Document:

Exhibit 10.20

 

Summary of Key Terms of Non-Employee Director
Compensation Arrangements

 

Directors who are also employees of the Company
receive no additional compensation for their services as directors. Directors
who are not employees of the Company receive cash compensation and equity
compensation as described below. All Directors are also reimbursed for
reasonable and necessary travel, communications, and other out-of-pocket
business expenses incurred in connection with their attendance at meetings, while
on corporate business or for continuing education related to their board
service.

 

	
  Annual Cash Retainer

  	
   

  	
  $25,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Additional Annual Cash
  Retainers for:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lead Director

  	
   

  	
  $30,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Audit Committee Chair

  	
   

  	
  $20,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Audit Committee Member

  	
   

  	
  $10,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Other Standing Committee Chair

  	
   

  	
  $7,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Other Standing Committee
  Member

  	
   

  	
  $3,750

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Special Litigation Committee
  Member

  	
   

  	
  $7,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Additional fee for excess
  meetings *

  	
   

  	
  $1,000
  in-person / $500 teleconference

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Initial Option Grant

  	
   

  	
  20,000
  shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Annual Option Grant

  	
   

  	
  12,000
  shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Annual Standing Committee
  Member Option Grant **

  	
   

  	
  3,000
  shares

  	
   

  

 

* In excess of eight meetings per year.

 

** In 2005 the Board elected not to grant these
awards.

 

All options are granted with an exercise price
equal to the fair market value of our stock on the grant date. Initial option
grants vest and become exercisable in 36 equal installments on each monthly
anniversary of the grant date, such that the stock option will be fully
exercisable three years after the grant date. Annual option grants, including
annual option grants to standing committee members, are made immediately
following each annual shareholder meeting and vest and become exercisable in
twelve equal installments on each monthly anniversary of the grant date, such
that the stock option will be fully exercisable one year after the grant date.
The Board has discretion to elect not to make the automatic annual option
grants.Exhibit 10.21

 

PERFORMANCE
VESTING SHARE AGREEMENT

 

THIS PERFORMANCE VESTING SHARE AGREEMENT (this “Agreement”) is made effective
January 3, 2006 (the “Grant Date”), by and between DIGIMARC CORPORATION, a
Delaware corporation (the “Company”) and                                           
(“Executive”). In connection with his services as                                       ,
the Company desires to grant Executive a performance vesting share award of                          
shares of the Company’s common stock.

 

1.                                      Grant of Performance Vesting Shares. The Company hereby grants to Executive as of the Grant
Date, a performance vesting share award of                                   
shares of the Company’s common stock (the “Shares”) pursuant to the terms and
conditions contained in this Agreement and the terms and conditions of the
Company’s Restated 1999 Stock Incentive Plan (the “1999 Plan”), subject to the
vesting rules set forth in Section 2 below.

 

2.                                      Vesting of the Shares.

 

2.1                               Performance
Condition and Release Date. Subject to the terms of this Agreement, if the closing price
of the Company’s common stock is at least $15 for more than 30 consecutive
calendar days during the period that begins on the Grant Date and ends on the
third anniversary of the Grant Date (the “Performance Condition”), then the
Shares shall vest and no longer be subject to forfeiture on the date on which
the Performance Condition is satisfied (the “Release Date”). All rights to
performance vesting shares are contingent on Executive remaining continuously
employed by the Company, or any parent or subsidiary of the Company, from the
Grant Date through the Release Date.

 

2.2                               Termination
Without Cause Prior to Release Date. In the event of termination by the Company of Executive’s
employment without “Cause” (as defined below) prior to the earlier of the third
anniversary of the Grant Date (the “Expiration Date”) and the Release Date, the
Shares shall be fully vested and the forfeiture restriction shall lapse as of
the date of termination of employment by the Company.

 

2.3                               Termination Due
to Death or Disability. In
the event of termination of Executive’s employment due to Executive’s death or “Disability”
(as defined in the 1999 Plan) prior to the earlier of the Expiration Date and
the Release Date, the Shares shall be fully vested and the forfeiture
restriction shall lapse as of the date of Executive’s death or Disability.

 

2.4                               Resignation for
Good Reason Following a Change in Control. In the event there is a “Change
in Control” of the Company (as defined below) prior to the earlier of the
Expiration Date and the Release Date and as a consequence of such Change in
Control, Executive resigns for “Good Reason” (as defined below) prior to the
earlier of the Expiration Date and the Release Date, the Shares shall be fully
vested and the forfeiture restriction shall lapse as of the date of Executive’s
resignation for Good Reason.

 

1

 

2.5                               Termination for
Other Reasons. In
the event that Executive’s employment terminates prior to the earlier of the
Expiration Date and the Release Date for any reason other than those specified
in Sections 2.2, 2.3, and 2.4 above, including termination voluntarily by
Executive or by the Company for Cause, the Shares shall immediately be
forfeited by Executive without payment of any further consideration to
Executive.

 

2.6                               Certain
Definitions.

 

(a)                                  “Cause.”  For purposes of this Section 2, “Cause”
shall mean: (i) a willful act of embezzlement, fraud, or dishonesty by
Executive, which is materially injurious to the Company; (ii) Executive’s
continued violation of his obligation to perform the duties and
responsibilities normally required of an executive, which are willful or
grossly negligent, after Executive has been given written notice from the
Company’s Board of Directors describing his violations and has failed to cure
or commence to cure such violations within thirty (30) days; or (iii) Executive’s
conviction of, or plea of nolo contendere to, a felony which the Board of
Directors reasonably believes has had or will have a material detrimental
effect on the Company’s reputation or business.

 

(b)                                 “Good Reason.”  For purposes of this Section 2, “Good
Reason” shall mean a resignation by Executive of his employment with the
Company, or any parent or subsidiary of the Company, as a result of any of the
following:

 

(i)  a meaningful and detrimental
alteration of his position, his title, or the nature or status of his
responsibilities (including his reporting responsibilities) from those in
effect immediately prior to the Change in Control.

 

(ii)  a reduction by the Company in
Executive’s annual base salary as in effect immediately prior to the Change in
Control or as the same may be increased from time to time thereafter;

 

(iii) the relocation of the Company’s
office where Executive is employed as of the Change in Control to a location
which is more than seventy-five (75) miles away from such office, or a
requirement that Executive be based more than seventy-five (75) miles away from
his Company office as of the Change in Control.

 

(c)                                  “Change in Control.”  For purposes of this Section 2, “Change
of Control” means the direct or indirect acquisition by any person or related
group of persons (other than an acquisition from or by the Company or by a
Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Company’s outstanding
securities pursuant to a tender or exchange offer made directly to the Company’s
stockholders, which a majority of the Company’s Board of Directors who are not
affiliated with the offeror do not recommend such stockholders accept.

 

3.                                      Restriction on Transfer. Executive
shall not sell, transfer, pledge, hypothecate, or otherwise dispose of any
Shares prior to the Release Date.

 

2

 

4.                                      Escrow of Shares. Promptly after the execution of this
Agreement, the Company shall cause the transfer agent for the Company’s common
stock to make a book entry record, showing ownership for the Shares in the name
of Executive subject to the terms and conditions of this Agreement. The Shares
shall be issued from common stock reserved for issuance pursuant to the 1999
Plan as granted under such plan. Subject to the terms hereof, Executive shall
have all rights of a shareholder with respect to the Shares while they are held
in escrow, including without limitation the right to vote the Shares and
receive any cash dividends declared thereon. If, from time to time prior to the
earlier of the Expiration Date and the Release Date, there is (a) any
stock dividend, stock split, or other change in the Shares, or (b) any
merger or sale of all or substantially all of the assets or other acquisition
of the Company, any and all new, substituted, or additional securities to which
Executive is entitled by reason of his ownership of the Shares shall be held on
his behalf by the Company’s transfer agent and included thereafter as “Shares”
for purposes of this Agreement and the forfeiture restriction. A certificate
for the Shares granted pursuant to this Agreement will be issued to Executive
following the Release Date, or, at Executive’s election, such Shares may be
transferred in book-entry form to Executive’s brokerage account (subject
to any adjustment made therein to withhold Shares to pay taxes as provided in Section 5.2
below).

 

5.                                      Tax Consequences.

 

5.1                               Section 83(b) Election. Executive understands that he
(and not the Company) shall be responsible for his own tax liability that may arise
as a result of the transactions contemplated by this Agreement. Executive
understands that Section 83 of the Internal Revenue Code of 1986, as
amended (the “Code”) taxes as ordinary income the fair market value of the
Shares as of the date the Shares vest and the forfeiture restriction on the
Shares lapses. Executive understands that he may elect to be taxed at the
time the Shares are granted rather than when the Shares vest and the forfeiture
restriction lapses by filing an election under Section 83(b) of the
Code with the Internal Revenue Service within 30 days from the Grant Date. Executive
understands that failure to file such an election in a timely manner may result
in adverse tax consequences for Executive; provided, however, that if the
election is timely filed with the IRS, Executive will be responsible for the
income taxes due on the fair market value of the Shares determined as of the
date of this Agreement. The tax payments to the IRS in connection with an 83(b) election
cannot be recovered if the Shares later fail to vest and are forfeited.
Executive further understands that an additional copy of such election form should
be filed with his federal income tax return for the calendar year in which the
Grant Date falls. Executive acknowledges that the foregoing is only a summary
of the effect of United States federal income taxation with respect to the
grant of the Shares hereunder and does not purport to be complete. Executive
further acknowledges that the Company has directed Executive to seek
independent advice regarding the applicable provisions of the Code, the income
tax laws of any municipality, state, or foreign country in which Executive may reside,
and the tax consequences of Executive’s death. Executive agrees that he will
execute and deliver to the Company with this executed Agreement a copy of the Section 83(b) Election
set forth on the attached Exhibit A if Executive desires to make
such an election within thirty days from the date of this Agreement.

 

5.2                               Withholding. The Company shall be required to
withhold the amount of taxes required to satisfy any applicable federal, state,
and local tax withholding obligations arising from either (a) Executive’s Section 83(b) election,
or (b) the lapse of restrictions on the

 

3

 

Shares. Executive shall satisfy any such tax
obligation in cash or by directing the Company to withhold from the Shares
issued to Executive as a result of the lapse of the restrictions on the Shares
the number of whole shares of the Company’s common stock required to satisfy
such tax obligation, the number to be determined by the fair market value of
the Shares on the date of the lapse of the restrictions on the Shares. If
Executive elects to withhold shares of the Company’s common stock to satisfy
any such tax obligation, Executive shall pay in cash any obligation that
remains after the application of whole shares that is less than the value of a
whole share. It is understood that if Executive makes an 83(b) election
(which can only be made within thirty days from the date of this Agreement),
Executive cannot satisfy the tax obligation by directing the Company to
withhold from the Shares since none of the Shares will be vested at the time of
such election.

 

6.                                      Representations by Executive. Executive
represents that the Shares are being acquired for investment and that Executive
has no present intention to transfer, sell, or otherwise dispose of the Shares,
except in compliance with applicable securities laws, and the parties agree
that the Shares are being acquired in accordance with and subject to the terms,
provisions, and conditions of this Agreement.

 

7.                                      General Provisions.

 

7.1                               This Agreement and the 1999 Plan
represent the entire agreement and understanding between the parties as to the
subject matter hereof and supersede all prior or contemporaneous agreements,
whether written or oral.

 

7.2                               Subject to the limitations
contained in this Agreement, all terms and conditions of the 1999 Plan are
incorporated in this Agreement and made part of this Agreement as if
stated herein.

 

7.3                               Neither this Agreement nor the
issuance of any of the Shares shall confer on Executive any right with respect
to continuance of employment or other service with the Company, or any parent
or subsidiary of the Company, nor shall they interfere in any way with any
right the Company, or any parent or subsidiary of the Company, would otherwise
have to terminate or modify the terms of Executive’s employment or other
service at any time.

 

7.4                               This Agreement shall be governed
by the laws of the State of Oregon without reference to its conflicts of law
principles.

 

7.5                               No waiver, alteration, or
modification of any of the provisions of this Agreement shall be binding,
unless in writing and signed by duly authorized representatives of the parties
hereto. This Agreement shall be binding on, and shall inure to the benefit of,
the parties and their respective successors and assigns.

 

7.6                               This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one instrument.

 

The parties have duly executed this Agreement effective as of the date
first set forth above.

 

4

 

The
Company:

 

DIGIMARC CORPORATION

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					

 

Executive:

 

 

	
   

  	
   

  
	
  Printed
  Name:

  	
   

  	
   

  
			

 

5

 

EXHIBIT A

 

SECTION 83(b) ELECTION

 

The
undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code, to include in taxpayer’s gross income for the current
taxable year, the amount of any compensation taxable to taxpayer in connection
with taxpayer’s receipt of the property described below:

 

1.                                       The name, address, taxpayer identification
number and taxable year of the undersigned are as follows:

 

	
  Name of Taxpayer:

  	
   

  	
   

  
	
  Name of Spouse:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Identification No. of
  Taxpayer:

  	
   

  	
   

  
	
  Identification No. of
  Spouse:

  	
   

  	
   

  
	
  Taxable Year:

  	
   

  	
   

  

 

2.                                       The property with respect to which the
election is made is described as follows:

 

 shares of the Common Stock (the “Shares”) of
Digimarc Corporation, a Delaware corporation (the “Company”).

 

3.                                       The date on which the property was
transferred is: January 3, 2006.

 

4.                                       The property is subject to the following
restrictions:

 

The Shares will be forfeited
to the Company for no consideration if the performance vesting condition is not
met or taxpayer’s employment terminates under certain circumstances before January 3,
2009.

 

5.                                       The fair market value at the time of
transfer, determined without regard to any restriction other than a restriction
which by its terms will never lapse, of such property is: $                                                .

 

6.                                       The amount (if any) paid for such property
is: $0.00.

 

The
undersigned has submitted a copy of this statement to the person for whom the
services were performed in connection with the undersigned’s receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property. The
undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.

 

	
   

  	
   

  	
  Date

  	
   

  	
   

  
	
  Taxpayer Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Date

  	
   

  	
   

  
	
  Spouse Name:

  	
   

  	
   

  	
   

  
							

 

6

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