Document:

EXHIBIT 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

 

Wells Fargo Bank

Portland, Oregon

 

[**]

 

**  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

  	
   

  	
  Mike
  McConnell

  	
   

  	
  $

  	
  515

  	
   

  
	
  Controller

  	
   

  	
  John Foy

  	
   

  	
  $

  	
  135

  	
   

  
	
  Senior Accountant

  	
   

  	
  Kimberly
  Anderson

  	
   

  	
  $

  	
  85

  	
   

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

  	
   

  	
  Jeanne
  Biermann

  	
   

  	
  $

  	
  110

  	
   

  
	
  Financial Reporting Manager

  	
   

  	
  Kelvin Wong

  	
   

  	
  $

  	
  115

  	
   

  
	
  Executive Assistant to CFO and CIO

  	
   

  	
  Sue Taylor

  	
   

  	
  $

  	
  80

  	
   

  
	
  AP/Accounting Specialist

  	
   

  	
  Beverly
  Foster

  	
   

  	
  $

  	
  60

  	
   

  

 

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

  	
   

  	
  Joanne Black

  	
   

  	
  $

  	
  65

  	
   

  
	
  AP/Accounting Specialist

  	
   

  	
  Suzanne
  Farmer

  	
   

  	
  $

  	
  60

  	
   

  
	
  AP/Tax Compliance Support Specialist

  	
   

  	
  Elizabeth
  Robles

  	
   

  	
  $

  	
  65

  	
   

  
	
  Tax Director

  	
   

  	
  Jeff Miller

  	
   

  	
  $

  	
  150

  	
   

  
	
  Payroll Specialist

  	
   

  	
  Lori
  Venneberg

  	
   

  	
  $

  	
  75

  	
   

  
	
  Internal Controls Specialist

  	
   

  	
  Heather Laws

  	
   

  	
  $

  	
  100

  	
   

  
	
  Systems Support Specialist

  	
   

  	
  Deina
  Chen-Vu

  	
   

  	
  $

  	
  75

  	
   

  
	
  Accounting Manager

  	
   

  	
  Sharon
  Birrel

  	
   

  	
  $

  	
  100

  	
   

  
	
  Process Control Specialist

  	
   

  	
  Renee
  Halpern

  	
   

  	
  $

  	
  105

  	
   

  

 

*    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

 

 

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

  	
   

  	
  Josh Bickel

  	
   

  	
  $

  	
  115

  	
   

  
	
  Network Administrator

  	
   

  	
  Rick Ly

  	
   

  	
  $

  	
  85

  	
   

  
	
  System Administrator/Support

  	
   

  	
  Adam Smith

  	
   

  	
  $

  	
  60

  	
   

  

 

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

 

 

(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 $100,000.

 

 

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

  	
   

  	
  Robert
  Chamness

  	
   

  	
  $

  	
  465

  	
   

  
	
  Attorney

  	
   

  	
  Joel Meyer

  	
   

  	
  $

  	
  240

  	
   

  
	
  Attorney

  	
   

  	
  Tom Horgan

  	
   

  	
  $

  	
  225

  	
   

  
	
  Attorney

  	
   

  	
  Steve
  Stewart

  	
   

  	
  $

  	
  190

  	
   

  
	
  Attorney

  	
   

  	
  Bill Conwell

  	
   

  	
  $

  	
  275

  	
   

  
	
  Paralegal

  	
   

  	
  Megan Warner

  	
   

  	
  $

  	
  85

  	
   

  
	
  Paralegal

  	
   

  	
  Lisa
  Parkinson

  	
   

  	
  $

  	
  85

  	
   

  

 

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

 

 

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

  	
   

  	
  Cindy Smith

  	
   

  	
  $

  	
  165

  	
   

  
							

 

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.

 

 

Digimarc shall pay for such services at the following rates:

 

	
  Job Function

  	
   

  	
  Contractor**

  	
   

  	
  Rate Per Hour*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HR VP

  	
   

  	
  Mike Cooney

  	
   

  	
  $

  	
  360

  	
   

  
	
  HR Director

  	
   

  	
  Carol Ward

  	
   

  	
  $

  	
  280

  	
   

  
	
  Benefits

  	
   

  	
  Amanda Ihle

  	
   

  	
  $

  	
  115

  	
   

  

 

** 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.

 

 

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

 

(d)                                  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)

  	
   

  	
  Finanace

  (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:

  	
   

  	
  Kimberly Anderson

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Accontant

  	
   

  	
  $

  	
  80

  	
   

  
	
  Finance:

  	
   

  	
  Jeanne Biermann

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Treasury

  	
   

  	
  $

  	
  110

  	
   

  
	
  Finance:

  	
   

  	
  Joanne Black

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lead AP

  	
   

  	
  $

  	
  65

  	
   

  
	
  Finance:

  	
   

  	
  Suzanne Farmer

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Clerical

  	
   

  	
  $

  	
  60

  	
   

  
	
  Finance:

  	
   

  	
  Beverly Foster

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Clerical

  	
   

  	
  $

  	
  60

  	
   

  
	
  Finance:

  	
   

  	
  John Foy

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Controller

  	
   

  	
  $

  	
  135

  	
   

  
	
  Finance:

  	
   

  	
  Sharon Birrel

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Accounting Manager

  	
   

  	
  $

  	
  100

  	
   

  
	
  Finance:

  	
   

  	
  Renee Halpern

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Project

  	
   

  	
  $

  	
  105

  	
   

  
	
  Finance:

  	
   

  	
  Heather Laws

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Process

  	
   

  	
  $

  	
  100

  	
   

  
	
  Finance:

  	
   

  	
  Michael McConnell

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  CFO

  	
   

  	
  $

  	
  515

  	
   

  
	
  Finance:

  	
   

  	
  Jeffrey Miller

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  TAX

  	
   

  	
  $

  	
  150

  	
   

  
	
  Finance:

  	
   

  	
  Elizabeth Robles

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Clerical

  	
   

  	
  $

  	
  65

  	
   

  
	
  Finance:

  	
   

  	
  Susan Taylor

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Exec Assistamt

  	
   

  	
  $

  	
  80

  	
   

  
	
  Finance:

  	
   

  	
  Lori Venneberg

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Payroll

  	
   

  	
  $

  	
  75

  	
   

  
	
  Finance:

  	
   

  	
  Kelvin Wong

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  F&A

  	
   

  	
  $

  	
  115

  	
   

  
	
  HR

  	
   

  	
  Mike Cooney

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  VP HR

  	
   

  	
  $

  	
  360

  	
   

  
	
  HR

  	
   

  	
  Carol Ward

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  HR Director

  	
   

  	
  $

  	
  280

  	
   

  
	
  HR

  	
   

  	
  Amanda Ihle

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Benfits Specialist

  	
   

  	
  $

  	
  115

  	
   

  
	
  HR

  	
   

  	
  Cindy Smith

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  HR Manager

  	
   

  	
  $

  	
  165

  	
   

  
	
  General Counsel

  	
   

  	
  Jacob Carroll

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  $

  	
  105

  	
   

  
	
  General Counsel

  	
   

  	
  Robert Chamness

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  CLO

  	
   

  	
  $

  	
  465

  	
   

  
	
  General Counsel

  	
   

  	
  Barbara Gilberti

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  $

  	
  180

  	
   

  
	
  General Counsel

  	
   

  	
  Thomas Horgan

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  $

  	
  225

  	
   

  
	
  General Counsel

  	
   

  	
  Megan Warner

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Paralegal

  	
   

  	
  $

  	
  85

  	
   

  
	
  IP Legal

  	
   

  	
  William Conwell

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  $

  	
  275

  	
   

  
	
  IP Legal

  	
   

  	
  Joel Meyer

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  $

  	
  240

  	
   

  
	
  IP Legal

  	
   

  	
  Lisa Parkinson

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Paralegal

  	
   

  	
  $

  	
  85

  	
   

  
	
  IP Legal

  	
   

  	
  Steven Stewart

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Lawyer

  	
   

  	
  $

  	
  190

  	
   

  
	
  IT

  	
   

  	
  Josh Bickel

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  IT Manger/ Security

  	
   

  	
  $

  	
  115

  	
   

  
	
  IT

  	
   

  	
  Ricky Ly

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Network

  	
   

  	
  $

  	
  85

  	
   

  
	
  IT

  	
   

  	
  Adam Smith

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Help Desk

  	
   

  	
  $

  	
  60

  	
   

  
	
  IT

  	
   

  	
  Deina Chen-Vu

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Business Support

  	
   

  	
  $

  	
  75

  	
   

  
	
  IT

  	
   

  	
  John May

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  CIO

  	
   

  	
  $

  	
  225

  	
   

  
	
  IT

  	
   

  	
  Mark Fleming

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Network

  	
   

  	
  $

  	
  90

  	
   

  
	
  IT

  	
   

  	
  Tim Putney

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Help Desk

  	
   

  	
  $

  	
  65

  	
   

  
	
  IT

  	
   

  	
  Alan Carr

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Network

  	
   

  	
  $

  	
  130

  	
   

  

 

** 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

  	
   

  	
  John May

  	
   

  	
  $

  	
  225

  	
   

  
	
  Director Delivery Services

  	
   

  	
  Alan Carr

  	
   

  	
  $

  	
  130

  	
   

  
	
  Systems Administrator

  	
   

  	
  Mark Fleming

  	
   

  	
  $

  	
  90

  	
   

  
	
  Help Desk and Cell Phone Support

  	
   

  	
  Tim Putney

  	
   

  	
  $

  	
  65

  	
   

  

 

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

 

 

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

  	
   

  	
  Barbara
  Giliberti

  	
   

  	
  $

  	
  180

  	
   

  
	
  Attorney

  	
   

  	
  Jacob
  Carroll

  	
   

  	
  $

  	
  105

  	
   

  
	
  Attorney

  	
   

  	
  Mark Molina

  	
   

  	
  $

  	
  610

  	
   

  
	
  Attorney

  	
   

  	
  Alan Roth

  	
   

  	
  $

  	
  180

  	
   

  
	
  Attorney

  	
   

  	
  Charles
  Taylor

  	
   

  	
  $

  	
  140

  	
   

  

 

* The rates provided are estimates and fees will be billed at fully
loaded cost.EXHIBIT
10.3

 

CONFIDENTIAL PORTIONS OMITTED

 

AGREEMENT

 

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

 

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

 

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

 

1.              IP Ownership and License Grants.

 

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

 

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

 

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

 

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

 

 

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

 

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

 

1.5.         License Limitations and Exclusions.

 

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

 

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

 

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

 

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

 

2.     Royalties
and Other Consideration for Licenses.

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

  	
   

  	
  [**]%

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

  	
   

  	
  [**]%

  
	
  In Royalty Year Three

  	
   

  	
  [**]%

  
	
  In Royalty Year Four

  	
   

  	
  [**]%

  
	
  In Royalty Year Five; and
  each year thereafter

  	
   

  	
  [**]%.

  

 

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

 

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

 

	
  In Royalty Year One -

  	
   

  	
  $[**];

  
	
  In Royalty Year Two -

  	
   

  	
  $[**];

  
	
  In Royalty Year Three -
  

  	
   

  	
  $[**];

  
	
  In Royalty Year Four -

  	
   

  	
  $[**]; and

  
	
  In Royalty Year Five -

  	
   

  	
  $[**].

  

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

3.               Digimarc Services.

 

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

 

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

 

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

 

 

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

 

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

 

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

 

	
  Annual Plan Period

  	
   

  	
  Plan Year 1

  	
   

  	
  Plan Year 2

  	
   

  	
  Plan Years 3-5

  (per
  year)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Fees

  	
   

  	
  $

  	
  [**]

  	
   

  	
  $

  	
  [**]

  	
   

  	
  $

  	
  [**]

  	
   

  
											

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

4.              Remedies
for Breach.

 

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

 

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

 

5.              Termination.

 

5.1       Nielsen Option
to Terminate After Two Years.  Within thirty days after the second
anniversary of the
Effective Date, Nielsen may terminate this Agreement if,  in
its reasonable judgment, the market opportunity for CIMR
Products and Services has not been realized. 
Notwithstanding the foregoing, the parties agree that the market
opportunity will be considered to have been realized if the CIMR
Products and Services generate CIMR Net Revenues of
at least $3.75 million in the third calendar quarter of 2009.

 

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

 

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

 

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

 

 

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

 

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

 

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

 

6.              Other
Provisions.

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

The
contacts to address the notices to are:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

	
  DIGIMARC CORPORATION

  	
  THE NIELSEN COMPANY (US), 

  
	
   

  	
  INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Robert P. Chamness

  	
   

  	
  By:

  	
  /s/ James O’Hara

  
	
  (Signature)

  	
  (Signature)

  
	
   

  	
   

  
	
  Robert P. Chamness

  	
  Name: James O’Hara

  
	
   

  	
  (Please print)

  
	
   

  	
   

  
	
  CLO and
  Secretary

  	
  Title: President-Media
  Product Leadership

  
	
   

  	
   

  
	
  Date: November 27,
  2007

  	
  Date: November 27,
  2007

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00148-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00148-of-00352.parquet"}]]