Document:

ex_199532.htm

Exhibit 10.11

 

TD BANK

 

MODIFICATION AGREEMENT

 

 

This MODIFICATION AGREEMENT is entered into as of August 13, 2020, between Information Analysis Incorporated, a Virginia corporation, with an address of 11240 Waples Mill Road, Fairfax, Virginia 22030 (the "Borrower") and TD Bank, N.A., a National Association with an address of 1919 Gallows Road, 2nd Floor, Vienna, Virginia 22182 (the "Bank").

 

WHEREAS, the Bank established a revolving line of credit (the "Revolving Loan") for Borrower which matures on July 31, 2020 (the "Maturity Date") respecting which Bank agreed to lend to Borrower upon Borrower’s request, but subject to the terms and conditions set forth in various loan documents, of up to One Million Dollars and Zero Cents ($1,000,000.00) (the "Revolving Loan Amount");

 

WHEREAS, the Revolving Loan is evidenced by that certain Revolving Term Note, dated December 20, 2005 (as previously amended, modified or supplemented, the "Note"), by the Borrower in favor of the Bank in the face amount of the Revolving Loan Amount;

 

WHEREAS, in connection with the Revolving Loan, Borrower entered into that certain Loan Agreement, dated December 20, 2005 (as previously amended, modified or supplemented, the "Loan Agreement");

 

WHEREAS, the Loan Agreement and the Note and all other documents and instruments executed in connection with or relating to the Loan are referred to herein, collectively, as the "Loan Documents"; and all collateral granted to the Bank to secure the Loan is referred to herein, collectively, as the "Collateral";

 

WHEREAS, the Borrower and the Bank have agreed to modify the Loan and the Loan Documents in accordance with the terms of this Agreement.

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Bank and the Borrower mutually agree as follows:

 

1. MODIFICATION

 

1.1         Recitals and Representations Accurate. The above recitals are hereby made a part of this Agreement and the Borrower acknowledges and agrees that each of the recitals is true and correct.

 

1.2         Ratification. All of the terms, covenants, provisions, representations, warranties, and conditions of the Loan Documents, as amended or modified hereby, are ratified, acknowledged, confirmed, and continued in full force and effect as if fully restated herein.

 

1.3         Unused Fee: The Borrower shall pay a fee of 30 Basis Points per annum on the un-borrowed portion of the Revolving Term Commitment, payable quarterly in arrears.

 

1.4         Financial Reporting Requirements. Section 7 of the Business Loan Agreement dated December 20, 2005 shall be deleted in its entirety and replaced with the following:

 

Financial Statements. Borrower will furnish to Bank:

 

	 	
			(a)

				
			as soon as available to Borrower, but in any event within 45 days after the close of each quarterly period of its fiscal year, a full and complete signed copy of financial statements, which shall include a balance sheet of the Borrower, as at the end of such quarter, and statement of profit and loss of the Borrower reflecting the results of its operations during such quarter and shall be prepared by the Borrower and certified by Borrower's chief financial officer as to correctness in accordance with generally accepted accounting principles, consistently applied, subject to year-end adjustments;

			

 

 

 

 

	 	
			(b)

				
			as soon as available to Borrower, but in any event within 120 days after the close of each fiscal year, a full and complete signed copy of financial statements, prepared by certified public accountants acceptable to Bank, which shall include a balance sheet of the Borrower, as at the end of such year, statement of cash flows and statement of profit and loss of the Borrower reflecting the results of its operations during such year, bearing the opinion of such certified public accountants and prepared on an audited basis in accordance with generally accepted accounting principles, consistently applied together with any so-called management letter;

			

 

	 	
			(c)

				
			Upon each advance Borrower shall provide to Bank, an Accounts Receivable aging report in form satisfactory to Bank showing the total amount due from each account debtor, the month in which each Account Receivable was created, as well as an Accounts Payable aging report and such other information as Bank shall request;

			

 

	 	
			(d)

				
			Borrower's filed Federal tax returns, including all schedules thereto, for the prior year within 150 days of the end of Borrower's Fiscal Year each such year or by such other date approved by the Bank;

			

 

	 	
			(e)

				
			within 45 days after end of each quarter Borrower shall deliver Contract Backlog in form satisfactory to the Bank;

			

 

	 	
			(f)

				
			within 45 days after end of each quarter Borrower shall deliver Compliance Certificate in form satisfactory to the Bank;

			

 

	 	
			(g)

				
			Upon each advance Borrower shall provide to Bank shall deliver Borrowing Base Certificate in form satisfactory to the Bank;

			

 

	 	
			(h)

				
			Within 30 days of fiscal year end of the Borrower, an annual budget projection to include income statement and balance sheet for the following fiscal year.

			

 

	 	
			(i)

				
			from time to time, such financial data and information about Borrower as Bank may reasonably request; and

			

 

	 	
			(j)

				
			any financial data and information about any guarantors of the Obligations as Bank may reasonably request.

			

 

1.5         Financial Covenants. Section 8 of the Business Loan Agreement dated December 20, 2005 shall be deleted in its entirety and replaced with the following:

 

1.6         Financial Covenants. The Borrower will not at any time or during any fiscal period (as applicable) fail to be in compliance with any of the financial covenants in this section.

 

	 	
			(a)

				
			Definitions. The following definitions shall apply to this Section:

			

 

	 	
			(i)

				
			"GAAP" shall mean Generally Accepted Accounting Principles in effect from time to time in the United States.

			

	 	
			(ii)

				
			"Tangible Net Worth" shall mean the book value of net worth (total assets - total liabilities) as set forth in the statement of financial position of the borrower determined in accordance with generally accepted accounting principals, minus the net book value of the following items (but only to the extent that such items are included in any determination of the total assets of the borrower): (i) good will, patents, trademarks, copyrights, trade names, customer lists, and other like intangible assets; (ii) receivables due from affiliates, subsidiaries or other related parties, include officers, employees or stockholders of the borrower; and (iii) any capitalized start-up or development expenses, and (iv) any write-up or reappraisal of the borrower's existing assets.

			

 

	 	
			(b)

				
			Minimum Tangible Net Worth. The Borrower shall not permit its Tangible Net Worth to be less than $1,000,000.00 plus 50% of positive net income not reduced by losses measured quarterly. Tested to be measured beginning with Q3 of Fiscal Year 2020.

			

 

	 	
			(c)

				
			Minimum Net Income. The Borrower shall not permit their Minimum Net Income to be less than $1.00, at the end of each fiscal quarter. Must comply with any two of the four quarters plus annually, Annual test is cumulative.

			

 

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			(d)

				
			Maintenance of Liquidity. Borrower and Guarantor shall maintain an unrestricted cash and cash equivalent balance (net of contingent liabilities, unsecured indebtedness and located in the United States) of no less than $500,000.00, at the end of each fiscal quarter.

			

 

1.7         Amended and Restated Note. The Note shall be amended and restated in the form attached hereto as Exhibit A (the "Amended Note").

 

1.8         Representations and Warranties. The Borrower hereby represents and warrants to the Bank that:

 

	 	
			(a)

				
			The person executing this Agreement is duly authorized to do so and to bind the Borrower to the terms hereof;

			

 

	 	
			(b)

				
			Each of the Loan Documents is a valid and legal binding obligation of the Borrower, enforceable in accordance with its terms, and is not subject to any defenses, counterclaims, or offsets of any kind;

			

 

	 	
			(c)

				
			All financial statements delivered to the Bank were true, accurate and complete, in all material respects, as of the date of delivery to the Bank;

			

 

	 	
			(d)

				
			Since the date of the Loan Documents there has been no material adverse change in the condition, financial or otherwise, of the Borrower, except as disclosed to the Bank in writing;

			

 

	 	
			(e)

				
			There exists no action, suit, proceeding or investigation, at law or in equity, before any court, board, administrative body or other entity, pending or threatened, affecting the Borrower or its property, wherein an unfavorable decision, ruling or finding would materially adversely affect the business operations, property or financial condition of the Borrower; and

			

 

	 	
			(f)

				
			There exists no event of default, or other circumstance that with the passage of time or giving of notice or both will become an event of default, under any of the Loan Documents.

			

 

1.9         Interest, Fees, Costs and Expenses. The Borrower shall, simultaneously with the execution of this Agreement, pay to the Bank all accrued interest owing on the Loan as of the date of this Agreement together with all fees, costs and expenses due and owing to the Bank by the Borrower under the Loan Documents.

 

2. MISCELLANEOUS

 

2.1         Set-Off. The Borrower hereby grants to the Bank a continuing lien and security interest in any and all deposits or other sums at any time credited by or due from the Bank to the Borrower and any cash, securities, instruments or other property of the Borrower in the possession of the Bank, whether for safekeeping or otherwise, or in transit to or from the Bank (regardless of the reason the Bank had received the same or whether the Bank has conditionally released the same) as security for the full and punctual payment and performance of all of the liabilities and obligations of the Borrower to the Bank and such deposits and other sums may be applied or set off against such liabilities and obligations of the Borrower to the Bank at any time, whether or not such are then due, whether or not demand has been made and whether or not other collateral is then available to the Bank.

 

2.2         Release of the Bank. The Borrower hereby confirms that as of the date hereof it has no claim, set-off, counterclaim, defense, or other cause of action against the Bank including, but not limited to, a defense of usury, any claim or cause of action at common law, in equity, statutory or otherwise, in contract or in tort, for fraud, malfeasance, misrepresentation, financial loss, usury, deceptive trade practice, or any other loss, damage or liability of any kind, including, without limitation, any claim to exemplary or punitive damages arising out of any transaction between the Borrower and the Bank. To the extent that any such set-off, counterclaim, defense, or other cause of action may exist or might hereafter arise based on facts known or unknown that exist as of this date, such set-off, counterclaim, defense and other cause of action is hereby expressly and knowingly waived and released by the Borrower. The Borrower acknowledges that this release is part of the consideration to the Bank for the financial and other accommodations granted by the Bank in this Agreement.

 

2.3         Costs and Expenses. The Borrower shall pay to the Bank on demand any and all costs and expenses (including, without limitation, reasonable attorneys' fees and disbursements, court costs, litigation and other expenses) incurred or paid by the Bank in establishing, maintaining, protecting or enforcing any of the Bank's rights or any of the obligations owing by the Borrower to the Bank, including, without limitation, any and all such costs and expenses incurred or paid by the Bank in defending the Bank's security interest in, title or right to, the Collateral or in collecting or attempting to collect or enforcing or attempting to enforce payment of the Loan.

 

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2.4         Indemnification. The Borrower shall indemnify, defend and hold the Bank and its directors, officers, employees, agents and attorneys (each an "Indemnitee") harmless against any claim brought or threatened against any Indemnitee by the Borrower or any guarantor or endorser of the obligations of the Borrower to the Bank, or any other person (as well as from attorneys' fees and expenses in connection therewith) on account of the Bank's relationship with the Borrower, or any guarantor or endorser of the obligations of the Borrower to the Bank (each of which may be defended, compromised, settled or pursued by the Bank with counsel of the Bank's election, but at the expense of the Borrower), except for any claim arising out of the gross negligence or willful misconduct of the Bank. The within indemnification shall survive payment of the obligations of the Borrower to the Bank, and/or any termination, release or discharge executed by the Bank in favor of the Borrower.

 

2.5         Severability. If any provision of this Agreement or portion of such provision or the application thereof to any person or circumstance shall to any extent be held invalid or unenforceable, the remainder of this Agreement (or the remainder of such provision) and the application thereof to other persons or circumstances shall not be affected thereby.

 

2.6         Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which shall constitute but one agreement. Borrower/Guarantor explicitly consents to the electronic delivery of the terms of the transaction evidenced by this instrument. Borrower/Guarantor agrees that its present intent to be bound by this instrument may be evidenced by transmission of digital images of signed signature pages via facsimile, email, SMS or other digital transmission and affirms that such transmission indicates a present intent to be bound by the terms of this instrument and is deemed to be valid execution and delivery as though an original ink or electronic signature. Borrower/Guarantor shall deliver original executed signature pages to Bank, but any failure to do so shall not affect the enforceability of this instrument. An electronic image of this instrument (including signature pages) shall be as effective as an original for all purposes.

 

2.7         Complete Agreement. This Agreement and the other Loan Documents constitute the entire agreement and understanding between and among the parties hereto relating to the subject matter hereof, and supersedes all prior proposals, negotiations, agreements and understandings among the parties hereto with respect to such subject matter.

 

2.8         Binding Effect of Agreement. This Agreement shall be binding upon and inure to the benefit of the respective heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, and shall remain in full force and effect (and the Bank shall be entitled to rely thereon) until released in writing by the Bank. The Bank may transfer and assign this Agreement and deliver the Collateral to the assignee, who shall thereupon have all of the rights of the Bank; and the Bank shall then be relieved and discharged of any responsibility or liability with respect to this Agreement and the Collateral. Except as expressly provided herein or in the other Loan Documents, nothing, expressed or implied, is intended to confer upon any party, other than the parties hereto, any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

 

2.9         Further Assurances. The Borrower will from time to time execute and deliver to the Bank such documents, and take or cause to be taken, all such other further action, as the Bank may request in order to effect and confirm or vest more securely in the Bank all rights contemplated by this Agreement (including, without limitation, to correct clerical errors) or to vest more fully in or assure to the Bank the security interest in the Collateral or to comply with applicable statute or law and to facilitate the collection of the Collateral (including, without limitation, the execution of stock transfer orders and stock powers, endorsement of promissory notes and instruments and notifications to obligors on the Collateral). To the extent permitted by applicable law, the Borrower authorizes the Bank to file financing statements, continuation statements or amendments without the Borrower's signature appearing thereon, and any such financing statements, continuation statements or amendments may be signed by the Bank on behalf of the Borrower, if necessary, and may be filed at any time in any jurisdiction. The Bank may at any time and from time to time file financing statements, continuation statements and amendments thereto which contain any information required by the Virginia Uniform Commercial Code, Titles 8.1-8.10 Code of Virginia as amended from time to time (the "Code") for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including whether the Borrower is an organization, the type of organization and any organization identification number issued to the Borrower. The Borrower agrees to furnish any such information to the Bank promptly upon request. In addition, the Borrower shall at any time and from time to time take such steps as the Bank may reasonably request for the Bank (i) to obtain an acknowledgment, in form and substance satisfactory to the Bank, of any bailee having possession of any of the Collateral that the bailee holds such Collateral for the Bank, (ii) to obtain "control" (as defined in the Code) of any Collateral comprised of deposit accounts, electronic chattel paper, letter of credit rights or investment property, with any agreements establishing control to be in form and substance satisfactory to Bank, and (iii) otherwise to insure the continued perfection and priority of the Bank's security interest in any of the Collateral and the preservation of its rights therein. The Borrower hereby constitutes the Bank its attorney-in-fact to execute, if necessary, and file all filings required or so requested for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; and such power, being coupled with an interest, shall be irrevocable until this Agreement terminates in accordance with its terms, all obligations of the Borrower to the Bank are irrevocably paid in full and the Collateral is released.

 

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2.10       Amendments and Waivers. This Agreement may be amended and the Borrower may take any action herein prohibited, or omit to perform any act herein required to be performed by it, if the Borrower shall obtain the Bank's prior written consent to each such amendment, action or omission to act. No delay or omission on the part of the Bank in exercising any right hereunder shall operate as a waiver of such right or any other right and waiver on any one or more occasions shall not be construed as a bar to or waiver of any right or remedy of the Bank on any future occasion.

 

2.11       Terms of Agreement. This Agreement shall continue in force and effect so long as any obligation of the Borrower to Bank shall be outstanding and is supplementary to each and every other agreement between the Borrower and Bank and shall not be so construed as to limit or otherwise derogate from any of the rights or remedies of Bank or any of the liabilities, obligations or undertakings of the Borrower under any such agreement, nor shall any contemporaneous or subsequent agreement between the Borrower and the Bank be construed to limit or otherwise derogate from any of the rights or remedies of Bank or any of the liabilities, obligations or undertakings of the Borrower hereunder, unless such other agreement specifically refers to this Agreement and expressly so provides.

 

2.12       Notices. Any notices under or pursuant to this Agreement shall be deemed duly received and effective if delivered in hand to any officer of agent of the Borrower or Bank, or if mailed by registered or certified mail, return receipt requested, addressed to the Borrower or Bank at the address set forth in this Agreement or as any party may from time to time designate by written notice to the other party; notwithstanding the foregoing notices to the Bank with respect to accounting and collateral release and notices to the Trustee pursuant to a Deed of Trust shall be sent to the Bank as follows: Attention: VP Loan Servicing, Loan Services, 6000 Atrium Way, Mt. Laurel NJ 08054.

 

2.13       Virginia Law. This Agreement shall be governed by the laws of the Commonwealth of Virginia without giving effect to the conflicts of laws principles thereof.

 

2.14       Reproductions. This Agreement and all documents which have been or may be hereinafter furnished by Borrower to the Bank may be reproduced by the Bank by any photographic, photostatic, microfilm, xerographic or similar process, and any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business).

 

2.15       Venue. Borrower irrevocably submits to the nonexclusive jurisdiction of any Federal or state court sitting in Virginia, over any suit, action or proceeding arising out of or relating to this Agreement. Borrower irrevocably waives to the fullest extent it may effectively do so under applicable law, any objection it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that the same has been brought in an inconvenient forum. Borrower irrevocably appoints the Secretary of State of the Commonwealth of Virginia as its authorized agent to accept and acknowledge on its behalf any and all process which may be served in any such suit, action or proceeding, consents to such process being served (i) by mailing a copy thereof by registered or certified mail, postage prepaid, return receipt requested, to Borrower’s address shown above or as notified to the Bank and (ii) by serving the same upon such agent, and agrees that such service shall in every respect be deemed effective service upon Borrower.

 

2.16       JURY WAIVER. BORROWER AND BANK EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, WAIVE (A) ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS AGREEMENT, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND (B) AGREE NOT TO SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CAN NOT BE, OR HAS NOT BEEN WAIVED. THE BORROWER CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.

 

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Executed under seal on this day August 13, 2020.

 

 

	 	
			Borrower:

			 

			Information Analysis Incorporated

			 

			 

			By:     /s/ Sandor Rosenberg                          

			Sandor Rosenberg, Chief Executive Officer

			

 

 

Accepted: TD Bank, N.A.

 

 

By:        /s/                                                           

Name:

Title:     Duly Authorized Representative

 

6dmrc-ex101_6.htm

 

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

 

 

THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into effective as of August 10, 2020 (the "Effective Date") at Beaverton, Oregon between DIGIMARC CORPORATION, an Oregon corporation ("Digimarc") with offices at 9405 SW Gemini Drive, Beaverton, Oregon 97008, and BRUCE DAVIS ("Executive").

 

WITNESSETH:

 

WHEREAS, Executive is Chairman of the Board and Chief Executive Officer of Digimarc;

 

WHEREAS, Digimarc and Executive wish to memorialize the terms of Executive's employment in a written agreement; and

 

WHEREAS, this Agreement shall replace Executive's prior employment agreement with Digimarc, dated September 1, 2017, which shall terminate as of the Effective Date and as described in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual promises and agreements contained herein, the parties hereto agree as follows:

 

1.DEFINITIONS.

 

For purposes of this Agreement, the following terms shall have the following meanings:

 

a. "Affiliate" shall mean any person or entity that directly or indirectly controls, is controlled by, or is under common control with Digimarc.  

 

b."Change of Control" shall mean: (i) any Person (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), other than a broker, bank, or trust company holding common stock of Digimarc for the account of customers who are not members of a "group" (within the meaning of Section 13(d) of the Exchange Act), becoming the record or beneficial owner of 50% or more of any class of Digimarc's voting equity securities, as disclosed by Digimarc's stock records or in any other way, including, without limitation, any filing with the Securities and Exchange Commission or otherwise; (ii) the purchase of 50% or more of any class of Digimarc's voting equity securities pursuant to any tender offer or exchange offer for shares of Digimarc's stock, other than one made by Digimarc; (iii) any merger, consolidation, reorganization or other transaction providing for the conversion or exchange of more than fifty percent (50%) of the outstanding shares of Digimarc's stock into securities of a third party, or cash, or property, or a combination of any of the foregoing; or (iv) the sale of substantially all of the assets of Digimarc.

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c."Code" shall mean the Internal Revenue Code of 1986, as amended, and the Treasury regulations promulgated thereunder.

 

d."Section 280G" shall mean Code Section 280G and the Treasury regulations promulgated thereunder or any similar or successor provision.

 

2.PERIOD OF EMPLOYMENT.

 

Digimarc agrees to employ Executive, and Executive agrees to be so employed, on the terms and conditions set forth herein for the period beginning on the Effective Date and ending on the third anniversary of the Effective Date, or on the termination date if earlier terminated as set forth herein ("Term").

 

3.DUTIES AND RESPONSIBILITIES.

 

a.Position.  Executive will serve as Chief Executive Officer of Digimarc in conformity with general management policies, guidelines and directions issued by the Board of Directors of Digimarc (the "Board"), and shall perform all services appropriate to that position as designated from time to time by the Board.  Executive will report directly to the Board, and will have general charge and supervision of those functions and such other responsibilities as are customary for his position.  As long as Executive serves as Chief Executive Officer, it is the intention of Digimarc that he will continue to be nominated to serve on the Board.  It is the current intention of the Board that Executive, if serving on the Board, will also serve as Chairman of Board; provided, however, that the foregoing statement of intent shall in no way derogate from the Board's right and power to act as it deems appropriate in the future.

 

b.Duties.  Executive will work exclusively for Digimarc on a full-time basis, devoting all of his time and attention during normal business hours to Digimarc's business.  Executive will perform his duties and responsibilities hereunder diligently, faithfully and loyally in order to facilitate the proper, efficient and successful operation of Digimarc's business.

 

c.Other Activity.  Except upon the prior approval of the Board, Executive (during the Term) shall not (i) accept any other employment; or (ii) engage, directly or indirectly, in any other business, commercial, or professional activity (whether or not pursued for pecuniary advantage) that is or may be competitive with Digimarc, that might create a conflict of interest with Digimarc, or that otherwise might interfere with the business of Digimarc or any Affiliate or the performance of Executive's duties and obligations to Digimarc.  So that Digimarc may be aware of the extent of any other demands upon Executive's time and attention, Executive shall disclose in confidence to Digimarc the nature and scope of any other business activity in which he is or becomes engaged during the Term.

 

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4.COMPENSATION AND BENEFITS.

 

As compensation for Executive's services, Executive will receive a cash salary, be eligible to receive an annual cash bonus, and participate in the Company's stock-based compensation plan, subject to the terms and conditions set forth in this Agreement. 

 

a.Salary.  During the Term, Executive will be paid an initial base salary of $785,000 per year until December 31, 2021, and for the remainder of the Term will be paid a base salary determined annually by the Board. All salary shall be payable in such installments as are consistent with Digimarc's general payroll practices as they may be amended, by Digimarc in its sole discretion, during the Term.  All compensation and comparable payments to be paid to Executive under this Agreement shall be less withholdings required by law.

 

b.Target Bonus. Beginning January 1, 2021, and in each fiscal year during the remainder of the Term, Executive will be eligible to receive an annual cash bonus based upon the achievement of performance goals determined by the Compensation Committee of the Board (the "Committee") in consultation with Executive. For the fiscal year ending December 31, 2021, the target bonus shall be $200,000 (the "Target Bonus") and the actual amount of cash bonus earned shall be, subject to meeting threshold performance levels (below which no bonus shall be earned), from 50% to a maximum of 150% of the Target Bonus. Any annual cash bonus payable under this Section 4.b will be paid within sixty (60) days after the end of the applicable fiscal year, subject to Executive’s continued employment with Digimarc through the end of the applicable fiscal year.  The Committee will have discretion to pay any annual cash bonus in the form of fully vested restricted stock units, with the number of such units calculated by dividing the cash amount of the bonus by the average price of a share of Digimarc's common stock for the twenty trading days preceding the payment date.

 

c.Long Term Incentives.  The Committee has approved the equity grants to Executive described in clause (i) and (ii) below, and will, within thirty (30) days of the Effective Date, approve the equity grant to Executive described in clause (iii) below, in each case subject to the terms and conditions of Digimarc's 2018 Incentive Plan and the vesting and any other terms as set forth in this Agreement.

 

i.45,000 time-based restricted stock units ("RSUs") that will vest in three equal annual installments over a three-year vesting period, the first installment to vest on the first anniversary of the Effective Date.

 

ii.105,000 time-based stock options that will vest in three equal annual installments over a three-year vesting period, the first installment to vest on the first anniversary of the Effective Date.

 

iii.A number of performance-based restricted stock units (the "PSUs") that is the greater of (x) 88,000, and (y) the number of PSUs with an aggregate fair value, as of the Effective Date, of approximately $1,250,000, with the specific number of shares 

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subject to the PSUs to be calculated using the valuation determined by a third-party valuation firm. The PSUs may be earned based on the achievement of certain increases during the Term in the ninety-trading-day average stock price of Digimarc common stock (the "Average Stock Price") in the following tranches: (A) Tranche 1, comprising one-quarter of the PSUs granted on the grant date, to be earned if the Average Stock Price increases to $25.00; (B) Tranche 2, comprising one-quarter of the PSUs granted on the grant date, to be earned if the Average Stock Price increases to $30.00; and (C) Tranche 3, comprising one-half of the PSUs granted on the grant date, to be earned if the Average Stock Price increases to $35.00. If earned based on achievement of the applicable performance goal, each tranche will then be subject to time-based vesting as follows: (A) Tranche 1 will vest and become payable on the later of (x) the date its performance goal is met and (y) the first anniversary of the Effective Date; (B) Tranche 2 will vest and become payable on the later of (x) the date its performance goal is met and (y) the second anniversary of the Effective Date; and (C) Tranche 3 will vest and become payable, if earned, on the third anniversary of the Effective Date. The PSUs will be deemed earned, and subject to time-based vesting, as to each tranche if the per-share purchase price paid in connection with a Change in Control equals or exceeds the Average Stock Price required for the respective tranche to be earned. Any PSUs that have not been earned by the third anniversary of the Effective Date shall be forfeited on that date. 

 

d.Flexible Time Off. Executive will be entitled to flexible time off consistent with that generally provided to other executives of Digimarc. 

 

e.Life Insurance. Digimarc shall promptly reimburse Executive for the premiums payable during the Term for a term life insurance policy, with Executive as beneficiary, that will pay Executive's estate a death benefit of $3,000,000, provided Executive requests such reimbursement and provides Digimarc with evidence reasonably satisfactory to Digimarc of the amount of such premiums and the fact that such premiums have been paid.  Such request must be made and such evidence provided no later than the January 31 immediately following the end of the calendar year in which Executive pays such premium.  (In lieu of reimbursement, Digimarc may, in its sole and absolute discretion, elect to pay such premiums directly to the insurance company.)  Executive agrees to use his best efforts to apply for and obtain such policy, including submitting to physical examinations and taking such other actions as may be necessary to obtain such policy.

 

f.Other Benefits. Except as specifically provided elsewhere in this Agreement, Digimarc will provide Executive with the same health, disability, retirement, death and other fringe benefits as are generally provided to other executives of Digimarc.  The amount and extent of benefits to which Executive is entitled shall be governed by the specific benefit plan, as it may be amended from time to time.  Digimarc reserves the ability, in its sole discretion, to adjust Executive's benefits under this Agreement provided that such adjustments generally apply to all executive officers.

 

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5.TERMINATION.

 

a.Executive's employment will terminate automatically upon Executive's death.

 

b.Executive's employment will terminate automatically on the last day of the calendar month in which Digimarc determines that Executive is permanently disabled.  For purposes of this Agreement, "permanent disability" shall be defined as disability due to illness, accident or otherwise that renders Executive unable to perform his regular duties for a period of more than three (3) months.

 

c.Digimarc may terminate Executive's employment under this Agreement at any time (i) immediately for Cause, or (ii) without Cause upon thirty (30) days written notice to Executive.  "Cause" means (i) any act of personal dishonesty by Executive in connection with his responsibilities as an officer or employee of Digimarc, (ii) Executive's conviction of a felony, (iii) any act by Executive which constitutes gross negligence or willful misconduct, (iv) any material violation by Executive of his employment duties provided that if such violation is curable, it has not been cured within (30) days after delivery to Executive of a written demand for cure, or (v) any act that would constitute a material violation of Digimarc's code of conduct or code of ethics or a material violation of any restrictive covenants contained in this Agreement or any other agreement between Digimarc and Executive or any Digimarc plan or program.  Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of a majority of the independent members of the Board (i.e., excluding Executive).

 

d.Executive may terminate his employment under this Agreement for Good Reason (as defined below) at any time upon thirty-one (31) days prior written notice to Digimarc.  "Good Reason" means any of the following events, if done without Executive's prior written consent:  (i) a material reduction in Executive's authority, duties or responsibilities; (ii) a material reduction in Executive's salary, other than in connection with a reduction of all executive salaries in comparable percentages or (iii) relocation of Executive's geographic work location to a location that is more than 50 miles from the Executive's geographic work location on the Effective Date, except for required travel in furtherance of Digimarc's business to the extent consistent with Executive's duties.  Notwithstanding any provision in this Agreement to the contrary, termination of employment by Executive will not be for Good Reason unless (i) Executive notifies Digimarc in writing of the existence of the condition which Executive believes constitutes Good Reason within ninety (90) days of the Executive having actual knowledge of the initial existence of such condition (which notice specifically identifies such condition), (ii) Digimarc fails to remedy such condition within thirty (30) days after the date on which it receives such notice (the "Remedial Period"), and (iii) Executive actually terminates employment during the sixty-day (60-day) period immediately following the expiration of the Remedial Period.

 

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e.Executive may otherwise voluntarily terminate his employment at any time upon thirty (30) days prior written notice to Digimarc.

 

6.EFFECTS OF TERMINATION.

 

a.If Executive's employment is terminated by reason of Executive's death or permanent disability under either Section 5.a or b of this Agreement, all Digimarc obligations under this Agreement will end except that, subject to Section 6.g of this Agreement, (i) Executive's unvested stock options and restricted stock units, including any PSUs earned and subject to time-based vesting,  that would have vested if Executive's employment with Digimarc had continued for an additional twenty-four (24) months following the termination date will immediately vest and become exercisable; (ii) Executive's right to exercise vested stock options will expire on the earliest of (A) the second anniversary of the date of death or termination due to disability, (B) the latest date the particular option could have expired by its original terms under any circumstances, or (C) the tenth anniversary of the original date of grant of the particular option; (iii) Digimarc will pay Executive any earned but unpaid annual cash bonus; and (iv) if Executive's employment is terminated by reason of Executive's death and Executive has been unable to obtain the life insurance policy on Executive's life as set forth in Section 4.e, Executive will receive salary continuation payments (at the salary rate in effect on the termination date) according to Digimarc's standard payroll schedule for the six (6) month period beginning immediately after Executive's termination date (and, for purposes of Code Section 409A, each such installment shall be treated as a separate and distinct payment).

 

b.If Digimarc terminates Executive for Cause or Executive voluntarily terminates his employment (except for a termination for Good Reason under Section 5.d of this Agreement), all Digimarc obligations under this Agreement will end except for payment of any Compensation payable under Section 4 of this Agreement for services performed prior to termination and reimbursement of properly authorized business expenses incurred by Executive prior to termination.

 

c.If Digimarc terminates Executive without Cause under Section 5.c of this Agreement or Executive terminates his employment for Good Reason under Section 5.d of this Agreement, in both cases other than following a Change of Control, all Digimarc obligations under this Agreement will end, except that, subject to Section 6.g of this Agreement, (i) Executive's unvested stock options and restricted stock units, including any PSUs earned and subject to time-based vesting, that would have vested if Executive's employment with Digimarc had continued for an additional twenty-four (24) months following the termination date will immediately vest and become exercisable; (ii) Digimarc will continue to pay salary to Executive for two years from the date of termination (at the salary rate in effect on the termination date) according to Digimarc's standard payroll schedule; (iii) Digimarc will pay Executive any earned but unpaid annual cash bonus; and (iv) if Executive and Executive's spouse and dependent children are eligible for and timely (and properly) elect COBRA continuation coverage under Digimarc's group health plan(s) pursuant to COBRA, Digimarc will pay the premium for 

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such coverage for a period of twenty-four (24) months following Executive's termination date or until Executive is no longer entitled to COBRA continuation coverage under Digimarc's group health plan(s), whichever period is shorter; provided, however, that Executive shall not be entitled to any of the benefits described in this Section 6.c of this Agreement if he breaches Sections 8 or 9 of this Agreement.  Subject to Section 6.g. of this Agreement, the compensation described in this Section 6.c (ii) will be paid according to Digimarc's standard payroll schedule from the date of termination, as if Executive had not been terminated, and, for purposes of Code Section 409A, each such installment shall be treated as a separate and distinct payment.  Executive's right to exercise vested stock options will expire on the earliest of (A) the first anniversary of the termination date, (B) the latest date the particular option could have expired by its original terms under any circumstances, or (C) the tenth anniversary of the original date of grant of the particular option.  Other than as set forth in this Section 6.c, Digimarc shall have no other obligations to Executive under this Agreement.

 

d.If within eighteen (18) months after a Change of Control, Digimarc terminates Executive without Cause under Section 5.c of this Agreement, or Executive terminates his employment for Good Reason under Section 5.d of this Agreement, then, all Digimarc obligations under this Agreement will end, except that, subject to Section 6.g of this Agreement, (i) Executive's unvested stock options and restricted stock units, including PSUs deemed earned and subject to time-based vesting, will immediately and fully vest and become exercisable or payable, (ii) Digimarc will continue to pay salary to Executive for two years from the date of termination (at the salary rate in effect on the termination date) according to Digimarc's standard payroll schedule, (iii) Digimarc will pay Executive any earned but unpaid annual cash bonus, and (iv) if Executive and Executive's spouse and dependent children are eligible for and timely (and properly) elect COBRA continuation coverage under Digimarc's group health plan(s) pursuant to COBRA, Digimarc will pay the premium for such coverage for a period of twenty-four (24) months following Executive's termination date or until Executive is no longer entitled to COBRA continuation coverage under Digimarc's group health plan(s), whichever period is shorter; provided, however, that Executive shall not be entitled to any of the benefits described in this Section 6.d if  he breaches Sections 8 or 9 of this Agreement.  Subject to Section 6.g of this Agreement, the compensation described in (ii) above will be paid according to Digimarc's standard payroll schedule from the date of termination, as if Executive had not been terminated, and, for purposes of Code Section 409A, each such installment shall be treated as a separate and distinct payment.  Executive's right to exercise vested stock options will expire on the earliest of (A) the first anniversary of the termination date, (B) the latest date the particular option could have expired by its original terms under any circumstances, or (C) the tenth anniversary of the original date of grant of the particular option.  Other than as set forth in this Section 6.d, Digimarc shall have no other obligations to Executive under this Agreement.  Solely for purposes of this Section 6.d, the Term shall be deemed to be extended to the date that is eighteen (18) months after a Change of Control that occurs within the original Term.

 

e.Digimarc makes no representations or warranties to Executive with respect to any tax, economic or legal consequences of this Agreement or any payments or other benefits 

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provided hereunder, including without limitation under Code Section 409A, and no provision of the Agreement shall be interpreted or construed to transfer any liability for failure to comply with Code Section 409A from Executive or any other individual to Digimarc or any of its affiliates.  Executive, by executing this Agreement, shall be deemed to have waived any claim against Digimarc and its affiliates with respect to any such tax, economic or legal consequences.  However, the parties intend that this Agreement and the payments and other benefits provided hereunder be exempt from the requirements of Code Section 409A to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise.  To the extent Code Section 409A is applicable to this Agreement (and such payments and benefits), the parties intend that this Agreement (and such payments and benefits) comply with the deferral, payout and other limitations and restrictions imposed under Code Section 409A.  Notwithstanding any provision of this Agreement to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intentions.  Without limiting the generality of the foregoing, and notwithstanding any provision of this Agreement to the contrary, with respect to any payments and benefits under this Agreement to which Code Section 409A applies, a termination of employment will not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of amounts or benefits upon or following a termination of employment unless such termination is also a "separation from service," as defined in Treas. Reg. Section 1.409A-1(h), after giving effect to the presumptions contained therein (and without regard to the optional alternative definitions available therein).  In addition, if Executive is a "specified employee," within the meaning of Code Section 409A(a)(2)(B)(i), at the time of his "separation from service," within the meaning of Code Section 409A(a)(2)(A)(i), then to the extent necessary to avoid subjecting Executive to the imposition of any additional tax under Code Section 409A, amounts that would otherwise be payable under this Agreement during the six-month period immediately following Executive's "separation from service," shall not be paid to Executive during such period, but shall instead be accumulated and paid to Executive (or, in the event of Executive's death, Executive's estate) in a lump sum on the first business day following the date that is six months after Executive's separation from service.  Moreover, the parties intend that this Agreement be deemed to be amended to the extent necessary to comply with the requirements of Code Section 409A and to avoid or mitigate the imposition of additional taxes under Code Section 409A, while preserving to the maximum extent possible the essential economics of Executive's rights under the Agreement.

 

f.If the Term ends as a result of the expiration of the Term on its scheduled end date without renewal, all Digimarc obligations under this Agreement will end except for payment of any Compensation payable under Section 4 of this Agreement for services performed prior to expiration, including any earned but unpaid annual cash bonus, and reimbursement of properly authorized business expenses incurred by Executive prior to expiration; provided, however, that if Executive's employment is thereafter terminated without Cause as defined in Section 5.c of this Agreement or Executive terminates his employment for Good Reason as defined in Section 5.d of this Agreement, in both cases 

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other than following a Change of Control (which is governed by Section 6.d of this Agreement), and subject to Section 6.g, (i) Executive's unvested stock options and restricted stock units, including any PSUs earned and subject to time-based vesting will immediately vest and become exercisable in full; (ii) Executive's right to exercise vested stock options will expire on the earliest of (A) the first anniversary of the employment termination date, (B) the latest date the particular option could have expired by its original terms under any circumstances, or (C) the tenth anniversary of the original date of grant of the particular option; and (iii) Digimarc will continue to pay salary to Executive for one year from the date of termination (at the salary rate in effect on the termination date) according to Digimarc's standard payroll schedule.

 

g.As a condition to receiving benefits under this Section 6 (other than Section 6.b), Executive (or, in the case of Executive’s death, Executive’s personal representative) must sign a general waiver and release (the "Release") in the form provided by the Digimarc, which waiver and release must become effective (i.e., Executive must have executed the Release and any revocation period specified in the Release must have expired without Executive revoking the Release) within sixty (60) days (or such shorter period specified in the Release) after the termination date, which form shall be substantially similar in coverage to the release contained in Section 10 of this Agreement and conditioned on Digimarc's provision of such benefits.  Digimarc shall provide Executive with the form of Release before, or as soon as practicable after, the termination date.  Failure of the Release to become effective within the period specified above will result in the forfeiture of any and all benefits under this Agreement.  The first installment of any severance benefits to which Executive may become entitled under this Section 6 will be paid by the Company to Executive on the first regularly scheduled payroll date following the date on which the Release becomes effective. Such first installment will include any severance amounts that would otherwise have been paid to Executive during the portion of the severance period between the date of termination and such initial installment date, with subsequent installments of the severance pay occurring as originally scheduled. Notwithstanding the foregoing, if the maximum period during which Executive can consider and revoke the Release begins in one calendar year and ends in the subsequent calendar year, then the initial installment of severance pay will not be made until the first regularly scheduled payroll date occurring after the later of (x) the date on which the Release becomes effective and (y) the first day of the subsequent calendar year.  Executive shall be responsible for paying the full amount of any COBRA premiums that become due during the portion of the severance period between the date of termination and such initial installment date, and the Company will reimburse Executive for such premiums on the initial installment date.

 

7.EXCISE TAXES.

 

a.Notwithstanding any other provision of this Agreement, in the event that Executive becomes entitled to receive or receives any payments, options, awards or benefits (including, without limitation, the monetary value of any non-cash benefits and the accelerated vesting of stock options) under this Agreement or under any other plan, agreement or arrangement with Digimarc, any person whose actions result in any change 

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described in Code Section 280G(b)(2)(A)(i) or any person affiliated with Digimarc or such person (collectively, the "Payments"), that may separately or in the aggregate constitute "parachute payments" within the meaning of Section 280G and Digimarc receives confirmation from an independent accounting firm or independent tax counsel appointed by Digimarc (the "Tax Advisor") that, but for this Section 7, any of the Payments will be subject to any excise tax pursuant to Code Section 4999 or any similar or successor provision (the "Excise Tax"), then the Company shall pay to Executive either (i) the full amount of the Payments or (ii) an amount equal to the Payments, reduced by the minimum amount necessary to prevent any portion of the Payments from being an "excess parachute payment" (within the meaning of Section 280G) (the "Capped Payments"), whichever of the foregoing amounts results in the receipt by Executive, on an after-tax basis, of the greatest amount of Payments notwithstanding that all or some portion of the Payments may be subject to the Excise Tax.  For purposes of determining the after-tax value of the Payments, (i) there shall be taken into account any Excise Tax and all applicable federal, state and local taxes required to be paid by Executive in respect of the receipt of the Payments and (ii) Executive shall be deemed to pay income taxes at the highest rate of federal income tax and the highest rate or rates of state and local income taxes in the state and locality of Executive's domicile for income tax purposes for the taxable year in which the Payments will be made, provided that the state and local income tax rate shall be determined assuming that such taxes are fully deductible for federal income tax purposes, and provided further that any phase-out of itemized deductions or other items shall be ignored.

b.All calculations and determinations under this Section 7, including application and interpretation of the Code and related regulatory, administrative and judicial authorities, shall be made by the Tax Advisor.  All determinations made by the Tax Advisor under this Section 7 shall be conclusive and binding on both Digimarc and Executive, and Digimarc shall cause the Tax Advisor to provide its determinations and any supporting calculations with respect to Executive to Digimarc and Executive.  Digimarc shall bear all fees and expenses charged by the Tax Advisor in connection with its services.  For purposes of making the calculations and determinations under this Section 7, after taking into account the information provided by Digimarc and Executive, the Tax Advisor may make reasonable, good faith assumptions and approximations concerning the application of Code Sections 280G and 4999.  Digimarc and Executive shall furnish the Tax Advisor with such information and documents as the Tax Advisor may reasonably request to assist the Tax Advisor in making calculations and determinations under this Section 7.

c.In the event that Section 7.a above applies and a reduction is required to be applied to the Payments thereunder, the Payments shall be reduced by the Company in its reasonable discretion in the following order: (i) reduction of any Payments that are subject to Code Section 409A on a pro-rata basis or such other manner that complies with Code Section 409A, as determined by the Company, and (ii) reduction of any Payments that are exempt from Code Section 409A.

8.TERMINATION OBLIGATIONS.

 

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a.Executive agrees that all property, including, without limitation, all equipment, tangible Proprietary Information (as defined below), documents, books, records, reports, notes, contracts, lists, computer disks (and other computer-generated files and data), and copies thereof, created on any medium and furnished to, obtained by, or prepared by Executive in the course of or incident to his employment, belongs to Digimarc and shall be returned promptly to Digimarc at the end of the Term.

 

b.All benefits to which Executive is otherwise entitled shall cease upon Executive's termination, unless explicitly continued either under this Agreement or under any specific written policy or benefit plan of Digimarc.

 

c.Effective at the end of the Term, Executive shall be deemed to have resigned from all offices and directorships then held with Digimarc or any Affiliate.

 

d.The representations and warranties contained in this Agreement and Executive's obligations under this Section 8 on Termination Obligations and Section 9 of this Agreement on Proprietary Information shall survive the termination of this Agreement.

 

e.Following any termination of this Agreement, Executive shall fully cooperate with Digimarc in all matters relating to the winding up of pending work on behalf of Digimarc and the orderly transfer of work to other executives of Digimarc.  Executive shall also cooperate in the defense of any action brought by any third party against Digimarc that relates in any way to Executive's acts or omissions while employed by Digimarc.

 

f.Prior to beginning any employment within two (2) years following the end of the Term, Executive shall first provide Digimarc with the name and address of his prospective employer so that Digimarc may provide the new employer with a copy of this Agreement.

 

9.PROPRIETARY INFORMATION AND COVENANT NOT TO

COMPETE.

 

a.Defined.  "Proprietary Information" is all information and any idea in whatever form, tangible or intangible, pertaining in any manner to the business of Digimarc, or any Affiliate, or its employees, clients, consultants, or business associates, which was produced by any employee of Digimarc in the course of his or her employment or otherwise produced or acquired by or on behalf of Digimarc.  All Proprietary Information not generally known outside of Digimarc's organization, and all Proprietary Information so known only through improper means, shall be deemed "Confidential Information."  Without limiting the foregoing definition, Proprietary and Confidential Information shall include, but not be limited to:  (i) formulas, teaching and development techniques, processes, trade secrets, computer programs, electronic codes, inventions, improvements, and research projects;  (ii) information about costs, profits, markets, sales, and lists of customers or clients;  (iii) business, marketing, and strategic plans; and (iv) employee personnel files and compensation information.  Executive should consult any Digimarc 

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procedures instituted to identify and protect certain types of Confidential Information, which are considered by Digimarc to be safeguards in addition to the protection provided by this Agreement.  Nothing contained in those procedures or in this Agreement is intended to limit the effect of the other.

 

b.General Restrictions on Use.  During the Term, Executive shall use Proprietary Information, and shall disclose Confidential Information, only for the benefit of Digimarc and as is necessary to carry out his responsibilities under this Agreement.  Following termination, Executive shall neither, directly or indirectly, use any Proprietary Information nor disclose any Confidential Information, except as expressly and specifically authorized in writing by Digimarc.  The publication of any Proprietary Information through literature or speeches must be approved in advance in writing by Digimarc.

 

c.Location and Reproduction.  Executive shall maintain at his work station and/or any other place under his control only such Confidential Information as he has a current "need to know."  Executive shall return to the appropriate person or location or otherwise properly dispose of Confidential Information once that need to know no longer exists.  Executive shall not make copies of or otherwise reproduce Confidential Information unless there is a legitimate business need for reproduction.

 

d.Prior Actions and Knowledge.  Executive represents and warrants that from the time of his first contact with Digimarc, he has held in strict confidence all Confidential Information and has not disclosed any Confidential Information, directly or indirectly, to anyone outside of Digimarc, or used, copied, published, or summarized any Confidential Information, except to the extent otherwise permitted in this Agreement.

 

e.Third-Party Information.  Executive acknowledges that Digimarc has received and in the future will receive from third parties their confidential information subject to a duty on Digimarc's part to maintain the confidentiality of this information and to use it only for certain limited purposes.  Executive agrees that he owes Digimarc and these third parties, during the Term and thereafter, a duty to hold all such confidential information in the strictest confidence and not to disclose or use it, except as necessary to perform his obligations hereunder and as is consistent with Digimarc's agreement with third parties.

 

f.No Competition.  In the interest of preventing the use or disclosure of Confidential Information in breach of the preceding subsections and in consideration for Digimarc agreeing to make the post-termination payments to Executive described in Section 6 of this Agreement,  Executive shall not, during the Term and for a period equal to the longer of (i) one (1) year or (ii) the period during which Executive is receiving severance payments under Section 6 of this Agreement following the end of the Term, for any reason, perform work for any of Digimarc's business competitors whether as an employee or as a consultant, and shall not serve as a director, partner, agent or shareholder of such competitor (except that Executive may hold less than 5% of the outstanding stock of any public company for investment purposes).

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g.Misuse of Confidential Information.  Executive agrees that for a period equal to the longer of (i) one (1) year or (ii) the period during which Executive is receiving severance payments under Section 6 of this Agreement following the end of the Term, he shall not, directly or indirectly, (i) divert or attempt to divert from Digimarc (or any Affiliate) any business of any kind in which it is engaged; or (ii) employ or recommend for employment any person employed by Digimarc (or any Affiliate), unless Executive can prove that any action taken in contravention of this subsection was done without the use in any way of Confidential Information.  

 

h.Interference with Business.  In order to avoid disruption of Digimarc's business, Executive agrees that for a period equal to the longer of (i) one (1) year or (ii) the period during which Executive is receiving severance payments under Section 6 of this Agreement following the end of the Term, he shall not, directly or indirectly, (i) solicit any customer of Digimarc (or any Affiliate) known to Executive during the Term to have been a customer; or (ii) solicit for employment any person employed by Digimarc (or any Affiliate).

 

10.RELEASE.

 

In consideration for Digimarc agreeing to make the post-termination payments to Executive, Executive hereby releases Digimarc and the predecessor Digimarc Corporation from which Digimarc was spun off in 2008 ("Old Digimarc") from any and all claims of any kind, known or unknown, arising out of or related to Executive's employment by Digimarc or Old Digimarc, excluding worker's compensation claims and claims for unemployment compensation, and agrees not to bring a claim or lawsuit based on or related to the released claims.  The claims Executive is releasing include, without limitation, all claims that Executive may have under each and every employment agreement entered into between Executive and each of Old Digimarc and Digimarc prior to the date of this Agreement, for breach of contract, for "torts," (civil wrongs or injuries), or under Title VII of the Civil Rights Act of 1964; the Age Discrimination in Employment Act, except that this Agreement does not release any claims under that Act that may arise after the signing of this Agreement; the Equal Pay Act; the Americans with Disabilities Act; and all other applicable federal, state or local laws.  The release Executive is giving releases not only all claims Executive may have against Digimarc and Old Digimarc, but also all claims Executive may have against their respective past and present shareholders, officers, directors, agents, employees, representatives, attorneys, parents, subsidiaries, affiliates, benefit plans, predecessors, successors, transferees and assigns.  It also releases such claims of anyone else Executive can bind in this Agreement, such as Executive's heirs and assigns.  Executive understands that Executive is releasing potentially unknown claims, and that Executive has limited knowledge with respect to some of the claims being released.  Executive agree that this release is fairly and knowingly made.  Executive assumes the risk of any mistake in entering into this Agreement.  Excluded are claims under this Agreement and any future claims under employee benefit plans in which Executive may have participated.  In addition, this 

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Agreement is not intended to release any claims which as a matter of law or public policy cannot be released.

11.NOTICES.

 

Any notice to be given hereunder by Digimarc to Executive will be deemed to be given if delivered to Executive in person, or if mailed to Executive, by certified mail, postage prepaid, return receipt requested, at his address last shown on the records of Digimarc.  Any notice to be given by Executive to Digimarc will be deemed to be given if delivered in person or by mail, postage prepaid, return receipt requested to the Chief Financial Officer at Digimarc's principal executive office, unless Executive or Digimarc will have duly notified the other party in writing of a change of address. If mailed, notice will be deemed to have been given when deposited in the mail as set forth above; provided, however, that solely for purposes of Section 5.d of this Agreement, Executive shall not be deemed to have given Digimarc notice of his termination for Good Reason (or of the event constituting Good Reason) until such time as Digimarc receives Executive's written notice thereof.

 

12.AMENDMENTS.

 

This Agreement will not be modified or discharged, in whole or in part, except by an agreement in writing signed by an executive officer of Digimarc other than Executive on the one hand, and Executive on the other hand.

 

13.ENTIRE AGREEMENT.

 

This Agreement, together with any and all other written agreement(s) made contemporaneously herewith and applicable options, restricted stock units and benefits plans of Digimarc, constitute the entire agreement between the parties with respect to Executive's employment by Digimarc from and after the Effective Date. The parties are not relying on any other representation or understanding with respect thereto, express or implied, oral or written. As of the Effective Date, this Agreement, as supplemented by such contemporaneous agreement(s), supersedes any prior employment agreement, written or oral, of Digimarc with respect to Executive, and including the Employment Agreement between Digimarc and Executive effective as of September 1, 2017; provided that the obligations set forth in Section 9.f of this Agreement are a continuing obligation running from the earliest date that Executive became subject to those obligations and any equity grants made under any prior agreement shall continue to vest according to their terms.

 

14.CAPTIONS.

 

The captions contained in this Agreement are for convenience of reference only and do not affect the meaning of any terms or provisions of this Agreement.

 

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15.BINDING EFFECT.

 

The rights and obligations of Digimarc hereunder will inure to the benefit of, and will be binding upon, Digimarc and its respective successors and assigns, and the rights and obligations of Executive hereunder will inure to the benefit of, and will be binding upon, Executive and his heirs, personal representatives and estate.  All references in this Agreement to "Digimarc" will be deemed to include its successors and assigns.

 

16.SEVERABLE PROVISIONS.

 

If any provision of this Agreement, or its application to any person, place, or circumstance, is held by an arbitrator or a court of competent jurisdiction to be invalid, unenforceable, or void, such provision shall be enforced to the greatest extent permitted by law, and the remainder of this Agreement and such provision as applied to other persons, places, and circumstances shall remain in full force and effect.

 

17.GOVERNING LAW.

 

This Agreement will be interpreted, construed, and enforced in all respects in accordance with the laws of the State of Oregon.

 

18.INTERPRETATION.

 

This Agreement shall be construed as a whole, according to its fair meaning, and not in favor of or against any party.  By way of example and not in limitation, this Agreement shall not be construed in favor of the party receiving a benefit nor against the party responsible for any particular language in this Agreement.  Captions are used for reference purposes only and should be ignored in the interpretation of the Agreement.

 

19.CONSIDERATION AND REVOCATION PERIODS.

 

a.Consideration Period.  In compliance with the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act, Executive has been advised to consult with counsel and has twenty-one (21) calendar days from the date the Agreement was given to him to consider this Agreement before signing it.  Executive may use as much or as little of this twenty-one (21) day period as he wishes before signing.  If Executive does not sign and return this Agreement to Digimarc within this twenty-one (21) day period, this Agreement will be null and void, and he will not receive any of the consideration described in this Agreement.

 

b.Revocation Period.  Executive has seven (7) calendar days after signing this Agreement to revoke it.  To revoke this Agreement after signing it, Executive must deliver a written notice of revocation to Roy Tucker, Perkins Coie LLP, 1120 NW Couch Street, 10th Floor, Portland, Oregon 97209, before the seven (7)-day revocation period expires.  If Executive revokes this Agreement during the revocation period, this Agreement will be null and void, and he will not receive any of the consideration 

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described in this Agreement.  If Executive does not timely revoke this Agreement, the Agreement shall become irrevocable by Executive.

 

20.EMPLOYEE ACKNOWLEDGEMENT.

 

Executive acknowledges that he has had the opportunity to consult legal counsel in regard to this Agreement, that he has read and understands this Agreement, that he is fully aware of its legal effect, and that he has entered into it freely and voluntarily and based on his own judgment and not on any representations or promises other than those contained in this Agreement.

 

 

[Signature Page Follows]

 

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement on August 10, 2020.

 

DIGIMARC CORPORATIONEXECUTIVE

 

 

/s/ Robert P. Chamness          ./s/ Bruce Davis                                 By:  Robert P. ChamnessBRUCE DAVIS

Its:  EVP, Chief Legal Officer & Secretary

[2020 Employment Agreement]

57775-0001/149080991.4

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