Document:

EXECUTION COPY

                

            

             

            REGISTRATION RIGHTS AGREEMENT

            by and between

            CASPIAN SERVICES INC.

            and

            GREAT CIRCLE ENERGY SERVICES LLC

             

            Dated as of September 3, 2008

             

             

            
                

                 

                
                    	
                                 

                            	
                                 

                            	
                                 

                            

                

                

            

             

            
                

            

            
                

                EXECUTION COPY

                

            

             

            REGISTRATION RIGHTS AGREEMENT

            This Registration Rights Agreement,dated as of September 3, 2008, is entered into by and between Caspian Services Inc., a Nevada corporation (the “Company”) and Great Circle Energy Services LLC, a Delaware limited liability company (“Great
            Circle”).

            RECITALS:

            WHEREAS, Great Circle and the Company have entered into the Facility Agreement (as defined below);

            WHEREAS, Great Circle desires to have certain rights to register Registrable Shares (as defined below) which it may hereafter acquire or into which the Loan (as defined below) may be converted pursuant to the Facility Agreement, and the Company is willing to grant such rights, subject to the terms and conditions hereof;

            NOW, THEREFORE, in consideration of the promises and the mutual representations, warranties and covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the Parties (as defined below) hereby agree as follows:

            Section 1.        Definitions. As used in this Agreement, the following terms shall have the meanings specified or referred to in this Section 1:

            “Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to “control” another Person if such
            Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise.

            “Agreement” means this Registration Rights Agreement, as amended, restated, modified or supplemented from time to time.

            “Business Day” means any day except a Saturday, a Sunday or a day on which banks located in New York, New York, shall be authorized or required by law to close.

            “Capital Stock” means the authorized capital stock of the Company, including all classes of common, preferred, voting and nonvoting capital stock.

            “Commission” means the Securities and Exchange Commission or any other U.S. Federal agency at the time administering the Securities Act.

            “Common Stock” means the shares of the common stock of the Company, par value $.001 per share.

            “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

             

            
                

                 

                
                    	
                                 

                            	
                                 

                            	
                                 

                            

                

                

            

             

            
                

            

            “Facility Agreement” means that certain Facility Agreement, dated as of September 3, 2008, by and between Great Circle and the Company.

            “Governmental or Regulatory Authority” means any United States or foreign government, instrumentality, subdivision, court, administration, agency, commission, official or other authority or entity exercising executive, legislative, judicial, arbitral, regulatory or administrative functions of, or pertaining to,
            government, regulation or compliance, of any country, state, province, city, prefect, municipality, locality or any other government or political subdivision thereof and any Person owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

            “Holders” means the beneficial owners, from time to time, of Registrable Shares.

            “Information” is defined in Section 4(a)(ix).

            “Inspectors” is defined in Section 4(a)(ix).

            “Loan” has the meaning given to such term in the Facility Agreement.

            “Notice and Questionnaire” means a written questionnaire containing such information as the Company may reasonably request for use in connection with a registration statement or prospectus and in any application to be filed with or under state securities laws.

            “Parties” means the Company and Great Circle.

            “Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, limited liability partnership, institution, entity, party, or Governmental or Regulatory Authority.

            “Records” is defined in Section 4(a)(ix).

            “Registrable Shares” during the term of this Agreement, with respect to Great Circle, its assignees and the Affiliates of either, the shares of Capital Stock held of record by Great Circle, its assignees or the Affiliates of either, which constitute Restricted Shares including but not limited to:

            
                	
                             

                        	
                            (i)

                        	
                            the Common Stock issuable or issued upon conversion of the Loan;

                        

            

            (ii) any Capital Stock issued as (or issuable upon the conversion or exercise of any warrant, right or other security that is issued as) a stock dividend, split or similar event;

            (iii)such other distribution with respect to, or in exchange for, or in replacement of, the shares referenced in (i) above, and

            (iv)any shares of Capital Stock acquired directly from the Company in a private transaction, except for shares of Capital Stock acquired by Great Circle in a private transaction in which other

            
                

                 

                
                    	
                                 

                            	
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            purchasers, which are not receiving registration rights and which do not otherwise have the right to freely transfer such shares of Capital Stock to the public, are also purchasing shares of Capital Stock on the same terms as the purchase by Great Circle, provided that in any event, shares of Capital Stock purchased by Great
            Circle for a purchase price of up to ten million dollars (US$10,000,000) to finance a potential purchase of KazakhstanCaspiShelf or other corporate purposes, shall be Registrable Shares even if another purchaser which does not get the benefit of registration rights is purchasing shares of Capital Stock at the same time, in connection therewith or in a related transaction;

            excluding in all cases, however, any Registrable Shares sold by Great Circle, its assignees or the Affiliates in a transaction in which its rights to register such Registrable Shares are not assigned, until the earliest of:

            
                	
                             

                        	
                            (a)

                        	
                            the date on which such Registrable Shares have been effectively registered under the Securities Act and disposed of in accordance with the registration statement relating thereto;

                        

            

            
                	
                             

                        	
                            (b)

                        	
                            the date on which such Registrable Shares may be resold without restriction pursuant to Rule 144(b)(1) promulgated under the Securities Act, or any successor provision thereto; and

                        

            

            
                	
                             

                        	
                            (c)

                        	
                            the date on which such security has been publicly sold pursuant to Rule 144 or any successor provision thereto.

                        

            

            “Registration Date” means the date on which any registration statement pursuant to which the Company shall have registered shares of Capital Stock under the Securities Act, or any equivalent legislation of a non-U.S. jurisdiction, for sale to the public shall have been declared effective by the Commission or an
            equivalent authority in any other jurisdiction.

            “Registration Expenses” means all expenses incident to the Company’s performance of or compliance with this Agreement and the completion of transactions relating thereto including, without limitation, all registration and filing fees, all fees and expenses of complying with securities or blue sky laws, all printing
            expenses, the fees and disbursements of the Company’s independent public accountants, including the expenses of any special audits, reviews, compilations or other reports or information required by or incident to such performance and compliance, and any fees or expenses of Shareholder’s Counsel and reasonable fees and expenses in connection with the review of the registration statement and all other documents referred to in this Agreement.

            “Requesting Shareholder”is defined in Section 2(a).

            “Restricted Shares” means at any time, with respect to any Person, the shares of Capital Stock, any other securities which by their terms are exercisable or exchangeable for or convertible into Capital Stock, and any securities of the Company received in respect thereof, which are held by such Person or its Affiliates
            and which have not previously been sold to the public pursuant to a registration statement under the Securities Act, or are able to be sold at such time under Rule 144.

             

            
                

                 

                
                    	
                                 

                            	
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            “Rule 144” means Rule 144 promulgated under the Securities Act or any successor rule thereto.

            “Securities Act” means the United States Securities Act of 1933, as amended.

            “Shareholder’s Counsel” means one counsel for the sellers of Registrable Shares selected by the Holders of a majority of the Registrable Shares being sold at that time, which counsel shall be reasonably satisfactory to the Company.

            Section 2.        Registration on Request. (a) Subject to the terms and conditions hereof, upon the written request by Holders of a majority of the Registrable Shares requesting that the Company effect the registration under the Securities Act of all or part of the Registrable Shares held by such Holders (the
            “Requesting Shareholder”), the Company shall use its best efforts to effect, at the earliest possible date, the registration, under the Securities Act, of the Registrable Shares which the Company has been so requested to register by the Requesting Shareholder; provided, that (i) the Company shall effect no less than two (2) such registrations requested by the Requesting
            Shareholder, for which it shall pay all related Registration Expenses, and (ii) the Company shall effect no less than two (2) additional registrations at the Requesting Shareholder’s request in writing, if the Requesting Shareholder has agreed in writing to pay the Registration Expenses for each such registration in excess of the two (2) registrations referred to in Section 2(a)(i);
            provided, that the Requesting Shareholder may request a maximum of two (2) registrations in any given calendar year. Each registration requested pursuant to this Section 2 shall be (A) effected by the filing of a registration statement on Form S-1, Form S-3 or Form SB-1 (or any successor or other form which the Company is qualified to use) as shall be selected by the Company and its
            counsel, (B) if the Company is qualified and if requested or agreed to in writing by the Requesting Shareholder, filed pursuant to Rule 415 under the Securities Act (or equivalent rule then in effect), and (C) if the Registrable Shares are registered in any jurisdiction outside the United States or are listed on any exchange outside the United States, effected as required by the laws and rules of such jurisdiction or exchange, as the case may be.

            (b)       Subject to Sections 2(a)(ii) and 2(c), the Company shall pay all Registration Expenses in connection with each registration of Registrable Shares effected by the Company pursuant to this Section
            2.

             

            
                

                 

                
                    	
                                 

                            	
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            (c)       If, at any time after requesting registration pursuant to Section 2(a) and prior to the effective date of the registration statement filed in connection with such registration request, the Requesting Shareholder determines for any reason not to register such Registrable Shares, the
            Requesting Shareholder shall give written notice of such determination to the Company. Upon receipt of such notice, the Company shall then be relieved of its obligations to register the Registrable Shares in connection with such Requesting Shareholder’s registration request, and the Requesting Shareholder shall pay the Registration Expenses in connection therewith, unless the Requesting Shareholder states in writing that such request shall count as one of the two
            (2) requests permitted by Section 2(a)(i). Nothing in this Section 2(c) shall preclude the Requesting Shareholder from making another registration request with respect to the Registrable Shares referred to in this Section 2(c).

            (d)       In connection with any request for registration pursuant to Section 2(a)(i), the Company may, within fifteen (15) days after its receipt of such request, request to issue and register securities under the Securities Act for sale for its own account. Thereafter, subject to written approval
            by the Requesting Shareholder of such issuance and registration, which approval shall not be unreasonably withheld, the provisions of Section 3 shall govern, and the Requesting Shareholder’s registration request under Section 2(a)(i) shall be deemed not to have been made. The Requesting Shareholder shall again be entitled to request such registration under
            Section 2(a)(i), and the Requesting Shareholder’s rescinded request under this Section 2(d) shall not count for the purposes of the Requesting Shareholder’s right to request two (2) registrations by the Company, the Registration Expenses of which shall be borne by the Company as described in Section 2(a)(i).

            (e)       The Requesting Shareholder agrees that, if such Holder wishes to sell Registrable Shares pursuant to a registration statement and related prospectus, it will do so only in accordance with this Section 2 and Section 4(xi). The Requesting
            Shareholder also agrees to deliver a completed and executed Notice and Questionnaire to the Company at the time registration is requested pursuant to thisSection 2.

            Section 3.        Incidental Registrations. (a) If, at any time, the Company proposes to register any of its Capital Stock under the Securities Act, whether or not for sale for its own account, it shall each such time give prompt written notice to the Requesting Shareholder of its intention to do so, describing such securities and
            specifying the form and manner and the other relevant facts involved in such proposed registration, and upon the written request of the Requesting Shareholder delivered to the Company within thirty (30) days after the giving of any such notice (which request shall specify the Registrable Shares intended to be disposed of by the Requesting Shareholder and the intended method of disposition thereof), the Company shall use its best efforts to effect the registration, bearing all
            related Registration Expenses, under the Securities Act of all Registrable Shares which the Company has been so requested to register by the Requesting Shareholder, to the extent required to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Shares so to be registered, provided that:

            (i)  if the registration so proposed by the Company involves an underwritten offering of the securities  so  being  registered,  whether   or  not  for   sale  for  the   account  of  the  Company,  to  be

            
                

                 

                
                    	
                                 

                            	
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            distributed by or through one or more underwriters, who are reasonably acceptable to the Requesting Shareholder, under underwriting terms appropriate for such a transaction, and the managing underwriter of such underwritten offering shall advise the Company in writing that, in its opinion, the distribution of all or a specified portion of the Registrable Shares which the
            Requesting Shareholder has requested the Company to register in accordance with this Section 3(a) concurrently with the securities being distributed by such underwriters will materially and adversely affect the distribution of such securities by such underwriters (such opinion to state the reasons therefor), then the Company will promptly furnish each holder of Registrable Shares with a copy of such opinion and may deny, by written
            notice to each such holder accompanying such opinion, the registration of all or a specified portion of such Registrable Shares (in case of a denial as to a portion of such Registrable Shares, such portion shall be allocated first to holders other than the Requesting Shareholder); and

            (ii) the Company shall not be obligated to effect any registration of Registrable Shares under this Section 3 incidental to the registration of any of its securities in connection with dividend reinvestment plans or stock option or other employee benefit plans.

            (b)       The Company shall pay all Registration Expenses in connection with each registration of Registrable Shares requested pursuant to this Section 3.

            Section 4.        Registration Procedures. (a) If and whenever the Company is under an obligation pursuant to the provisions of this Agreement to use its best efforts to effect the registration of any Registrable Shares under the Securities Act, the Company shall, as soon as practicable:

            (i)  promptly prepare, file and use its best efforts to cause a registration statement that registers such Registrable Shares to become effective and remain so for a period of ninety (90) days or until all of such Registrable Shares have been disposed of (if earlier);

            (ii) furnish, at least ten (10) Business Days before filing a registration statement that registers such Registrable Shares, a draft of the prospectus proposed to be included in such registration statement or any amendments or supplements relating to such a registration statement or prospectus, to Shareholder’s Counsel, and copies of all such
            documents proposed to be filed (it being understood that such ten-Business-Day period need not apply to successive drafts of the same document proposed to be filed so long as such successive drafts are supplied to such counsel in advance of the proposed filing by a period of time that is customary and reasonable under the circumstances);

            (iii)prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith, as may be necessary to keep such registration statement effective for a period of ninety (90) days or until all of such Registrable Shares have been disposed of (if earlier) and to comply with the provisions
            of the Securities Act applicable to it with respect to the sale or other disposition of such Registrable Shares, including but not limited to Rules 424, 430A and 462, as applicable;

             

            
                

                 

                
                    	
                                 

                            	
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            (iv)notify in writing the Shareholder’s Counsel promptly (A) of the receipt by the Company of any notification with respect to any comments by the Commission with respect to such registration statement or prospectus or any amendment or supplement thereto or any request by the Commission for the amending or supplementing thereof or for additional
            information with respect thereto, (B) of the receipt by the Company of any notification with respect to the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or prospectus or any amendment or supplement thereto or the initiation or threatening of any proceeding for that purpose and (C) of the receipt by the Company of any notification with respect to the suspension of the qualification of such Registrable Shares for sale in any
            jurisdiction or the initiation or threatening of any proceeding for such purposes;

            (v) use its best efforts to register or qualify such Registrable Shares under such other securities or blue sky laws of such jurisdictions as any seller of Registrable Shares reasonably requests in writing and do any and all other acts and things which may be reasonably necessary or advisable to enable the disposition in such jurisdictions of such
            Registrable Shares in the manner set forth in the relevant registration statement and the related prospectus. Notwithstanding the above, the Company will not be required to register or qualify generally to do business, subject itself to general taxation or consent to personal jurisdiction or general service of process in any jurisdiction where it would not otherwise be required so to do but for this paragraph (v);

            (vi)furnish to each seller of such Registrable Shares such reasonable number of copies of a summary prospectus or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents prepared by the Company in connection with such registration as the Requesting Shareholder may request in
            order to facilitate the public sale or other disposition of such Registrable Shares;

            (vii)     use its best efforts to cause such Registrable Shares to be registered with or approved by such other Governmental or Regulatory Authorities as may be necessary by virtue of the business and operations of the Company to enable the seller or sellers thereof to consummate the disposition of such Registrable Shares;

            (viii)    notify the Requesting Shareholder on a timely basis at any time when a prospectus relating to such Registrable Shares is required to be delivered under the Securities Act within the appropriate period mentioned in paragraph (i) of this Section 4(a), of the happening of any
            event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, at the request of such seller, prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be
            necessary so that, as thereafter delivered to the offerees of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

             

            
                

                 

                
                    	
                                 

                            	
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            (ix)make available for inspection during normal business hours by any one lead underwriter participating in any such registration and its attorneys, accountants or other agent retained by it (collectively, the “Inspectors”), all pertinent financial and other records, pertinent corporate documents
            and properties of the Company (collectively, the “Records”), as shall be necessary to enable it, for itself and on behalf of the underwriters, to exercise its due diligence responsibility under the Securities Act, and cause the Company’s officers, directors and employees to supply all information (together with the Records, the “Information”) requested
            by any such Inspector in connection with the preparation and filing of such registration statement. Any of the Information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, shall not be disclosed by the Inspectors unless (A) the disclosure of such Information is necessary to avoid or correct a misstatement or omission in the registration statement, (B) the release of such Information is ordered pursuant to a
            subpoena or other order from a court of competent jurisdiction or (C) such Information has been made generally available to the public. The seller of Registrable Shares agrees that it will, upon learning that disclosure of such Information is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of the Information deemed confidential;

            (x)       to the extent necessary to ensure that any registration statement made pursuant to Rule 415 of the Securities Act is available for sales of Registrable Shares by the Requesting Shareholder, the Company shall use its best efforts to keep any such registration statement continuously effective, supplemented, amended
            and current as required by the provisions of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, until the expiration for all Registrable Shares of the holding period prior to a sale permitted under Rule 144, as such period may be extended pursuant to this Agreement, including Section 4(a)(iii), until the Registrable Shares included in the registration
            statement have been sold by the Requesting Shareholder or for a period of one (1) year from the date the registration statement is first declared effective by the Commission, whichever occurs first;

            (xi)upon: (A) the occurrence or existence of any pending corporate development that the Company’s legal or financial advisors advise the Company in writing makes it appropriate to suspend the availability of any registration statement and related prospectus (a “Material Event”); (B) the
            issuance by the SEC of a stop order suspending the effectiveness of any registration statement or the initiation of proceedings with respect to any registration statement under Section 8(d) or 8(e) of the Securities Act; or (C) the occurrence of any event or the existence of any fact as a result of which any registration statement shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements
            therein not misleading, or any prospectus shall contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading,

             

            
                

                 

                
                    	
                                 

                            	
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            (i) in the case of clause (A) or (C) above, subject to the next sentence, as promptly as practicable, prepare and file, if necessary pursuant to applicable law, a post-effective amendment to such registration statement or a supplement to such prospectus or any document incorporated therein by reference or file any other required document that
            would be incorporated by reference into such registration statement and prospectus so that such registration statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and so that such prospectus does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of
            the circumstances under which they were made, not misleading, as thereafter delivered to the purchasers of the Registrable Shares being sold thereunder, and, in the case of a post-effective amendment to a registration statement, subject to the next sentence, use its best efforts to cause it to become effective under the Securities Act as promptly as practicable, and

            (ii) give notice to the Requesting Shareholder and Shareholder’s Counsel that the availability of the registration statement is suspended (a “Suspension Notice”) (and, upon receipt of any Suspension Notice, the Requesting Shareholder agrees not to sell any Registrable Shares pursuant to such
            registration statement until such Requesting Shareholder receives copies of the supplemented or amended prospectus provided for in clause (i) above or until such Requesting Shareholder is advised in writing by the Company that the prospectus may be used).

            The Company will use its best efforts to ensure that the use of the prospectus may be resumed (x) in the case of clause (A) above, as soon as, in the reasonable discretion of the Company, such suspension is no longer appropriate, (y) in the case of clause (B) above, as promptly as is practicable, and (z) in the case of clause (C) above, as soon as, in the reasonable judgment of
            the Company, the registration statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and the prospectus does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The effectiveness period
            of the registration statement shall be extended by the number of days from and including the date on which the Company notifies the Requesting Shareholder that the registration statement or prospectus has been suspended to and including the date on which the Requesting Shareholder receives copies of the supplemented or amended prospectus provided in clause (i) above, or the date on which it is advised in writing by the Company that the prospectus may be used and has received copies
            of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such prospectus. If a prospectus is suspended, and is not resumed within four (4) months, then the related registration shall not count against the number of registration requests permitted the Holders under any provision of Section 2(a), and if the related registration was requested pursuant to Section
            2(a)(ii), then the Company shall also reimburse the Requesting Shareholder for its Registration Expenses incurred to date.

             

            
                

                 

                
                    	
                                 

                            	
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            (xii)        obtain from its independent certified public accountants “cold comfort” letters in customary form and at customary times and covering matters of the type customarily covered by cold comfort letters in each case as may be reasonably requested by the underwriters in similar underwritten
            offerings;

            
                	
                             

                        	
                            (xiii)

                        	
                            obtain from its counsel an opinion or opinions in customary form;

                        

            

            (xiv)        provide a transfer agent and registrar (which may be the same entity and which may be the Company) for such Registrable Shares to the extent not already provided;

            (xv)         provide a CUSIP number for all Registrable Shares covered by the registration statement not later than the effective date of a registration statement covering such shares;

            (xvi)         use its best efforts to list such Registrable Shares on any securities exchange or automated quotation system on which any shares of Capital Stock are listed or, if the shares of Capital Stock are not so listed, use its best efforts to qualify such Registrable Shares for inclusion on the automated
            quotation system of the National Association of Securities Dealers, Inc. or such other securities exchange as the Company shall reasonably determine;

            (xvii)       otherwise use its best efforts to comply with all applicable rules and regulations of the Commission and make available to its security holders, as soon as reasonably practicable, earnings statements (which need not be audited) covering a period of twelve (12) months beginning within three (3) months after the
            effective date of the registration statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder; and

            (xviii)      use its best efforts to take all other steps necessary to effect the registration of such Registrable Shares contemplated hereby.

            (b)       If the Company at any time proposes to register any of its securities under the Securities Act (other than pursuant to a request made under Section 2), whether or not for sale for its own account, and such securities are to be distributed by or through one or more underwriters, the
            Company shall use its reasonable efforts, if requested by the Requesting Shareholder pursuant to Section 3, to arrange for such underwriters to include such Registrable Shares among those securities to be distributed by or through such underwriters. If Registrable Shares are included among the securities to distributed by or through one or more underwriters, the Requesting Shareholder shall be a party to any such underwriting
            agreement and the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters, shall also be made to and for the benefit of the Requesting Shareholder, and the Requesting Shareholder shall make such representations, warranties and covenants to such underwriters and the Company as may be reasonably requested and as are customary in such offerings.

             

            
                

                 

                
                    	
                                 

                            	
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            (c)       In the event any registration pursuant to Section 2 shall be for an underwritten offering, the underwriters of such offering shall be one or more underwriting firms selected by the Requesting Shareholder and reasonably acceptable to the Company.

            (d)       Whenever a registration pursuant to Section 3 is for an underwritten offering, the underwriters of such offering shall be one or more underwriting firms selected by the Company and reasonably acceptable to the Requesting Shareholder.

            Section 5.        Requesting Shareholder’s Obligations. Each Requesting Shareholder agrees, by acquisition of the Registrable Shares, that no Requesting Shareholder shall be entitled to sell any of such Registrable Shares pursuant to a registration statement or to receive a prospectus relating thereto, unless such Requesting
            Shareholder has furnished the Company with a Notice and Questionnaire as required pursuant to Section 2(e) hereof (including the information required to be included in such Notice and Questionnaire) and the information set forth in the next sentence. Each Requesting Shareholder agrees promptly to furnish to the Company all information required to be disclosed in order to make the information previously furnished to the Company by
            such Requesting Shareholder not misleading. Any sale of any Registrable Securities by any Requesting Shareholder shall constitute a representation and warranty by such Requesting Shareholder that the information of such Requesting Shareholder furnished in writing by or on behalf of such Requesting Shareholder to the Company specifically for inclusion in the prospectus does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make
            the statements in such Holder Information, in the light of the circumstances under which they were made, not misleading.

            Section 6.        Indemnification. (a) In connection with any registration of any Registrable Shares under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless the Requesting Shareholder and any Affiliate of the Requesting Shareholder and any other Person acting on behalf of the Requesting
            Shareholder and each other Person, if any, who controls any of the foregoing Persons within the meaning of Rule 405 promulgated under the Securities Act against any losses, claims, damages or liabilities, joint or several, (or actions in respect thereof) to which any of the foregoing Persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue
            statement or alleged untrue statement of a material fact contained in the registration statement under which such Registrable Shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any document incident to registration or qualification of any Registrable Shares, or arise out of or are based upon the omission or alleged omission to state therein a
            material fact required to be stated therein or necessary to make the statements therein not misleading or, with respect to any prospectus, necessary to make the statements therein in light of the circumstances under which they were made not misleading, or any violation by the Company of the Securities Act or state securities or blue sky laws applicable to the Company and relating to action or inaction required of the Company in connection with such registration or qualification
            under such state securities or blue sky laws. The Company shall reimburse the Requesting Shareholder, any Affiliate of the Requesting Shareholder, such other Person acting on behalf of the Requesting Shareholder and each such controlling Person for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, damage, liability or action;

             

            
                

                 

                
                    	
                                 

                            	
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            provided, however, that the Company shall not be required to provide any indemnification pursuant to this Section 5(a) in any such case to the extent that any such loss, claim, damage, liability or action arises out of or is based upon an untrue statement or alleged
            untrue statement or omission or alleged omission knowingly made by the Requesting Shareholder or any of its Affiliates in said registration statement, preliminary prospectus, final prospectus, amendment, supplement or document incident to registration or qualification of any Registrable Shares in reliance upon and in conformity with written information furnished to the Company through an instrument executed by or on behalf of the Requesting Shareholder, its Affiliates, any Person
            acting on behalf of the Requesting Shareholder, each such controlling Person or the underwriter specifically for use in the preparation thereof; and provided, further, that, as to any underwriter or any Person controlling any underwriter, this indemnity does not apply to any losses, claims, damages or liabilities arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission in any
            preliminary prospectus if a copy of a prospectus was not sent or given by or on behalf of an underwriter to such Person asserting such loss, claim, damage, liability or action at or prior to the written confirmation of the sale of the Registrable Shares as required by the Securities Act and such untrue statement or omission had been corrected in such prospectus.

            (b)       In connection with any registration of any Registrable Shares under the Securities Act pursuant to this Agreement, the Requesting Shareholder shall indemnify and hold harmless (in the same manner and to the same extent as set forth in the preceding paragraph of this Section) the Company, each director of the Company, each officer of the
            Company who shall sign such registration statement, each underwriter, broker or other Person acting on behalf of the Company, each other Person, if any, who controls any of the foregoing Persons within the meaning of Rule 405 promulgated under the Securities Act with respect to any statement or omission from such registration statement, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any
            document incident to registration or qualification of any Registrable Shares, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company or such underwriter through an instrument executed by or on behalf of the Requesting Shareholder specifically for use in connection with the preparation of such registration statement, preliminary prospectus, final prospectus, amendment, supplement or document;
            provided that the maximum amount of liability in respect of such indemnification shall be limited, in the case of the Requesting Shareholder, to an amount equal to the net proceeds actually received by the Requesting Shareholder from the sale of Registrable Shares effected pursuant to such registration; and provided, further, that, as to
            any underwriter or any Person controlling any underwriter, this indemnity does not apply to any losses, claims, damages or liabilities arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission in any preliminary prospectus if a copy of a prospectus was not sent or given by or on behalf of an underwriter to such Person asserting such loss, claim, damage, liability or action at or prior to the written confirmation of the sale of the
            Registrable Shares as required by the Securities Act and such untrue statement or omission had been corrected in such prospectus.

            (c)       Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in Section 5(a) and 5(b), such indemnified party will, if a claim in respect thereof is made  against an
            indemnifying  party,  give written  notice to the latter  of the  commencement  of  such

            
                

                 

                
                    	
                                 

                            	
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            action. In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its
            election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof; provided that if any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the
            indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity agreement provided in this Section 5, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party and such indemnifying party shall reimburse such indemnified party and any Person controlling such indemnified party for the reasonable fees and
            expenses of any one law firm or counsel (as well as the reasonable fees and expenses of reasonably necessary local counsel) retained collectively by the indemnified parties subject to such proceeding which is reasonably related to the matters covered by this Section 5. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of
            which such indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceedings and does not include an admission of fault or culpability or a failure to act on behalf of such indemnified party.

            (d)       If the indemnification provided for in this Section 5 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party, in
            lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage or liability as well as any
            other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or
            prevent such statement or omission.

            Section 7.        Exchange Act Compliance. The Company shall, so long as the Requesting Shareholder holds any shares of its Capital Stock, (i) comply in a timely manner with all of the reporting requirements of the Exchange Act, (ii) comply in a timely manner with all other public information reporting requirements of the Commission in
            order to minimize the holding period under Rule 144 under the Securities Act for the sale of such Capital Stock thereunder, and (iii) provide the Requesting Shareholder and any prospective purchaser designated by the Requesting Shareholder with such information as the Requesting Shareholder shall request in connection with any prospective sale of the Capital Stock, including but not limited to the information required by Rule 144A(d)(4) under the Securities
            Act.

             

            
                

                 

                
                    	
                                 

                            	
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            Section 8.        No Conflict of Rights. The Company represents and warrants to the Requesting Shareholder that the registration rights granted to the Requesting Shareholder hereby do not conflict with any other registration rights granted by the Company. The Company shall not, after the date hereof, grant any registration rights that
            conflict with or impair the registration rights granted hereby without the prior written consent of the Requesting Shareholder.

            Section 9.        Notices. Unless otherwise specified herein, all notices, consents, approvals, reports, designations, requests, waivers, elections and other communications authorized or required to be given pursuant to this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made
            upon receipt) by facsimile transmission (receipt confirmed) or by a courier guaranteeing overnight delivery, sent to a party and its legal counsel at the addresses set forth below for such party and its legal counsel hereto or such other addresses as such party may specify by notice to the other party:

            if to the Company, to:

            Caspian Services Inc.

            257 East 200 South

            Suite 340

            Salt Lake City, Utah 84111

            Attention: Alexey Kotov

            Facsimile: (801) 746-3701

            with a copy to:

            Poulton & Yordan

            324 South 400 West, Suite 250

            Salt Lake City, Utah 84101

            Attention: Richard Ludlow

            Facsimile: (801) 355-2990

             

            if to Great Circle, to:

            Great Circle Energy Services LLC

            c/o Great Circle Capital LLC

            One Atlantic Street

            Stamford, Connecticut 06901

            Attention: Paul Rapello

            Facsimile: (203) 323-4363

            with a copy to:

            White & Case LLP

            1155 Avenue of the Americas

            New York, NY 10036

            Attention: Alison M. Dreizen, Esq.

            Facsimile: (212) 354-8113

             

            
                

                 

                
                    	
                                 

                            	
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            Any party hereto may change the address to which notice to it, or copies thereof, shall be addressed, by giving notice thereof to the other parties hereto in conformity with this Section 9.

            Section 10.      Successors; Assigns; Transferees. This Agreement shall inure to the benefit of and be binding upon, and enforceable by, the successors and permitted assigns of the Parties. Subject to applicable securities laws, the Requesting Shareholder may assign any of its rights under this Agreement, in whole or in part to any Person in
            connection with an assignment of the Facility Agreement or transfer of the Requesting Shareholder. Except as to successors of the Company, the Company may not assign any of its rights, or delegate any of its obligations, under this Agreement without the prior written consent of the Requesting Shareholder, and any such purported assignment by the Company without the written consent of the Requesting Shareholder shall be void and of no effect.

            Section 11.      No Third Party Beneficiaries. Except as set forth in Section 5, nothing expressed by or mentioned in this Agreement is intended or shall be construed to give any Person, other than the Parties and their respective successors or permitted assigns and transferees, any legal or
            equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the Parties and their respective successors and permitted assigns and transferees, and for the benefit of no other Person.

            Section 12.      Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof. This Agreement may be executed by facsimile and in counterparts, each of which shall be deemed to be an original and shall
            be binding on the party who executed the same, but all of which together shall constitute one and the same instrument.

            Section 13.      Amendments; Waivers. This Agreement cannot be changed or amended orally, but only by an agreement in writing signed by the Parties. Any failure on the part of a party to enforce at any time, or for any period of time, any of the provisions of this Agreement shall not be deemed or construed to be a waiver of such provisions or of
            the right of such party thereafter to enforce each and every such provision.

            Section 14.      Severability. If any term, provision, agreement, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, agreements, covenants and restrictions of this Agreement shall remain in full force and effect and
            shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto. Upon such determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a reasonably acceptable manner in order that the transactions contemplated hereby may be
            consummated as originally contemplated to the fullest extent possible.

             

            
                

                 

                
                    	
                                 

                            	
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            Section 15.      Headings. The Article and Section headings in this Agreement are included for convenience of reference only and shall be disregarded in the interpretation of this Agreement.

            Section 16.      Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same document.

            Section 17.      Governing Law. THIS AGREEMENT SHALL BE GIVEN EFFECT AND CONSTRUED BY APPLICATION OF THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE PRINCIPLES THEREOF GOVERNING CONFLICTS OF LAWS), AND ANY ACTION OR PROCEEDING ARISING HEREUNDER SHALL ONLY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN MANHATTAN OR IN THE
            UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE PARTIES HERETO CONSENT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN MANHATTAN AND/OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK.

            Section 18.      Equitable Relief. The Parties agree that legal remedies may be inadequate to enforce the provisions of this Agreement and that equitable relief, including specific performance and injunctive relief, may be used to enforce the provisions of this Agreement.

            Section 19.      Applicability. This Agreement applies to all Registrable Shares whether acquired by Great Circle before or after the date of this Agreement.

             

            [Signature Page Follows]

             

            
                

                 

                
                    	
                                 

                            	
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                EXECUTION COPY

                

            

             

            IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement on the date first above written.

            THE COMPANY

            CASPIAN SERVICES INC.

            
                	
                             

                        	
                             

                             

                            By: /s/ Alexey Kotov

                        

            

            Name: Alexey Kotov

            Title: Corporate Secretary

            THE SHAREHOLDER

            GREAT CIRCLE ENERGY SERVICES LLC

            
                	
                             

                        	
                             

                             

                            By: /s/ Paul Rapello

                        

            

            Name: Paul Rapello

            Title: Authorized SignatoryEXHIBIT 10.1

 

CONFIDENTIAL PORTIONS OMITTED

 

TRANSITION SERVICES AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

ARTICLE I

 

SERVICES

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

ARTICLE II

 

PERFORMANCE OF SERVICES

 

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

 

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

 

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

 

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

 

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

 

Section 2.6.                                   No Representations or Warranties.

 

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

 

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

 

4

 

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

 

ARTICLE III

 

CHARGES FOR SERVICES

 

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

 

ARTICLE IV

 

PAYMENT OF CHARGES AND REIMBURSEMENTS

 

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

 

ARTICLE V

 

RECORDS AND AUDITS

 

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

 

5

 

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

 

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

 

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

 

ARTICLE VI

 

CONFIDENTIALITY

 

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

 

6

 

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

 

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

 

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

 

ARTICLE VII

 

TERM OF AGREEMENT

 

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

 

7

 

ARTICLE VIII

 

TERMINATION

 

Section 8.1.                                   Termination of Agreement.

 

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

 

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

 

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

 

(c) by
mutual written agreement of the Parties.

 

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

 

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

 

ARTICLE IX

 

MISCELLANEOUS

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

L-1
Identity Solutions, Inc.

177
Broad Street

Stamford,
CT 06901

Attention:
Mark Molina

Facsimile:
(203)504-1104

E-mail:
mmolina@L1ID.com

 

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

 

Weil,
Gotshal & Manges LLP

767
Fifth Avenue

New
York, NY 10153

Attention:
Marita A. Makinen

Facsimile:
(212)310-8007

E-mail: Marita.Makinen@weil.com

 

and

 

Weil,
Gotshal & Manges LLP

201
Redwood Shores Parkway

Redwood
Shores, CA  94065

Attention:
Kyle C. Krpata

Facsimile:
(650) 802-3100

E-mail: Kyle.Krpata@weil.com

 

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

 

DMRC Corporation

9405 SW Gemini Drive

Beaverton, OR 97008

Attention: Robert Chamness

Facsimile: (503)469-4771

E-mail: Robert.Chamness@digimarc.com

 

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

 

Perkins
Coie LLP

1120
NW Couch Street

Tenth
Floor

Portland,
OR 97209

Attention:
Roy W. Tucker and John R. Thomas

Facsimile:
(503)727-2222

E-mail:
rtucker@perkinscoie.com

jrthomas@perkinscoie.com

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

13

 

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

 

 

	
   

  	
  DIGIMARC CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Robert Chamness

  
	
   

  	
  Name:

  	
  Robert Chamness

  
	
   

  	
  Title:

  	
  Chief Legal Officer and
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DMRC CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Robert Chamness

  
	
   

  	
  Name:

  	
  Robert Chamness

  
	
   

  	
  Title:

  	
  Chief Legal Officer and
  Secretary

  

 

 

Exhibit A

 

Wire Instructions

 

Digimarc

 

DMRC

 

[**]

 

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

 

 

SCHEDULE 1.2.1

 

DMRC ACCOUNTING AND TAX SERVICES

 

(a)                                  Services
to be Provided:

 

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

 

1.                                       Transaction
Processing

 

·                  payroll
processing

·                  accounts
payable processing

·                  travel
coordination and management

·                  credit
card program,

·                  IT
capital leases, of which there are two,

·                  performance
bonds,

·                  stock
administration,

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

 

2.                                       Regulatory
Reporting for tax services

 

·                  income
taxes

·                  property

·                  VAT
taxes

·                  sales
and use taxes

·                  business
and occupation taxes

·                  state
and nations’ annual corporation reporting

·                  other
domestic and foreign reporting

·                  payroll
tax and vendor 10099 reporting

 

3.                                       Consulting
Services

 

·                  In
connection with transaction services and regulatory services

 

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

 

 

(c)                                  Fees
for Services:

 

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

 

	
  Job Function

  	
   

  	
  Employee

  	
   

  	
  Rate Per

  Hour*

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CFO

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Controller

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Senior
  Accountant

  	
   

  	
  [**]

  	
   

  	
  [**]

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

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Financial
  Reporting Manager

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Executive
  Assistant to CFO and CIO

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  AP/Accounting
  Specialist

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

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

 

Digimarc shall
pay for such services at the following rates:

 

	
  Job Function

  	
   

  	
  Contractor**

  	
   

  	
  Rate Per

  Hour*

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lead AP

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  AP/Accounting
  Specialist

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  AP/Tax
  Compliance Support Specialist

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Tax Director

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Payroll
  Specialist

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Internal
  Controls Specialist

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Systems
  Support Specialist

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Accounting
  Manager

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Process
  Control Specialist

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

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

 

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

 

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

 

 

SCHEDULE 1.2.2

 

DMRC INFORMATION TECHNOLOGY SERVICES

 

(a)                                  Services
to be Provided:

 

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

 

a.               Monitoring of systems, hardware and
networks

 

b.              Back up tape rotation

 

c.               Facility cooling and electrical

 

2.               Network usage to be charged based on
actual usage

 

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

 

(b)                                                          Duration
of Services:

 

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

 

(c)                                                          Fees
for Services:

 

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

 

	
  Job Function

  	
   

  	
  Employee

  	
   

  	
  Rate Per Hour*

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Manager
  Infrastructure Services

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Network
  Administrator

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  System
  Administrator/Support

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

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

 

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

 

 

(d)                                                          Temporary
Computer Room:

 

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

 

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

 

 

SCHEDULE 1.2.3

 

DMRC LEGAL SERVICES

 

(a)                                 Services
to be Provided:

 

·                  Litigation
support

·                  Intellectual
property protection

·                  Paralegal
support

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

 

Digimarc shall
request such services in writing in reasonable detail.

 

(b)                                 Duration
of Services: Six months

 

(c)                                 Fees
for Services:

 

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

 

	
  Job Function

  	
   

  	
  Employee

  	
   

  	
  Rate Per

  Hour*

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attorney

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Attorney

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Attorney

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Attorney

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Attorney

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Paralegal

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Paralegal

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

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

 

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

 

 

SCHEDULE 1.2.4

 

DMRC HUMAN RESOURCES SERVICES

 

(a)                                 Services
to be Provided:

 

1.               Support and training in maintaining the
HR Systems

 

a.               HR Perspective – HR-B HRIS

b.              PilotWorks – Goal Management

c.               SonicRecruit – Applicant Tracking System

d.              Comply – Policy Management System

e.               Intellum – Learning Management System

 

2.               Health Plan administration support

 

a.               5500 filing for the 2007 and 2008 plan
years

 

(b)                                 Duration
of Services:

 

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

 

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

 

(c)                                 Fees
for Services:

 

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

 

	
  Job Function

  	
   

  	
  Employee

  	
   

  	
  Rate Per Hour*

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HR
  Operations Mgr

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

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

 

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

 

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

 

 

Digimarc shall
pay for such services at the following rates:

 

	
  Job Function

  	
   

  	
  Contractor**

  	
   

  	
  Rate Per Hour*

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HR VP

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  HR Director

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Benefits

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

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

 

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

 

 

SCHEDULE 1.2.5

 

DMRC OTHER SERVICES

 

(a)                                  Office
Space to be Provided:

 

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

 

(b)                                  Duration
of Office Space Availability:

 

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

 

(c)                                  Rent
for Office Space:

 

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

 

Rent = TBFC x L1 Employees / Total Employees

 

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

 

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

 

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

 

(c)                                  Reimbursement
of Direct Expense:

 

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

 

 

	
  Employee
  Specific

  	
   

  	
  General
  Overhead

  	
   

  	
   

  	
   

  	
  Per hour

  with 1656

  Hours per

  	
   

  	
   

  	
   

  	
   

  
	
  Classification

  	
   

  	
  Name

  	
   

  	
  Base Pay

  	
   

  	
  100%
  Bonus

  	
   

  	
  On Target

  Earnings

  	
   

  	
  Individual

  Payrol Load

  Based on OTE

  	
   

  	
  Facilities

  Cost

  (Note 1)

  	
   

  	
  IT Cost

  (Note 2)

  	
   

  	
  Executive

  Cost

  (Note 3)

  	
   

  	
  Board of

  Directors

  (Note 4)

  	
   

  	
  Non-Labor

  General

  Counsel

  (Note 5)

  	
   

  	
  Finance

  (Note 6)

  	
   

  	
  Actual 2008

  Stock Comp

  (Note 7)

  	
   

  	
  Hr Cost

  (Note 8)

  	
   

  	
  Fully burdened

  Cost

  	
   

  	
  year of

  billable

  time

  (Note 9)

  	
   

  	
  Classification

  	
   

  	
  Rounded to

  nearest $5

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Accontant

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Treasury

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lead AP

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Clerical

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Clerical

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Controller

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Accounting Manager

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Project

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Process

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  CFO

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
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  TAX

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
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  Clerical

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
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  Exec Assistant

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
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  Payroll

  	
   

  	
  [**]

  
	
  Finance:

  	
   

  	
  [**]

  	
   

  	
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  F&A

  	
   

  	
  [**]

  
	
  HR

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  VP HR

  	
   

  	
  [**]

  
	
  HR

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  HR Director

  	
   

  	
  [**]

  
	
  HR

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Benefits Specialist

  	
   

  	
  [**]

  
	
  HR

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  HR Manager

  	
   

  	
  [**]

  
	
  General Counsel

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  [**]

  
	
  General Counsel

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  CLO

  	
   

  	
  [**]

  
	
  General Counsel

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  [**]

  
	
  General Counsel

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
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  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  [**]

  
	
  General Counsel

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Paralegal

  	
   

  	
  [**]

  
	
  IP Legal

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  [**]

  
	
  IP Legal

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  [**]

  
	
  IP Legal

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Paralegal

  	
   

  	
  [**]

  
	
  IP Legal

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  IT Manager/ Security

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Network

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Help Desk

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Business Support

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  CIO

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Network

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Help Desk

  	
   

  	
  [**]

  
	
  IT

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Network

  	
   

  	
  [**]

  

 

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

 

 

	
  Note
  1

  	
   

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

  
	
  Note
  2

  	
   

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

  
	
  Note
  3

  	
   

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

  
	
  Note
  4

  	
   

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

  
	
  Note
  5

  	
   

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

  
	
  Note
  6

  	
   

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

  
	
  Note 7

  	
   

  	
  Actual Stock Comp to be expensed in 2008

  
	
  Note
  8

  	
   

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

  
	
  Note
  9

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

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

 

 

SCHEDULE 1.3.2

 

DIGIMARC INFORMATION TECHNOLOGY SERVICES

 

(a)           Services to be
Provided:

 

1.     Network
Charges based on usage

 

2.     Email

 

3.     Dynamics
Great Plains (5 licenses)

 

4.     Share Point environments

 

(b)                   Duration of
Services:

 

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

 

(c)           Fees
for Services:

 

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

 

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

 

	
  Job Function

  	
   

  	
  Employee

  	
   

  	
  Rate Per

  Hour*

  
	
  CIO

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Director Delivery Services

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Systems Administrator

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Help Desk and Cell Phone Support

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

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

 

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

 

 

SCHEDULE 1.3.3

 

DIGIMARC LEGAL SERVICES

 

(a)       Services to be Provided:

 

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

 

DMRC shall request such services in writing in reasonable detail

 

(b)           Duration
of Services:  Six months.

 

(c)           Fees
for Services:

 

DMRC shall pay for such services at the following rates:

 

	
  Job Function

  	
   

  	
  Employee

  	
   

  	
  Rate Per

  Hour*

  
	
  Attorney

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Attorney

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Attorney

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Attorney

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Attorney

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

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

 

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]