**Exhibit 10.5**

**DIGIMARCCORPORATION**

**1999EMPLOYEE STOCK PURCHASE PLAN**

(Amended andRestated on November 5, 1999)

(Amended andRestated on February 19, 2004)

(Amended andRestated on November 2, 2006)

The followingconstitute the provisions of the 1999 Employee Stock Purchase Plan of DigimarcCorporation.

# 1. Purpose.  The purposeof the Plan is to provide employees of the Company and its Designated Parentsor Subsidiaries with an opportunity to purchase Common Stock of the Companythrough accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an “EmployeeStock 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 consistentwith the requirements of that Section of the Code.

# 2. Definitions.  As used herein, the following definitionsshall apply:

## (a) “Applicable Laws” means the legalrequirements relating to the administration of employee stock purchase plans,if any, under applicable provisions of federal securities laws, state corporateand securities laws, the Code, the rules of any applicable stock exchange ornational market system, and the rules of any foreign jurisdiction applicable toparticipation 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 ofthe Company effected through the direct or indirect acquisition by any personor related group of persons (other than an acquisition from or by the Companyor by a Company-sponsored employee benefit plan or by a person that directly orindirectly controls, is controlled by, or is under common control with, theCompany) of beneficial ownership (within the meaning of Rule 13d-3 of theExchange Act) of securities possessing more than fifty percent (50%)****of the total combined voting power of theCompany’s outstanding securities.

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

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

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## (f) “Company” means Digimarc Corporation, a Delawarecorporation.

## (g) “Compensation” means an Employee’s base salary, excludingother cash payments for commissions, overtime, bonuses, annual awards, andother cash incentive payments from the Company or one or more DesignatedParents or Subsidiaries, but including such amounts as are deferred by theEmployee (i) under a qualified cash or deferred arrangement described inSection 401(k) of the Code, or (ii) to a plan qualified underSection 125 of the Code. Compensation also does not include reimbursements or other expenseallowances, fringe benefits (cash or noncash), moving expenses, deferredcompensation, contributions (other than contributions described in the firstsentence) made on the Employee’s behalf by the Company or one or moreDesignated Parents or Subsidiaries under any employee benefit or welfare plannow or hereafter established, and any other payments not specificallyreferenced in the first sentence.

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

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

### (2)          the sale, transfer or otherdisposition of all or substantially all of the assets of the Company (includingthe capital stock of the Company’s subsidiary corporations) in connection withcomplete liquidation or dissolution of the Company;

### (3)          any reverse merger in which theCompany is the surviving entity but in which securities possessing more thanfifty percent (50%) of the total combined voting power of the Company’soutstanding securities are transferred to a person or persons different fromthose who held such securities immediately prior to such merger; or

### (4)          acquisition by any person or relatedgroup of persons (other than the Company or by a Company-sponsored employeebenefit plan) of beneficial ownership (within the meaning of Rule 13d-3 ofthe Exchange Act) of securities possessing more than fifty percent (50%) of thetotal combined voting power of the Company’s outstanding securities (whether ornot in a transaction also constituting a Change in Control), but excluding anysuch transaction that the Plan Administrator determines shall not be aCorporate Transaction

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

## (j) “Effective Date” means the effective date of theRegistration Statement relating to the Company’s initial public offering of itsCommon Stock.  However, should anyDesignated Parent or Subsidiary become a participating company in the Planafter such date, then such entity shall designate a separate Effective Datewith respect to its employee-participants.

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## (k) “Employee” means any individual, including an officer ordirector, who is an employee of the Company or a Designated Parent orSubsidiary for purposes of Section 423 of the Code.  For purposes of the Plan, the employmentrelationship shall be treated as continuing intact while the individual is onsick leave or other leave of absence approved by the individual’semployer.  Where the period of leaveexceeds ninety (90) days and the individual’s right to reemployment is notguaranteed either by statute or by contract, the employment relationship willbe deemed to have terminated on the ninety-first (91st) day of such leave, forpurposes 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 ofCommon Stock determined as follows:

### (1)          Where there exists a public market forthe Common Stock, the Fair Market Value shall be (A) the closing price fora share of Common Stock for the last market trading day prior to the time ofthe determination (which will generally be the date on which the determinationis made as long as the determination is made after the close of market on thatdate or, if no closing price was reported on that date, on the last tradingdate on which a closing price was reported) on the stock exchange determined bythe Plan Administrator to be the primary market for the Common Stock or theNasdaq Stock Market, whichever is applicable or (B) if the Common Stock isnot traded on any such exchange, the average of the closing bid and askedprices of a share of Common Stock otherwise reported for the day prior to thetime of the determination (or, if no such prices were reported on that date, onthe last date on which such prices were reported), in each case, as reported in*The Wall Street Journal* or such othersource as the Plan Administrator deems reliable; or

### (2)          In the absence of an establishedmarket of the type described in (1), above, for the Common Stock, the FairMarket Value thereof shall be determined by the Plan Administrator in goodfaith.

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

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

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## (r) “Participant” means an Employee of the Company or DesignatedParent 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 committeeof the Board that is responsible for the administration of the Plan as isdesignated from time to time by resolution of the Board.

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

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

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

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

## 3. Eligibility.

## (a) General.  Anyindividual who is an Employee on a given Enrollment Date shall be eligible toparticipate in the Plan for the Offer Period commencing with such EnrollmentDate.

## (b) Limitations on Grant and Accrual.  Any provisions of the Plan to the contrarynotwithstanding, no Employee shall be granted an option under the Plan (i) if,immediately after the grant, such Employee (taking into account stock owned byany other person whose stock would be attributed to such Employee pursuant toSection 424(d) of the Code) would own stock and/or hold outstandingoptions to purchase stock possessing five percent (5%) or more of the totalcombined voting power or value of all classes of stock of the Company or of anyParent or Subsidiary, or (ii) which permits the Employee’s rights to purchasestock under all employee stock purchase plans of the Company and its Parents orSubsidiaries 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 atthe time such option is granted) for each calendar year in which such option isoutstanding at any time.  Thedetermination of the accrual of the right to purchase stock shall be made in accordancewith Section 423(b)(8) of the Code and the regulations thereunder.

## (c) Other Limits on Eligibility. Notwithstanding Subsection (a), above, the following Employeesshall 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 

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## whosecustomary employment is for not more than 5 or fewer months in any calendaryear; and (iii) Employees who are subject to rules or laws of a foreignjurisdiction that prohibit or make impractical the participation of suchEmployees in the Plan.

# 4. Offer Periods.

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

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

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

# (d) If on the first dayof any Purchase Period in an Offer Period in which a Participant isparticipating, the Fair Market Value of the Common Stock is less than the FairMarket Value of the Common Stock on the Enrollment Date of the Offer Period(after taking into account any adjustment during the Offer Period pursuant toSection 18(a)), the Offer Period shall be terminated automatically and theParticipant shall be enrolled automatically in the new Offer Period which hasits first Purchase Period commencing on that date, provided the Participant iseligible to participate in the Plan on that date and has not elected toterminate participation in the Plan.

# (e) Except asspecifically provided herein, the acquisition of Common Stock throughparticipation in the Plan for any Offer Period shall neither limit nor requirethe acquisition of Common Stock by a Participant in any subsequent OfferPeriod.

# 5. Participation.

# (a) An eligible Employeemay become a Participant in the Plan by completing a subscription agreement (orother agreement satisfactory to the Plan Administrator) authorizing payrolldeductions in the form of Exhibit A to this Plan and filing it with thedesignated payroll office of the Company at least ten (10) business days priorto the Enrollment Date for the Offer Period in which such participation willcommence, unless a later time for filing the subscription agreement is set bythe Plan Administrator for all eligible Employees with respect to a given OfferPeriod.

# (b) Payroll deductionsfor a Participant shall commence with the first partial or full payroll periodbeginning on the Enrollment Date and shall end on the last complete payroll 

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# period during the Offer Period, unless soonerterminated by the Participant as provided in Section 10.

# 6. Payroll Deductions.

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

# (b) All payrolldeductions made for a Participant shall be credited to the Participant’saccount under the Plan and will be withheld in whole percentages only.  A Participant may not make any additional paymentsinto such account.

# (c) A Participant maydiscontinue participation in the Plan as provided in Section 10, or mayincrease or decrease the rate of payroll deductions for a future Offer Periodby completing and filing with the Company a change of status notice in the formof Exhibit B to this Plan authorizing an increase or decrease in the payrolldeduction rate at least ten (10) business days prior to the Enrollment Date forthe next Offer Period, unless a later time for filing the notice is set by thePlan Administrator for all eligible Employees with respect to a given OfferPeriod.  Any increase or decrease in therate of a Participant’s payroll deductions shall be effective with the firstfull payroll period commencing during the next Offer Period.  A Participant’s subscription agreement (asmodified by any change of status notice) shall remain in effect for successiveOffer Periods unless terminated as provided in Section 10.  The Plan Administrator shall be authorized tolimit the number of payroll deduction rate changes during any Offer Period.

# (d) Notwithstanding theforegoing, to the extent necessary to comply with Section 423(b)(8) of theCode and Section 3(b) herein, a Participant’s payroll deductions may bedecreased to 0% at such time during any Purchase Period which is scheduled toend during the current calendar year (the “Current Purchase Period”) that theaggregate of all payroll deductions which were previously used to purchasestock under the Plan in a prior Purchase Period which ended during thatcalendar year plus all payroll deductions accumulated with respect to theCurrent Purchase Period equal $21,250. Payroll deductions shall recommence at the rate provided in suchParticipant’s subscription agreement, as amended, at the beginning of the firstPurchase 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 Participantshall be granted an option to purchase a number of shares of the Common Stockwith a value equal to $6,250, subject to adjustment as provided inSection 18 hereof; provided that such option shall be subject to thelimitations set forth in Sections 3(b), 6 and 12 hereof Section .  Exercise of the option shall occur asprovided in Section 8, unless the Participant has withdrawn pursuant toSection 10, and the option, to the extent not exercised, shall expire onthe last day of the Offer Period.

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# 8. Exercise of Option.  Unless a Participant withdraws from the Planas provided in Section 10, below, the Participant’s option for thepurchase of shares will be exercised automatically on each Exercise Date byapplying the accumulated payroll deductions in the Participant’s account topurchase the number of full shares subject to the option by dividing suchParticipant’s payroll deductions accumulated prior to such Exercise Date andretained in the Participant’s account as of the Exercise Date by the applicablePurchase Price.  No fractional shareswill be purchased; any payroll deductions accumulated in a Participant’saccount which are not sufficient to purchase a full share shall be carried overto the next Purchase Period or Offer Period, whichever applies, or returned tothe Participant, if the Participant withdraws from the Plan.  Notwithstanding the foregoing, any amountremaining in a Participant’s account following the purchase of shares on theExercise Date due to the application of Section 423(b)(8) of the Code orSection 7, above, shall be returned to the Participant and shall not becarried over to the next Offer Period. During a Participant’s lifetime, a Participant’s option to purchaseshares hereunder is exercisable only by the Participant.

# 9. Delivery.  Upon receipt of a request from a Participantafter each Exercise Date on which a purchase of shares occurs, the Companyshall arrange the delivery to such Participant, as promptly as practicable, ofa certificate representing the shares purchased upon exercise of theParticipant’s option, or the issuance may be effected on a noncertificatedbasis, to the extent not prohibited by applicable law or the applicable rulesof any stock exchange.

# 10.           Withdrawal; Termination ofEmployment.

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

# (b) Upon termination of aParticipant’s employment relationship (as described in Section 2(k)) atany time prior to the next scheduled Exercise Date, the payroll deductionscredited to such Participant’s account during the Offer Period but not yet usedto exercise the option will be returned to such Participant or, in the case ofhis/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 payrolldeductions credited to a Participant’s account under the Plan.

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# 12.           Stock.

# (a) Subject to adjustmentupon changes in capitalization of the Company as provided in Section 18, themaximum number of shares of Common Stock which shall be made available for saleunder the Plan shall be 625,000 shares, plus an annual increase to be added onthe first day of the Company’s fiscal year beginning in 2001 equal to thelesser of (i) 250,000 shares, (ii) one percent (1%) of the fully-diluted numberof outstanding shares on such date, or (iii) a lesser number of sharesdetermined by the Plan Administrator. For purposes of determining the outstanding number of Shares under thisSection 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 convertibleor exercisable presently or in the future by the holder into Shares, shall bedeemed to have been fully converted or exercised (notwithstanding any limits onsuch conversions or exercises) into the number of Shares represented by suchsecurities, notes, stock options, other equity compensation arrangements, andwarrants calculated using the treasury stock method.  If on a given Exercise Date the number ofshares with respect to which options are to be exercised exceeds the number ofshares then available under the Plan, the Plan Administrator shall make a prorata allocation of the shares remaining available for purchase in as uniform amanner as shall be practicable and as it shall determine to be equitable.

# (b) A Participant willhave no interest or voting right in shares covered by the Participant’s optionuntil such shares are actually purchased on the Participant’s behalf inaccordance 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 ofsuch purchase.

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

# 13.           Administration.  The Plan shall be administered by the PlanAdministrator which shall have full and exclusive discretionary authority toconstrue, interpret and apply the terms of the Plan, to determine eligibilityand to adjudicate all disputed claims filed under the Plan.  Every finding, decision and determinationmade by the Plan Administrator shall, to the full extent permitted byApplicable Law, be final and binding upon all persons.

# 14.           Designation of Beneficiary.

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

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

 

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

# 15.           Transferability.  Neither payroll deductions credited to aParticipant’s account nor any rights with regard to the exercise of an optionor to receive shares under the Plan may be assigned, transferred, pledged orotherwise disposed of in any way (other than by will, the laws of descent anddistribution 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 PlanAdministrator may treat such act as an election to withdraw funds from an OfferPeriod in accordance with Section 10.

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

# 17.           Reports.  Individual accounts will be maintained for eachParticipant in the Plan.  Statements ofaccount will be given to Participants at least annually, which statements willset forth the amounts of payroll deductions, the Purchase Price, the number ofshares purchased and the remaining cash balance, if any.

# 18.           Adjustments Upon Changes inCapitalization; Corporate Transactions.

# (a) AdjustmentsUpon Changes in Capitalization. Subject to any required action by the stockholders of the Company, theReserves, the Purchase Price, as well as any other terms that the PlanAdministrator determines require adjustment shall be proportionately adjustedfor (i) any increase or decrease in the number of issued shares of Common Stockresulting from a stock split, reverse stock split, stock dividend, combinationor reclassification of the Common Stock, (ii) any other increase ordecrease in the number of issued shares of Common Stock effected withoutreceipt of consideration by the Company, or (iii) as the Plan Administrator maydetermine in its discretion, any other transaction with respect to Common Stockto which Section 424(a) of the Code applies; provided, however thatconversion of any convertible securities of the Company shall not be deemed tohave been “effected without receipt of consideration.”  Such adjustment shall be made by the PlanAdministrator and its determination shall be final, binding andconclusive.  Except as the PlanAdministrator determines, no issuance by the Company of shares of stock of anyclass, or securities convertible into shares of stock of any class, shallaffect, and no adjustment by reason hereof shall be made with respect to, theReserves and the Purchase Price.

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

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

# 19.           Amendment or Termination.

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

# (b) Withoutstockholder consent and without regard to whether any Participant rights may beconsidered to have been “adversely affected,” the Plan Administrator shall beentitled to limit the frequency and/or number of changes in the amount withheldduring Offer Periods, change the length of Purchase Periods within any OfferPeriod, determine the length of any future Offer Period, whether future OfferPeriods shall be consecutive or overlapping, establish the exchange ratioapplicable to amounts withheld in a currency other than U.S. dollars, establishadditional terms, conditions, rules or procedures to accommodate the rules orlaws of applicable foreign jurisdictions, permit payroll withholding in excessof the amount designated by a Participant in order to adjust for delays ormistakes in the Company’s processing of properly completed withholdingelections, establish reasonable waiting and adjustment periods and/oraccounting and crediting procedures to ensure that amounts applied toward thepurchase of Common Stock for each Participant properly correspond with amountswithheld from the Participant’s Compensation, and establish such otherlimitations or procedures as the Plan Administrator determines in its solediscretion advisable and which are consistent with the Plan.

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

# 21.           Conditions Upon Issuance of Shares.  Shares shall not be issued with respect to anoption unless the exercise of such option and the issuance and delivery of suchshares pursuant thereto shall comply with all Applicable Laws and shall befurther subject to the approval of counsel for the Company with respect to suchcompliance.  As a condition to theexercise of an option, the Company may require the Participant to represent andwarrant at the time of any such exercise that the shares are being purchasedonly for investment and without any present intention to sell or distributesuch shares if, in the opinion of counsel for the Company, such arepresentation is required by any of the aforementioned Applicable Laws.  In addition, no options shall be exercised orshares issued hereunder before the Plan shall have been approved bystockholders of the Company as provided in Section 23.

# 22.           Term of Plan.  The Plan shall become effective upon theearlier to occur of its adoption by the Board or its approval by thestockholders of the Company.  It shallcontinue in effect for a term of ten (10) years unless sooner terminated underSection 19.

# 23.           Stockholder Approval.  Continuance of the Plan shall be subject toapproval by the stockholders of the Company within twelve (12) months before orafter the date the Plan is adopted.  Suchstockholder approval shall be obtained in the degree and manner required underApplicable 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 topurchase any shares under the Plan, or create in any employee or class ofemployees any right with respect to continuation of employment by the Companyor a Designated Parent or Subsidiary, and it shall not be deemed to interferein any way with such employer’s right to terminate, or otherwise modify, anemployee’s employment at any time.

# 25.           No Effect on Retirement and OtherBenefit Plans.  Except asspecifically provided in a retirement or other benefit plan of the Company or aDesignated Parent or Subsidiary, participation in the Plan shall not be deemedcompensation for purposes of computing benefits or contributions under anyretirement plan of the Company or a Designated Parent or Subsidiary, and shallnot affect any benefits under any other benefit plan of any kind or any benefitplan subsequently instituted under which the availability or amount of benefitsis related to level of compensation.  ThePlan is not a “Retirement Plan” or “Welfare Plan” under the Employee RetirementIncome Security Act of 1974, as amended.

# 26.           Effect of Plan.  The provisions of the Plan shall, inaccordance with its terms, be binding upon, and inure to the benefit of, allsuccessors of each Participant, including, without limitation, such Participant’sestate and the executors, administrators or trustees thereof, heirs andlegatees, and any receiver, trustee in bankruptcy or representative ofcreditors of such Participant.

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# 27.           Governing Law.  The Plan is to be construed in accordancewith and governed by the internal laws of the State of Oregon without givingeffect to any choice of law rule that would cause the application of the lawsof any jurisdiction other than the internal laws of the State of Oregon to therights and duties of the parties, except to the extent the internal laws of theState of Oregon are superseded by the laws of the United States.  Should any provision of the Plan bedetermined by a court of law to be illegal or unenforceable, the otherprovisions shall nevertheless remain effective and shall remain enforceable.

# 28.           Dispute Resolution.  The provisions of this Section 28 shallbe the exclusive means of resolving disputes arising out of or relating to thePlan.  The Company, the Grantee, and theGrantee’s beneficiary pursuant to Section 14 (the “parties”) shall attemptin good faith to resolve any disputes arising out of or relating to the Plan bynegotiation between individuals who have authority to settle thecontroversy.  Negotiations shall be commencedby either party by notice of a written statement of the party’s position andthe name and title of the individual who will represent the party.  Within thirty (30) days of the writtennotification, the parties shall meet at a mutually acceptable time and place,and thereafter as often as they reasonably deem necessary, to resolve thedispute.  If the dispute has not beenresolved by negotiation, the parties agree that any suit, action, or proceedingarising 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 thejurisdiction 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 orrelated to the Plan shall be brought before the Oregon Circuit Court, 4thJudicial District, located in Portland, Oregon, and that the parties shallsubmit 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 AJURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING.  If any one or more provisions of thisSection 28 shall for any reason be held invalid or unenforceable, it isthe specific intent of the parties that such provisions shall be modified tothe minimum extent necessary to make it or its application valid andenforceable.

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**Exhibit A**

DigimarcCorporation 1999 Employee Stock Purchase Plan******SUBSCRIPTIONAGREEMENT**

Effective with theOffer 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     **AnyEmployee whose customary employment is more than 20 hours per week and morethan 5 months per calendar year, who is an Employee on Enrollment date and whodoes not hold (directly or indirectly) five percent (5%) or more of thecombined voting power of the Company, a parent or a subsidiary, whether instock or options to acquire stock is eligible to participate in the DigimarcCorporation 1999 Employee Stock Purchase Plan (the “ESPP”); provided, however,that Employees who are subject to the rules or laws of a foreign jurisdictionthat prohibit or make impractical the participation of such Employees in theESPP are not eligible to participate.

3.               **Definitions**    Eachcapitalized term in this Subscription Agreement shall have the meaning setforth in the ESPP.

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

5.               **Payroll Deduction Authorization**             I hereby authorize payroll deductions from myCompensation during the Offer Period in the percentage specified below (payrolldeductions 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      **Iunderstand that all payroll deductions will be credited to my account under theESPP.  No additional payments may be madeto my account.  No interest will becredited on funds held in the account at any time including any refund of theaccount caused by withdrawal from the ESPP. All payroll deductions shall be accumulated for the purchase of CompanyCommon Stock at the applicable Purchase Price determined in accordance with theESPP.

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

8.               **Perpetual Subscription**          Iunderstand that this Subscription Agreement shall remain in effect forsuccessive Offer Periods until I withdraw from participation in the ESPP, ortermination of the ESPP.

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9.               **Taxes**     I havereviewed the ESPP prospectus discussion of the federal tax consequences ofparticipation in the ESPP and consulted with tax consultants as I deemedadvisable prior to my participation in the ESPP.  I hereby agree to notify the Company inwriting within thirty (30) days of any disposition (transfer or sale) of anyshares purchased under the ESPP if such disposition occurs within two (2) yearsof the Enrollment Date (the first day of the Offer Period during which theshares were purchased) or within one (1) year of the Exercise Date (the date Ipurchased such shares), and I will make adequate provision to the Company forforeign, federal, state or other tax withholding obligations, if any, whicharise upon the disposition of the shares. In addition, the Company may withhold from my Compensation any amountnecessary to meet applicable tax withholding obligations incident to myparticipation in the ESPP, including any withholding necessary to makeavailable to the Company any tax deductions or benefits contingent on suchwithholding.

10.         **Designationof Beneficiary      **In theevent of my death, I hereby designate the following person or trust as mybeneficiary 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.         **Terminationof ESPP         **I understandthat the Company has the right, exercisable in its sole discretion, to amend orterminate the ESPP at any time, and a termination may be effective as early asan Exercise Date (after purchase of shares on such date) within eachoutstanding Offer Period.

| Date:  | Employee  Signature: |                                                           |
|--------|----------------------|----------------------------------------------------------------|
|   |                 |                                                           |
|   |                 | spouse’s  signature (if beneficiary is other than spouse) |

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**Exhibit B**

DigimarcCorporation 1999 Employee Stock Purchase Plan******CHANGE OFSTATUS NOTICE**
|                            |
|---------------------------------|
| Participant Name (Please Print) |
|                            |
| Social Security Number          |
|                            |

__                      **Withdrawal From ESPP**

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

__                       **Change in Payroll Deduction**

I hereby elect to change my rate of payroll deduction under the ESPP asfollows 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 changingyour payroll deduction rate:

An increase or a decrease in payroll deduction will beeffective for the first full payroll period commencing during the next OfferingPeriod.

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

This change ofbeneficiary shall terminate my previous beneficiary designation under theESPP.  In the event of my death, I herebydesignate the following person or trust as my beneficiary to receive allpayments 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) |

 

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