuant to Section 9.1,
that the Party receiving Services is required to pay all or a portion of the
disputed amounts to the Party providing Services, the Party receiving the
Services shall pay such amounts promptly and in no case more than five (5) days
after such determination is made.


 


Section 5.3.                                   Undisputed Amounts.  Any statement or payment not disputed
in writing by DMRC or Digimarc within six (6) months after the month in
which the Services were rendered shall be considered final and no longer
subject to adjustment.


 


ARTICLE VI


 


CONFIDENTIALITY


 


Section 6.1.                                   Confidential Information. Each Party acknowledges that in connection
with its performance under this Agreement, it may gain access to confidential
material and information that is of a proprietary, technical or business nature
to the other Party with respect to the Services being performed hereunder.  Therefore, each Party agrees that it shall
not, and shall cause each of its respective officers, directors, employees, and
other agents and representatives, including attorneys, agents, customers,
suppliers, contractors and consultants (collectively, such Party’s “Representatives”),
not to disclose, reveal, divulge or communicate to any person (other than
Representatives of such Party who reasonably need to know such information in
providing Services hereunder) or use or otherwise exploit for its own benefit
or for the benefit of any third Party, any of the other Party’s Confidential
Information (as defined below).  If any
Confidential Information is disclosed by a Party to its Representatives in
connection with the Services hereunder, then the Confidential Information so
disclosed shall be used only as required to perform the Services.  Such Party shall use the same degree of care
to prevent and restrain the unauthorized use or disclosure of the other Party’s
Confidential Information by any of its Representatives as they currently use
for their own confidential information of a like nature, but in no event less
than a reasonable standard of care.  If a
Party is required to disclose Confidential Information of the other Party due
to a provision of applicable law, a compulsory disclosure notice of a court or
governmental agency or the rules and regulations of the New York Stock


 


6

















 


Exchange or Nasdaq Global
Market, the Party required to make such disclosure shall promptly notify the
other Party and shall assist the other Party in obtaining confidential
treatment of such Confidential Information. “Confidential Information”
of a Party means any information, material or documents relating to the business
of such Party currently or formerly conducted, or proposed to be conducted, by
such Party furnished to or in possession of the other Party, irrespective of
the form of communication, and all notes, analyses, compilations, forecasts,
data, translations, studies, memoranda or other documents prepared by or on
behalf of the other Party that contain or otherwise reflect such information,
material or documents.  Confidential
Information does not include, and there shall be no obligation hereunder with respect
to, information that (a) is or becomes generally available to the public,
other than as a result of a disclosure by any member of the other Party or any
of its Representatives not otherwise permissible hereunder, (b) the other
Party can demonstrate was or became available to such other Party from a source
other than the first Party, or (c) is developed independently by the other
Party without reference to the Confidential Information; provided, however,
that, in the case of clause (b) above, the source of such information was
not known by the other Party to be bound by a confidentiality agreement with,
or other contractual, legal or fiduciary obligation of confidentiality to, the
first Party with respect to such information.


 


Section 6.2.                                   Return of Confidential Information. Following termination of the Services
hereunder, upon written request at any time by either Party, the Parties shall
use commercially reasonable efforts to account for and return or destroy all
papers, books, records and electronic records containing any Confidential
Information.


 


Section 6.3                                      Injunctive Relief.  The
Parties acknowledge that a breach of this Article VI, will give rise to
irreparable injury to a Party that is inadequately compensable in damages.
Accordingly, in the event that either Party breaches this Article VI, the
non-breaching Party may seek injunctive relief against the breach or threatened
breach of the foregoing undertakings, in addition to any other legal remedies
that may be available. The Parties acknowledge and agree that the covenants
contained herein are necessary for the protection of the legitimate business
interests of the Parties and are reasonable in scope and content.


 


ARTICLE VII


 


TERM OF AGREEMENT


 


Unless sooner terminated
pursuant to Article VIII hereof, this Agreement shall become
effective for a term commencing on the Distribution Date, or the Trust Transfer
Date, as applicable, and ending upon the completion, or termination in
accordance with Article VIII, of all Services pursuant to the terms
set forth on the Digimarc Services Schedules and the DMRC Services Schedules,
as may be amended from time to time.


 


7

















 


ARTICLE VIII


 


TERMINATION


 


Section 8.1.                                   Termination of Agreement.


 


8.1.1.                     This Agreement may be terminated after the
Distribution Date, or Trust Transfer Date, as applicable:


 


(a) at the election of
a non-breaching Party if the other Party fails to perform or violates any
material obligation of this Agreement and fails to cure such breach within
thirty (30) days after the receipt of 
written notice of such breach from the non-breaching Party, in which
case, the non-breaching party shall have no liability for such termination;


 


(b) immediately (i) upon
the filing by a Party of a voluntary petition in bankruptcy or insolvency or
petitions for reorganization under any bankruptcy law, (ii) if a Party
consents to involuntary petition in bankruptcy or if a receiving order is given
against the Party under the United States Bankruptcy Code; or (iii) if an
order, judgment or decree by a court of competent jurisdiction, upon the
application of a creditor, is entered approving a petition seeking
reorganization or appointing a receiver, trustee or liquidator of all or
substantially all of such Party’s assets and such order, judgment or decree
continues in effect for a period of thirty (30) consecutive days; or


 


(c) by mutual written
agreement of the Parties.


 


8.1.2.                     Notwithstanding any other provision of this
Agreement, this Agreement may be terminated at any time prior to the
Distribution Date, or Trust Transfer Date, as applicable, by the Board of
Directors of Digimarc in the event the Merger Agreement is terminated in
accordance with its terms.  In the event of such termination, no Party
hereto shall have any liability to the other Party hereto by reason of this
Agreement.


 


Section 8.2.                                   Termination of Services.  At any time or from time to time,
either Party may terminate any one or more of the specific Services provided
hereunder by giving the other Party at least thirty (30) days’ prior written
notice to that effect.


 


ARTICLE IX


 


MISCELLANEOUS


 


Section 9.1.                                   Dispute Resolution. The procedures for discussion and
negotiation set forth in this Section 9.1 shall apply to all
disputes, controversies or claims (whether arising in contract, tort or
otherwise) that may arise out of or relate to, or arise under or in connection
with this Agreement or the transactions contemplated hereby.


 


9.1.1.                     Primary Points of Contact. It is the intent of the Parties hereto to
use their respective reasonable efforts to resolve expeditiously any dispute,
controversy or claim between them with respect to the matters covered hereby
that may arise from time to time on a mutually acceptable negotiated basis.  In furtherance of the foregoing, each of
Digimarc and DMRC shall appoint one or more employees to serve as the primary
contact to address questions and consider issues that arise under this
Agreement.  Such Digimarc employee or
employees shall be designated the “Digimarc Contract Committee” and such
DMRC employee or employees shall


 


8

















 


be designated the “DMRC
Contract Committee.”  If a dispute
arises, the Digimarc Contract Committee and the DMRC Contract Committee shall
consider the dispute for up to seven (7) Business Days (as defined in Section 9.7)
following receipt of a notice from either Party hereto specifying the nature of
the dispute, during which time the Digimarc Contract Committee and the DMRC
Contract Committee shall meet in person at least once, and attempt to resolve
the dispute.


 


9.1.2.                     Senior Management. If the dispute is not resolved by the end
of the seven (7) Business Day period referred to in Section 9.1.1,
or if the Digimarc Contract Committee and the DMRC Contract Committee agree
that the dispute cannot be resolved by them, either Party hereto may deliver a
notice (an “Escalation Notice”) demanding an in person meeting involving
appropriate representatives of the Parties hereto at a senior level of
management of the Parties hereto (or if the Parties agree, of the appropriate
strategic business unit or division within such entity) (collectively, “Senior
Executives”).  Thereupon, each of the
Digimarc Contract Committee and the DMRC Contract Committee shall promptly
prepare a memorandum stating (a)the issues in dispute and each Party’s position
thereon, (b) a summary of the evidence and arguments supporting each Party’s
positions (attaching all relevant documents), (c a summary of the
negotiations that have taken place to date, and (d) the name and title of
the Senior Executive or Senior Executives who shall represent each Party.  The Digimarc Contract Committee and the DMRC
Contract Committee shall deliver such memorandum to its respective Senior Executive
or Senior Executives promptly upon receipt of such memorandum from the Digimarc
Contract Committee and the DMRC Contract Committee, respectively.  The Senior Executives shall meet for
negotiations (which may be held telephonically) at a mutually agreed time and
place within ten (10) days of receipt of the Escalation Notice, and
thereafter as often as the Senior Executives deem reasonably necessary to
resolve the dispute.


 


9.1.3.                     Court Actions. In the event that any Party, after
complying with the provisions set forth in Sections 9.1.1 and 9.1.2,
desires to commence an action, such Party may submit the dispute, controversy
or claim (or such series of related disputes, controversies or claims), to the
Chancery Court of the State of Delaware or any federal court sitting in the State
of Delaware.  Unless otherwise agreed in
writing, the Parties hereto shall continue to provide service and honor all
other commitments under this Agreement during the course of dispute resolution
pursuant to the provisions of this Section 9.1 with respect to all
matters not subject to such dispute, controversy or claim.


 


Section 9.2.                                   Force Majeure.  Neither Party shall have any
obligation to perform any specific Service hereunder if its failure to do so is
caused by or results from any act of God, governmental action, natural
disaster, strike, terrorism, war, insurrection or other cause or circumstances
beyond its control, which acts or occurrences make it impossible for such Party
to carry out its obligations under this Agreement.  During the term of the
force majeure event, the Party receiving the Service shall have no obligation
to pay for the specific Service that the other Party does not provide as a
result of the force majeure event; provided, that the Party performing
the Service, shall, unless instructed otherwise by the Party receiving the
Service, use commercially reasonable efforts to remove or eliminate such cause
of delay or default.


 


9

















 


Section 9.3.                                Limitation  of Liability.  EXCEPT IN THE CASE OF
FRAUD, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, INDIRECT,
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL LOSSES OR DAMAGES OF ANY KIND OR
NATURE WHATSOEVER, INCLUDING LOST PROFITS AND GOODWILL, WITH RESPECT TO THE
SERVICES PROVIDED UNDER THIS AGREEMENT.


 


Section 9.4.                                   Indemnification.  Subject to the limitations set forth
in Section 9.3, each Party shall release, defend (upon the other
Party’s request), protect, indemnify and save the other Party and its
Affiliates harmless from and against all liability, claims, costs, expenses,
demands, suits and causes of action of every kind and character which the first
Party or any of its Affiliates may sustain or incur, arising, resulting from or
related to the gross negligence, bad faith or willful misconduct of the other
Party, its employees, contractors, agents or representatives in the provision
of any Service.


 


Section 9.5.                                   Independent Contractor.  The Parties hereto agree that the
Services rendered by the Digimarc Group and the DMRC Group in fulfillment of
the terms and obligations of this Agreement shall be as an independent
contractor and not as an employee, and with respect thereto, the Digimarc
Group, the DMRC Group and their respective employees, contractors or agents are
not entitled to the compensation or benefits provided by the other Party to its
employees, including, without limitation, group insurance and participation in
any employee benefit and pension plans. 
Nothing stated in this Agreement shall be construed to create an agency
relationship, partnership, association or joint venture between DMRC Group and
Digimarc Group.  No employee, contractor or agent of either the Digimarc
Group or the DMRC Group shall represent to any third-Party to be anything other
than an independent contractor of the other Party.  Nothing in this Agreement shall permit the
Digimarc Group or DMRC Group to create or assume any obligations or commitments
in the name of such Party or for such Party without the prior consent and
authorization of such Party.


 


Section 9.6.                                   Complete Agreement.  This Agreement and the schedules and
exhibits hereto, the other Transaction Agreements and other documents referred
to herein and therein shall constitute the entire agreement between the Parties
hereto with respect to the subject matter hereof and shall supersede all
previous negotiations, commitments and writings with respect to such subject
matter.


 


Section 9.7.                                   Governing Law.  This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
reference to its conflicts of laws principles.


 


Section 9.8.                                   Notices.  All notices, requests and other communications to any Party
hereunder shall be in writing and shall be deemed given if delivered
personally, facsimiled (which is confirmed), sent by e-mail (with a return
receipt) or sent by overnight courier (providing proof of delivery) to the
Parties to the following addresses:


 


If to Digimarc or any member
of the Digimarc Group subsequent to the Distribution Date, or Trust Transfer Date,
as applicable, to:


 


10

















 


L-1 Identity
Solutions, Inc.


177 Broad Street


Stamford, CT 06901


Attention: Mark Molina


Facsimile: (203)504-1104


E-mail: mmolina@L1ID.com


 


with a copy (which shall not
constitute notice) to:


 


Weil, Gotshal &
Manges LLP


767 Fifth Avenue


New York, NY 10153


Attention: Marita A. Makinen


Facsimile: (212)310-8007


E-mail:
Marita.Makinen@weil.com


 


and


 


Weil, Gotshal &
Manges LLP


201 Redwood Shores Parkway


Redwood Shores, CA  94065


Attention: Kyle C. Krpata


Facsimile: (650) 802-3100


E-mail:
Kyle.Krpata@weil.com


 


If to DMRC or any member of
the DMRC Group, to:


 


DMRC Corporation


9405 SW Gemini Drive


Beaverton, OR 97008


Attention: Robert Chamness


Facsimile: (503)469-4771


E-mail: Robert.Chamness@digimarc.com


 


with a copy (which shall not
constitute notice) to:


 


Perkins Coie LLP


1120 NW Couch Street


Tenth Floor


Portland, OR 97209


Attention: Roy W. Tucker and
John R. Thomas


Facsimile: (503)727-2222


E-mail:
rtucker@perkinscoie.com


jrthomas@perkinscoie.com


 


11

















 


or such other addresses or
facsimile number as such Party may hereafter specify by like notice to the
other Parties hereto.  All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 p.m. in the
place of receipt and such day is a Business Day (as defined below) in the place
of receipt.  Otherwise, any such notice,
request or communication shall be deemed not to have been received until the
next succeeding Business Day in the place of receipt.  “Business Day” means a day except a
Saturday, a Sunday or other day on which the Securities and Exchange Commission
or banks in the City of New York are authorized or required by law to be
closed.


 


Section 9.9.                                   Amendment and Modification.  This Agreement may be amended,
modified or supplemented only by a written agreement signed by all of the
Parties hereto.


 


Section 9.10.                             Successors and Assigns; No Third-Party
Beneficiaries.  This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the Parties hereto and their successors and permitted assigns,
but neither this Agreement nor any of the rights, interests and obligations
hereunder shall be assigned by any Party hereto without the prior written
consent of the other Party.   Except
for the provisions of Section 9.3, which are also for the benefit
of the indemnitees, this Agreement is solely for the benefit of Digimarc and
DMRC and their respective affiliates, successors and assigns, and is not
intended to confer upon any other persons any rights or remedies hereunder


 


Section 9.11.                             Counterparts.  This Agreement may be executed in
counterparts (each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument) and shall become
effective when one or more counterparts have been signed by each of the Parties
and delivered to the other Party.


 


Section 9.12.                             Interpretation.  The Section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the Parties hereto and shall not in any way affect the meaning or
interpretation of this Agreement.


 


Section 9.13.                             Severability.  If any provision of this Agreement or
the application thereof to any person or circumstance is determined by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or circumstances
other than those as to which it has been held invalid or unenforceable, shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby, so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
Party.


 


Section 9.14.                             References; Construction.  References to any “Schedule,” “Exhibit”
or “Section,” without more, are to Schedules, Exhibits and Sections to or
of this Agreement.  Unless otherwise expressly stated, clauses beginning
with the term “including” or similar words set forth examples only and in no
way limit the generality of the matters thus exemplified.


 


Section 9.15.                             Waivers.  Except as provided in this Agreement, no action taken pursuant
to this Agreement, including, without limitation, any investigation by or on
behalf of any Party, shall be deemed to constitute a waiver by the Party taking
such action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement.  The waiver


 


12

















 


by any Party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.


 


Section 9.16.                            Specific Performance.  The Parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the Parties shall be
entitled to seek specific performance of the terms hereof, in addition to any
other remedy at law or in equity.


 


Section 9.17.                        Waiver of Jury Trial.  EACH OF THE PARTIES
HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
LITIGATION, CLAIM, ACTION, SUIT, ARBITRATION, INQUIRY, PROCEEDING,
INVESTIGATION OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES
HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.


 


Section 9.18.                            Further Assurances.  Each
of the Parties shall execute and deliver, or cause to be executed and
delivered, all such instruments and shall take all such action as may
reasonably be requested by the other Party in order to effectuate the intent
and purposes of, and to carry out the terms of, this Agreement.


 


Section 9.19                               Survival. The provisions of Articles IV, V, VI, and IX
(other than Section 9.16), shall survive the expiration or
termination of this Agreement.


 


[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]


 


13

















 


The
Parties hereto have executed this Agreement on the date first written above, to
be effective on the Distribution Date, or Trust Transfer Date, as applicable.


 


 


	
   

  	
  DIGIMARC CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Robert Chamness

  
	
   

  	
  Name:

  	
  Robert Chamness

  
	
   

  	
  Title:

  	
  Chief Legal Officer and
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DMRC CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Robert Chamness

  
	
   

  	
  Name:

  	
  Robert Chamness

  
	
   

  	
  Title:

  	
  Chief Legal Officer and
  Secretary

  



 

















 


Exhibit A


 


Wire Instructions


 


Digimarc


 


DMRC


 


Wells Fargo Bank


Portland, Oregon


 


[**]


 






**  CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.


 














 


SCHEDULE 1.2.1


 


DMRC ACCOUNTING AND TAX SERVICES


 


(a)                                  Services
to be Provided:


 


DMRC will provide to Digimarc, from the current shared services group
located in Beaverton, Oregon, the following accounting and tax services:


 


1.                                       Transaction
Processing


 


·                  payroll
processing


·                  accounts payable
processing


·                  travel
coordination and management


·                  credit card
program,


·                  IT capital
leases, of which there are two,


·                  performance
bonds,


·                  stock
administration,


·                  insurance
administration (Property and Casualty, or P&C,  and Directors and Officers, or D&O) and
treasury.


 


2.                                       Regulatory
Reporting for tax services


 


·                  income taxes


·                  property


·                  VAT taxes


·                  sales and use
taxes


·                  business and
occupation taxes


·                  state and
nations’ annual corporation reporting


·                  other domestic
and foreign reporting


·                  payroll tax and
vendor 10099 reporting


 


3.                                       Consulting
Services


 


·                  In connection
with transaction services and regulatory services


 


(b)                                  Duration
of Services:  45 days for accounts payable, accounting, tax
and payroll services, with periodic extensions thereafter, provided that
employees or contractors are available to perform the requested services.


 

















 


(c)                                  Fees
for Services:


 


DMRC will make offers of employment to the individuals in the following
table, and anticipates that they will be available to provide services and
support in the transition.  Digimarc
shall pay for such services at the following rates:


 


	
  Job Function

  	
   

  	
  Employee

  	
   

  	
  Rate Per

  Hour*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CFO

  	
   

  	
  Mike
  McConnell

  	
   

  	
  $

  	
  515

  	
   

  
	
  Controller

  	
   

  	
  John Foy

  	
   

  	
  $

  	
  135

  	
   

  
	
  Senior Accountant

  	
   

  	
  Kimberly
  Anderson

  	
   

  	
  $

  	
  85

  	
   

  
	
  Administration Manager – stock, treasury,
  autos, credit cards, insurance

  	
   

  	
  Jeanne
  Biermann

  	
   

  	
  $

  	
  110

  	
   

  
	
  Financial Reporting Manager

  	
   

  	
  Kelvin Wong

  	
   

  	
  $

  	
  115

  	
   

  
	
  Executive Assistant to CFO and CIO

  	
   

  	
  Sue Taylor

  	
   

  	
  $

  	
  80

  	
   

  
	
  AP/Accounting Specialist

  	
   

  	
  Beverly
  Foster

  	
   

  	
  $

  	
  60

  	
   

  



 


DMRC will not make offers of employment to the individuals in the
following table, but to the extent Digimarc makes a request for such services
prior to the Spin-off, DMRC will offer these individuals temporary positions as
contractors.  Once these individuals are
severed from employment, DMRC cannot commit that they will be available to
provide services and support in the transition.


 


Digimarc shall pay for such services at the following rates:


 


	
  Job Function

  	
   

  	
  Contractor**

  	
   

  	
  Rate Per

  Hour*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lead AP

  	
   

  	
  Joanne Black

  	
   

  	
  $

  	
  65

  	
   

  
	
  AP/Accounting Specialist

  	
   

  	
  Suzanne
  Farmer

  	
   

  	
  $

  	
  60

  	
   

  
	
  AP/Tax Compliance Support Specialist

  	
   

  	
  Elizabeth
  Robles

  	
   

  	
  $

  	
  65

  	
   

  
	
  Tax Director

  	
   

  	
  Jeff Miller

  	
   

  	
  $

  	
  150

  	
   

  
	
  Payroll Specialist

  	
   

  	
  Lori
  Venneberg

  	
   

  	
  $

  	
  75

  	
   

  
	
  Internal Controls Specialist

  	
   

  	
  Heather Laws

  	
   

  	
  $

  	
  100

  	
   

  
	
  Systems Support Specialist

  	
   

  	
  Deina
  Chen-Vu

  	
   

  	
  $

  	
  75

  	
   

  
	
  Accounting Manager

  	
   

  	
  Sharon
  Birrel

  	
   

  	
  $

  	
  100

  	
   

  
	
  Process Control Specialist

  	
   

  	
  Renee
  Halpern

  	
   

  	
  $

  	
  105

  	
   

  



 






*    The rates provided are
estimates and fees will be billed at fully loaded cost.  See Appendix 1 for rate detail.


 


**  Upon an indication of
interest from Digimarc, the individuals listed in this table will be offered
the opportunity to continue working through the transition as contractors.  The individuals may or may not be available
to render services to DMRC and/or Digimarc at any time following the Spin-off


 

















 


SCHEDULE 1.2.2


 


DMRC INFORMATION TECHNOLOGY SERVICES


 


(a)                                  Services
to be Provided:


 


1.               The following basic computer operations
services will be performed by DMRC:


 


a.               Monitoring of
systems, hardware and networks


 


b.              Back up tape
rotation


 


c.               Facility cooling
and electrical


 


2.               Network usage to be charged based on
actual usage


 


3.               Personal services related to the data
center transition and other IT related activities will be provided upon receipt
of request in reasonable detail, at rates to be agreed upon by L-1 and DMRC at
the time of such request


 


(b)                   Duration
of Services:


 


For a period of 34 days following the Effective Time, L-1 and DMRC will
be sharing L-1 computer equipment and operating system software within the DMRC
facility.  DMRC personnel will supply
computer operations and maintenance for the L-1 hardware and software during
this time.


 


(c)                   Fees
for Services:


 


DMRC will make offers of employment to the individuals in the following
table, and anticipates that they will be available to provide services and
support in the transition.  Digimarc
shall pay for such services at the following rates:


 


	
  Job Function

  	
   

  	
  Employee

  	
   

  	
  Rate Per Hour*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Manager Infrastructure Services

  	
   

  	
  Josh Bickel

  	
   

  	
  $

  	
  115

  	
   

  
	
  Network Administrator

  	
   

  	
  Rick Ly

  	
   

  	
  $

  	
  85

  	
   

  
	
  System Administrator/Support

  	
   

  	
  Adam Smith

  	
   

  	
  $

  	
  60

  	
   

  



 






* The rates provided are estimates and
fees will be billed at fully loaded cost. 
See Appendix 1 for rate detail.


 

















 


(d)                   Temporary
Computer Room:


 


In consideration of DMRC providing the continuing data center space and
infrastructure on DMRC’s premises as requested by Digimarc, DMRC was required
to build a temporary space to house its separate data center for the Digital
Watermarking Business.  This is an
expense that DMRC would not have been required to incur but for the request
that DMRC continue to house Digimarc’s data center, which service will be
provided pursuant to an appropriate agreement and will be managed and operated
only by Digimarc employees or contractors. 
Digimarc understands and agrees that DMRC employees and contracts will
not manage or operate the Digimarc data center. 
Digimarc agrees to reimburse DMRC for the reasonable costs for the
build-out, maintenance and relocation of this center, at actual cost not to
exceed $100,000.


 

















 


SCHEDULE 1.2.3


 


DMRC LEGAL SERVICES


 


(a)                     Services
to be Provided:


 


·                  Litigation
support


·                  Intellectual
property protection


·                  Paralegal
support


·                  Such legal
services as may be required to assist in the transfer of Delayed Transfer
Assets and Delayed Transfer Liabilities


 


Digimarc shall request such services in writing in reasonable detail.


 


(b)           Duration of Services:
Six months


 


(c)           Fees for Services:


 


DMRC will make offers of employment to the individuals in the following
table, and anticipates that they will be available to provide services and
support in the transition.  Digimarc
shall pay for such services at the following rates:


 


	
  Job Function

  	
   

  	
  Employee

  	
   

  	
  Rate Per Hour*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attorney

  	
   

  	
  Robert
  Chamness

  	
   

  	
  $

  	
  465

  	
   

  
	
  Attorney

  	
   

  	
  Joel Meyer

  	
   

  	
  $

  	
  240

  	
   

  
	
  Attorney

  	
   

  	
  Tom Horgan

  	
   

  	
  $

  	
  225

  	
   

  
	
  Attorney

  	
   

  	
  Steve
  Stewart

  	
   

  	
  $

  	
  190

  	
   

  
	
  Attorney

  	
   

  	
  Bill Conwell

  	
   

  	
  $

  	
  275

  	
   

  
	
  Paralegal

  	
   

  	
  Megan Warner

  	
   

  	
  $

  	
  85

  	
   

  
	
  Paralegal

  	
   

  	
  Lisa
  Parkinson

  	
   

  	
  $

  	
  85

  	
   

  



 






* The rates provided are estimates and fees will be billed at
fully loaded cost.  See Appendix 1 for
rate detail.


 

















 


SCHEDULE 1.2.4


 


DMRC HUMAN RESOURCES SERVICES


 


(a)                                  Services
to be Provided:


 


1.               Support and
training in maintaining the HR Systems


 


a.               HR Perspective –
HR-B HRIS


b.              PilotWorks – Goal
Management


c.               SonicRecruit –
Applicant Tracking System


d.              Comply – Policy
Management System


e.               Intellum – Learning
Management System


 


2.               Health Plan
administration support


 


a.               5500 filing for the
2007 and 2008 plan years


 


(b)                                  Duration
of Services:


 


1.   HR Systems: 
For a period of up to 90 days following the Effective Time.


2.   Health Plans: 
For a period up to 90 days following the Effective Time, for
administration support and for the specific time periods for the 5500 filings
for the 2007 and 2008 plan years.


 


(c)                                  Fees
for Services:


 


DMRC will make an offer of employment to the
individual in the following table, and anticipates that they will be available
to provide services and support in the transition.  Digimarc shall pay for such services at the
following rates:


 


	
  Job Function

  	
   

  	
  Employee

  	
   

  	
  Rate Per Hour*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HR Operations Mgr

  	
   

  	
  Cindy Smith

  	
   

  	
  $

  	
  165

  	
   

  
							



 


DMRC will not make offers of employment to the individuals in the
following table, but to the extent Digimarc makes a request for such services
prior to the Spin-off, DMRC will offer these individuals temporary positions as
contractors.  Once these individuals are
severed from employment, DMRC cannot commit that they will be available to
provide services and support in the transition.


 






* The rates provided are
estimates and fees will be billed at fully loaded cost.  See Appendix 1 for rate detail.


 

















 


Digimarc shall pay for such services at the following rates:


 


	
  Job Function

  	
   

  	
  Contractor**

  	
   

  	
  Rate Per Hour*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HR VP

  	
   

  	
  Mike Cooney

  	
   

  	
  $

  	
  360

  	
   

  
	
  HR Director

  	
   

  	
  Carol Ward

  	
   

  	
  $

  	
  280

  	
   

  
	
  Benefits

  	
   

  	
  Amanda Ihle

  	
   

  	
  $

  	
  115

  	
   

  



 






** Upon an indication of
interest from Digimarc, the individuals listed in this table will be offered
the opportunity to continue working through the transition as contractors.  The individuals may or may not be available
to render services to DMRC and/or Digimarc at any time following the Spin-off.


 

















 


SCHEDULE 1.2.5


 


DMRC OTHER SERVICES


 


(a)                                  Office
Space to be Provided:


 


Cubical and Related Work Space:  DMRC will provide cubicle and attendant
office space (the “DMRC Office Space”) to Digimarc employees.  Each cubicle will include the equipment and
related amenities normally and customarily provided in the facility.  L-1 personnel shall have access to conference
rooms and phone rooms in accordance with the normal and customary access rules,
including scheduling, applicable to DMRC Employees.


 


(b)                                  Duration
of Office Space Availability:


 


The parties will enter into an agreement wherein DMRC will provide
workspace to employees of L1/Digimarc within the Beaverton facility.  DMRC Office Space will be provided for a
period of up to one year after the Effective Time, with periodic extensions
thereafter if excess capacity remains.


 


(c)                                  Rent
for Office Space:


 


DMRC will charge Digimarc for the use of DMRC Office Space at DMRC’s
cost, which will be calculated using the following equation:


 


Rent = TBFC x L1 Employees / Total Employees


 


“Total Beaverton Facility Cost”
(TBFC). The total facilities cost will include all costs for rent,
utilities, pass-through expenses, taxes and related amounts incurred in
operating the Beaverton facility.


 


“L1 Employees”.  The total number of persons located at the
Beaverton facility as employees or contractors who are on the L1 or Digimarc
payroll


 


“Total Employees”. The total number of persons located at the
Beaverton facility as employees or contractors


 


(d)                                  Reimbursement
of Direct Expense:


 


Any direct expenses incurred by DMRC on behalf of L1/Digimarc, such as
long distance expenses, copying and office supplies, and any moving or similar
expenses actually incurred, will be itemized and billed regularly.  If L-1 desires to partition the space by
constructing a wall, the costs of construction will be billed to L-1.


 















 


	
  Employee
  Specific

  	
   

  	
  General
  Overhead

  	
   

  	
   

  	
   

  	
  Per hour

  with 1656

  Hours per

  	
   

  	
   

  	
   

  	
   

  
	
  Classification

  	
   

  	
  Name

  	
   

  	
  Base Pay

  	
   

  	
  100%
  Bonus

  	
   

  	
  On Target

  Earnings

  	
   

  	
  Individual

  Payrol Load

  Based on OTE

  	
   

  	
  Facilities

  Cost

  (Note 1)

  	
   

  	
  IT Cost

  (Note 2)

  	
   

  	
  Executive

  Cost

  (Note 3)

  	
   

  	
  Board of

  Directors

  (Note 4)

  	
   

  	
  Non-Labor

  General

  Counsel

  (Note 5)

  	
   

  	
  Finance

  (Note 6)

  	
   

  	
  Actual 2008

  Stock Comp

  (Note 7)

  	
   

  	
  Hr Cost

  (Note 8)

  	
   

  	
  Fully burdened

  Cost

  	
   

  	
  year of

  billable

  time

  (Note 9)

  	
   

  	
  Classification

  	
   

  	
  Rounded to

  nearest $5

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  Accontant

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
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  Treasury

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  Lead AP

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  Clerical

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
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  Clerical

  	
   

  	
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  Finance:

  	
   

  	
  [**]

  	
   

  	
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  Controller

  	
   

  	
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  Finance:

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Accounting Manager

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Project

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Process

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  CFO

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  TAX

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Clerical

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Exec Assistant

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Payroll

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  F&A

  	
   

  	
  [**]

  
	
  HR

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  VP HR

  	
   

  	
  [**]

  
	
  HR

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  HR Director

  	
   

  	
  [**]

  
	
  HR

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Benefits Specialist

  	
   

  	
  [**]

  
	
  HR

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  HR Manager

  	
   

  	
  [**]

  
	
  General Counsel

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  [**]

  
	
  General Counsel

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  CLO

  	
   

  	
  [**]

  
	
  General Counsel

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  [**]

  
	
  General Counsel

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  [**]

  
	
  General Counsel

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Paralegal

  	
   

  	
  [**]

  
	
  IP Legal

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  [**]

  
	
  IP Legal

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  [**]

  
	
  IP Legal

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Paralegal

  	
   

  	
  [**]

  
	
  IP Legal

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  IT

  Manager/

  Security

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Network

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Help Desk

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Business Support

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  CIO

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Network

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Help Desk

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Network

  	
   

  	
  [**]

  



 






** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.


 


















 






	
  Note
  1

  	
   

  	
  Beaverton
  Facilities Cost of $[**] allocated to 107 FTE heads located in Beaverton.

  
	
  Note
  2

  	
   

  	
  IT
  Costs net of allocations to Programs of $[**] allocated to 463.25 FTE - (w/o
  Salaries, $[**] allocated to 463.25)

  
	
  Note
  3

  	
   

  	
  Executive
  Costs of $[**] allocated to 463.25 FTE

  
	
  Note
  4

  	
   

  	
  Board
  of Director costs of $[**] allocated to 463.25 FTE

  
	
  Note
  5

  	
   

  	
  General
  Counsel costs of $[**] allocated to 463.25 FTE - (w/o Salaries, [**]
  allocated to 463.25)

  
	
  Note
  6

  	
   

  	
  Finance
  Costs of $[**] allocated to 463.25 FTE -(w/o Salaries, $[**] allocated to
  463.25)

  
	
  Note 7

  	
   

  	
  Actual Stock Comp to be expensed in 2008

  
	
  Note
  8

  	
   

  	
  HR
  cost of $[**] allocated to 463.25 FTE ($[**] allocated to 463.25)

  
	
  Note
  9

  	
   

  	
  2080
  is the total number hours in one year, less 10 Holidays and 20 FTO days, 1
  week a year for sabbatical would be 1800 Hours available, assumed 10%
  administrative time so that would be 1620 billable hours

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ** Please Note: All Stay Bonus/Severance costs to be billed
  directly

  



 






** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.


 














 


SCHEDULE 1.3.2


 


DIGIMARC INFORMATION TECHNOLOGY SERVICES


 


(a)                                  Services
to be Provided:


 


1.               Network
Charges based on usage


 


2.               Email


 


3.               Dynamics
Great Plains (5 licenses)


 


4.               Share Point environments


 


(b)                                 Duration
of Services:


 


                                               For
a period of up to 34 days following the Effective Time, DMRC will use the
shared systems listed above.


 


(c)                                 Fees
for Services:


 


DMRC will use without any usage fee or cost the shared systems listed
above.


 


The following individuals will be either employees or contractors of
Digimarc following the Spin-off.  Upon
request for services, DMRC shall pay for such services at the following rates:


 


	
  Job Function

  	
   

  	
  Employee

  	
   

  	
  Rate Per

  Hour*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CIO

  	
   

  	
  John May

  	
   

  	
  $

  	
  225

  	
   

  
	
  Director Delivery Services

  	
   

  	
  Alan Carr

  	
   

  	
  $

  	
  130

  	
   

  
	
  Systems Administrator

  	
   

  	
  Mark Fleming

  	
   

  	
  $

  	
  90

  	
   

  
	
  Help Desk and Cell Phone Support

  	
   

  	
  Tim Putney

  	
   

  	
  $

  	
  65

  	
   

  



 






* The rates provided are estimates and fees will be billed at fully
loaded cost.


 

















 


SCHEDULE 1.3.3


 


DIGIMARC LEGAL SERVICES


 


(a)                      Services
to be Provided:


 


Digimarc shall provide to DMRC such legal services as DMRC may
reasonably request to assist in the continued operation and transition of the
Digital Watermarking Business, including Delayed Transfer Assets and Delayed
Transfer Liabilities.  These services may
involve certain current Digimarc Legal employees (identified below with an
asterisk) if they remain employees of surviving Digimarc, either as permanent
employees or as transition employees.


 


DMRC shall request such services in writing in reasonable detail


 


(b)                      Duration
of Services:  Six months.


 


(c)                      Fees for
Services:


 


DMRC shall pay for such services at the following rates:


 


	
  Job Function

  	
   

  	
  Employee

  	
   

  	
  Rate Per

  Hour*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attorney

  	
   

  	
  Barbara
  Giliberti

  	
   

  	
  $

  	
  180

  	
   

  
	
  Attorney

  	
   

  	
  Jacob
  Carroll

  	
   

  	
  $

  	
  105

  	
   

  
	
  Attorney

  	
   

  	
  Mark Molina

  	
   

  	
  $

  	
  610

  	
   

  
	
  Attorney

  	
   

  	
  Alan Roth

  	
   

  	
  $

  	
  180

  	
   

  
	
  Attorney

  	
   

  	
  Charles
  Taylor

  	
   

  	
  $

  	
  140

  	
   

  



 






* The rates provided are estimates and fees will be billed at fully
loaded cost.