Document:

EXHIBIT
10.3

 

CONFIDENTIAL PORTIONS OMITTED

 

AGREEMENT

 

This
is an agreement (the “Agreement”) between Digimarc Corporation, a Delaware
Corporation, having a place of business at 9405 SW Gemini Drive, Beaverton,
Oregon 97008, and its subsidiaries (“Digimarc”), and The Nielsen Company (US), Inc.,
a New York Corporation, having a place of business at 770 Broadway, New York,
New York 10003, its Subsidiaries
and Affiliates (“Nielsen”).

 

Nielsen “Affiliates” are
The Nielsen Company, B.V., a Netherlands corporation, and any of the
Subsidiaries of The Nielsen Company, B.V. that are not also a Subsidiary of
Nielsen (US).  Nielsen “Subsidiaries”
include any corporation, partnership or other entity in which a party holds,
directly or indirectly, ownership of, or the right to vote on behalf of, more
than forty percent (40%) of its voting stock or other voting equity interests,
for so long as such ownership or right to vote exists.  An entity in which Nielsen owns more than
forty percent (40%) of its voting stock or other voting equity interests but
less than a majority of the voting stock or other voting equity interests, is
not considered a Subsidiary under this definition unless that entity agrees in
writing to be bound to all applicable provisions of this Agreement.

 

The
effective date of this Agreement is October 1, 2007 (“Effective Date”) and
the parties hereby further agree:

 

1.              IP Ownership and License Grants.

 

1.1.   Digimarc Patents.  “Digimarc Patents” means all patents and
patent applications owned by Digimarc that Digimarc has the right to license,
and any reissues, continuations, continuations-in-part, divisionals,
extensions, re-examinations, substitutions and renewals of any such patents and
patent applications and any and all foreign counterparts and equivalents of the
foregoing; excluding U.S.
Patent Nos. [**], and any reissues, continuations, continuations-in-part,
divisionals, extensions, re-examinations, substitutions, renewals and foreign
counterparts and equivalents of those patents.

 

1.2.   Current Nielsen Products and Services. 
Subject to the terms and conditions of this Agreement, as of January 1,
2008 (the “License Initiation Date”), Digimarc hereby grants to Nielsen a worldwide[**]
(except as set forth in Section 6.4) license under the Digimarc Patents to
make, have made, use, import, Sell and Offer to Sell Current Nielsen Products
and Services.  “Current Nielsen Products and Services”
means [**].

 

1.3.   CIMR Products and Services. 
Subject to the terms and conditions of this Agreement, as of the License
Initiation Date, Digimarc hereby grants to Nielsen a worldwide[**] (except as
set forth in Section 6.4) license under the Digimarc Patents to make, have
made, use, import, Sell and Offer to Sell the CIMR Products and Services.  “CIMR Products and Services” means products and 

 

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

 

 

services that are made
or offered by and/or for Nielsen and that are provided to customers by Nielsen and described in Appendix D, and any
improvements and other modifications, that are developed and marketed as a
result of this Agreement, using [**].

 

1.4.   Technology and Patents Developed Pursuant to Services
Agreement.  All (a) technology and patents arising
from Services performed by Digimarc for Nielsen and paid for by Nielsen and (b) technology
and patents that are jointly developed by Nielsen and Digimarc arising from
Digimarc Services (collectively, the “[**] Technology”) shall be [**] owned by
[**].  For so long as both the Current
Nielsen Products and Services and CIMR Products and Services licenses are in
effect and subject to Digimarc’s pre-existing agreements (as of the Effective
Date, and as may be amended and/or extended from time to time in ways
consistent with the relevant terms as they exist as of the Effective Date),
Digimarc covenants that it shall [**] right, license or permission in or to any
[**] Technology [**] the fields of CIMR Products and Services and [**]in which
Nielsen conducts such activities as of the Effective Date (“[**]”).

 

1.5.         License Limitations and Exclusions.

 

1.5.1.      Pre-existing
License.  The
licenses for Current Nielsen Products and Services and CIMR Products and
Services do not cover products and services covered by the license from Digimarc
to [**], later [**] to Nielsen [**].

 

1.5.2.      Excluded
Applications.  Neither Current
Nielsen Products and Services nor CIMR Products and Services shall include:
[**].

 

1.5.3.      Sell and Offer
to Sell Defined.  The terms “Sell”
and “Offer to Sell” and other forms of such terms, with respect to software
products, mean the granting of licenses to use such software products in
accordance with this Agreement.

 

1.5.4.      No implied licenses.  Nothing contained in this Agreement will be construed as conferring by
implication, estoppel or otherwise, any license or other right under any patent
rights or other industrial or intellectual property rights of either party
except for the licenses expressly granted herein.  For the avoidance of doubt,
the licenses for Current Nielsen Products and Services and CIMR Products and
Services do not authorize Nielsen to grant any license concerning any Digimarc
Patents that is not
in connection with the use of CIMR Products and Services or Current Nielsen
Products and Services.

 

2.     Royalties
and Other Consideration for Licenses.

 

2.1.         Consideration Exchanged. 
The minimum royalty payments and ongoing royalties and fees for Digimarc
Services set forth in this Agreement provide 

 

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

 

 

partial
consideration for several elements of value provided by Digimarc including: (i) licenses
for both Current Nielsen Products and Services and CIMR Products and Services; (ii) use of Digimarc’s technology and market
development work prior to the Effective Date; (iii) [**]; (iv) [**];
and (v) foregoing potential claims against alleged use of Digimarc Patents
by Nielsen in Current Nielsen Products and Services while that license is in
place.

 

2.2.         Current Nielsen Products and
Services.  The license
for Current Nielsen Products and Services shall remain in effect for so long as
Nielsen is in compliance with payments of CIMR Royalties and Digimarc Service
Fees, the Nielsen Commitment of Resources, and all other material terms of this
Agreement.  The license will become
permanent once Nielsen has paid [**]. 
The fully paid up license to Current Nielsen Products and Services will
[**], and will continue in effect prospectively and perpetually without further
fees or royalties to Digimarc, and will not be thereafter terminable. [**].

 

2.3.         CIMR Products and Services.  The license for CIMR Products and Services
shall be royalty bearing:

 

2.3.1.     Royalties.  Nielsen will pay to Digimarc royalties on
CIMR Net Revenues for each year (a “Royalty Year”), as follows:

 

	
  In Royalty Year One
  (Jan.1-Sept. 30, 2008)

  	
   

  	
  [**]%

  
	
  In Royalty Year Two
  (Oct. 1, 2008-Sept. 30, 2009)

  	
   

  	
  [**]%

  
	
  In Royalty Year Three

  	
   

  	
  [**]%

  
	
  In Royalty Year Four

  	
   

  	
  [**]%

  
	
  In Royalty Year Five; and
  each year thereafter

  	
   

  	
  [**]%.

  

 

2.3.2                      CIMR Net Revenues.  “CIMR Net Revenues” means all revenues
recognized by Nielsen that are received from, attributable to, or derived from,
the CIMR Products and Services, such as revenue from [**] fees, from [**], from
[**] fees, from [**] fees, from [**] fees and from [**], less: (i) any
[**].  All CIMR Net Revenues, including
Other Non-Interest Income, shall be calculated in good faith by Nielsen in
accordance with United States generally accepted accounting principles (“GAAP”).

 

2.3.3                      Minimum Royalties.  Regardless of
the level of CIMR Net Revenues, Nielsen shall pay to
Digimarc, on an equal quarterly basis, annual minimum royalties as follows:

 

	
  In Royalty Year One -

  	
   

  	
  $[**];

  
	
  In Royalty Year Two -

  	
   

  	
  $[**];

  
	
  In Royalty Year Three -
  

  	
   

  	
  $[**];

  
	
  In Royalty Year Four -

  	
   

  	
  $[**]; and

  
	
  In Royalty Year Five -

  	
   

  	
  $[**].

  

 

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

 

 

2.3.4                    Royalty Payments. 
With the exception of the Royalty Year One payments, quarterly payments
of the annual minimum royalties shall be due on the first day of the quarter,
e.g., the first quarterly payment for Royalty Year Two shall be due on October 1,
2008.  The three quarterly payments (of
$[**]) for Royalty Year One shall be due on January 1, 2008, April 1,
2008, and July 1, 2008.

 

2.3.5                    Reports.  Within
sixty (60) days after the end of each quarter in each Royalty Year, Nielsen
will submit to Digimarc a statement in writing, in the form attached as Appendix
B (the “Quarterly License Reporting Statement”), including with respect to that
quarter:  (a) all CIMR Net Revenues;
(b) the royalties owed to Digimarc under this Agreement based on such CIMR
Net Revenues; and (c) such other information reasonably
necessary to enable Digimarc to verify Nielsen’s calculation of royalties
payable.

 

2.3.6                    Payment of Royalties in Excess of
Minimums.  Within sixty (60) days after the end of each
quarter of each Royalty Year, Nielsen shall pay to Digimarc the amount of the
royalties owed for that quarter if earned royalties for that Royalty Year to
date exceed the annual Minimum Royalties owed for that Royalty Year.  Royalty payments (including
annual Minimum Royalties) are nonrefundable and any unused portions of annual
Minimum Royalties do not carry forward into future Royalty Years.

 

2.3.7                    Credits.  If Nielsen has to reverse
previously recognized CIMR Net Revenues reported under a previous Quarterly
License Reporting Statement submitted to Digimarc in any Royalty Year in which
Nielsen paid royalties exceeding the minimum annual royalty, Nielsen can claim
a credit on a subsequent Quarterly License Reporting Statement in the same
quarter it reverses this revenue on its income statement to the extent that it
did actually pay royalties exceeding the minimum annual royalty for that
Royalty Year.  Such credit will not
exceed the amount of royalties to be paid in the then-current quarter, but the
unused credit may be carried over to succeeding quarters until exhausted.

 

2.3.8                    Books and
Records.  Nielsen will maintain documents with respect to the
CIMR Net Revenues in accordance with United States generally accepted accounting principles (GAAP) and
will make complete and accurate entries concerning all transactions relevant to
this Agreement.  All such documents will
be kept available by Nielsen for no less than three (3) years after the
end of each Royalty Year or until the resolution of any dispute between the
parties concerning the payment of royalties that arises within that three-year
period.

 

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

 

 

2.3.9                    Audit.  For a period of three (3) years
following the end of any Royalty Year, or until the resolution of any dispute
concerning the accuracy of any Quarterly License Reporting Statement submitted
during that Royalty Year and arising within that three-year period, Digimarc
(and its designated agents) shall have the right to inspect and examine
relevant Nielsen documents relating to the calculation of royalties, provided,
however, that Nielsen may redact such documents to preserve the confidentiality
of Nielsen proprietary information that is not necessary to verify the
calculation of royalties.  Any such
inspection and examination will take place upon reasonable prior written notice
to Nielsen, during Nielsen’s regular business hours and no more than once a
year. The cost of such inspection and examination will be borne by Digimarc
unless there is an actual underpayment of more than five percent (5%) by
Nielsen in that Royalty Year, in which case Nielsen will pay the reasonable
out-of-pocket cost of the inspection and examination.

 

2.3.10              Overdue Amounts.  Digimarc will be entitled to
charge, and Nielsen will pay, interest on any overdue amounts or underpayments
under this Agreement at the rate of one percent (1%) per month (or part
thereof), or at such lower rate as may be the maximum rate allowed under
applicable law.

 

3.               Digimarc Services.

 

3.1.      Authorized Services. 
Digimarc will perform services for Nielsen relating to the CIMR Products
and Services (the “Digimarc Services”), including research, development,
engineering, quality assurance, market research and development, strategic
planning, strategy development, business development, preparing, obtaining and
maintaining patents, project management, reporting, and such other services or
activities as the parties may mutually agree. 
Digimarc will perform the Digimarc Services in good faith and with a
reasonable standard of quality, but in no event with a standard of quality less
than that Digimarc employs for services Digimarc performs for itself.  The Digimarc Services shall
not include any time or labor spent by Digimarc in its own strategic planning
or the management of its own organization, outside of the management of the
specific activities to be conducted as part of such Services.

 

3.2         Annual Plan. 
The particular services to be performed and expenditures to be made by
Digimarc shall be set forth in an annual plan and budget (the “Annual Plan”).  The parties shall mutually agree upon a
process for determining the Annual Plan, which shall state reasonable and
specific objectives to be met by Digimarc, and which shall take into account
Nielsen’s strategic goals and operational experience, Digimarc’s resources and
capabilities to assist Nielsen in achieving those goals, and the market
conditions then prevailing.  The parties
shall also mutually agree upon an informal process for change management and
for resolving disputes concerning determination of the Annual Plan.  In all events, 

 

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

 

 

Digimarc shall
make resources available in each year covered by a timely submitted and
reasonable Annual Plan (a “Plan Year”) sufficient to perform the Services
identified in the Annual Plan.  The first
Plan Year will begin on October 1, 2007, prior to completion of the Annual
Plan, based upon a short statement of work to be agreed upon by the
parties.  The first Annual Plan will be
determined as soon as practicable thereafter, and no later than December 15,
2007.  Successive Annual Plans shall be
determined no later than ninety (90) days prior to the beginning of each
subsequent Plan Year.  If Digimarc reasonably
believes that any requested changes to the Annual Plan will result in
additional expenditures exceeding those approved by Nielsen in the Annual Plan,
it shall so inform Nielsen.  If Nielsen
and Digimarc agree to the requested changes and such additional expenditures,
they shall amend the Annual Plan to reflect such changes.  Unless Nielsen authorizes such additional
expenditures in writing, Nielsen shall not be obligated to pay for Services in
excess of the larger of (a) the amount set forth in the Annual Plan
(including as amended pursuant to the preceding sentence) or (b) the
Service Minimum Fee (as defined below).

 

3.3   Quarterly Reporting and Review.  Within thirty (30) days following the end of
each quarter during each Plan Year, Digimarc shall provide reports stating its
progress in achieving the objectives set forth in the Annual Plan, and
describing in detail the Services performed and expenditures made in that
quarter.  The parties shall mutually
agree upon a process for a joint quarterly review of Digimarc’s progress in
achieving the objectives set forth in the Annual Plan, and for considering any
changes that either Nielsen or Digimarc may propose to the Annual Plan.

 

3.4   Minimum Service Fees.  Subject to any termination of its obligation
to engage Digimarc to perform Services, Nielsen shall pay, in equal quarterly
payments as set forth below, the following minimum annual amounts for Services
in each Plan Year (the “Minimum Service Fees”):

 

	
  Annual Plan Period

  	
   

  	
  Plan Year 1

  	
   

  	
  Plan Year 2

  	
   

  	
  Plan Years 3-5

  (per
  year)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Fees

  	
   

  	
  $

  	
  [**]

  	
   

  	
  $

  	
  [**]

  	
   

  	
  $

  	
  [**]

  	
   

  
											

 

Quarterly payments of
such fees, including Minimum Service Fees, will be due and payable to Digimarc
only for those quarters in which Digimarc performs Services in accordance with
a timely submitted and reasonable Annual Plan, at such levels as would be
sufficient to generate the Minimum Service Fees as set forth above; or if
Nielsen fails to timely submit a reasonable Annual Plan, in which Digimarc was
ready, willing and able to perform such level of Services.  Quarterly
Minimum Service Fee payments are due and payable to Digimarc on the first day
of each quarter in which the Services are to be provided.  There will be no Minimum Service Fee for the
first quarter (beginning October 1, 2007) of the first Plan Year.  The Plan Year 1 Minimum Service Fees, less
actual fees earned in that first quarter, will be spread evenly over the
remaining quarters of that Year.

 

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

 

 

3.5   Labor
Rates.  Labor rates charged for
Services will be as shown in Appendix A. 
The labor rates will be increased by five percent per year, reflecting
an estimate of average rates of wage and benefits cost inflation, and may otherwise
be adjusted by mutual agreement of the parties.

 

3.6   Services Payment Schedule and Invoice.  Digimarc shall furnish an invoice to Nielsen
following each quarter of any Plan Year. 
The invoice shall be accompanied by an itemization of the Services actually
performed in that quarter, including an identification of individual
timekeepers, their respective hours and rates, and the nature of the work
performed by them with reference to the objectives of the Annual Plan.  The invoice shall also be accompanied by an
itemization of those out-of-pocket expenditures reasonably incurred by Digimarc
in performing the Services, reimbursement of which shall be included in the
Minimum Service Fees.  Within thirty (30)
days of receipt of such invoice, Nielsen shall pay for Services actually
performed by Digimarc in accordance with the then-current Annual Plan in that
quarter to the extent that the Services actually performed by Digimarc within
that Plan Year to date, as reflected in the cumulative quarterly invoices for
that Plan Year, exceed the Minimum Service Fees owed for that Plan Year
cumulatively to date.  If the amount of
Services actually performed and invoiced in that quarter, when added to the
amount of Services actually performed and invoiced in prior quarters of that
Plan Year, is less than the Minimum Service Fees owed for that Plan Year
cumulatively to date, Nielsen shall [**].

 

3.7   Audit
Rights.  For a period of three (3) years
following the end of any Plan Year, or until resolution of a dispute concerning
the accuracy of the invoices or quarterly reports for a particular Plan Year
arising within that three-year period, Nielsen (and its designated agents)
shall have the right to inspect and examine Digimarc’s books and records
relating to the Digimarc Services, including time records and activity logs,
for the purpose of determining whether Digimarc’s invoices and  quarterly reports for that Plan Year are
accurate; provided, however, that
Digimarc may redact such documents to preserve the confidentiality of Digimarc
proprietary information that is not necessary to verify the accuracy of the
invoices or quarterly reports.  Any such inspection and examination will take place
upon reasonable prior written notice to Digimarc, during regular business hours
and no more than once a year.  Digimarc
shall promptly refund to Nielsen any amount that the audit shows was overpaid
by Nielsen in that Plan Year per the Agreement and, if the overpayment is
greater than 5% of the total payment for that Plan Year, Digimarc shall also
pay the reasonable out-of-pocket costs of the inspection and examination.

 

3.8   Nielsen Commitment of Resources.   For so long as the CIMR Products and Services license
remains in effect, Nielsen shall use its reasonable best efforts to
develop and support the CIMR Products and Services, including the commitment of
a reasonable amount of marketing, financial and organizational resources.  In furtherance of those efforts, Nielsen
shall prepare an annual plan for the development and support of the CIMR
Products and Services business, shall invite Digimarc to 

 

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

 

 

advise
and contribute to the formation of such plan, and shall share such plan with
Digimarc.

 

3.9   Digimarc Opportunity [**].   For so long as [**], Nielsen shall provide
Digimarc with a reasonable opportunity to [**].

 

3.10 Limitations on
Digimarc Services [**].  For as long
as Nielsen is timely paying Digimarc for Digimarc Services, Digimarc shall not
[**].

 

3.11 Patent
Prosecution.  The parties shall
endeavor to identify potentially patentable inventions arising from the
Digimarc Services relating to the [**] Technology.  As such inventions are identified and the
filing of patent applications is agreed upon, [**] will have primary responsibility to
manage the process of applying for and maintaining patents relating to the [**]
Technology.  The parties shall agree upon
a process enabling [**] to have substantial prior review and participation in
the preparation of patent applications relating to [**] Technology.  [**] and [**] shall [**] the reasonable
expenses incurred by [**] in the prosecution and maintenance of such patents on
[**] basis, including expenses incurred after the termination of the
Services.  Notwithstanding the foregoing,
either party may decide, at any time, that it does not wish to pay its share of
the costs of applying for or maintaining patents relating to [**] Technology,
which decision can be made on a jurisdiction by jurisdiction basis.  In that event, the other party has the option
either to abandon the application or patent, or to proceed on its own to pay
the remaining costs of applying for or maintaining the patent.  If either elects not to pay its share of the
costs of applying for or maintaining such patent, notwithstanding that the
other party may elect to apply for and maintain such patent, the parties’
respective ownership and rights in that patent shall otherwise remain
unchanged.  For so long as the Services
portion of this Agreement shall be in effect, all reasonable costs reasonably
incurred by [**] that are to be paid by [**] pursuant to this provision shall be
invoiced by [**] and included in [**].

 

3.12        Patent
Enforcement.  Unless limited by the
covenant of Section 1.4, each party shall have the right to defend or
prosecute its rights in and to the [**] Technology, in its own name, on its own
behalf, and at its own expense.  Each
party shall be entitled to retain all revenue obtained by it from third parties
(without accounting to the other) as a result of any revenue generating
activities.

 

3.13        Nielsen
Data Rights Retention.  Nielsen
retains the sole right to use or grant to any third party the right to use, any
[**], as well as [**].  Digimarc will
have no right to use or grant any rights of usage of any [**].

 

3.14        Assertion
and Defense of Patents.  Except as
provided in this section, all defense and litigation of Digimarc Patents will
remain the sole responsibility of Digimarc. 
Digimarc has no duty to enforce any patents.  All defense and litigation of patents owned
or controlled by Nielsen independent of Digimarc (the “Nielsen Patents”), will
remain the sole responsibility of Nielsen. 
Nielsen has no duty to 

 

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

 

 

Digimarc to enforce any
Nielsen Patents.  For so long as Nielsen
enjoys a covenant concerning certain [**] Technology, Nielsen has the right, as
between Digimarc and Nielsen, to bring suit against third parties for
infringement of those patents within those fields and may, if it deems it
necessary, join Digimarc as a party to such lawsuits.  In such event, Nielsen shall be solely
responsible for all costs of such litigations and shall be entitled to retain
the proceeds from any such case to the extent they relate to infringement
occurring within the [**] fields.  Any
proceeds relating to infringement occurring outside the [**] field shall be shared
with Digimarc on [**] basis, after the deduction of [**].

 

4.              Remedies
for Breach.

 

4.1.         Responsibility
for Performance.  Nielsen
(US) shall be solely responsible for its performance under this Agreement. A
breach by a Subsidiary or by an Affiliate shall be deemed to be a breach by
Nielsen (US).

 

4.2.         Remedies for Breach. 
If either party materially breaches this Agreement, the non-breaching
party may, in addition to other remedies at law and in equity, terminate this
Agreement.  Prior to terminating this
Agreement for breach, the non-breaching party must first give the
breaching party written notice specifying in detail the alleged breach.  The breaching party shall then have sixty
(60) days to cure such breach.

 

5.              Termination.

 

5.1       Nielsen Option
to Terminate After Two Years.  Within thirty days after the second
anniversary of the
Effective Date, Nielsen may terminate this Agreement if,  in
its reasonable judgment, the market opportunity for CIMR Products and Services
has not been realized.  Notwithstanding
the foregoing, the parties agree that the market opportunity will be considered
to have been realized if the CIMR Products and Services generate CIMR Net
Revenues of at least $[**] in [**].

 

5.2       Nielsen Option to Terminate After Five Years.   Nielsen may
terminate this Agreement at any time after the fifth anniversary of the Effective Date for
any reason or no reason.

 

5.3       Termination by Digimarc Due to Patent
Challenges by Nielsen.  If Nielsen files an action
challenging the validity or enforceability of any Digimarc Patents (except as a
defense or counterclaim to an action for infringement brought by Digimarc or
its assignee), Digimarc can: (i) before the Current Nielsen Products and
Services license becomes permanent under Section 2.2, terminate either or
both of the Current Nielsen Products and Services license and/or the CIMR
Products and Services license; and (ii) after that time, terminate the
CIMR Products and Services license.

 

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

 

 

5.4       Termination of CIMR License Due to Failure to Meet
Working Requirements.   Following any Royalty Year after Royalty
Year Five of this Agreement, Digimarc
may terminate the CIMR Products and Services license, with prospective effect
only, if Nielsen does not pay Digimarc: (a) at least $[**] in royalties
for a Royalty Year within sixty (60) days following the end of that Royalty
Year; or (b) if royalties for a Royalty Year are less than $[**], a lump
sum payment equal to the difference, to be made within sixty (60) days
following the end of that Royalty Year.

 

5.5       Notice of Termination.  
Any termination of this Agreement by either party for any reason other
than the material breach of the other party shall be made on no less than
ninety (90) days’ notice to the other party.

 

5.6       Effects of Termination. 
Termination of this Agreement by either party prior to the fifth anniversary of the Effective Date will
automatically terminate the licenses for CIMR Products and Services and
for Current Nielsen Products and Services, unless Nielsen agrees to pay, and
does pay, [**], in that latter case, only the license for CIMR Products and
Services will automatically terminate. Thereafter, if Nielsen elects to
terminate after five years pursuant to Section 5.2, the license for CIMR
Products and Services will automatically terminate.  In the event of termination of either or both
licenses for any reason, [**].  In other
words, [**].  Digimarc will not be barred from [**].  If either, or both, of the
Current Nielsen Products and Services or the CIMR Products and Services
licenses are terminated, the covenant in Section 1.4 with respect to [**]
Technology shall automatically terminate. After termination of the CIMR Products and Services
license, Nielsen shall have no right to use trade secrets or other information
and plans of Digimarc in the CIMR Products and Services.  [**].

 

6.              Other
Provisions.

 

6.1.         Press Release.  The
parties will issue a mutually agreeable press release, similar to the one in
Appendix C, relating to the subject matter of this Agreement no later than four
days after execution of this Agreement.  Except as expressly permitted herein, neither party will make public
announcements or issue press releases relating to this Agreement without the
prior written consent of the other party, which consent or refusal will not be
unreasonably withheld.

 

6.2.         Confidentiality. 
Each party agrees that it will treat this Agreement as confidential and
will handle confidential information of the other party in a manner consistent
with the policies and practices of that party for handling its own confidential
information.  Notwithstanding the
foregoing, either party may provide a copy of this Agreement to a third party
considering in good faith a bona fide transaction as contemplated in Section 6.4,
provided that such third party agrees in writing to be bound to a
confidentiality agreement customary to such transactions and prohibiting use of
its knowledge of this Agreement or its 

 

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

 

 

provisions for any
competitive purpose.  Upon request by the
disclosing party with respect to specifically identified information, the
receiving party will return to the disclosing party or destroy all of the
confidential information in the receiving party’s possession or control
furnished to it by the disclosing party which the receiving party does not need
to retain in order to perform any obligations imposed, or exercise any rights
(including rights of ownership) acquired, by this Agreement, and shall certify
in writing its return or destruction of such confidential information.  If the receiving party is subject to judicial
or governmental proceedings or is subject to government regulations requiring
disclosure of confidential information of the disclosing party, then prior to
disclosing such information, the receiving party will provide the disclosing
party with reasonable prior notice for the disclosing party to seek a
protective order for confidential treatment of the confidential information and
will only disclose that information that is necessary and required.  If the entire Agreement is terminated, the
obligations set out in this Section will extend for a period of [**] years
from this termination date, except that the confidential information of the
disclosing party that is specifically identified by it as a trade secret will
be protected for a period of [**] years.

 

6.3.         Non-solicitation.  Neither party will, directly or through a third party,
during the period of the Digimarc Services and for a period of [**] after the
end of such Services, solicit or entice away those key employees of the other
party specifically identified to it by name in Appendix E hereto (as may be
amended from time to time at the sole discretion of either party), provided
that the foregoing will not prohibit either party from hiring or soliciting to
hire any person (a) responding to general advertising or general
solicitations (including solicitations by recruiting firms retained by a party
and not directed at the employees of the other party), or (b) who has been
terminated by another party, or (c) has not been employed by the other
party during the [**] preceding any such action.

 

6.4.         Assignment.  Neither party may assign any of
its rights or obligations under this Agreement to any person without the prior
written consent of the other, and any such purported assignment shall be null and void from
inception; provided, however, that (a) either party may assign all its
rights and delegate all its obligations hereunder to a single person without
such approval in connection with: (i) a merger, consolidation,
reorganization, statutory conversion, amalgamation or similar corporate
transaction, or (ii) a sale or other disposition of all or substantially
all of its assets in the businesses relating to this Agreement, and (b) Nielsen
may assign all its rights and delegate all its responsibilities to an Affiliate
in connection with a restructuring or reorganization of Nielsen.  In the event that Digimarc assigns this
Agreement to [**] (an “Assignee”) pursuant to this provision, the Digimarc
Patents subject to the licenses granted in this Agreement shall include [**].

 

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

 

 

6.5.         Bankruptcy.  Any
intellectual property licenses and rights granted to either party hereunder or
pursuant hereto are, and will be deemed to be, for purposes of Section 365(n) of
the United States Bankruptcy Code (“Code”) licenses of “intellectual property”,
as defined under the Code. 
Notwithstanding any provision contained herein to the contrary, if a
party is under any proceeding under the Code and the trustee in bankruptcy of
that party, or that party as a debtor in possession, rightfully elects to
reject this Agreement, then the other party pursuant to the relevant portions
of Section 365(n) of the Code may retain any and all of such other
party’s licenses and rights hereunder to the maximum extent permitted by law.

 

6.6.         Tolling.  Nielsen agrees to toll any statute of
limitations and any time limitation on damages under [**] relative to
[**].  In return for this tolling
agreement, Digimarc will not [**].

 

6.7.         Limitations on Damages.  NEITHER DIGIMARC NOR NIELSEN WILL BE LIABLE
UNDER ANY CIRCUMSTANCES OR ANY LEGAL OR EQUITABLE THEORY, WHETHER IN CONTRACT,
TORT, STRICT LIABILITY OR OTHERWISE FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, EXEMPLARY, RELIANCE, PUNITIVE OR SPECIAL DAMAGES ARISING OUT OF
THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

6.8.         Infringement Remedies. 
Nothing in this Agreement prevents either party from seeking any
available remedies under patent law for any patent infringement by the other
party in periods when the party does not have a license to that activity
including any remedies available under 35 U.S.C. 281, 283, 284 and 285.

 

6.9.         Governing Law,
Jurisdiction and Venue.  This
Agreement shall be governed by New York law. 
Effective as of the termination date of either license in this
Agreement, Digimarc may seek judgment and remedies for alleged infringement of
its patents in any forum where jurisdiction and venue are proper, including the
United States International Trade Commission or Government Customs Service proceedings,
for alleged infringement occurring before the License Initiation Date or after any such
license termination date.  All other
matters concerning the interpretation of, or performance under, this Agreement
will be resolved in the state or federal courts in New York applying New York
law and jurisdiction and venue will be proper in such New York courts.

 

6.10.         No
Waiver.  Each and all of the various
rights, powers and remedies of the parties will be considered to be cumulative
with and in addition to any other rights, powers and remedies which such
parties may have at law or in equity in the event of breach of any of the terms
of this Agreement.  The exercise or
partial exercises of any rights, powers or remedies will neither constitute the
exclusive election thereof nor the waiver of any other right, power or remedy
available to such party.  In no event
will any waiver of any rights hereunder constitute the 

 

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

 

 

waiver of such rights in any future instance unless the waiver so
specifies in writing.

 

6.11.                   Notices. 
All notices of breach or early termination must be made in writing.  Any written notice under this Agreement will
be sent by email with a hard copy sent via certified mail, return receipt
requested, or by recognized courier service with tracking capabilities.  The notice will be deemed effective as of the
earlier of (i) the date of delivery, as evidenced by a delivery receipt or
the addressee’s registry, or (ii) five business days after sending notice
to the correct address in the authorized manner.  The addresses of the parties, as set forth
above, will be used for any such notice unless either party hereafter
designates a substitute address in writing in accordance with this provision.

 

The
contacts to address the notices to are:

 

For
Digimarc: Reed Stager, Executive Vice President; with a co-copy to: General
Counsel; and

 

For
Nielsen: James M. O’Hara, President, Media Product Leadership; with a co-copy
to: General Counsel.

 

6.12.                   Integration.  This
Agreement embodies the entire agreement of the parties hereto regarding the
subject matter herein, and supersedes and cancels any and all previous
negotiations, agreements or commitments with respect to them.

 

6.13.                   Severability. 
If any provision of this Agreement is held to be void or unenforceable,
the parties agree that such determination will not result in the nullity or
unenforceability of the remaining portions of this Agreement.  The parties further agree to replace such
void or unenforceable provisions of this Agreement with valid and enforceable
provisions that will achieve, to the extent legally permissible, the economic,
business and other purposes of the void or unenforceable provisions and that
reflect the intent of the parties when entering into this Agreement.

 

6.14.                   Amendments.  This Agreement may not be modified in any
manner except by an instrument in writing duly signed by each of the parties
hereto.

 

6.15.                   Construction. 
Each party and its counsel have participated fully in the review and
revision of this Agreement.  Any rule or
construction to the effect that ambiguities are to be resolved against the
drafting party will not apply in interpreting this Agreement.

 

6.16.                   No Agency. 
Nothing in this Agreement will be construed as creating any agency,
partnership or other form of joint enterprise between Digimarc and
Nielsen.  The relationship between Digimarc
and Nielsen will at all times be that 

 

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

 

 

of independent contractors. 
Neither party will have authority to contract for or bind the other in
any manner whatsoever.

 

6.17.                   Other Documents. 
Each party hereto will execute any documents which may be necessary or
advisable to carry out or effectuate the foregoing.

 

6.18.                   Survival. 
Upon expiration or termination of this Agreement, rights to payment
under this Agreement and the provisions set out in Sections 2.3.5-2.3.10, 3.11-3.14,
4, 5.6 and 6.2-6.19 will remain in effect.

 

6.19.                   Counterparts. 
This Agreement may be executed in separate counterparts, and by
facsimile, each of which will be deemed an original, and when executed,
separately or together, will constitute a single original instrument, effective
in the same manner as if the parties had executed one and the same instrument.

 

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

 

 

	
  DIGIMARC CORPORATION

  	
  THE NIELSEN COMPANY (US), 

  
	
   

  	
  INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Robert P. Chamness

  	
   

  	
  By:

  	
  /s/ James O’Hara

  
	
  (Signature)

  	
  (Signature)

  
	
   

  	
   

  
	
  Robert P. Chamness

  	
  Name: James O’Hara

  
	
   

  	
  (Please print)

  
	
   

  	
   

  
	
  CLO and Secretary

  	
  Title: President-Media
  Product Leadership

  
	
   

  	
   

  
	
  Date: November 27,
  2007

  	
  Date: November 27,
  2007Exhibit 10.4

 

CONFIDENTIAL PORTIONS OMITTED

 

COUNTERFEIT
DETERRENCE SYSTEM

DEVELOPMENT
AND LICENSE AGREEMENT

 

This Counterfeit Deterrence System Development
and License Agreement (the “Agreement”) is made

 

Between

 

DIGIMARC
CORPORATION, a corporation incorporated
under the laws of Oregon and having its head office at One Centerpointe Drive, Suite 500,
Lake Oswego, Oregon. U.S.A.  97035-8615                                                (“Digimarc”)

 

and

 

[**]

 

Recitals

 

Digimarc has expertise in, and owns extensive
intellectual property, including patents, patent applications, copyrights and
trade secrets, related to digital watermarks, counterfeit deterrence, copyright
protection, and device control.

 

[**] possesses or will possess the right to
grant licences in respect of intellectual property rights related to the
application of such intellectual property to the detection and deterrence of
bank note counterfeiting.

 

Digimarc and [**] have cooperated in the
development of means, using such intellectual property, to detect and deter the
counterfeiting of bank notes [**].

 

The CDS is an improvement to Digimarc’s
existing copyright protection system for deterring personal computer-based
counterfeiting of bank notes.

 

The CDS has [**].

 

[**]  In
return, [**] will acquire the exclusive right, as more particularly detailed
herein, to grant and direct Digimarc to grant licenses to [**] the CDS [**] and
[**].

 

[**] is also investing in certain improvements
to [**] and a broadening of the deployment of the [**] across the personal
computer industry.  In return, [**]
during the term of the Agreement [**], as more particularly detailed herein.

 

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

 

 

In consideration of these premises, the
covenants set out in this Agreement and other good and valuable consideration,
the receipt and adequacy of which are acknowledged by each of the parties, the
parties agree as follows:

 

1.                                      DEFINITIONS AND PRINCIPLES OF
INTERPRETATION

 

1.1                               Definitions - Whenever used in this Agreement, the following
words and terms shall have the meanings set out below:

 

“Agreement” means these articles of agreement, including the
Schedules, and those documents as specified or referenced in this Agreement as
forming part of the Agreement, all as may be amended from time to time;

 

“Allowable
Cost” means a cost of the kind
identified in Schedule I;

 

“Arbitration Agreement” means the Arbitration Agreement dated June 21,
1999, a copy of which is attached as Schedule E;

 

“[**]” has the meaning assigned to it by clause 5.1;

 

“[**]” means that technology, if any, from the technology
described in Schedule “F” in respect of which from time to time [**] after
discussion between the [**] and the [**], [**] offers, and Digimarc accepts in
writing, a [**] on the [**] in clause 8.2 to use, design or implement the CDS
and all Intellectual Property Rights in that [**];

 

“Business
Day” means a day on which both
[**] and Digimarc are open for business at their respective addresses noted
above;

 

“CDS
Technology” collectively, means
whatever of  the [**], the Digimarc
Technology and the Project Technology is incorporated into the CDS;

 

“Confidential
Information” means information
disclosed during the Term of this Agreement in any form which, if disclosed in
tangible form, is labelled “Confidential”, “Proprietary” or with a similar
legend, or if disclosed orally is information that by its nature would be
understood to be confidential to the Discloser;

 

“Counterfeit
Deterrence System” or “CDS” or
“System” means a system for [**] that includes, without limitation,
[**].  The System incorporates means for
[**];

 

“Deliverable” for a [**] means a task to be performed or an item to
be delivered by Digimarc to [**], identified in the Statement of Work for [**],
and in the case of a Deliverable [**] Digimarc’s obligations to [**] with the
Escrow Agent as part of the Technical Information;

 

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

 

 

“Designated Country” means a country,
the [**] of which is designated in writing by [**] effective on the Effective
Date, and any additional country as may be designated by [**] in writing to
Digimarc from time to time;

 

“[**]” means those portions of the Project Technology and the
Digimarc Technology which relate to [**] including [**];

 

“Device” means a [**] for a general purpose [**], or a device
[**];

 

“[**]” means the [**] of a [**];

 

“Digimarc
Contract Authority”
means the President of Digimarc;

 

“Digimarc Project Manager” means the Project Manager appointed by Digimarc in
accordance with the provisions of clause 4.1;

 

“Digimarc
Technology” means:

 

(a)                                  the technology partially described in Schedule “G”
developed or owned by Digimarc prior to [**] to the extent that it forms part
of the CDS,

(b)                                 all Improvements to the technology described in (a) made
by or on behalf of Digimarc other than under this Agreement to the extent that
they form part of the CDS,

(c)                                  all Improvements to the technology described in (a) made
by or on behalf of Digimarc under this Agreement to the extent that they relate
to or form part of the CDS, and

(d)                                 all Intellectual Property Rights in all such
technology and Improvements;

 

“Digital
Watermark” refers to [**]
(including [**]) that are [**] from [**] by [**] of [**], which [**] of [**]
and yet do not significantly [**] from the aesthetics of the [**] or [**]
thereby.  Examples include, but are not
limited to:

 

1.                                       generally imperceptible changes to [**] or placement
in [**];

2.                                       [**] of a substrate, where the [**] substantially uniform to human
touch;

3.                                       slight localized changes to [**] or [**] of a printed
document;

4.                                       slight changes to [**]; or

5.                                       [**] of substantially [**];

 

“Discloser” means a party which has disclosed or otherwise made
available its Confidential Information to the other party;

 

“DLA
Contract Authority”
means the Contract Authority designated by [**] in writing to Digimarc from
time to time;

 

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

 

 

“DLA
Project Manager”
means the project manager appointed by the DLA Contract Authority from time to
time on notice to the Digimarc Contract Authority who shall also serve as the
person primarily responsible to conduct inspections on behalf of [**];

 

[**];

 

[**];

 

[**];

 

“Effective Date” means [**];

 

[**];

 

[**];

 

[**];

 

“Escrow
Agent” means [**], or any mutually
acceptable new custodian appointed pursuant to clause 11.2 or 11.3 of the
Escrow Agreement;

 

“Escrow
Agreement” means the agreement
in the form attached as Schedule M;

 

“Escrowed
Materials” means any and all
materials deposited or to be deposited by Digimarc with the Escrow Agent under
this Agreement and the Escrow Agreement including the Technical Information and
Improvements pertaining to the CDS Technology which shall include but not be
limited to the following:

 

1.                                      details of the deposit including: full name and
version details, number of media items, media type and density, file or archive
format, list or retrieval commands, archive hardware and operating system
details;

2                                         name and functionality of each module or application
of the Escrowed Materials;

3.                                      names and versions of development tools;

4.                                      documentation describing the procedures for building,
compiling, executing and using the software which forms part of the Escrowed
Materials ([**]);

5.                                      hardcopy directory listings and tables of the contents
of the computer media, manuals and other materials; and

6.                                      name and contact details of employee(s) with
knowledge of how to maintain and support the Escrowed Materials;

 

“Feasibility
Work” means that portion of [**]
performed by Digimarc between [**] and the date of signature of this Agreement;

 

“Improvement” means any change in the CDS Technology or the
Technical Information made by or at the direction of Digimarc after [**] which
enhances, whether by 

 

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

 

 

improvement, enhancement,
correction, addition or otherwise, the properties, characteristics or
manufacture of the CDS including, for greater certainty, [**];

 

“Integration
Support” means the consulting and
programming services to be provided by Digimarc to a [**] on the terms
described in Schedule P attached to assist the [**] to ensure that the [**];

 

“Intellectual
Property Rights” means
all intellectual property rights existing now and in the future including,
without limitation, trade secrets, copyright, database rights, know-how,
topographies, patents and patent applications;

 

“[**]” means an entity responsible for [**];

 

“Licensed
[**]” means an [**] licensed by
Digimarc pursuant to clause 2.8;

 

“[**]” means an entity, regardless of whether it has a legal
status distinct from that of an [**] pursuant to clause 2.9;

 

“Other [**] Technology”
means any of the technology described in Schedule F which is not [**]
Technology, but in respect of which Digimarc elects, on written notice given to
the DLA Contract Authority prior to the expiry of the [**] of the Project, to
obtain a licence on the terms set out in clause 8.2 to use in relation to [**]
for a Security Purpose in accordance with clause 9.2;

 

“Person” means any individual or other legal entity, including
without limitation a sole proprietorship, partnership, unincorporated
association, unincorporated syndicate, unincorporated organization, trust, body
corporate, or a natural person in the capacity of trustee, executor,
administrator or other legal representative;

 

[**];

 

[**];

 

[**];

 

[**];

 

“[**]” means the tasks and Deliverables identified in the
[**] attached as Schedule B to be performed or produced [**];

 

“[**]” means the tasks and Deliverables identified in the
[**] attached as Schedule C to be performed or produced [**];

 

“[**]” means the tasks and Deliverables identified in the
[**] attached as Schedule D to be performed or produced [**];

 

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

 

 

“Problem
Report” means a report of a problem
addressing as many of the topics specified in Schedule “R” as are relevant to a
reasonable understanding of the problem;

 

“Project
Technology” means the technology
described in Schedule “H” developed by or on behalf of Digimarc under this
Agreement after [**], all Improvements to that technology or to the [**]
Technology or to the Other [**] Technology, and all Intellectual Property
Rights in that technology and those Improvements;

 

“Properly
Embedded” when used in reference to a
[**] means that the [**] is [**] in accordance with the written instructions
provided by Digimarc with the [**] used to [**] and is capable of passing the
Verification Test;

 

“Recipient”
means a party to which the
Confidential Information of the other party has been disclosed or otherwise
made available;

 

“Schedule” means a schedule to this Agreement;

 

[**];

 

“Security
Purpose” means the purpose of [**];

 

“Security
Requirements” means the
requirements for physical security including, without limitation, electronic
systems security set out in Schedule J;

 

“Specifications”
for the CDS or any part
thereof means the specifications for the CDS or part thereof accepted by [**]
under this Agreement;

 

[**];

 

“Statement of Work” means the Statement of Work set out in Schedules B, C
or D as applicable;

 

“System
Support” means the maintenance and
other support for the CDS described in Schedule “O” attached;

 

“Technical
Information” means all
information including, without limitation, source code, programming
instructions, algorithms, software and other works of authorship, manufacturing
and technical data, drawings, specifications, instruction manuals, user
manuals, procedures, facilities, prices, suppliers’ lists and all other
information comprising or relating to the development of the CDS Technology, or
any part thereof, or the application of the CDS Technology, or any part
thereof, in the [**];

 

“Term” means the period commencing on the Effective Date and
ending on [**];

 

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

 

 

“Training” means the training in the use and operation of the
[**] described in Schedule Q;

 

“Verification
Test” means a test or tests
developed by Digimarc as part of the [**] to determine if [**]; and

 

“Work” means the Work that is required to be performed by
Digimarc in order to complete the tasks and deliver the Deliverables and
otherwise comply with its obligations under this Agreement.

 

1.2                               Interpretation - In this Agreement:

 

1.2.1                      unless otherwise specified, all references to money
amounts are to the currency of the United States of America;

 

1.2.2                      the use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the application of any
provision of this Agreement to such Person or Persons or circumstances as the
context otherwise permits;

 

1.2.3                      whenever a provision of this Agreement requires an
acceptance, approval or consent by a party to this Agreement and notice of such
acceptance, approval or consent is not delivered within the applicable time,
then the party shall be conclusively deemed to have withheld the acceptance,
consent or approval;

 

1.2.4                      unless otherwise specified, the number of days within
or following which any payment is to be made or act is to be done shall be
interpreted to be continuous and shall be calculated by excluding the day on
which the period commences and including the day which ends the period and by
extending the period to the next Business Day if the last day of the period is
not a Business Day;

 

1.2.5                      unless otherwise specified, the order of precedence
for interpreting this Agreement shall be:

 

(a)                                  this Agreement, excluding Schedules;

 

(b)                                 the Schedules; and

 

(c)                                  as between the delivery schedules forming part of a
Statement of Work, and other provisions of such Statement of Work, the delivery
schedules shall take precedence.

 

1.2.6                      for greater certainty, a party or representative to
which this Agreement grants the right to make a decision or determination in
the sole discretion of the party or representative is not required to act
reasonably in making the decision or determination and no such decision or
determination may be challenged by the other party under the Arbitration
Agreement or otherwise;

 

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

 

 

1.2.7                      the words “includes” or “including” will be construed
as meaning “included without limitation” and “including without limitation” as
the case may be; and

 

1.2.8                      a clause or Schedule, unless the context requires
otherwise, is a reference to a clause to, a Schedule of, or a paragraph of a
Schedule to, this Agreement, as amended from time to time in accordance with
this Agreement.

 

1.3                               Applicable Law - This Agreement shall be construed in accordance
with the laws of England to the exclusion of its rules of conflicts of laws.

 

1.4                               Schedules - The Schedules to this Agreement, listed below, are
an integral part of this Agreement:

 

	
  Schedule

  	
   

  	
  Description

  
	
  Schedule “A”

  	
   

  	
  System Description

  
	
  Schedule “B”

  	
   

  	
  [**]

  
	
  Schedule “C”

  	
   

  	
  [**]

  
	
  Schedule “D”

  	
   

  	
  [**]

  
	
  Schedule “E”

  	
   

  	
  Arbitration Agreement

  
	
  Schedule “F”

  	
   

  	
  [**]

  
	
  Schedule “G”

  	
   

  	
  Digimarc Technology

  
	
  Schedule “H”

  	
   

  	
  Project Technology

  
	
  Schedule “I”

  	
   

  	
  [**]

  
	
  Schedule “J”

  	
   

  	
  Security Requirements

  
	
  Schedule “K-1”

  	
   

  	
  [**]

  
	
  Schedule “K-2”

  	
   

  	
  [**] - Non-[**]

  
	
  Schedule “L-1”

  	
   

  	
  [**]

  
	
  Schedule “L-2”

  	
   

  	
  [**] - Non-[**]

  
	
  Schedule “M”

  	
   

  	
  Escrow Agreement

  
	
  Schedule “N”

  	
   

  	
  Progress Reporting and Project Reviews

  
	
  Schedule “O”

  	
   

  	
  System Support Services Agreement

  
	
  Schedule “P”

  	
   

  	
  Fees for Integration Support and Verification
  Testing

  
	
  Schedule “Q”

  	
   

  	
  Training

  
	
  Schedule “R”

  	
   

  	
  Problem Report

  
	
  Schedule “S”

  	
   

  	
  Proforma Invoice

  
	
  Schedule “T”

  	
   

  	
  Form of Deed of Adherence

  
	
  Schedule “U”

  	
   

  	
  Form of Comfort Letter

  

 

2.                                      SCOPE OF THE WORK

 

2.1                               Digimarc shall perform [**] in accordance with the
[**] and, subject to [**] acceptance of the corresponding Offer described in
clause 2.3, the [**] in accordance with the [**] and the [**] in accordance
with the [**].

 

2.2                               On or before (i) [**] and (ii) [**],
Digimarc shall deliver to [**] and the DLA Project Manager a written proposal
(the “Proposal”) for the Work to be done [**], which Proposal will 

 

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

 

 

be in the form of a proposed amendment to this
Agreement and will include, but not be limited to:

 

(a)                                  changes to the Statement of Work for [**];

 

(b)                                 an estimate of the [**] to be incurred by Digimarc in
connection with Digimarc’s performance of the Work for [**]; and

 

(c)                                  the nature, timing and estimated quantity of the
effort which will be required from [**] to enable Digimarc to perform the Work
as proposed [**] including, for greater certainty, the assistance reasonably
required from [**].

 

2.3                               The Proposal for [**] when delivered by Digimarc to
[**] pursuant to clause 2.2 shall be deemed to constitute an irrevocable offer
(the “Offer”) to amend the Agreement. 
Digimarc undertakes and represents that each Proposal will be prepared
with all due care and diligence and that at the date of [**]’ acceptance of
each Offer it will not be aware of any matters within its reasonable control
which might or will adversely affect its ability to perform the Work for the
applicable Phase.

 

2.4                               The Offer (i) for [**] shall remain open until
[**] and (ii) for the [**] shall remain open until [**] for written
acceptance by [**] at its sole discretion. 
If requested by the DLA Contract Authority at least seven (7) days
before the expiry date for an Offer, Digimarc shall prepare and submit a
revised Offer to take into account any reasonable revisions and clarifications
to the original Offer requested by the DLA Contract Authority and [**] will
have ten (10) days from receipt of the revised Offer to accept it.

 

2.5                               Effective immediately on [**]’ acceptance of the Offer
or revised Offer in respect of a [**], the Statement of Work [**] and all other
relevant provisions of this Agreement will be deemed to have been amended to
reflect the Proposal as accepted by [**].

 

2.6                               The Term will continue notwithstanding that [**]
elects not to accept the Offer for [**].

 

2.7                               Pending acceptance, or express or implied rejection by
[**] of the Offer as provided in clause 2.4, the DLA Contract Authority may, in
his or her sole discretion, authorize Digimarc to perform all or part of the
Work described in the Offer (or other Work as agreed between the parties’
respective Contract Authorities).  If
[**] accepts the Offer for [**], all such authorized Work will be deemed to
form part of the Work [**] to which the Offer relates.  In any event, [**] shall compensate Digimarc
for such authorized Work as though it were [**].

 

2.8                               Commencing no later than ten (10) Business Days
after every written request made during the Term by the DLA Contract Authority,
Digimarc shall make an irrevocable offer, which offer shall remain open for
acceptance within sixty (60) days from the date of receipt by [**] to which the
Offer is addressed, to grant to an [**] a [**] to [**] in connection with the
[**] of the [**] on terms no less favourable to that [**] than those set out in
whichever of Schedules “K-1” and “K-2” is applicable.

 

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2.9                               Commencing no later than ten (10) Business Days
after every written request made during the Term by the DLA Contract Authority
or a [**], Digimarc shall make an irrevocable offer, which offer shall remain
open for acceptance within sixty (60) days of receipt by the [**] to which the
Offer is addressed, to:

 

(a)                                  [**] designated by the DLA Contract Authority or a
[**] a [**] to [**] in connection with [**] of a [**], on terms no less
favourable to the [**] than those set out in whichever of Schedules “L-1” and “L-2”
is applicable; and

 

(b)                                 [**] referred to in clause 2.9(a) at no charge
and provide the Training to the [**] for the charges to the [**] described in
clause 2.12 within ten (10) Business Days after the [**] acceptance of the
offer to [**], or at such other time as may be agreed between Digimarc and the
[**].

 

2.10                         No later than sixty (60) Business Days after every
written request made by a [**] during the Term, Digimarc shall provide
Integration Support to the [**] on a date or dates agreed between Digimarc and
the [**] for the charges described in clause 2.12 provided that in 1999 the
sixty (60) Business Day limit shall apply only to the first three [**] which
require such services.

 

2.11                         No later than twenty (20) Business Days after every
written request made by [**] or a [**] during the Term, Digimarc shall conduct
Verification Tests of [**] on a date or dates agreed between Digimarc and the
[**] or the [**], as the case may be, for the charges specified in
clause 2.12.

 

2.12                         The amount charged by Digimarc to the [**] or Licensed
[**] for the Training, Integration Support and Verification Tests provided:

 

(i)                                     before the [**], will be determined in accordance with the provisions of
Schedule “P”;

 

(ii)                                  [**], will not be greater than the charge then paid to Digimarc for
similar support by Digimarc’s most favoured customer.

 

2.13                         At any time during the Term following [**] which [**]
elects to proceed with as described in clause 2.4 Digimarc shall on receipt of
a written request from a [**].

 

2.14                         Digimarc shall report to the DLA Contract Authority at
least once each calendar quarter of the Term on Improvements and [**] which
Digimarc has made or caused to be made since the last report.  Promptly following notice by the DLA Contract
Authority, Digimarc [**] the [**] provided to the [**] designated by the DLA
Contract Authority to [**] the [**]. 
Digimarc shall in any event issue the [**] to the [**].  The [**] of such [**] by Digimarc (i) before
[**] of the [**] and (ii) following [**] of the [**] and will be
[**].  Notwithstanding the foregoing,
[**] an Improvement into [**] employed by it in [**].  Digimarc shall [**] the System Support for
the two (2) versions of [**] which preceded the then current version of
[**] or for all versions of 

 

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[**] released within twenty-four (24) months
prior to the date of issue of the [**], [**] at [**] to the [**] above the [**]
for the System Support.

 

2.15                         Digimarc shall obtain at its own expense all licenses
or permits required to be obtained from the Government of the United States in
order for Digimarc to comply with its obligations under this Agreement
including, without limitation, to [**] and Escrowed Materials, and grant the
associated licenses, to [**] and other licensees.

 

2.16                         Digimarc acknowledges and confirms [**]’ right to
enforce clauses 2.9 and 2.11 by an application for specific performance or
otherwise.

 

3.                                      PRICE AND PAYMENT

 

3.1                               In addition to the amounts payable in accordance with
clause 8, [**] shall pay Digimarc [**] for the [**] to the Digimarc Technology
granted to [**] under clause 8 of this Agreement by the later of (a) five (5) Business
Days after the date that the Escrow Agent notifies [**] that it has taken
possession of the reproductions of the Technical Information for the CDS
Technology under clause 8.7 and successfully verified that Technical
Information in accordance with the Verification Process (as defined in the
Escrow Agreement), and (b) thirty (30) days after this Agreement is signed
by both parties.  Both parties will use
their best efforts to ensure the activities in a) are completed within 30 days
after this Agreement is signed.

 

3.2                               Subject to the limits set out in this Agreement and
unless otherwise expressly set out herein, [**] shall [**] Digimarc for all the
[**] reasonably and properly incurred by Digimarc during each calendar month to
perform [**], and any other Work authorized by [**] in writing, plus a [**] on
the [**] (the “[**]”).  Digimarc shall
invoice [**] monthly in arrears for such Costs and [**].  Each invoice shall specify the time spent by
the staff and sub-contractors of Digimarc in performing the Work and shall give
a [**] of the [**] in the form attached as Schedule S.

 

3.3                               The amount which [**] is required to pay Digimarc for
the [**] incurred in performing the [**] and [**] in calendar year 1999 will not
be greater than [**].  The amount which
[**] is required to reimburse Digimarc for the [**] incurred in performing
[**], respectively, will not be greater than the estimates for that Work
accepted by [**] pursuant to the provisions of clause 2.4.  Digimarc shall complete all relevant work
notwithstanding that it is unable to recover [**] incurred in relation thereto
due to the operation of the limits set out in this clause 3.3.

 

3.4                               Except as otherwise expressly provided herein, the
total amount which [**] will be liable to pay Digimarc for or in connection
with the [**] and [**] for [**] will not be greater than [**] and, assuming
that (i) [**] has accepted Digimarc’s Offer for [**] and, (ii) [**]
does not terminate this Agreement as permitted herein prior to the date on
which Digimarc completes [**] in accordance with the provisions of this
Agreement, not less than [**], subject to Digimarc having performed the Work
equal to this amount of [**] and [**].

 

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

 

 

3.5                                 If [**] elects not to proceed with [**] as described
in clause 2.4 above, and at the time of such election [**] has not served
notice of breach, or termination for Digimarc’s default, under clause 15, [**]
shall pay Digimarc an amount equal to [**] of the total amount paid for [**]
and the corresponding [**] for the Work done during the previous nine (9) months.

 

3.6                                 [**] shall pay Digimarc each amount which [**] owes
Digimarc under this Agreement no later than thirty (30) days after the later of
the payment due date and the date on which [**] receives a detailed and correct
invoice for the amount.

 

3.7                                 For a period commencing on the Effective Date and
ending on the date [**] following the last date on which Digimarc issues an
invoice to [**] for [**], Digimarc shall maintain proper, up-to-date, accurate
and complete books, records and other documentation substantiating [**]
invoiced under this Agreement including, without limitation, time sheets
showing the hours spent on each task which forms part of the Work and receipts
for all disbursements.  Digimarc shall
produce such books, records and documentation to [**] or its representatives
for inspection and copying at all reasonable times on request by the DLA Project
Manager.

 

3.8                                 Except as otherwise expressly provided in this
Agreement, [**] shall pay Digimarc all sales, use, goods and services or other
similar taxes levied by any government in the [**] which Digimarc is obliged to
collect and remit to such government(s) in connection with any amount paid
by [**] to Digimarc under this Agreement. 
Such payments by [**] shall be in addition to those set forth in clause
3.4.

 

3.9                                 Digimarc is responsible for, and shall indemnify [**]
against, and hold [**] harmless from, the payment of all taxes levied by any
government on or in respect of Digimarc’s income and any amounts required by
law to be paid in respect of social benefits for Digimarc’s employees relating
to or arising out of the performance of the Work by Digimarc.  If required by law, [**] shall deduct all
such taxes and amounts from the amounts otherwise payable to Digimarc and remit
them to the appropriate authorities.

 

3.10                           [**] may set off against any amount which [**] owes
Digimarc under or in connection with 
this Agreement any amount which Digimarc owes [**] under or in
connection with this Agreement.

 

4.                                        PROJECT MANAGEMENT

 

4.1                                 Digimarc shall designate a responsible individual with
adequate authority and competence as the Digimarc Project Manager whose
responsibilities, in addition to those expressly set out in this Agreement,
shall be to serve as project leader and primary interface with [**].

 

4.2                                 The DLA Project Manager shall be responsible for
coordinating fulfilment by [**] of its obligations under this Agreement
including the provision of all the general information about [**] that Digimarc
may reasonably require in order to perform its obligations under this
Agreement.  The DLA Project Manager shall
have no authority to amend this Agreement, 

 

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approve payments or approve or accept
Deliverables or other Work or Proposals on behalf of [**], all of which actions
shall be within the exclusive authority of [**].

 

4.3                                 The Digimarc Project Manager shall be responsible for
coordinating the performance of the Work by Digimarc but shall have no
authority to agree to an amendment of this Agreement on behalf of Digimarc
which action shall be within the exclusive authority of the Digimarc Contract
Authority.

 

4.4                                 Either party’s Project Manager or Contract Authority
may from time to time appoint one or more persons to represent him or her on
prior written notice to the other party’s Project Manager or Contract
Authority.

 

4.5                                 Digimarc shall not, without first obtaining the
written consent of the DLA Contract Authority which consent will not be
unreasonably withheld, remove or replace:

 

(a)                                  any employee of Digimarc or its authorized
subcontractors assigned to do any part of the Work if the employee or subcontractor
is critical to completion of the Work by Digimarc in accordance with this
Agreement; or

 

(b)                                 its Project Manager.

 

“Critical” means that the Work cannot timely be
completed by Digimarc without such employee.

 

4.6                                 Digimarc shall replace within a reasonable time under
the circumstances any of its employees or authorized subcontractors engaged in
fulfilling its obligations under this Agreement, including its Project Manager,
whose removal is required by the DLA Contract Authority, provided that the DLA
Contract Authority specifies reasonable cause for such removal in writing.

 

4.7                                 Digimarc represents that all personnel assigned to do
the Work will be employees of Digimarc. Digimarc shall not engage any
subcontractor other than the subcontractors identified by Digimarc in writing
to [**] before this Agreement was executed to do any part of the Work without
first obtaining the prior written consent of the DLA Project Manager, who may
give or withhold such consent in his or her sole discretion.  Digimarc undertakes that it shall obtain from
each subcontractor prior to permitting that subcontractor to do any part of the
Work a written undertaking that all Intellectual Property Rights in any Work
created by that subcontractor vest absolutely in Digimarc upon the date of
creation. Digimarc hereby warrants and represents that it has obtained such
undertakings from all subcontractors engaged in relation to the Work prior to
the date of execution of this Agreement.

 

4.8                                 Digimarc shall report on progress of the Work and
conduct progress reviews in accordance with the provisions of Schedule “N”.

 

4.9                                 In the event that it becomes evident to either party’s
Project Manager that a failure or delay by either party to perform in
accordance with its obligations under this Agreement will 

 

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result in a material impact on the completion
of the Work in accordance with the applicable Statement of Work, then the
relevant Project Manager shall immediately bring the issue to the attention of
the other party’s Project Manager.

 

5.                                        RESPONSIBILITIES OF [**]

 

5.1                                 [**] shall perform all tasks assigned to it in the
Statement of Work [**] (herein sometimes referred to as the [**] Tasks).

 

5.2                                 Unless otherwise expressly set out in this Agreement,
[**] shall respond in writing within ten (10) Business Days to every
written request for consent required by this Agreement received from Digimarc.

 

5.3                                 If [**] is delayed in complying with any of its
obligations under clauses 5.1 or 5.2 for any reason not attributable to
Digimarc, and such delay is the cause of a delay in the completion and delivery
by Digimarc of any Deliverable, then the time for completion of the
Deliverable, and all subsequent Deliverables dependent thereon, will be
extended automatically by one day for each day of delay by [**] or such other
period as may be agreed in writing between the parties’ respective Contract
Authorities.  If Digimarc suffers
increased costs by reason of such delay, other than a delay due to a force
majeure event, such costs shall be borne by [**] and shall be in addition to
the [**] otherwise contemplated by this Agreement. If the delay is due to a
force majeure event, such costs shall be borne equally by [**] and Digimarc,
and shall be in addition to the [**]. 
This clause 5.3 sets forth Digimarc’s only remedy for a delay by [**] in
complying with any such obligation.

 

6.                                        CHANGES TO THE WORK

 

6.1                                 Either party may propose a change to the Work from
time to time by submitting a request in writing to the other party’s Project
Manager.

 

6.2                                 On making such a request or within three (3) Business
Days after receiving such a request from the DLA Project Manager, Digimarc
shall inform the DLA Project Manager of the amount, if any, which Digimarc
intends to invoice [**] to investigate whether the change can be made and the
effect the change will have on the Statement of Work and the [**] for [**].

 

6.3                                 Within ten (10) Business Days after receiving the
written authorization of the DLA Project Manager to conduct the investigation
or such longer period as may be authorized by the DLA Project Manager, Digimarc
shall report to the DLA Project Manager, in writing, on the results of the
investigation.

 

6.4                                 Within ten (10) Business Days after the DLA
Project Manager receives the report, the DLA Contract Authority shall, on
behalf of [**], notify Digimarc whether or not [**] authorizes the change.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
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6.5                                 Digimarc shall not implement any change to the Work
until the change is authorized in writing by the DLA Contract Authority on
behalf of [**].

 

6.6                                 Pending receipt of a written authorization from the
DLA Contract Authority, on behalf of [**], Digimarc shall proceed with the Work
in accordance with the Agreement.

 

7.                                        APPROVAL OF DELIVERABLES

 

7.1                                 If Digimarc fails to produce a Deliverable acceptable
to [**] by the date set out in the applicable Statement of Work, or in the case
where the Statement of Work requires  the
parties to agree on whether a Deliverable is acceptable, if the parties fail to
agree for any reason by the date specified in the Statement of Work or, if no
date is specified, within ten (10) Business Days after a party’s Contract
Authority asks the other party’s Contract Authority for agreement, then the DLA
Contract Authority may, in its sole discretion, by written notice to Digimarc,
either:

 

(a)                                  allow additional time 
for Digimarc to produce a Deliverable acceptable to [**] or for the
parties to come to agreement, whereupon the time for completion of all other
Deliverables which depend on the acceptance or agreement will be automatically
extended by one day for each additional day or such other period as may be agreed
in writing between the parties’ respective Contract Authorities; or

 

(b)                                 cancel any further Work on the Deliverable and all
Deliverables which depend on the acceptance or agreement, whereupon the
Statement or Statements of Work which provide for the cancelled Work or
Deliverables will be deemed to be amended to exclude them.

 

7.2                                 Neither party shall refer for arbitration any failure
to agree referred to in clause 7.1.

 

8.                                        INTELLECTUAL PROPERTY MATTERS

 

8.1                                 [**] acknowledges that Digimarc does not have sufficient
basis on which to determine whether [**] is the owner of the [**] Technology or
the Other [**] Technology.

 

8.2                                 [**] shall grant to Digimarc following Digimarc’s
written acceptance of an offer by [**] to obtain a licence for any [**]
Technology a [**] such [**] Technology to comply with its obligations under
this Agreement and any license agreement entered into as directed or permitted
by the DLA Contract Authority under this Agreement and for no other purpose.

 

8.3                                 Digimarc acknowledges that [**] does not have
sufficient basis on which to determine whether Digimarc is the owner of the
Digimarc Technology or the Project Technology but as between [**] and Digimarc,
Digimarc is the owner of the Project Technology, the Improvements thereon and
the Technical Information related thereto. 
Except as otherwise provided herein, Digimarc may freely use and license
all such technology.

 

8.4                                 Digimarc hereby grants to [**], effective upon the
date specified in clause 8.5, the [**] the Digimarc Technology and the Project
Technology, and all Improvements thereto, and the Technical Information
pertaining to the Digimarc Technology, the Project Technology and such
Improvements, and to sublicense the use of the Digimarc Technology and the
Project Technology and such 

 

** CONFIDENTIAL PORTION OMITTED AND FILED
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Improvements and Technical Information to other
Persons, for the purposes of [**] the System and any such component thereof,
and making the System and any component available to others solely for
[**].  On the effective date of the grant
of the license referred to above, [**] copy and use the Escrowed Materials for
the purpose of exercising all rights granted under the license and the Escrow
Agent shall be deemed authorized to release the Escrowed Materials to
[**].  The expressions “[**]” as used in
this clause 8.4, shall be deemed to refer to [**].

 

8.5                                 The license described in clause 8.4 shall take effect
on the earliest of:

 

(a)                                  the date on which the DLA Contract Authority requests
in writing the license and [**] pays Digimarc the difference, if any, between
[**] and the total of the amounts paid and owing to Digimarc pursuant to clause
3.3 above;

 

(b)                                 [**], subject to payment of all sums properly due to
Digimarc under clause 3.2 for Work completed up to [**];

 

(c)                                  sixty (60) days following the effective date of  termination of this Agreement by [**] in
accordance with the provisions of clause 15.2 (a), (b), (d) or (e) unless
Digimarc demonstrates within such sixty (60) day period that, notwithstanding
the occurrence of the events giving rise to the termination, Digimarc is
willing and able to comply with its obligations under the Agreement; and

 

(d)                                 the effective date of 
termination of this Agreement by [**] in accordance with the provisions
of clauses 15.2(c), 15.2 (f), 15.2(g) or 15.3.

 

8.6                                 Digimarc hereby grants to [**], effective on the date
specified in this clause, the [**] the Digimarc Technology and the Project
Technology and all Improvements thereto, and the Technical Information
pertaining to the Digimarc Technology, the Project Technology and such
Improvements, and to sublicense the use of the Digimarc Technology,  the Project Technology and such Improvements
and Technical Information to other Persons, for the sole purpose [**] solely
for [**].  This license shall take effect
on written request by the DLA Contract Authority at any time following the
later of the date on which the license referred to in 8.4 takes effect and the
date on which [**] pays Digimarc [**].

 

8.7                                 Upon the date on which this Agreement is last signed
by them, [**] and Digimarc shall sign the Escrow Agreement and procure that the
Escrow Agent signs that Agreement within thirty (30) days.  Upon complete signature of the Escrow
Agreement, Digimarc shall make available a complete and accurate copy of the
Technical Information for the Digimarc Technology and the Project Technology
existing on April 19, 1999, for collection and the carrying out of the
Verification Process referred to in clause 3.1 by the Escrow Agent at Digimarc’s
premises.

 

8.8                                 From time to time during the Term, on no less than
five (5) Business Days prior written notice by the DLA Project Manager,
Digimarc shall, at Digimarc’s premises, present 

 

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representatives of the Escrow Agent with all
the material, in any form, in Digimarc’s possession or control which contains
or describes the Technical Information pertaining to the Digimarc Technology
and the Project Technology.  The
representatives may identify any or all of such material and Digimarc shall
arrange, at the expense of [**],  for a
complete, accurate and up-to-date copy of the selected material to be made and
sent to the Escrow Agent within five (5) Business Days of the selection
being made for deposit under the terms of the Escrow Agreement.  If [**] exercises the right granted by this
provision 8.8, [**] shall reimburse Digimarc’s costs related thereto which
costs are in addition to the [**] otherwise contemplated by this Agreement.

 

8.9                                 Within twenty (20) Business Days after the end of each
calendar quarter during each Phase, Digimarc shall update the Escrowed Material
in the possession of the Escrow Agent to reflect all Improvements to the CDS
Technology and [**] made by or at the request of Digimarc during that quarter.

 

8.10                           Nothing in this Agreement shall be construed to grant
any broader license rights than those expressly granted by the Agreement.

 

8.11                           From and after the date on which [**] gets access to
the Escrowed Materials pursuant to the Escrow Agreement, [**] shall inform
Digimarc within thirty (30) days after the end of each calendar quarter during
the Term of all improvements relating to (i) [**]; (ii) [**]; (iii) [**];
and (iv) any other part of the CDS, [**], or caused or permitted to be
made, as a result of access to and use of the Escrowed Materials or the
Digimarc Confidential Information. The first such information shall be provided
to Digimarc within thirty (30) days after the first calendar quarter following
said access, and shall cover improvements made from the date [**] first
received, or caused or permitted others to receive, any of the Escrowed
Materials or  any Digimarc Confidential
Information.  Following the provision of
the information under this clause 8.11, [**] shall provide to Digimarc within a
reasonable period of time following request, the Technical Information for
those improvements requested by Digimarc in writing.

 

8.12                           [**] hereby grants to Digimarc a royalty-free,
non-exclusive, non-transferable, worldwide license to use and license the
improvements described in clause 8.11 and in any patents thereon owned or
otherwise licensable by [**].

 

8.13                           The license referred to in clause 8.12 shall continue
until this Agreement expires or is terminated, or until [**]  has no further rights to the Escrowed
Materials and Digimarc Confidential Information, whichever occurs last.

 

8.14                           For greater certainty, the obligations set out in
clauses 8.11, 8.12 and 8.13 shall not apply to any improvement which [**] can
demonstrate would have been made irrespective of access to the Escrowed
Materials or Digimarc Confidential Information.

 

8.15                           [**] shall take all reasonable steps to ensure that
Persons, other than its directors, officers and employees, to whom it allows
access to the Escrowed Materials will be contractually bound in accordance with
terms substantially like those set forth in clauses 8.11, 8.12, 8.13 and 8.14,
granting rights in favour of Digimarc.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
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8.16                           Notwithstanding any other provision of this Agreement
to the contrary, [**]’ right to acquire the license described in clause 8.4 by
payment of the fee described in clause 8.5(a) shall survive termination of
this Agreement by [**] in accordance with the provisions of clause 15.2 (a),
(b), (d) or (e) and be exercisable at any time during a period of
sixty (60) days following such termination.

 

9.                                        SECURITY

 

9.1                                 Unless otherwise expressly permitted by this Agreement
or authorized in writing by the DLA Contract Authority pursuant to this
Agreement, Digimarc shall not use, or permit or suffer, to be used:

 

(a)                                  [**]

 

(b)                                 the [**] Technology or the Other [**] Technology for
any purpose except solely to comply with Digimarc’s obligations under this
Agreement and any license agreement entered into as directed by the DLA
Contract Authority under this Agreement.

 

Subject to the restrictions set out in this
clause 9.1, Digimarc may, at its option, [**]

 

9.2                                 Notwithstanding the provisions of clause 9.1, Digimarc
may use the [**] Technology, the Other [**] Technology and the [**], and any
Improvements, and the Technical Information pertaining to the [**] Technology,
the Other [**] Technology and the [**] and such Improvements, to [**] a
Security Client for a Security Purpose. 
Such use may continue so long as:

 

(a)                                  [**]; and

 

(b)                                 [**]

 

9.3                                 Digimarc may, at any time, make a proposal to the DLA Contract
Authority to use the [**] Technology, the Other [**] Technology and the
Technical Information pertaining thereto, to develop products and services and
to license the use of those products and services to other clients or for other
purposes.  The DLA Contract Authority
may, in his or her sole discretion, authorize the proposed use.  Following authorization, such use may
continue so long as:

 

(a)                                  the use does not have a material adverse impact on the
effectiveness for [**] provided by Digimarc to any Person during the Term for
incorporation into any Device in [**]; and

 

(b)                                 Digimarc uses its best efforts, including obtaining a
legally binding commitment from the proposed user, to ensure that the proposed
user does not use the product or service or permit or suffer the product or
service to be used, for any purpose other than the permitted purpose.

 

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

 

 

9.4                                 For the purposes of clauses 9.2 and 9.3:

 

(a)                                  a license to use shall not, unless expressly agreed to
by the DLA Contract Authority in his or her sole discretion, include the right
to grant a sublicense to any Person except end-user customers of the licensee;
and

 

(b)                                 a “material adverse impact” will be deemed to arise
if, as a result of such use or enjoyment, a [**] referred to therein fails to
meet the Specifications for the version of the [**] last accepted by [**] under
this Agreement.

 

9.5                                 Digimarc shall supply the DLA Contract Authority with
all information reasonably available and required to evaluate the effect of
each use proposed by Digimarc pursuant to clause 9.3 including, but not limited
to, details of the ownership, affiliations, financial stability, security
practises, industry reputation, business plans and business operations of the
proposed user.

 

9.6                                 If Digimarc learns, or has reasonable cause to
believe, that any Person to whom Digimarc:

 

(a)                                  licenses the use of a product or service as permitted
by the DLA Contract Authority under clauses 9.2 or 9.3 has used, or permitted
or suffered to be used, or proposes to use, or permit or suffer to be used, the
product or the results of the services for any purpose which is not permitted
as described above, or

 

(b)                                 has granted a license as requested by the DLA Contract
Authority under clause 2.8 or 2.9 in respect of, or has used, or permitted or
suffered to be used, or proposes to use or permit or suffer to be used, the
[**] or the Technical Information pertaining thereto subject of the license for
any purpose other than as permitted by this Agreement,

 

Digimarc shall immediately notify the DLA
Contract Authority of such unauthorised use and Digimarc shall use its best
efforts, at its own expense, to prevent any further such use including
exercising whatever legal remedies (including, without limitation, an
application for injunctive relief) are available to Digimarc. Digimarc shall,
immediately on notice by the DLA Contract Authority, assign to [**] any right
of action which Digimarc may have in respect of any such further use, or
transfer to [**] the control and conduct of legal proceedings and claims in
relation to such use.  Following such
assignment or transfer, Digimarc shall cooperate with [**] to achieve the
successful prosecution or, if directed by [**], settlement, of any such action,
proceedings or claims.

 

9.7                                 Digimarc shall not, except as reasonably necessary to
fulfill its obligations under this Agreement or any license agreement entered
into as requested by the DLA Contract Authority under clause 2.8 or 2.9, enable
any product referred to in clauses 9.2 or 9.3 to produce, display or otherwise
make detectable, [**] which is or may be used in [**] by any Licensed [**].

 

9.8                                 Digimarc shall at all times comply, and shall ensure
that its employees, agents and subcontractors comply, with the Security
Requirements.

 

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

 

 

10.           REPRESENTATIONS AND WARRANTIES OF
DIGIMARC

 

10.1         Digimarc represents, warrants and undertakes to [**] that from and after
the Effective Date:

 

(a)                                  the Work will be of professional quality conforming to
generally accepted [**] practices and will be performed at all times in a
timely and cost effective manner and, for greater certainty Digimarc shall
employ the standard of care in performing the work that would be expected of
[**] of the same or similar type as the [**] which comprises the CDS
Technology;

 

(b)                                 Digimarc is duly incorporated and organized and is
validly subsisting under the laws of the State of Oregon, U.S.A. or some other
state in the United States with full corporate power and authority to enter
into this Agreement;

 

(c)                                  to the best of its knowledge, neither this Agreement
nor the Work will contravene, breach, or result in any default under any
agreement, permit, by-law, or law or regulation to which Digimarc is subject or
by which it is bound including, for greater certainty, any laws or regulations
in effect in the United States governing export;

 

(d)                                 this Agreement when executed and delivered by Digimarc
shall constitute a valid and binding agreement with Digimarc enforceable
against Digimarc according to its terms;

 

(e)                                  Digimarc owns all rights in and to, or is properly
licensed in respect of, the Digimarc Technology, the Project Technology and the
Technical Information pertaining thereto;

 

(f)                                    Digimarc will at all material times have the right to
grant the licenses to the Digimarc Technology, the Project Technology and the
Improvements thereon and the Technical Information pertaining to the Digimarc
Technology and the Project Technology and all such Improvements as required by
this Agreement; and

 

(g)                                 for greater certainty, neither the Project Technology,
the Digimarc Technology or Improvements thereon or the Technical Information
pertaining to the Project Technology, the Digimarc Technology or such
Improvements infringe any Intellectual Property Right of  any Person.

 

10.2         Digimarc represents, warrants and undertakes to [**] that:

 

(a)                                  incorporated as part of its [**] practices and
procedures are those measures and security procedures commercially and
reasonably available on the date for delivery of a component of the CDS [**] in
the CDS that could interfere with the use of the CDS or corrupt, interfere with
or damage any data;

 

** CONFIDENTIAL PORTION OMITTED AND
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(b)                                 the CDS shall contain no lock, clock, timer, counter,
copy protection feature, replication device or intentional defects (including
but not limited to “viruses” or “worms” as such terms are commonly used in the
computer industry), CPU serial number reference, or other device which might:

 

(i)                                     lock, disable or erase the CDS or any data which is loaded on the CDS so
as to prevent full use of the CDS by authorized Persons; or

 

(ii)                                  require action or intervention by Digimarc or any other Person to allow
properly trained and authorized Persons to use the CDS;

 

(c)                                  the source code for the CDS, including that deposited
with the Escrow Agent, will, without reference to Digimarc or any of its
employees or authorized subcontractors, be understandable and usable by expert
personnel familiar with the programming languages, and scientific and
processing techniques, used therein, and will not involve any programming
components that such personnel could not reasonably be expected to understand,
and if necessary such source code shall contain sufficient commentary to enable
such personnel to understand and use such components; the source code for the
CDS will support the year 2000 and neither performance nor functionality will
be affected by dates prior to, during and after the year 2000 and, for greater
certainty, the CDS will switch to 1 January 2000 on 1 January 2000,
and the year 2000 will be recognized as a leap year; and

 

(d)                                 the Technical Information and all other Escrowed
Materials deposited with the Escrow Agent under this Agreement will contain all
information in human readable form and on suitable media to enable an expert
technical consultant, familiar with the scientific and processing techniques
used therein, to understand and use the same without reference to Digimarc or
any of its employees and authorised subcontractors.

 

10.3                           Digimarc represents, warrants and undertakes to [**]
that:

 

(a)                                  [**] accepted by [**] will meet the Specifications for
that version from the date that it is accepted by [**] until the earlier of the
date on which the next version is accepted by [**] and the last day of the
Term; and

 

(b)                                 until the last day of the Term, [**] provided by
Digimarc to any Person for incorporation into any Device will be capable of
meeting the performance criteria which formed part of the Specifications for
the version of the [**] last accepted by [**] under this Agreement at the time
such detector was so provided.

 

10.4                           [**] will not be counted in the determination under
clause 10.3 as to whether or not an [**] meets the Specifications.

 

10.5                           If any version of the [**] fails to meet the
Specifications for that version within one (1) year of the date of
acceptance thereof by [**], and such failure could not have been discovered by 

 

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[**] using reasonable diligence during the
acceptance procedure for that version, then Digimarc shall, at its own expense,
within sixty (60) days after receipt of the Problem Report from the DLA
Contract Authority or the DLA Project Manager or such other period as the DLA
Project Manager may agree, rectify the failure and at the direction of the DLA
Project Manager provide a corrected [**] to which Digimarc had previously
provided the [**].

 

10.6                           If a particular version of [**] provided by Digimarc
to any Person during the Term for incorporation into any Device, including for
greater certainty any version of a [**], fails to meet the relevant
Specifications within one (1) year of the date of acceptance thereof by
[**], and such failure could not have been discovered by [**] using reasonable
diligence during the acceptance procedure for that version, then Digimarc
shall, at its own expense, within sixty (60) days after receipt of written
notice of a Problem Report from the DLA Contract Authority or the DLA Project
Manager or such other period as the DLA Project Manager may agree, rectify the
failure and at the direction of the DLA Project Manager provide [**] to all
Persons to which Digimarc had previously provided such [**].

 

11.                                 REPRESENTATIONS AND WARRANTIES OF THE
[**]

 

11.1                           [**] represents and warrants to Digimarc that:

 

(a)                                  [**] has full power and authority to enter into this
Agreement;

 

(b)                                 this Agreement when executed and delivered by [**]
shall constitute a valid, binding and enforceable obligation of [**];

 

(c)                                  [**] will at all material times have the right to
grant the licenses required by this Agreement to the [**] Technology and the
Technical Information pertaining to the [**] Technology;

 

(d)                                 from and after the date on which [**] gets access to
the Escrowed Materials (the “Release Date”) as provided by clause 8.4 or 8.6
above until the last day of the Term, every [**] which [**] develops, permits,
or causes to be developed using the Escrowed Materials for incorporation into
any Device will be capable of [**] with the same or better performance ([**])
than the version of the [**] last accepted by [**] possessed on the Release
Date on which [**] gets access to the Escrowed Materials.

 

11.2         [**] makes no representations, warranties or undertakings that [**] has
any right to grant any license in respect of any Other [**] Technology or grant
the licenses required to be granted by clause 8.12 in relation to any
improvements referred to therein and in each case Digimarc shall be solely
responsible for determining that any Other [**] Technology and/or such
improvements are suitable for the intended use and for the consequences of any
use of the same, whether by Digimarc or others, and [**] hereby disclaims all
liability in connection therewith.

 

11.3         For greater certainty, the provisions of clauses 16.5 and 16.6 shall not
apply to any Other [**] Technology.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
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12.                                 CONFIDENTIALITY

 

12.1                           Except as otherwise expressly permitted by this
Agreement, a Recipient shall not use, reproduce or disclose the Confidential
Information of the Discloser for any purpose other than as reasonably necessary
to comply with its obligations under 
this Agreement or to exercise any rights or licenses granted to it under
or pursuant to this Agreement.

 

12.2                           The Recipient shall 
protect the Confidential Information of the Discloser from disclosure by
using the same degree of care, which shall be no less than a reasonable degree
of care, as the Recipient uses to protect its own confidential information.

 

12.3                           On written request from the Discloser, the Recipient
shall return, or certify the destruction of, all originals and copies of the
Discloser’s Confidential Information in the Recipient’s possession or control
which the Recipient does not need to retain in order to perform any obligations
imposed, or exercise any rights acquired, by this Agreement.

 

12.4                           A Recipient may, on a need to know basis, and only for
the purposes described in clause 12.1, give the other party’s Confidential
Information to the Recipient’s employees, authorized subcontractors or
representatives provided that such employee, subcontractor or representative
shall have entered into a non-disclosure agreement in respect of such
Confidential Information in favour of the Discloser on terms materially similar
to the provisions of this clause 12.  For
greater certainty, [**]’ representatives shall include the DLA Contract Authority,
the DLA Project Manager and all representatives of members of [**].

 

12.5                           The obligations set out in this clause 12 will not
apply to any Confidential Information that:

 

(a)                                  is or becomes publicly available other than through
the fault of the Recipient;

 

(b)                                 was known to the Recipient prior to disclosure as
shown by documentation sufficient to establish such knowledge;

 

(c)                                  was or is lawfully disclosed to the Recipient by a
third party who did not breach any obligation of confidence by such disclosure
and who made the disclosure without restriction on further disclosure all of
which is shown by documentation sufficient to establish same; or

 

(d)                                 is required by law to be disclosed provided, however,
that the Recipient shall first give written notice to the Discloser before the
disclosure so that the Discloser may seek an appropriate protective order.

 

The fact that Confidential Information, or any
part thereof, can be linked together by a search of publications and other
information, followed by a selection of a series of such items of knowledge
from unconnected sources, and fitting together those items of knowledge so as
to 

 

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duplicate or recreate any item of Confidential
Information, shall not be deemed to cause the Confidential Information, or any
part thereof, to be included within exceptions (a), (b) or (c), above.

 

12.6                           If either party is required by applicable law or
regulation, by legal process or by the U.S. Securities and Exchange Commission
or listing requirements of any exchange or quotation system on which securities
of any party may be listed or quoted, to disclose the terms of this Agreement
(such disclosure being referred to herein as “Legally Required Disclosure”),
such party shall provide the other party with prompt notice of such requirement
so that the other party may seek an appropriate protective order or
remedy.  In the event the other party
fails to obtain an order or remedy that would permit the requested party not to
disclose the required terms, the disclosure shall be permitted, but the
disclosing party will use all reasonable efforts to have the disclosure treated
confidentially by the recipient.

 

12.7                           The [**] Technology, the Other [**] Technology, and
solely for the purposes of clause 12 the [**] insofar as it pertains to [**],
and the Technical Information which pertains solely to the [**] Technology and
the Other [**] Technology and those aspects of the [**], including any [**]
which is or may be used [**] by any Licensed [**], shall be deemed to be the
Confidential Information of [**]. 
Digimarc may disclose such Confidential Information to a person to whom
Digimarc has granted a license pursuant to clause 9.2 or 9.3 but only if:

 

(a)                                  Digimarc can demonstrate to the reasonable
satisfaction of [**] that disclosure is necessary to enable Digimarc to grant
the license under clause 9.2 or 9.3; and

 

(b)                                 such person enters into a non-disclosure agreement in
respect of such Confidential Information in favour of [**] on terms materially
similar to the provisions of this clause 12.

 

12.8                           Nothing in this Agreement shall be construed to
require [**] or any representative of [**] including, for greater certainty,
the DLA Project Manager or the DLA Contract Authority, to disclose any
information which is confidential to a third party including for greater
certainty a [**] or a Licensed [**].

 

12.9                           [**] shall not reverse-engineer, disassemble, or
decompile any [**] forming part of the CDS, [**] (except to the extent that any
such activity is reasonably necessary to permit [**] to exercise its licence
rights under clauses 8.4 and 8.6 of this Agreement or [**]’ right to do so may
not be contractually restricted under applicable law), and shall contractually
ensure that any other Person to whom [**] provides [**] shall be similarly
obliged.

 

12.10                     For greater certainty the obligations imposed by this
clause 12 shall continue to apply to the Escrowed Material after it comes into
the possession of [**] notwithstanding the circumstances that give rise to such
possession.

 

12.11                     General attributes of the CDS may be disclosed in
connection with promotion of the CDS to the [**], and to customers or prospects
in related markets; information relating to the [**] 

 

** CONFIDENTIAL PORTION OMITTED AND FILED
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Technology and the [**] Technology may be
disclosed to [**] and vendors of [**] subject to a nondisclosure agreement but
in all such cases Digimarc shall not disclose any information relating to the
[**].  The existence and terms of this
Agreement may be disclosed to the parties’ professional advisors, to members of
the[**], and to Digimarc’s present shareholders, institutional and corporate
investors, and commercial and investment bankers, who have a reasonable need to
know such information subject to a non-disclosure agreement.

 

13.                                 AUDIT AND INSPECTION

 

13.1                           [**], or its duly authorised representatives, may from
time to time, without notice, at its own expense, conduct an audit or
inspection during normal business hours to verify Digimarc’s compliance with
its obligations under this Agreement. 
Digimarc shall facilitate such audit activities by providing access to
its premises, as well as any books, records, and other information relating to
this Agreement and the Work as may be reasonably requested by [**].  [**] shall promptly advise Digimarc in
writing of the results of any audit.  If
[**] exercises this right more frequently than twice in each calendar year,
[**] shall reimburse Digimarc’s reasonable costs related thereto which costs
are in addition to the [**] otherwise contemplated by this Agreement except in
the case where the exercise of such right is reasonably required to follow-up
on a non-compliance detected during a previous audit or inspection.

 

13.2                           If, as a result of any such audit, [**] is of the view
that Digimarc has engaged in or is about to engage in any act, or has omitted
to perform any act, which act or omission is not in compliance with Digimarc’s
obligations under this Agreement, the DLA Contract Authority may issue to
Digimarc a directive requiring Digimarc to refrain from engaging in such act or
to perform such act or acts as the DLA Contract Authority deems necessary, acting
reasonably, for Digimarc to comply with the Agreement and Digimarc shall
promptly comply with such directive at its own expense.

 

13.3                           No act performed by [**], its duly authorised
representatives or the DLA Contract Authority pursuant to the provisions of
this clause 13 and no omission by any of them to perform an act pursuant to the
provisions of this clause 13 shall in any way affect Digimarc’s obligation to
comply with this Agreement.

 

14.                                 DISPUTE RESOLUTION

 

14.1                           Any Dispute (as defined in the Arbitration Agreement)
shall be finally settled by arbitration in accordance with the Arbitration
Agreement.

 

14.2                           Unless otherwise agreed between the parties or unless
the subject matter of the dispute resolution proceedings is a party’s right to
terminate this Agreement, the Work shall continue during the arbitration
proceedings and payments due to Digimarc shall not be withheld on account of
such proceedings unless that particular Work or payment is the subject matter
of the proceedings.  Notwithstanding the
foregoing, [**] may at its sole discretion instruct Digimarc to continue the
performance of that Work, and Digimarc shall act in accordance with those
instructions, subject to payment in accordance with clause 3.2.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
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15.           TERM AND TERMINATION

 

15.1         This Agreement shall take effect on the Effective Date and shall remain
in force throughout the Term unless sooner terminated as provided herein.

 

15.2         [**] may in its sole discretion terminate this Agreement effective
immediately on notice to Digimarc if:

 

(a)                                  Digimarc makes a general assignment or any other
arrangement for the benefit of its creditors;

 

(b)                                 a proposal or arrangement under applicable bankruptcy
or insolvency legislation, or a petition is filed by or against Digimarc under
applicable bankruptcy or insolvency legislation and is not discontinued within
thirty (30) days;

 

(c)                                  Digimarc is declared or adjudicated bankrupt or goes
into liquidation;

 

(d)                                 a liquidator, trustee in bankruptcy, custodian,
receiver, administrator, administrative - receiver, manager, or any other
officer with similar power is appointed over all or any part of the assets and
undertaking of Digimarc;

 

(e)                                  Digimarc commits an act of bankruptcy, institutes
proceedings to be adjudged bankrupt or insolvent, consents to the initiation of
such appointment or proceedings or admits in writing inability to pay debts
generally as they become due;

 

(f)                                    Digimarc assigns the Agreement without [**]`s consent
in breach of clause 19.7; or

 

(g)                                 Digimarc ceases or threatens to cease business.

 

15.3         Either party may terminate this Agreement effective immediately on
notice to the other party if:

 

(a)                                  the other party fails, or is unable or unwilling to
perform any of its obligations under this Agreement (hereinafter referred to as
a “breach”) and fails to remedy such breach within sixty (60) days after
receiving written notice of such breach from the other party; or

 

(b)                                 an event of force majeure (as defined in clause 17)
has continued for a period longer than sixty (60) continuous days or such
longer period as the parties may agree and no satisfactory alternative
arrangements have been agreed to continue the Work.

 

15.4         Notwithstanding the foregoing, [**] has no right to terminate this
Agreement for breach under clause 15.3 if the breach consists of a failure by
Digimarc to perform a particular task the performance of which proves to be
technically infeasible provided that the DLA Project Manager 

 

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has agreed with the Digimarc Project Manager in
writing before the  task is commenced
that the task may be technically infeasible.

 

15.5                           As of the effective date of a termination of this
Agreement by Digimarc as permitted by clause 15.3(a) above, the licenses
granted by Digimarc pursuant to clause 2.8 or 2.9 above shall continue but be
deemed to be restricted [**].

 

15.6                           Termination of this Agreement by [**] for any reason
in accordance with the provisions of this clause 15 shall not affect any
license granted by Digimarc pursuant to clauses 2.8, 2.9, 8.4, or 8.6 above.

 

15.7                           On termination of this Agreement by Digimarc or [**]
for any reason Digimarc shall within fifteen (15) Business Days deliver to the
Escrow Agent all Work in progress done up to the effective date of termination,
including all Technical Information relating to such Work, and all Technical
Information pertaining to the Digimarc Technology or the Project Technology
which has not previously been deposited with the Escrow Agent and issue to the
DLA Contract Authority a certificate signed by an officer of Digimarc that it
has fully complied with this obligation.

 

16.                                 INTELLECTUAL PROPERTY INDEMNIFICATION

 

16.1                           [**] shall provide Digimarc with prompt written notice
of any claim, demand or action against [**] based on an allegation that the
CDS, the Digimarc Technology or the Project Technology or any Improvements
thereto or any part thereof, infringes any Intellectual Property Right of any
Person (referred to below as a “Claim”). 
[**] shall use its reasonable efforts to conduct the defence of any
Claim in a timely and cost effective manner. 
Digimarc shall, at Digimarc’s expense, comply with all reasonable
requests for assistance from [**] in connection with the defence of the Claim.

 

16.2                           Notwithstanding any other provision of this Agreement
to the contrary, Digimarc shall indemnify [**] against and save [**] harmless
from all loss, costs, liabilities including, for greater certainty an award of
damages, and expenses, including, for greater certainty, reasonable legal fees,
arising from each Claim.  The obligation
set out in this clause 16 shall not apply in respect of any settlement made by
[**] without the consent of Digimarc.

 

16.3                           If the CDS, the Digimarc Technology or the Project
Technology, or any Improvement thereto or part thereof is held to infringe, or
if Digimarc believes that it is likely to be held to infringe, any of the
Intellectual Property Rights described in clause 16.1, Digimarc shall, in
addition to its other obligations set out above, at its own expense either:

 

(a)                                  procure for [**] the right to continue using the
allegedly infringing materials; or

 

(b)                                 replace or modify the materials to the reasonable
satisfaction of [**] so that they are no longer infringing but remain
functionally equivalent;

 

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Failing either of which result [**] may, at its
option, terminate this Agreement without prejudice to [**]’ other rights and
remedies available in law, at equity or otherwise.

 

16.4                           Digimarc shall provide [**] with prompt written notice
of any claim, demand or action against Digimarc based on an allegation that the
[**] Technology or any part thereof, infringes any Intellectual Property Right
of any person (referred to below as a “[**] Technology Claim”).  Digimarc shall, at [**]’s expense, comply
with all reasonable requests for assistance from [**] in connection with the
settlement or defence of any [**] Technology Claim.

 

16.5                           Notwithstanding any other provision of this Agreement
to the contrary, [**] shall indemnify Digimarc against and save Digimarc
harmless from all loss, costs, liabilities including, for greater certainty an
award of damages, and expenses, including, for greater certainty, reasonable
legal fees, arising from each [**] Technology Claim.  The obligation set out in this clause 16.5
shall not apply in respect of any settlement made by Digimarc without the
consent of [**].

 

16.6                           If the [**] Technology or any part thereof is held to
infringe, or if [**] believes that it is likely to be held to infringe, any of
the Intellectual Property Rights described in clause 16.4, [**] may, in
addition to its other obligations set out above, at its own expense either:

 

(a)                                  procure for Digimarc the right to continue using the
allegedly infringing materials; or

 

(b)                                 replace or modify the materials to the reasonable
satisfaction of Digimarc so that they are no longer infringing but remain
functionally equivalent.

 

17.                                 FORCE MAJEURE

 

17.1                           If the performance by either party of any of its
obligations under this Agreement is prevented or delayed by any circumstance of
force majeure, which shall mean fire, flood, earthquakes, war, riots, or
insurrection, the party shall immediately notify the other party.

 

17.2                           The time period within which the party delayed is
obliged to perform its obligations will be delayed during the period such
circumstance exists.  During the period
of delay the party delayed shall use its best efforts to make alternate
arrangements satisfactory to the other party to avoid delay or resume
performance.

 

18.                                 NOTICES

 

18.1                           All notices under this Agreement shall be delivered by
fax, or recognized international courier service.  The notice shall be deemed effective as of
the date of delivery to the address of the party specified below as evidenced
by a delivery receipt or the addressee’s registry of incoming
correspondence.  Unless otherwise
expressly set out in this Agreement, all notices to a party will be sent to the
party’s authorized representative identified below and all notices from a party
will be sent by the party’s authorized representative identified below.

 

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18.2                           Any notice to DIGIMARC shall be sent to both of, and
any notice from Digimarc shall be sent by either:

 

	
  Mr. Bruce Davis 

  President and CEO 

  Digimarc Corporation 

  One Centerpointe Drive 

  Suite 500 

  Lake Oswego, Oregon 97035 USA 

  FAX: (503) 968-0219

  	
   

  	
  Mr. William Y. Conwell 

  Klarquist, Sparkman, Campbell, 

  Leigh & Whinston 

  121 SW Salmon Street 

  Suite 1600 

  Portland, Oregon 97204 USA 

  FAX: (503) 228-9446

  

 

18.3                           Any notice to [**] shall be sent to both of, and any
notice from [**] shall be sent by either:

 

	
  [**] 

  	
   

  	
  [**] 

  

 

18.4                           A party may change its address for notice by notice to
the other party in accordance with the provisions of this clause 18.

 

19.                                 MISCELLANEOUS PROVISIONS

 

19.1                           Remedies Cumulative - Except as otherwise expressly set out in this
Agreement:

 

(a)                                  each and every right, power and remedy of a party will
be considered to be cumulative with and in addition to any other right, power
and remedy which such party may have at law or in equity in the event of breach
of any of the terms of this Agreement;

 

(b)                                 the exercise or partial exercise of any right, power
or remedy will neither constitute the exclusive election thereof nor the waiver
of any other right, power or remedy available to such party; and

 

(c)                                  a party terminating this Agreement in accordance with
the provisions of this Agreement will have no liability or obligation to the
other as a result of or with respect to the termination.

 

19.2                           Severability - If any part of this Agreement is held by an
arbitral tribunal appointed pursuant to the Arbitration Agreement or by any
other competent authority to be void or unenforceable, the parties agree that
such determination will not result in the nullity or unenforceability of the
remaining parts of this Agreement, which will continue in force to the fullest
extent permitted by law.  The parties
further agree to replace such void or unenforceable part of this Agreement with
a valid and enforceable provision that will achieve, to the extent legally
permissible, the economic, business and other purposes of the void or
unenforceable part.

 

19.3                           Counterparts.  This
Agreement may be executed in separate counterparts, and by facsimile, each of
which will be deemed an original, and when executed, separately or together, 

 

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will constitute a single original instrument,
effective in the same manner as if the parties had executed one and the same
instrument.

 

19.4                           Entire Agreement.  This
Agreement is intended by the parties to be the final expression of their
agreement and constitutes and embodies the entire agreement and understanding
between the parties hereto and constitutes a complete and exclusive statement
of the terms and conditions thereof, and will supersede any and all prior
correspondence, conversations, negotiations, agreements or understandings
between the parties relating to the same subject matter.

 

19.5                           Amendments.  No change in,
modification of or addition to the terms and conditions contained herein will
be valid as between the parties unless set forth in a writing that is signed by
an authorized representative of each party and which specifically states that
it constitutes an amendment to this Agreement.

 

19.6                           Waiver.  No waiver of any term,
provision, or condition of this Agreement will be effective unless in a written
document signed by the waiving party and no such waiver in any one or more
instances, will be deemed to be, or be construed as, a further or continuing
waiver of that term, provision or condition or any other term, provision or
condition of this Agreement.

 

19.7                           Assignment and Successors.  This
Agreement may not be assigned, novated or otherwise transferred by Digimarc
without the prior written consent of [**], which consent shall not be
unreasonably withheld.  For the purpose
of this Agreement, an assignment includes a change in the voting control of
Digimarc or the sale or other disposal of substantially all of Digimarc’s
assets.  This Agreement and all of its
terms, conditions and covenants are intended to be fully effective and binding,
to the extent permitted by law, on the successors and permitted assigns of the
parties hereto.

 

19.8                           Substitution.  [**] may by
written notice to Digimarc at any time substitute any of the following (“Substitute”)
as a party to this Agreement in place of and in substitution for [**], provided
that such notice is accompanied by a Deed Of Adherence duly executed by the
Substitute in the form attached as Schedule T:

 

(a)                                  any wholly owned subsidiary of [**];

 

(b)                                 any [**] existing at the Effective Date or any
partnership or joint venture, the entire economic interest in which is owned by
one or more of such [**];

 

(c)                                  any body corporate, the entire economic interest in
which is owned by one or more of the [**] described in clause 19.8(b); or

 

(d)                                 [**].

 

With effect from the date of such notice the
Substitute shall benefit from the same rights and be subject to the same
obligations as [**] under this Agreement, and [**] shall no longer benefit from
such rights and shall no longer be subject to such obligations.

 

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19.9                           Upon exercising its right of substitution in favour of
any wholly owned subsidiary of the [**], the 
[**] shall provide Digimarc with a comfort letter in the form attached
as Schedule “U”.

 

19.10                     Captions.   Captions are provided in this Agreement for
convenience only and they form no part, and are not to serve as a basis for
interpretation or construction, of this Agreement, nor as evidence of the
intention of the parties.

 

19.11                     Disclaimer of Agency.   Nothing contained in this Agreement is
intended or will be interpreted so as to constitute the parties to this
Agreement as partners or joint venturers or as agents of each other. Neither
party will have any express or implied right or authority to assume or create
any obligations on behalf of or in the name of any other party or to bind any
other party in any contract, agreement or undertaking with any third party. No
employee of a party shall be deemed or considered to be an employee of the
other party or of both parties.

 

19.12                     Publicity.   The parties
agree that from time-to-time it will be beneficial to both parties to issue
press releases and other public announcements concerning benefits arising from
the CDS.  Each party agrees to submit
such releases or announcements for prior approval by the other party which
approval may be withheld by the party in its sole discretion.  The DLA Contract Authority shall recommend to
the [**] that they issue a communiqué produced by the DLA Project Manager at an
appropriate time [**].

 

19.13                     Effectiveness.   This Agreement shall be effective only after it is
signed by both of the parties.

 

19.14       Ambiguities.   Each party and its counsel have participated fully in
the review and revision of this Agreement. 
Any rule or construction to the effect that ambiguities are to be
resolved against the drafting party shall not apply in interpreting this
Agreement.

 

19.15       Survival.   All clauses of this Agreement which expressly or by implication are
intended to survive the termination of this Agreement will do so and, for
greater certainty and notwithstanding any provision in this Agreement to the
contrary, the provisions set out in clauses 2.5, 3.6, 3.7, 3.8, 3.9, 3.10, 8.4,
8.6, 8.11 - 8.16, inclusive, 9.1, 9.2, 9.3, 9.7, 10, 11, 12, 13, 14, 16, 18 and
19 of this Agreement shall survive termination of this Agreement by either
party for any reason.

 

IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the Effective Date.

 

	
  [**]

  	
   

  	
  DIGIMARC CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature  
  

  	
   

  	
  Signature

  
	
  Name:

  	
   

  	
  Name: Bruce Davis

  
	
  Title:

  	
   

  	
  Title: President & CEO

  

 

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

 

 

	
  Date

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  

 

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

 

 

AMENDMENT
TO COUNTERFEIT DETERRENCE SYSTEM

DEVELOPMENT
AND LICENSE AGREEMENT

 

This is an Amendment to the Counterfeit
Deterrence System Development and License Agreement (the “Amendment”) made

 

Between

 

DIGIMARC
CORPORATION, a corporation
incorporated under the laws of Delaware and having its head office at 19801 SW
72nd Avenue, Suite 250, Lake Oswego, Oregon. U.S.A.  97062 ( “Digimarc”)

 

and

 

[**]

 

Recitals

 

Effective 1 January [**], the above
identified parties entered into an agreement entitled the “Counterfeit
Deterrence System Development and License Agreement” (hereinafter “the
Agreement”).  The Agreement included
documents listed in Section 1.4 of the Agreement which were made an
integral part of the Agreement.

 

As required under Section 2.2 of the Agreement,
by 21 December [**], Digimarc submitted to [**] a Proposal for the work to
be done during Phase [**].  As required
under Section 2.4, Digimarc submitted to [**] a revised Proposal for the
work to be done during Phase [**].

 

Effective 8 March [**],
Digimarc’s Contract Authority, Bruce Davis, duly appointed J. Scott Carr to
represent him in agreeing to amendments to the Agreement on behalf of Digimarc.

 

In consideration of the promises and covenants
set out in this Amendment and in the Agreement and other good and valuable
consideration, the receipt and adequacy of which are acknowledged by each of
the parties, the parties agree as follows:

 

1.               Change the address of Digimarc wherever it appears in
the Agreement to the address shown herein.

 

2.               Change the State of Incorporation of Digimarc wherever
it appears in the Agreement from the State of Oregon, U.S.A. to the “State of
Delaware, U.S.A.”

 

3.               Delete the notice requirement to Mr. William Y.
Conwell wherever it appears in the Agreement.

 

4.               Replace Attachment 3 of Schedule “B” entitled “Device
Vendors” with the attached page entitled “SCHEDULE ‘B’, AMENDED ATTACHMENT
3: DEVICE VENDORS.”

 

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

 

 

5.               Replace Schedule “C” with the attached document
entitled “AMENDED SCHEDULE ‘C’ DATED MARCH 14TH [**] PHASE [**]
STATEMENT OF WORK.”

 

6.               Replace Schedule “I” with the attached document
entitled “AMENDED SCHEDULE ‘I’ ALLOWABLE COSTS.”

 

7.               The parties agree the above-identified replacement
documents for a page of Schedule B and 
all of Schedules C and I are, by this reference, made an integral part
of this Amendment and supercede the corresponding documents referenced in Section 1.4
of the Agreement.

 

8.               [**] hereby accepts, under Section 2.5 of the
Agreement, the revised Proposal as evidenced in this Amendment and the
attachments referenced in this Amendment.

 

9.               Unless modified or superceded by this or other
Amendments to the Agreement, all terms of the Agreement remain in full force
and effect.

 

IN WITNESS WHEREOF, this Amendment to the Agreement has been executed
and delivered by the parties hereto as of the date the last of the parties
affixes their signature hereto.

 

 

	
  [**]

  	
   

  	
  DIGIMARC CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Signature

  
	
  Name:

  	
   

  	
  Name:  Scott
  Carr

  
	
  Title:

  	
   

  	
  Title:   
  Vice President and General Manager,

  
	
  Date

  	
   

  	
               Government
  and Bank Programs

  
	
   

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  

 

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

 

 

AMENDMENT
NUMBER TWO TO THE COUNTERFEIT DETERRENCE SYSTEM

DEVELOPMENT
AND LICENSE AGREEMENT

 

This is the second Amendment to the Counterfeit
Deterrence System Development and License Agreement (the “Second Amendment”)
made

 

Between

 

DIGIMARC
CORPORATION, a corporation
incorporated under the laws of Delaware and having its head office at 19801 SW
72nd Avenue, Suite 100, Tualatin, Oregon. U.S.A.  97062                    ( “Digimarc”)

 

and

 

[**]

 

Recitals

 

Effective 1 January [**], the
above-identified parties entered into an agreement entitled the “Counterfeit
Deterrence System Development and License Agreement” (hereinafter “the
Agreement”).  The Agreement included
documents listed in Section 1.4 of the Agreement which were made an
integral part of the Agreement.

 

As required under Section 2.2 of the
Agreement, by November 22, [**], Digimarc submitted to [**] the Offer for
the work to be done during Phase [**].

 

[**] hereby accepts, under Section 2.5 of
the Agreement, the Offer as evidenced in this Second Amendment and the
attachments referenced in this Second Amendment.

 

In consideration of the promises and covenants
set out in this Second Amendment and in the Agreement and other good and
valuable consideration, the receipt and adequacy of which are acknowledged by
each of the parties, the parties agree as follows:

 

1.                                       Replace Attachment 3 of Schedule “B” entitled “Device
Vendors” with the attached page entitled “SCHEDULE ‘B’, AMENDED ATTACHMENT
3: DEVICE VENDORS.”

 

2.                                       Replace Schedule “D” with the attached document
entitled “AMENDED SCHEDULE ‘D’ PHASE [**] STATEMENT OF WORK.”

 

3.                                       Replace Schedule “I” with the attached document
entitled “AMENDED SCHEDULE ‘I’ ALLOWABLE COSTS.”

 

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

 

 

4.                                       The parties agree the above-identified replacement
documents for a page of Schedule B and all of Schedules D and I are, by
this reference, made an integral part of the Agreement and supersede the
corresponding documents referenced in Section 1.4 of the Agreement.

 

5.                                       Unless expressly modified by this Second Amendment or
other amendments to the Agreement, all terms of the Agreement remain in full
force and effect.

 

6.                                       In the Agreement, replace paragraph 3.4 with the
following:

 

“Except as otherwise expressly provided herein,
the total amount which [**] will be liable to pay Digimarc for or in connection
with the Allowable Costs and Mark-up for the Phase [**] Work, the Phase [**]
Work and the Phase [**] Work will not be greater than [**] and assuming that (i) [**]
has accepted Digimarc’s Offer for all [**] and, (ii) [**] does not
terminate this Agreement as permitted herein prior to the date on which
Digimarc completes the Phase [**] Work in accordance with the provisions of
this Agreement, not less than [**], subject to Digimarc having performed the
Work equal to this amount of Allowable Costs and Mark-up.”

 

7.                                       In the Agreement, add paragraphs 19.16.1 and 19.16.2
as follows:

 

“19.16.1
No third party Person shall have any right to enforce any provision of this
Agreement under the Contracts (Rights of Third Parties) Act 1999.

 

19.16.2
Digimarc covenants that it will take all measures which are reasonably
necessary to ensure that no third party with which Digimarc contracts or may
contract has any right to enforce any provision of this Agreement against the
[**] pursuant to the Contracts (Rights of Third Parties) Act 1999 and, in
particular, that it will make no statements, representations or warranties to
any such third party implying that the latter would have any right to enforce
any provision of this Agreement under the Contracts (Rights of Third Parties)
Act 1999.”

 

IN WITNESS WHEREOF, this Second Amendment to the Agreement has been
executed and delivered by the parties hereto as of the date the last of the
parties affixes their signature hereto.

 

	
  [**]

  	
   

  	
  DIGIMARC
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Signature

  
	
  Name:

  	
   

  	
  Name:  Scott
  Carr

  
	
  Title:

  	
   

  	
  Title:   
  Vice President and General Manager, 

  
	
  Date

  	
   

  	
               Government
  and Bank Programs

  
	
   

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  

 

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

 

 

AMENDMENT
NUMBER THREE TO THE COUNTERFEIT DETERRENCE SYSTEM

DEVELOPMENT
AND LICENSE AGREEMENT

 

This is the third Amendment to the Counterfeit
Deterrence System Development and License Agreement (the “Third Amendment”)
made by and between

 

DIGIMARC
CORPORATION, a corporation
incorporated under the laws of Delaware and having its head office at 19801 SW
72nd Avenue, Suite 100, Tualatin, Oregon. U.S.A.  97062 (“Digimarc”)

 

and

 

[**]

 

Recitals

 

Effective 1 January [**],
the above-identified parties entered into an agreement entitled the “Counterfeit
Deterrence System Development and License Agreement” (hereinafter “the
Agreement”).  The Agreement included
documents listed in clause 1.4 of the Agreement which were made an integral
part of the Agreement.

 

On 14 March [**] and 28
December [**] the parties entered into Amendments to the Agreement
(hereinafter First and Second Amendments).

 

In consideration of the
promises and covenants set out in this Third Amendment, in the Agreement, in
the First and Second Amendments and other good and valuable consideration, the
receipt and adequacy of which are acknowledged by each of the parties, the
parties agree that the Agreement as previously amended will be further amended
as of 1 January, [**]:

 

1.                                      DEFINITIONS AND PRINCIPLES OF
INTERPRETATION

 

The following definitions in
clause 1.1 shall be replaced as follows:

 

“Arbitration
Agreement” means the Arbitration
Agreement dated 21 June 1999 as amended and attached as Schedule “E”.

 

“[**]  Technology” means
that technology, if any, from the technology described in Schedule “F” in
respect of which from time to time during Phases [**] of this Agreement and
Phases [**] as defined in the [**] Agreement after discussion between the DLA
Project Manager and the Digimarc Project Manager, [**] offers, and Digimarc
accepts in writing, a [**] on the [**] in clause 8.2 to use, design or
implement the CDS and all Intellectual Property Rights in that [**];

 

“Digimarc
Contract Authority”
means Digimarc’s President or the Vice President, Government and Bank Programs;

 

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

 

 

“Phase” means Phase [**] of this Agreement as the case
requires, adjusted if required by any period added pursuant to clause 5.3 or
other changes to the Work authorized pursuant to clause 6 below;

 

“Statement of
Work” means the Statement of Work
set out in Schedules B, C, D, V or W as applicable;

 

Add new Definitions to
clause 1.1 as follows:

 

“[**]
Agreement” means the Agreement
between [**] and Digimarc relating to the provision by Digimarc of certain [**]
services effective as of 1 January [**], as amended from time to time.

 

“Phase [**] means the period from 1 January 2002 to 31 December 2002;

 

“Phase [**]” means the period from 1 January 2003 to 31 December 2003;

 

“Phase [**]  Work”
means the tasks and Deliverables identified in the Phase [**] Statement of Work
attached as Schedule V to be performed or produced during Phase [**];

 

“Phase [**] Work” means the tasks and Deliverables identified in the
Phase [**] Statement of Work attached as Schedule W to be performed or produced
during Phase [**] if [**] elects to proceed with Phase [**]; and

 

“Project
Manager” means either the Digimarc or DLA Project Manager, as the
context requires.

 

1.2                               Interpretation:

 

Clause 1.2.5 shall be
replaced with:

 

1.2.5                        unless otherwise
specified, the order of precedence for interpreting this Agreement shall be:

 

a)                                      the Amendments to the Agreement with the Third
Amendment supplementing the Second Amendment and the Second Amendment
supplementing the First Amendment;

 

b)                                     the other terms of this Agreement, excluding
Schedules;

 

c)                                      the Schedules; and

 

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

 

 

d)                                     as between the
delivery schedules forming part of a Statement of Work, and other provisions of
such Statement of Work, the delivery schedules shall take precedence.

 

Add
new clause 1.2.9 as follows:

 

1.2.9                        When a
definition or a clause in this Agreement is described in the Third Amendment as
a replacement, the definition or clause in this Third Amendment replaces the
previous definition or clause in the Agreement. When a new definition or a
clause is presented in this Third Amendment, the new definition or clause in
this Third Amendment is considered added to and incorporated into the Agreement.
The changes in this Third Amendment are referenced by the clauses they appear
in the Agreement and such changes shall not apply to the interpretation of any
part of the Agreement relating to any events, acts or omissions occurring prior
to 1 January [**] unless such events, acts or omissions are relevant to
any event, act or omission occurring on and after that date. Unless expressly
modified, superseded or replaced by this Third Amendment, each term of the
Agreement as amended by the First or Second Amendment remains in full force and
effect.

 

1.4                               Schedules

 

In clause 1.4,

 

Replace Schedules E, I, K-1,
K-2, L-1, L-2, N and S as attached; and

 

Add the following new
schedules:

Schedule V described as
Phase [**] Statement of Work;

When agreed upon, Schedule W
described as Phase [**] Statement of Work; and Schedule X described as [**]
Expenditures.

 

The
parties agree the above-identified replacement document Schedules E, I, K-1,
K-2, L-1, L-2, N and S supersede the corresponding documents referenced in clause
1.4 of the Agreement and such replacement Schedules together with the new
Schedules V, W and X are, by this reference, made an integral part of the
Agreement.

 

2.                                      SCOPE OF THE WORK

 

Add new clauses to clause 2
as follows:

 

2.17                           [**] has
accepted Digimarc’s Offer to perform the Phase [**] Work in accordance with the
“Phase [**] Statement of Work.”  Digimarc
shall perform the Phase [**] Work in accordance with the “Phase [**] Statement
of Work.” [**] has no right to terminate this Agreement during Phase [**],
unless [**] terminates this Agreement under clause 15 before Digimarc completes
the Phase [**] Work.

 

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

 

 

2.18                         Subject to [**]
acceptance of the corresponding Offer described in clauses 2.20 and 2.21,
Digimarc shall perform the Phase [**] Work in accordance with the “Phase [**]
Statement of Work.”  After acceptance by
[**] of the Offer described in clauses 2.20 and 2.21, [**] has no right to
terminate this Agreement during Phase [**], unless [**] terminates this
Agreement under clause 15 before Digimarc completes the Phase [**] Work.

 

2.19                         On or before 15
August [**], Digimarc shall deliver to [**] and the DLA Project Manager a
written proposal (the “Proposal”) for the Work to be done during Phase [**],
which Proposal will be in the form of a proposed amendment to the Agreement and
will include, but not be limited to:

 

(a)                                  The Statement of Work for Phase [**] (Schedule W);

 

(b)                                 an estimate of the Allowable Costs to be incurred by
Digimarc in connection with Digimarc’s performance of the Work for Phase [**];
and

 

(c)                                  the nature, timing and
estimated quantity of the effort which will be required from [**] to enable
Digimarc to perform the Work as proposed during Phase [**].

 

2.20                         The Proposal
for Phase [**] when delivered by Digimarc to [**] pursuant to clause 2.19 shall
be deemed to constitute an irrevocable offer (the “Offer”) to amend the
Agreement.  Digimarc undertakes and
represents that the Proposal will be prepared with all due care and diligence
and that at the date of [**] acceptance of the Offer, it will not be aware of
any matters within its reasonable control which might or will adversely affect
its ability to perform the Work for Phase [**].

 

2.21                         The Offer for
the Phase [**] Work shall remain open for written acceptance by [**] at its
sole discretion until the earlier of 30 November [**] or notice by [**]
that it elects not to proceed with Phase [**]. 
If requested by the DLA Contract Authority by November 1, [**],
Digimarc shall prepare and send by November 10, [**] a revised Offer to
[**] to take into account any reasonable revisions and clarifications to the
original Offer requested by the DLA Contract Authority and [**] will have until
November 30, [**], subject to receipt of the revised Offer by November 15,
[**], to accept the revised Offer.

 

2.22                         The Term will
continue notwithstanding that [**] elects not to accept the Offer for the Phase
[**] Work.

 

2.23                         Pending
acceptance, or express or implied rejection by [**] of the Offer as provided in
clause 2.21, the DLA Contract Authority may, in his or her sole discretion,
authorize Digimarc to perform all or part of the Work described in the Offer
(or other Work as agreed between the parties’ respective Contract
Authorities).  If [**] accepts the Offer
for Phase [**], all such authorized Work will be deemed to form part of the
Work 

 

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

 

 

for
Phase [**].  In any event, [**] shall
compensate Digimarc for such authorized Work as though it were Phase [**] Work.

 

2.24                           Actions or lack
of actions by the [**] under clauses 2.21 or 2.23 do not waive or delay any
notice duties of the [**] under clauses 3.13-3.17.

 

2.25                           This Third
Amendment is conditional upon execution of an Amendment to [**] between the
[**] and the requisite [**]. After execution of this Third Amendment by [**]
and Digimarc, the [**] will proceed with reasonable diligence to have the
Amendment to the [**] fully executed. When the Amendment to the [**] is fully
executed, the [**] will so notify Digimarc that the condition of this clause
2.25 has been removed from this Third Amendment.

 

3.                                      PRICE AND PAYMENT

 

Clause 3.7 shall be replaced in relation to
Phase [**] and Phase [**] as follows:

 

3.7                                 For a period commencing on the Effective Date and
ending on the date [**] following the last date on which Digimarc issues an
invoice to [**] for Allowable Costs, Digimarc shall maintain proper,
up-to-date, accurate and complete books, records and other documentation
substantiating the Allowable Costs invoiced under this Agreement including,
without limitation, time sheets showing the hours spent on each task which
forms part of the Work and receipts for all Expenses (as defined in Schedule
I).  Digimarc shall produce such books,
records and documentation to [**] or its representatives for inspection and
copying at all reasonable times on request by the DLA Project Manager.

 

Add new clauses to clause 3
as follows:

 

3.11                           Subject to the
limits set out in this Agreement and unless otherwise expressly set out herein,
[**] shall reimburse Digimarc for all the Allowable Costs reasonably and
properly incurred by Digimarc during each calendar month to perform the Phase [**]
Work and the Phase [**] Work (if any) and any other Work authorized by [**] in
writing.  Digimarc shall invoice [**]
monthly in arrears for such Allowable Costs. 
Each invoice shall specify the Expenses incurred and the time spent by
the staff and sub-contractors of Digimarc in performing the Work and shall give
a breakdown of the Allowable Costs in the form attached as Schedule S.

 

3.12.1                  Unless [**] terminates this
Agreement under clause 15 before Digimarc completes the Phase [**] Work or
terminates [**] before Digimarc completes [**] Phase [**] (as such expression
is defined in the [**] Agreement), and subject always to clause 3.12.2, the
total amount which [**] will be liable to pay Digimarc for or in connection
with the Phase [**] Work and/or for the [**] Phase [**], will not be less than
[**](“[**]”).

 

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

 

 

3.12.2                  [**] obligation to pay the
[**] is subject to Digimarc having performed all of its obligations under this
Agreement and the [**] Agreement relating to the performance of Work and
Services (as such expression is defined in the [**] Agreement) which Digimarc
is obliged to perform in connection with Phase [**] Work and [**] Phase [**],
including any Work or Services which Digimarc is requested to perform pursuant
to clause 3.16.  If [**] requests, under
clause 3.16, that Digimarc cease or reduce the scope of the Work and/or
Services remaining to be completed, [**] payment obligation would still be due.

 

3.13                           If [**] elects not to proceed with both Phase [**] and
[**] Phase [**] and [**] has provided Digimarc with notice of such election by
30 September [**] will not owe Digimarc any money for Phase [**] or [**]
Phase [**] or have any other liability to Digimarc in connection with [**]
election not to proceed with Phase [**] or [**] Phase [**]. Such notice will
not affect either party’s obligations under Phase [**] or [**] Phase [**].

 

3.14                           If [**] elects
not to proceed with both Phase [**] and [**] Phase [**] and [**] has provided
Digimarc with notice of such election between October 1, [**] and November 30,
[**], then, subject to clause 3.16,[**] sole liability to Digimarc relative to
Phase [**] and [**] Phase [**] is that [**] shall owe Digimarc an amount equal
to [**] months of Work and Services from the effective date of such
notice.  For example, if [**] provides
notice on November 30, [**] of a decision by [**] not to proceed with
Phase [**] and [**] Phase [**] shall owe Digimarc through February 28[**].  The amount of such payment shall be
calculated in accordance with clause 3.15.

 

3.15                           When such
notice is provided as in clause 3.14 for both Phase [**] and [**] Phase [**] or
if clause 3.18 applies in respect of both Phase [**] and [**] Phase [**], the
amount due Digimarc shall be calculated as follows:  (i) for the remainder of [**] in
accordance with the remaining financial commitments made for Phase [**] and
[**] Phase [**] by [**]; and (ii) for the relevant portion of [**] at the
rate of [**] per calendar day. If [**] continues with either Phase [**] or [**]
Phase [**], then no payment shall be due under clause 3.14 or clause 3.15 and
[**] payment obligation in respect of the Phase which is not terminated shall
be the [**] referred to and payable in accordance with clause 3.17.

 

3.16                           During the [**]-month period after notice under clause
3.14, or, if clause 3.18 applies, [**] may request, (but it is not obliged to
do so) and Digimarc will, if requested by [**], (a) at [**] sole
discretion, cease or reduce the scope of the Work and/or Services remaining to
be completed at the date of [**] giving notice and/or, (b) if reasonably
possible, provide services relating to Work and/or Services, including work or
services relating to the wind down or transfer of the Work and/or Services to
[**] and/or any replacement provider as reasonably directed by the DLA Project
Manager, commensurate with the payment obligations of the [**] in accordance
with clause 3.14.  Such requested work or
services will be deemed to form part of the Work under this Agreement and/or
Services under the [**] Agreement, as applicable.  If, when operating under this clause, [**]
requests Digimarc to cease or reduce the scope of the Work and/or Services 

 

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

 

 

remaining to be completed, [**] payment
obligations under clauses 3.12.1, 3.14 or 3.18, as applicable, will still be
due.  Sums due under such obligations
will be invoiced monthly in arrears.

 

3.17.1                  If (i) [**] has accepted the Offer for Phase [**]
by Digimarc with notice by November 30, [**], or (ii) [**] does not
terminate [**] before 30 November [**], then subject always to clause
3.17.2, the total amount which [**] will be liable to pay Digimarc for or in
connection with Phase [**] and/or for [**] Phase [**] will not be less than
[**] unless [**] terminates this Agreement under clause 15 before Digimarc
completes the Phase [**] Work or terminates [**]

 

3.17.2                  [**] obligation to pay the
[**] is subject to Digimarc having performed all of its obligations under this
Agreement and [**] relating to the performance of Work and Services which
Digimarc is obliged to perform in connection with Phase [**] Work and [**]
Phase [**].

 

3.18                           If by November 30, [**] has not accepted an Offer
by Digimarc for Phase [**] with notice and has provided notice of termination
of the [**] Agreement [**], then, subject to clause 3.16, [**] Sole liability
to Digimarc relative to Phase [**] and [**] Phase [**] is that [**] shall owe
Digimarc an amount equal to [**] months of Work and Services from November 30,
[**] through February 28, [**].  The
amount of such payment shall be calculated in accordance with clause 3.15.

 

3.19.                        For greater certainty, it is confirmed and agreed that
[**], subject to previously agreed upon Statements of Work under this Agreement
and [**] Plans (as such expression is defined in the [**] Agreement), and in
accordance with the procedures and timescales set out in clause [**] is
entitled from time to time a) to determine in what proportion the [**] referred
to in clause 3.12.1 is to be allocated between Work and/or Services to be
performed as Phase [**] Work and/or [**] Phase [**] Services; and b) to
determine in what proportion the [**] referred to in clause 3.17.1 is to be
allocated between Work and/or Services to be performed as Phase [**] Work
and/or [**] Phase [**] Services (if any).

 

3.20                           Unless authorized in this Agreement, [**] or otherwise
agreed in writing by [**], the [**] under this Agreement and the [**] Agreement
shall not be greater than an amount equal to the amount listed in Schedule X
and the [**] under this Agreement and the [**] Agreement shall not be greater
than an amount equal to the amount listed in Schedule X.  Such [**] limitations of this clause 3.20 do
not apply to costs or charges identified in clauses 3.8, 3.21, 6.5, 8.6 and 8.8
of this Agreement or in clauses 3.6, 6.5, 8.2, 15.7 and 19 of the [**]
Agreement.  The [**] limitations of this
clause may, in some cases, not apply to costs or charges identified in clauses
5.3 and 13.1 of this Agreement or in clauses 5.3 and 13.1 of the [**]
Agreement.

 

3.21                           Any equipment or software [**] purchased for over [**]
as an Allowable Cost under Schedule I for [**] shall be owned by the [**] or
another entity designated by the 

 

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

 

 

DLA Contract Authority and shall be held in
trust by Digimarc.  Digimarc will ensure
that [**] or the designated entity is identified on such [**] and [**] as the
owner.  Unless such [**] or [**] needs to
be used in a manner that it was not designed for and the [**] is made aware of
such need, Digimarc will, at its own risk, use such [**] or [**] in a
reasonably careful and proper manner and in accordance with all operating
instructions. In any event such [**] and [**] shall be used by Digimarc solely
for the provision of the Work under this Agreement or Services under the [**]
Agreement.  Upon termination of this
Agreement and at [**] request, Digimarc will promptly deliver such [**] and
[**] to the [**] or designated entity, at no charge to Digimarc.   Such [**] and [**] shall be returned in the
same condition as originally received by Digimarc, reasonable wear and tear
excepted.  If, however, the [**] or [**]
needs to be used in a manner that it was not designed for and the [**] is made
aware of such need, then such [**] and [**] will be returned “as is.” [**] will
reimburse Digimarc for any unrecovered costs of such [**] or [**] (i.e. costs
not recovered through depreciation charges), subject to receipt of a correct
and properly due invoice.

 

5.              RESPONSIBILITIES OF [**]

 

Clause 5.3 shall be replaced
as follows:

 

5.3                                 If [**] is delayed in complying with any of its
obligations under clauses 5.1 or 5.2 for any reason not attributable to
Digimarc, and such delay will cause a delay in the completion and delivery by
Digimarc of any Deliverable, then Digimarc shall reasonably promptly advise the
DLA Project Manager of the impact of the delay. 
The time for completion of the Deliverable and all subsequent
Deliverables dependent thereon, will then be extended automatically by one day
for each day of delay by [**] or such other period as may be agreed in writing
between the parties’ respective Contract Authorities.  If Digimarc suffers increased costs by reason
of such delay, other than a delay due to a force majeure event, such costs
reasonably and necessarily incurred by Digimarc shall be borne by [**].  Digimarc shall make every reasonable effort
to reassign staff and otherwise to mitigate the increased costs associated with
such a delay.  If the delay is due to a force
majeure event, such costs shall be borne equally by [**] and Digimarc.  If any additional costs to be borne by [**]
would lead to the [**] otherwise contemplated by this Agreement being exceeded,
Digimarc will reasonably promptly notify the DLA Contract Authority of such and
[**] will either approve of costs beyond the [**] and/or request a change to
the Work under clause 6.  Such a change
request under clause 6 will ask Digimarc to stay within the [**] and to describe
the effect the costs and delay under this clause 5.3 will have on the
applicable [**] Plans or Statements of Work. If after Digimarc describes the
effect the costs and delay under this clause 5.3 will have on the applicable
[**] Plans or Statements of Work, the DLA Contract Authority requests such a
change, Digimarc will implement such change in [**] Plans and Statements of
Work so that Digimarc remains within the [**] limitations.  This clause 5.3 sets forth Digimarc’s only
remedy for a delay by [**] in complying with any such obligation.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
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6.                                      CHANGES TO THE WORK

 

Clause 6 shall be replaced as follows:

 

6.1                                 [**] or Digimarc may request, a change to the
Statements of Work or the [**] Plans (as defined in the [**] Agreement) from
time to time by submitting a request in writing to the other party’s Project
Manager. Such changes directed by [**] may include allocating development
personnel other than the Project Manager to provide Services under the [**]
Agreement in accordance with clause 4.6 of the [**] Agreement.  Any such request will indicate the nature of
the new work to be performed, and indicate the desired number and optimum skill
set of the personnel to be redirected, in a form sufficient for Digimarc to
investigate the effect of the change.

 

6.2                                 On making such a change request or within three (3) Business
Days after receiving a change request from the DLA Project Manager, Digimarc
shall inform the DLA Project Manager of the amount, if any, which Digimarc
intends to invoice [**] to investigate the effect the change will have on the
applicable [**] Plans or Statements of Work and the [**] for the applicable
[**] Plans or Statements of Work.

 

6.3                                 Within ten (10) Business Days after receiving the
written authorization of the DLA Project Manager to conduct the investigation
of a change, or such longer period as may be authorized by the DLA Project
Manager, Digimarc shall report to the DLA Project Manager, in writing, on the
results of the investigation.

 

6.4                                 Within ten (10) Business Days after the DLA
Project Manager receives the report, the DLA Contract Authority shall, on
behalf of [**], notify Digimarc whether or not [**] authorizes the change.  Any authorized change will include an amendment
to the Statement of Work and the associated [**] Plans to properly state the
new obligations of Digimarc.

 

6.5                                 Digimarc shall not implement any change to the Work
until the change is authorized in writing by the DLA Contract Authority on
behalf of [**].  Digimarc shall implement
any change directed and authorized by [**] pursuant to clause 6.4 provided: i)
the change is technically feasible and is within the capabilities of Digimarc;
ii) the costs associated with such change identified by Digimarc in its
investigation report and approved by [**] as part of the approval of the change
are borne by [**] (such costs may be over and above the Phase [**] or the Phase
[**]); and iii) Digimarc is given commensurate relief in the manner and to the
extent as specified in the authorized change from prior commitments under the
Statements of Work and/or the [**] Plans.

 

6.6                                 Pending receipt of a written authorization from the
DLA Contract Authority, on behalf of [**], Digimarc shall proceed with the Work
in accordance with this Agreement.

 

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

 

 

8.                                      INTELLECTUAL PROPERTY MATTERS

 

Clause 8.4, 8.6, 8.8 and 8.9 shall be replaced
as follows:

 

8.4                                 Digimarc hereby grants to [**], effective upon the
date specified in clause 8.5, the [**] the Digimarc Technology and the Project
Technology, and all Improvements thereto, and the Technical Information
pertaining to the Digimarc Technology, the Project Technology and such
Improvements, and to sublicense the use of the Digimarc Technology and the
Project Technology and such Improvements and Technical Information to other
Persons, for the purposes of [**] the System and any such component thereof,
and making the System and any component available to others solely for the
[**]  On the effective date of the grant
of the license referred to above, [**] copy and use the Escrowed Materials for
the purpose of exercising all rights granted under the license and the Escrow
Agent shall be deemed authorized to release the Escrowed Materials to
[**].  The expressions [**] as used in
this clause 8.4, shall be deemed to refer to [**]  The [**] by clause 8.4 applies to Digimarc Technology
and the Project Technology and all Improvements thereto, and the Technical
Information pertaining to the Digimarc Technology, the Project Technology and
such Improvements existing on or before December 31, [**].  Digimarc acknowledges that in accordance with
clause 8.5, the [**] herein is effective as of 15 November [**].

 

8.6                                 Digimarc hereby
grants to [**], effective on the date specified in this clause, the [**] the
Digimarc Technology and the Project Technology and all Improvements thereto,
and the Technical Information pertaining to the Digimarc Technology, the
Project Technology and such Improvements, and to sublicense the use of the
Digimarc Technology, the Project Technology and such Improvements and Technical
Information to other Persons, for the sole purpose of [**], solely for [**]  This license shall take effect on written
request by the DLA Contract Authority at any time following the later of the
date on which the license referred to in 8.4 takes effect and the date on which
[**] pays Digimarc [**].  The license of
clause 8.6 applies to Digimarc Technology and the Project Technology and all
Improvements thereto, and the Technical Information pertaining to the Digimarc
Technology, the Project Technology and such Improvements existing on or before December 31,
[**].

 

8.8                                 From time to
time during the Term, on no less than five (5) Business Days prior written
notice by the DLA Project Manager, Digimarc shall, at Digimarc’s premises,
present representatives of the Escrow Agent with all the material, in any form,
in Digimarc’s possession or control which contains or describes the Technical
Information pertaining to the Digimarc Technology and the Project
Technology.  The representatives may
identify any or all of such material and Digimarc shall arrange, at the expense
of [**], for a complete, accurate and up-to-date copy of the selected material
to be made and sent to the Escrow Agent within five (5) Business Days of
the selection being made for deposit under the terms of the Escrow Agreement.

 

8.9                                 If so requested by the [**], within twenty (20)
Business Days after the end of each calendar quarter during each Phase,
Digimarc shall update the Escrowed Material in the 

 

** CONFIDENTIAL PORTION OMITTED AND
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possession of the Escrow
Agent to reflect all Improvements to the CDS Technology and [**] Updates made
by or at the request of Digimarc during that quarter.

 

Add new clauses to clause 8
as follows:

 

8.17                           Digimarc hereby confirms and agrees that a) the [**]
to [**] by clause 8.4 applies, effective upon the date specified in clause
8.18, to Digimarc Technology and the Project Technology and all Improvements
thereto, and the Technical Information pertaining to the Digimarc Technology,
the Project Technology and such Improvements, created between January 1,
[**] and the earlier of the completion of the Phase [**] Work and the
termination of this Agreement; and b) the expressions [**] as used in clause
8.4, shall be deemed to include [**]

 

8.18                           The [**]
described in clause 8.17 shall take effect in respect of each specific item of
Digimarc Technology, Project Technology or Improvements thereto, or Technical
Information pertaining to the Digimarc Technology, the Project Technology or
such Improvements created between 1 January, [**] and the earlier of the
completion of the Phase [**] Work and the termination of this Agreement on the
earliest of:

 

a)                                      the date on
which both the [**] referred to in clause 8.4 takes effect and [**] pays
Digimarc all sums properly due to Digimarc under this Agreement for the
development of that specific item;

 

b)                                     sixty (60) days following the effective date of
termination of this Agreement by [**] in accordance with the provisions of
clause 15.2 (a), (b), (d) or (e) unless Digimarc demonstrates within
such sixty (60) day period that, notwithstanding the occurrence of the events
giving rise to the termination, Digimarc is willing and able to comply with its
obligations under the Agreement; or

 

c)                                      the effective date of termination of this Agreement by
[**] in accordance with the provisions of clauses 15.2(c), 15.2 (f), 15.2(g) or
15.3.

 

8.19                           Digimarc hereby
confirms and agrees that any [**] to [**] pursuant to clause 8.6 applies,
without any additional payments over and above that in clauses 8.6 and 8.18, to
Digimarc Technology and the Project Technology and all Improvements thereto,
and the Technical Information pertaining to the Digimarc Technology, the
Project Technology and such Improvements created between January 1, [**]
and the earlier of the completion of the Phase [**] Work and the termination of
this Agreement. The [**] confirmed by this clause 8.19 is effective when both
the [**] under clauses 8.6 and 8.17 take effect.

 

8.20                           Notwithstanding
any other provision of this Agreement to the contrary, [**] right to acquire
the [**] described in clause 8.17 by payments as described in clause 8.18(a) shall
survive termination of this Agreement by [**] in accordance with the provisions
of clause 15.2 (a), (b), (d) or (e) and be exercisable at any time
during a period of sixty (60) days following such termination.

 

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

 

 

10.                               REPRESENTATIONS AND WARRANTIES OF
DIGIMARC

 

Sub-clause (g) of
clause 10.1 shall be replaced as follows:

 

(g)                                 for greater certainty, with the exception of the [**],
neither the Project Technology, the Digimarc Technology or Improvements thereon
or the Technical Information pertaining to the Project Technology, the Digimarc
Technology or such Improvements infringe any Intellectual Property Right of any
person.

 

11.                               REPRESENTATIONS AND WARRANTIES OF THE
[**]

 

Sub-clauses (b) and (d) of
clause 11.1 shall be replaced as follows:

 

(b)                                 this Agreement when executed and delivered by [**]
shall constitute a valid, binding and enforceable obligation of [**].  With regard to the obligations under the
Third Amendment, this representation will be subject to clause 2.25 of the
Third Amendment;

 

(d)                                 from and after the date on
which [**] gets access to the Escrowed Materials (the “Release Date”) as provided
by clauses 8.4, 8.6, 8.17 and 8.19 above until the last day of the Term, every
[**]which [**] develops, permits, or causes to be developed using the Escrowed
Materials for incorporation into any Device will be capable of [**] with the
same or better performance [**] than the version of the [**] last accepted by
[**] possessed on the Release Date on which [**] gets access to the Escrowed
Materials.

 

12.                               CONFIDENTIALITY

 

Clauses 12.4, 12.7, 12.9 and
12.11 shall be replaced as follows:

 

12.4                           A Recipient
may, on a need to know basis, and only for the purposes described in clause
12.1, give the other party’s Confidential Information to the Recipient’s
employees, authorized subcontractors or representatives provided that such
employee, subcontractor or representative shall have entered into a
non-disclosure agreement in respect of such Confidential Information in favour
of the Discloser on terms requiring at least [**] years of confidentiality from
the date of disclosure of such Confidential Information but that are in all
other respects materially similar to the provisions of this clause 12.  For greater certainty, [**] representatives
shall include the DLA Contract Authority, the DLA Project Manager and all
representatives of members of [**].

 

12.7                           The [**]
Technology, the Other [**] Technology, and solely for the purposes of clause 12
the [**] insofar as it pertains to [**], and the Technical Information which
pertains solely to the [**] Technology and the Other [**] Technology and those
aspects of the [**], including any [**] which is or may be used [**] by any
Licensed [**], shall 

 

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be
deemed to be the Confidential Information of [**].  Digimarc may disclose such Confidential
Information to a person to whom Digimarc has granted a license pursuant to
clause 9.2 or 9.3 but only if:

 

a)                                      Digimarc can demonstrate to the reasonable
satisfaction of [**] that disclosure is necessary to enable Digimarc to grant the
license under clause 9.2 or 9.3; and

 

b)                                     such person
enters into a non-disclosure agreement in respect of such Confidential
Information in favour of [**] on terms requiring at least [**] years of
confidentiality from the date of disclosure of such Confidential Information
but that are in all other respects materially similar to the provisions of this
clause 12.

 

12.9                           [**] shall not
reverse-engineer, disassemble, or decompile any Digimarc software forming part
of the CDS, [**] (except to the extent that any such activity is reasonably
necessary to permit [**] to exercise its licence rights under clauses 8.4, 8.6,
8.17 and 8.19 of this Agreement or [**] right to do so may not be contractually
restricted under applicable law), and shall contractually ensure that any other
Person to whom [**] provides [**] shall be similarly obliged.

 

12.11                     General attributes of the
CDS may be disclosed in connection with promotion of the CDS to the [**], and
to customers or prospects in related markets; information relating to the [**]
Technology and the [**] may be disclosed to [**] and vendors of [**] subject to
a nondisclosure agreement on terms requiring at least [**] years of
confidentiality from the date of disclosure of such Confidential Information
but that are in all other respects materially similar to the provisions of this
clause 12, but in all such cases Digimarc shall not disclose any information
relating to the [**].  The existence and
terms of this Agreement may be disclosed to the parties’ professional advisors,
to members of the [**], and to Digimarc’s present shareholders, institutional
and corporate investors, and commercial and investment bankers, who have a
reasonable need to know such information subject to a non-disclosure agreement.

 

13.                               AUDIT AND INSPECTION

 

Clause 13.1 shall be replaced as follows:

 

13.1                           [**], or its
duly authorised representatives, may from time to time, without notice, at its
own expense, conduct an audit or inspection during normal business hours to
verify Digimarc’s compliance with its obligations under this Agreement.  Digimarc shall facilitate such audit
activities by providing access to its premises, as well as any books, records,
and other information relating to this Agreement and the Work as may be
reasonably requested by [**].  [**] shall
promptly advise Digimarc in writing of the results of any audit.  If [**] exercises this right more frequently
than twice in each calendar year, [**] shall reimburse Digimarc’s reasonable
costs related thereto which costs are in addition to the [**] otherwise
contemplated by this Agreement except in the 

 

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case
where the exercise of such right is reasonably required to follow-up on a
non-compliance detected during a previous audit or inspection.

 

14.                               DISPUTE RESOLUTION

 

Clause 14.2 shall be
replaced as follows:

 

14.2                           Unless
otherwise agreed between the parties or unless the subject matter of the
dispute resolution proceedings is a party’s right to terminate this Agreement,
the Work shall continue during the arbitration proceedings and payments due to
Digimarc shall not be withheld on account of such proceedings unless that
particular Work or payment is the subject matter of the proceedings.  Notwithstanding the foregoing, [**] may at
its sole discretion instruct Digimarc to continue the performance of that Work,
and Digimarc shall act in accordance with those instructions, subject to
payment in accordance with this Agreement.

 

15.                               TERM AND TERMINATION

 

Clauses 15.6 and 15.7 shall
be replaced as follows:

 

15.6                           Termination of
this Agreement by [**] for any reason in accordance with the provisions of this
clause 15 shall not affect any license granted by Digimarc pursuant to clauses
2.8, 2.9, 8.4, 8.6, 8.17 or 8.19 above.

 

15.7                           On termination of this Agreement by Digimarc or [**]
for any reason, Digimarc shall within fifteen (15) Business Days deliver to the
Escrow Agent all Work in progress done up to the effective date of termination,
including all Technical Information relating to such Work, and all Technical
Information pertaining to the Digimarc Technology or the Project Technology
which has not previously been deposited with the Escrow Agent and issue to the
DLA Contract Authority a certificate signed by an officer of Digimarc that it
has fully complied with this obligation. 
Digimarc shall be entitled to charge [**] for its reasonable costs in
providing such assistance calculated in accordance with the Allowable Costs.

 

18.                               NOTICES

 

Clause 18.2 shall be
replaced as follows:

 

18.2                           Any notice to
Digimarc shall be sent to both of, and any notice from Digimarc shall be sent
by either:

 

	
  Mr. Scott Carr

  	
  or

  	
  Mr. William Y. Conwell

  
	
  Vice President and General Manager,

  	
   

  	
   

  
	
  Government and Bank Programs

  	
   

  	
  Vice President, Intellectual Property

  
	
  Digimarc Corporation

  	
   

  	
  Digimarc Corporation

  
	
  19801 SW 72nd Avenue

  	
   

  	
  19801 SW 72nd Avenue

  

 

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  Suite 100

  	
   

  	
  Suite 100

  
	
  Tualatin, Oregon 97062 USA

  	
   

  	
  Tualatin, Oregon 97062 USA

  
	
  FAX: (503) 885-9880

  	
   

  	
  FAX: (503) 885-9880

  

 

19.                               MISCELLANEOUS PROVISIONS

 

Clause 19.15 shall be
replaced as follows:

 

19.15                     Survival.                                                All clauses of this Agreement which expressly or by
implication are intended to survive the termination of this Agreement will do
so and, for greater certainty and notwithstanding any provision in this
Agreement to the contrary, the provisions set out in clauses 2.5, 3.6-3.10
inclusive, 3.12-3.18 inclusive, 3.20, 3.21, 8.4, 8.5, 8.6, 8.8, 8.11-8.20
inclusive, 9.1, 9.2, 9.3, 9.7, 10, 11, 12, 13, 14, 16, 18 and 19 of this
Agreement shall survive termination of this Agreement by either party for any
reason.

 

IN WITNESS WHEREOF, this Third Amendment has been executed and delivered
by the parties hereto as of the date of the last signature below.

 

	
  [**]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Signature

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
  Title:

  
	
  Date

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  DIGIMARC CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  
	
  Name: Paul Gifford

  	
   

  	
   

  
	
  Title: President

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  

 

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AMENDMENT
NUMBER FOUR TO THE COUNTERFEIT DETERRENCE SYSTEM

DEVELOPMENT AND LICENSE AGREEMENT

 

This is the fourth Amendment to
the Counterfeit Deterrence System Development and License Agreement (the “Fourth
Amendment”) made by and between

 

DIGIMARC
CORPORATION, a corporation incorporated under the laws of Delaware and having its
head office at 9405 SW Gemini Drive, Beaverton, Oregon, U.S.A.  97008 (“Digimarc”)

 

and

 

[**]

 

Recitals

 

Effective 1 January [**], the
above-identified parties entered into an agreement entitled the “Counterfeit
Deterrence System Development and License Agreement” (hereinafter, “the
Agreement”).

 

On 14 March [**], 28 December [**]
and 1 January [**], the parties entered into Amendments to the Agreement
(hereinafter, First, Second and Third Amendments).

 

In consideration of the promises and
covenants set out in this Fourth Amendment, in the Agreement, in the First,
Second and Third Amendments and other good and valuable consideration, the
receipt and adequacy of which are acknowledged by each of the parties, the
parties agree that the Agreement as previously amended will be further amended
with effect from 1 January [**], with the exception of Schedule W,
effective from 1 January [**]:

 

1.                                      DEFINITIONS AND
PRINCIPLES OF INTERPRETATION

 

The following
definitions in clause 1.1 shall be deleted and replaced as follows:

 

“[**]
Technology” means that technology, if any, from the technology described in Schedule
“F” in respect of which from time to time during Phases [**] of this Agreement
and Phases [**] as defined in the [**] Agreement after discussion between the
CDS Project Director and the Digimarc Project Director, [**] offers, and
Digimarc accepts in writing, a [**] on the [**] in clause 8.2 to use, design or
implement the CDS and all Intellectual Property Rights in that [**];

 

“Digimarc
Contract Authority” means Digimarc’s President or the President, Digimarc Watermarking
Solutions;

 

“Improvement” means any change in the CDS
Technology or the Technical Information made by or at the direction of Digimarc
after [**] which enhances, whether by

 

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SECURITIES AND EXCHANGE COMMISSION.

 

 

improvement, enhancement,
correction, addition or otherwise, the properties, characteristics or manufacture
of the CDS including, for greater certainty, the [**] and the [**], and any
change to the CDS, the CDS Technology, the [**] Technology and/or the [**] made
by or at the direction of Digimarc or any [**] in connection with the [**] of
the CDS by any [**] that Digimarc has rights in, including customization,
improvements, enhancements, corrections, and changes to the [**] so that it can
interface properly to a [**];

 

“Phase” means Phase [**] of this Agreement
as the case requires, adjusted if required by any period added pursuant to
clause 5.3 or other changes to the Services authorized pursuant to clause 6
below;

 

“Security
Purpose” means the purpose of [**]; and

 

“Statement of
Work”
means the Statement of Work set out in Schedules B, C, D, V or W as applicable,
or the Statements of Work developed for Phases [**] in accordance with the
Planning Process set forth in Section 2.

 

The following
terms in clause 1.1 shall be renamed and redefined as follows:

 

Delete “Digimarc Project Manager” and replace with
“Digimarc Project  Director” means the project director
appointed by the Digimarc Contract Authority in accordance with clause 4.2.;

 

Delete “DLA Contract Authority” and replace with “[**]  Contract
Authority” means the Contract Authority designated by [**] in
writing to Digimarc from time to time;

 

Delete “DLA Project Manager” and replace with “[**]  Project
Director” means the project director appointed by the [**] Contract
Authority from time to time on notice to the Digimarc Contract Authority who shall
also serve as the person primarily responsible to conduct inspections on behalf
of [**];

 

Delete “Project Manager” and replace with “Project Director” means either the [**] or
Digimarc Project Director, as the context requires;

 

Delete “[**]” and replace with “[**]” means a committee of representatives
from various [**] called “[**]”, previously known as “[**]”; and

 

Delete “Work” and replace with “Services” means the services required to
be performed by Digimarc as authorized by [**] in the Planning Process set out
in Section 2.  Digimarc shall
provide all development, maintenance and [**] services related to the CDS,
including (a) acting as [**]; (b) any tasks required to be performed
to complete and deliver the [**] (c) any task to be performed by Digimarc
for and any item to be delivered by Digimarc to [**] as such tasks and items
are identified in the [**] Plan for that [**];

 

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

 

 

and (d) other services
reasonably necessary to comply with its obligations under this Agreement.

 

Add new
definitions to clause 1.1 as follows:

 

“[**] means the [**] established by the
[**] Contract Authority and that is responsible for the oversight of the
overall relationship between [**] and Digimarc and for the key day-to-day
contract management;

 

[**]

 

“Dependancy” means any of the following
dependencies of Digimarc on [**] and such [**] employees, agents,
representatives and subcontractors:

(a)                                  performing a task upon which
Digimarc’s performance of any part of the Services is dependent;

(b)                                 timely providing to Digimarc the
relevant technical information, [**];

(c)                                  timely returning/negotiating [**],
documents of understanding as necessary to protect Digimarc or [**] intellectual
property;

(d)                                 having attendance of the relevant
[**] employees or consultants at key briefings and review meetings;

(e)                                  maintaining/not materially changing
planned [**];

(f)                                    not materially altering their [**];
or

(g)                                 such dependencies as are expressly
identified in the [**] may be revised;

 

“[**]  Agreement”
means that [**] Agreement effective as of 1 January [**] between [**] and
Digimarc;

 

“[**]  Personnel”
means any officer, employee, permitted agent or subcontractor assigned by
Digimarc to perform any part of the Services required under a [**]

 

“[**]

 

“[**]  Problem
Report” means a report of a [**] problem addressing as many of the
topics specified in Schedule “BB” as are relevant to a reasonable understanding
of the problem;

 

“Key [**]  Personnel”
means those [**] Personnel identified in Schedule AA;

 

“Phase  [**]”
means the period from 1 January 2004 to 31 December 2008;

 

“Phase  [**]”
means the period from 1 January 2009 to 31 December 2011;

 

“Phase  [**]”
means the period from 1 January 2012 to 31 December 2014;

 

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

 

 

“Planning
Process” means the process set forth in Section 2 of this Agreement by
which [**] and Digimarc will develop Program Work Plans, Statements of Work for
Phases [**] and [**] Plans;

 

“[**]” means the [**]; and

 

“Program Work
Plan”
means a two-year plan developed pursuant to Section 2.26 with an estimated
budget for each of the two years, approved tasks for the first year and
anticipated tasks for the second year.

 

Section 1.2                                   Interpretation

 

Clause 1.2.5 shall be replaced
with:

 

	
  1.2.5.

  	
   

  	
  unless otherwise specified,
  the order of precedence for interpreting this Agreement shall be:

  
	
   

  	
   

  	
   

  
	
  a)

  	
   

  	
  the Amendments to the
  Agreement with the Fourth Amendment supplementing the Third Amendment and the
  Third Amendment supplementing the Second Amendment and the Second Amendment
  supplementing the First Amendment;

  
	
   

  	
   

  	
   

  
	
  b)

  	
   

  	
  the other terms of this
  Agreement, excluding Schedules;

  
	
   

  	
   

  	
   

  
	
  c)

  	
   

  	
  the Schedules excluding the
  [**] Plans;

  
	
   

  	
   

  	
   

  
	
  d)

  	
   

  	
  as between the delivery
  schedules forming part of a Statement of Work, and other provisions of such
  Statement of Work, the delivery schedules shall take precedence;

  
	
   

  	
   

  	
   

  
	
  e)

  	
   

  	
  the [**] Plans except that as
  between the delivery schedules, if any, forming part of a [**] Plan and other
  provisions of such plan, the delivery schedules shall take precedence.

  

 

Replace clause 1.2.9 as follows:

 

(a)  When a definition or
clause in this Agreement is described in the Fourth Amendment as a replacement,
the definition or clause in this Fourth Amendment replaces the previous
definition or clause in the Agreement. 
When a new definition or clause is presented in this Fourth Amendment,
the new definition or clause is considered added to and incorporated into the
Agreement.

 

(b)  The changes in this
Fourth Amendment are referenced by the clauses as they appear in the Agreement
and such changes shall not apply to the interpretation of any part of the
Agreement relating to any events, acts or omissions occurring prior

 

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

 

 

to 1 January [**] unless
such events, acts or omissions are relevant to any event, act or omission
occurring on and after that date.  Unless
expressly modified, superseded or replaced by this Fourth Amendment, each term
of the Agreement as amended by the First, Second or Third Amendment remains in
full force and effect.

 

1.3                               Applicable Law

 

Clause 1.3 shall be replaced as
follows:

 

1.3                                 This Agreement and all amendments
thereto shall be construed in accordance with the laws of England to the
exclusion of its rules of conflicts of laws.

 

1.4                               Schedules

 

In clause 1.4,

 

Replace Schedules G, H, I, K-1,
K-2, L-1, L-2, N, S and W, as attached; and

 

Add the following new schedules:

Schedule Y, described as [**]
Plan;

Schedule Z, described as [**]
Team;

Schedule AA, described as [**]
Personnel;

Schedule BB, described as [**]
Problem Report; and

Schedule CC, described as
Project Indicators.

 

The parties agree that the
above-identified replacement document Schedules G, H, I, K-1, K-2, L-1, L-2, N,
S and W supersede the corresponding documents referenced in clause 1.4 of the
Agreement and such replacement Schedules together with the new Schedules Y, Z,
AA, BB and CC are, by this reference, made an integral part of the Agreement.

 

2.                                      SCOPE AND DURATION
OF THE SERVICES

 

Clause 2.15 shall be replaced as follows:

 

2.15                          Digimarc shall obtain at its own
expense all licenses or permits required to be obtained from the Government of
the United States in order for Digimarc to comply with its obligations under
this Agreement.  [**], [**]

 

Add new clauses to clause 2 as
follows:

 

2.26                          [**] and Digimarc have agreed that
Digimarc shall provide the Services for Phases [**] as stated in the Statements
of Work and [**] Plans developed in accordance

 

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

 

 

with the Planning Process set
forth herein.  The [**] and Digimarc shall
hold planning meetings in each June and December during the
then-current phase to review the scope and status of current and planned
projects under the Statement of Work and the current and proposed [**] Plans,
relative to the timing schedule and expenditures and budgets and to establish
the Statement of Work and revised or new [**] Plans for subsequent
periods.  Prior to these meetings, the
[**] and Digimarc shall exchange such information as is reasonably necessary to
enable the parties to conduct an informed evaluation.  In addition, the [**] and Digimarc shall meet
approximately two months in advance of each planning meeting to discuss [**]
and similar issues related to the development, [**] the CDS.  At this preparation meeting the parties shall
also discuss the project indicators, in accordance with the process set out in
Schedule CC.  The Statement of Work and
revised or new [**] Plans for the next calendar year shall be finalized at the June meeting,
except that the Statement of Work and [**] Plans for [**] and the [**] for [**]
shall be finalized by May 12, [**]. 
The [**] and tentative Statement of Work and [**] Plans for the year
following the next year shall be set at the December meeting.  Services may be added and/or priorities
changed, and resources and priorities may be shifted between tasks following a
process to be agreed to between the [**] and Digimarc.  Digimarc shall not exceed the [**] for a
given calendar year without the written approval of the [**].  At each planning meeting, the planned tasks
and associated estimated budget shall be set for an additional six months to
create an updated Program Work Plan.  The
[**] and Digimarc shall present the agreed-upon Statement of Work and revised
or new [**] Plans to the [**] for approval. 
The [**] Contract Authority shall notify Digimarc in writing of the [**]
approval of the Statement of Work and revised or new [**] Plans.

 

2.27                           The parties shall, unless otherwise
agreed, prepare a specific [**] plan for a [**] following the [**] of Schedule
Y.  Digimarc undertakes and represents
that each [**] Plan and every revision thereto prepared by Digimarc shall be
prepared with all due care and diligence and that as of the date of the
applicable June or December planning meeting, Digimarc shall not be
aware of any matters within its reasonable control which might or will
adversely affect its ability to perform the Services described in that [**]
Plan or revised [**] Plan and other existing approved [**] Plans.

 

2.28                           In the event that the [**] and Digimarc
are unable to mutually agree on the pricing of a given task(s) proposed in a
Statement of Work or [**] Plan, the matter will be escalated as follows:  (1) to the [**] Project Director and the
President of Digimarc Watermarking Solutions, (2) to the [**] and the
President of Digimarc Corporation, and (3) ultimately to an agreed upon
third party expert who is qualified by education and training to pass upon the
particular matter to be decided.  The
dispute resolution process provided for in this clause 2.28 is
non-binding.  If the parties do not
accept the expert’s decision, either party may initiate the arbitration process
in accordance with Clause 14.

 

2.29  Phase [**] shall commence on 1 January 2009
unless [**] notifies Digimarc in writing on or before 31 December 2007
that it is not exercising its option for Phase [**] or unless Phase [**] is
terminated prior to 31 December 2008. 
Assuming that [**] exercises its option for Phase [**] Phase [**] shall
commence on 1 January 2012 unless

 

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

 

 

[**] notifies Digimarc in
writing on or before 31 December 2010 that it is not exercising its option
for Phase [**] or unless Phase [**] is terminated prior to 31 December 2011.

 

2.30  [**] may terminate for convenience without
cause the Services being performed in any of Phases [**] if and only if [**]
determines to cease development and [**] the CDS.  Termination shall be effective on the last
day of the calendar year in which [**] gives written notice of such termination
to Digimarc, provided that Digimarc receives that notice on or before June 30
of that year.

 

2.31  In the event of a termination for convenience
without cause, [**] shall pay Digimarc all of its actual and reasonable
termination costs, including third party contract termination costs, employee
re-deployment or termination costs, undepreciated capital costs of assets
purchased exclusively for the project, and accounting, legal and travel costs
associated with termination and termination negotiation (“Termination Costs”).  Actual and reasonable termination costs shall
be capped [**].  Digimarc shall use
commercially reasonable efforts to mitigate all Termination Costs.  [**] shall also pay Digimarc an amount equal
to [**].  [**] exercises its termination
for convenience without cause option during the last year of a phase, the “remaining
years” of that phase will mean the number of years in the follow-on phase.

 

2.32.                        Digimarc agrees to make Key [**]
Personnel and/or other suitably skilled and experienced personnel available as
mutually agreed between [**] and Digimarc to provide assistance as part of any
termination transition plan that is agreed to three months prior to the date of
termination of Services.  Alternatively,
at the request of the [**] Project Director, Digimarc agrees for a period of up
to six months after termination of Services for any reason except for breach by
[**] under clause 15.3 to make Key [**] Personnel and/or other suitably skilled
and experienced personnel, at Digimarc’s reasonable discretion and acceptable
to [**] available to render to [**] or any third party designated by [**], all
reasonable assistance. [**] agrees to pay for such assistance provided prior to
the termination date at the then-current DLA Labor Rates and for such
assistance provided after the termination date at the then-current labor rates
charged to Digimarc Watermarking Solutions’s most favored customers, excluding
the [**] and inter-company transfers, and for Expenses as allowed in accordance
with the Allowable Costs.

 

2.33                           The Term will continue
notwithstanding that [**] may elect not to exercise its option for Phase [**]
or Phase [**] or that it may terminate for convenience without cause the
Services being provided by Digimarc under Phases [**]

 

2.34                           This Fourth Amendment is conditional
upon execution of an Amendment to the [**] between the [**] and the requisite
[**].  After execution of this Fourth
Amendment by the [**] and Digimarc, the [**] shall proceed with reasonable
diligence to have the Amendment to the [**] fully executed.  When the Amendment to the [**] is fully
executed, the [**] shall so notify Digimarc that the condition of this clause
2.34 has been removed from this Fourth Amendment.

 

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

 

 

3.                                      PRICE AND PAYMENT

 

Replace clause 3.7 as follows:

 

3.7                                 For a period commencing on the
Effective Date and ending on the date [**] following the last date on which
Digimarc issues an invoice to [**] for Allowable Costs, Digimarc shall maintain
proper, up-to-date, accurate and complete books, records and other
documentation substantiating the Allowable Costs invoiced under this Agreement
including time sheets showing the hours spent on each task which forms part of
the Services and receipts for all Expenses (as defined in Schedule I).  Digimarc shall produce such books, records
and documentation to [**] or its representatives for inspection and copying at
Digimarc’s premises (with the right to take such copies from Digimarc’s
premises as long as Digimarc is notified in writing what copies are removed
from Digimarc’s premises and the copies are handled by [**] or its
representative in accordance with [**] confidentiality obligations under clause
12) at all reasonable times on request by [**] Project Director.

 

Add new clauses to clause 3 as
follows:

 

3.22                           Subject to the limits set out in
this Agreement and unless otherwise expressly set out herein, [**] shall
reimburse Digimarc for all the Allowable Costs reasonably and properly incurred
by Digimarc during each calendar month to perform the Phase [**] Services,
Phase [**] Services (if any), Phase [**] Services (if any) and other Services
authorized by [**] in writing.  Digimarc
shall invoice [**] monthly in arrears for such Allowable Costs.  Each invoice shall specify the Expenses
incurred and the time spent by the staff and sub-contractors of Digimarc in
performing the Services, including time spent by [**] Personnel, and shall give
a breakdown of the Allowable Costs, including a breakdown in respect of each
[**] Plan, in the form attached as Schedule S.

 

3.23                           If [**] terminates this Agreement in
accordance with Clause 15, Digimarc shall be reimbursed for all Services performed
through the date of termination and for any transition services provided after
the date of termination in accordance with Clause 2.32.  For greater certainty, [**] obligation to pay
the [**] for a given year (as determined in accordance with the Planning
Process) is subject to Digimarc having performed all of its obligations under
this Agreement relating to the performance of Services.

 

4.                                      PROJECT MANAGEMENT

 

Replace Section 4 as follows:

 

4.1                                 The [**] Project Director shall be
responsible for coordinating fulfillment by [**] of its obligations under this
Agreement including the provision of all the general information about [**]
that Digimarc may reasonably require in order to perform its obligations under
this Agreement and directing Digimarc in respect of prioritizing effort

 

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

 

 

and timing of Services in
relation to any [**] in accordance with the agreed upon [**] Plans and changes
thereto.  The [**] Project Director shall
have no authority to amend this Agreement, approve payments or approve or
accept Deliverables or other Services or proposals on behalf of [**], all of
which action shall be within the exclusive authority of [**].

 

4.2                                 Digimarc shall designate a
responsible individual with adequate authority and competence as the Digimarc
Project Director.  The Digimarc Project
Director shall be responsible for coordinating the performance of the Services
by Digimarc including serving as project leader and primary interface with [**]
but shall have no authority to agree to an amendment of this Agreement on
behalf of Digimarc which action shall be within the exclusive authority of the
Digimarc Contract Authority.

 

4.3                                 Either party’s Project Director or
Contract Authority may from time to time appoint one or more persons to
represent him or her on prior written notice to the other party’s Project
Director or Contract Authority.

 

4.4                                 Digimarc shall maintain throughout
Phases [**] (unless [**] terminates for convenience without cause the Services
being performed by Digimarc or elects not to exercise its option for Phases
[**]) the [**] Team as defined in Schedule Z comprising the Key [**] Personnel
and other persons who have the qualifications, expertise and experience
reasonably necessary to perform the tasks and roles of the members of the [**]
Team specified in Schedule Z.

 

4.5                                 Digimarc acknowledges that it is
important to [**] that [**] has the flexibility, at the discretion of [**] to
maximize the use of the combined resource pool of personnel allocated by
Digimarc to development and [**] Services. 
Accordingly, as directed by the [**] Project Director in accordance with
the procedures set out in clause 6, Digimarc shall: (a) increase the
number of [**] Personnel assigned by Digimarc to perform the Services beyond
the number of the [**] Team or to subsequently reduce the [**] Personnel back
to the level of the [**] Team; and/or (b) assign those [**] Personnel who
have the necessary skills to development Services or vice versa.

 

4.6                                 The names of the Key [**] Personnel
approved by the [**] Contract Authority are set out in Schedule AA.  If it becomes necessary for Digimarc to
provide substitute or add Key [**] Personnel for any reason, the [**] Contract
Authority must approve such Key [**] Personnel in advance, which approval shall
not be unreasonably withheld.

 

4.7                                 Digimarc shall not, without first
obtaining the written consent of the [**] Contract Authority, which consent
shall not be unreasonably withheld, remove or replace:

 

(a)                                  any employee of Digimarc or its
authorized subcontractors assigned to do any part of the Services if the
employee or subcontractor is critical to completion of the Services by Digimarc
in accordance with this Agreement or the applicable [**]

 

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

 

 

Plan.  “Critical”
means that the applicable Services cannot be completed by Digimarc without such
person; or

 

(b)                                 its Project Director.

 

4.8                                 Digimarc shall replace within a
reasonable time under the circumstances any of its employees or authorized
subcontractors engaged in fulfilling its obligations under this Agreement,
including its Project Director, whose removal is required by the [**] Contract
Authority, provided that the [**] Contract Authority specifies reasonable cause
for such removal in writing.  With
respect to [**] Personnel, Digimarc shall, at Digimarc’s cost, train the
replacement personnel about the job specifics so the replacement personnel
shall be able to perform the Services in a manner substantially equal to the
replaced [**] Personnel at the particular state the Services had reached when
the personnel change occurred.

 

4.9                                 Digimarc undertakes that all
personnel assigned to do the Services shall be employees of Digimarc unless it
provides reasonable prior written notice of its intent to use a specific
subcontractor.  The [**] Project Director
shall have the right to approve all subcontractors, which approval shall not be
unreasonably withheld.  Digimarc
undertakes that it shall obtain from each subcontractor prior to permitting
that subcontractor to do any part of the Services a written undertaking that
all Intellectual Property Rights in any work developed by that subcontractor
while providing the Services shall vest absolutely in Digimarc upon the date of
creation.  Digimarc shall remain
responsible for any obligations which are performed by a subcontractor and for
the conduct of subcontractors as if they were the acts or omissions of
Digimarc.

 

4.10                           Digimarc shall report on progress of
the Services and conduct progress reviews in accordance with the provisions of
Schedule “N”.

 

4.11                           In the event that it becomes evident
to either party’s Project Director that a failure or delay by either party to
perform in accordance with its obligations under this Agreement will result in
a material impact on the completion of the Services in accordance with the
applicable Statement of Work or [**] Plan, then the relevant Project Director shall
immediately bring the issue to the attention of the other party’s Project
Director.

 

5.                                      RESPONSIBILITIES OF
[**]

 

Clauses 5.1 and 5.3 shall be
replaced as follows:

 

5.1                                 [**] shall perform all tasks
assigned to it in a Statement of Work or an applicable [**] Plan by the dates
set out therein (herein referred to as the [**] Tasks), provided that if the
[**] Task is required in relation to a [**] Plan, Digimarc has provided the
[**] Contract Authority with reasonable notice that there is a Digimarc action
that is dependent on that [**] Task.

 

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

 

 

5.3                                 If [**] is delayed in complying with
any of its obligations under clauses 5.1 or 5.2 for any reason not attributable
to Digimarc, and such delay will cause a delay in the completion and delivery
by Digimarc of any Services, then Digimarc shall reasonably promptly advise the
[**] Project Director of the impact of the delay.  The time for completion of the Services and
all subsequent Services dependent thereon, shall then be extended automatically
by one day for each day of delay by [**] or such other period as may be agreed
in writing between the parties’ respective Contract Authorities.  If Digimarc suffers increased costs by reason
of such delay, other than a delay due to a force majeure event (as defined in
clause 17.1), such costs reasonably and necessarily incurred by Digimarc shall
be borne by [**].  Digimarc shall make
every reasonable effort to reassign staff and otherwise to mitigate the
increased costs associated with such a delay. 
If the delay is due to a force majeure event, such costs shall be borne
equally by [**] and Digimarc.  If there
are any additional costs to be borne by [**] otherwise than as agreed under
clause 2 of this Agreement, Digimarc shall reasonably promptly notify the [**]
Contract Authority of such and [**] shall either approve of such costs and/or
request a change to the Services under clause 6.  Such a change request will ask Digimarc to
describe the effect the costs and delay under this clause 5.3 will have on the
applicable [**] Plans or Statements of Work. 
If after Digimarc describes the effect the costs and delay under this
clause 5.3 will have on the applicable [**] Plans or Statements of Work, the
[**] Contract Authority requests such a change, Digimarc shall implement such
change in [**] Plans and Statements of Work so that Digimarc remains within the
previously approved budget.  This clause
5.3 sets forth Digimarc’s only remedy for a delay by [**] in complying with any
such obligation.

 

6.                                      CHANGES TO THE
SERVICES

 

Clause 6.1 shall be replaced as
follows:

 

6.1                                 [**] or Digimarc may request a
change to the Statements of Work or the [**] Plans from time to time by
submitting a request in writing to the other party’s Project Director.  Such changes directed by [**] may include
allocating personnel other than the Project Director to provide development
and/or [**] Services in accordance with clause 4.5.  Any such request will indicate the nature of
the new work to be performed, and indicate the desired number and optimum skill
set of the personnel to be redirected, in a form sufficient for Digimarc to
investigate the effect of the change.

 

7.                                      PERFORMANCE OF
SERVICES

 

Add new clauses to clause 7 as follows:

 

7.3                                 If any part of the [**] Services
have not been performed in accordance with this Agreement and Digimarc receives
a [**] Problem Report from the [**] Project Director, Digimarc shall at its own
cost and expense, without charge to [**] and in the fastest time reasonably
practicable, but no later than sixty (60) days after receipt of a [**] Problem

 

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

 

 

Report from the [**] Project
Director, ensure, by taking all steps reasonably necessary, that the relevant
part of the Services is re-performed or corrected in compliance with this
Agreement.

 

7.4                                 Digimarc shall not be responsible to
the extent any failure by Digimarc to perform the Services in accordance with
this Agreement is directly attributable to: a) a delay by [**] to perform any
[**] Task (as defined in clause 5.1) applicable to the affected part of the
Services; b) a Dependancy applicable to the affected part of the Services not
being fulfilled by [**]; or c) a force majeure event (as defined in clause
17.1).

 

8.                                      INTELLECTUAL
PROPERTY MATTERS

 

The following provision shall be
added at the end of clause 8.6:

 

In the event that this Agreement
is terminated by [**] under clauses 15.2 or 15.3, [**] in this Section 8.6
shall take effect on the date on which [**] pays Digimarc [**] and agrees to
pay Digimarc an additional [**] by January 31 of the following year.  In the event [**] fails to pay [**] by January 31
of the following year, the [**] shall become void ab initio.  Interest
shall accrue on the outstanding amount from the date the [**] is effective to
and including the day the balance is paid in full [**].

 

Clauses 8.17, 8.18, 8.19 and
8.20 shall be replaced as follows:

 

8.17                           Digimarc hereby confirms and agrees
that a) [**] to [**] by clause 8.4 applies, effective upon the date specified
in clause 8.18, to Digimarc Technology and the Project Technology and all
Improvements, and the Technical Information pertaining to the Digimarc
Technology, the Project Technology and such Improvements, created between January 1,
[**] and December 31, [**] and to Digimarc Technology and the Project
Technology and all Improvements, and the Technical Information pertaining to
the Digimarc Technology, the Project Technology and such Improvements, created
on an on-going basis under any subsequent Statement of Work or [**] Plan
approved under clause 2.26; and b) the expressions [**] as used in clause 8.4,
shall be deemed to include [**].

 

8.18                           The [**] in clause 8.17 shall take
effect in respect of each specific item of Digimarc Technology, Project
Technology or Improvements, or Technical Information pertaining to the Digimarc
Technology, the Project Technology or such Improvements created as set out in
clause 8.17 on the earliest of:

 

a)                                      the date on which both [**] to in
clause 8.4 takes effect and [**] pays Digimarc all sums properly due to Digimarc
under this Agreement for the development of that specific item;

 

b)                                     sixty (60) days following the
effective date of termination of this Agreement by [**] in accordance with the
provisions of clause 15.2(a), (b), (d) or (e) unless Digimarc
demonstrates within such sixty (60) day period that, notwithstanding the

 

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

 

 

occurrence of the events giving
rise to the termination, Digimarc is willing and able to comply with its
obligations under the Agreement; or

 

c)                                      the effective date of termination of
this Agreement by [**] in accordance with the provisions of clauses 15.2(c),
15.2(f), 15.2(g) or 15.3 or of termination for convenience without cause
of Services under clause 2.30.

 

8.19                           Digimarc hereby confirms and agrees
that any [**] to [**] pursuant to clause 8.6 applies, without any additional
payments over and above that in clauses 8.6 and 8.18, to Digimarc Technology
and the Project Technology and all Improvements, and the Technical Information
pertaining to the Digimarc Technology, the Project Technology and such
Improvements created between January 1, [**] and December 31, [**]
and to Digimarc Technology and the Project Technology and all Improvements, and
the Technical Information pertaining to the Digimarc Technology, the Project
Technology and such Improvements created on an on-going basis under any
subsequent Statement of Work or [**] Plan approved under clause 2.26.  The [**] by this clause 8.19 is effective
when [**] under clauses 8.6 and 8.17 take effect.

 

8.20                           Notwithstanding any other provision
of this Agreement to the contrary, [**] right to [**] in clause 8.17 by
payments as described in clause 8.18(a) shall survive termination of this
Agreement by [**] in accordance with the provisions of clauses 15.2 (a), (b), (d) or
(e) or termination for convenience without cause of Services under clause
2.30 and be exercisable at any time during a period of sixty (60) days
following such termination.

 

Add new clauses to clause 8 as
follows:

 

8.21                           Digimarc hereby [**], with
effect from 1 January [**] the [**] the Digimarc Technology and the
Project Technology, and all Improvements, and the Technical Information
pertaining to the Digimarc Technology, the Project Technology and such
Improvements, and [**] the Digimarc Technology and the Project Technology and
such Improvements and Technical Information pertaining to the Digimarc
Technology, the Project Technology and such Improvements to other Persons for
the purposes of [**], the [**] and any such component thereof, and making the
[**] and any component available to others solely for [**].  [**], including [**].  For greater certainty, the uses permitted by
this grant are limited to [**]  This
grant does not permit any other uses, [**] 
The expressions [**] as used in this clause 8.21 shall be deemed to
refer to [**].   The [**] by clause 8.21
applies to Digimarc Technology and the Project Technology and all Improvements,
and the Technical Information pertaining to the Digimarc Technology, the
Project Technology and such Improvements existing on or before December 31,
[**], and to Digimarc Technology and the Project Technology and all
Improvements, and the Technical Information pertaining to the Digimarc
Technology, the Project Technology and such Improvements created on an on-going
basis under any subsequent Statement of Work or [**] Plan approved under clause
2.26.   This [**] is in addition to those
rights granted in Sections 8.4, 8.6, 8.17 and 8.19 of this Agreement.

 

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

 

 

8.22                           Digimarc grants to [**],
effective on the date specified in this clause, the [**] the Digimarc
Technology and the Project Technology and all Improvements, and the Technical
Information pertaining to the Digimarc Technology, the Project Technology and
such Improvements, and [**] the Digimarc Technology, the Project Technology and
such Improvements and Technical Information to other Persons, for the sole
purpose of [**] solely for [**].  This
grant is subject to the limitations set forth in Clause 8.21.  This [**] shall take effect on written
request by the [**] Contract Authority at any time following the later of the
date on which the [**] to in 8.21 takes effect and the date on which [**] pays
Digimarc the amount as set forth below:

(a)                                  if [**] desires to
[**] during the period covered by Phase [**], [**] shall pay an amount to be
negotiated by [**] and Digimarc, in addition to the amount to be paid under
clause 8.6;

(b)                                 if [**] desires to
[**] during the period covered by Phases [**] shall only pay to Digimarc [**]
as set out in clause 8.6; or

(c)                                  if [**] desires to
[**] at any time after the refusal to perform or other material breach of the
Agreement by Digimarc, [**] shall [**] at no cost.

The [**] clause 8.22 applies to Digimarc Technology and the Project
Technology and all Improvements, and the Technical Information pertaining to
the Digimarc Technology, the Project Technology and such Improvements existing
on or before December 31, [**], and to Digimarc Technology and the Project
Technology and all Improvements, and the Technical Information pertaining to
the Digimarc Technology, the Project Technology and such Improvements created
on an on-going basis under any subsequent Statement of Work or [**] Plan
approved under clause 2.26.

 

8.23                           [**] hereby grants Digimarc
during the term of this Agreement a [**] may have or acquire under clauses 8.4,
8.6, 8.17, 8.19, 8.21 and 8.22 of the Agreement.  This [**] to Digimarc is retroactive to any
previously [**] rights from Digimarc to [**] may have or may acquire under
clauses 8.4, 8.6, 8.17 and 8.19 of the Agreement.

 

10.                               REPRESENTATIONS AND
WARRANTIES OF DIGIMARC

 

Add new subclauses to clause
10.1 as follows:

 

(h)                                 it possesses the necessary skills,
knowledge and experience to perform all [**] Services under this Agreement and
such [**] Services shall be performed at all times in a timely, cost effective,
professional and diligent manner by Digimarc exercising due professional care,
skill and competence.  For greater
certainty Digimarc shall, and shall ensure that the [**] Personnel shall,
employ the standard of care in performing the [**] Services that would be expected
of a competent and experienced provider of the same or similar type of [**]
Services; and

 

(i)                                     Digimarc shall ensure that the [**]
Personnel are appropriately qualified, skilled, trained and experienced to
undertake the [**] Services and tasks assigned to them, and that each of the
[**] Personnel shall possess the qualifications and experience which Digimarc
has represented them to possess.

 

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

 

 

11.                               REPRESENTATIONS AND
WARRANTIES OF [**]

 

Sub-clause (d) of clause 11.1 shall be
replaced as follows:

 

from and after the date on which [**] gets access to the Escrowed
Materials (the “Release Date”) as provided by clauses 8.4, 8.6, 8.17, 8.19,
8.21 and 8.22 above until the last day of the Term, every [**] which [**]
develops, permits, or causes to be developed using the Escrowed Materials for
incorporation into any Device will be capable of [**]with the same or better
performance [**] than the version of the [**] last accepted by [**] possessed
on the Release Date on which [**] gets access to the Escrowed Materials.

 

12.                               CONFIDENTIALITY

 

Clause 12.9 shall be replaced as
follows:

 

[**] shall not reverse-engineer,
disassemble, or decompile any Digimarc software forming part of the CDS, [**]
(except to the extent that any such activity is reasonably necessary to permit
[**] to exercise its [**] clauses 8.4, 8.6, 8.17, 8.19, 8.21 and 8.22 of this
Agreement or [**] right to do so may not be contractually restricted under
applicable law), and shall contractually assure that any other Person to whom
[**] provides [**] shall be similarly obliged.

 

Clause 12.11 shall be replaced
as follows:

 

12.11                     General attributes of the CDS may be
disclosed in connection with promotion of the CDS to the [**] and [**], and to
customers or prospects in related markets; information relating to the [**]
Technology and the [**]Technology may be disclosed to [**] and vendors of [**]
subject to a nondisclosure agreement on terms requiring at least [**] years of
confidentiality from the date of disclosure of such Confidential Information,
but that are in all other respects materially similar to the provisions of this
clause 12, but in all such cases Digimarc may disclose information relating to
the [**] only to Licensed [**] but to no others.  The existence and terms of this Agreement may
be disclosed to the parties’ professional advisors, to members of the [**] and
to Digimarc’s shareholders, institutional and corporate investors, and
commercial and investment bankers, who have a reasonable need to know such
information subject to a non-disclosure agreement, or as required by applicable
law or regulations.

 

15.                               TERM AND
TERMINATION

 

Clause 15.6 shall be replaced as
follows:

 

15.6                           Termination of this Agreement by
[**] for any reason in accordance with the provisions of this clause 15 or
termination for convenience without cause of Services under clause 2.30 shall
not affect any license granted by Digimarc pursuant to clauses 2.8, 2.9, 8.4,
8.6, 8.17, 8.19, 8.21 or 8.22 above.

 

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  18.

  	
   

  	
  NOTICES

  

 

Clause 18.2 shall be replaced as follows:

 

	
  18.2

  	
   

  	
  Any notice to Digimarc shall be sent to both of, and any notice from
  Digimarc shall be sent by either:

  
	
   

  	
   

  	
   

  
	 
	
  Mr. J. Scott Carr

  	
   

  	
  Mr. Robert Chamness

  
	 
	
  President, Digimarc
  Watermarking

  	
   

  	
  Vice President and General
  Counsel

  
	 
	
  Solutions

  	
   

  	
  Digimarc Corporation

  
	 
	
  9405 SW Gemini Drive

  	
   

  	
  9405 SW Gemini Drive

  
	 
	
  Beaverton, Oregon 97008 USA

  	
   

  	
  Beaverton, Oregon 97008 USA

  
	 
	
  FAX: (503) 469-4777

  	
   

  	
  FAX: (503) 469-4777

  

 

With a copy to:

 

Digimarc Project Director

Digimarc Corporation

9405 SW Gemini Drive

Beaverton, Oregon 97008  USA

FAX:  (503) 469-4777

 

Clause 18.3 shall be replaced as
follows:

 

18.3                           Any notice to [**] shall be sent to
both of, and any notice from [**] shall be sent by either:

 

[**]

 

With a copy to:

 

[**]

 

Clause 18.4 shall be replaced as
follows:

 

18.4                           A party may change its addressee(s) or
address(es) for notice by notice to the other party in accordance with the provisions
of this clause 18.

 

19.                               MISCELLANEOUS
PROVISIONS

 

Clause 19.12 shall be replaced
as follows:

 

19.12                     The parties agree that from
time-to-time it will be beneficial to both parties to issue press releases and
other public announcements concerning benefits arising from the

 

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[**] of the CDS.  Each party agrees to submit such releases or
announcements for prior approval by the other party if the name of the other
party is mentioned, which approval may be withheld by the other party in its
sole discretion.  Any Digimarc press
releases and public announcements that mention CDS or [**] must be pre-approved
by the [**] Project Director.

 

Clause 19.15 shall be replaced
as follows.

 

19.15                     Survival.  All clauses of this Agreement which expressly
or by implication are intended to survive the termination of this Agreement
will do so and, for greater certainty and notwithstanding any provision in this
Agreement to the contrary, the provisions set out in clauses 2.5, 3.6-3.10
inclusive, 3.12-3.18 inclusive, 3.20, 3.21, 8.4, 8.5, 8.6, 8.8, 8.11-8.22
inclusive, 9.1, 9.2, 9.3, 9.7, 10, 11, 12, 13, 14, 16, 18, 19 and 20 of this
Agreement shall survive termination of this Agreement by either party for any
reason.

 

20.                               INTELLECTUAL
PROPERTY INDEMNIFICATION [**]

 

Add new clause 20 as follows:

 

20.1                           Digimarc hereby undertakes to assume
and be responsible for the provision of intellectual property (IP) infringement
indemnification in respect of any infringement or alleged infringement of any
third party intellectual property rights of any kind (“IP Indemnification”)
arising in respect of [**] that Digimarc [**] after January 10, [**].  [**] (a) Digimarc
has the right to direct the defense of any infringement and indemnity claim; (b) [**]
shall take such actions as are reasonably requested by Digimarc in connection
with managing, defending, and settling any claim or demand, including
mitigation of damages; (c) to facilitate mitigation or avoid infringement,
Digimarc can supply, at its own cost, [**] prior approval which shall not be
unreasonably withheld; and (d) if [**] as of the date of the notice.

 

20.2                           Unless otherwise agreed between
Digimarc and the [**] Project Director, [**] 
Digimarc and the [**] Project Director shall mutually agree on a [**]
such agreement not to be unreasonably withheld.

 

20.3                           [**] Digimarc shall provide
indemnification [**] in accordance with its obligations under this Agreement,
[**] provided that [**] in accordance with clause [**].

 

20.4                           In addition to any other
[**] obligations in this Agreement and in
consideration of Digimarc’s continuing compliance at all times with its
obligations under this clause 20, [**] agrees [**] Digimarc for the IP
Indemnification [**] subject to [**] in accordance with clause 20.5.  [**].

 

20.5                           Prior to November 15 [**] that
the IP Indemnification of clauses 20.1 and 20.2 [**], the [**] Project Director
[**] to Digimarc [**] Digimarc under clause 20.4 in the following contract year
[**], or, if a review is conducted as per this clause 20.5, [**]

 

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20.6                           [**] is not included under the
provisions of this clause 20.  [**]

 

20.7                           This clause 20 is not subject to the
termination provisions of clause 15, but will continue until terminated in
accordance with this clause 20.7.  [**] has the option, at its sole
discretion, to terminate the IP Indemnification obligations of Digimarc under
this clause 20: (a) at the end of a calendar year and discontinue [**]
under this clause 20 as of the end of that same calendar year with written
notice by November 15 of that same calendar year; (b) immediately on
written notice by [**] if this Agreement is terminated by [**] pursuant to
clauses 15.3; or (c) immediately on written notice by [**] if any of the
events specified in clauses 15.3 occur after the termination of this Agreement
whilst the provisions of this clause 20 are in force.   Digimarc has the option to terminate the
indemnification obligations of Digimarc under this clause 20 if [**] under
clause 20 after receiving [**] by [**] of a termination notice from
Digimarc.  Upon termination of this clause
20, Digimarc shall [**] from and [**] shall arrange for [**] covered by this
clause 20 except that if [**] before such termination, Digimarc shall [**], in
accordance with clause 20, [**].

 

20.8                           Digimarc undertakes to
review the [**] with [**]
Contract Authority [**] the CDS Technology or any part thereof in [**]

 

20.9                           Notwithstanding the above, Digimarc has agreed
[**] to allow the [**] to:

 

a)                                      continue the IP Indemnification
obligations of Digimarc under this clause 20 for the first six months of [**].

 

b)                                     [**] has the option, at its sole discretion,
to terminate the IP Indemnification obligations of Digimarc under this clause
20 effective June 30, [**] by providing Digimarc with written notice by April 15,
[**].   Upon termination of this clause
20, Digimarc shall [**] and [**] shall arrange for [**] covered by this clause
20 except that if [**], in accordance with clause 20, [**].

 

c)                                      if [**] does not exercise its option
as set out in (b), the IP Indemnification obligations of Digimarc under this
clause 20 shall continue for the remainder of [**] and [**] Digimarc [**].

 

20.10                   Notwithstanding the above, Digimarc
has agreed for [**] to allow [**] to:

 

a)                                      continue the IP Indemnification
obligations of Digimarc under this clause 20 for the first six months of [**].

 

b)                                     [**] has the option, at its sole
discretion, to terminate the IP Indemnification obligations of Digimarc under
this clause 20 effective June 30, [**] by providing Digimarc with written
notice by March 31, [**].   Upon
termination of this clause

 

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20, Digimarc shall [**] and [**]
shall arrange for [**] covered by this clause 20 except that if [**], in
accordance with clause 20, [**].

 

c)                                      if [**] does not exercise its option
as set out in (b), the IP Indemnification obligations of Digimarc under this
clause 20 shall continue for the remainder of [**] and [**] Digimarc [**].

 

IN WITNESS
WHEREOF, this Fourth Amendment has been executed and delivered by the parties
hereto as of the date of the last signature below.

 

	
  [**]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  
	
  DIGIMARC CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  J. Scott Carr

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  President, Digimarc
  Watermarking Solutions

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
								

 

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SCHEDULE
“A”

 

DIGITAL
COUNTERFEIT DETERRENCE SYSTEM DESCRIPTION

 

1.0                               GENERAL DESCRIPTION
OF THE DIGITAL COUNTERFEIT DETERRENCE SYSTEM (“CDS”)

 

The CDS is a system designed to hinder or
deter the counterfeiting of bank notes by the use of personal computer-based
equipment.  [**]

 

[**]

 

The capitalized terms in this Schedule A have
the meanings provided in the Counterfeit Deterrence System Development and
License Agreement to the extent same are not elaborated herein.

 

The term [**] refers to a [**]

 

2.0                               FUNCTIONAL
DESCRIPTION OF THE CDS

 

The CDS is comprised of the following three
subsystems:

 

1.                                       [**]

2.                                       [**]

3.                                       [**]

 

The functions of the various subsystems and
components described below may be changed by the [**] or the [**].

 

2.1                               [**]

2.1.1                     [**]

 

1.                                       [**]

 

2.                                       [**]

 

3.                                       [**]

 

4.                                       [**]

 

2.1.2                     [**]

 

1.                                       [**].

 

2.                                       [**]

 

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3.                                       [**]

 

4.                                       [**]

 

5.                                       [**]

 

2.1.3                     [**]

 

1.                                       [**]

 

2.2                               [**]

 

1.                                       [**]

 

2.                                       [**]

3.                                       [**]

 

4.                                       [**]

 

(a)                                  [**]

(b)                                 [**]

(c)                                  [**]

 

5.                                       [**]

 

6.                                       [**]

 

7.                                       [**]

 

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SCHEDULE “B”

 

[**]

1. 0                            DESCRIPTION
OF [**]

 

Digimarc shall
perform the following Work [**]. (The specific responsibilities to be
discharged by [**]  are also described below.)

 

1.1                               [**]
Study

 

Digimarc shall
conduct the “[**] Study”
described below.

 

1.                                       Digimarc
shall examine the feasibility of integrating [**] in the form of the [**].  This study will investigate viable technical
approaches and report on the performance, false positive rates, and [**] time that might be expected from the
preferred approach.

 

2.                                       Digimarc
shall deliver a final report to the [**] by the date set out in the Delivery Schedule attached as
Attachment 2 (the “Delivery Schedule”) describing the findings of the study and
providing recommendations useful in the development of a prototype including
the detection rates for [**].

 

1.2                               [**]
Study

 

Digimarc shall
conduct a study to attempt to characterise the behaviour of [**] and its measure of strength, as
determined by [**] through the [**]. 
Digimarc shall relate the results of this characterisation to [**]
performance. Digimarc shall submit a report on this study to the DLA Project
Manager [**]. The results, and
other information as available, will be made available by Digimarc to the [**]  as guidance in the
use of [**].

 

As part of the
[**], Digimarc shall:

 

1.                                       deliver a study plan to the DLA Project Manager outlining
the objects, test and analysis methods for the [**];

 

2.                                       perform a suite of tests on [**] on [**].  [**] shall assist Digimarc in
the performance of a reasonable number of tests involving the [**];

 

3.                                       conduct
parameter measurements (e.g. signal correlation and error rate) on the
experimental designs listed in paragraph 4 below and report on and attempt to
characterise how the parameters change through the sequence from [**].

 

4.                                       [**].

 

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1.3                               Design,
Development and Production of the CDS [**]

 

Digimarc shall
design, develop and produce for acceptance by [**] of each of the [**] and each
component thereof and the [**] according to the following process:

 

1.                                       By
the date set out in the Delivery Schedule, Digimarc shall develop a detailed
specification for each subsystem and component which support the functional
description of the subsystem or component described in Schedule A and the
additional requirements for the subsystem or component, if any, specified
below.

 

2.                                       Digimarc
shall deliver the specifications to the DLA Project Manager by the dates set out
in the Delivery Schedule for [**]
review,  comment
and acceptance or rejection.

 

3.                                       As
soon as possible after receiving them under 2, the DLA Project Manager shall
notify the Digimarc Project Manager in writing whether or not [**] approves the specifications and if
not, why not. Within fifteen (15) calendar days after receiving notice of
rejection,  Digimarc
shall change the specifications to make them acceptable to [**] and redeliver them to [**] for approval as provided
above.

 

4.                                       Upon notice of approval under 3, Digimarc shall develop the
subsystem or component which will meet the approved specifications and deliver
the “evaluation release” of the subsystem or component to [**] for testing and acceptance.

 

5.                                       Within
forty five (45) calendar days after receiving an evaluation version under 4,
the DLA Project Manager shall notify the Digimarc Project Manager in writing
whether or not the evaluation release meets the specifications with details of
the non-compliance.   Any problems shall
be detailed using, to the extent appropriate, the [**] form attached as Schedule “R.”

 

6.                                       By
the date set out in the Delivery Schedule, Digimarc shall develop a final
release of the subsystem or component incorporating any changes required to the
evaluation release to rectify the non-compliance with the specifications and
any other modifications agreed in writing between the parties’ respective
project managers and deliver the final release to [**] for testing and
acceptance.

 

7.                                       Within
forty five (45) calendar days after receiving the final release under 6,  the DLA Project
Manager shall notify the Digimarc Project Manager in writing whether or not the
final release meets the specifications with details of the non-compliance.
Within thirty (30) calendar days after receiving notice of rejection,  Digimarc shall
rectify all non-compliance and redeliver the final release to [**] for approval as provided above.

 

1.4                               Acceptance Procedures

 

1.4.1                     The acceptance procedures for the
[**] will include the following:

 

1.                                       The
[**] will be evaluated at the facilities of up to three [**].

 

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2.                                       Digimarc
will train one person on the [**] from each evaluation facility to enable them
to evaluate the [**] as part of the acceptance process. Digimarc shall conduct
the training at a single facility to be agreed between Digimarc Project Manager
and the DLA Project Manager.

 

1.4.2                     The acceptance procedures for the
[**] will include the following:

 

1.                                       Digimarc
shall deliver the [**] to the DLA Project Manager in an example [**] that
Digimarc will develop to allow the [**] to conduct acceptance tests on
performance, robustness, and resistance to [**].  Digimarc shall deliver a detailed description
of how the [**] was integrated and the techniques used to defend against [**].

 

1.5                               Implementation of [**]

 

1.5.1                     Digimarc shall implement [**] as
follows:

 

1.                                       [**]

 

1.6                               Training
Program

 

1.                                       Digimarc
shall develop a training program acceptable to the DLA Project Manager to train
the personnel of [**] as set out
in Schedule “Q” to the Agreement. This training program will be delivered
according to the Delivery Schedule for [**].

 

2.                                       Each
[**] shall equip its site for training and installation prior to the start of
training, following a pre-site configuration guide to be developed by Digimarc.
Failure to establish the required hardware and software environment in advance
of installation will lengthen the required installation and training time and
costs.

 

3.                                       Training
will be provided in English and will be designed for delivery in five days to
students who speak English. Translation, if required, shall be provided by the
[**], and may lengthen the training time and costs.

 

2.0                               DESCRIPTION
OF, AND REQUIREMENTS FOR, VERSIONS 1.0

 

2.1                               [**]

 

[**]:

 

2.1.1                     [**]

 

1.                                       [**].

 

2.                                       [**].

 

3.                                       [**].

 

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4.                                       [**].

 

5.                                       [**].

 

6.                                       [**].

 

2.1.2                     [**]

 

1.                                       [**].

 

2.                                       [**].

 

2.1.3                     [**]

 

1.                                       [**].

 

2.                                       [**].

 

3.                                       [**].

 

4.                                       [**].

 

5.                                       [**].

 

6.                                       [**].

 

2.2                               [**]

 

2.2.1                     [**]:

 

1.                                       [**].

 

2.                                       [**]:

 

(a)                                  [**]

 

(b)                                 [**].

 

3.                                       [**].

 

4.                                       [**].

 

5.                                       [**].

 

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6.                                       [**].

 

7.                                       [**]:

 

(a)                                  [**].

 

(b)                                 [**] CDS [**].

 

(c)                                  [**].

 

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Attachment 1

 

BASELINE, EXTENDED BASELINE, AND OPTIONAL
TESTS

 

1.0                               [**]

 

1.1                               [**]

 

1.1.1                     [**]

1.1.2                     [**]

1.1.3                     [**]

1.1.3.1           [**]

1.1.3.2           [**]

1.1.3.3           [**]

 

1.2                               [**]

 

1.2.1                     [**]

1.2.3                     [**]

1.2.4                     [**]

1.2.5                     [**]

 

[**]

 

2.0                               [**]

 

2.1                               [**]

 

2.1.1                     [**]

2.1.2                     [**]

2.1.3                     [**]

2.1.4                     [**]

2.1.5                     [**]

2.1.6                     [**]

2.1.7                     [**]

2.1.8                     [**]

 

2.2                               [**]

 

2.2.1                     [**]

2.2.2                     [**]

2.2.3                     [**]

2.2.4                     [**]

 

3.0                               [**]

 

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3.1                               [**]

 

3.2                               [**]

 

3.2.1                     [**]

 

3.2.2                     [**]

 

3.2.3                     [**]

 

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Attachment 2

 

CDS PHASE 1 DELIVERY SCHEDULE

 

[**]

 

	
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Attachment 3

 

DEVICE VENDORS

 

[**]

 

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SECURITIES AND EXCHANGE COMMISSION.

 

 

 

SCHEDULE “B,”  AMENDED ATTACHMENT 3

 

[**]

 

[**]

 

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AMENDED
SCHEDULE “C”

PHASE
[**] STATEMENT OF WORK

 

Digimarc shall perform the
following Work during Phase [**]. (The specific responsibilities to be
discharged by [**] during Phase [**] are also described below.)

 

1.0                               [**]

 

Digimarc shall [**] for acceptance
by [**] and each component thereof according to the following process:

 

1.                                       By the date set out in the Delivery
Schedule, Digimarc shall develop a detailed specification for the [**] that
supports the [**] of the [**] described in Schedule A and the additional
requirements for the [**], if any, specified below.

 

2.                                       Digimarc shall deliver the
specifications to the DLA Project Manager by the dates set out in the Delivery
Schedule for [**]’ review, comment and acceptance or rejection.

 

3.                                       As soon as possible after receiving
them under 2, the DLA Project Manager shall notify the Digimarc Project Manager
in writing whether or not [**] approves the specifications and if not, why not.
Within fifteen (15) calendar days after receiving notice of rejection, Digimarc
shall change the specifications to make them acceptable to [**] and redeliver
them to [**] for approval as provided above.

 

4.                                       Upon notice of approval under 3,
Digimarc shall [**] which will meet the approved specifications and deliver
[**] and acceptance.

 

5.                                       Within forty five (45) calendar days
after receiving an [**] under 4, the DLA Project Manager shall notify the
Digimarc Project Manager in writing whether or not the [**]  meets the specifications with details
of the non-compliance.   Any problems shall
be detailed using, to the extent appropriate, the [**] Problem Report form
attached as Schedule “R.”

 

6.                                       By the date set out in the Delivery
Schedule, Digimarc shall [**] incorporating any changes required to the [**]
with the specifications and any other modifications agreed in writing between
the parties’ respective project managers and deliver the [**] to [**] for [**].

 

7.                                       Within thirty (30) calendar days
after receiving [**] under 6, the DLA Project Manager shall notify the Digimarc
Project Manager in writing whether or not [**] meets the specifications [**].
Within thirty (30) calendar days after receiving notice of rejection, Digimarc
shall rectify all non-compliance and redeliver the [**] for approval as
provided above.

 

1.2                               Acceptance
Procedures

 

1.2.1                     The acceptance procedures for the
[**] will include the following:

 

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1.                                       Digimarc shall deliver the [**] for
[**] to the DLA Project Manager in an example [**] that Digimarc will develop
to allow [**] to conduct [**].

 

2.                                       Digimarc shall deliver the [**] for
[**] DLA Project Manager in a [**] that Digimarc will develop based on
[**].  The [**] will allow the [**] to
conduct [**].

 

3.                                       Digimarc shall deliver into escrow
and review with the [**] a detailed description of how the [**].

 

1.3                               [**]

 

1.3.1                     Digimarc shall [**] as follows:

 

1.                                       Digimarc shall [**] with [**]
attached to Schedule B as Attachment 3 or such other [**] as may be agreed
between the parties’ respective Project Managers.  Digimarc shall deliver [**]

 

2.                                       Digimarc shall [**] with at least
[**] from [**] or [**] as may be agreed between the parties’ respective Project
Managers.  Development
of [**].

 

2.0                               DESCRIPTION OF, AND
REQUIREMENTS FOR, [**]

 

For the purpose of this
Schedule, [**] means an agreed
upon [**] used to produce [**].  For
Phase [**], the [**] was the February [**].

 

2.1                               [**]

 

Digimarc shall develop for
approval by the DLA Project Manager a set of [**] that defines the term [**].
This includes a [**].

 

2.2                               New [**]

 

The [**] was selected by the
[**] as the new [**] design. The [**] will be [**] as described in paragraph
2.5.1.

 

2.3                               [**]

 

Digimarc shall [**] according to
the following requirements:

 

2.3.1                     [**] Requirements

 

The [**] will meet the following
[**] requirements:

 

1.                                       The [**] shall be capable of being
[**].

 

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2.                                       The [**] shall meet all the
requirements in Schedule B paragraph 2.2, plus it shall [**].

 

3.                                       The [**] shall [**] when more than
one [**].

 

4                                          The [**] shall [**]. Refinements to
the [**] will be recommended as required to accommodate the unique needs of a
[**].

 

2.3.2                     [**] Improvements

 

Digimarc shall [**] improvements
that will be incorporated into [**] as follows:

 

1.                                       Digimarc will focus such improvement
work on the new [**].

 

2.                                       The [**] made at the start of the
Phase [**] and described below in section 2.5.1 (4) using the [**] will
establish a [**].  The [**] and Digimarc
will mutually agree to [**]. Since these [**] will be established after the
detailed specification has been delivered to [**], as described in the Delivery
Schedule, the [**] will be described in an amendment to the [**] detailed
specification.

 

3.                                       [**] improvements will focus on
improving [**] in [**].  [**] and
Digimarc will mutually set priorities for the various possible improvements,
and such priorities will guide Digimarc’s development work.

 

2.3.3                     [**]

 

Digimarc shall build and [**]:

 

1.                                       Digimarc shall [**].

 

2.                                       Digimarc shall build and maintain
[**], or [**], for [**] and all [**] to use the [**].

 

2.4                               [**] and [**]

 

Digimarc shall deliver a [**]
and [**]. Digimarc shall work [**] or independently to [**] as mutually agreed
with [**].  [**] will be capable of [**]
identified by Digimarc and [**]. The capability to [**] selected by [**] will
be added if resources and schedule permit as mutually agreed by Digimarc and
[**].  Once a decision is made as to
whether Digimarc will work [**] or independently, Attachment 1 will be updated
with the [**] and [**] schedule.

 

To complete the development, it
may be necessary for Digimarc [**] in order to implement [**].  [**] and Digimarc will mutually agree on a
strategy to [**].

 

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2.5                               [**] Study

 

Digimarc shall conduct the [**]
Phase of the [**] Study that attempts to [**] the relationship between [**]
during [**] and [**] as follows:

 

2.5.1                     [**]

 

Digimarc shall work [**] as
follows:

 

1.                                       [**] shall provide Digimarc with
[**] for the [**].

 

2.                                       Digimarc shall [**] and provide the
[**].

 

3.                                       [**] shall [**] and provide the [**]
to Digimarc.

 

4.                                       Digimarc shall assess and report
[**] in the versions of the [**].  The
version of [**] to use as the [**] will be mutually agreed to between [**] and
Digimarc.  These [**] will establish a
[**] to use in [**] improvements.

 

2.5.2                     [**]
Characterization

 

Digimarc shall:

 

1.                                       conduct a study to characterize the behavior
of the [**];

 

2.                                       include a study of the [**] and [**] of the
[**] such that [**] into a [**] may be [**];

 

3.                                       [**].

 

4.                                       deliver a study plan to the DLA Project
Manager outlining the objectives, test and analysis methods for the [**];

 

5.                                       deliver a report of the results of the
study to the DLA Project Manager by the dates set out in the Delivery Schedule.

 

2.6                               [**]

 

2.6.1                     [**] in [**]
Applications

 

Digimarc shall [**] as described
in section 1.3.1 (1) as follows:

 

1.                                       Digimarc shall provide [**] assist [**]
in [**] in [**].

 

2.                                       Digimarc and [**] shall agree to
[**] in [**].

 

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3.                                       Digimarc shall [**].

 

4.                                       [**] may, at its option, evaluate
[**] of [**] which [**] has been [**]. The DLA Project Manager shall identify
to Digimarc any concerns which [**] may have relating to [**] or [**]. Digimarc
shall make a proposal to the DLA Project Manager to address those concerns for
approval by the DLA Project Manager.

 

2.6.2                     [**] and [**]

 

Digimarc shall [**] in [**] as
follows:

 

1.                                       Digimarc
and the [**] shall define [**] program that establishes agreed to [**] and
[**].  This program will be developed
with the assistance [**] and will be described by a [**] plan. This [**]
program will be comprised of three elements:

 

a) To [**]CDS [**].

 

b) To [**]CDS.

 

2.                                       Digimarc
shall [**] CDS [**].

 

3.                                       Digimarc
shall [**].

 

4.                                       Digimarc shall [**] CDS [**].

 

5.                                       [**].

 

6.                                       [**] shall support in-person
meetings with [**] as needed to [**] the CDS.

 

7.                                       Digimarc shall [**] the CDS [**] CDS
[**]. Digimarc shall [**] CDS [**], and Digimarc shall [**].  Digimarc shall report [**] to [**].

 

2.7                               [**]
Study

 

Digimarc shall work [**] to [**]
and Digimarc shall provide [**].

 

2.8                               [**]

 

Digimarc shall [**] the CDS
program [**] as follows:

 

1.                                       Digimarc and [**] shall develop a
plan to [**] in the [**] the CDS System, and to [**].

 

2.                                       Digimarc shall update the [**]
documentation and [**] on an as-needed basis [**].

 

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3.                                       Digimarc shall [**] the CDS [**].

 

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Attachment  1

 

CDS
PHASE [**] DELIVERY SCHEDULE

 

[**]

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends 

  On

  	
   

  	
  Days

  	
   

  	
  CompletionDate

  
	
  [**]-1

  	
   

  	
  Detailed [**] specification delivered

  	
   

  	
  [**]

  	
   

  	
  1.1

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  28 Feb [**]

  
	
  [**]-2

  	
   

  	
  [**] specification signoff

  	
   

  	
  [**]

  	
   

  	
  1.2

  	
   

  	
  [**]-1

  	
   

  	
  11

  	
   

  	
  9 Mar [**]

  
	
  [**]-3

  	
   

  	
  Detailed [**] specification update – 

  [**]

  	
   

  	
  [**]

  	
   

  	
  1.1

  	
   

  	
  [**]-3  

  [**]-2

  	
   

  	
  30

  	
   

  	
  13 Apr [**]

  
	
  [**]-4

  	
   

  	
  [**] customer specification signoff

  	
   

  	
  [**]

  	
   

  	
  1.2

  	
   

  	
  [**]-3

  	
   

  	
  11

  	
   

  	
  18 Apr [**]

  
	
  [**]-5

  	
   

  	
  [**] Approved

  	
   

  	
  [**]

  	
   

  	
  2.3.1.4

  	
   

  	
  [**]-2

  	
   

  	
  82

  	
   

  	
  1 Jun [**]

  
	
  [**]-6

  	
   

  	
  [**] Test Set change deadline

  	
   

  	
  [**]  

  [**]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1 Jun [**]

  
	
  [**]-7

  	
   

  	
  Delivery [**]

  	
   

  	
  [**]

  	
   

  	
  1.4

  	
   

  	
  [**]-4

  	
   

  	
  97

  	
   

  	
  8 Sep [**]

  
	
  [**]-8

  	
   

  	
  [**] acceptance of [**]

  	
   

  	
  [**]

  	
   

  	
  1.5

  	
   

  	
  [**]-5

  	
   

  	
  41

  	
   

  	
  5 Oct [**]

  
	
  [**]-9

  	
   

  	
  Delivery of the  [**]

  	
   

  	
  [**]

  	
   

  	
  1.6

  	
   

  	
  [**]-6

  	
   

  	
  42

  	
   

  	
  1 Dec [**]

  
	
  [**]-10

  	
   

  	
  [**] acceptance of final [**]

  	
   

  	
  [**]

  	
   

  	
  1.7

  	
   

  	
  [**]-7

  	
   

  	
  27

  	
   

  	
  28 Dec [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]  and
  [**]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends 

  On

  	
   

  	
  Days

  	
   

  	
  CompletionDate

  
	
   

  	
   

  	
  [**]
  Study with [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  15 Feb [**]

  
	
  [**]-1

  	
   

  	
  [**] report delivered

  	
   

  	
  [**]

  	
   

  	
  2.4

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  15 Feb [**]

  
	
  [**]-2

  	
   

  	
  [**] evaluation of [**]

  	
   

  	
  [**]

  	
   

  	
  2.4

  	
   

  	
  [**]-1

  	
   

  	
  43

  	
   

  	
  28 Mar [**]

  
	
  [**]-3

  	
   

  	
  [**] determined

  	
   

  	
  [**]

  	
   

  	
  2.4

  	
   

  	
  [**]-2

  	
   

  	
  —

  	
   

  	
  28 Mar [**]

  

 

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[**]

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends 

  On

  	
   

  	
  Days

  	
   

  	
  CompletionDate

  
	
  [**]-1

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  2.5.1.1

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  17 Jan [**]

  
	
  [**]-2

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  2.5.1.2

  	
   

  	
  [**]-1

  	
   

  	
  21

  	
   

  	
  8 Feb [**]

  
	
  [**]-3

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  2.5.1.3

  	
   

  	
  [**]-2

  	
   

  	
  23

  	
   

  	
  15 Mar [**]

  
	
  [**]-4

  	
   

  	
  [**] reported and Phase 

  [**]

  	
   

  	
  [**]  

  [**]

  	
   

  	
   

  	
   

  	
  [**]-3

  	
   

  	
  23

  	
   

  	
  13 Apr [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**] Study  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends 

  On

  	
   

  	
  Days

  	
   

  	
  Completion 

  Date

  
	
  [**]-1

  	
   

  	
  [**] study plan delivered

  	
   

  	
  [**]

  	
   

  	
  2.5.2.3

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  28 Feb [**]

  
	
  [**]-2

  	
   

  	
  [**] Study plan signoff

  	
   

  	
  [**]

  	
   

  	
  1.2

  	
   

  	
  [**]-1

  	
   

  	
  11

  	
   

  	
  9 Mar [**]

  
	
  [**]-1

  	
   

  	
  [**] Analysis [**] delivered

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-2

  	
   

  	
  103

  	
   

  	
  8 Sep [**]

  
	
  [**]-2

  	
   

  	
  Draft report delivered

  	
   

  	
  [**]

  	
   

  	
  2.5.2.5

  	
   

  	
  [**]-1

  	
   

  	
  103

  	
   

  	
  8 Sep [**]

  
	
  [**]-3

  	
   

  	
  [**] evaluation of draft report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-2

  	
   

  	
  20

  	
   

  	
  6 Oct [**]

  
	
  [**]-4

  	
   

  	
  Final report delivered

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-3

  	
   

  	
  41

  	
   

  	
  4 Dec [**]

  
	
  [**]-5

  	
   

  	
  [**] evaluation of the final report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-4

  	
   

  	
  20

  	
   

  	
  29 Dec [**]

  
	
  [**]-1

  	
   

  	
  [**] Study draft report delivered

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-2

  	
   

  	
  75

  	
   

  	
  1 Aug [**]

  
	
  [**]-2

  	
   

  	
  [**] evaluation of draft report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-1

  	
   

  	
  28

  	
   

  	
  29 Aug [**]

  
	
  [**]-3

  	
   

  	
  Final report delivered

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-2

  	
   

  	
  41

  	
   

  	
  25 Oct [**]

  
	
  [**]-4

  	
   

  	
  [**] evaluation of the final report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-3

  	
   

  	
  20

  	
   

  	
  21 Nov [**]

  
	
  [**]-1

  	
   

  	
  [**] Study draft report delivered

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-2

  	
   

  	
  60

  	
   

  	
  30 May [**]

  
	
  [**]-2

  	
   

  	
  [**] evaluation of draft report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-1

  	
   

  	
  40

  	
   

  	
  25 Jul [**]

  
	
  [**]-3

  	
   

  	
  Final report delivered

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-2

  	
   

  	
  41

  	
   

  	
  20 Sep [**]

  
	
  [**]-4

  	
   

  	
  [**] evaluation of the final report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-3

  	
   

  	
  20

  	
   

  	
  17 Oct [**]

  

 

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

 

 

Verification
Test ([**])

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends 

  On

  	
   

  	
  Days

  	
   

  	
  CompletionDate

  
	
  [**]-1

  	
   

  	
  Proposed [**] program

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  28 Jul [**]

  
	
  [**]-2

  	
   

  	
  [**] feedback on verification test [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-1

  	
   

  	
  30

  	
   

  	
  24 Aug [**]

  
	
  [**]-3

  	
   

  	
  Final verification test [**] signoff

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-2

  	
   

  	
  25

  	
   

  	
  7 Sep [**]

  
	
  [**]-4

  	
   

  	
  [**] acceptance of the [**] test [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-3

  	
   

  	
  13

  	
   

  	
  21 Sep [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]  Tests  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends 

  On

  	
   

  	
  Days

  	
   

  	
  CompletionDate

  
	
  [**]-1

  	
   

  	
  Proposed [**] test program

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  28 Apr [**]

  
	
  [**]-2

  	
   

  	
  [**] feedback on [**] test program

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-1

  	
   

  	
  40

  	
   

  	
  25 May [**]

  
	
  [**]-3

  	
   

  	
  Final
  [**] test program signoff

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-2

  	
   

  	
  35

  	
   

  	
  8 Jun [**]

  
	
  [**]-4

  	
   

  	
  [**] acceptance of the [**] test program

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-3

  	
   

  	
  13

  	
   

  	
  22 Jun [**]

  

 

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

 

 

AMENDED SCHEDULE “D”

 

PHASE [**] STATEMENT OF WORK

 

1.0   DESCRIPTION OF PHASE [**] WORK

 

Digimarc shall perform the following Work during Phase [**]. (The
specific responsibilities to be discharged by [**] during Phase [**] are also
described below.)

 

1.1     [**] Of The
Phase [**] Deliverables

 

Digimarc shall [**] for acceptance by [**] the Phase [**] Deliverables
according to the following process:

 

1.              By the date set out in the Delivery Schedule outlined
in Attachment 1, Digimarc shall develop a detailed Specification for each [**]
that supports the functional description of the [**] described in Schedule A as
relates to Phase [**] and the additional requirements for the [**], if any,
specified below.

 

2.              Digimarc shall deliver the Specifications to the DLA
Project Manager by the dates set out in the Delivery Schedule for [**] review,
comment and acceptance or rejection.

 

3.              Within thirty (30) calendar days after receiving them
under 2, the DLA Project Manager shall notify the Digimarc Project Manager in
writing whether or not [**] approves the Specifications and if not, why not.
Within fifteen (15) calendar days after receiving notice of rejection, Digimarc
shall change the Specifications to make them acceptable to [**] and redeliver
them to [**] for approval as provided above.

 

4.              Upon notice of approval under 3, Digimarc shall [**] which will meet the
approved Specifications and deliver the [**] and acceptance.

 

5.              Within thirty (30) calendar days after receiving an
[**] under 4, the DLA Project Manager shall notify the Digimarc Project Manager
in writing whether or not the evaluation release meets the Specifications with
details of any non-compliance.   Any
problems shall be detailed using, to the extent appropriate, the [**] Report
form attached as Schedule “R.”

 

6.              By the date set out in the Delivery Schedule, Digimarc
shall [**] incorporating any changes required to the [**] with the
Specifications and any other modifications agreed in writing between the
parties’ respective project managers and deliver the final release to [**] for
[**] and acceptance.

 

7.              Within fifteen (15) calendar days after receiving the
final release under 6, the DLA Project Manager shall notify the Digimarc
Project Manager in writing whether or not the final release meets the Specifications
with details of any non-compliance. Within thirty (30) calendar days 

 

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

 

 

after receiving any notice of rejection, Digimarc shall
rectify all [**] for approval as provided above.

 

1.2   Acceptance Procedures

 

1.2.1                        [**]

 

The
acceptance procedures for the [**] will be the following:

 

1.     Digimarc shall deliver or make available the [**] for [**] to the DLA
Project Manager in a [**] that Digimarc will develop based on [**] from a
[**].  The [**] will allow the [**] to
conduct [**] as set forth in the Specification.

 

2.     Digimarc shall deliver into escrow and review with the [**] a detailed
description of how the 
[**] for [**] was integrated into the [**] and the techniques
used to [**].

 

1.2.2                        [**]

 

The
acceptance procedure for the [**] will be the following:

 

1.     Digimarc shall deliver or make available the [**] to the DLA
Project Manager in a suitably modified [**] from a [**] for [**] on compliance
with the Specification.

 

2.     Digimarc
shall deliver into escrow and review with the [**] a detailed description of
how the [**] was [**], as well as copies of the [**].  This excludes deposit into escrow of any [**]
proprietary data or information for the design and operation of the [**].

 

2.0   DESCRIPTION
OF, AND REQUIREMENTS FOR, PHASE [**] DELIVERABLES

 

2.1                                 [**]

 

Digimarc
shall develop the [**] according to the following requirements:

 

2.1.1                        [**]
requirements

 

[**]
will meet the following requirements:

 

1.               [**] shall be capable of being [**].

 

2                  [**] shall be capable of [**] shall be conditional upon Digimarc [**]
Digimarc and the [**] to intellectual property [**] in order to [**].

 

3.               Digimarc shall [**] needed for replacement of the [**]
with a suitably designed alternative [**].

 

4.               Detailed requirements for [**] will be specified in a
Specification delivered in accordance with the Delivery Schedule outlined in
Attachment 1.

 

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

 

 

2.2                                 [**]

 

Digimarc
shall develop an [**] according to the following requirements:

 

1.          Digimarc shall
make [**] changes to the [**] necessary for [**].

 

2.          Digimarc
shall develop [**] needed to implement an [**]. 
Digimarc will engage one or more [**] in this effort [**] during the
[**] phase.

 

3.          Digimarc
shall work with one [**] to implement the [**] of the [**] a selected
[**].  The implementation will be used to
demonstrate that the [**] functions properly when [**].

 

4.          Digimarc
shall deliver or make available the [**] for assessment by the [**].

 

5.          Digimarc
shall deliver a detailed technical report on the findings of the Work and
recommendations for any future work including requirements to add [**].

 

The
detailed requirements for the [**] will be specified in a Specification
delivered in accordance with the Delivery Schedule outlined in Attachment 1.

 

2.3   [**]

 

2.3.1                        Implementation
of [**]

 

Digimarc
shall implement the [**] as follows:

 

1.               Digimarc shall [**] to [**] with [**] from the list of
such [**] attached to Schedule B as Attachment 3 or such other [**] as may be
agreed to between the parties’ respective project managers.  Digimarc shall deliver and [**].

 

2.               Digimarc shall [**] to [**] attached to Schedule B as
Attachment 3 or such other [**] as may be agreed to between the parties’
respective project managers.  Digimarc
shall deliver and [**].

 

3.               Digimarc shall [**] to [**] attached to Schedule B as
Attachment 3 or such other [**] as may be agreed to between the parties’
respective project managers.

 

2.3.2                        Support
for [**]

 

Digimarc
shall support [**] that [**] as follows:

 

1.               Digimarc shall provide [**] to assist [**].

 

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

 

 

2.               Digimarc shall administer the certification program
approved by [**] for the ongoing review and certification of [**].

 

3.               [**] may, at its option, evaluate the [**] each
[**].  The DLA Project Manager shall
identify to Digimarc any concerns that [**] may have relating to [**]. Digimarc
shall make a proposal to the [**] Project Manager to address those concerns for
approval by the [**] Project Manager.

 

2.3.3                        [**]

 

Digimarc
shall operate, maintain and improve the [**] as follows:

 

1.   Digimarc shall operate the [**] making it available at
[**].

 

2.3.4                        [**]
and [**] research

 

1.               Digimarc shall develop, in cooperation with the DLA
Project Manager, a program of activities to enhance [**] and [**]. This program
will provide detailed strategies and plans. The focus will be on [**] and [**].
The program will support [**] initiatives to motivate [**] of [**].

 

2.               The DLA Contract Authority will authorize use of an
additional [**] upon successful completion by May 15, [**] of the [**]
specified in the program described in 2.3.4.1.

 

3.               Digimarc shall deliver to the [**] and provide
training for [**].

 

4.               Digimarc shall track and summarize for [**] and [**]
trends that affect the CDS [**] and development strategy.

 

5.               [**] shall support in-person meetings with [**] as
needed to promote support for the [**] of the CDS.

 

6.               Digimarc shall manage [**].

 

2.3.5                        [**]

 

1.               Digimarc shall [**] the [**] to [**] and their [**],
including administration of [**].

 

3.0              Representations
and Warranties.

 

For
the avoidance of doubt, with the exception of the conditions in Section 2.1.1.2
of Amended Schedule D, Digimarc represents, warrants and undertakes that the
performance of its obligations under Amended Schedule D are covered by Section 10
of the Agreement.

 

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

 

 

Amended Schedule D

Attachment  1

 

CDS PHASE [**] DELIVERY
SCHEDULE

 

[**] for [**]

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends 

  On

  	
   

  	
  Days

  	
   

  	
  CompletionDate

  
	
  [**]-1

  	
   

  	
  Detailed [**] specification
  delivered

  	
   

  	
  [**]

  	
   

  	
  1.1.2

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  15 Jan [**]

  
	
  [**]-2

  	
   

  	
  [**] specification signoff

  	
   

  	
  [**]

  	
   

  	
  1.1.3

  	
   

  	
  [**]-1

  	
   

  	
  15

  	
   

  	
  31 Jan [**]

  
	
  [**]-3

  	
   

  	
  [**] Approved

  	
   

  	
  [**]

  	
   

  	
  2.1

  	
   

  	
  [**]-2

  	
   

  	
  28

  	
   

  	
  1 Mar [**]

  
	
  [**]-4

  	
   

  	
  [**] of the [**]  evaluation release

  	
   

  	
  [**]

  	
   

  	
  1.1.4

  	
   

  	
  [**]-2

  	
   

  	
  161

  	
   

  	
  7 Sept [**]

  
	
  [**]-5

  	
   

  	
  [**] acceptance of [**]

  	
   

  	
  [**]

  	
   

  	
  1.1.5

  	
   

  	
  [**]-4

  	
   

  	
  30

  	
   

  	
  19 Oct [**]

  
	
  [**]-6

  	
   

  	
  [**] of the [**]

  	
   

  	
  [**]

  	
   

  	
  1.1.6

  	
   

  	
  [**]-5

  	
   

  	
  28

  	
   

  	
  3 Dec [**]

  
	
  [**]-7

  	
   

  	
  [**] acceptance of [**]

  	
   

  	
  [**]

  	
   

  	
  1.1.7

  	
   

  	
  [**]-6

  	
   

  	
  28

  	
   

  	
  31 Dec [**]

  

 

[**]

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends 

  On

  	
   

  	
  Days

  	
   

  	
  CompletionDate

  
	
  [**]-1

  	
   

  	
  [**] Specification

  	
   

  	
  [**]

  	
   

  	
  1.1.2

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  15 Jan [**]

  
	
  [**]-2

  	
   

  	
  [**] Specification signoff

  	
   

  	
  [**]

  	
   

  	
  1.1.3

  	
   

  	
  [**]-1

  	
   

  	
  15

  	
   

  	
  31Jan [**]

  
	
  [**]-3

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  1.1.6

  	
   

  	
  [**]-2

  	
   

  	
  213

  	
   

  	
  3 Dec [**]

  
	
  [**]-4

  	
   

  	
  Deliver [**] Report

  	
   

  	
  [**]

  	
   

  	
  1.1.6

  	
   

  	
  [**]-2

  	
   

  	
  213

  	
   

  	
  3 Dec [**]

  
	
  [**]-5

  	
   

  	
  [**] acceptance of [**] and
  report

  	
   

  	
  [**]

  	
   

  	
  1.1.7

  	
   

  	
  [**]-3, 

  [**]-4

  	
   

  	
  28

  	
   

  	
  31 Dec [**]

  

 

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

 

 

DLA: SCHEDULE “E”

 

ARBITRATION AGREEMENT

 

An Agreement dated June 21, 1999, hereby amended effective as of January 1,
[**], by and among the Parties (as defined below) to submit for final and
binding resolution by international arbitration all Disputes (as defined below)
arising out of or otherwise connected to a project relating to the development
and potential licensing, marketing and servicing of a Counterfeit Deterrence
System (as defined in the Development and License Agreement identified below)
and the services of Digimarc (as defined below) in relation to the project.

 

WHEREAS, Digimarc Corporation, a corporation existing under the laws of
the State of Delaware, USA, is developing, [**] and referred to in the
Development and License Agreement (identified below) as [**]), technology [**]
(the “Counterfeit Deterrence System” or “CDS” as defined in the Development and
License Agreement identified below);

 

WHEREAS, the [**] has asked the [**], to provide it with limited
assistance in connection with the development and potential subsequent
licensing of the CDS as set out in a Development and License Agreement (the “DLA”)
effective from January 1, [**] and [**] Agreement effective January 1,
[**];

 

WHEREAS, in performance of the DLA, the [**] and Digimarc will enter
into a contract with [**], which will act as escrow agent for certain purposes
pursuant to an Escrow Agreement (the “Escrow Agreement”) which is attached as
Schedule M to the DLA;

 

WHEREAS, in the course of performance of the DLA, Digimarc may be directed
to issue licenses to certain [**] in accordance with standard forms of license
agreement which are attached at Schedules K-1, K-2, L-1 and L-2 to the DLA all
as amended;

 

WHEREAS, in the course of performance of the DLA, Digimarc may enter
into System Support Services Agreements, a form of which is attached at
Schedule O to the DLA, with licensees;

 

WHEREAS, in the course of performance of the DLA, Digimarc may provide
consulting and programming services to a [**] on the terms described in
Schedule P to the DLA to assist [**] to ensure that a [**] (as defined in the
DLA) [**];

 

WHEREAS, [**], pursuant to an  Indemnity Agreement (as
amended from time to time) of or of approximately the same date as this
Arbitration Agreement (the “Indemnity Agreement”), agreed to compensate and to
indemnify and hold harmless the  [**] in respect of any liability in
connection with the project;

 

WHEREAS, given the international nature of the Agreements (as defined
below), all the Parties (as defined below) to the Agreements (as defined below)
are desirous to avoid recourse to national courts and the potential expense and
delay of prosecuting connected Claims (as defined 

 

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

 

 

below)
in more than one proceeding and also to exclude the risk of having to apply
contradictory or inconsistent fact-findings, conclusions, judgments or awards
for any Dispute (as defined below) which may arise between or among the Parties
(as defined below) and instead wish to resort to international arbitration as
the exclusive means of resolving in a final, binding and consistent manner all
Disputes (as defined below) arising in connection with the Agreements (as
defined below) for the CDS and of establishing through this Arbitration
Agreement a mechanism to these ends.

 

The
Parties agree as follows:

 

1.                                      The meaning of the following terms in this Arbitration Agreement shall
be as set out below:

 

(a)                                 “Agreements” shall mean all agreements, contracts, schedules
or other arrangements in connection with the development or licensing or
marketing or servicing of the CDS as listed in Schedule B, as amended from
time to time.

 

(b)                                “Appointing Authority” shall mean the [**].

 

(c)                                 “Arbitrating Party” or “Arbitrating Parties” shall
mean (i) any and all Parties which have become involved in any arbitration
under this Arbitration Agreement as Claimants or Respondents or (ii) which
have been otherwise joined to any arbitration under this Arbitration Agreement
or (iii) the [**], Digimarc, any [**] or any licensed [**] in the
aforementioned circumstances or when it or they has or have exercised their
right of Intervention in any arbitration under this Arbitration Agreement.

 

(d)                                “Claim” shall include without limitation any claim or
counterclaim or crossclaim made by an Arbitrating Party.

 

(e)                                 “Claimant” or “Claimants” shall mean any Party which,
either separately or together with any other Party or Parties, initiates an arbitration under this Arbitration Agreement.

 

(f)                                   “Dispute” shall mean any dispute, difference,
controversy or claim except only for an Excluded Dispute (as defined below)
between or among the parties arising out of or relating to or in connection
with this Arbitration Agreement or any of the Agreements listed in
Schedule B, including, but not limited to, their signature, validity,
interpretation, performance, amendment, breach, termination and
post-termination obligations.

 

(g)                                “Excluded Dispute” shall mean only a dispute between
the [**] and Digimarc as described in clause 6.4 of the Escrow Agreement as to
the occurrence of a Release Event as defined in clause 6.1 of the Escrow
Agreement. Any such dispute shall be referred to an expert appointed by the
Managing Director of the Escrow Agent (as defined in the Escrow Agreement) and
any decision rendered by such an expert pursuant to clause 6.4 of the Escrow
Agreement shall be accorded res judicata
effect by any arbitral tribunal appointed under this Arbitration Agreement.

 

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

 

 

(h)                                “Intervention” shall mean the right of any of the
[**], Digimarc, any [**] or any licensed [**] to intervene into a particular
arbitration as an Arbitrating Party even when it is not a Claimant or
Respondent and has not been joined into any arbitration by an Arbitrating
Party.

 

(i)                                    “Notice of Arbitration” shall mean the document given
when initiating recourse to arbitration or to join any Party as an Arbitrating Party as well as to initiate recourse in
arbitration against any Party which is already an Arbitrating Party.

 

(j)                                    “Party” or “Parties” shall mean any of the signatories
to this Arbitration Agreement and those parties listed in Schedule A as
amended from time to time.

 

(k)                                 “Respondent” or “Respondents” shall mean any Party
which, either separately or together with any other Party, is named as a
Respondent in an arbitration by any Claimant or
Claimants.

 

(l)                                    In interpreting this Arbitration Agreement, singular
shall be read for plural where appropriate to reflect the multi-party nature of
any arbitration.

 

2.                                       Any Dispute shall be finally settled by arbitration
under the [**] as in force at the date of commencement of this Arbitration
Agreement except as the [**] Rules are modified in the body and
Schedule C of this Arbitration Agreement and to the exclusion of any
provisions of the [**] Rules as are inconsistent with the express
provisions of this Arbitration Agreement or with the multi-party nature of an
arbitration under this Arbitration Agreement.

 

3.                                       The language used in any arbitration shall be English.
All documents submitted into any arbitration shall be in English or submitted
with a complete English translation. Oral evidence may be submitted in a
language other than English provided that the Arbitrating Party submitting the
oral evidence makes provision for its simultaneous interpretation into English.
The cost of any translation or interpretation into English shall be borne
entirely by the Arbitrating Party on whose behalf the non-English document or
oral evidence is submitted and shall not be included among the “costs of
arbitration” apportioned pursuant to Article 40 of the [**]

 

4.                                      The place of Arbitration shall be [**].

 

5.                                      Arbitration pursuant to this Arbitration Agreement shall be the sole and
exclusive means for resolving any Dispute.

 

6.                                      No entity shall become a Party unless that entity has become a Party to
this Arbitration Agreement by executing a counterpart of this Arbitration
Agreement.

 

7.                                      No Party shall enter into any contract or agreement which alters or
amends in any material respect any of the rights or obligations of any Party
under any Agreement unless the contract or agreement shall contain the clause
set out in Schedule D.  Each Party
to this 

 

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Arbitration
Agreement hereby expressly accepts the addition of new parties to Schedule A and of new contracts or agreements to Schedule B.  Any Party which fails to act in conformity
with this Article 7 shall be fully liable for any loss, injury or damage
whatsoever resulting therefrom to any other Party.

 

8. (a)                     Any Claimant or Claimants shall initiate recourse to
arbitration by giving to each Respondent a Notice of Arbitration and statement
of claim which specify, inter alia,
the Agreement or Agreements involved in the Dispute. Any Claimant or Claimants
shall also at the same time send a copy of the same Notice of Arbitration and
statement of claim to all other Parties and to the [**]. An arbitration shall
be deemed to commence upon receipt of the Notice of Arbitration and statement
of claim by the [**].

 

(b)                                Within thirty (30) days of the date on which each
Respondent received the Notice of Arbitration, a Respondent may give a third
party Notice of Arbitration in order to join into the arbitration any Party or
Parties as an Arbitrating Party or Arbitrating Parties. The Respondent shall
also at the same time send a copy of any third party Notice of Arbitration to
all other Parties and to the [**].

 

(c)                                 Any third party joined as an Arbitrating Party may,
within thirty (30) days of receipt of any third party Notice of Arbitration,
give fourth party Notices of Arbitration in order to join any Party or Parties
as an Arbitrating Party or Arbitrating Parties. The third party shall also at
the same time send a copy of any fourth party Notice of Arbitration to all
other Parties and to the [**].

 

(d)                                Parties may be joined as further additional
Arbitrating Parties by any Arbitrating Party or Arbitrating Parties until such
time as thirty (30) days have elapsed without a new Arbitrating Party being
joined into the arbitration.

 

(e)                                 The [**], Digimarc, any [**], and any licensed [**],
whether or not joined as a Respondent or as a further additional Arbitrating
Party, shall each have the right to intervene in any arbitration by giving a
Notice of Arbitration to each of the Arbitrating Parties within thirty (30)
days after receipt of the copy of a Notice of Arbitration from the last Arbitrating
Party to be joined or from the last Party to intervene. The [**], Digimarc, any
[**], and any licensed [**] shall also at the same time send a copy of the
Notice of Arbitration to the [**] and to all other Parties.

 

(f)                                   The arbitral tribunal, once constituted and after
affording the Arbitrating Parties and all other Parties a reasonable period of
time in which to comment, shall have the authority to require by an order that
any Party or Parties which is not or are not an Arbitrating Party or Arbitrating
Parties shall nonetheless be joined into the arbitration as an Arbitrating
Party or Arbitrating Parties should the arbitral tribunal determine that: (a) the
absence of said Party or Parties from the pending arbitration would prevent the
according of complete relief in regard to the Claims of the Arbitrating
Parties; or (b) that the Party or Parties has or have a real and
significant interest in the Agreement or Agreements out of or in connection
with which the Disputes involved in the pending arbitration have arisen and 

 

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that the absence of said Party or Parties would
significantly impede its or their ability to protect that interest. Any such
order issued by the arbitral tribunal shall be final and binding upon the
Parties.

 

(g)                                Any Arbitrating Party may join into a pending
arbitration any Dispute which presents issues of law or fact common with those
in the Dispute or Disputes already in the pending arbitration by issuing,
within 30 days of its receipt of a Notice of Arbitration, a Notice of
Arbitration and a statement of claim which specify, inter alia, the Agreement or Agreements involved in the
Dispute and sets out the issues of law or fact it alleges are common with those
in the Dispute or those Disputes already in the pending arbitration.

 

(h)                                The arbitral tribunal shall determine by an order,
which shall be final and binding upon the Parties, any issue raised by an
Arbitrating Party as to whether or not a Dispute joined into any pending
arbitration did, in fact, at the time it was joined into the arbitration,
present issues of law or fact common with those presented in other Disputes in
the pending arbitration. Any Dispute which is found not to have presented
common issues of law or fact shall be dismissed without prejudice from the
pending arbitration.

 

(i)                                    Joinder of any Party or Parties or of any Dispute or
Disputes to any arbitration pursuant to this Arbitration Agreement shall be
permitted only when made in accordance with the provisions of this Arbitration
Agreement, including, without limitation, the strict time limits and no joinder
or Intervention other than those provided for shall be permitted.

 

(j)                                    Any multi-party arbitration arising as a result of
there being more than two Arbitrating Parties will be conducted as a single
arbitration involving all Arbitrating Parties.

 

(k)                                 Any Arbitrating Party giving any Notice of Arbitration
or sending any copy of a Notice of Arbitration shall send to each recipient
according to the provisions set out above a full copy of the document by international courier or other appropriate means of ensuring rapid and certain
delivery and, when required to send documents to several recipients, the
Arbitrating Party shall send all documents on the same day.

 

(l)                                    Any advances deemed necessary to cover the costs of
any arbitration shall be made in equal shares by all Arbitrating Parties,
provided that multiple Claimants or multiple Respondents shall be deemed to constitute
one Arbitrating Party for purposes of this subparagraph only, and provided
further that should any Arbitrating Party fail to advance its share (a “Defaulting
Arbitrating Party”), it shall be the responsibility of the Arbitrating Party
which gave the Notice of Arbitration against the Defaulting Arbitrating Party
or Defaulting Arbitrating Parties to advance the share due from the Defaulting
Arbitrating Party or Defaulting Arbitrating Parties. Any Claim brought by a
Defaulting Arbitrating Party shall be dismissed without prejudice. However, the
recipient of any Notice of Arbitration given by a Defaulting Arbitrating Party
shall continue to be an Arbitrating Party if it has itself given any Notice of
Arbitration, unless it withdraws any such Notice of Arbitration. Should any
Defaulting Arbitrating Party commence arbitration in order to reassert any
Claim which has been dismissed pursuant to this subparagraph, that Claim 

 

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shall be deemed to be connected to the pending
arbitration from which it was dismissed for the purposes of Article [**]
of the [**] Arbitration Act, 1986 and the Defaulting Arbitrating Party shall be
required to cover the costs of the arbitration as though its Claim had not been
dismissed.

 

9.                                      If any Dispute arises whilst an arbitration is pending in accordance
with the provisions of this Arbitration Agreement, but one or more of the
Arbitrating Parties to that Dispute cannot be joined to the pending arbitration
in accordance with the provisions of Article 8 of this Arbitration
Agreement, the Dispute and the Arbitrating Parties thereto shall nonetheless be
joined into the pending arbitration at the request of a Party which is an
Arbitrating Party in both the pending arbitration and the Dispute which has
arisen so that the Disputes may be resolved in the same arbitration, provided
the arbitral tribunal decides that the later Dispute presents issues of law or
fact common with those in the pending arbitration and that joinder under these
circumstances would not result in undue delay for the pending arbitration.

 

10.                                Each Party agrees that neither an arbitral tribunal established pursuant
to this Arbitration Agreement nor the Parties shall be authorised to take or
seek from any arbitral tribunal or judicial authority any interim measure or
any pre-award relief against the [**], any provision of the [**] Rules notwithstanding.
Nothing in this Arbitration Agreement shall operate or be regarded as a waiver,
renunciation or other modification of the [**], of whatever nature and wherever
situated, under international convention or under any applicable law. Except as
otherwise provided in this Article 10 with regard to the [**], each Party
irrevocably agrees that, to the extent that it or any of its assets has or
hereafter may acquire any right of immunity, whether characterized as sovereign
immunity or otherwise, from any legal proceedings, whether in [**] or
elsewhere, to enforce or collect upon any obligation of that Party in
connection with the transaction contemplated under any Agreement, including,
without limitation, immunity from jurisdiction of any arbitral tribunal,
immunity from service of process, immunity from execution of judgment and immunity
of any of its property from attachment prior to the rendering of an arbitral
award under this Arbitration Agreement or entry of judgment, it hereby
expressly and irrevocably waives all such immunity.

 

11. (a)                Any Dispute, regardless of the number of Arbitrating
Parties, shall be submitted to an arbitral tribunal of three (3) arbitrators
appointed by the Appointing Authority.

 

(b)                                The arbitral tribunal shall be appointed by the
Appointing Authority once the time has terminated during which any Party is entitled
to give a Notice of Arbitration to join any other Party or the [**], Digimarc,
any [**] or any licensed [**] is entitled to intervene.

 

(c)                                 The presiding arbitrator of the arbitral tribunal
shall be a British national and shall have been admitted to practice as a
barrister or solicitor in England and shall also have significant expertise in
the resolution of disputes in international commercial matters. All arbitrators
shall have a full command of the English language.

 

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(d)                                The arbitrators appointed in accordance with this
Arbitration Agreement shall be remunerated in accordance with the provisions of
the Rules of the [**] in effect at the time [**].

 

12.                                Awards shall be final and binding as from the date the awards are made.
The Parties undertake to carry out all awards without delay and waive their
right to any form of appeal or recourse to a court of law or other judicial
authority, insofar as any such waiver may validly be made. All awards may if
necessary be enforced by any court having jurisdiction in the same manner as
the judgment of any such court.

 

13.                                Each Party explicitly agrees hereby that it shall recognise any arbitral
award rendered in an arbitration under this
Arbitration Agreement as final and binding upon it unless a competent arbitral
tribunal or a competent judicial authority determines that said Party never
received notice of the pendency of the arbitration in which the award was
rendered.

 

14.                                Any arbitral award rendered under this Arbitration Agreement shall be
accorded res judicata effect by
any arbitral tribunal appointed under this Arbitration Agreement in regard to
those Parties which are bound by an award pursuant to Article 13.

 

15.                                The obligations of the Parties to the Agreements shall not be altered or
suspended by reason of any arbitration being conducted during the life of any
Agreement.

 

16.                                Any Agreement in regard to which a Dispute has arisen shall be governed
by the applicable law as specified in that Agreement.

 

17.                                This Arbitration Agreement shall bind and inure to the benefit of the
respective successors and permitted assigns of the Parties, subject to all
Parties respecting Articles 6 and 7 hereto.

 

18.                                This Arbitration Agreement may be executed in several counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.

 

19.                                Any provision of this Arbitration Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

 

20.                                This Arbitration Agreement shall enter into full force and effect on the
date first written above and shall continue in full force and effect
indefinitely, unless it is terminated by mutual written consent of all of the
Parties.

 

21.                                This Arbitration Agreement shall be governed by and construed in all
respects in accordance with the laws of England, to the exclusion of its rules of
conflicts of law.

 

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The Parties have caused this Arbitration Agreement to be executed in
multiple copies, with effect from January 1, 1999.

 

[Signatures]

 

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Schedule A
to Arbitration Agreement

 

The following, together with
their assigns or successors are Parties to the Arbitration Agreement. Each
Party has the obligation to advise every other Party of any change in address
and each Party expressly agrees that any notice delivered to that Party at the
listed address or to any duly notified change of address shall be deemed to be
valid notice and that any notice shall be deemed to have been received on the
day it is so delivered:

 

[**],

Digimarc,

[**]

 

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Schedule
B to Arbitration Agreement

 

The following are considered to
be Agreements:

 

1.               Development and License Agreement

2.               Indemnity Agreement

3.               Escrow Agreement

4.               [**] License Agreements – [**]

5.               [**] License Agreements – [**]

6.               [**] License Agreements – [**]

7.               [**] License Agreements – [**]

8.               System Support Services Agreements

9.               [**] Agreement

 

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Schedule
C to Arbitration Agreement

 

In accordance
with Article 1.1 of the [**] Rules, in addition to such other
modifications of the [**] Rules as are contained in this Arbitration
Agreement, the Parties to this Arbitration Agreement and to the Agreements
modify the [**] Rules as follows:

 

(a)                                           Notwithstanding Article 3.1 of
the [**] Rules, a Notice of Arbitration may be given by any Arbitrating Party
to any Party or Parties so as to join said Party or Parties into any pending
arbitration and this Arbitration Agreement shall allow for multi-party
arbitration involving third parties, fourth parties and any further additional
parties.

 

(b)                                          Notwithstanding Article 3.2 of
the [**] Rules, arbitral proceedings under this Arbitration Agreement shall be
deemed to commence on the date on which the Claimant’s Notice of Arbitration is
received by the [**].

 

(c)                                           Notwithstanding Article 3.3(g),
Article 3.4(a) and Article 3.4(b) of the [**] Rules, the
Notice of Arbitration shall not contain a proposal as to the number or
appointment or the notification of the appointment of arbitrators (and, if
made, any such proposal shall be disregarded).

 

(d)                                          Notwithstanding Article 19.3 of
the [**] Rules, any Arbitrating Party must make any counter-claim or claim for
the purpose of set-off in its statement of defence and not at a later stage of
the arbitral proceedings.

 

(e)                                           Notwithstanding Article 20 of
the [**] Rules, the arbitral tribunal shall, in considering whether it is
appropriate to allow a party to amend or supplement a written communication
(given the interests of economy, efficiency and the desire to avoid the risk of
inconsistent awards), have particular regard to the multi-party nature of any
arbitration proceeding, the consequences in terms of delay and the objective of
resolving related Claims in a single arbitration involving all relevant
Parties.

 

(f)                                             Notwithstanding Article 23 of
the [**] Rules, in considering whether an extension of a time-limit for the
communication of written statements is justified, the arbitral tribunal shall
have particular regard to the multi-party nature of any arbitration proceeding
and the consequences in terms of delay.

 

(g)                                          Notwithstanding Article 26 of
the [**] Rules, no interim measures shall be sought or applied against the [**]
in connection with any Dispute by either an arbitral tribunal established
pursuant to this Arbitration Agreement or any judicial authority.

 

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Schedule
D to Arbitration Agreement

 

Standard language to be inserted in each Agreement.

 

“[Article No:
and heading (e.g., Settlement of Disputes), if applicable]

 

Any Dispute
(as defined in the Arbitration Agreement) shall be finally settled by
arbitration in accordance with the Arbitration Agreement as amended from time
to time.

 

“[Article No:
and heading (e.g., Governing Law), if applicable]

 

This
[Agreement] shall be governed by and construed in all respects in accordance
with the laws of [INSERT], to the exclusion of [INSERT]’s rules of
conflicts of law.”

 

[E – Arbitration Agreement]

 

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SCHEDULE “F”

 

OTHER [**] TECHNOLOGY

 

1.                                       Techniques
for [**].

 

2.                                       Copyright
in the [**].

 

3.                                       The
above technology is partially described in the following UK patent
applications:

 

UK Patent Application Nos:  [**]

 

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SCHEDULE “G”

 

DIGIMARC TECHNOLOGY

 

The Digimarc Technology includes [**].

 

This technology is partially described in the following issued U.S.
patents:

 

US 5,850,481

US 5,832,119

US 5,809,160

US 5,768,426

US 5,748,763

US 5,745,604

US 5,721,788

US 5,710,834

US 5,636,292[**]

 

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SCHEDULE “H”

 

PROJECT TECHNOLOGY

 

The Project Technology shall include:

 

1.                                       The
modification of techniques for using the Digimarc and [**] Technologies in the
[**].

 

2.                                       The
effects and behaviours of [**] when used in [**].

 

3.                                       The
effects of various types [**].

 

4.                                       Improvements
to Digimarc’s testing and certification processes used in testing and
certifying [**].

 

5.                                       The
improvement of [**].

 

6.                                       The
use of [**].

 

7.                                       Detailed
techniques [**]

 

8.                                       [**]

 

9.                                       Intellectual Property Rights that:
a) [**] under Section 8 of this Agreement; b) were developed by or on
behalf of Digimarc under this Agreement; and c) were developed by or on behalf
of Digimarc after 1 January [**].

 

10.                                 Examples
of Project Technology include the following:

 

[**]

 

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SCHEDULE
“I”

 

ALLOWABLE
COSTS

 

1.                                       For the purposes of this Schedule I:

 

	
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SCHEDULE “J”

 

SECURITY REQUIREMENTS

 

1.                                       Digimarc
shall implement the “Security Measures” normally followed by a [**] and
distributor comparable to Digimarc in number of employees and revenue engaged
in the development and distribution of [**] and maintain such Security Measures
in effect at all times throughout the Term. 
The Security Measures will include but not be limited to
:

 

1.1                                 Electronic
security for protection of the network and protection of the CDS software
products that are under development.

 

(a)                                  Network
protection which will ensure that unauthorized users will not get access to
design information, sensitive test data, proprietary information, released
software products or software documentation that is hosted on the network. This
protection will include:

 

(i)                                     erecting
barriers to prevent hackers, whether inside or outside the Digimarc facility,
from accessing the secure network; and

 

(ii)                                  the
customizing of developmental and operational procedures for the software
development team that maximize security while not impeding the team’s ability
to work efficiently and effectively.

 

1.2                                 Physical
Security, including the following:

 

(a)                                  the Digimarc facility at which the Work will be performed
will be secure from unauthorized visitors;

 

(b)                                 the software development laboratory and the computer network
employed in the Work shall be secure;

 

(c)                                  all  personnel authorized to have access to
sensitive CDS information, data and designs including but not limited to the
employees of authorised Subcontractors will be properly screened; and

 

(d)                                 production and handling of interim and final versions of the
Deliverables will be carefully controlled, monitored and audited.

 

2.                                       Within sixty (60) days after the Agreement is last signed, [**] shall conduct an audit,
at its own expense, of the Security Measures.

 

3.                                       Following
the audit, the DLA Project Manager shall submit 
a “Security Plan” to Digimarc which will prescribe the actions which
Digimarc must take, if any, to improve the 

 

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Security Measures to be followed by Digimarc until the end of Phase 3
and the dates by which Digimarc shall take them.

 

4.                                       Within
twenty (20) Business Days after receipt of the Security Plan, Digimarc shall
notify the DLA Project Manager of the cost to implement the Plan. Within ten (10) Business
Days after receipt of the notice, the DLA Project Manager shall notify Digimarc
which aspects of the Security Plan to implement and Digimarc shall implement
them in accordance with the Plan.

 

5.                                       Any
cost incurred providing security required by the Security Plan, beyond what is
reasonable and customary for a similarly-situated [**] company in the Portland area, will be an Allowable Cost and
compensated by [**] accordingly.  Digimarc has budgeted [**].  Costs required in
excess of this amount may require an adjustment to the [**] and/or Statement of
Work.

 

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SCHEDULE”K-1”

 

[**]
LICENSE AGREEMENT - [**]

 

This [**]  LICENSE AGREEMENT
(the “Agreement”) is made

 

BETWEEN

 

<<[**]
and Address>> (“[**]”)

 

-
AND -

 

DIGIMARC
CORPORATION, a corporation incorporated under the laws of Delaware and having its
head office at 9405 SW Gemini Drive, Beaverton, Oregon. U.S.A.  97008 (“Digimarc”)

 

[**]

 

Digimarc has expertise in, and
owns extensive intellectual property, including patents, patent applications,
copyrights and trade secrets related to digital watermarks, counterfeit
deterrence, copyright protection, and device control (the  ̈Digimarc IPR”);

 

[**] possesses or will possess
intellectual property rights related to the application of such intellectual
property to the detection and deterrence of bank note counterfeiting;

 

Digimarc and [**] have
cooperated in the development of means, using such intellectual property, to
detect and deter the counterfeiting of bank notes [**] (the “Counterfeit
Deterrence System” or “CDS”);

 

[**] desires to obtain a license
to certain components of the CDS so it can [**] which include the CDS
counterfeit deterring [**].

 

In
consideration of these premises, the covenants set out in this Agreement and
other good and valuable consideration, the receipt and adequacy of which are
acknowledged by each of the parties, the parties agree as follows:

 

I.              DEFINITIONS  AND
PRINCIPLES OF INTERPRETATION

 

1.1           Definitions

 

“Agreement” means these articles of agreement,
including the Attachments, and those documents as specified or referenced in
this Agreement as forming part of the Agreement, all as may be amended from
time to time;

 

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“Arbitration
Agreement” means the Arbitration Agreement entered into between the parties and
others and effective 1 January 1999, as amended from time to time;

 

“Attachment” means a document specified as being
attached to this Agreement;

 

[**] the CDS;[**]

 

“Business Day” means a day that both Digimarc and
[**] are open for business at their respective addresses noted above;

 

“Confidential
Information” means information disclosed before or during the Term of this Agreement
in any form which, if disclosed in tangible form, is or was labeled “Confidential”,
“Proprietary” or with a similar legend, or if disclosed orally, is or was
information that by its nature would be understood to be confidential to the
Discloser.  For greater certainty, the
Confidential Information of Digimarc includes the Digimarc IPR and the [**];

 

[**]”Counterfeit
Deterrence System” (or “CDS” or “System”) [**]

 

“Digimarc IPR” means Intellectual Property Rights
owned by Digimarc, now or during the Term of this Agreement, to the extent that
same specifically relates to or forms part of the CDS;

 

“Digital
Watermark” refers to [**] (including [**]) that are [**] from [**] by [**] of
[**], which [**] of [**] and yet do not significantly [**] from the aesthetics
of the [**] or [**] thereby.  Examples
include, but are not limited to:

 

1.             generally imperceptible changes to [**] or
placement in [**];

2.                                       [**] of a substrate, where the [**]
substantially uniform to human touch;

3.             slight localized changes to [**] or [**] of a
printed document;

4.             slight changes to [**]; or

5.             [**] of substantially [**];

 

“Discloser” means a party which has disclosed
or otherwise made available its Confidential Information to the other party;

 

“DLA Contract
Authority” means the individual appointed as such under the [**] License;

 

[**]

 

“Effective Date”
means
the date on which this Agreement is last signed by the parties;

 

[**]

 

“Field of Use” means the field of [**]

 

“Improvement” means an improvement provided to
[**] under clause 2.14 of the [**] License;

 

“Intellectual
Property Rights” or “IPR” means all
intellectual property rights existing now and in the future including, without
limitation, trade secrets, copyright, database rights, know-how, topographies,
patents and patent applications;

 

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[**]

[**]

 

“[**] License” means Schedule L-1 to the [**]
License;

 

[**]

 

“Recipient” means a party to which the
Confidential Information of the other party has been disclosed or otherwise
made available;

 

“Services” means the Verification Tests and
any other service performed by Digimarc under this Agreement;

 

“Term” means the period commencing on the
Effective Date and ending on the earlier of 31 December [**] or the
date of termination of this Agreement; and

 

“Verification
Test”
means a test or tests developed under the [**] License  to determine [**]

 

1.2           Interpretation - In this Agreement:

 

1.2.1        unless otherwise specified, all references to
money amounts are to the currency of the United States of America;

 

1.2.2        the use of words in the singular or plural, or
with a particular gender, shall not limit the scope or exclude the application
of any provision of this Agreement to such person or persons or circumstances
as the context otherwise permits;

 

1.2.3        whenever a provision of this Agreement requires
an approval or consent by a party to this Agreement and notice of such approval
or consent is not delivered within the applicable time, then the party shall be
conclusively deemed to have withheld the consent or approval;

 

1.2.4        unless otherwise specified, the number of days
within or following which any payment is to be made or act is to be done shall
be interpreted to be continuous and shall be calculated by excluding the day on
which the period commences and including the day which ends the period and by extending
the period to the next Business Day if the last day of the period is not a
Business Day;

 

1.2.5        unless otherwise specified, the order of
precedence for interpreting this Agreement shall be:

 

(a)            this Agreement, excluding Attachments, and

 

(b)           the Attachments;

 

1.2.6        for greater certainty, a party or
representative to which this Agreement grants the right to make a decision or
determination in the sole discretion of the party or representative is not

 

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required to act reasonably in
making the decision or determination and no such decision or determination may
be challenged by the other party under the Arbitration Agreement or otherwise;

 

1.2.7        the words “includes” or “including” will be
construed as meaning “included without limitation” and “including without
limitation” as the case may be; and

 

1.2.8        a clause or Attachment, unless the context
requires otherwise, is a reference to a clause to, an Attachment of, or a
paragraph of an Attachment to, this Agreement, as amended from time to time in
accordance with this Agreement.

 

1.3           Applicable Law - This Agreement shall be
construed in accordance with the laws of England to the exclusion of its rules of
conflicts of laws.

 

1.4           Attachments - The attachments to this
Agreement, listed below, are an integral part of this Agreement:

 

	
  Attachment

  	
   

  	
  Description

  
	
  Attachment “1”

  	
   

  	
  [**]

  
	
  Attachment “2”

  	
   

  	
  Problem Report

  
	
  Attachment “3”

  	
   

  	
  Payment for Services

  
	
  Attachment “4”

  	
   

  	
  [**]

  
	
  Attachment “5”

  	
   

  	
  [**]

  

 

2.             GRANT OF RIGHTS  AND
SERVICES

 

2.1           Subject to the terms of this Agreement,
Digimarc hereby grants to [**], a no charge, non-exclusive, non-transferable
license under the Digimarc IPR and the [**] IPR, in the Field of Use only, [**]

 

2.2           [**] acknowledges and agrees that the Digimarc
IPR, and any technology developed by Digimarc during the course of its
forthcoming and prior work with [**], is the property of Digimarc and that [**]
has no right to sublicense it. [**] acknowledges that a [**] may not [**]

 

2.3           [**] acknowledges and agrees that the [**] IPR
is the property of its owner and that [**] has no right to sublicense it.

 

2.4           Nothing in this Agreement shall be construed to
grant, by implication or otherwise, any broader rights than those specifically
granted herein.

 

2.5           Commencing no later than ten (10) Business
Days after every written request made during the Term by [**], Digimarc shall
make an irrevocable offer, which offer shall remain open for acceptance within
sixty (60) days of receipt [**]

 

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2.6           Commencing no later than twenty (20) Business
Days after every written request made by [**] during the Term, Digimarc shall
conduct Verification Tests of specified [**] on a date or dates agreed between
Digimarc and [**] for the charges specified in clause 3.

 

2.7           Digimarc shall obtain at its own expense all
licenses or permits required to be obtained from the Government of the United
States in order for Digimarc to comply with its obligations under this
Agreement including, without limitation, to deliver the [**], and grant the
foregoing license to [**].

 

3.             SERVICE FEES

 

3.1           [**] shall pay to Digimarc a fee for the  Services as detailed below.  The fee for Services provided pursuant to any
prior agreements between the parties referenced herein shall be as set forth
therein.  Otherwise, the fee for Services
provided:

 

(a)           on or before 31 December [**],
is as set out in Attachment 3;

 

(b)           after 31 December [**], will be
no greater than the fee then paid to Digimarc for similar services by Digimarc’s
most favoured customer.

 

3.2           Shipments of [**], [**] and related
documentation shall be by air, Cost, Insurance & Freight (C.I.F.)
closest major airport (i.e., Digimarc shall be responsible for transportation
and insurance to this port of entry). 
Except as otherwise expressly provided in this Agreement, [**] shall pay
Digimarc all sales, use, goods and services or other similar taxes levied by
any government in the United States or the country of the [**] principal place
of business which Digimarc is obliged to collect and remit to such government(s) in
connection with any amount paid by [**] to Digimarc under this Agreement.

 

3.3           Digimarc is responsible for, and shall
indemnify [**] against, and hold [**] harmless from, the payment of all taxes
levied by any government on or in respect of Digimarc’s income and any amounts
required by law to be paid in respect of social benefits for Digimarc’s
employees relating to or arising out of the performance of the Services. If
required by law, [**] shall deduct all such taxes and amounts from the amounts
otherwise payable to Digimarc and remit them to the appropriate authorities.

 

4.             NUMBER NOT USED

 

5.             [**]
RESPONSIBILITIES

 

5.1           [**] shall make every reasonable effort,
including obtaining a legally binding commitment from all [**], to ensure that
the [**] do not use [**] IPR or the Digimarc IPR, or permit or suffer the [**]
IPR or the Digimarc IPR to be used, for any purpose other than [**].

 

5.2           If [**] learns, or has reasonable cause to
believe, that any [**] has used, or permitted or suffered to be used, or
proposes to use or permit or suffer to be used, [**] IPR or the Digimarc

 

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IPR except as expressly
authorised herein, [**] shall immediately notify Digimarc and the DLA Contract
Authority, and [**] shall use all reasonable efforts, at its own expense,  to prevent any further such use including
exercising whatever legal remedies (including, without limitation, an
application for injunctive relief) are available to [**].  [**] shall, immediately on notice by
Digimarc, assign to Digimarc any right of action which [**] may have to prevent
any further such use. Following such assignment, [**] shall cooperate with
Digimarc to achieve the successful prosecution, or, if elected by Digimarc,
settlement, of any such action.

 

5.3           [**] shall promptly report to Digimarc every
instance which comes to its attention of:

 

(i)            a failure of the [**] to meet the
specifications established under the [**] Agreement in the form of the Problem
Report attached as Attachment 2; or

 

(ii)           unauthorised access to the [**] in the possession of a [**]; or

 

(iii)          failure of any [**] or [**] provided by Digimarc to [**] in response to
the attempted [**].

 

5.4           [**] shall inform Digimarc within thirty (30)
days after the end of each calendar quarter during the Term  of all improvements  relating to (i) Digital Watermarks [**];
(ii) the technology for [**] Digital Watermarks [**], and (iii) the
technology for [**] Digital Watermarks [**] (iv) any other part of the
CDS, which improvements [**] has made, or caused or permitted to be made, as a
result of access to and use of the Digimarc Confidential Information. The first
such information shall be provided to Digimarc within thirty (30) days after
the first calendar quarter following said access, and shall cover improvements
made from the date the [**] first learned of the Digimarc Confidential
Information.  Following the provision of
the information under this clause 5.4, [**] shall provide to Digimarc within a
reasonable period of time following request, the Technical Information for
those improvements requested by Digimarc in writing.

 

5.5           [**] hereby grants to Digimarc a royalty-free,
non-exclusive, sub-licensable, worldwide license to use the improvements
described in clause 5.4 and in any patents thereon owned or otherwise licenseable
by [**].

 

5.6           Such license shall continue until this
Agreement expires or is terminated, or until [**] has no further rights to
Digimarc IPR, whichever occurs last.

 

5.7           For greater certainty, the obligations set out
in clauses 5.4, 5.5 and 5.6 shall not apply to any such improvement which the
[**] can demonstrate would have been made irrespective of access to the
Digimarc Confidential Information.

 

5.8           [**] (or Digimarc if [**] so
designates), shall conduct Verification Tests on representative samples of
[**].  A report detailing the results of
the Tests shall be prepared and promptly provided to [**].

 

5.9           If [**] designates Digimarc to conduct the
tests:

 

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(i)            on or before December 31, [**],
[**] shall pay Digimarc the fees set out in 
Attachment 3;

 

(ii)           after December 31, [**], [**] shall pay Digimarc the fees then paid
to Digimarc for similar services by Digimarc’s most favoured customer.

 

5.10         In the event that said Tests do not indicate,
to [**] satisfaction, that [**] standards detailed in the Verification Tests,
[**] will require the [**] to immediately take whatever corrective action(s) [**]
considers appropriate.

 

5.11         [**] shall advise Digimarc in writing in
advance of any changes which [**] may, at its sole discretion, make from time
to time to the information set forth in Attachments 4 and 5.

 

6.             CONFIDENTIALITY

 

6.1           Except as otherwise expressly permitted by this
Agreement, a Recipient shall not use, 
reproduce or disclose the Confidential Information of the Discloser for
any  purpose other than as reasonably
necessary to comply with its obligations 
under this Agreement or to exercise any rights or licenses granted to it
under or pursuant to this Agreement.

 

6.2           The Recipient shall protect the Confidential
Information of the Discloser from disclosure by using the same degree of care,
which shall be no  less than a reasonable
degree of care, as the Recipient uses to protect its own confidential
information.

 

6.3           On written request from the Discloser, the
Recipient shall return, or certify the destruction of, all originals and copies
of the Discloser’s Confidential Information in the Recipient’s possession or
control which the Recipient does not need to retain in order to perform any
obligations imposed, or exercise any rights acquired, by this Agreement.

 

6.4           A Recipient may, on a need to know basis, and
only for the purposes  described in
clause 6.1, give the other party’s Confidential Information to the
Recipient’s employees or  authorized
subcontractors provided that such employee or subcontractor shall have entered
into a non-disclosure agreement in respect of such Confidential Information in
favour of the Discloser on terms materially similar to the provisions of this
clause 6.

 

6.5           The obligations set out in this clause 6 will
not apply to any Confidential Information that:

 

(a)           is or becomes publicly available
other than through the fault of the Recipient;

 

(b)           was known to the Recipient prior to
disclosure as shown by documentation sufficient to establish such knowledge;

 

(c)           was or is lawfully disclosed to
the  Recipient by a third party who did
not breach any obligation of confidence by such disclosure and who made the
disclosure without 

 

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restriction on
further disclosure all of which is shown by documentation sufficient to
establish same; or

 

(d)           is required by law to be disclosed  provided, however, that the Recipient shall
first give written notice to the Discloser before the disclosure so that the
Discloser may seek an appropriate protective order.

 

Notwithstanding the foregoing,
the fact that Confidential Information, or any part thereof, can be linked
together by a search of publications and other information, followed by a
selection of a series of such items of knowledge from unconnected sources, and
fitting together those items of knowledge so as to duplicate or recreate any
item of Confidential Information, shall not be deemed to cause the Confidential
Information, or any part thereof, to be included within exceptions (a), (b) or
(c), above.

 

6.6           [**] shall not make any disclosure of Digimarc
Confidential Information to [**] which is not licensed by Digimarc, except as
expressly and previously authorized in writing by Digimarc.  Disclosure to [**] shall only be made if and
to the extent reasonably necessary for [**] to fulfill its obligations to [**].

 

6.7           The obligations of the parties under this
clause 6 will survive the Term or sooner termination of this Agreement and will
remain in full force and effect regardless of the cause of any termination.

 

6.8           Nothing in this Agreement shall be construed to
require [**] to disclose any information which is confidential to a third party
including for greater certainty [**].

 

7.             INTELLECTUAL
PROPERTY INDEMNIFICATION

 

7.1           [**] shall provide Digimarc with prompt written
notice of any claim, demand or action against [**] based on an allegation that
the  Digimarc IPR or any part thereof,
infringes any Intellectual Property Right of any person (referred to below as a
“Claim”).

 

7.2                                 Subject to the limitations set out
in clauses 7.3 to 7.6 inclusive, Digimarc shall, at its own expense:

 

(a)                                  negotiate the resolution of any such
Claim;

 

(b)                                 pay all costs associated with the
Claim; and

 

(c)                                  defend any action based on the
Claim.

 

7.3                                 [**] shall, at Digimarc’s expense,
comply with all reasonable requests by Digimarc for assistance from [**] in connection
with the settlement or defence of the Claim.

 

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7.4           Notwithstanding any other provision of this
Agreement to the contrary, but subject to the limitations in this clause 7,
Digimarc shall indemnify [**]  against
and save [**] harmless from all loss, costs, liabilities including an award of
damages, and expenses, including legal fees, arising from each Claim first
notified to Digimarc prior to 31 December [**].  The obligation set out in this clause 7 shall
not apply in respect of any settlement made by [**] without the consent of
Digimarc.

 

7.5           For the purposes of clauses 7.2 through 7.4
inclusive, “Claim” shall mean any Claim, other than a Claim for patent
infringement which Digimarc can demonstrate occurred without Digimarc acting
recklessly or negligently.

 

7.6           The provisions of this Section 7 shall
apply to any prior Agreements between the parties referenced herein as if fully
set forth therein.

 

8.             REPRESENTATIONS AND
WARRANTIES OF DIGIMARC

 

8.1           Digimarc represents, warrants and undertakes to
[**] that from and after the Effective Date:

 

(a)                                  the Services provided under this
Agreement will be of professional quality conforming to generally accepted
practices for like services and will be performed at all times in a timely and
cost effective manner and, for greater certainty Digimarc shall employ the
standard of care in performing the Services 
that would be expected of an expert [**] of the same or similar type as
the [**] which comprises the [**];

 

(b)           Digimarc is duly incorporated and
organized and is validly subsisting under the laws of the State of Delaware,
U.S.A. or some other state in the United States with full corporate power and
authority to enter into this Agreement;

 

(c)           to the best of its knowledge,
neither this Agreement nor the Services will contravene, breach, or result in
any default under any agreement, permit, by-law, or law or regulation to which
Digimarc is subject or by which it is bound including, for greater certainty
any laws or regulations in effect in the United States governing export;

 

(d)           this Agreement when executed and
delivered by Digimarc shall constitute a valid and binding agreement with
Digimarc enforceable against Digimarc according to its terms; and

 

(e)                                  Digimarc will at all material times
have the right to grant the licenses to the Digimarc IPR as required by this
Agreement.

 

8.2                                 Digimarc represents, warrants and
undertakes to [**] that:

 

(a)                                  incorporated as part of its [**];

 

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(b)           [**] shall contain no lock, clock,
timer, counter, copy protection feature, replication device or intentional
defects (including but not limited to “viruses” or “worms” as such terms are
commonly used in the computer industry), CPU serial number reference, or other
device which might:

 

(i)            lock, disable or erase the [**] or any data
which is loaded on the [**] so as to prevent full use of the [**] by authorized
persons; or

 

(ii)           require action or intervention by Digimarc or
any other person to allow properly trained and authorized persons to use the
[**];

 

(c)          the source code for the [**] will support the
year 2000 and neither performance nor functionality will be affected by dates
prior to, during and after the year 2000, and for greater certainty, the [**]
will switch to 1 January 2000 on 1 January 2000, and the year 2000
will be recognized as a leap year.

 

9.             REPRESENTATIONS AND
WARRANTIES OF [**]

 

9.1           [**] represents and warrants to Digimarc that:

 

(a)           [**] has full power and authority to
enter into this Agreement; and

 

(b)           this Agreement when executed and
delivered by [**] shall constitute a valid, binding and enforceable obligation
of [**].

 

9.2           [**] makes no representations, warranties or
undertakings that [**] has any right to grant the licenses required to be
granted by clause 5.5 and Digimarc shall be solely responsible for determining
that such improvements are suitable for the intended use and for the
consequences of any use of the same whether by Digimarc or others, and [**]
hereby disclaims all liability in connection therewith.

 

10.          TERM AND
TERMINATION

 

10.1         This Agreement will take effect on the
Effective Date and will remain in force throughout the Term unless sooner
terminated as provided herein.

 

10.2         Either party may terminate this Agreement if
the other party breaches any of its obligations under this Agreement and fails
to remedy such breach within thirty (30) days after receiving written notice of
such breach from the other party.

 

10.3         Upon termination of this Agreement:

 

(a)           all rights granted to [**] under
this Agreement will immediately terminate. 
No interest in any such rights will thereafter remain with [**],except
that [**] that have already been 

 

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produced will
continue to be licensed, but no further production of [**] for [**] shall be
permitted; and

 

(b)           each party shall return, or certify
the destruction of, to the Discloser, all originals and copies of the  Discloser’s Confidential Information in the
party’s possession or control which the party does not need to retain in order
to exercise any rights acquired by this Agreement.

 

10.4         No termination of this Agreement will in any
manner release, or be construed as releasing, any party from any liability
arising out of or in connection with that party’s breach of or failure to
perform any covenant, duty or obligation contained herein prior to the date of
such termination.

 

10.5         Upon termination of the [**] License by
Digimarc for cause, the rights of the [**] hereunder to use the Digimarc IPR
shall be deemed to be restricted to the [**] as of the date of such termination.

 

11.          DISPUTE RESOLUTION

 

11.1         Any Dispute (as defined in the Arbitration
Agreement) shall be finally settled by arbitration in accordance with the
Arbitration Agreement.

 

11.2         Unless otherwise agreed between the parties or
unless the subject matter of the dispute resolution proceedings is a party’s
right to terminate this Agreement, the Services shall continue during the
dispute resolution proceedings and payments due to Digimarc shall not be
withheld on account of such proceedings unless that particular services or
payment is the subject matter of the proceedings.  Notwithstanding the foregoing, [**] may in
its sole discretion instruct Digimarc to continue to perform services which are
the subject matter of the proceedings and Digimarc shall act in accordance with
those instructions, subject to payment under clause 3.1.

 

12.          MISCELLANEOUS
PROVISIONS

 

12.1         Remedies Cumulative - Except as otherwise
expressly set out in this Agreement:

 

(a)           each and every right, power and
remedy of a party will be considered to be cumulative with and in addition to
any other right, power and remedy which such party may have at law or in equity
in the event of breach of any of the terms of this Agreement;

 

(b)           the exercise or partial exercise of
any right, power or remedy will neither constitute the exclusive election
thereof nor the waiver of any other right, power or remedy available to such
party; and

 

(c)          a party terminating this Agreement in
accordance with the provisions of the Termination clause will have no liability
or obligation to the other as a result of or with respect to the termination.

 

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12.2                        Notices.  
All notices under this Agreement shall be delivered by fax or recognized
international courier service.  The
notice shall be deemed effective as of the date of delivery to the address of
the party specified below, as evidenced by a delivery receipt or the addressee’s
registry of incoming correspondence. 
Unless otherwise expressly set out in this Agreement, all notices to a
party will be sent to the party’s authorized representative identified below
and all notices from a party will be sent by the party’s authorized
representative identified below.

 

12.3         Any notice to [**] shall be sent to both of,
and any notice from [**] shall be sent by either:

 

	
  Name 1

  	
   

  	
  Name 2

  
	
  Address 1

  	
   

  	
  Address 2

  

 

12.4                           Any notice to Digimarc shall be sent
to both of, and any notice from Digimarc shall be sent by either:

 

	
  Mr. Robert Chamness

  	
   

  	
  Mr. Scott Carr

  
	
  Vice President and General
  Counsel

  	
   

  	
  President, Digimarc Watermarking
  Solutions

  
	
  Digimarc Corporation

  	
   

  	
  Digimarc Corporation

  
	
  9405 SW Gemini Drive

  	
   

  	
  9405 SW Gemini Drive

  
	
  Beaverton, OR 97008

  	
   

  	
  Beaverton, OR 97008

  
	
  Fax: (503) 469-4777

  	
   

  	
  Fax: (503) 469-4777

  

 

12.5         A copy of every notice sent by either party
shall be sent to: [**].

 

12.6         A party may change its address for notice by
notice to the other party in accordance with the foregoing provisions.

 

12.7         Severability. 
If any part of this Agreement is held by an arbitral tribunal appointed
pursuant to the Arbitration Agreement or other competent authority to be void
or unenforceable, the parties agree that such determination will not result in
the nullity or unenforceability of the remaining parts of this Agreement, which
will continue in force to the fullest extent permitted by law. The parties
further agree to replace such void or unenforceable part of this Agreement with
a valid and enforceable provision that will achieve, to the extent legally
permissible, the economic, business and other purposes of the void or
unenforceable part.

 

12.8         Counterparts. 
This Agreement may be executed in separate counterparts, and by facsimile,
each of which will be deemed an original, and when executed, separately or
together, will constitute a single original instrument, effective in the same
manner as if the parties had executed one and the same instrument.

 

12.9         Entire Agreement. 
With the exception of any prior agreements between the parties
referenced herein, this Agreement is intended by the parties to be the final
expression of their 

 

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agreement and constitutes and
embodies the entire agreement and understanding between the parties hereto and
constitutes a complete and exclusive statement of the terms and conditions
thereof, and will supersede any and all prior correspondence, conversations,
negotiations, agreements or understandings relating to the same subject
matter.  In case of a conflict of any
prior agreements between the parties referenced herein and this Agreement, the
latter shall control.

 

12.10       Amendments.  
 No change in, modification of or addition to the terms and
conditions contained herein will be valid as between the parties unless set
forth in a writing that is signed by an authorized representative of each of
the parties and which specifically states that it constitutes an amendment to
this Agreement.

 

12.11       Waiver.   No waiver of any term, provision, or condition
of this Agreement will be effective unless in a written document signed by the
waiving party and no such waiver in any one or more instances, will be deemed
to be, or be construed as, a further or continuing waiver of that term,
provision or condition or any other term, provision or condition of this
Agreement.

 

12.12       Assignment and Successors.   
This Agreement may not be assigned by [**] without Digimarc’s consent,
which consent shall not be unreasonably withheld or delayed. This Agreement and
all of its terms, conditions and covenants are intended to be fully effective
and binding, to the extent permitted by law, on the successors and permitted
assigns of the parties hereto.

 

12.13       Captions.  
Captions are provided in this Agreement for convenience only and they
form no part, and are not to serve as a basis for interpretation or
construction, of this Agreement, nor as evidence of the intention of the parties
hereto.

 

12.14       Disclaimer of Agency.  
Nothing contained in this Agreement is intended or will be construed so
as to constitute the parties to this Agreement as partners or joint venturers
or as agents of each other. Neither party will have any express or implied
right or authority to assume or create any obligations on behalf of or in the
name of any other party or to bind any other party in any contract, agreement
or undertaking with any third party.  No
employee of a party shall be deemed or considered to be an employee of the
other party or of both parties.

 

12.15       Publicity.   The parties agree that from time-to-time it
will be beneficial to both parties to issue press releases and other public
announcements concerning benefits arising from the CDS. Each party agrees to
submit for approval by the other party any press release that involves the
other party, which approval shall not unreasonably be withheld.

 

12.16       Effectiveness.  This Agreement shall not be effective until it is signed by both of the
parties.

 

12.17       Ambiguities.   Each party and its counsel have participated
fully in the review and revision of this Agreement. Any rule or
construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in interpreting this Agreement.

 

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12.18       Survival.    All clauses of this Agreement which expressly
or by implication are intended to survive the termination of this Agreement
will do so and, for greater certainty and notwithstanding any provision in this
Agreement to the contrary, the provisions of clauses 3.2, 3.3, 5.1, 5.2, 5.5,
5.6, 6, 7,11, and 12 of this Agreement shall survive termination of this
Agreement by either party for any reason.

 

IN WITNESS
WHEREOF,
this Agreement has been executed and delivered by the parties hereto as of the
Effective Date.

 

	
  DIGIMARC
  CORPORATION

  	
   

  	
  <<
  [**]>>

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  

 

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ATTACHMENT
1

 

[**]

 

[**] will cause the following [**] to take place:

 

(a)                                  [**]

[**](b)           [**]

[**](c)            [**]

 

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ATTACHMENT
2

 

PROBLEM
REPORT

 

Each problem report will contain
all information necessary to reproduce or demonstrate the occurrence of the
problem.  Problem reports will be in
English and will be delivered electronically in a format to be provided by
Digimarc.

 

Problem reports will contain:

 

·                  Date problem was encountered

·                  Detailed description of the problem, including the frequency with which
the problem occurs

·                  Name and version number of the
program / system component that exhibits the problem

·                  Step by step instructions to reproduce the problem

·                  All data files required to reproduce the problem

·                  [**]Manufacturer and Model

·                  CPU type and speed

·                  Amount of memory

·                  Operating System and Version

·                  Disk Configuration (number of drives, total space per drive, free space
per drive)

·                  Display Adapter Model, Resolution, Number of colors

·                  Peripheral configuration (where applicable)[**]TWAIN driver and version
number

·                  [**]

·                  Severity of problem

·                  Contact information for person to contact for further information (name,
phone number, FAX number, email address)

 

[**] agrees to work with
Digimarc to provide reasonable additional information and perform reasonable
additional tests, as requested by Digimarc, to assist Digimarc in resolution of
the problem.

 

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COMMISSION.

 

 

ATTACHMENT
3

 

PAYMENT
FOR SERVICES

 

Digimarc shall bill [**] for
services in one hour increments at the following hourly rates:

 

	
  Technical/Design Consultant

  	
   

  	
  [**]

  
	
  Senior Engineer

  	
   

  	
  [**]

  
	
  R&D/Engineering Executive

  	
   

  	
  [**]

  
	
  Project Manager

  	
   

  	
  [**]

  
	
  Administrator/Scheduler

  	
   

  	
  [**]

  

 

Fees for services will be
invoiced on the earlier of 1) the last day of the month or 2) the completion of
the Services.  Invoices are due thirty
(30) days from the date of receipt of a correct invoice.  A late charge of 1.5% per month will be
charged on any late payments.  All fees
are due and payable in US funds.

 

[**] will reimburse Digimarc for
all out-of-pocket expenses reasonably and necessarily incurred in providing the
Verification Tests and other services. 
Expenses will be itemized and reported by category.  Out-of-pocket expenses will not be “marked up”
by Digimarc.  Costs include, but are not
limited to, reasonable travel and lodging expenses, telephone and fax charges,
postage and overnight deliveries, and charges for rental equipment or materials
purchased specifically to be used in providing the Verification Tests and other
services.  All invoices for out-of-pocket
expenses will be issued monthly in arrears and are due thirty (30) days from
the date of receipt of a correct invoice. 
Supporting receipts and vouchers will be available for review at
Digimarc’s offices.  A late charge of
1.5% per month will be charged on any late payments. Payments will additionally
include Value Added taxes and other tariffs and fees that may be imposed by any
governments other than the United States of America.

 

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

 

 

ATTACHMENT
4

 

IDENTIFICATION
OF [**]

 

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

 

 

ATTACHMENT
5

 

[**]

 

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

 

 

SCHEDULE
“K-2”

 

[**]
LICENSE AGREEMENT - [**]

 

This [**] LICENSE AGREEMENT (the “Agreement”) is made

 

BETWEEN

 

<name and address of [**]>
(“[**]”)

 

-
AND -

 

DIGIMARC
CORPORATION, a corporation incorporated under the laws of Delaware and having its
head office at 9405 SW Gemini Drive, Beaverton, OR 97006 (“Digimarc”)

 

RECITALS

 

Digimarc has expertise in, and
owns extensive intellectual property, including patents, patent applications,
copyrights and trade secrets related to digital watermarks, counterfeit deterrence,
copyright protection, and device control (the “Digimarc IPR”); and

 

The [**] possesses or will
possess intellectual property rights related to the application of such
intellectual property to the detection and deterrence of bank note counterfeiting;
and

 

Digimarc and [**] have
cooperated in the development of means, using such intellectual property, to
detect and deter the counterfeiting of bank notes [**] (the “Counterfeit
Deterrence System” or “CDS”); and

 

[**] desires to obtain a license
to certain components of the CDS so it can have [**] which include the CDS
counterfeit deterring [**].

 

In
consideration of these premises, the covenants set out in this Agreement and
other good and valuable consideration, the receipt and adequacy of which are acknowledged
by each of the parties, the parties agree as follows:

 

I.              DEFINITIONS  AND
PRINCIPLES OF INTERPRETATION

 

1.1           Definitions

 

“Agreement” means these articles of agreement, including the Attachments, and those
documents as specified or referenced in this Agreement as forming part of the
Agreement, all as may be amended from time to time;

 

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

 

 

“Arbitration Agreement” means the Arbitration Agreement entered into
between the parties and others effective 1 January 1999, as amended from
time to time;

 

“Attachment” means a document specified as being attached to this Agreement;

 

[**]
the CDS;[**]

“Business Day” means
a day that both Digimarc
and [**] are open for business at their respective addresses noted above;

 

“Confidential
Information” means information disclosed before or during the Term of this Agreement
in any form which, if disclosed in tangible form, is or was labelled “Confidential”,
“Proprietary” or with a similar legend, or if disclosed orally, is or was
information that by its nature would be understood to be confidential to the
Discloser.  For greater certainty, the
Confidential Information of Digimarc includes the Digimarc IPR and [**];

 

[**]”Counterfeit Deterrence System”
(or “CDS” or “System”) [**]

“Digimarc IPR”
means Intellectual Property Rights owned by Digimarc, now or during the Term of this Agreement, to the extent
that same specifically relates to or forms part of the CDS;

 

“Digital Watermark” refers to [**] (including [**])
that are [**] from [**] by [**] of [**], which [**] of [**] and yet do not
significantly [**] from the aesthetics of the [**] or [**] thereby.  Examples include, but are not limited to:

 

1.             generally imperceptible changes to [**] or
placement in [**];

2.             [**] of a substrate, where the [**]
substantially uniform to human touch;

3.             slight localized changes to [**] or [**] of a
printed document;

4.             slight changes to [**]; or

5.     [**] of substantially [**];

 

“Discloser”
means a party which has disclosed or otherwise made available its Confidential Information to the
other party;

 

“DLA Contract
Authority” means the individual appointed as such under the [**]
License;

 

[**]

[**]

[**]

[**]

“Effective Date” means
the date on which this Agreement is last signed by the parties;

 

[**]

“Field of Use”
means the field of [**];

 

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

 

 

“Improvement”
means an improvement provided to [**] under clause 2.14 of the [**] License;

 

“Intellectual
Property Rights” or “IPR”
means all intellectual
property rights existing now and in the future including, without limitation,
trade secrets, copyright, database rights, know-how, topographies, patents and
patent applications;

 

[**]

[**]

“[**] License”
means Schedule L-2 to the [**] License;

 

[**]

“Recipient” means
a party to which the Confidential Information of the other party has been disclosed or otherwise
made available;

 

“Services”
means the Verification Tests and any other service performed by Digimarc under this Agreement;

 

“Term” means
the period commencing on the Effective Date and ending on the earlier of 31 December [**] or
the date of termination of this Agreement; and

 

“Verification Test”
means a test or tests developed under the [**] License  to determine if a [**].

 

1.2           Interpretation - In
this Agreement:

 

1.2.1        unless
otherwise specified, all references to money amounts are to the currency of the
United States of America;

 

1.2.2        the
use of words in the singular or plural, or with a particular gender, shall not limit the scope or exclude
the application of any provision of this Agreement to such person or persons or
circumstances as the context otherwise permits;

 

1.2.3        whenever
a provision of this Agreement requires an approval or consent by a party to
this Agreement and notice of such approval or consent is not delivered within the
applicable time, then the party shall be conclusively deemed to have withheld
the consent or approval;

 

1.2.4        unless
otherwise specified, the number of days within or following which any payment
is to be made or act is to be done shall be interpreted to be continuous and shall be calculated by excluding
the day on which the period commences and including the day which ends the
period and by extending the period to the next Business Day if the last day of
the period is not a Business Day;

 

1.2.5        unless
otherwise specified, the order of precedence for interpreting this Agreement shall be:

 

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

 

 

(a)           this
Agreement, excluding Attachments, and

 

(b)           the
Attachments;

 

1.2.6        for greater certainty, a
party or representative
to which this Agreement grants the right to make a decision or determination in
the sole discretion of the party or representative is not required to act
reasonably in making the decision or determination and no such decision or
determination may be challenged by the other party under the Arbitration
Agreement or otherwise;

 

1.2.7        the
words “includes” or “including” will be construed as meaning “included without
limitation” and “including without limitation” as the case may be; and

 

1.2.8        a
clause or Attachment, unless the context requires otherwise, is a reference to
a clause to, an Attachment of, or a paragraph of an Attachment to, this
Agreement, as amended from time to time in accordance with this Agreement.

 

1.3           Applicable
Law - This Agreement shall be construed in accordance with the laws of England
to the exclusion of its rules of conflicts of laws.

 

1.4           Attachments
- The attachments to this Agreement, listed below, are an integral part of this
Agreement:

 

	
  Attachment

  	
   

  	
  Description

  
	
  Attachment “1”

  	
   

  	
  [**]

  
	
  Attachment “2”

  	
   

  	
  Opinion of Counsel

  
	
  Attachment “3”

  	
   

  	
  Problem Report

  
	
  Attachment “4”

  	
   

  	
  Payment for Services

  
	
  Attachment “5”

  	
   

  	
  [**]

  
	
  Attachment “6”

  	
   

  	
  [**]

  

 

2.             GRANT
OF RIGHTS  AND SERVICES

 

2.1           Subject
to the terms of this Agreement, Digimarc hereby grants to [**], a no
charge,  non-exclusive, non-transferable license under the Digimarc IPR and the
[**] IPR, in the Field of Use only, [**].

 

2.2           [**]
acknowledges and agrees that the Digimarc IPR, and any technology developed by
Digimarc during the course of its work [**], is the property of Digimarc and
that [**] has no right to sublicense it. [**] acknowledges that [**] may not
[**].

 

2.3           [**]
acknowledges and agrees that the [**] IPR is the property of its owner and that
[**] has no right to sublicense it.

 

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

 

 

2.4           Nothing
in this Agreement shall be construed to grant, by implication or otherwise, any
broader rights than those specifically granted herein.

 

2.5           Commencing
no later than ten (10) Business Days after every written request made
during the Term by [**], Digimarc shall make an irrevocable offer, which offer
shall remain open for acceptance within sixty (60) days of receipt [**]

 

2.6           Commencing
no later than twenty (20) Business Days after every written request made by
[**] during the Term, Digimarc shall conduct Verification Tests of specified
[**] on a date or dates agreed between Digimarc and [**] for the charges
specified in clause 3.

 

2.7           Digimarc
shall obtain at its own expense all licenses or permits required to be obtained
from the Government of the United States in order for Digimarc to comply with
its obligations under this Agreement including, without limitation, to deliver
the [**], and grant the foregoing license to [**].

 

3.             SERVICE
FEES

 

3.1           [**]
shall pay to Digimarc a fee for the Services as detailed below.  The fee for Services provided:

 

(a)           on
or before 31 December [**], is as set out in Attachment 4;

 

(b)           after
31 December [**], will be no greater than the fee then paid to Digimarc
for similar services by Digimarc’s most favoured customer.

 

3.2           Shipments
of [**], [**] and related documentation shall be by air, Cost, Insurance and
Freight (C.I.F.) closest major airport (i.e., Digimarc shall be responsible for
transportation and insurance to this port of entry).  Except as otherwise expressly provided in
this Agreement, [**] shall pay Digimarc all sales, use, goods and services or
other similar taxes levied by any government in the United States or the country
of the [**] principal place of business which Digimarc is obliged to collect
and remit to such government(s) in connection with any amount paid by [**]
to Digimarc under this Agreement.

 

3.3           Digimarc
is responsible for, and shall indemnify [**] against, and hold [**] harmless
from, the payment of all taxes levied by any government on or in respect of
Digimarc’s income and any amounts required by law to be paid in respect of
social benefits for Digimarc’s employees relating to or arising out of the
performance of the Services. If required by law, [**] shall deduct all such
taxes and amounts from the amounts otherwise payable to Digimarc and remit them
to the appropriate authorities.

 

4.             OPINION OF COUNSEL

 

4.1           Before
introducing [**] shall obtain and forward to Digimarc a written opinion of
counsel substantially in the form attached as Attachment 2 that confirms:

 

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

 

 

(a)           the
validity and enforceability of the terms of this Agreement, under the laws of
the jurisdiction where [**] resides; and

 

(b)           the
legality of each [**] under the laws of the jurisdiction where [**] resides.

 

4.2           Digimarc
shall not unreasonably withhold its consent to any qualifications which [**]
counsel may require to be made to such opinion.

 

5.             [**]
RESPONSIBILITIES

 

5.1           [**]
shall make every reasonable effort, including obtaining a legally binding
commitment from all [**], to ensure that the [**] do not use the [**] IPR or
the Digimarc IPR, or permit or suffer the [**] IPR or the Digimarc IPR to be
used, for any purpose other than [**].

 

5.2           If
[**] learns, or has reasonable cause to believe, that any [**] has used, or
permitted or suffered to be used, or proposes to use or permit or suffer to be
used, [**] IPR or the Digimarc IPR except as expressly authorised herein, [**]
shall immediately notify Digimarc and the DLA Contract Authority, and [**]
shall use all reasonable efforts, at its own expense,  to prevent any further such use including
exercising whatever legal remedies (including, without limitation, an
application for injunctive relief) are available to [**].  [**] shall, immediately on notice by
Digimarc, assign to Digimarc any right of action which [**] may have to prevent
any further such use. Following such assignment, [**] shall cooperate with
Digimarc to achieve the successful prosecution, or, if elected by Digimarc,
settlement, of any such action.

 

5.3           [**]
shall promptly report to Digimarc every instance which comes to its attention
of:

 

(i)      a
failure of the [**] to meet the specification established under the [**] in the
form of the Problem Report attached as Attachment 3; or

 

(ii)     unauthorised
access to the [**] in the possession of a [**]; or

 

(iii)    failure
of any [**] or [**] provided by Digimarc to [**] in response to the attempted [**].

 

5.4           [**]
shall inform Digimarc within thirty (30) days after the end of each calendar
quarter during the Term  of all
improvements  relating to (i) Digital
Watermarks [**]; (ii) the technology for [**] Digital Watermarks [**], and
(iii) the technology for [**] Digital Watermarks [**] and (iv) any
other part of the CDS, which improvements [**] has made, or caused or permitted
to be made, as a result of access to and use of the Digimarc Confidential
Information. The first such information shall be provided to Digimarc within
thirty (30) days after the first calendar quarter following said access, and
shall cover improvements made from the date [**] first learned of the Digimarc
Confidential 

 

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

 

 

Information.  Following the
provision of the information under this clause 5.4, [**] shall provide to
Digimarc within a reasonable period of time following request, the Technical
Information for those improvements requested by Digimarc in writing.

 

5.5           [**]
hereby grants to Digimarc a royalty-free, non-exclusive, sub-licensable,
worldwide license to use the improvements described in clause 5.4 and in any
patents thereon owned or otherwise licenseable by [**].

 

5.6           Such
license shall continue until this Agreement expires or is terminated, or until
[**] has no further rights to Digimarc IPR, whichever occurs last.

 

5.7           For
greater certainty, the obligations set out in clauses 5.4, 5.5 and 5.6 shall
not apply to any such improvement which the [**] can demonstrate would have
been made irrespective of access to the Digimarc Confidential Information.

 

5.8           [**]
(or Digimarc if [**] so designates), shall conduct Verification Tests on
representative samples [**].  A report
detailing the results of the Tests shall be prepared and promptly provided to
[**].

 

5.9           If
[**] designates Digimarc to conduct the tests:

 

(i)      on
or before December 31, [**], [**] shall pay Digimarc the fees set out
in  Attachment 4;

 

(ii)     after
December 31, [**], [**] shall pay Digimarc the fees then paid to Digimarc
for similar services by Digimarc’s most favoured customer.

 

5.10         In
the event that said Tests do not indicate, to [**] satisfaction, that [**]
standards detailed in the Verification Tests, [**] will require the [**] to
immediately take whatever corrective action(s) [**] considers appropriate.

 

5.11         [**]
shall advise Digimarc in writing in advance of any changes which [**] may, at
its sole discretion, make from time to time to the information set forth in
Attachments 5 and 6.

 

6.             CONFIDENTIALITY

 

6.1           Except
as otherwise expressly permitted by this Agreement, a Recipient shall not
use,  reproduce or disclose the
Confidential Information of the Discloser for any  purpose other than as reasonably necessary to
comply with its obligations under this Agreement or to exercise any rights or
licenses granted to it under or pursuant to this Agreement.

 

6.2           The
Recipient shall protect the Confidential Information of the Discloser from disclosure
by using the same degree of care, which shall be no  less than a reasonable degree of care, as the
Recipient uses to protect its own confidential information.

 

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

 

 

6.3           On
written request from the Discloser, the Recipient shall return, or certify the
destruction of, all originals and copies of the Discloser’s Confidential
Information in the Recipient’s possession or control which the Recipient does
not need to retain in order to perform any obligations imposed, or exercise any
rights acquired, by this Agreement.

 

6.4           A
Recipient may, on a need to know basis, and only for the purposes  described in clause 6.1, give the other
party’s Confidential Information to the Recipient’s employees or  authorized subcontractors provided that such
employee or subcontractor shall have entered into a non-disclosure agreement in
respect of such Confidential Information in favour of the Discloser on terms
materially similar to the provisions of this clause 6.

 

6.5           The
obligations set out in this clause 6 will not apply to any Confidential
Information that:

 

(a)           is
or becomes publicly available other than through the fault of the Recipient;

 

(b)           was
known to the Recipient prior to disclosure as shown by documentation sufficient
to establish such knowledge;

 

(c)           was
or is lawfully disclosed to the 
Recipient by a third party who did not breach any obligation of
confidence by such disclosure and who made the disclosure without restriction
on further disclosure all of which is shown by documentation sufficient to
establish same; or

 

(d)           is
required by law to be disclosed 
provided, however, that the Recipient shall first give written notice to
the Discloser before the disclosure so that the Discloser may seek an
appropriate protective order.

 

Notwithstanding the foregoing, the fact that Confidential Information,
or any part thereof, can be linked together by a search of publications and
other information, followed by a selection of a series of such items of
knowledge from unconnected sources, and fitting together those items of
knowledge so as to duplicate or recreate any item of Confidential Information,
shall not be deemed to cause the Confidential Information, or any part thereof,
to be included within exceptions (a), (b) or (c), above.

 

6.6           [**]
shall not make any disclosure of Digimarc Confidential Information to [**]
which is not licensed by Digimarc, except as expressly and previously
authorized in writing by Digimarc.  Disclosure
[**] shall only be made if and to the extent reasonably necessary for [**] to
fulfill its obligations to [**].

 

6.7           The
obligations of the parties under this clause 6 will survive the Term or sooner
termination of this Agreement and will remain in full force and effect
regardless of the cause of any termination.

 

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

 

 

6.8           Nothing
in this Agreement shall be construed to require [**] to disclose any information
which is confidential to a third party including for greater certainty [**].

 

7.             INTELLECTUAL
PROPERTY INDEMNIFICATION

 

7.1           [**]
shall provide Digimarc with prompt written notice of any claim, demand or
action against [**] based on an allegation that the Digimarc IPR or any part
thereof, infringes any Intellectual Property Right of any person (referred to
below as a “Claim”).

 

7.2           Subject
to the limitations set out in clauses 7.3 to 7.7 inclusive, Digimarc shall, at
its own expense:

 

(a)           negotiate the
resolution of any such Claim;

 

(b)           pay all costs
associated with the Claim; and

 

(c)           defend any action based
on the Claim.

 

7.3           [**]
shall, at Digimarc’s expense, comply with all reasonable requests by Digimarc
for assistance from [**] in connection with the settlement or defence of the
Claim.

 

7.4           Notwithstanding
any other provision of this Agreement to the contrary, but subject to the
limitations in this clause 7, Digimarc shall indemnify [**] and all of  the [**] against and save [**] and all [**]
harmless from all loss, costs, liabilities including an award of damages, and
expenses, including legal fees, arising from each Claim first notified to
Digimarc prior to 31 December [**]. 
The obligation set out in this clause 7 shall not apply in respect of any
settlement made by [**] without the consent of Digimarc.

 

7.5           The
liability of Digimarc under clause 7.4 of this Agreement and under the
equivalent clause of every other licence or consulting agreement entered into
between Digimarc and [**] and [**] pursuant to the provisions of [**] License
will not exceed the Indemnity Limit as defined in clause 7.6 below.

 

7.6           The
Indemnity Limit shall be [**], or such higher amount as notified by Digimarc
from time to time.

 

7.7           For
the purposes of clauses 7.2 through 7.6 inclusive, “Claim” shall mean any
Claim, other than a Claim for patent infringement which Digimarc can
demonstrate occurred without Digimarc acting recklessly or negligently.

 

7.8           The
provisions of this Section 7 shall apply to any prior Agreements between
the parties referenced herein as if fully set forth therein.

 

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

 

 

8.             REPRESENTATIONS
AND WARRANTIES OF DIGIMARC

 

8.1           Digimarc
represents, warrants and undertakes to [**] that from and after the Effective
Date:

 

(a)           the
Services provided under this Agreement will be of professional quality
conforming to generally accepted practices for like services and will be
performed at all times in a timely and cost effective manner and, for greater
certainty Digimarc shall employ the standard of care in performing the
Services  that would be expected of an
expert [**] of [**] of the same or similar type as the [**] which comprises the
[**];

 

(b)           Digimarc
is duly incorporated and organized and is validly subsisting under the laws of
the State of Delaware, U.S.A. or some other state in the United States with
full corporate power and authority to enter into this Agreement;

 

(c)           to
the best of its knowledge, neither this Agreement nor the Services will
contravene, breach, or result in any default under any agreement, permit,
by-law, or law or regulation to which Digimarc is subject or by which it is
bound including, for greater certainty any laws or regulations in effect in the
United States governing export;

 

(d)           this
Agreement when executed and delivered by Digimarc shall constitute a valid and
binding agreement with Digimarc enforceable against Digimarc according to its
terms; and

 

(e)           Digimarc
will at all material times have the right to grant the licenses to the Digimarc
IPR as required by this Agreement.

 

8.2           Digimarc
represents, warrants and undertakes to [**] that:

 

(a)           incorporated
as part of [**];

 

(b)           [**]
shall contain no lock, clock, timer, counter, copy protection feature,
replication device or intentional defects (including but not limited to “viruses”
or “worms” as such terms are commonly used in the computer industry), CPU
serial number reference, or other device which might:

 

(i)            lock,
disable or erase the [**] or any data which is loaded on the [**] so as to
prevent full use of the [**] by authorized persons; or

 

(ii)           require
action or intervention by Digimarc or any other person to allow properly
trained and authorized persons to use the [**];

 

(c)           the
source code for the [**] will support the year 2000 and neither performance nor
functionality will be affected by dates prior to, during and after the year
2000, and for greater certainty, the [**] will switch to 1 January 2000 on
1 January 2000, and the year 2000 will be recognized as a leap year.

 

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

 

 

	
  9.

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF [**]

  
	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  [**] represents and warrants to Digimarc that:

  
	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  [**] has full power and authority to enter into this Agreement; and

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  this Agreement when executed and delivered by [**] shall constitute a
  valid, binding and enforceable obligation of [**].

  
	
   

  	
   

  	
   

  
	
  9.2

  	
   

  	
  [**] makes no representations, warranties or undertakings that [**]
  has any right to grant the licenses required to be granted by clause 5.5 and
  Digimarc shall be solely responsible for determining that such improvements
  are suitable for the intended use and for the consequences of any use of the
  same whether by Digimarc or others, and [**] hereby disclaims all liability
  in connection therewith.

  
	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  TERM AND TERMINATION

  
	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  This Agreement will take effect on the Effective Date and will remain
  in force throughout the Term unless sooner terminated as provided herein.

  
	
   

  	
   

  	
   

  
	
  10.2

  	
   

  	
  Either party may terminate this Agreement if the other party breaches
  any of its obligations under this Agreement and fails to remedy such breach
  within thirty (30) days after receiving written notice of such breach from
  the other party.

  
	
   

  	
   

  	
   

  
	
  10.3

  	
   

  	
  Upon termination of this Agreement:

  
	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  all rights granted to [**] under this Agreement will immediately terminate.
  No interest in any such rights will thereafter remain with [**], except that
  [**] that have already been produced will continue to be licensed, but no
  further production of [**] for [**] shall be permitted; and

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  each party shall return, or certify the destruction of, to the
  Discloser, all originals and copies of the Discloser’s Confidential
  Information in the party’s possession or control which the party does not
  need to retain in order to exercise any rights acquired by this Agreement.

  
	
   

  	
   

  	
   

  
	
  10.4

  	
   

  	
  No termination of this Agreement will in any manner release, or be
  construed as releasing, any party from any liability arising out of or in
  connection with that party’s breach of or failure to perform any covenant,
  duty or obligation contained herein prior to the date of such termination.

  
	
   

  	
   

  	
   

  
	
  10.5

  	
   

  	
  Upon termination of the [**] License by Digimarc for cause, the
  rights of the [**] hereunder to use the Digimarc IPR shall be deemed to be
  restricted to the [**] as of the date of such termination.

  

 

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

 

 

	
  11.

  	
   

  	
  DISPUTE RESOLUTION

  
	
   

  
	
  11.1

  	
   

  	
  Any Dispute (as defined in the Arbitration Agreement) shall be
  finally settled by arbitration in accordance with the Arbitration Agreement.

  
	
   

  
	
  11.2

  	
   

  	
  Unless otherwise agreed between the parties or unless the subject
  matter of the dispute resolution proceedings is a party’s right to terminate
  this Agreement, the Services shall continue during the dispute resolution
  proceedings and payments due to Digimarc shall not be withheld on account of
  such proceedings unless that particular services or payment is the subject
  matter of the proceedings. Notwithstanding the foregoing, [**] may in its
  sole discretion instruct Digimarc to continue to perform services which are
  the subject matter of the proceedings and Digimarc shall act in accordance
  with those instructions, subject to payment under clause 3.1.

  
	
   

  
	
  12.

  	
   

  	
  MISCELLANEOUS PROVISIONS

  
	
   

  
	
  12.1

  	
   

  	
  Remedies Cumulative
  - Except as otherwise expressly set out in this Agreement:

  
	
   

  
	
  (a)

  	
   

  	
  each and every right, power and remedy of a party will be considered
  to be cumulative with and in addition to any other right, power and remedy
  which such party may have at law or in equity in the event of breach of any
  of the terms of this Agreement;

  
	
   

  
	
  (b)

  	
   

  	
  the exercise or partial exercise of any right, power or remedy will
  neither constitute the exclusive election thereof nor the waiver of any other
  right, power or remedy available to such party; and

  
	
   

  
	
  (c)

  	
   

  	
  a party terminating this Agreement in accordance with the provisions
  of the Termination clause will have no liability or obligation to the other
  as a result of or with respect to the termination.

  
	
   

  	
   

  	
   

  
	
  12.2

  	
   

  	
  Notices.  All notices under this Agreement shall be
  delivered by fax or recognized international courier service. The notice
  shall be deemed effective as of the date of delivery to the address of the
  party specified below, as evidenced by a delivery receipt or the addressee’s
  registry of incoming correspondence. Unless otherwise expressly set out in
  this Agreement, all notices to a party will be sent to the party’s authorized
  representative identified below and all notices from a party will be sent by
  the party’s authorized representative identified below.

  
	
   

  
	
  12.3

  	
   

  	
  Any notice to [**] shall be sent to both of, and any notice from [**]
  shall be sent by either:

  

 

	
   

  	
   

  	
  Name1

  	
  Name2

  
	
   

  	
   

  	
  Address1

  	
  Address2

  

 

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

 

 

12.4         Any notice to Digimarc shall be sent to both
of, and any notice from Digimarc shall be sent by either:

 

	
  Mr. Robert Chamness

  	
   

  	
  Mr. Scott Carr

  
	
  Vice President and General Counsel

  	
   

  	
  President Digimarc Watermarking Solutions

  
	
  Digimarc Corporation

  	
   

  	
  Digimarc Corporation

  
	
  9405 SW Gemini Drive

  	
   

  	
  9405 SW Gemini Drive

  
	
  Beaverton, OR 97008

  	
   

  	
  Beaverton, OR 97008

  
	
  Fax: (503) 469-4777

  	
   

  	
  Fax: (503) 469-4777

  

 

12.5         A copy of every notice sent by either party
shall be sent to: [**].

 

12.6         A party may change its address for notice by
notice to the other party in accordance with the foregoing provisions.

 

12.7         Severability.  If any part of this Agreement is held by an
arbitral tribunal appointed pursuant to the Arbitration Agreement or other
competent authority to be void or unenforceable, the parties agree that such
determination will not result in the nullity or unenforceability of the
remaining parts of this Agreement, which will continue in force to the fullest
extent permitted by law. The parties further agree to replace such void or
unenforceable part of this Agreement with a valid and enforceable provision
that will achieve, to the extent legally permissible, the economic, business
and other purposes of the void or unenforceable part.

 

12.8         Counterparts.  This Agreement may be executed in separate
counterparts, and by facsimile, each of which will be deemed an original, and
when executed, separately or together, will constitute a single original
instrument, effective in the same manner as if the parties had executed one and
the same instrument.

 

12.9         Entire
Agreement.  This Agreement is
intended by the parties to be the final expression of their agreement and
constitutes and embodies the entire agreement and understanding between the
parties hereto and constitutes a complete and exclusive statement of the terms
and conditions thereof, and will supersede any and all prior correspondence,
conversations, negotiations, agreements or understandings relating to the same
subject matter.

 

12.10       Amendments.    No change in, modification of or
addition to the terms and conditions contained herein will be valid as between
the parties unless set forth in a writing that is signed by an authorized
representative of each of the parties and which specifically states that it
constitutes an amendment to this Agreement.

 

12.11       Waiver.   No waiver of any term, provision,
or condition of this Agreement will be effective unless in a written document
signed by the waiving party and no such waiver in any one or more instances,
will be deemed to be, or be construed as, a further or 

 

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

 

 

continuing waiver of that term, provision or condition or any other
term, provision or condition of this Agreement.

 

12.12       Assignment and
Successors.    This Agreement
may not be assigned by [**] without Digimarc’s consent, which consent shall not
be unreasonably withheld or delayed. This Agreement and all of its terms,
conditions and covenants are intended to be fully effective and binding, to the
extent permitted by law, on the successors and permitted assigns of the parties
hereto.

 

12.13       Captions.   Captions are provided in this Agreement for
convenience only and they form no part, and are not to serve as a basis for
interpretation or construction, of this Agreement, nor as evidence of the
intention of the parties hereto.

 

12.14       Disclaimer of
Agency.   Nothing contained in
this Agreement is intended or will be construed so as to constitute the parties
to this Agreement as partners or joint venturers or as agents of each other.
Neither party will have any express or implied right or authority to assume or
create any obligations on behalf of or in the name of any other party or to
bind any other party in any contract, agreement or undertaking with any third
party.  No employee of a party shall be
deemed or considered to be an employee of the other party or of both parties.

 

12.15       Publicity.   The parties agree that from
time-to-time it will be beneficial to both parties to issue press releases and
other public announcements concerning benefits arising from the CDS. Each party
agrees to submit for approval by the other party any press release that
involves the other party, which approval shall not unreasonably be withheld.

 

12.16       Effectiveness.  This Agreement shall not be
effective until it is signed by both of the parties.

 

12.17       Ambiguities.   Each party and its counsel have
participated fully in the review and revision of this Agreement. Any rule or
construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in interpreting this Agreement.

 

12.18       Survival.    All clauses of this Agreement
which expressly or by implication are intended to survive the termination of
this Agreement will do so and, for greater certainty and notwithstanding any
provision in this Agreement to the contrary, the provisions of clauses 3.2,
3.3, 5.1, 5.2, 5.5, 5.6, 6, 7, 11, and 12 of this Agreement shall survive
termination of this Agreement by either party for any reason.

 

IN WITNESS WHEREOF,
this Agreement has been executed and delivered by the parties hereto as of the
Effective Date.

 

	
  DIGIMARC CORPORATION

  	
  <[**]>

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
						

 

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

 

 

	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  

 

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

 

 

ATTACHMENT 1

 

[**]

 

The [**] will cause the following [**]
to take place:

 

	
  (a)

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  [**] by
  {date TBD} [**]

  

 

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

 

 

ATTACHMENT 2

 

DRAFT OPINION OF COUNSEL

 

Digimarc Corporation

9405 SW Gemini Drive

Beaverton, OR 97008

USA

 

	
  Attention:

  
	
   

  
	
  President and CEO

  
	
   

  
	
   

  
	
  Dear:

  
	
   

  
	
    In connection with your
  proposal to grant a license to <[**]> to use the Counterfeit Deterrence
  System and for no other purpose, we confirm that:

  
	
   

  
	
  (a)

  	
   

  	
  each provision of this Agreement is valid and enforceable against
  <[**]> under the laws of <name of jurisdiction>; and

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  none of the [**] described below, at the time of writing, contravenes
  any law, regulation, policy, principle, or doctrine in effect in the
  jurisdiction of the <principal place of business/head office> of
  <[**]>.

  

 

	
  <[**]>

  
	
   

  	
  Yours truly,

  

 

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

 

 

ATTACHMENT 3

 

PROBLEM REPORT

 

Each problem report will contain all information necessary to reproduce
or demonstrate the occurrence of the problem. 
Problem reports will be in English and will be delivered electronically
in a format to be provided by Digimarc.

 

Problem reports will contain:

 

·      Date problem was encountered

·      Detailed description of the problem, including
the frequency with which the problem occurs

·      Name and version number of
the program / system component that exhibits the problem

·      Step by step
instructions to reproduce the problem

·      All data files required to
reproduce the problem

·      [**]Manufacturer and Model

·      CPU type and speed

·      Amount of memory

·      Operating System and Version

·      Disk Configuration (number
of drives, total space per drive, free space per drive)

·      Display Adapter Model,
Resolution, Number of colors

·      Peripheral configuration
(where applicable)[**]TWAIN driver and version number

·      [**]

·      Severity of problem

·      Contact information for
person to contact for further information (name, phone number, FAX number, email
address)

 

Licensee agrees to work with Digimarc to provide reasonable additional
information and perform  reasonable
additional tests, as requested by Digimarc, to assist Digimarc in resolution of
the problem.

 

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

 

 

ATTACHMENT 4

 

PAYMENT FOR SERVICES

 

Digimarc shall bill [**] for services in one hour increments at the
following hourly rates:

 

	
  Technical/Design Consultant

  	
   

  	
  [**]

  
	
  Senior Engineer

  	
   

  	
  [**]

  
	
  R&D/Engineering Executive

  	
   

  	
  [**]

  
	
  Project Manager

  	
   

  	
  [**]

  
	
  Administrator/Scheduler

  	
   

  	
  [**]

  

 

Fees for services will be invoiced on the earlier of 1) the last day of
the month or 2) the completion of the Services. 
Invoices are due thirty (30) days from the date of receipt of a correct
invoice.  A late charge of 1.5% per month
will be charged on any late payments. 
All fees are due and payable in US funds.

 

[**] will reimburse Digimarc for all out-of-pocket expenses reasonably
and necessarily incurred in providing the Verification Tests and other
services.  Expenses will be itemized and
reported by category.  Out-of-pocket
expenses will not be “marked up” by Digimarc. 
Costs include, but are not limited to, reasonable travel and lodging
expenses, telephone and fax charges, postage and overnight deliveries, and
charges for rental equipment or materials purchased specifically to be used in
providing the Verification Tests and other services.  All invoices for out-of-pocket expenses will
be issued monthly in arrears and are due thirty (30) days from the date of
receipt of a correct invoice.  Supporting
receipts and vouchers will be available for review at Digimarc’s offices.  A late charge of 1.5% per month will be
charged on any late payments. Payments will additionally include Value Added
taxes and other tariffs and fees that may be imposed by any governments other
than the United States of America.

 

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

 

 

ATTACHMENT 5

 

IDENTIFICATION OF [**]

 

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

 

 

ATTACHMENT 6

 

[**]

 

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

 

 

SCHEDULE
“L-1”

 

[**]
LICENSE AGREEMENT - [**]

 

This [**] LICENSE AGREEMENT (the “Agreement”)
is made

BETWEEN

 

<name
and address of Licensee> (“Licensee”)

 

-
AND -

 

DIGIMARC
CORPORATION, a corporation incorporated under the laws of Delaware and having its head
office at 9405 SW Gemini Drive, Beaverton, Oregon. U.S.A.  97006 (“Digimarc”)

 

“[**]”

 

RECITALS

 

                Digimarc has expertise in, and owns
extensive intellectual property, including patents, patent applications,
copyrights and trade secrets related to digital watermarks, counterfeit
deterrence, copyright protection, and device control;

 

                The [**] possesses or will possess
intellectual property rights related to the application of such intellectual
property to the detection and deterrence of bank note counterfeiting; and

 

                Digimarc and [**] have cooperated in
the development of means, using such intellectual property, to detect and deter
the counterfeiting of bank notes[**] and [**] (the “Counterfeit Deterrence
System” or “CDS”); and

 

                Digimarc is licensing its CDS [**]
authorized by a duly licensed [**], and

 

                Licensee, having been authorized by
a duly licensed [**], desires access to such technology so that Licensee can
include Digimarc’s [**];

 

                In consideration of
these premises, the
covenants set out in this Agreement and for other good and valuable
consideration, the receipt and adequacy of which are acknowledged by each of
the parties, the parties agree as follows:

 

1.             DEFINITIONS  AND
PRINCIPLES OF INTERPRETATION

 

In this Agreement:

 

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

 

 

“Agreement” means these articles of agreement,
including the Attachments, and those documents as specified or referenced in
this Agreement as forming part of the Agreement, all as may be amended from
time to time;

 

“Arbitration
Agreement” means the Arbitration Agreement entered into between the parties and
others effective 1 January 1999, as amended from time to time;

 

“Attachment” means a document specified as being
attached to this Agreement;

 

[**] the CDS;

 

“Business Day” means a day on which both Digimarc
and Licensee are open for business at their respective addresses noted above;

 

“Confidential
Information” means information disclosed before or during the Term of this Agreement
in any form which, if disclosed in tangible form, is or was labeled “Confidential”,
“Proprietary” or with a similar legend, or if disclosed orally is or was
information that by its nature would be understood to be confidential to the
Discloser. For greater certainty, the Confidential Information of Digimarc
includes the Digimarc IPR and the [**]

 

[**]”Counterfeit
Deterrence System” (“CDS” or “System”) [**]

 

“Consulting
Services” means the Integration Support and all other services that Digimarc provides
to Licensee regarding [**], and such other matters as Licensee may request and
Digimarc agrees to provide, pursuant to this Agreement;

 

“Digimarc IPR” means Intellectual Property Rights
owned by Digimarc, now or during the Term of this Agreement, to the extent that
same specifically relates to or forms part of the CDS;

 

“Digital
Watermark” refers to [**] (including [**]) that are [**] from [**] by [**] of
[**], which [**] of [**] and yet do not significantly [**] from the aesthetics
of the [**] or [**] thereby.  Examples
include, but are not limited to:

 

1.             generally imperceptible changes to
[**] or placement in [**];

 

2.             [**] of a substrate, where the [**]
substantially uniform to human touch;

 

3.             slight localized changes to [**] or
[**] of a printed document;

 

4.             slight changes to [**]; or

 

5.             [**] of substantially [**];

 

“Discloser” means a party that has disclosed or
otherwise made available its Confidential Information to the other party;

 

[**]

 

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

 

 

“Effective Date”
means
the later of the date on which this Agreement is last signed by the parties and
the date on which Digimarc receives written notice from the [**] that the
Licensee is authorized to [**];

 

[**]

 

“Field of Use” means the field of [**];

 

“Improvement” means an improvement provided to
[**] under clause 2.14 of the [**] Agreement;

 

“Installation” means installation of the Digimarc [**] in
accordance with in the design work flow of the Licensee.

 

“Integration
Support” means the consulting and programming services to be provided by
Digimarc to Licensee to assist Licensee to [**];

 

“Intellectual
Property Rights” or “IPR” means all
intellectual property rights existing now and in the future including, without
limitation, trade secrets, copyright, database rights, know-how, topographies,
patents and patent applications;

 

“[**]” means the [**] named above;

 

[**]

 

“Recipient” means the party to which the
Confidential Information of the other party has been disclosed or otherwise
made available;

 

“Services” means Installation, the
Verification Tests, the Training, and the Consulting Services, or any of them;

 

“Term” means the period commencing on the
Effective Date and ending on the earlier of 31 December [**] or the
date of termination of this Agreement;

 

“Training” means the training in the use of
the [**] described in Attachment 6; and

 

“Verification
Test”
means a test or tests developed under the [**] Agreement to determine [**].

 

1.2           Interpretation
- In this Agreement:

 

1.2.1        unless
otherwise specified, all references to money amounts are to the currency of the
United States of America;

 

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

 

 

1.2.2        the
use of words in the singular or plural, or with a particular gender, shall not
limit the scope or exclude the application of any provision of this Agreement
to such person or persons or circumstances as the context otherwise permits;

 

1.2.3        whenever
a provision of this Agreement requires an approval or consent by a party to
this Agreement and notice of such approval or consent is not delivered within
the applicable time, then, the party shall be conclusively deemed to have
withheld the consent or approval;

 

1.2.4        unless
otherwise specified, the number of days within or following which any payment
is to be made or act is to be done shall be interpreted to be continuous and
shall be calculated by excluding the day on which the period commences and
including the day which ends the period and by extending the period to the next
Business Day if the last day of the period is not a Business Day;

 

1.2.5        unless
otherwise specified, the order of precedence for interpreting this Agreement
shall be:

 

(a)              this Agreement, excluding
Attachments, and

 

(b)             the Attachments;

 

1.2.6        for
greater certainty, a party or representative to which this Agreement grants the
right to make a decision or determination in the sole discretion of the party
or representative is not required to act reasonably in making the decision or
determination and no such decision or determination may be challenged by the
other party under the Arbitration Agreement or otherwise;

 

1.2.7        the
words “includes” or “including” will be construed as meaning “included without
limitation” and “including without limitation” as the case may be; and

 

1.2.8        a
clause or Attachment, unless the context requires otherwise, is a reference to
a clause to, an Attachment of, or a paragraph of an Attachment to, this
Agreement, as amended from time to time in accordance with this Agreement.

 

1.3           Applicable
Law - This Agreement shall be construed in accordance with the laws of England
to the exclusion of its rules of conflicts of laws.

 

1.4           Attachments
- The attachments to this Agreement, listed below, are an integral part of this
Agreement:

 

	
  Attachment

  	
   

  	
  Description

  
	
  Attachment “1”

  	
   

  	
  [**]

  
	
  Attachment “2”

  	
   

  	
  Problem Report

  
	
  Attachment “3”

  	
   

  	
  Payment for Services

  
	
  Attachment “4”

  	
   

  	
  [**]

  
	
  Attachment “5”

  	
   

  	
  [**]

  
	
  Attachment “6”

  	
   

  	
  Training

  

 

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

 

 

2.             GRANT OF RIGHTS

 

2.1           Subject
to the terms of this Agreement, Digimarc hereby grants to Licensee a no charge
non-exclusive, non-transferable
license in the Field of Use to use the [**], the Digimarc IPR and the [**] IPR
at the Facilities to:

 

(a)           [**];

 

(b)           [**];

 

(c)           [**]; and

 

(d)           [**] to [**].

 

2.2           For
greater certainty, the foregoing license applies [**].

 

2.3           Licensee
shall not use the [**], the Digimarc IPR or the [**] IPR at, or transfer the
Digimarc IPR or [**] IPR to, any place other than the Facilities.

 

2.4           Licensee
acknowledges and agrees that the Digimarc IPR, and any technology developed by
Digimarc during the course of its work with Licensee under this Agreement is
the property of Digimarc and that, except as otherwise expressly set out in
this Agreement, Licensee has no right to sublicense it. Licensee acknowledges
that it may [**] unless and until, and only during such period, that [**] is licensed
therefore by Digimarc.

 

2.5           Licensee
acknowledges and agrees that the [**] IPR is the property of its owner and that
Licensee has no right to sublicense it.

 

2.6           Nothing
in this Agreement shall be construed to grant, by implication or otherwise, any
broader rights than those specifically granted herein.

 

2.7           Digimarc
shall obtain at its own expense all licenses or permits required to be obtained
from the Government of the United States in order for Digimarc to comply with
its obligations under this Agreement including, without limitation, to deliver
[**], and grant the associated licenses to Licensee.

 

2.8           Digimarc
shall inform Licensee within thirty (30) days after the end of each calendar
quarter during the Term of all Improvements relating to [**] which Improvements
Digimarc has made, or caused or permitted to be made, during the course of its
work with Licensee under this Agreement. 
Following the provision of the information under this clause 2.8,
Digimarc shall provide to Licensee within a reasonable period of time following
request, the Technical Information for those Improvements requested by Licensee
in writing.

 

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

 

 

2.9           Digimarc
hereby grants to Licensee a royalty-free, non-exclusive, sub-licenseable
worldwide license to use the Improvements described in clause 2.8 and in any
patents thereon owned or otherwise licenseable by Digimarc.  Such license shall continue until this
Agreement expires or is terminated or until Licensee has no further rights to
Digimarc IPR, whichever occurs last.

 

2.10         For
greater certainty, the obligations set out in clauses 2.8 and 2.9 shall not
apply to any such Improvements which Digimarc can demonstrate would have been
made irrespective of Digimarc’s work with Licensee under this Agreement.

 

3.             SERVICES

 

3.1           Digimarc
shall ship [**] to the Licensee within ten (10) Business Days after the
Effective Date or after instructions from the [**] whichever is later. The
shipment shall be by air, Cost, Insurance and Freight (C.I.F.) closest major
airport (i.e., Digimarc shall be responsible for transportation and insurance
to this port of entry).

 

3.2           Digimarc
shall provide Installation of the [**] at Licensee’s [**] for the fees
described in clause 4.  The Installation
will take no more than ten (10) person days, provided the site is prepared
according to a site preparation guide to be provided to Licensee by Digimarc
reasonably prior to Installation.

 

3.3           Digimarc
shall provide the Training to Licensee within ten (10) Business Days
after  completion of installation of the
[**] or at such other time as the parties may agree for the fees described in
clause 4.  The [**] training will be
designed to be delivered by one trainer in five days for up to two trainees,
provided the trainees [**].

 

3.4           No
later than sixty (60) Business Days after every written request made by
Licensee during the Term, Digimarc shall provide Integration Support to
Licensee on a date or dates agreed between Digimarc and the Licensee for the
fees described in clause 4.

 

3.5           Commencing
no later than twenty (20) Business Days after every written request made by
Licensee during the Term, Digimarc shall conduct Verification Tests of [**] on
a date or dates agreed between Digimarc and Licensee for the fees described in
clause 4.

 

3.6           Commencing
no later than five (5) Business Days after every written request therefore
made by Licensee during the Term, Digimarc shall schedule Consulting Services,
which Services shall commence not less than thirty (30) Business Days after the
written request or at such other time agreed between Digimarc and Licensee.

 

3.7           Digimarc
shall periodically apprise Licensee of Improvements which Digimarc makes to the
[**].  Rights to employ such Improvements
shall automatically be granted to Licensee pursuant to the terms of clause 2 at
no additional charge to Licensee.

 

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

 

 

4.             FEES

 

4.1           Licensee
shall pay to Digimarc a fee for the Services as detailed below.  The fee for Services provided:

 

(a)           on or before 31 December [**],
is as set out in Attachment 3;

 

(b)           after 31 December [**],
will be no greater than the fee then paid to Digimarc for similar services by
Digimarc’s most favoured customer.

 

4.2           Except
as otherwise expressly provided in this Agreement, Licensee shall pay Digimarc
all sales, use, goods and services or other similar taxes levied by any
government in the United States or the country of the Licensee’s principal
place of business which Digimarc is obliged to collect and remit to such
government(s) in connection with any amount paid by Licensee to Digimarc
under this Agreement.

 

4.3           Digimarc
is responsible for, and shall indemnify Licensee against, and hold Licensee
harmless from, the payment of all taxes levied by any government on or in
respect of Digimarc’s income and any amounts required by law to be paid in
respect of social benefits for Digimarc’s employees relating to or arising out
of the performance of the Services. If required by law, Licensee shall deduct
all such taxes and amounts from the amounts otherwise payable to  Digimarc and remit them to the appropriate
authorities.

 

5.             NUMBER
NOT USED

 

6.             LICENSEE
RESPONSIBILITIES

 

6.1           Licensee
shall promptly report to Digimarc every instance which comes to its attention
of:

 

                (i)            [**]
to meet the specifications established under the  [**] Agreement in the form of the Problem
Report attached as Attachment 2;

 

                (ii)           unauthorised access to the [**] in the
possession of  Licensee; or

 

                (iii)          [**]

 

6.2           Licensee
shall inform Digimarc within thirty (30) days after the end of each calendar
quarter during the Term of all improvements relating to (i) Digital
Watermarks [**]; (ii) [**] Digital Watermarks [**], (iii) [**]
Digital Watermarks [**] and (iv) any other part of the CDS, which
improvements Licensee has made, or caused or permitted to be made, as a result
of knowledge of Digimarc Confidential Information.  The first such information shall be provided
to Digimarc within thirty (30) days after the Effective Date and shall cover
improvements made from the date Licensee first learned of  the Digimarc Confidential Information.
Following the provision of the information under this clause 6.2, Licensee
shall provide to Digimarc within a 

 

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

 

 

reasonable period of time following request, the Technical Information
for those improvements requested by Digimarc in writing.

 

6.3           Licensee hereby grants
to Digimarc a royalty-free, non-exclusive, sub-licenseable worldwide license to
use the improvements described in clause 6.2 and in any patents thereon owned
or otherwise licenseable by Licensee.

 

6.4           Such license shall
continue until this Agreement expires or is terminated, or until Licensee has
no further rights to Digimarc IPR, whichever occurs last.

 

6.5           For
greater certainty, the obligations set out in clauses 6.2, 6.3, and 6.4 shall
not apply to any such improvement which the Licensee can demonstrate would have
been made irrespective of knowledge of the Digimarc Confidential Information.

 

6.6           Licensee
shall, as directed by [**], cooperate fully with [**] and/or Digimarc in all
matters concerning testing of [**] to confirm that they pass the Verification
Tests.

 

7.             REPRESENTATIONS AND
WARRANTIES OF DIGIMARC.

 

7.1           General
- Digimarc represents, warrants and undertakes to Licensee that from and after
the Effective Date:

 

(a)           the Services provided
under this Agreement will be of professional quality conforming to generally
accepted practices for like services and will be performed at all times in a
timely and cost effective manner and, for greater certainty Digimarc shall
employ the standard of care in performing the Services that would be expected
of an expert [**] of the same or similar type as the [**] which comprises the
[**];

 

(b)           Digimarc is duly
incorporated and organized and is validly subsisting under the laws of the
State of Delaware, U.S.A. or some other state in the United States with full
corporate power and authority to enter into this Agreement;

 

(c)           to the best of its
knowledge, neither this Agreement nor the Services will contravene, breach, or
result in any default under any agreement, permit, by-law, or law or regulation
to which Digimarc is subject or by which it is bound including, for greater
certainty any laws or regulations in effect in the United States governing
export;

 

(d)           this Agreement when
executed and delivered by Digimarc shall constitute a valid and binding
agreement with Digimarc enforceable against Digimarc according to its terms;
and

 

(e)           Digimarc will at all
material times have the right to grant the licenses to the Digimarc IPR as
required by this Agreement.

 

7.2           Digimarc
represents, warrants and undertakes to Licensee that:

 

** CONFIDENTIAL PORTION
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(a)           [**] provided to
Licensee hereunder will, for a period of one hundred eighty (180) days following
the date on which the production of the [**] first commences, meet the
specifications for that version of [**] accepted by [**];

 

(b)           until the last day of
the Term, [**]; and

 

(c)           incorporated as part of
its installation and integration practices and procedures are those measures
and security procedures commercially and reasonably available on the date for
delivery of a component of [**] to search for, detect and eliminate software
viruses in [**] that could interfere with the use of [**] or corrupt, interfere
with or damage any data;

 

(d)           the [**] shall contain
no lock, clock, timer, counter, copy protection feature, replication device or
intentional defects (including but not limited to “viruses” or “worms” as such
terms are commonly used in the computer industry), CPU serial number reference,
or other device which might:

 

(i)            lock, disable or erase [**] or any data which is loaded on
[**] so as to prevent full use of [**] by authorized persons; or

 

(ii)           require action or
intervention by Digimarc or any other person to allow properly trained and
authorized persons to use [**];

 

(e)           the source code for
[**] will support the year 2000 and neither performance nor functionality will
be affected by dates prior to, during and after the year 2000, and , for greater
certainty, the [**] will switch to 1 January 2000 on 1 January 2000,
and the year 2000 will be recognized as a leap year.

 

7.3           If [**] fails to meet
the relevant Specifications then Digimarc shall, within thirty (30) days after
receipt of written notice of the failure from Licensee, on the form  attached as Attachment 2, rectify the failure
and provide a [**] to Licensee.

 

8.             REPRESENTATIONS AND
WARRANTIES OF LICENSEE

 

8.1           Licensee
represents and warrants to Digimarc that:

 

(a)           Licensee has full power
and authority to enter into this Agreement; and

 

(b)           this Agreement when
executed and delivered by Licensee shall constitute a valid, binding and
enforceable obligation of Licensee.

 

8.2           Licensee
makes no representations, warranties or undertakings that Licensee has any
right to grant the licenses required to be granted by clause 6.3 and Digimarc
shall be solely responsible for determining that such improvements are suitable
for the intended use and for the

 

** CONFIDENTIAL PORTION
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consequences of any use of the same whether by Digimarc or others, and
Licensee and hereby disclaims all liability in connection therewith.

 

9.             CONFIDENTIALITY

 

9.1           Except
as otherwise expressly permitted by this Agreement, a Recipient shall not
use,  reproduce or disclose the
Confidential Information of the Discloser for any  purpose 
other than as reasonably necessary to comply with its obligations under
this Agreement or to exercise any rights or licenses granted to it under or
pursuant to this Agreement.

 

9.2           The
Recipient shall  protect the Confidential
Information of the Discloser from disclosure by using the same degree of care,
which shall be no  less than a reasonable
degree of care, as the Recipient uses to protect its own confidential
information.

 

9.3           On
written request from the Discloser, the Recipient shall return, or certify the
destruction of, all originals and copies of the Discloser’s Confidential
Information in the Recipient’s possession or control which the Recipient does
not need to retain in order to perform any obligations imposed, or exercise any
rights acquired, by this Agreement.

 

9.4           A
Recipient may, on a need to know basis, and only for the purposes described in
clause  9.1, give the other party’s
Confidential Information to the Recipient’s employees or authorized
subcontractors provided that such employee or subcontractor shall have entered
into a non-disclosure agreement in respect of such Confidential Information in
favour of the Discloser on terms materially similar to the provisions of this
clause  9.

 

9.5           The
obligations set out in this clause 9 will not apply to any Confidential
Information that:

 

(a)           is
or becomes publicly available other than through the fault of the Recipient;

 

(b)           was known to the
Recipient prior to disclosure as shown by documentation sufficient to establish
such knowledge;

 

(c)           was or is lawfully
disclosed to the  Recipient by a third
party who did not breach any obligation of confidence by such disclosure and
who made the disclosure without restriction on further disclosure all of which
is shown by documentation sufficient to establish same; or

 

(d)           is required by law to
be disclosed provided, however, that the Recipient shall first give written
notice to the Discloser before the disclosure so that the Discloser may seek an
appropriate protective order.

 

Notwithstanding the foregoing, the fact that Confidential Information,
or any part thereof, can be linked together by a search of publications and
other information, followed by a selection of a series of such items of
knowledge from unconnected sources, and fitting together those items of 

 

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

 

 

knowledge so as to duplicate or recreate any item of Confidential
Information, shall not be deemed to cause the Confidential Information, or any
part thereof, to be included within exceptions (a), (b) or (c), above.

 

9.6           The
obligations of the parties under this clause 9 will survive the Term or sooner
termination of this Agreement and will remain in full force and effect
regardless of the cause of any termination.

 

9.7           Nothing
in this Agreement shall be construed to require Licensee to disclose any
information which is confidential to a third party including for greater
certainty a Licensed [**]

 

10.          INTELLECTUAL PROPERTY INDEMNIFICATION

 

10.1         Licensee
shall provide Digimarc with prompt written notice of any claim, demand or
action against Licensee based on an allegation that the Digimarc IPR or any
part thereof, infringes any Intellectual Property Right of any person (referred
to below as a “Claim”).

 

10.2         Subject
to the limitations set out in clauses 10.3 to 10.7 inclusive, Digimarc shall,
at its own expense:

 

(a)             negotiate the resolution of any
such Claim;

 

(b)             pay all costs associated with
the Claim; and

 

(c)             defend any action based on the
Claim.

 

10.3         Licensee
shall, at Digimarc’s expense, comply with all reasonable requests by Digimarc
for assistance from Licensee in connection with the settlement or defense of
the Claim.

 

10.4         Notwithstanding
any other provision of this Agreement to the contrary, but subject to the
limitations in this clause 10, Digimarc shall indemnify Licensee against and
save Licensee harmless from all loss, costs, liabilities including an award of
damages, and expenses, including legal fees, arising from each Claim first
notified to Digimarc prior to 31 December [**].  The obligation set out in this clause 10
shall not apply in respect of any settlement made by Licensee without the
consent of Digimarc.

 

10.5         The
liability of Digimarc under clause 10.4 of this Agreement and under the
equivalent clause of every other licence or consulting agreement entered into
between Digimarc and [**] and [**] pursuant to the provisions of the [**]
Agreement will not exceed the Indemnity Limit as defined in clause 10.6 below.

 

10.6         The
Indemnity Limit shall be [**], or such higher amount as notified by Digimarc
from time to time.

 

** CONFIDENTIAL PORTION
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10.7         For
the purposes of clauses 10.2 through 10.6 inclusive, “Claim” shall mean any
Claim, other than a Claim for patent infringement which Digimarc can
demonstrate occurred without Digimarc acting recklessly or negligently.

 

11.          TERM AND
TERMINATION

 

11.1         This
Agreement will take effect on the Effective Date and will remain in force
throughout the Term unless sooner terminated as provided herein.

 

11.2         Either
party may terminate this Agreement if the other party breaches any of its
obligations under this Agreement and fails to remedy such breach within thirty
(30) days after receiving written notice of such breach from the other party.

 

11.3         Upon
termination of this Agreement:

 

(a)           all
rights granted to Licensee under this Agreement will immediately terminate. No
interest in any such rights will thereafter remain with Licensee, except that
[**], but no further [**] Licensee
shall be permitted; and

 

(b)           each
party shall return, or certify the destruction of, to the Discloser, all
originals and copies of the Discloser’s Confidential Information in the party’s  possession or control which the party does
not need to retain in order to exercise any rights acquired by this Agreement.

 

11.4         No
termination of this Agreement will in any manner release, or be construed as
releasing, any party from any liability arising out of or in connection with
that party’s breach of or failure to perform any covenant, duty or obligation
contained herein prior to the date of such termination.

 

11.5         Upon
termination of the [**] Agreement by Digimarc for cause, the rights of Licensee
hereunder to use the Digimarc IPR shall be deemed to be restricted to the [**]
as of the date of such termination.

 

11.6         Termination
of the license between Digimarc and [**] shall automatically act to terminate
this Agreement.

 

12.          DISPUTE
RESOLUTION

 

12.1         Any
Dispute (as defined in the Arbitration Agreement) shall be finally settled by
arbitration in accordance with the Arbitration Agreement.

 

12.2         Unless
otherwise agreed between the parties or unless the subject matter of the
dispute resolution proceedings is a party’s right to terminate this Agreement,
the Services shall continue during the dispute resolution proceedings and
payments due to Digimarc shall not be withheld on account of such proceedings
unless that particular services or payment is the subject matter of the 

 

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

 

 

proceedings.  Notwithstanding the
foregoing, Licensee may in its sole discretion instruct Digimarc to continue to
perform such services which are the subject matter of the proceedings and
Digimarc shall act in accordance with those instructions, subject to payment
under clause 4.1.

 

13.          MISCELLANEOUS PROVISIONS

 

13.1         Remedies Cumulative - Except as otherwise
expressly set out in this Agreement:

 

(a)           each
and every right, power and remedy of a party will be considered to be
cumulative with and in addition to any other right, power and remedy which such
party may have at law or in equity in the event of breach of any of the terms
of this Agreement;

 

(b)           the
exercise or partial exercise of any right, power or remedy will neither
constitute the exclusive election thereof nor the waiver of any other right,
power or remedy available to such party; and

 

(c)           a
party terminating this Agreement in accordance with the provisions of the
Termination clause will have no liability or obligation to the other as a
result of or with respect to the termination.

 

13.2         All
notices under this Agreement shall be delivered by fax, or recognized
international courier service.  The
notice shall be deemed effective as of the date of delivery to the address of
the party specified below as evidenced by a delivery receipt or the addressee’s
registry of incoming correspondence. 
Unless otherwise expressly set out in this Agreement, all notices to a
party will be sent to the party’s authorized representative identified below
and all notices from a party will be sent by the party’s authorized
representative identified below.

 

13.3         Any notice to Licensee
shall be sent to both of, and any notice from Licensee shall be sent by either:

 

	
  Name 1

  	
   

  	
  Name 2

  
	
  Address 1

  	
   

  	
  Address 2

  

 

13.4         Any
notice to Digimarc shall be sent to both of, and any notice from Digimarc shall
be sent by either:

 

	
  Mr. Robert Chamness

  	
   

  	
  Mr. Scott Carr

  
	
  Vice President and General Counsel

  	
   

  	
  President Watermarking Solutions

  
	
  Digimarc Corporation

  	
   

  	
  Digimarc Corporation

  
	
  9405 SW Gemini Drive

  	
   

  	
  9405 SW Gemini Drive

  
	
  Beaverton, OR 97008

  	
   

  	
  Beaverton, OR 97008

  
	
  Fax: (503) 469-4777

  	
   

  	
  Fax: (503) 469-4777

  

 

** CONFIDENTIAL PORTION
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13.5         A
copy of every notice sent by either party shall be sent to: [**].

 

13.6         A
party may change its address for notice by notice to the other party in
accordance with the foregoing provisions.

 

13.7         Severability.  If any part of this Agreement is held by an
arbitral tribunal appointed pursuant to the Arbitration Agreement or other
competent authority to be void or unenforceable, the parties agree that such
determination will not result in the nullity or unenforceability of the
remaining parts of this Agreement, which will continue in force to the fullest
extent permitted by law.  The parties
further agree to replace such void or unenforceable part of this Agreement with
a valid and enforceable provision that will achieve, to the extent legally
permissible, the economic, business and other purposes of the void or
unenforceable part.

 

13.8         Counterparts.   This Agreement may be executed in separate
counterparts, and by facsimile, each of which will be deemed an original, and
when executed, separately or together, will constitute a single original
instrument, effective in the same manner as if the parties had executed one and
the same instrument.

 

13.9         Entire Agreement.   This Agreement is intended by
the parties to be the final expression of their agreement and constitutes and
embodies the entire agreement and understanding between the parties hereto and
constitutes a complete and exclusive statement of the terms and conditions
thereof, and will supersede any and all prior correspondence, conversations,
negotiations, agreements or understandings relating to the same subject matter.

 

13.10       Amendments.   No change in, modification of or addition to
the terms and conditions contained herein will be valid as between the parties
unless set forth in a writing that is signed by an authorized representative of
each of the parties and which specifically states that it constitutes an amendment
to this Agreement.

 

13.11       Waiver.    No waiver of any term, provision, or
condition of this Agreement, will be effective unless in a written document
signed by the waiving party and no such waiver in any one or more instances,
will be deemed to be, or be construed as, a further or continuing waiver of
that term, provision or condition or any other term, provision or condition of
this Agreement.

 

13.12       Assignment and Successors.   This Agreement may not be assigned by
Licensee without Digimarc’s consent, which consent shall not be unreasonably
withheld or delayed.  This Agreement and
all of its terms, conditions and covenants are intended to be fully effective
and binding, to the extent permitted by law, on the successors and permitted
assigns of the parties hereto.

 

13.13       Captions.  
Captions are provided in this Agreement for convenience only and they
form no part, and are not to serve as a basis for interpretation or
construction, of this Agreement, nor as evidence of the intention of the parties
hereto.

 

** CONFIDENTIAL PORTION
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13.14       Disclaimer of Agency.    Nothing contained in this Agreement is
intended or will be construed so as to constitute the parties to this Agreement
as partners or joint venturers or as agents of each other. Neither party will
have any express or implied right or authority to assume or create any
obligations on behalf of or in the name of the other party or to bind any other
party in any contract, agreement or undertaking with any third party.  No employee of a party shall be deemed or
considered to be an employee of the other party or of both parties.

 

13.15       Publicity.   The
parties agree that from time-to-time it will be beneficial to both parties to issue
press releases and other public announcements concerning benefits arising from
the CDS.  Each party agrees to submit for
approval by the other party any press release that involves the other party,
which approval shall not unreasonably be withheld.

 

13.16       Effectiveness.   This Agreement shall not be effective until
it is signed by both of the parties.

 

13.17       Ambiguities.  Each party and its counsel have participated
fully in the review and revision of this Agreement. Any rule or
construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in interpreting this Agreement.

 

13.18       Survival.  
All clauses of this Agreement which expressly or by implication are
intended to survive the termination of this Agreement will do so and, for
greater certainty and notwithstanding any provision in this Agreement to the
contrary, the provisions of clause 2.9, 4.2, 4.3, 6.1, 6.3, 6.4, 7.2(b), 9, 10,
12 and 13 of this Agreement shall survive termination of this Agreement by either
party for any reason.

 

IN WITNESS WHEREOF,
this Agreement has been executed and delivered by the parties hereto as of the
Effective Date.

 

	
  DIGIMARC CORPORATION

  	
   

  	
  <Licensee>

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  

 

** CONFIDENTIAL PORTION
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ATTACHMENT 1

 

[**]

 

[**] will cause the following [**] to take place:

 

(a)           [**]

 

(b)           [**]

 

(c)           [**] a date TBD [**]

 

** CONFIDENTIAL PORTION
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ATTACHMENT 2

 

PROBLEM REPORT

 

Each problem report will contain all information necessary to reproduce
or demonstrate the occurrence of the problem. 
Problem reports will be in English and will be delivered electronically
in a format to be provided by Digimarc.

 

Problem reports will contain:

 

·              Date problem was encountered

·              Detailed description of the problem,
including the frequency with which the problem occurs

·              Name and version number of the program /
system component that exhibits the problem

·              Step by step instructions to reproduce
the problem

·              All data files required to reproduce the
problem

·              [**]Manufacturer and Model

·              CPU type and speed

·              Amount of memory

·              Operating System and Version

·              Disk Configuration (number of drives,
total space per drive, free space per drive)

·              Display Adapter Model, Resolution, Number
of colors

·              Peripheral configuration (where
applicable)[**]TWAIN driver and version number

·              [**]

·              Severity of problem

·              Contact information for person to contact
for further information (name, phone number, FAX number, email address)

 

Licensee agrees to work with Digimarc to provide reasonable additional
information and perform reasonable additional tests, as requested by Digimarc,
to assist Digimarc in resolution of the problem.

 

** CONFIDENTIAL PORTION
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ATTACHMENT 3

 

PAYMENT FOR SERVICES

 

Digimarc shall bill Licensee for Services in one hour increments at the
following hourly rates:

 

	
  Technical/Design Consultant

  	
   

  	
  [**]

  
	
  Senior Engineer

  	
   

  	
  [**]

  
	
  R&D/Engineering Executive

  	
   

  	
  [**]

  
	
  Project Manager

  	
   

  	
  [**]

  
	
  Administrator/Scheduler

  	
   

  	
  [**]

  

 

Fees for Services will be invoiced on the earlier of 1) the last day of
the month or 2) the completion of the Services. 
Invoices are due thirty (30) days from the date of receipt of a correct
invoice.  A late charge of 1.5% per month
will be charged on any late payments. 
All fees are due and payable in US funds.

 

Licensee will reimburse Digimarc for all out-of-pocket expenses
reasonably and necessarily incurred in providing the Services.  Expenses will be itemized and reported by
category.  Out-of-pocket expenses will
not be “marked up” by Digimarc.  Costs
include, but are not limited to, reasonable travel and lodging expenses,
telephone and fax charges, postage and overnight deliveries, and charges for
rental equipment or materials purchased specifically to be used in providing
the Service.  All invoices for
out-of-pocket expenses will be issued monthly in arrears and are due thirty
(30) days from the date of receipt of a correct invoice. Supporting receipts
and vouchers will be available for review at Digimarc’s offices.  A late charge of 1.5% per month will be
charged on any late payments.  Payments
will additionally include Value Added taxes and other tariffs and fees that may
be imposed by any government other than the United States of America.

 

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

 

 

ATTACHMENT 4

 

[**]

 

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

 

 

ATTACHMENT 5

 

IDENTIFICATION OF [**]

 

** CONFIDENTIAL PORTION
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ATTACHMENT 6

 

TRAINING

 

1.0           As
part of the [**], Digimarc shall develop a program of training acceptable to
the [**] Project Director (as
defined in the [**] Agreement) in the [**].

 

2.0           Digimarc
shall deliver the Training as follows:

 

2.1           Digimarc shall provide
the Training to up to two (2) people simultaneously.  The trainees will be experienced in digital
design system operation.

 

2.2           Digimarc shall conduct
the Training at the facilities of Licensee or, at the request of Licensee, at
Digimarc’s facilities or at some other place agreed between Digimarc and
Licensee.

 

2.3           Digimarc shall give
Licensee reasonable notice concerning the equipment which Digimarc will require
in order to conduct the Training. 
Licensee shall provide all such equipment at its own expense.  If the parties are unable to agree on the
equipment to be provided either party may refer the matter for decision to the
DLA Contract Authority (as defined in the [**] Agreement).

 

2.4           Digimarc shall conduct
the Training using the [**].

 

2.5           Digimarc shall provide
a training manual in English to every trainee. 
Any translation or interpretation which the trainees may require will be
provided by Licensee at its own expense.

 

2.6           Digimarc shall provide
each trainee with a certificate of training at the completion of the Training
session.

 

2.7           Digimarc shall conduct
the Training in English.

 

** CONFIDENTIAL PORTION
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SCHEDULE “L-2”

 

[**]
AGREEMENT [**]

 

This [**]  LICENSE AGREEMENT (the
“Agreement”) is made

 

BETWEEN

 

<name
and address of Licensee> (“Licensee”)

 

-
AND -

 

 

DIGIMARC
CORPORATION, a corporation incorporated under the laws of Delaware and having its
head office at 9405 SW Gemini Drive, Beaverton, Oregon. U.S.A.  97006 (“Digimarc”)

 

[**]

RECITALS

 

                Digimarc has expertise in, and owns
extensive intellectual property, including patents, patent applications,
copyrights and trade secrets related to digital watermarks, counterfeit
deterrence, copyright protection, and device control;

 

                [**] possesses or will possess
intellectual property rights related to the application of such intellectual
property to the detection and deterrence of bank note counterfeiting; and

 

                Digimarc and [**] have cooperated in
the development of means, using such intellectual property, to detect and deter
the counterfeiting of bank notes [**] (the “Counterfeit Deterrence System” or “CDS”);
and

 

                Digimarc is licensing its CDS [**]
authorized by a duly licensed [**]; and

 

                Licensee, having been authorized by
a duly licensed [**], desires access to such technology so that Licensee can
include Digimarc’s [**].

 

                In consideration of
these premises, the
covenants set out in this Agreement and for other good and valuable
consideration, the receipt and adequacy of which are acknowledged by each of
the parties, the parties agree as follows:

 

1.             DEFINITIONS  AND
PRINCIPLES OF INTERPRETATION

 

In this Agreement:

 

** CONFIDENTIAL PORTION
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“Agreement” means these articles of agreement, including the Attachments, and those
documents as specified or referenced in this Agreement as forming part of the
Agreement, all as may be amended from time to time;

 

“Arbitration Agreement” means the Arbitration Agreement entered into
between the parties and others effective 1 January 1999, as amended from
time to time;

 

“Attachment” means a document specified as being attached to
this Agreement;

 

[**] CDS;

 

“Business Day” means
a day on which both
Digimarc and Licensee are open for business at their respective addresses noted
above;

 

“Confidential
Information” means information disclosed before or
during the Term of this Agreement in any form which, if disclosed in tangible
form, is or was labeled “Confidential”, “Proprietary” or with a similar legend,
or if disclosed orally is or was information that by its nature would be
understood to be confidential to the Discloser. For greater certainty, the Confidential
Information of Digimarc includes the Digimarc IPR and the [**]

 

[**]”Counterfeit
Deterrence System” (“CDS”
or “System”)[**]

 

“Consulting Services”
means the Integration
Support and all other services that Digimarc provides to Licensee regarding [**],
and such other matters as Licensee may request and Digimarc agrees to provide,
pursuant to this Agreement;

 

“Digimarc IPR”
means Intellectual Property Rights owned by Digimarc, now or during the Term of
this Agreement, to the extent that same specifically relates to or forms part
of the CDS;

 

“Digital Watermark” refers to [**] (including [**])
that are [**] from [**] by [**] of [**], which [**] of [**] and yet do not
significantly [**] from the aesthetics of the [**] or [**] thereby.  Examples include, but are not limited to:

 

1.             generally imperceptible changes to
[**] or placement in [**];

 

2.             [**] of a substrate, where the [**]
substantially uniform to human touch;

 

3.             slight localized changes to [**] or
[**] of a printed document;

 

4.             slight changes to [**]; or

 

5.             [**] of substantially [**];

 

“Discloser” means
a party that has disclosed
or otherwise made available its Confidential Information to the other party;

 

[**]

 

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

 

 

“Effective Date” means
the later of the date
on which this Agreement is last signed by the parties and the date on which
Digimarc receives written notice from the [**] that the Licensee is authorized to [**]

 

[**]

 

“Field of Use”
means the field of [**];

 

“Improvement”
means an improvement
provided to [**] under
clause 2.14 of the [**] Agreement;

 

“Installation” means installation of the Digimarc [**] in
accordance with in the design work flow of the Licensee.

 

“Integration Support”
means the consulting
and programming services to be provided by Digimarc to Licensee to assist
Licensee to [**];

 

“Intellectual
Property Rights” or “IPR”
means all intellectual property rights existing now and in the
future including, without limitation, trade secrets, copyright, database
rights, know-how, topographies, patents and patent applications;

 

“[**]” means
the [**] named above;

 

[**]

 

“Recipient” means
the party to which the Confidential Information of the other party has been
disclosed or otherwise made available;

 

“Services”
means the Installation, Verification Tests, the Training, and the Consulting
Services, or any of them;

 

“Term” means
the period commencing on the Effective Date and ending on the earlier of
31 December [**] or the date of termination of this Agreement;

 

“Training”
means the training in the use of the [**] described in Attachment 7; and

 

“Verification Test”
means a test or tests developed under the [**] Agreement to determine [**].

 

1.2           Interpretation
- In this Agreement:

 

1.2.1        unless otherwise specified, all references to
money amounts are to the currency of the United States of America;

 

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

 

 

1.2.2        the use of words in the singular or plural, or
with a particular gender, shall not limit the scope or exclude the application
of any provision of this Agreement to such person or persons or circumstances
as the context otherwise permits;

 

1.2.3        whenever a provision of this Agreement requires
an approval or consent by a party to this Agreement and notice of such approval
or consent is not delivered within the applicable time, then, the party shall
be conclusively deemed to have withheld the consent or approval;

 

1.2.4        unless otherwise specified, the number of days
within or following which any payment is to be made or act is to be done shall
be interpreted to be continuous and shall be calculated by excluding the day on
which the period commences and including the day which ends the period and by
extending the period to the next Business Day if the last day of the period is
not a Business Day;

 

1.2.5        unless otherwise specified, the order of
precedence for interpreting this Agreement shall be:

 

(a)           this
Agreement, excluding Attachments, and

 

(b)           the
Attachments;

 

1.2.6        for greater certainty, a party or
representative to which this Agreement grants the right to make a decision or
determination in the sole discretion of the party or representative is not
required to act reasonably in making the decision or determination and no such
decision or determination may be challenged by the other party under the
Arbitration Agreement or otherwise;

 

1.2.7        the words “includes” or “including” will be
construed as meaning “included without limitation” and “including without
limitation” as the case may be; and

 

1.2.8        a clause or Attachment, unless the context
requires otherwise, is a reference to a clause to, an Attachment of, or a
paragraph of an Attachment to, this Agreement, as amended from time to time in
accordance with this Agreement.

 

1.3           Applicable Law - This Agreement shall be
construed in accordance with the laws of England to the exclusion of its rules of
conflicts of laws.

 

1.4           Attachments - The attachments to this
Agreement, listed below, are an integral part of this Agreement:

 

	
  Attachment

  	
   

  	
  Description

  
	
  Attachment “1”

  	
   

  	
  [**]

  
	
  Attachment “2”

  	
   

  	
  Opinion of Counsel

  
	
  Attachment “3”

  	
   

  	
  Problem Report

  
	
  Attachment “4”

  	
   

  	
  Payment for Services

  
	
  Attachment “5”

  	
   

  	
  [**]

  	
   

  	
   

  
	
  Attachment “6”

  	
   

  	
  [**]

  	
   

  	
   

  
	
  Attachment “7”

  	
   

  	
  Training

  

 

 

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

 

 

2.             GRANT OF RIGHTS

 

2.1           Subject to the terms of this Agreement,
Digimarc hereby grants to Licensee a no charge non-exclusive, non-transferable
license in the Field of Use to use the [**], the Digimarc IPR and [**] IPR at the Facilities to:

 

(a)           [**]

 

(b)           [**]

 

(c)           [**]; and

 

(d)           [**] to [**].

 

2.2           For greater certainty, the foregoing license
applies [**]

 

2.3           Licensee shall not use the [**], the Digimarc IPR or the [**] IPR at, or transfer the Digimarc IPR or
[**] IPR to, any place other than
the Facilities.

 

2.4           Licensee acknowledges and agrees that the
Digimarc IPR, and any technology developed by Digimarc during the course of its
work with Licensee under this Agreement is the property of Digimarc and that,
except as otherwise expressly set out in this Agreement, Licensee has no right
to sublicense it.  Licensee acknowledges
that it may [**] unless and until,
and only during such period, that [**] is
licensed therefore by Digimarc.

 

2.5           Licensee acknowledges and agrees that the
[**] IPR is the property of its
owner and that Licensee has no right to sublicense it.

 

2.6           Nothing in this Agreement shall be construed
to grant, by implication or otherwise, any broader rights than those
specifically granted herein.

 

2.7           Digimarc shall obtain at its own expense all
licenses or permits required to be obtained from the Government of the United
States in order for Digimarc to comply with its obligations under this
Agreement including, without limitation, to deliver [**], and grant the
foregoing licenses to Licensee.

 

2.8           Digimarc shall inform Licensee within thirty
(30) days after the end of each calendar quarter during the Term of all
Improvements relating to [**] which
Improvements Digimarc has made, or caused or permitted to be made, during the
course of its work with Licensee under this Agreement.  Following the provision of the information
under this 

 

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

 

 

clause 2.8, Digimarc shall provide to Licensee within a reasonable
period of time following request, the Technical Information for those
Improvements requested by Licensee in writing.

 

2.9           Digimarc hereby grants to Licensee a
royalty-free, non-exclusive, sub-licenseable worldwide license to use the
Improvements described in clause 2.8 and in any patents thereon owned or
otherwise licenseable by Digimarc.  Such
license shall continue until this Agreement expires or is terminated or until
Licensee has no further rights to Digimarc IPR, whichever occurs last.

 

2.10         For greater certainty, the obligations set out
in clauses 2.8 and 2.9 shall not apply to any such Improvements which Digimarc
can demonstrate would have been made irrespective of Digimarc’s work with
Licensee under this Agreement.

 

3.             SERVICES

 

3.1           Digimarc shall ship
[**] to the Licensee within ten (10) Business
Days after the Effective Date or after instructions from the [**] whichever is later. The shipment shall
be by air, Cost, Insurance and Freight (C.I.F.) closest major airport (i.e.,
Digimarc shall be responsible for transportation and insurance to this port of
entry).

 

3.2           Digimarc shall provide
Installation of the [**] at Licensee’s [**] for the fees described in clause 4. 
The Installation will take no more than ten (10) person days,
provided the site is prepared according to a site preparation guide to be
provided to Licensee by Digimarc reasonably prior to Installation.

 

3.3           Digimarc shall provide
the Training to Licensee within ten (10) Business Days after  completion of installation of the [**] or at such other time as the parties
may agree for the fees described in clause 4. 
The [**] training will be
designed to be delivered by one trainer in five days for up to two trainees,
provided the trainees [**].

 

3.4           No later than sixty (60) Business Days after
every written request made by Licensee during the Term, Digimarc shall provide
Integration Support to Licensee on a date or dates agreed between Digimarc and
Licensee for the fees described in clause 4.

 

3.5           Commencing no later than twenty (20)
Business Days after every written request made by Licensee during the Term,
Digimarc shall conduct Verification Tests of [**] on a date or dates agreed between Digimarc and Licensee for the
fees described in clause 4.

 

3.6           Commencing no later than five (5) Business
Days after every written request made by Licensee during the Term, Digimarc
shall schedule Consulting Services, which Services shall commence not less than
thirty (30) Business Days after the written request or at such other time
agreed between Digimarc and Licensee.

 

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

 

 

3.7           Digimarc shall periodically apprise Licensee
of Improvements which Digimarc makes to the [**].  Rights to employ such
Improvements shall automatically be granted to Licensee pursuant to the terms
of clause 2 at no additional charge to Licensee.

 

4.             FEES

 

4.1           Licensee shall pay to Digimarc a fee for the
Services as detailed below.  The fee for
Services provided:

 

(a)           on or before 31 December [**],
is as set out in Attachment 4;

 

(b)           after 31 December [**],
will be no greater than the fee then paid to Digimarc for similar services by
Digimarc’s most favoured customer.

 

4.2           Except as otherwise expressly provided in
this Agreement, Licensee shall pay Digimarc all sales, use, goods and services
or other similar taxes levied by any government in the United States or the
country of the Licensee’s principal place of business which Digimarc is obliged
to collect and remit to such government(s) in connection with any amount
paid by Licensee to Digimarc under this Agreement.

 

4.3           Digimarc is responsible for, and shall
indemnify Licensee against, and hold Licensee harmless from, the payment of all
taxes levied by any government on or in respect of Digimarc’s income and any
amounts required by law to be paid in respect of social benefits for Digimarc’s
employees relating to or arising out of the performance of the Services. If
required by law, Licensee shall deduct all such taxes and amounts from the
amounts otherwise payable to Digimarc and remit them to the appropriate
authorities.

 

5.             OPINION
OF COUNSEL

 

5.1           Before producing [**], Licensee shall obtain
and forward to Digimarc a written opinion of counsel substantially in the form
attached as Attachment 2 that confirms:

 

(a)           the validity and
enforceability of the terms of this Agreement under the laws of the
jurisdiction of Licensee’s principal place of business; and

 

(b)           the legality of each of
the [**] under the laws of the
jurisdiction of Licensee’s principal place of business.

 

5.2           Digimarc shall not
unreasonably withhold its consent to any qualifications which Licensee’s
counsel may require to be made to such opinion.

 

6.             LICENSEE
RESPONSIBILITIES

 

6.1           Licensee shall promptly
report to Digimarc every instance which comes to its attention of:

 

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

 

 

                (i)            [**] to meet the specifications established
under the  [**] Agreement in the form of the
Problem Report attached as Attachment 3;

 

                (ii)           unauthorised access to the [**] in the possession of Licensee; or

 

                (iii)          [**]

 

6.2           Licensee shall inform
Digimarc within thirty (30) days after the end of each calendar quarter during
the Term of all improvements relating to (i) Digital Watermarks [**]; (ii) [**] Digital Watermarks [**] (iii) [**] Digital Watermarks [**] and (iv) any other part of the
CDS, which improvements Licensee has made, or caused or permitted to be made,
as a result of knowledge of Digimarc Confidential Information.  The first such information shall be provided
to Digimarc within thirty (30) days after the Effective Date and shall cover
improvements made from the date Licensee first learned of the Digimarc
Confidential Information.  Following the
provision of the information under this clause 6.2, Licensee shall provide to
Digimarc within a reasonable period of time following request, the Technical
Information for those improvements requested by Digimarc in writing.

 

6.3           Licensee hereby grants
to Digimarc a royalty-free, non-exclusive, sub-licenseable worldwide license to
use the improvements described in clause 6.2 and in any patents thereon owned
or otherwise licenseable by Licensee.

 

6.4           Such license shall
continue until this Agreement expires or is terminated, or until Licensee has
no further rights to Digimarc IPR, whichever occurs last.

 

6.5           For greater certainty,
the obligations set out in clauses 6.2, 6.3, and 6.4 shall not apply to any
such improvement which the Licensee can demonstrate would have been made
irrespective of knowledge of the Digimarc Confidential Information.

 

6.6           Licensee shall, as
directed by [**], cooperate fully
with [**] and/or Digimarc in all
matters concerning testing of [**] to confirm that they pass the Verification
Tests.

 

7.             REPRESENTATIONS AND
WARRANTIES OF DIGIMARC.

 

7.1           General - Digimarc
represents, warrants and undertakes to Licensee that from and after the
Effective Date:

 

(a)           the Services provided
under this Agreement will be of professional quality conforming to generally
accepted practices for like services and will be performed at all times in a
timely and cost effective manner and, for greater certainty Digimarc shall
employ the standard of care in performing the Services that would be expected
of an [**] of the same or similar type as the [**] which comprises the [**];

 

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

 

 

(b)           Digimarc is duly
incorporated and organized and is validly subsisting under the laws of the
State of Delaware, U.S.A. or some other state in the United States with full
corporate power and authority to enter into this Agreement;

 

(c)           to the best of its
knowledge, neither this Agreement nor the Services will contravene, breach, or
result in any default under any agreement, permit, by-law, or law or regulation
to which Digimarc is subject or by which it is bound including, for greater
certainty any laws or regulations in effect in the United States governing
export;

 

(d)           this Agreement when
executed and delivered by Digimarc shall constitute a valid and binding
agreement with Digimarc enforceable against Digimarc according to its terms;
and

 

(e)           Digimarc will at all
material times have the right to grant the licenses to the Digimarc IPR as
required by this Agreement.

 

7.2           Digimarc
represents, warrants and undertakes to Licensee that:

 

(a)           [**] provided to Licensee hereunder will,
for a period of one hundred eighty (180) days following the date on which the
production of the [**] first commences, meet the specifications for that
version of [**] accepted by [**];

 

(b)           until the last day of
the Term, [**]; and

 

(c)           incorporated as part of
its installation and integration practices and procedures are those measures
and security procedures commercially and reasonably available on the date for
delivery of a component of [**] to
search for, detect and eliminate software viruses in [**] that could
interfere with the use of [**] or
corrupt, interfere with or damage any data;

 

(d)           [**] shall contain no lock, clock, timer,
counter, copy protection feature, replication device or intentional defects
(including but not limited to “viruses” or “worms” as such terms are commonly
used in the computer industry), CPU serial number reference, or other device
which might:

 

(i)            lock, disable or erase
[**] or any data which is loaded
on [**] so as to prevent full use
of [**] by authorized persons; or

 

(ii)           require action or
intervention by Digimarc or any other person to allow properly trained and
authorized persons to use [**];

 

(e)           the source code for
[**] will support the year 2000
and neither performance nor functionality will be affected by dates prior to, during
and after the year 2000, and, for greater certainty, the [**] will switch to 1 January 2000 on 1
January 2000, and the year 2000 will be recognized as a leap year.

 

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

 

 

7.3           If [**] fails to meet the relevant
Specifications then Digimarc shall, within thirty (30) days after receipt of
written notice of the failure from Licensee, on the form attached as Attachment
3, rectify the failure and provide a [**] to Licensee.

 

8.             REPRESENTATIONS AND
WARRANTIES OF LICENSEE

 

8.1           Licensee
represents and warrants to Digimarc that:

 

(a)           Licensee has full power
and authority to enter into this Agreement; and

 

(b)           this Agreement when
executed and delivered by Licensee shall constitute a valid, binding and
enforceable obligation of Licensee.

 

8.2           Licensee makes no
representations, warranties or undertakings that Licensee has any right to
grant the licenses required to be granted by clause 6.3 and Digimarc shall be
solely responsible for determining that such improvements are suitable for the
intended use and for the consequences of any use of the same whether by
Digimarc or others, and Licensee and hereby disclaims all liability in
connection therewith.

 

9.             CONFIDENTIALITY

 

9.1           Except as otherwise
expressly permitted by this Agreement, a Recipient shall not use,  reproduce or disclose the Confidential
Information of the Discloser for any 
purpose other than as reasonably necessary to comply with its
obligations under this Agreement or to exercise any rights or licenses granted
to it under or pursuant to this Agreement.

 

9.2           The Recipient
shall  protect the Confidential
Information of the Discloser from disclosure by using the same degree of care,
which shall be no  less than a reasonable
degree of care, as the Recipient uses to protect its own confidential
information.

 

9.3           On written request from
the Discloser, the Recipient shall return, or certify the destruction of, all
originals and copies of the Discloser’s Confidential Information in the
Recipient’s possession or control which the Recipient does not need to retain
in order to perform any obligations imposed, or exercise any rights acquired,
by this Agreement.

 

9.4           A Recipient may, on a
need to know basis, and only for the purposes described in clause  9.1, give the other party’s Confidential
Information to the Recipient’s employees or authorized subcontractors provided
that such employee or subcontractor shall have entered into a non-disclosure
agreement in respect of such Confidential Information in favour of the
Discloser on terms materially similar to the provisions of this clause  9.

 

9.5           The obligations set out
in this clause  9 will not apply to any
Confidential Information that:

 

(a)           is
or becomes publicly available other than through the fault of the Recipient;

 

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

 

 

(b)           was known to the
Recipient prior to disclosure as shown by documentation sufficient to establish
such knowledge;

 

(c)           was or is lawfully
disclosed to the  Recipient by a third
party who did not breach any obligation of confidence by such disclosure and
who made the disclosure without restriction on further disclosure all of which
is shown by documentation sufficient to establish same; or

 

(d)           is required by law to
be disclosed provided, however, that the Recipient shall first give written
notice to the Discloser before the disclosure so that the Discloser may seek an
appropriate protective order.

 

Notwithstanding the foregoing, the fact that Confidential Information,
or any part thereof, can be linked together by a search of publications and
other information, followed by a selection of a series of such items of
knowledge from unconnected sources, and fitting together those items of
knowledge so as to duplicate or recreate any item of Confidential Information,
shall not be deemed to cause the Confidential Information, or any part thereof,
to be included within exceptions (a), (b) or (c), above.

 

9.6           The obligations of the
parties under this clause 9 will survive the Term or sooner termination of this
Agreement and will remain in full force and effect regardless of the cause of
any termination.

 

9.7           Nothing in this
Agreement shall be construed to require Licensee to disclose any information
which is confidential
to a third party including for greater certainty a Licensed [**].

 

10.          INTELLECTUAL PROPERTY
INDEMNIFICATION

 

10.1         Licensee shall provide
Digimarc with prompt written notice of any claim, demand or action against
Licensee based on an allegation that the Digimarc IPR or any part thereof,
infringes any Intellectual Property Right of any person (referred to below as a
“Claim”).

 

10.2         Subject to the
limitations set out in clauses 10.3 to 10.7 inclusive, Digimarc shall, at its
own expense:

 

(a)           negotiate
the resolution of any such Claim;

 

(b)           pay
all costs associated with the Claim; and

 

(c)           defend
any action based on the Claim.

 

10.3         Licensee shall, at
Digimarc’s expense, comply with all reasonable requests by Digimarc for
assistance from Licensee in connection with the settlement or defence of the
Claim.

 

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

 

 

10.4         Notwithstanding any other
provision of this Agreement to the contrary, but subject to the limitations in
this clause 10, Digimarc shall indemnify Licensee against and save Licensee
harmless from all loss, costs, liabilities including an award of damages, and
expenses, including legal fees, arising from each Claim first notified to
Digimarc prior to 31 December [**]. The obligation set out in this clause
10 shall not apply in respect of any settlement made by Licensee without the
consent of Digimarc.

 

10.5         The liability of Digimarc
under clause 10.4 of this Agreement and under the equivalent clause of every
other licence or consulting agreement entered into between Digimarc and [**] and [**] pursuant to the provisions of the [**] Agreement will not exceed the
Indemnity Limit as defined in clause 10.6 below.

 

10.6         The Indemnity Limit shall
be [**], or such higher amount as notified by Digimarc from time to time.

 

10.7         For the purposes of
clauses 10.2 through 10.6 inclusive, “Claim” shall mean any Claim, other than a
Claim for patent infringement which Digimarc can demonstrate occurred without
Digimarc acting recklessly or negligently.

 

11.          TERM
AND TERMINATION

 

11.1         This Agreement will take
effect on the Effective Date and will remain in force throughout the Term
unless sooner terminated as provided herein.

 

11.2         Either party may
terminate this Agreement if the other party breaches any of its obligations
under this Agreement and fails to remedy such breach within thirty (30) days
after receiving written notice of such breach from the other party.

 

11.3         Upon
termination of this Agreement:

 

(a)                                  all
rights granted to Licensee under this Agreement will immediately
terminate.  No interest in any such
rights will thereafter remain with Licensee, except that [**], but no further
[**] Licensee shall be permitted;
and

 

(b)                                 each
party shall return, or certify the destruction of, to the Discloser, all
originals and copies of the Discloser’s Confidential Information in the party’s  possession or control which the party does
not need to retain in order to exercise any rights acquired by this Agreement.

 

11.4         No termination of this
Agreement will in any manner release, or be construed as releasing, any party
from any liability arising out of or in connection with that party’s breach of
or failure to perform any covenant, duty or obligation contained herein prior
to the date of such termination.

 

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

 

 

11.5         Upon termination of the [**] Agreement by Digimarc
for cause, the rights of Licensee hereunder to use the Digimarc IPR shall be
deemed to be restricted to the [**] as
of the date of such termination.

 

11.6                           Termination
of the license between Digimarc and [**] shall
automatically act to terminate this Agreement.

 

12.                             DISPUTE
RESOLUTION

 

12.1         Any Dispute (as defined
in the Arbitration Agreement) shall be finally settled by arbitration in
accordance with the Arbitration Agreement.

 

12.2         Unless otherwise agreed
between the parties or unless the subject matter of the dispute resolution
proceedings is a party’s right to terminate this Agreement, the Services shall
continue during the dispute resolution proceedings and payments due to Digimarc
shall not be withheld on account of such proceedings unless that particular
services or payment is the subject matter of the proceedings.  Notwithstanding the foregoing, Licensee may
in its sole discretion instruct Digimarc to continue to perform such services
which are the subject matter of the proceedings and Digimarc shall act in
accordance with those instructions, subject to payment under clause 4.1.

 

13.                             MISCELLANEOUS PROVISIONS

 

13.1                           Remedies Cumulative - Except as otherwise
expressly set out in this Agreement:

 

(a)                                  each
and every right, power and remedy of a party will be considered to be
cumulative with and in addition to any other right, power and remedy which such
party may have at law or in equity in the event of breach of any of the terms
of this Agreement;

 

(b)                                 the
exercise or partial exercise of any right, power or remedy will neither
constitute the exclusive election thereof nor the waiver of any other right,
power or remedy available to such party; and

 

(c)                                  a
party terminating this Agreement in accordance with the provisions of the Termination
clause will have no liability or obligation to the other as a result of or with
respect to the termination.

 

13.2         All notices under this
Agreement shall be delivered by fax, or recognized international courier
service.  The notice shall be deemed
effective as of the date of delivery to the address of the party specified
below as evidenced by a delivery receipt or the addressee’s registry of
incoming correspondence.  Unless
otherwise expressly set out in this Agreement, all notices to a party will be
sent to the party’s authorized representative identified below and all notices
from a party will be sent by the party’s authorized representative identified
below.

 

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

 

 

13.3         Any notice to Licensee
shall be sent to both of, and any notice from Licensee shall be sent by either:

 

	
  Name1

  	
   

  	
  Name2

  
	
  Address1

  	
   

  	
  Address2

  

 

13.4         Any notice to Digimarc
shall be sent to both of, and any notice from Digimarc shall be sent by either:

 

	
  Mr. Robert Chamness

  	
   

  	
  Mr. Scott Carr

  
	
  Vice President and General Counsel

  	
   

  	
  President

  
	
  Digimarc Corporation

  	
   

  	
  Digimarc Watermarking Solutions

  
	
  9405 SW Gemini Drive

  	
   

  	
  9405 SW Gemini Drive

  
	
  Beaverton, OR 97008

  	
   

  	
  Beaverton, OR 97008

  
	
  Fax: (503) 469-4777

  	
   

  	
  Fax: (503) 469-4777

  

 

13.5         A copy of every notice sent by either party
shall be sent to:  [**]

 

13.6         A party may change its
address for notice by notice to the other party in accordance with the
foregoing provisions.

 

13.7         Severability.  If
any part of this Agreement is held by an arbitral tribunal appointed pursuant
to the Arbitration Agreement or other competent authority to be void or
unenforceable, the parties agree that such determination will not result in the
nullity or unenforceability of the remaining parts of this Agreement, which
will continue in force to the fullest extent permitted by law.  The parties further agree to replace such
void or unenforceable part of this Agreement with a valid and enforceable
provision that will achieve, to the extent legally permissible, the economic,
business and other purposes of the void or unenforceable part.

 

13.8         Counterparts.   This
Agreement may be executed in separate counterparts, and by facsimile, each of
which will be deemed an original, and when executed, separately or together,
will constitute a single original instrument, effective in the same manner as
if the parties had executed one and the same instrument.

 

13.9         Entire Agreement.   This Agreement is intended by the parties to
be the final expression of their agreement and constitutes and embodies the
entire agreement and understanding between the parties hereto and constitutes a
complete and exclusive statement of the terms and conditions thereof, and will
supersede any and all prior correspondence, conversations, negotiations,
agreements or understandings relating to the same subject matter.

 

13.10       Amendments.   No change
in, modification of or addition to the terms and conditions contained herein
will be valid as between the parties unless set forth in a writing that is 

 

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

 

 

signed by an authorized representative of
each of the parties and which specifically states that it constitutes an
amendment to this Agreement.

 

13.11       Waiver.    No
waiver of any term, provision, or condition of this Agreement, will be
effective unless in a written document signed by the waiving party and no such
waiver in any one or more instances, will be deemed to be, or be construed as,
a further or continuing waiver of that term, provision or condition or any
other term, provision or condition of this Agreement.

 

13.12       Assignment and Successors.  
This Agreement may not be assigned by Licensee without Digimarc’s
consent, which consent shall not be unreasonably withheld or delayed.  This Agreement and all of its terms,
conditions and covenants are intended to be fully effective and binding, to the
extent permitted by law, on the successors and permitted assigns of the parties
hereto.

 

13.13       Captions.   Captions are
provided in this Agreement for convenience only and they form no part, and are
not to serve as a basis for interpretation or construction, of this Agreement,
nor as evidence of the intention of the parties hereto.

 

13.14       Disclaimer of Agency.   
Nothing contained in this Agreement is intended or will be construed so
as to constitute the parties to this Agreement as partners or joint venturers
or as agents of each other. Neither party will have any express or implied right
or authority to assume or create any obligations on behalf of or in the name of
the other party or to bind any other party in any contract, agreement or
undertaking with any third party.  No
employee of a party shall be deemed or considered to be an employee of the
other party or of both parties.

 

13.15       Publicity.   The parties
agree that from time-to-time it will be beneficial to both parties to issue
press releases and other public announcements concerning benefits arising from
the CDS.  Each party agrees to submit for
approval by the other party any press release that involves the other party,
which approval shall not unreasonably be withheld.

 

13.16       Effectiveness.   This
Agreement shall not be effective until it is signed by both of the parties.

 

13.17       Ambiguities.  Each party
and its counsel have participated fully in the review and revision of this
Agreement. Any rule or construction to the effect that ambiguities are to
be resolved against the drafting party shall not apply in interpreting this Agreement.

 

13.18       Survival.   All clauses
of this Agreement which expressly or by implication are intended to survive the
termination of this Agreement will do so and, for greater certainty and
notwithstanding any provision in this Agreement to the contrary, the provisions
of clause 2.9, 4.2, 4.3, 6.1, 6.3, 6.4, 7.2(b), 9, 10, 12 and 13 of this
Agreement shall survive termination of this Agreement by either party for any
reason.

 

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

 

 

 

IN WITNESS WHEREOF,
this Agreement has been executed and delivered by the parties hereto as of the
Effective Date.

 

	
  DIGIMARC CORPORATION

  	
  <Licensee>

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  

 

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

 

 

ATTACHMENT 1

 

[**]

 

The [**] will
cause the following [**] to take place:

 

(a)           [**]

 

(b)           [**].

 

(c)           [**] <<a date TBD>> [**].

 

** CONFIDENTIAL PORTION
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ATTACHMENT 2

 

DRAFT OPINION OF COUNSEL

 

Digimarc Corporation

9405 SW Gemini Drive

Beaverton, OR 97062

USA

 

Attention:

 

President and CEO

 

Dear:

 

In connection with your proposal to grant  a license to <name of Licensee> to
use  the Counterfeit Deterrence System and for no other purpose, we confirm
that:

 

(a)                                  each
provision of this Agreement is valid and enforceable against <name of
Licensee> under the laws of <name of jurisdiction>; and

 

(b)                                 none
of the [**] described below, at
the time of writing, contravenes any law, regulation, policy, principle, or
doctrine in effect in the jurisdiction of the <principal place of
business/head office> of <name of Licensee>.

 

[**]

 

Yours truly,

 

** CONFIDENTIAL PORTION
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ATTACHMENT 3

 

PROBLEM REPORT

 

Each problem report will contain all information necessary to reproduce
or demonstrate the occurrence of the problem. 
Problem reports will be in English and will be delivered electronically
in a format to be provided by Digimarc.

 

Problem reports will contain:

 

·      Date problem
was encountered

·      Detailed description of the
problem, including the frequency with which the problem occurs

·      Name and version number of
the program / system component that exhibits the problem

·      Step by step instructions to
reproduce the problem

·      All data files required to
reproduce the problem

·      [**]Manufacturer and Model

·      CPU type and speed

·      Amount of memory

·      Operating System and Version

·      Disk Configuration (number
of drives, total space per drive, free space per drive)

·      Display Adapter Model,
Resolution, Number of colors

·      Peripheral configuration
(where applicable)[**]TWAIN driver and version number

·      [**]

·      Severity of problem

·      Contact information for
person to contact for further information (name, phone number, FAX number, email
address)

 

Licensee agrees to work with Digimarc to provide reasonable additional
information and perform reasonable additional tests, as requested by Digimarc,
to assist Digimarc in resolution of the problem.

 

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

 

 

ATTACHMENT 
4

 

PAYMENT FOR SERVICES

 

Digimarc shall bill Licensee for Services in one hour increments at the
following hourly rates:

 

	
  Technical/Design Consultant

  	
   

  	
  [**]

  
	
  Senior Engineer

  	
   

  	
  [**]

  
	
  R&D/Engineering Executive

  	
   

  	
  [**]

  
	
  Project Manager

  	
   

  	
  [**]

  
	
  Administrator/Scheduler

  	
   

  	
  [**]

  

 

Fees for Services will be invoiced on the earlier of 1) the last day of
the month or 2) the completion of the Services. 
Invoices are due thirty (30) days from the date of receipt of a correct
invoice.  A late charge of 1.5% per month
will be charged on any late payments. 
All fees are due and payable in US funds.

 

Licensee will reimburse Digimarc for all out-of-pocket expenses
reasonably and necessarily incurred in providing the Services.  Expenses will be itemized and reported by
category.  Out-of-pocket expenses will
not be “marked up” by Digimarc.  Costs
include, but are not limited to, reasonable travel and lodging expenses,
telephone and fax charges, postage and overnight deliveries, and charges for
rental equipment or materials purchased specifically to be used in providing
the Service.  All invoices for
out-of-pocket expenses will be issued monthly in arrears and are due thirty
(30) days from the date of receipt of a correct invoice. Supporting receipts
and vouchers will be available for review at Digimarc’s offices.  A late charge of 1.5% per month will be
charged on any late payments.  Payments
will additionally include Value Added taxes and other tariffs and fees that may
be imposed by any government other than the United States of America.

 

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

 

 

ATTACHMENT 5

 

[**]

 

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

 

 

ATTACHMENT 6

 

IDENTIFICATION OF [**]

 

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

 

 

ATTACHMENT 7

 

TRAINING

 

	
  1.0

  	
   

  	
  As
  part of the  [**],
  Digimarc shall develop a program of training acceptable to the [**] Project Director(as
  defined in the [**] Agreement) in the [**]

  
	
   

  	
   

  	
   

  
	
  2.0

  	
   

  	
  Digimarc
  shall deliver the Training as follows:

  
	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Digimarc
  shall provide the Training to up to two (2) people simultaneously. The
  trainees will be experienced in digital design system operation.

  
	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Digimarc
  shall conduct the Training at the facilities of Licensee  or, at the request of Licensee , at Digimarc’s facilities  or at some other place agreed between Digimarc and Licensee.

  
	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  Digimarc
  shall give Licensee reasonable notice concerning the equipment which Digimarc
  will require in order to conduct the Training. Licensee shall provide all
  such equipment at its own expense. If the parties are unable to agree on the
  equipment to be provided either party may refer the matter for decision to
  the DLA Contract Authority (as defined in the [**] Agreement).

  
	
   

  	
   

  	
   

  
	
  2.4

  	
   

  	
  Digimarc
  shall conduct the Training using the [**]

  
	
   

  	
   

  	
   

  
	
  2.5

  	
   

  	
  Digimarc
  shall provide a training manual in English to every trainee. Any translation
  or interpretation which the trainees may require will be provided by Licensee
  at its own expense.

  
	
   

  	
   

  	
   

  
	
  2.6

  	
   

  	
  Digimarc
  shall provide each trainee with a certificate of training at the completion
  of the Training session.

  
	
   

  	
   

  	
   

  
	
  2.7

  	
   

  	
  Digimarc
  shall conduct the Training in English.

  

 

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

 

 

SCHEDULE M

 

ESCROW AGREEMENT

 

DATED:

 

Between:

 

(1)                                  DIGIMARC CORPORATION whose head office is at One Centerpointe Drive,
Suite 500, Lake Oswego, Oregon. U.S.A. 97035-8615 (“Digimarc”);

 

(2)                                  [**]

 

(3)                                  [**]
whose registered office is at
[**]

 

Each of the parties to this Agreement
acknowledges that the considerations for their respective undertakings given
under it are the undertakings given under it by each of the other parties.

 

It is agreed that:

 

1.             Definitions

 

In this Agreement the following terms shall
have the following meanings:

 

1.1                                 “Arbitration Agreement” means the Arbitration Agreement entered into between
the parties and others effective 1 January 1999.

 

1.2                                 “Business Day” means a day on which each of [**], Digimarc, and [**]
is open for business at their respective addresses noted above;

 

1.3                                 “Intellectual Property Rights” means copyright, trade secret, patent, and all other
rights of a similar nature;

 

1.4                                 “Licence Agreement” means the Counterfeit Deterrence System Development
and License Agreement entered into between Digimarc and [**], effective 1 January 1999.

 

1.5                                 “Material” means the “Escrowed Materials” as that term is
defined in the Licence Agreement; and

 

1.6                                 “Technology” means the CDS Technology as defined in the Licence
Agreement.

 

2.             Owner’s Duties and Warranties

 

2.1                                 Digimarc shall:

 

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

 

 

2.1.1                        deliver a copy of the Material to [**] within thirty
(30) days of the date of this Agreement;

 

2.1.2                        make available to [**] at Digimarc’s premises a copy
of the Material in accordance with its obligations under Clause 8.8 of the
Licence Agreement; and

 

2.1. 3                     deliver to [**] a replacement copy of the Material
within twenty (20) Business Days of receipt of a notice served upon it by [**]
under the provisions of Clause 4.1.5.

 

2.2                                 Digimarc
warrants to [**] that
Digimarc has sufficient rights in the Intellectual Property Rights in the
Material to enter into this Agreement, and that it has authority to enter into
this Agreement.

 

3.                                      [**] Responsibilities

 

                                                It shall be the responsibility of [**] to notify [**]
of any change to the Technology that necessitates a replacement deposit of the
Material.

 

4.                                      [**]’s Duties

 

4.1                                 [**] shall:

 

4.1.1                        hold the Material in a safe and secure environment;

 

4.1.2                        notify Digimarc and [**] of the receipt of any copy of
the Material;

 

4.1.3                        in accordance with the terms of Clause 9 perform the
Verification Process from time to time;

 

4.1.4                        at all times retain a copy of the latest verified
deposit of the Material;

 

4.1.5                        notify Digimarc and [**] if it becomes aware at any
time during the term of this Agreement that the copy of the Material held by it
has been lost, damaged or destroyed; and

 

4.1.6                        upon receipt and verification of a new version of the
Material, return all prior versions of the Material to Digimarc with ten (10) Business
Days.

 

4.2                                 [**] shall not be responsible for procuring the
delivery of the Material in the event of failure by Digimarc to deliver it.

 

5.                                      Payment

 

[**]’s fees are payable in accordance with
Schedule 1.

 

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

 

 

6.             Release Events

 

6.1                                 For the purposes of this Agreement any of the
following events shall be considered to be a “Release Event”:

 

(a)                                  the date on which the license referred to in Clause
8.4 of the Licence Agreement takes effect in accordance with Clause 8.5 of that
Agreement;

 

(b)                                 the date on which the license referred to in Clause
8.6 of the Licence Agreement takes effect.

 

6.2                                 [**] must notify [**] of the occurrence of a Release
Event by delivering to [**] a statutory or notarized declaration (“the
Declaration”) made by an officer of [**] attesting that such event has occurred
and that the Licence Agreement was still valid and effective up to the
occurrence of such event and exhibiting:

 

6.2.1                        such documentation in support of the Declaration as
[**] shall reasonably require; and

 

6.2.2                        a copy of the Licence Agreement.

 

6.3           Upon
receipt of a Declaration from [**] claiming a Release Event under Clause 6.1:

 

6.3.1                        [**] shall send a copy of the Declaration to Digimarc
by courier and fax; and

 

6.3.2                        unless within fourteen (14) days after the date of
delivery Digimarc delivers to [**] a counter-notice signed by a duly authorized
officer of Digimarc stating that no such Release Event has occurred

 

then [**] will release the Material to an
authorized officer of [**] upon receipt of the release fee stated in Schedule
1.

 

6.4                                 Where there is any dispute as to the occurrence of any
of the events set out in Clause 6.1, such dispute will be referred at the
request of either Digimarc or [**] to the Managing Director for the time being
of [**] (or the equivalent officer of any new custodian appointed pursuant to
Clause 11.2 or 11.3) for the appointment of an expert who shall give a decision
on the matter within fourteen (14) days of the date of referral or as soon as
practicable thereafter.  The expert’s
decision shall be final and binding as between Digimarc and [**] except in the
case of manifest error.

 

6.5                                 If the expert’s decision is that a Release Event has
occurred, [**] shall immediately release the Material to an authorized officer
of [**] upon receipt of the release fee stated in Schedule 1.

 

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

 

 

7.             Confidentiality

 

7.1                                 The Material shall remain the confidential property of
Digimarc and in the event that [**] provides a copy of the Material to [**],
[**] shall be permitted to use and sublicence the Material only in accordance
with the terms set forth in the License Agreement.

 

7.2                                 [**] agrees to maintain all information and/or
documentation coming into its possession or to its knowledge under this
Agreement in strictest confidence and secrecy. 
[**] further agrees not to make use of such information and/or
documentation other than for the purposes of this Agreement and will not
disclose or release it other than in accordance with the terms of this
Agreement.

 

7.3                                 Termination of this Agreement will not relieve [**] or
its employees, or [**] or its employees, from the obligations of
confidentiality contained in this Clause 7.

 

8.             Intellectual Property Rights

 

                                                The release of the Material to [**] will not act as an
assignment or license of any Intellectual Property Rights that Digimarc
possesses in the Material except as specifically provided in the Licence
Agreement.

 

9.             Verification

 

9.1                                 Subject to the provisions of Clauses 9.2 and 9.3, [**]
shall bear no obligation or responsibility to any person, firm, company or
entity whatsoever to determine the existence, relevance, completeness,
accuracy, effectiveness or any other aspect of the Material.

 

9.2                                 Upon the Material being lodged with [**] from time to
time under Clause 2.1, [**] shall perform tests in accordance with its standard
verification service applying from time to time and shall provide a copy of the
test report to [**] and Digimarc. 
Additionally, at [**]’ request and expense, [**] shall perform the
Verification Process detailed in clause 9.3 below.

 

9.3                                 Verification Process. 
[**] shall inspect, audit and verify any or all of the Material for
accuracy, completeness and sufficiency. 
Such verification process may include, at [**]’s option, assembling
and/or compiling the source code into executable object code.  Digimarc agrees to make reasonably available,
at its standard consulting rates as in effect from time to time, technical and
support personnel reasonably necessary for [**] to perform verification of the
Material, and further agrees to give [**] reasonable access to Digimarc’s
facilities, including its computer systems, for the purpose of such
verification at no additional charge. 
Digimarc hereby grants [**] permission to release to [**] directory
lists and/or tables of contents of computer media, manuals, and other materials
comprising the Material.  Digimarc and
[**] shall be entitled to have a representative present at all times to observe
such verification by [**].  Any report
prepared by [**] shall be provided to all parties hereto.

 

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

 

 

10.          [**]’s Liability

 

10.1                           [**] shall not be liable for any loss caused to
Digimarc or [**] either jointly or severally except for loss of or damage to
the Material to the extent that such loss or damage is caused by the negligent
acts or omissions of [**], its employees, agents or sub-contractors and in such
event [**]’s total liability in respect of all claims arising under or by
virtue of this Agreement shall not (except in the case of claims for personal
injury or death) exceed the sum of five hundred thousand pounds (£500,000).

 

10.2                           [**] shall in no circumstances be liable to Digimarc
or [**] for indirect or consequential loss of any nature whatsoever whether for
loss of profit, loss of business or otherwise.

 

10.3                           [**] shall be protected in acting upon any written
request, waiver, consent, receipt or other document furnished to it pursuant to
this Agreement, not only in assuming its due execution and the validity and
effectiveness of its provisions but also as to the truth and acceptability of
any information contained in it, which [**] in good faith believes to be
genuine and what it purports to be.

 

11.          Termination

 

11.1                           [**] may terminate this Agreement after failure by
[**] to comply with a 30 day written notice from [**] to pay any outstanding
fee.

 

11.2                           [**] may terminate this Agreement by giving sixty (60)
days written notice to Digimarc and [**]. 
In that event Digimarc and [**] shall appoint a mutually acceptable new
custodian on terms similar to those contained in this Agreement.

 

11.3                           If a new custodian is not appointed within 30 days of
delivery of any notice issued by [**] in accordance with the provisions of
Clause 11.2, Digimarc or [**] shall be entitled to request the President for
the time being of the British Computer Society to appoint a suitable new
custodian upon such terms and conditions as he shall require.  Such appointment shall be final and binding
on all parties.

 

11.4                           If the rights of all parties to use the Technology
under or pursuant to the Licence Agreement have expired or have been lawfully
terminated this Agreement will automatically terminate on the same date.

 

11.5                           [**] may terminate this Agreement at any time by
giving written notice to Digimarc and [**].

 

11.6                           Digimarc may only terminate this Agreement with the
written consent of [**].

 

11.7                           This Agreement shall terminate upon release of the
Material to [**] in accordance with Clause 6.

 

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

 

 

11.8                           Upon termination under the provisions of Clauses 11.4,
11.5 or 11.6 [**] will deliver the Material to Digimarc.  If [**] is unable to trace Digimarc, [**]
will destroy the Material. Upon termination under the provisions of Clause 11.2
[**] will deliver the Material to the new custodian agreed under Clause 11.2 or
appointed under Clause 11.3.

 

11.9                           Upon termination under the provisions of Clause 11.1
the Material will be available for collection by Digimarc from [**] for thirty
(30) days from the date of termination. 
After such thirty (30) day period [**] will destroy the Material.

 

12.          General

 

12.1                           This Agreement shall be governed by and construed in
accordance with the laws of England to the exclusion of its rules of
conflicts of laws.

 

12.2                           This Agreement represents the whole agreement relating
to the escrow arrangements between the parties for the Material and supersedes
all prior arrangements, negotiations and undertakings.

 

12.3                           Except as otherwise provided, all notices to be given
to the parties under this Agreement shall be served by hand, by
internationally-recognized courier service, or by registered post (return
receipt requested), addressed to the signatories hereto at the addresses given
above or, for companies based in the UK, at the registered office.  Facsimile may not be used except as a
supplement to one of the foregoing.  Notices
shall be deemed to have been duly given or made when delivered, as evidenced by
delivery receipt or customary courier delivery notification.

 

12.4                           Any “Dispute”, as the term is defined in the
Arbitration Agreement, shall be finally settled by arbitration in accordance
with the Arbitration Agreement.

 

Signed on behalf of

 

[**]

 

 

	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
  (Authorized Signatory)

  
	
  Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
  (Authorized Signatory)

  
	
  Date

  	
   

  	
   

  

 

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

 

 

DIGIMARC CORPORATION

 

 

	
  Signature

  	
   

  	
   

  
	
  Name:

  	
  Bruce
  Davis

  	
   

  	
   

  
	
  Title:

  	
  President &
  CEO

  	
   

  	
  (Authorized
  Signatory)

  
	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [**] ESCROW INTERNATIONAL
  LIMITED

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
  (Authorized Signatory)

  
	
  Date:

  	
   

  	
   

  

 

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

 

 

SCHEDULE 1

 

[**]’s
Fees (St£)

 

	
  DESCRIPTION

  	
   

  	
  FEE

  	
   

  	
  DIGIMARC

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Initial
  Fee

  	
   

  	
  £

  	
  700

  	
   

  	
  NIL

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2 

  	
   

  	
  Annual
  Fee (payable on completion of this Agreement and on each anniversary
  thereafter)

  	
   

  	
  £

  	
  385

  	
   

  	
  NIL

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3 

  	
   

  	
  Update
  Fee (per update after the first 4 updates per annum)

  	
   

  	
  £

  	
  100

  	
   

  	
  NIL

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4 

  	
   

  	
  Storage
  Fee (an additional annual fee may be payable for deposits in excess of one
  cubic foot)

  	
   

  	
  TBA

  	
   

  	
  NIL

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5 

  	
   

  	
  Liability
  Fee (£100 per £500,000 of liability exceeding £500,000, per annum)

  	
   

  	
  Not Applicable

  	
   

  	
  NIL

  	
   

  	
  Not Applicable

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6 

  	
   

  	
  Release
  Fee (plus [**]’s reasonable expenses)

  	
   

  	
  £

  	
  500

  	
   

  	
  NIL

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7. 

  	
   

  	
  Verification
  Fee (plus [**]’s reasonable expenses)

  	
   

  	
  £

  	
  700 per day

  	
   

  	
  NIL

  	
   

  	
  100

  	
  %

  

 

	
   

  	
   

  	
  1.

  	
   

  	
  All
  fees are subject to VAT where applicable*

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
   

  	
  All
  fees are reviewed by [**] from time to time

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*  only
applicable to countries within the EU.

 

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

 

 

SCHEDULE “N”

 

PROGRESS REPORTS AND PROJECT REVIEWS

 

1.                                      TASK STATUS

 

Within
fifteen (15) Business Days after the end of every calendar month [**] Digimarc
shall deliver reports to the [**] Project Director in accordance with Sections
8 to 10 herein as agreed in the current Program Work Plan.

 

2.                                      PROBLEM REPORT

 

Digimarc
shall report to the [**] Project Director on problems that impact technical or
schedule performance. Each problem will be reported in a problem list that
includes the following information:

 

Problem
title

Date
reported

Task
or Service affected

Task
or Service impact

Proposed
corrective action

Current
status

Date
closed

 

Red
Flag reports (see paragraph 7) will be included on the problem list. A problem
will remain on the list until closed or otherwise resolved.

 

3.                                      PROGRESS REVIEWS

 

Digimarc shall provide materials, information and
documentation in support of progress review meetings with the [**] once every
three (3) months on average throughout the period during which Phase [**]
Services are being performed and will attend progress review meetings as
requested by the [**] Project Director. The objective of each meeting is to
review the: status of each major task and Service; status of deliverable items;
[**] progress for each [**]; each parties’
proposed plans concerning [**] including intended outcome during the Term of
this Agreement and during the period until the next meeting under this
Schedule; [**]; a summary of the financial status; contractual and
administrative matters; contract changes and amendments, as necessary;
technical reports or data; market and user factors and marketing activities;
and other topics as necessary and relevant.

 

Each
meeting that Digimarc is requested to attend will last no more than 2 days
unless otherwise agreed upon in advance. Attendees will include management,
technical and administrative representatives from Digimarc and [**], including
the parties’ respective Project Directors or suitable designees. To ensure
meeting effectiveness, [**] will be limited to ten (10)

 

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

 

 

or
fewer persons including any outside vendors or consultants deemed necessary by
agreement of the parties’ respective Project Directors to be necessary to
ensure an effective meeting.

 

In
between the quarterly meetings described above, the technical representatives
of Digimarc and [**] shall hold technical review meetings at least six (6) times
per year or as otherwise agreed by the parties to review technical, and
resource matters. Each such meeting will last no more than 2 days unless
otherwise agreed upon in advance and will be held at a mutually agreeable date and
location. At least half of the reviews will be held at Digimarc’s
facilities.Digimarc will provide a presentation for the [**] on development and
[**] progress at least once per year if requested by the [**] Project Director.

 

4.                                      AGENDA

 

An
agenda will be prepared by Digimarc and sent to the [**] ten (10) days in
advance of each progress review and technical review meeting for review and
comment or approval.

 

5.                                      MEETING MATERIALS

 

Progress
review and technical review meeting materials will consist of power point
presentations, technical data, marketing
white papers, studies, technical specifications analyses and other
reports. Meeting materials will be delivered to the [**].

 

6                                         REPORT

 

Within
five (5) Business Days after the progress review or technical review
meeting, Digimarc shall prepare and deliver to the [**] a report summarizing
the essential topics discussed including the action items assigned during the
meeting. Meeting materials will be appended to the report.

 

7.                                      RED FLAG REPORT

 

Digimarc
shall prepare and deliver to the [**] Project Director a “Red Flag” report when
a problem requiring the immediate attention of [**] is required.  Red Flag reports may be informative; e.g., a
report about a [**] delinquency that will impact a critical version release
date.  They may also report on problems
whose correction requires immediate consideration or action from [**] or
another organization external to Digimarc. Red Flag reports on development or
[**] problems will contain the following information:

 

·                  A summary describing the
development or [**] problem and background information that may be necessary to
understand the development or [**] problem.

·                  A description of the impact
of the problem on the development project(s) or [**] plan(s).

·                  The date by which a
resolution is required.

·                  A description of the
recommended next action.

·                  The action requested of the
[**] Project Director.

 

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

 

 

8.                                      PROJECT REPORTING GENERAL

 

Monthly
activities reports will be provided that include a report for each of the [**]
areas: Development, Maintenance, [**] and Program Wide.

 

a.               DEVELOPMENT DETAIL

 

1.               Project Objectives –
Statement of the objectives for the project

2.               Major project
risks or unknowns – Project Directors view of the major risks and unknowns as
of the current month

3.               Accomplishments
in the current month – List of major tasks completed and milestones reached in
the current month

4.               Changes to plan
– Changes to the project plan made during the current month

5.               Next month’s
tasks and milestones – List of the major tasks and the milestones that are
expected to be reached in the next month

6.               Current project
Gantt chart – Updated Gantt chart project with all project changes to date

7.               Utilized
resources – List of staff utilized on the project during the current month

8.               Monthly labor
hours by type of labor – Summary of labor hours by job class for the current
month

9.               Monthly
Utilization – Actual monthly Allowable Costs, forecast to end of scope of work,
and comparison to estimated Allowable Costs projection.

 

b.               MAINTENANCE DETAIL

 

1.               Project Objectives –
Statement of the objectives for the project

2.               Major project
risks or unknowns – Project Directors view of the major risks and unknowns as
of the current month

3.               Accomplishments
in the current month – List of major tasks completed and milestones reached in
the current month

4.               Changes to plan
– Changes to the project plan made during the current month

5.               Next month’s
tasks and milestones – List of the major tasks and the milestones that are
expected to be reached in the next month

6.               Current project
Gantt chart – Updated Gantt chart project with all project changes to date

7.               Utilized
resources – List of staff utilized on the project during the current month

8.               Monthly labor
hours by type of labor – Summary of labor hours by job class for the current
month

 

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

 

 

9.               Monthly
Utilization – Actual monthly Allowable Costs, forecast to end of scope of work,
and comparison to estimated Allowable Costs projection.

 

c.               [**] DETAIL

 

1.               Project Objectives –
Statement of the objectives for the project

2.               Major project
risks or unknowns – Digimarc Project Director’s view of the major risks and
unknowns as of the current month

3.               Accomplishments
in the current month – List of major tasks completed in the current month

4.               Changes to plan
– Changes to the project plan made during the current month

5.               Next month’s
tasks – List of the major tasks that are expected to be accomplished in the
next month

6.               Utilized
resources – List of staff utilized on the project during the current month

7.               Monthly labor
hours by type of labor – Summary of labor hours by job class for the current
month

8.               Monthly
Utilization – Actual monthly Allowable Costs, forecast to end of scope of work,
and comparison to estimated Allowable Costs projection.

 

d.               PROGRAM WIDE DETAIL

 

1.               Project Objectives –
Statement of the objectives for the project

2.               Accomplishments
in the current month – List of major tasks completed in the current month

3.               Changes to plan
– Changes to the project plan made during the current month

4.               Next month’s
tasks – List of the major tasks that are expected to be accomplished in the
next month

5.               Utilized
resources – List of staff utilized on the project during the current month

6.               Monthly labor
hours by type of labor – Summary of labor hours by job class for the current
month

7.               Monthly
Utilization – Actual monthly Allowable Costs, forecast to end of scope of work,
and comparison to estimated Allowable Costs projection.

 

9.                                                              PROJECT MANAGEMENT UPDATES

 

1.               Digimarc and the [**] will conduct weekly project management updates to
review progress on [**] plans and coordinate [**] work to be undertaken over
the next period.

 

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

 

 

2.               Digimarc will be responsible for the issuance of minutes for each
project management update and also maintain a register of changes in process
and approved.

 

3.               Digimarc will update the [**] activity report once per month.

 

10.                                                       [**] REPORTS

 

1.               Digimarc will provide [**] reports on the status of
the [**] and related [**] twice per year – in March and September.  The [**] will reimburse to Digimarc the cost
of providing additional [**] reports as requested by the [**] Project Director.

 

2.               Digimarc will provide reports to the [**] on the
specific [**] identified in the [**] Plans once per quarter if requested by the
[**] Project Director.

 

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

 

 

SCHEDULE “O”

 

THIS SYSTEM SUPPORT SERVICES
AGREEMENT (the “Agreement”)  is  made

 

BETWEEN

 

<name
and address of licensee> (“Licensee”)

 

- AND -

 

DIGIMARC CORPORATION, a corporation incorporated
under the laws of Oregon and having its head office at One Centerpointe, Suite 500
Drive, Lake Oswego, Oregon. U.S.A. 
97035-8615 (“Digimarc”)

 

Licensee
entered into one or more license agreements with Digimarc for the license of
the [**] a counterfeit deterrence system (the “CDS”);

 

Licensee
now wishes to engage Digimarc to maintain and support [**];

 

In consideration of these premises, the covenants
set out in this Agreement and for other good and valuable consideration, the
receipt and adequacy of which are acknowledged by each of the parties, the
parties agree as follows:

 

1.                                      DEFINITIONS AND PRINCIPLES OF INTERPRETATION

 

1.1                                 Definitions - Whenever used in this Agreement, the
following words and terms shall have the meanings set out below:

 

“Arbitration Agreement” means the Arbitration
Agreement entered into between the parties and others effective 1 January 1999;

 

“Agreement” means these articles of
agreement, including the Attachments, and those documents as specified or
referenced in this Agreement as forming part of the Agreement, all as may be
amended from time to time;

 

“[**]  Agreement” means
Counterfeit Deterrence System Development and License Agreement entered into
between [**] and Digimarc effective 1 January 1999;

 

“Business Day” means a day on which both
Licensee and Digimarc are open for business at their respective addresses noted
above;

 

“Confidential
Information” means information
disclosed during the Term of this Agreement in any form which, if disclosed in
tangible form, is labelled “Confidential”,

 

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

 

 

“Proprietary” or with a similar
legend, or if disclosed orally is information that by its nature would be
understood to be confidential to the Discloser;

 

“Core Hours” means 7:00 a.m. to
7:00 p.m. Monday through Friday, United States Pacific time zone,
excluding statutory holidays observed by Licensee at its Site;

 

“Discloser” means a party which has disclosed or otherwise made
available its Confidential Information to the other party;

 

“Effective Date” means the date on which this
Agreement is last signed, or the Effective Date of the License Agreement,
whichever is later;

 

[**]

 

“Hot-line” means a single dedicated
telephone line provided by Digimarc to Licensee for the reporting of problems
with [**];

 

“License Agreement” means, collectively, all
license agreements entered into between the parties pursuant to which Licensee
acquired a license to use [**];

 

“Person” means any individual or
other legal entity, including without limitation sole proprietorship,
partnership, unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate, or 
a natural person in the capacity of trustee, executor, administrator or
other legal representative;

 

“Recipient”
means a party to which the
Confidential Information of the other party has been disclosed or otherwise
made available;

 

“Services” means the services
described in clauses 2 and 3 below, or any of them;

 

“Severity Level One Software Problem” means a
Software Problem which causes the [**] to cease operating or which causes the
computer system running [**] to crash;

 

“Severity Level Two Software Problem” means a
Software Problem which causes the [**] to cease operation in accordance with
its Specifications or which produces substantially incorrect data;

 

“Severity Level Three Software Problem” means a Software
Problem which is not a Severity Level Two Problem or a Severity Level One
Problem;

 

“Site” means the [**] of Licensee at which a
Software Problem is encountered;

 

“Software Problem” means  a circumstance where [**]  does not function in accordance with its Specifications, produces
substantially incorrect data, or causes a computer running [**] to crash, or
other problem with [**] and which can be reproduced by

 

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

 

 

Digimarc,
at Digimarc’s facility, based on information provided to Digimarc by Licensee
in a Software Problem Report;

 

“Software Problem Report” means a written report in
the form attached as Attachment 1;

 

“Specifications” has the meaning given to it
by the [**] Agreement;

 

“System Documentation” means the documentation for
[**]  provided by Digimarc to
Licensee under a License Agreement;

 

“Training Manual” means the training manual
which relates to the use of [**] provided by Digimarc to Licensee under a
License Agreement; and

 

“Work” means the tasks that are required to be
performed by Digimarc in order to comply with its obligations under this
Agreement.

 

1.2                                 Interpretation - In this Agreement:

 

1.2.1                        unless
otherwise specified, all references to money amounts are to the currency of the
United States of America;

 

1.2.2                        the use of
words in the singular or plural, or with a particular gender, shall not limit
the scope or exclude the application of any provision of this Agreement to such
Person or Persons or circumstances as the context otherwise permits;

 

1.2.3                        whenever a
provision of this Agreement requires an approval or consent by a party to this
Agreement and notice of such approval or consent is not delivered within the
applicable time, then the party shall be conclusively deemed to have withheld
the consent or approval;

 

1.2.4                        unless
otherwise specified, the number of days within or following which any payment
is to be made or act is to be done shall be interpreted to be continuous and
shall be calculated by excluding the day on which the period commences and
including the day which ends the period and by extending the period to the next
Business Day if the last day of the period is not a Business Day;

 

1.2.5                        unless
otherwise specified, the order of precedence for interpreting this Agreement
shall be:

 

(a)                                  this Agreement,
excluding the Attachments,

 

(b)                                 the
Attachments;

 

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

 

 

If
this Agreement conflicts in substance with a License Agreement entered into
between the parties, the License Agreement shall control;

 

1.2.6                        for greater
certainty, a party or representative to which this Agreement grants the right
to make a decision or determination in the sole discretion of the party or
representative is not required to act reasonably in making the decision or
determination and no such decision or determination may be challenged by the
other party under the Arbitration Agreement or otherwise;

 

1.2.7                        the words “includes”
or “including” will be construed without limitation to the generality of the
preceding words;

 

1.2.8                        a clause,
Schedule or Attachment unless the context requires otherwise, is a reference to
a clause, a Schedule or Attachment of, or a paragraph of a Schedule or
Attachment of, this Agreement, as amended from time to time in accordance with
this Agreement; and

 

1.2.9                        any due date or
time period prescribed by this Agreement may be changed by written agreement
between the parties’ respective representatives identified in clauses 5.1 and
5.2.

 

1.3                                 Applicable Law  - This
Agreement shall be construed in accordance with the laws of England to the
exclusion of its rules of conflicts of laws.

 

1.4                                 Attachments - The attachment to this Agreement, listed below,
is an integral part of this Agreement:

 

Attachment
1                        Software
Problem Report

 

2.                                      SCOPE OF THE WORK

 

2.1                                 Digimarc shall
provide the  Services described in this
clause 2 as required to ensure that [**] will conform to and operate in
accordance with the Specifications.

 

2.2                                 Problem Resolution.  Digimarc shall
resolve every Software Problem in [**] reported by Licensee as follows:

 

2.2.1                        Digimarc shall
provide and maintain in effect throughout the Term:

 

 (a)                               a Hot-line
which Licensee representative shall use to report Software Problems, and;

 

 (b)                              a paging
service by which Licensee can communicate with Digimarc when Licensee is unable
to  communicate with Digimarc using the Hot-line.

 

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

 

 

Licensee
will follow-up each such communication with a Software Problem Report.

 

2.2.2                        Both Digimarc
and Licensee shall log each Software Problem reported by Licensee.

 

2.2.3                        Upon receipt by
Digimarc of a report from Licensee of a Software Problem, Digimarc shall
respond as provided below in accordance with the level of severity of the
Software Problem identified by Licensee. 
Digimarc may respond to the report of a Software Problem by telephone or
in writing.

 

2.2.4                        Digimarc shall
file a “Resolution Report” with Licensee for each Software Problem reported by
Licensee which will include a description of the cause of the Software Problem
and the means by which the Software Problem was resolved.

 

2.2.5                        Digimarc shall
use its best efforts to respond to a Software Problem Report of a Severity
Level One Software Problem made during Core Hours and resolve the identified
Software Problem within two (2) Business Days of receipt of the Software
Problem Report.  The resolution of the Software
Problem may include a work-around to the Software Problem acceptable to
Licensee in the form of an amendment to [**] on an interim basis if a permanent
resolution is provided within a further twenty (20) Business Days. If:

 

(a)                                  Digimarc fails
to provide a permanent resolution of the Software Problem within twenty (20)
Business Days after Digimarc provides the work-around, or

 

(b)                                 Digimarc fails
to provide a work-around to the Software Problem within two (2) Business
Days after receipt of a report from Licensee of the Software Problem,

 

Licensee
may, at its option, reduce the monthly charge for the Services by [**]  for each Business Day after the first Business Day which elapses until
Digimarc provides the required temporary or permanent resolution to that
Software Problem.

 

2.2.6                        Digimarc shall use
commercially reasonable efforts to respond to a Software Problem Report of a
Severity Level Two Software Problem within ten (10) Business Days of
receipt and resolve the identified Software Problem within a further ten (10) Business
Days of receipt.  If Digimarc fails to
resolve the Software Problem within the twenty (20) Business Day period,
Licensee may, at its option, designate the Software Problem as a Severity Level
One Software Problem.

 

2.2.7                        Digimarc will
accept reports for Severity Level Three Software Problems and will consider
them for resolution in a future release.

 

2.2.8                        The period for
resolution of any Software Problem identified under Clause 2.2.5 and 2.2.6
shall commence with the receipt by Digimarc of the information necessary to

 

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

 

 

reproduce
the reported Software Problem if the resolution of that Problem requires such
reproduction.

 

2.3                                 Application Support.   Digimarc
shall, using the Hotline, answer questions from 
Licensee related to the use of [**] and resolve problems with [**]  which do not require changes to [**].

 

2.4                                 Documentation Updating.
  Digimarc shall update both the hard copy and the electronic
versions of the Training Manuals as required to reflect changes in [**] which
result from the provision by Digimarc of the Services.

 

2.5                                 Digimarc shall
provide the Services during the Core Hours. 
If Licensee  notifies Digimarc
that the provision of the Services during Core Hours will have a noticeable
impact on Licensee’s normal operations, Digimarc shall provide the Services
outside of Core Hours at a time or times and for the charges to be agreed with
Licensee.

 

2.6                                 Changes to the
[**] other than changes to redress a Software Problem shall be made by Digimarc
only at the direction of the DLA Contracting Authority, pursuant to the terms
of the [**] Agreement.

 

2.7                                 All Services
required to be provided as a result of :

 

(a)                                  use by Licensee of [**]
other than in accordance with the Training Manual supplied by Digimarc under a
License Agreement; or

 

(b)                                 failure of the computer
system on which [**] is installed to operate in accordance with the applicable
manufacturer’s specifications; will be for the account of Licensee.

 

3.                                      [**] UPDATES

 

3.1                                 No Licensee
shall be compelled to incorporate [**].

 

3.2                                 Digimarc shall
continue to provide the Services to Licensee for the two (2) versions of
[**] which immediately preceded the then current version of [**]  or for all versions of [**] released within twenty-four (24) months of
the date of issue of the [**], whichever is the greater, at no additional cost
to Licensee.

 

4.                                      PURCHASE PRICE AND PAYMENT

 

4.1                                 The fee for the
Services is [**] for each year during the Term. Licensee shall pay the fee in
equal monthly installments on or before the first day of the calendar month.

 

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

 

 

4.2                                 Except as
otherwise expressly provided in this Agreement, Licensee shall pay Digimarc all
sales, use, goods and services or other similar taxes levied by any government
in the United States or the country of Licensee’s principal place of business
which Digimarc is obliged to collect and remit to such government(s) in
connection with any amount paid by Licensee to Digimarc under this Agreement.

 

4.3                                 Digimarc is
responsible for, and shall indemnify Licensee against, and hold Licensee
harmless from, the payment of all taxes levied by any government on or in
respect of Digimarc’s income and any amounts required by law to be paid in
respect of social benefits for Digimarc’s employees relating to or arising out
of the services performed under this Agreement by Digimarc.  If required by law, Licensee shall deduct all
such taxes and amounts from the amounts otherwise payable to Digimarc and remit
them to the appropriate authorities.

 

4.4                                 Licensee may
set off against any amount which Licensee owes Digimarc under or in connection
with  this Agreement any amount which
Digimarc owes Licensee under or in connection with this Agreement, and vice
versa.

 

5.                                      SERVICES COORDINATION

 

5.1                                 Digimarc shall
designate a responsible individual with adequate authority and competence as a
services representative whose responsibilities, in addition to those expressly
set out in this Agreement, shall be to serve as primary interface with
Licensee.

 

5.2                                 Licensee shall
designate a responsible individual with adequate authority and competence to
serve as primary interface with Digimarc.

 

5.3                                 Either party’s
representative may from time to time appoint one or more Persons to represent
him or her on prior written notice to the other party’s representative.

 

5.4                                 Digimarc shall
replace within a reasonable time under the circumstances any of its employees
or authorized subcontractors engaged in fulfilling its obligations under this
Agreement, including its services representative, whose removal is required by
Licensee, provided that Licensee specifies reasonable cause for such removal in
writing.

 

5.5                                 Digimarc
represents that all personnel assigned to do the Work will be employees of
Digimarc. Digimarc shall not engage any subcontractor to do any part of the
work without first obtaining the prior written consent of Licensee, which
consent will not unreasonably be withheld.

 

6.                                      LICENSEE’S RESPONSIBILITIES

 

6.1                                 Unless
otherwise expressly set out in this Agreement, Licensee shall respond in
writing within ten (10) Business Days to every written request for consent
required by this Agreement received from Digimarc.

 

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

 

 

6.2                                 If Licensee is
delayed in complying with any of its obligations under clause 6.1 for any
reason not attributable to Digimarc, and such delay is the cause of  a delay in the
compliance by Digimarc with any of its obligations under this Agreement, then the
time for completion and the deadlines dependent thereon will be extended
automatically  by one day for each day of
delay by Licensee or such other period as may be agreed in writing between the
parties’ respective representatives.  If
Digimarc reasonably incurs any costs as a result of the delay, other than a
delay due to a force majeure event, such costs will, at Digimarc’s option, be
borne by Licensee.  If the delay is due
to a force majeure event, such costs shall be borne equally by Licensee and Digimarc.  This clause 6.2 sets forth Digimarc’s only
remedy for a delay by Licensee in complying with such obligation.

 

7.                                      INTELLECTUAL PROPERTY MATTERS

 

7.1                                 Licensee
acknowledges that Digimarc is the owner of all changes to [**]  made by Digimarc under this Agreement and all such changes shall be
considered for all purposes of a License Agreement as forming part of [**]
licensed thereunder.

 

8.                                      REPRESENTATIONS AND WARRANTIES OF DIGIMARC

 

8.1                                 General - Digimarc represents,
warrants and undertakes to Licensee that from and after the Effective Date:

 

(a)                                  the Services will be of
professional quality conforming to generally accepted software product
development practices and will be performed at all times in a timely and cost
effective manner and, for greater certainty Digimarc shall employ the standard
of care in performing the work that would be expected of an [**] of the same or
similar type as [**] which comprises the CDS Technology;

 

(b)                                 Digimarc is duly
incorporated and organized and is validly subsisting under the laws of the
State of Oregon, U.S.A. or some other state in the United States with full
corporate power and authority to enter into this Agreement;

 

(c)                                  to the best of its
knowledge, neither this Agreement nor the Services will contravene, breach, or result
in any default under any agreement, permit, by-law, or law or regulation to
which Digimarc is subject or by which it is bound including, for greater
certainty any laws or regulations in effect in the United States governing
export; and

 

(d)                                 this Agreement when
executed and delivered by Digimarc shall constitute a valid and binding
agreement with Digimarc enforceable against Digimarc according to its terms.

 

9.                                      REPRESENTATIONS AND WARRANTIES OF LICENSEE

 

9.1                                 Licensee
represents and warrants to Digimarc that:

 

(a)                                  Licensee has
full power and authority to enter into this Agreement; and

 

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

 

 

(b)                                 this Agreement when
executed and delivered by Licensee shall constitute a valid, binding and
enforceable obligation of Licensee.

 

10.                               CONFIDENTIALITY

 

10.1                           Except as
otherwise expressly permitted by this Agreement, a Recipient shall not use,
reproduce or disclose the Confidential Information of the Discloser for any  purpose other than as reasonably necessary to
comply with its obligations under  this
Agreement or to exercise any rights or licenses granted to it under or pursuant
to this Agreement.

 

10.2                           The Recipient
shall protect the Confidential Information of the Discloser from disclosure by
using the same degree of care, which shall be no less than a reasonable degree
of care, as the Recipient uses to protect its own confidential information.

 

10.3                           On written
request from the Discloser, the Recipient shall return, or certify the
destruction of, all originals and copies of the Discloser’s Confidential
Information in the Recipient’s possession or control which the Recipient does
not need to retain in order to perform any obligations imposed, or exercise any
rights acquired, by this Agreement.

 

10.4                           A Recipient
may, on a need to know basis, and only for the purposes  described in clause 10.1, give the
other party’s Confidential Information to the Recipient’s employees, authorized
subcontractors or representatives provided that such employee, subcontractor or
representative shall have entered into a non-disclosure agreement in respect of
such Confidential Information in favour of the Discloser on terms materially
similar to the provisions of this clause 10.

 

10.5                           The obligations
set out in this clause 10 will not apply to any Confidential Information that:

 

(a)                                  is or becomes
publicly available other than through the fault of the Recipient;

 

(b)                                 was known to the
Recipient prior to disclosure as shown by documentation sufficient to establish
such knowledge;

 

(c)                                  was or is lawfully disclosed
to the Recipient by a third party who did not breach any obligation of
confidence by such disclosure and who made the disclosure without restriction
on further disclosure all of which is shown by documentation sufficient to
establish same; or

 

(d)                                 is required by
law to be disclosed provided, however, that the Recipient shall first give
written notice to the Discloser before the disclosure so that the Discloser may
seek an appropriate protective order.

 

The
fact that Confidential Information, or any part thereof, can be linked together
by a search of publications and other information, followed by a selection of a
series of such items of

 

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

 

 

knowledge
from unconnected sources, and fitting together those items of knowledge so as
to duplicate or recreate any item of Confidential Information, shall not be
deemed to cause the Confidential Information, or any part thereof, to be
included within exceptions (a), (b) or (c), above.

 

10.6                           Each party
hereby consents to any court order sought by the other party to enjoin
non-compliance, or to require compliance, by the party with any of the party’s
obligations under this clause 10.

 

10.7                           Nothing in this
Agreement shall be construed to require Licensee or any representative of
Licensee to disclose any information which is confidential to a third party
including for greater certainty an [**].

 

11.                               DISPUTE RESOLUTION

 

11.1                           Any Dispute as the term is
defined in the Arbitration Agreement shall be finally settled by Arbitration in
accordance with the Arbitration Agreement.

 

11.2                           Unless
otherwise agreed between the parties or unless the subject matter of the dispute
resolution proceedings is a party’s right to terminate this Agreement, the
Services shall continue during the dispute resolution proceedings and payments
due to Digimarc shall not be withheld on account of such proceedings unless
that particular Services or payment is the subject matter of the
proceedings.  In the latter case,
Digimarc may suspend continued provision of the disputed Services until the
dispute resolution proceeding is concluded unless Licensee instructs Digimarc
to continue the provision of the disputed Services, in which case Digimarc
shall act in accordance with such instructions, subject to payment of the fees
due for such Services.

 

12.                               TERM

 

12.1                           This Agreement
shall take effect on the Effective Date and shall remain in force for one (1) year
thereafter (the “Term”) unless sooner terminated as provided herein.  [**], Licensee may in its sole discretion renew the Agreement for one (1) or
more successive one (1) year Terms on no less than sixty (60) days notice
prior to the last day of a Term.

 

12.2                           Either party
may terminate this Agreement if the other party breaches any of its obligations
under this Agreement and fails to remedy such breach within thirty (30) days
after receiving written notice of such breach from the other party.

 

12.3                           Upon
termination of this Agreement each party shall return or certify the
destruction of, to the Discloser, all originals and copies of the  Discloser’s Confidential Information in the
party’s possession or control which the party does not need to retain in order
to exercise any rights acquired by this Agreement.

 

12.4                           No termination
of this Agreement will in any manner release, or be construed as releasing, any
party from any liability arising out of or in connection with that party’s
breach of or

 

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

 

 

failure to perform any
covenant, duty or obligation contained herein prior to the date of such
termination.

 

13.                               FORCE
MAJEURE

 

13.1                           If the
performance by either party of any of its obligations under this Agreement is
prevented or delayed by any circumstance of force majeure (which shall mean
fire, flood, earthquakes, war, riots, or insurrection) the party shall
immediately notify the other party.

 

13.2                           The time period
within which the party delayed is obliged to perform its obligations will be
delayed during the period such circumstance exists.  During the period of delay the party delayed
shall use its best efforts to make alternate arrangements satisfactory to the
other party to avoid delay or resume performance.

 

14.                               NOTICES

 

14.1                           All notices
under this Agreement shall be delivered by fax, certified mail, return receipt
requested, or recognized international courier service.  The notice shall be deemed effective as of
the date of delivery to the address of the party specified below as evidenced
by a delivery receipt or the addressee’s registry of incoming
correspondence.  Unless otherwise
expressly set out in this Agreement, all notices to a party will be sent to the
party’s authorized representative identified below and all notices from a party
will be sent by the party’s authorized representative identified below.

 

14.2                           Any notice to
DIGIMARC shall be sent to both of, and any notice from Digimarc shall be sent
by either:

 

Mr. Bruce Davis

President and CEO

Digimarc Corporation

One Centerpointe Drive

Suite 500

Lake Oswego, Oregon 97035 USA

FAX: (503) 968-0219

 

Mr. William Y. Conwell

Klarquist, Sparkman, 
Campbell,

Leigh & Whinston

121 SW Salmon Street

Suite 1600

Portland, Oregon 97204USA

FAX: (503) 228-9446

 

14.3                           Any notice to
Licensee shall be sent to both of, and any notice from Licensee shall be sent
by:

 

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

 

 

TBD

 

TBD

 

14.4         A party may
change its address for notice by notice to the other party in accordance with
the provisions of this clause 14.

 

14.5         A copy of every
notice sent by either party shall be sent to: [**]

 

15.                               MISCELLANEOUS PROVISIONS

 

15.1         Remedies Cumulative - Except as otherwise expressly set out in
this Agreement:

 

(a)                                  each and every right, power
and remedy of a party will be considered to be cumulative with and in addition
to any other right, power and remedy which such party may have at law or in
equity in the event of breach of any of the terms of this Agreement;

 

(b)                                 the exercise or partial
exercise of any right, power or remedy will neither constitute the exclusive
election thereof nor the waiver of any other right, power or remedy available
to such party; and

 

(c)                                  a party
terminating this Agreement in accordance with the provisions of the Termination
clause will have no liability or obligation to the other as a result of or with
respect to the termination.

 

15.2         Severability - If any part of this Agreement is held by an
arbitral tribunal appointed pursuant to the Arbitration Agreement or by any
other competent authority to be void or unenforceable, the parties agree that
such determination will not result in the nullity or unenforceability of the
remaining parts of this Agreement, which will continue in force to the fullest
extent permitted by law.  The parties
further agree to replace such void or unenforceable part of this Agreement with
a valid and enforceable provision that will achieve, to the extent legally
permissible, the economic, business and other purposes of the void or
unenforceable part.

 

15.3         Counterparts.  This
Agreement may be executed in separate counterparts, and by facsimile, each of
which will be deemed an original, and when executed, separately or together,
will constitute a single original instrument, effective in the same manner as
if the parties had executed one and the same instrument.

 

15.4         Entire Agreement.  This
Agreement is intended by the parties to be the final expression of their
agreement and constitutes and embodies the entire agreement and understanding
between the parties hereto and constitutes a complete and exclusive statement
of the terms and conditions thereof, and will supersede any and all prior
correspondence, conversations, negotiations, agreements or understandings
between the parties relating to the same subject matter.

 

15.5         Amendments.  No change
in, modification of or addition to the terms and conditions contained herein
will be valid as between the parties unless set forth in a writing that is
signed by

 

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

 

 

an authorized
representative of each party and which specifically states that it constitutes
an amendment to this Agreement.

 

15.6                           Waiver.  No waiver
of any term, provision, or condition of this Agreement will be effective unless
in a written document signed by the waiving party and no such waiver in any one
or more instances will be deemed to be, or be construed as, a further or
continuing waiver of that term, provision or condition or any other term,
provision or condition of this Agreement.

 

15.7                           Assignment and Successors.  This Agreement may not be assigned by Licensee
without the prior written consent of the Digimarc, which consent may be
withheld or given, with or without conditions at Digimarc’s sole
discretion.  This Agreement and all of
its terms, conditions, and covenants are intended to be fully effective and
binding, to the extent permitted by law, on the successors and permitted
assigns of the parties hereto.

 

15.8                           Captions.  Captions are provided in this Agreement for
convenience only and they form no part, and are not to serve as a basis for
interpretation, of this Agreement, nor as evidence of the intention of the
parties.

 

15.9                           Disclaimer of Agency.  Nothing contained in this Agreement is
intended or will be interpreted so as to constitute the parties to this
Agreement as partners or joint venturers or as agents of each other. Neither party
will have any express or implied right or authority to assume or create any
obligations on behalf of or in the name of any other party or to bind any other
party in any contract, agreement or undertaking with any third party. No
employee of a party shall be deemed or considered to be an employee of the
other party or of both parties.

 

15.10                     Effectiveness.  This
Agreement shall be effective only after it is signed by both of the parties.

 

15.11                     Ambiguities.  Each party
and its counsel have participated fully in the review and revision of this
Agreement.  Any rule or construction
to the effect that ambiguities are to be resolved against the drafting party
shall not apply in interpreting this Agreement.

 

15.12                     Survival.  All clauses
of this Agreement which expressly or by implication are intended to survive the
termination of this Agreement will do so and, for greater certainty and
notwithstanding any provision in this Agreement to the contrary, the provisions
of clauses 4.2, 4.3, 4.4, 10, 11, 14 and 15 of this Agreement shall survive
termination of this Agreement by either party for any reason.

 

IN WITNESS WHEREOF, this Agreement has been
executed and delivered by the parties hereto as of the Effective Date.

 

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

 

 

	
  TBD

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
  Date

  	
   

  
	
   

  	
   

  
	
  DIGIMARC
  CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
  Date:

  	
   

  

 

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

 

 

ATTACHMENT 1

 

SOFTWARE
PROBLEM REPORT

 

Each
problem report will contain all information necessary to reproduce or
demonstrate the occurrence of the problem. 
Problem reports will be in English and will be delivered electronically
in a format to be provided by Digimarc.

 

Problem
reports will contain:

 

Date
problem was encountered

Detailed
description of the problem, including the frequency with which the problem
occurs

Name
and version number of the program / system component that exhibits the problem

Step
by step instructions to reproduce the problem

All
data files required to reproduce the problem

[**]

Manufacturer
and Model

CPU
type and speed

Amount
of memory

Operating
System and Version

Disk
Configuration (number of drives, total space per drive, free
space per drive)

Display
Adapter Model, Resolution, Number of colors

Peripheral
configuration (where applicable)

[**]

TWAIN
driver and version number

[**]

Severity
of problem

Contact
information for person to contact for further information (name, phone number,
FAX number, email address)

 

Licensee
agrees to work with Digimarc to provide reasonable additional information and
perform reasonable additional tests, as requested by Digimarc, to assist
Digimarc in resolution of the problem.

 

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

 

 

SCHEDULE “P”

 

FEES FOR INTEGRATION SUPPORT AND VERIFICATION TESTING

 

Digimarc shall bill [**] for Services in one hour increments at the
following hourly rates:

	
   

  	
   

  	
   

  	
   

  
	
  Technical/Design
  Consultant

  	
   

  	
  $

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Senior
  Engineer

  	
   

  	
  $

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  R&D/Engineering
  Executive

  	
   

  	
  $

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Project
  Manager

  	
   

  	
  $

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Administrator/Scheduler

  	
   

  	
  $

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  

Fees
for Services will be invoiced on the earlier of 1) the last day of the month or
2) the completion of the Service. 
Invoices are due thirty (30) days from the date of receipt of a correct
invoice.  A late charge of 1.5% per month
will be charged on any late payments. 
All fees are due and payable in US funds.

 

The
[**] will reimburse Digimarc for all out-of-pocket expenses reasonably and
necessarily incurred in providing the Services. 
Expenses will be itemized and reported by category.  Out-of-pocket expenses will not be “marked up”
by Digimarc.  Costs include, but are not
limited to, reasonable travel and lodging expenses, telephone and fax charges,
postage and overnight deliveries, and charges for rental equipment or materials
purchased specifically to be used in providing the Services.  All invoices for out-of-pocket expenses will
be issued monthly in arrears and are due thirty (30) days from the date of
receipt of a correct invoice. Supporting receipts and vouchers shall be
available for review at Digimarc’s offices. A late charge of 1.5% per month
will be charged on any late payments. 
All out-of-pocket expenses will be billed and payable in US funds.
Payments will additionally include Value Added taxes and other tariffs and fees
that may be imposed by any government other than the United States.

 

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

 

 

SCHEDULE “Q”

 

TRAINING

 

1.0                                 As part of
[**], Digimarc shall develop a program of training acceptable to the DLA
Project Manager in [**].

 

2.0                                 Digimarc shall
deliver the Training as follows:

 

2.1                                 Digimarc shall
provide the Training to up to two (2) people simultaneously.  The trainees will be experienced in digital
design system operation.

 

2.2                                 Digimarc shall
conduct the Training at the facilities of [**] or, at the request of the [**],
at Digimarc’s facilities or at some other place agreed between Digimarc and the [**].

 

2.3                                 Digimarc shall
give the [**] reasonable
notice concerning the equipment which Digimarc will require in order to conduct
the Training.  The [**] shall provide all
such equipment at its own expense.  If
the parties are unable to agree on the equipment to be provided either party
may refer the matter for decision to the DLA Contract Authority.

 

2.4                                 Digimarc shall
conduct the Training using the [**].

 

2.5                                 Digimarc shall
provide a training manual in English to every trainee.  Any translation or interpretation which the
trainees may require will be provided by [**] at its own expense.

 

2.6                                 Digimarc shall
provide each trainee with a certificate of training at the completion of the
Training session.

 

2.7                                 Digimarc shall
conduct the training in English.

 

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

 

 

SCHEDULE “R”

 

SOFTWARE PROBLEM REPORT

 

Each
problem report will contain all information necessary to reproduce or
demonstrate the occurrence of the problem. Problem reports will be in English
and will be delivered electronically in a format to be provided by Digimarc.

 

Problem
reports will contain:

 

X                                       Date problem was encountered

X                                       Detailed description of the problem, including the
frequency with which the problem occurs

X                                       Name and version number of the program / system
component that exhibits the problem

X                                       Step by step instructions to reproduce the problem

X                                       All data files required to reproduce the problem

X                                       PC configuration

X                                       Manufacturer and Model

X                                       CPU type and speed

X                                       Amount of memory

X                                       Operating System and Version

X                                       Disk Configuration (number of drives, total space per drive, free space per drive)

X                                       Display Adapter Model, Resolution, Number of
colors

X                                       Peripheral configuration (where applicable)

X                                       Scanner Manufacturer and Model

X                                       TWAIN driver and version number

X                                       Scanning resolution

X                                       Severity of problem

X                                       Contact information for person to contact for further
information (name, phone number, FAX number, email address)

 

[**]
agrees to work with Digimarc to provide reasonable additional information and
perform reasonable additional tests, as requested by Digimarc, to assist
Digimarc in resolution of the problem.

 

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

 

 

DLA: SCHEDULE “S”

 

PROFORMA INVOICE

MONTH, YEAR

CDS DEVELOPMENT SERVICES

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Add columns

  	
   

  	
   

  	
   

  	
  Program

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Project 1

  	
   

  	
  Project 2

  	
   

  	
  as necessary

  	
   

  	
  Sub-total

  	
   

  	
  Wide

  	
   

  	
  Total

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineering
  Labor

  	
   

  	
  Hourly Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Director

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Engineering
  Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Engineer - SW
  Development

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Engineer -
  R&D

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  QA Engineer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Business
  Team Labor

  	
   

  	
  Hourly Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Project Director

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Lawyer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Account Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  [**] Engineer

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Technical Writer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Labor

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Expenses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consulting

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name consultant 1

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Name consultant 2

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Add names as
  necessary

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sub-total:
  Consulting

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equipment

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Equipment - [**]

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Security costs

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Postage and
  shipping

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Communications

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Internet

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  [**] Research

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Travel

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Other
  authorized expenses under Schedule I

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Description 1

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Description 2

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Due

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note:
A 15% charge is included in the Expenses.

 

Wiring
Instructions:

Payable
to Digimarc Corporation, General Account.

 

Note:
A change to the wiring instructions on this invoice is deemed to be a duly
authorized change by Digimarc.

 

	
  DLA: Schedule “S”

  	
   

  	
  27
  February [**]

  	
   

  
	
  DLA: SCHEDULE “S”

  	
   

  	
   

  	
   

  

 

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

 

 

PROFORMA INVOICE

MONTH, YEAR

CDS DEVELOPMENT SERVICES

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Add columns

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Project 1

  	
   

  	
  Project 2

  	
   

  	
  as necessary

  	
   

  	
  Sub-total

  	
   

  	
  Program Wide

  	
   

  	
  Total

  	
   

  
	
   

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
   

  	
   

  
	
  Engineering Labor

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Director

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Engineering Manager

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Engineer - SW Development

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Engineer - R&D

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  QA Engineer

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Business Team Labor

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Project Director

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Lawyer

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Account Manager

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product Manager

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  [**] Engineer

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Technical Writer

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Labor

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consulting

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name consultant 1

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Name consultant 2

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Add names as necessary

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total: Consulting

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  

 

	
  DLA:
  Schedule “S”

  	
   

  	
  27
  February [**]

  

 

DLA: SCHEDULE “S”

 

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

 

 

PROFORMA INVOICE

MONTH, YEAR

CDS [**] SERVICES

 

	
   

  	
   

  	
   

  	
   

  	
  Summary of

  	
   

  	
  Summary of

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  all [**]

  	
   

  	
  all [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  including [**]

  	
   

  	
  including [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Research

  	
   

  	
  Research

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Hours

  	
   

  
	
  Engineering Labor

  	
   

  	
  Hourly Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Director

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineering Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineer - SW Development

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Engineer - R&D

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  QA Engineer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Business Team Labor

  	
   

  	
  Hourly Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project Director

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Lawyer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Account Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Product Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**] Engineer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Technical Writer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Labor

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Expenses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consulting

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name consultant 1

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Name consultant 2

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Add names as necessary

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total: Consulting

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equipment

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Equipment - [**]

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Security costs

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Postage and shipping

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Communications

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Internet

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  [**] Research

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Travel

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Other authorized expenses under Schedule I

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Description 1

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Description 2

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Due

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  

 

	
  DLA:
  Schedule “S”

  	
   

  	
  27 February [**]

  
	
   

  	
   

  	
   

  
	
  DLA: SCHEDULE “S”

  	
   

  	
   

  

 

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

 

 

PROFORMA INVOICE

MONTH, YEAR

CDS [**] SERVICES

 

	
   

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Research

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Activities

  	
   

  	
  Maintenance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineering
  Labor

  	
   

  	
  Hourly Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Director

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineering
  Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineer - SW
  Development

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Engineer -
  R&D

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  QA Engineer

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Business
  Team Labor

  	
   

  	
  Hourly Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project Director

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Lawyer

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Account Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Product Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**] Engineer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Technical Writer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Labor

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Expenses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consulting

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name consultant 1

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Name consultant 2

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Add names as
  necessary

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total:
  Consulting

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equipment

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Equipment - [**]

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Security costs

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Postage and
  shipping

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Communications

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Internet

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**] Research

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Travel

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Other
  authorized expenses under Schedule I

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Description 1

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Description 2

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  

 

	
  [**]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DLA:
  Schedule “S”

  	
   

  	
  27
  February [**]

  

 

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

 

 

PROFORMA INVOICE

MONTH, YEAR

CDS [**] SERVICES

 

	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Research

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Activities

  	
   

  	
  Maintenance

  	
   

  
	
   

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  
	
  Engineering Labor

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Director

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineering Manager

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineer - SW Development

  	
   

  	
   

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Engineer - R&D

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  QA Engineer

  	
   

  	
   

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Business Team Labor

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project Director

  	
   

  	
   

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Lawyer

  	
   

  	
   

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Account Manager

  	
   

  	
   

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Product Manager

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**] Engineer

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Technical Writer

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Labor

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Expenses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consulting

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name consultant 1

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Name consultant 2

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Add names as necessary

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total: Consulting

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  

 

	
  [**]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DLA:
  Schedule “S”

  	
   

  	
  27
  February [**]

  

 

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

 

 

SCHEDULE
“T”

 

AGREED
FORM  DEED OF ADHERENCE

 

THIS DEED is made on [                                                                         
]

 

BY [NAME OF SUBSTITUTE] (“Substitute”)
of [INSERT ADDRESS]

 

WHEREAS

 

(A)                              At the request of [**], the Substitute is
willing to become a party to the Counterfeit Deterrence System Development and
License Agreement of [                                        ], 1999
(“DLA”) between the [**] and Digimarc Corporation (“Digimarc”) in substitution
for and to the exclusion of the [**]

 

(B)                                The Substitute is permitted so to become a
party to the DLA pursuant to clause 19.8 of the DLA.

 

NOW THIS DEED
WITNESSES that with effect from (and including) the date of this Deed, the
Substitute agrees with Digimarc to become a party to the DLA in substitution
for and to the exclusion of the [**] so that the Substitute, and not the [**],
shall have the benefit of, and be subject to the obligations of, the [**] under
the DLA, whether arising before, on or after the date of this Deed.

 

Executed as a deed and delivered
on the date written at the start of this Deed by

 

[Substitute]

 

acting by

 

[duly authorized signatory]

 

[second duly authorised
signatory (where necessary)]

 

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

 

 

SCHEDULE
“U”

 

COMFORT
LETTER

 

From:      [**]

 

To:          Digimarc Corporation

 

Dear Sirs:

 

We refer to the Development and
License Agreement (“DLA”) entered into between us on                                            ,
1999.

 

We hereby exercise our right of
substitution under clause 19.8(a) of the DLA in favour of [Substitute];
and attach a Deed of Adherence in the form of Schedule “T” to the DLA duly
executed by the Substitute.

 

We are writing to confirm that
[Substitute]:

 

1.                                       Is lawfully organized and existing;

 

2.                                       Is fully qualified, legally and
otherwise, to assume the rights and obligations of [**] under the DLA, pursuant
to the Deed of Adherence; and under the Escrow Agreement; and

 

3.                                       Has access to and the benefit of all
the facilities previously available to [**] for the exercise of its obligations
under the DLA and the Escrow Agreement.

 

	
   

  	
   

  	
  Yours faithfully,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [**]

  

 

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

 

 

DLA SCHEDULE “V”

PHASE [**] STATEMENT OF WORK

 

DESCRIPTION OF
PHASE [**] WORK

 

Digimarc shall perform the following Work
during Phase [**]. (The specific responsibilities to be discharged by [**]
during Phase [**] are also described below.)

 

[**] Of The
Phase [**]

 

Digimarc shall [**] for acceptance by [**]
the Phase [**] according to the following process:

 

1.               By the date set out in the Delivery Schedule outlined in Attachment 1,
Digimarc shall develop a detailed Specification for [**] described in Schedule
A of the [**] as relates to Phase [**] and the additional requirements for
[**], if any, specified below.

 

2.               Digimarc shall deliver the Specifications to the DLA Project Manager by
the dates set out in the Delivery Schedule for [**] review, comment and
acceptance or rejection.

 

3.               Within thirty (30) calendar days after receiving them under 2, the DLA
Project Manager shall notify the Digimarc Project Manager in writing whether or
not [**] approves the Specifications and if not, why not. Within fifteen (15)
calendar days after receiving notice of rejection, Digimarc shall change the
Specifications [**] and redeliver them to [**] for approval as provided above.

 

4.               Upon notice of approval under 3, Digimarc shall [**] will meet the
approved Specifications and deliver [**] against specification requirements.

 

5.               Within thirty (30) calendar days after receiving [**] under 4, the DLA
Project Manager shall notify the Digimarc Project Manager in writing whether or
not [**] meets the Specifications with details of any non-compliance.   Any problems shall be detailed using, to the
extent appropriate, the [**] Problem Report form attached as Schedule “R.”

 

6.               By the date set out in the Delivery Schedule, Digimarc shall develop
[**] incorporating any changes required [**] with the Specifications and any
other modifications agreed in writing between the parties’ respective project
managers and deliver [**] to [**] and acceptance.

 

7.               Within thirty (30) calendar days after receiving [**] under 6, the DLA
Project Manager shall notify the Digimarc Project Manager in writing whether or
not [**] meets the Specifications with details of any non-compliance. Within
thirty (30) calendar days after receiving any notice of rejection, Digimarc
shall rectify all [**] for approval as provided above.

 

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

 

1.2          Acceptance Procedures

 

1.2.1        [**]

 

The acceptance procedures for
the [**] will be the following:

 

1.               Digimarc shall deliver or make available the
[**] to the [**] Project Manager in a [**] that Digimarc will develop based on
[**].  The [**] will allow the [**] to
conduct [**] and [**] as set forth in the Specification.

 

2.               Digimarc shall deliver into escrow and review
with the [**] a detailed description of how the [**] was [**] and the
techniques used to [**].

 

1.2.2        [**]

 

The acceptance procedure for any
improvements to the [**] will be the following:

 

1.               Digimarc shall deliver the [**] for [**] to the
[**] Project Manager in an example [**] that Digimarc will develop to allow the
[**] to [**] and [**].

 

2.               Digimarc shall deliver or make available the
[**] for [**] to the [**] Project Manager in an example [**] that Digimarc will
develop based on [**].  The example [**]
will allow the [**] to [**] and [**].

 

3.               Digimarc shall deliver the [**] Project Manager
in an example [**] that Digimarc will develop based on [**] or other [**].  The example [**] will allow the [**].

 

4.               Digimarc shall deliver into escrow and review
with the [**] a detailed description of how the [**] was [**] and the
techniques used to [**].

 

1.2.3        [**]

 

The acceptance procedure for any
improvements to the [**] will be the following:

 

1.               Digimarc shall deliver the [**], [**], and the
[**] to the [**] Project Manager to allow [**] with the Specifications.

 

2.               Digimarc shall deliver updated [**] and
training materials to the [**] Project Manager to allow the [**] to review the
materials for acceptance.

 

DESCRIPTION OF, AND REQUIREMENTS
FOR, PHASE [**]

 

2.1                       [**]

 

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

 

 

Digimarc shall develop the [**]
according to the following requirements:

 

2.1.1        [**]

 

Digimarc shall develop [**] to
[**].  [**] shall meet the following
requirements:

[**]1.  [**] for [**] shall be
capable of being [**].

 

2.  [**] for [**] shall be capable of [**] and
shall meet all the requirements of the Specification for [**]. In addition, the
[**] shall meet the performance criteria as determined in the Specification for
[**] for [**] and in addition shall meet or exceed the actual performance of
[**] as specified in the [**] Specification.

 

3.  [**] shall be capable of [**] and shall meet
all the requirements of the Specification for [**] for [**]. In addition, [**]
shall meet the performance criteria as determined in the Specification for [**]
and in addition shall meet or exceed the actual performance of [**]
Specification.  Delivery of such [**]
shall be conditional upon Digimarc [**] Digimarc and the [**] to intellectual
property held [**] in order to [**].

 

4.   Digimarc shall publish the [**] needed for
replacement of the [**] with a suitably designed alternative [**].

 

5.   Detailed requirements for [**] will be
specified in a Specification delivered in accordance with the Delivery Schedule
outlined in Attachment 1.

 

2.1.2        [**]

 

At the end of [**] will be [**]
in [**]:

 

[**] As such, the [**] must be
[**].

 

1.               Digimarc shall develop [**].

 

2.               Detailed requirements for [**] will
be specified in a Specification delivered in accordance with the Delivery
Schedule outlined in Attachment 1.

 

2.1.3        [**]

 

During the course of the year,
[**] activities will result in the need to improve the [**], either to [**]
needs or to respond to [**], such as [**] or in response to [**].   To ensure delivery of [**] in September [**]
and a [**] in December [**], a detailed Specification for the project must
be completed by February 28, [**].

 

2.2                       [**]

 

2.2.1        [**]

 

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

 

 

The [**] Digimarc shall [**] the
[**] to add [**] for the following [**]:

 

·      [**]

 

·      [**]

 

1.               Digimarc shall make technology changes to the
[**] necessary to operate [**].

 

2.               Digimarc shall make changes to the [**] as
necessary to operate [**].

 

3.               Upon [**] acceptance, Digimarc shall release
the updated version of the [**] to [**].

 

4.               The [**] documentation will be [**] to reflect
[**].

 

2.3                       [**]

 

2.3.1        Digimarc shall maintain and operate
the [**] and make it available at [**].

 

[**]

 

2.4.1        Digimarc shall [**] the [**] to
[**].

 

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

 

 

SCHEDULE “W”

 

PHASE [**] STATEMENT OF WORK

 

1.                   DESCRIPTION OF PHASE [**] WORK

 

Digimarc shall perform the
following Work during Phase [**]. (The specific responsibilities to be
discharged by [**] during Phase [**] are also described below.)

 

1.1                     [**] of the Phase [**]  Deliverables

 

Digimarc shall [**] for
acceptance by [**] the Phase [**] Deliverables according to the following
process:

 

1.             By the date set out in the Delivery
Schedule outlined in Attachment 1, Digimarc shall develop a detailed
Specification for each [**].

 

2.             Digimarc shall deliver the
Specifications to the DLA Project Manager by the dates set out in the Delivery
Schedule for [**] review, comment and acceptance or rejection.

 

3.             Within thirty (30) calendar days
after receiving [**] under 2, the DLA Project Manager shall notify the Digimarc
Project Manager in writing whether or not [**] approves the Specifications and
if not, why not. Within fifteen (15) calendar days after receiving notice of
rejection, Digimarc shall change the Specifications to [**] and redeliver [**]
to [**] for approval as provided above.

 

4.             Upon notice of approval under 3,
Digimarc shall [**] that will meet the approved Specifications.

 

5.             By the date set out in the [**]
Schedule, Digimarc shall [**] that will meet the approved Specifications.

 

6.             Within thirty (30) calendar days
after receiving [**] under 5, the [**] Project Manager shall notify the
Digimarc Project Manager in writing whether or not [**] meets the Specifications
with details of any non-compliance. Any problems shall be detailed using, to
the extent appropriate, the [**] Problem Report form attached as Schedule R.

 

7.             Within thirty (30) calendar days
after receiving any notice of rejection, Digimarc shall rectify all
non-compliance and redeliver [**] for approval as provided above.

 

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

 

 

1.2                     Acceptance Deliverables

 

1.2.1        [**]

 

1.             Digimarc will deliver the [**] for
[**] in the [**] to allow the [**] to [**].

 

2.             Digimarc will deliver or make
available the [**] that Digimarc will [**]. 
The example [**].

 

3.             Digimarc will deliver the [**] for
[**].  The example [**].

 

1.2.2        [**]

 

1.             Digimarc will provide the findings of the study
to investigate the [**].

 

1.2.3        [**]

 

1.               Digimarc will
provide the findings of the study to investigate the [**].

 

2.              DESCRIPTION OF, AND
REQUIREMENTS FOR, PHASE [**]

 

Digimarc will develop the [**]
according to the requirements described below.

 

2.1                     [**] for Applications and [**]

 

Digimarc shall [**] to meet the
following requirements:

 

1.               [**] shall be capable of [**].

 

2.               [**] shall substantially [**].

 

3.               Detailed requirements for [**]

 

2.2                     [**] Study

 

Digimarc shall investigate [**]
that meet the following requirements:

 

1.               [**], which may include [**].

 

2.               Technology that could be [**], which
may include a [**].

 

3.               Assessment of the current [**].

 

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

 

 

4.               Provide a strategy for how [**].

 

5.               Detailed requirements for [**]
outlined in Attachment 1.

 

6.               Provide a technical report of the
findings in accordance with the [**] outlined in Attachment 1.

 

2.3                     [**] Study

 

1.               Digimarc shall investigate [**]:

 

2.               [**].  The requirements [**].

 

3.               The costs to [**] to make the [**]

 

4.               Detailed requirements for [**] will
be written in a Specification delivered in accordance with the Delivery
Schedule outlined in Attachment 1.

 

5.               Provide a technical report of the
findings in accordance with the Delivery Schedule outlined in Attachment 1.

 

2.4                     [**]

 

2.4.1.                     Digimarc shall maintain and operate
the [**] and [**]

 

2.5                     [**]

 

2.5.1        Digimarc shall [**] the [**] to [**]
and [**], including administration of the [**].

 

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

 

 

ATTACHMENT 1: DELIVERY SCHEDULES

 

[**]

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  SOW Sec,

  	
   

  	
  Depends

  	
   

  	
  Completion

  	
   

  
	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Par. Ref.

  	
   

  	
  On

  	
   

  	
  Date

  	
   

  
	
  D-1

  	
   

  	
  [**] Draft Specification delivered

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  [**]

  	
   

  
	
  D-2

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  [**]

  	
   

  
	
  D-3

  	
   

  	
  [**] specification signoff

  	
   

  	
  [**]

  	
   

  	
  1.1.4

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  D-4

  	
   

  	
  First Progress Update PowerPoint Summary

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  D-5

  	
   

  	
  Changes to the [**]

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  D-6

  	
   

  	
  Second Progress Update and Development Status Technical Report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  D-7

  	
   

  	
  Third Progress Update / [**]

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  D-8

  	
   

  	
  Delivery of [**]

  	
   

  	
  [**]

  	
   

  	
  1.1.5

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  D-9

  	
   

  	
  [**] acceptance of [**]

  	
   

  	
  [**]

  	
   

  	
  1.1.6

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  

 

[**] Study

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Par.

  Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Completion

  Date

  	
   

  
	
  DSE-1

  	
   

  	
  Send out Study Plan

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  
	
  DSE-2

  	
   

  	
  [**] feedback

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  DSE-3

  	
   

  	
  Signoff of Study Plan

  	
   

  	
  [**]

  	
   

  	
  1.1.4

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  DSE-4

  	
   

  	
  First Project Update

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  DSE-5

  	
   

  	
  Second Project Update

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  DSE-6

  	
   

  	
  Deliver Final Report

  	
   

  	
  [**]

  	
   

  	
  1.1.5

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  DSE-8

  	
   

  	
  Final Report Acceptance

  	
   

  	
  [**]

  	
   

  	
  1.1.6

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  

 

[**] Study

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Par.

  Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Completion

  Date

  	
   

  
	
  CLP-1

  	
   

  	
  Send out Study Plan

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  
	
  CLP-2

  	
   

  	
  [**] feedback

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  CLP-3

  	
   

  	
  Signoff of Study Plan

  	
   

  	
  [**]

  	
   

  	
  1.1.4

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  CLP-4

  	
   

  	
  Notification of [**] Participation

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  

 

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

 

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Par.

  Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Completion

  Date

  	
   

  
	
  CLP-5

  	
   

  	
  First Project Update

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  CLP-6

  	
   

  	
  Deliver Final Report

  	
   

  	
  [**]

  	
   

  	
  1.1.5

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  CLP-7

  	
   

  	
  Final Report Acceptance

  	
   

  	
  [**]

  	
   

  	
  1.1.6

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  

 

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COMMISSION.

 

 

SCHEDULE X:

 

[**] EXPENDITURES

 

Unless authorized in this
Agreement, the [**] Agreement or otherwise agreed in writing by [**],

 

the [**] Expenditure under this
Agreement and the [**] Agreement shall not be greater than an amount equal to
[**]; and

 

the [**] Expenditure under this
Agreement and the [**] Agreement shall not be greater than an amount equal to
[**].

 

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

 

 

Schedule “Y”

 

[**]

[**] PLAN

 

PROVIDED TO

 

[**]

 

 

[date]

 

 

 

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

 

 

	
  SITUATION ANALYSIS

  	
  2

  
	
   

  	
   

  
	
  DEPENDENCIES

  	
  2

  
	
   

  	
   

  
	
  WORK TO BE PERFORMED AS OF JANUARY [**]

  	
  3

  

 

	
  TASK: 1.

  	
  [**]

  	
  3

  
	
  TASK: 2.

  	
  [**] COMPLETION

  	
  4

  
	
  TASK: 3.

  	
  [**] COMPLETION

  	
  5

  
	
  TASK: 4.

  	
  [**] COMMITMENT TO [**]

  	
  5

  
	
  TASK: 5.

  	
  [**] IN PLACE

  	
  6

  
	
  TASK: 6.

  	
  [**]

  	
  7

  
	
  TASK: 7.

  	
  [**]

  	
  8

  
	
  TASK: 8.

  	
  [**]

  	
  8

  
	
  TASK: 9.

  	
  [**]

  	
  9

  
	
  TASK: 10.

  	
  [**]

  	
  10

  

 

** CONFIDENTIAL PORTION OMITTED AND FILED
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Situation
Analysis

[One paragraph overview of [**] & current status]

 

[**]:

[Input all
relevant [**] details associated with the situation analysis]

·

 

Technical
Context

[Input all relevant
technical details associated with the situation analysis]

·

 

Primary  Contacts

[Input all major contact names and titles [**]]

 

Name – title

Name – title

Name – title

Name – title

 

Current barriers [**]

[Input all
[**] or technical [**] barriers]

·

 

Current roles of [**] and Digimarc with
relation to [**]:

[**]

[**] Tasks

 

[**] agrees to complete tasks
upon which any part of the Services is dependent. The dependencies include all
tasks identified in this plan as a [**] Task and approval and acceptance by
[**] the CDS.

 

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

 

 

Work to Be Performed in [input year]

[Input the
major task names & durations]

 

	
   

  	
   

  	
  Jan

  	
   

  	
  Feb

  	
   

  	
  Mar

  	
   

  	
  Apr

  	
   

  	
  May

  	
   

  	
  Jun

  	
   

  	
  Jul

  	
   

  	
  Aug

  	
   

  	
  Sep

  	
   

  	
  Oct

  	
   

  	
  Nov

  	
   

  	
  Dec

  	
   

  
	
  Task
  Number & Name

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Task
  Number & Name

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Task
  Number & Name

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Task
  Number & Name

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Task
  Number & Name

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Tasks will not necessary follow the order
provided below.

 

Task: 1                               [**]

 

1.1                               Completion

·                  [**]

 

1.2                               Work

·                  [List tasks to be
completed to achieve the objective]

 

1.3                               Assumptions

·                  [List any
assumptions made that could affect the work needed to complete the task]

 

1.4                               [**]
Tasks

·                  [List deliverables
needed from [**] to complete the task]

 

1.5                               Dependencies

·                  [List dependencies
that could affect work needed to achieve the objective or Digimarc’s ability to
achieve the objective]

 

1.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 2                               [**]
Completion

 

2.1                               Completion

 

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

 

 

·                  [**]

·                  [**]

 

2.2                               Work

·                  [List tasks to be
completed to achieve the objective]

 

2.3                               Assumptions

·                  [List any
assumptions made that could affect the work needed to complete the task]

 

2.4                               [**]
Tasks

·                  [List deliverables
needed from [**] to complete the task]

 

2.5                               Dependencies

·                  [List dependencies
that could affect work needed to achieve the objective or Digimarc’s ability to
achieve the objective]

 

2.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 3                               [**]
Completion

 

3.1                               Completion

·                  [**]

·                  [**]

·                  [**]

·                  Digimarc conveys these results to
the appropriate [**] representatives

 

3.2                               Work

·                  [List tasks to be
completed to achieve the objective]

 

3.3                               Assumptions

·                  [List any
assumptions made that could affect the work needed to complete the task]

 

3.4                               [**]
Tasks

·                  [List deliverables
needed from [**] to complete the task]

 

3.5                               Dependencies

·                  [List dependencies
that could affect work needed to achieve the objective or Digimarc’s ability to
achieve the objective]

 

3.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

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

 

 

Task: 4                               [**]
commitment to [**]

 

[**]

 

4.1                               Completion

·                  [**]

 

4.2                               Work

·                  [List tasks to be
completed to achieve the objective]

 

4.3                               Assumptions

·                  [List any
assumptions made that could affect the work needed to complete the task]

 

4.4                               [**]
Tasks

·                  [List deliverables
needed from [**] to complete the task]

 

4.5                               Dependencies

·                  [List dependencies
that could affect work needed to achieve the objective or Digimarc’s ability to
achieve the objective]

 

4.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 5                               [**] in
Place

 

5.1                               Completion

·                  [**]

 

5.2                               Work

·                  [List tasks to be
completed to achieve the objective]

 

5.3                               Assumptions

·                  [List any
assumptions made that could affect the work needed to complete the task]

 

5.4                               [**]
Tasks

·                  [List deliverables
needed from [**] to complete the task]

 

5.5                               Dependencies

·                  [List dependencies
that could affect work needed to achieve the objective or Digimarc’s ability to
achieve the objective]

 

5.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

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

 

 

Task: 6                               [**]

 

6.1                               Completion

·                  [**]

 

6.2                               Work

·                  [List tasks to be
completed to achieve the objective]

 

6.3                               Assumptions

·                  [List any
assumptions made that could affect the work needed to complete the task]

 

6.4                               [**]
Tasks

·                  [List deliverables
needed from [**] to complete the task]

 

6.5                               Dependencies

·                  [List dependencies
that could affect work needed to achieve the objective or Digimarc’s ability to
achieve the objective]

 

6.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 7                               [**]

 

7.1                               Completion

·                  [**]

 

7.2                               Work

·                  [List tasks to be
completed to achieve the objective]

 

7.3                               Assumptions

·                  [List any
assumptions made that could affect the work needed to complete the task]

 

7.4                               [**]
Tasks

·                  [List deliverables
needed from [**] to complete the task]

 

7.5                               Dependencies

·                  [List dependencies
that could affect work needed to achieve the objective or Digimarc’s ability to
achieve the objective]

 

7.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 8                               [**]

 

8.1                               Completion

 

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

 

 

·                  [**]

 

8.2                               Work

·                  [List tasks to be
completed to achieve the objective]

 

8.3                               Assumptions

·                  [List any
assumptions made that could affect the work needed to complete the task]

 

8.4                               [**]
Tasks

·                  [List deliverables
needed from [**] to complete the task]

 

8.5                               Dependencies

·                  [List dependencies
that could affect work needed to achieve the objective or Digimarc’s ability to
achieve the objective]

 

8.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 9                              [**]

 

9.1                               Completion

·                  [**]

 

9.2                               Work

·                  [List tasks to be
completed to achieve the objective]

 

9.3                               Assumptions

·                  [List any
assumptions made that could affect the work needed to complete the task]

 

9.4                               [**]
Tasks

·                  [List deliverables
needed from [**] to complete the task]

 

9.5                               Dependencies

·                  [List dependencies
that could affect work needed to achieve the objective or Digimarc’s ability to
achieve the objective]

 

9.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 10                        [**]

 

10.1                        Completion

·                  [**]

 

10.2                        Work

 

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

 

 

·                  [List tasks to be
completed to achieve the objective]

 

10.3                        Assumptions

·                  [List any
assumptions made that could affect the work needed to complete the task]

 

10.4                        [**] Tasks

·                  [List deliverables
needed from [**] to complete the task]

 

10.5                        Dependencies

·                  [List dependencies
that could affect work needed to achieve the objective or Digimarc’s ability to
achieve the objective]

 

10.6                        Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

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

 

 

SCHEDULE “Z”

 

[**] TEAM

 

Engineer [**] Development: A
total of [**] FTE of [**] Engineering time is allocated.  In addition to meeting Digimarc’s
requirements as a professional [**] developer, the [**] engineers assigned to
the [**] Team must, as a collective group, have skill and experience in the
following:

·                  [**]

 

QA Engineer: A
total of [**] FTE of Quality Assurance Engineering time is allocated. In
addition to meeting Digimarc’s requirements as a professional [**] development
QA Engineer, the QA Engineers assigned to the [**] Team must, as a collective
group, have skill and experience in the following:

·                  [**]

 

Account Manager: A
total of [**] FTE of Account Management time is allocated. In addition to
meeting Digimarc’s requirements for an Account Manager, the account managers
assigned to the [**] team must have skills in the following:

·                  [**]

 

Attorney: A
total of [**] FTE of Attorney (Lawyer) time is allocated. Legal staff assigned
to the [**] must have experience [**].

 

[**] Engineer: A
total of [**] FTE of [**] Engineering time is allocated. In addition to meeting
Digimarc’s requirements as a [**] Engineer, the [**] Engineer assigned to the
[**] Team must have
experience providing [**] research for the [**].

 

Technical Writer: A
total of [**] FTE of Technical Writer time is allocated. In addition to meeting
Digimarc’s requirements as a professional Technical Writer, the Technical
writers assigned to the [**] Team must have experience in the development of
technical documentation targeted at [**].

 

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

 

 

SCHEDULE
“AA”

 

KEY
[**] PERSONNEL

 

Following are the names and positions of Key [**] Personnel required as
per clause 4.6 of this Agreement:

 

- Digimarc Project Director - [**]

- Business Team - [**]

- [**] Development - [**]

- R&D Engineering - [**]

- QA Engineering – [**]

 

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

 

 

SCHEDULE “BB”

 

[**] PROBLEM REPORT

 

Each [**] Problem Report will contain all information necessary to
reproduce or demonstrate the occurrence of the problem.  [**] Problem Reports will be in English and
will be delivered electronically in a format to be provided by Digimarc.

 

[**] Problem Reports will contain:

Name of [**]

[**]         Date problem was encountered

Detailed
description of the problem, including the frequency with which the problem
occurs

Severity of
problem

Impact on [**]
schedules and other [**] activities

Cost and
budget impact

Recommended
solution and estimated cost of implementation

Contact
information for person to contact for further information (name, phone number,
FAX number, email address)

 

If the problem involves [**]:

Name [**] that
exhibits the problem

Step by step
instructions to reproduce the problem

All [**]
required to reproduce the problem

[**]

[**]

[**] type and
speed

Amount of [**]

[**]         [**]         [**]         [**]         [**]         [**]         [**]

 

[**] agrees to work with Digimarc to provide reasonable additional
information [**], as requested by Digimarc, to assist Digimarc in resolution of
the problem.

 

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

 

 

SCHEDULE
“CC”

 

CDS
PROJECT INDICATORS

 

The project indicators
established shall be used as a communications and planning tool that will allow
the [**] and Digimarc to assess the overall health of the project, and to help
identify potential problems.  The agreed
upon project indicators may change, new ones may be added or some deleted.  Such changes shall be agreed to by the
parties.  Both parties shall work
co-operatively to interpret the results of the project indicators. The project
indicators shall not be used to assess penalties.

 

The parties shall establish at
each June’s planning meeting which project indicators will be measured that
year.  A report shall be prepared by the
end of March the following year and shall be discussed at the strategic
planning meeting held approximately two months prior to the June meeting.  The parties shall agree on what, if any,
corrective measures need to be taken.

 

Among the project indicators
which may be measured are the following:

 

1.                                       [**] Survey – [**] and Digmarc shall
develop a joint survey to assess the level of [**] satisfaction with the CDS
project and the [**] Services;

 

2.                                       [**] Survey – [**] and Digmarc shall
develop a joint survey to assess the level of [**] satisfaction with the CDS
project and the [**] provided by Digimarc;

 

3.                                       Budget performance – the parties
shall track Allowable Costs and Expenses under the Agreement to the established
budgets;

 

4.                                       Help Desk Calls – Digimarc shall
monitor and report on the calls from [**] to Digimarc’s help desk; and

 

5.                                       Number of [**] and Number of [**] –
Digimarc shall report on the number and [**] containing the CDS [**] and the
number of [**]

 

Each party shall share equally
any [**] costs associated with developing, implementing and carrying out the
project indicators.  Services performed
in developing and reporting on project indicators that is performed as part of
normal operational reporting shall be an Allowable Cost.  The parties shall determine in advance if
work in addition to normal operational reporting shall be required and whether
the costs of such work will be an Allowable Cost.

 

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

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