**Exhibit 10.9**

**DIGIMARC CORPORATION1999 STOCK INCENTIVE PLAN**

**1999 NON-EMPLOYEEDIRECTOR STOCK INCENTIVE PROGRAMAmended and Restated on April 22, 2001Amended and Restated on March 29, 2002Amended and Restated on April 17, 2003Amended and Restated on May 2, 2003Amended and Restated on March 10, 2004 Amended and Restated on May 2, 2006**

# **ARTICLE IESTABLISHMENT AND PURPOSE OF THE PROGRAM**

## **1.01        Establishment of Program**

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

## **1.02        Purpose of Program**

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

## **1.03        Effective Date of the Program**

                TheProgram became effective as of the Registration Date on December 1, 1999,and was first amended and restated by the Board on April 22, 2001 toincrease the number of Shares granted pursuant to Initial Grants and SubsequentGrants (as defined below) and to change the vesting provisions thereunder. TheProgram was further amended and restated by the Board on March 29, 2002 toincrease the number of Shares granted pursuant to Initial Grants and SubsequentGrants, to award additional Option grants to Non-Employee Directors serving oncommittees of the Board, and to change the vesting provisions for all automaticOption grants. The Program was further amended and restated by the Board onApril 17, 2003 to specify that Committee Service Grants shall be made onlyto Non-Employee Directors who serve as a member of a “standing committee” ofthe Board. The Program was further amended and restated by the Board onMay 2, 2003 to eliminate the requirement that a Non-Employee Directorserve as a director of the Company for at least six (6) months beforereceiving a Committee Service Grant. The Program was further amended andrestated by the Board on March 10, 2004 to provide that the Board maywaive the issuance of option grants under the Program, in whole or in part, forany particular year. The Program was further amended and restated by the Boardon May 2, 2006 to specify that the Board may elect to make the stockcompensation awards 

----

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

# **ARTICLE IIDEFINITIONS**

                Capitalizedterms in this Program, unless otherwise defined in this Program, have themeaning given to them in the Plan. As used in this Program, the followingdefinitions shall apply:

## **2.01        Change in Control**

                “*Change in Control*” means a change inownership or control of the Company effected through either of the followingtransactions:

                (a)           the direct or indirect acquisition by any person orrelated group of persons (other than an acquisition from or by the Company orby 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 thetotal combined voting power of the Company’s outstanding securities pursuant toa tender or exchange offer made directly to the Company’s stockholders which amajority of the Continuing Directors who are not Affiliates or Associates ofthe offeror do not recommend such stockholders accept, or

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

## **2.02        Continuing Directors**

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

## **2.03        Corporate Transaction**

                “*Corporate Transaction*” means any of thefollowing transactions:

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

----

 

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

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

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

# **ARTICLE IIISTOCK INCENTIVE GRANT TERMS**

## **3.01        Date of Grant and Number of Shares**

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

                (b)*           SubsequentGrants*.  Immediately followingeach annual meeting of the Company’s stockholders commencing with the annualmeeting of the Company’s stockholders in 2002, each Non-Employee Director whocontinues as a Non-Employee Director following such annual meeting shall begranted a Non-Qualified Stock Option to purchase twelve thousand (12,000)shares of Common Stock (a “Subsequent Grant”); provided that no SubsequentGrant shall be made to any Non-Employee Director who has not served as adirector of the Company, as of the time of such annual meeting, for at leastsix (6) months. Each such Subsequent Grant shall be made on the date ofthe annual stockholders’ meeting in question.

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

----

 

                (d)*           Waiverof Option Grants*.  The Boardmay waive the issuance of option grants to be made pursuant to thisSection 3.01 of the Program for any particular year, in whole or in part,provided such waiver is made prior to the date of grant of such options. Anywaiver by the Board with respect to option grants for a particular year shallin no way affect the right of Non-Employee Directors to receive option grantsunder the Program in a subsequent year.

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

## **3.02        Vesting**

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

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

## **3.03        Exercise Price**

                Theexercise price per share of Common Stock of each Initial Grant and SubsequentGrant shall be one hundred percent (100%) of the Fair Market Value per Share onthe date of grant.

## **3.04        Corporate Transaction/Change in Control**

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

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

----

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

## **3.05        Other Terms**

                ThePlan Administrator shall determine the remaining terms and conditions of theAwards awarded under the Program.

 

----