Exhibit 10.1


 


TRANSITION SERVICES AGREEMENT


 


THIS TRANSITION SERVICES AGREEMENT, dated as
of July     , 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 (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) subject to Section 3.04 of the Separation
Agreement, all of the limited liability company interests of DMRC LLC will be
distributed on a pro rata basis to the holders as of the Record Date of
Digimarc Common Stock (the “Spin-Off”), and (iii) immediately
following the Spin-Off, 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 Digimarc and DMRC, 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 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 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.


 


Section 2.7.            Employees; Use of
Subcontractors. The Parties shall employ and retain the


 


4

















 


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 of auditing and verifying the accuracy of the invoices
submitted regarding such amounts due.


 


5

















 


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
Exchange or Nasdaq Global Market, the Party required to make such disclosure
shall promptly


 


6

















 


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 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:


 


(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 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 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


 


8

















 


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.


 


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


 


9

















 


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, to:


 


L-1 Identity Solutions, Inc.


177 Broad Street


Stamford, CT 06901


Attention: Mark Molina


Facsimile: (203)504-1104


E-mail: mmolina@L1ID.com


 


10

















 


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


 


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,


 


11

















 


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 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.


 


12

















 


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.


 


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


 


 


	
   

  	
  DIGIMARC
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DMRC LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 

















 


Exhibit A


 


Wire Instructions