Document:

Exhibit 10.2

 

RESTRICTED STOCK AWARD AGREEMENT

 

THIS AGREEMENT (the “Agreement”) is made effective
as of July 22, 2008 (the “Grant Date”), between Sealy Corporation, a
Delaware corporation (hereinafter called the “Company”), and Lawrence Rogers,
an employee of the Company, hereinafter referred to as the “Grantee.”  Capitalized terms not otherwise defined
herein shall have the same meanings as in the Plan or the Management
Stockholder’s Agreement (each as defined below).

 

WHEREAS, the Compensation Committee of the
Corporation’s Board of Directors 
(hereinafter called the “Committee”) 
has approved the grant of shares of Common Stock, pursuant to the terms
and conditions of this Agreement (the “Restricted Stock Award”), which grant is
subject in its entirety to the Company’s shareholders (the “Shareholders”)
approval of an amendment (the “Amendment”) to the 2004 Stock Incentive Plan for
Key Employees of Sealy Corporation and Its Subsidiaries (the “Plan”) to permit
the grant of shares of Common Stock under the Plan;

 

WHEREAS, the Company desires to grant the Grantee
shares of Common Stock, pursuant to the terms and conditions of this Restricted
Stock Award, the Plan (the terms of which are hereby incorporated by reference
and made a part of this Agreement), and a Management Stockholder’s Agreement
entered into by and between the Company and the Grantee as of the date hereof
(the “Management Stockholder’s Agreement”);

 

WHEREAS, the Board has determined that it would be
to the advantage and best interest of the Company and its Shareholders to grant
the shares of Common Stock provided for herein to the Grantee as an incentive
for increased efforts during his employment with the Company, and has advised
the Company thereof and instructed the undersigned officer to grant said
Restricted Stock Award;

 

WHEREAS, the Restricted Stock Award is subject in
its entirety to the Shareholders approval of the Amendment, and, if such
Amendment is not approved by the Shareholders, the Restricted Stock Award will
be forfeited in its entirety without any consideration payable therefore to the
Grantee;

 

NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.     Grant
of Restricted Stock.  Subject to the
terms and conditions of the Plan, the Management Stockholder’s Agreement (and
the agreements incorporated by reference therein), and the additional terms and
conditions set forth in this Agreement, the Company hereby grants to the
Grantee 291,971  shares of Common Stock (hereinafter
called the “Restricted Stock).  The
Restricted Stock shall vest and become nonforfeitable in accordance with Section 2
hereof.

 

2.             Vesting.

 

(a)           Unless
otherwise provided in the Management Stockholder’s Agreement, so long as the
Grantee continues to be employed by the Company or its Subsidiaries through the
applicable vesting date, the Restricted Stock shall become vested as to
two-thirds of such shares on the second anniversary of the Grant Date, and the
remaining one-third of such shares on the third anniversary of the Grant Date; provided,
however, that, if prior to the third anniversary of 

 

1

 

the
Grant Date, (i) there occurs a Change in Control, one hundred percent
(100%) of such shares shall become vested or (ii) upon the termination of
Grantee’s employment without Cause by the Company or any of its Subsidiaries or
by the Grantee for Good Reason or due to his death or Permanent Disability (as
defined below), fifty percent (50%) of any unvested shares shall become
vested.  Any stock that becomes vested
pursuant to this Section 2(a) shall hereafter be referred to as “Vested
Restricted Stock.”  For purposes of this
Agreement, the terms “Cause”, “Good Reason” and “Permanent Disability” shall
have the meanings as defined under the Employment Agreement between the Grantee
and the Company dated July 22, 2008.

 

(b)           Notwithstanding
the above, if the Grantee’s employment with the Company or any of its
Subsidiaries is terminated for any reason by the Company or its Subsidiaries,
or by the Grantee, any Restricted Stock that has not yet become Vested
Restricted Stock or that does not as a result of such action become Vested
Restricted Stock pursuant to Section 2(a) above at such time shall be
forfeited by the Grantee without consideration therefor.

 

3.             Certificates.

 

(a)   Certificates evidencing the Restricted Stock shall be issued by
the Company and shall be registered in the Grantee’s name on the stock transfer
books of the Company promptly after the date hereof.  As a condition to the receipt of this
Restricted Stock Award, the Grantee shall deliver to the Company a stock power,
duly endorsed in blank, relating to the Restricted Stock.  No certificates shall be issued for
fractional shares.

 

(b)   As
soon as practicable following the date hereof, certificates for the Restricted
Stock shall be delivered to the Grantee or to the Grantee’s legal guardian or
representative along with the stock powers relating thereto.

 

4.     Rights
as a Stockholder.  The Grantee shall
be the record owner of the Restricted Stock unless or until such Restricted
Stock is forfeited pursuant to Section 2 or is otherwise sold or disposed
of as permitted under Section 6 of this Agreement, and as record owner
shall be entitled to all rights of a common stockholder of the Company
(including, without limitation, the payment of any dividends on the shares of
Restricted Stock).

 

5.     Legend
on Certificates.  The Restricted Stock
shall contain a legend stating that they are subject to transfer restrictions
and shall be subject to such stop transfer orders and other restrictions as the
Board may deem reasonably advisable under the Plan, the Management Stockholder’s
Agreement or the rules, regulations, and other requirements of the Securities
and Exchange Commission, any stock exchange upon which such Restricted Stock
are listed, any applicable federal or state laws and the Company’s Articles of
Incorporation and Bylaws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.

 

6.     Transferability.  The Restricted Stock may not at any time be
transferred, sold, assigned, pledged, hypothecated or otherwise disposed of
unless such transfer, sale, assignment, pledge, hypothecation or other
disposition complies with the provisions of this Agreement and the Management
Stockholder’s Agreement.

 

7.     Securities Laws.  The Company may require the Grantee to make
or enter into such written representations, warranties and agreements as the
Committee may reasonably request in order to comply with applicable securities
laws or with this Agreement.  The
granting 

 

2

 

of the
Restricted Stock hereunder shall be subject to all applicable laws, rules and
regulations and to such approvals of any governmental agencies as may be
required.

 

8.     Grantee’s
Continued Employment with the Company.  
Nothing contained in this Agreement or in any other agreement entered
into by the Company and the Grantee guarantees that the Grantee will continue
to be employed by the Company or any of its Subsidiaries for any specified
period of time.

 

9.     Change
in Capitalization.  If the Company
shall be reorganized, recapitalized or restructured, consolidated or merged
with another corporation, or otherwise undergo a significant corporate event, (a) the
Restricted Stock may be adjusted and (b) any stock, securities or other
property exchangeable for Common Stock pursuant to such reorganization,
recapitalization, restructuring, consolidation, merger or other corporate
event, shall be deposited with the Company and shall become subject to the
restrictions and conditions of this Agreement to the same extent as if it had
been the original property granted hereby, all pursuant to Sections 8 and 9 of
the Plan.

 

10.   Payment
of Taxes.   The Grantee shall have
full responsibility, and the Company shall have no responsibility, for
satisfying any liability for any federal, state or local income or other taxes
required by law to be paid with respect to such Restricted Stock; provided,
however, the Grantee shall be permitted to satisfy the minimum
withholding tax obligation with respect to such Restricted Stock by selling the
number of shares having an equivalent Fair Market Value (as defined under the
Plan) to the payment required to satisfy the tax obligation, and to the extent
applicable, the Company shall agree to waive any restrictions on the transfer
of such shares for this purpose.

 

11.   Limitation
on Obligations.  The Company’s
obligation with respect to the Restricted Stock granted hereunder is limited
solely to the delivery to the Grantee of shares of Common Stock on the date
when such shares are due to be delivered hereunder, and in no way shall the
Company become obligated to pay cash in respect of such obligation.  This Restricted Stock Award shall not be
secured by any specific assets of the Company or any of its Subsidiaries, nor
shall any assets of the Company or any of its subsidiaries be designated as
attributable or allocated to the satisfaction of the Company’s obligations
under this Agreement.  In addition, the
Company shall not be liable to the Grantee for damages relating to any delays
in issuing the share certificates to him (or his designated entities), any loss
of the certificates, or any mistakes or errors in the issuance of the
certificates or in the certificates themselves.

 

12.   Notices.  Any notice to be given under the terms of
this Agreement to the Company shall be addressed to the Company in care of its
Secretary, and any notice to be given to the Grantee shall be addressed to him
at the address given beneath his signature hereto.  By a notice given pursuant to this Section 12,
either party may hereafter designate a different address for notices to be
given to him.  Any notice that is
required to be given to the Grantee shall, if the Grantee is then deceased, be
given to the Grantee’s personal representative if such representative has
previously informed the Company of his status and address by written notice
under this Section 12.  Any notice
shall have been deemed duly given when enclosed in a properly sealed envelope
or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office
or branch post office regularly maintained by the United States Postal Service

 

13.   Governing
Law.  The laws of the State of
Delaware shall govern the interpretation, validity and performance of the terms
of this Agreement regardless of the law that might be applied under principles
of conflicts of laws.

 

3

 

14.   Restricted
Stock Subject to Plan and Management Stockholder’s Agreement.   The Restricted Stock shall be subject to all
terms and provisions of the Plan, to the extent applicable to the Restricted
Stock and, to the extent applicable to Vested Restricted Stock, the Management
Stockholder’s Agreement and the Sale Participation Agreement.   In the event of any conflict between this
Agreement and the Plan, the terms of the Plan shall control; provided, Section 3(c) of
the Plan to the contrary notwithstanding, solely for the purposes of this
Agreement Section 3(c) of the Plan shall be deemed modified by
disregarding the sentence: “All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Participants, the Company and all other interested persons.”  In the event of any conflict between this
Agreement or the Plan and the Management Stockholder’s Agreement or the Sale
Participation Agreement, the terms of the Management Stockholder’s Agreement or
the Sale Participation Agreement, as applicable, shall control.  For all purposes of the Management
Stockholder’s Agreement and Sale Participation Agreement, only Vested
Restricted Stock shall be considered “Stock” for purposes of the Management
Stockholder’s Agreement (except that no shares of Replacement Restricted Stock
shall be deemed to be “Stock” for purposes of Sections 5 and 6 of the Management
Stockholder’s Agreement), or “Common Stock” that is eligible to be included in
any Request (as defined in the Sale Participation Agreement) for purposes of
the Sale Participation Agreement.

 

15.   Signature
in Counterparts.  This Agreement may
be signed in counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first above written.

 

 

	
   

  	
  SEALY CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GRANTEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lawrence Rogers

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  3607 Gaston Road

  
	
   

  	
  Greensboro, North Carolina 27407

  

 

4EXHIBIT 10.4

 

CONFIDENTIAL PORTIONS OMITTED

 

COUNTERFEIT DETERRENCE SYSTEM

DEVELOPMENT AND LICENSE AGREEMENT

 

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

 

Between

 

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

 

and

 

BANK FOR INTERNATIONAL SETTLEMENTS,
created pursuant to the Hague Agreements of January, 1930, having its head
office at Centralbahnplatz 2, CH-4051 Basle, Switzerland (“BIS”)

 

Recitals

 

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

 

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

 

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

 

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

 

The CDS has [**].

 

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

 

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

 

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

 

 

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

 

1.                                    DEFINITIONS
AND PRINCIPLES OF INTERPRETATION

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

“[**]” means the
[**] of a [**];

 

“Digimarc Contract Authority”
means the President of Digimarc;

 

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

 

“Digimarc
Technology” means:

 

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

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

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

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

 

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

 

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

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

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

4.                                     slight changes to
[**]; or

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

 

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

 

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

 

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

 

 

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

 

[**];

 

[**];

 

[**];

 

“Effective Date”
means [**];

 

[**];

 

[**];

 

[**];

 

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

 

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

 

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

 

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

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

3.                                       names
and versions of development tools;

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

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

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

 

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

 

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

 

 

“Improvement” means
any change in the CDS Technology or the Technical Information made by or at the
direction of Digimarc after [**] which enhances, whether by improvement,
enhancement, correction, addition or otherwise, the properties, characteristics
or manufacture of the CDS including, for greater certainty, [**];

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

[**];

 

[**];

 

[**];

 

[**];

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

“Schedule” means a
schedule to this Agreement;

 

[**];

 

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

 

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

 

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

 

[**];

 

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

 

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

 

“Technical Information”
means all information including, without limitation, source code, programming
instructions, algorithms, software and other works of authorship, manufacturing
and technical data, drawings, specifications, instruction manuals, user
manuals, procedures, facilities, prices, suppliers’ lists and all other
information 

 

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

 

 

comprising or relating to the development of
the CDS Technology, or any part thereof, or the application of the CDS
Technology, or any part thereof, in the [**];

 

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

 

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

 

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

 

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

 

1.2                               Interpretation
- In this Agreement:

 

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

 

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

 

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

 

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

 

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

 

(a)                                this
Agreement, excluding Schedules;

 

(b)                               the
Schedules; and

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

	
  Schedule

  	
   

  	
  Description

  
	
  Schedule “A”

  	
   

  	
  System Description

  
	
  Schedule “B”

  	
   

  	
  [**]

  
	
  Schedule “C”

  	
   

  	
  [**]

  
	
  Schedule “D”

  	
   

  	
  [**]

  
	
  Schedule “E”

  	
   

  	
  Arbitration Agreement

  
	
  Schedule “F”

  	
   

  	
  BIS [**] BIS [**]

  
	
  Schedule “G”

  	
   

  	
  Digimarc Technology

  
	
  Schedule “H”

  	
   

  	
  Project Technology

  
	
  Schedule “I”

  	
   

  	
  [**]

  
	
  Schedule “J”

  	
   

  	
  Security Requirements

  
	
  Schedule “K-1”

  	
   

  	
  [**]

  
	
  Schedule “K-2”

  	
   

  	
  [**] - Non-[**]

  
	
  Schedule “L-1”

  	
   

  	
  [**]

  
	
  Schedule “L-2”

  	
   

  	
  [**] - Non-[**]

  
	
  Schedule “M”

  	
   

  	
  Escrow Agreement

  
	
  Schedule “N”

  	
   

  	
  Progress Reporting and Project Reviews

  
	
  Schedule “O”

  	
   

  	
  System Support Services Agreement

  
	
  Schedule “P”

  	
   

  	
  Fees for Integration Support and Verification Testing

  
	
  Schedule “Q”

  	
   

  	
  Training

  
	
  Schedule “R”

  	
   

  	
  Problem Report

  
	
  Schedule “S”

  	
   

  	
  Proforma Invoice

  
	
  Schedule “T”

  	
   

  	
  Form of Deed of Adherence

  
	
  Schedule “U”

  	
   

  	
  Form of Comfort Letter

  

 

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

 

 

2.                                    SCOPE
OF THE WORK

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.7                               Pending
acceptance, or express or implied rejection by BIS of the Offer as provided in
clause 2.4, the DLA Contract Authority may, in his or her sole discretion,
authorize Digimarc to perform all or part of the Work described in the Offer
(or other Work as agreed between the parties’ respective Contract
Authorities).  If BIS accepts the Offer
for [**], all such authorized 

 

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

 

 

Work will be deemed to form part of the Work [**] to which the Offer
relates.  In any event, BIS shall
compensate Digimarc for such authorized Work as though it were [**].

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

3.                                      PRICE
AND PAYMENT

 

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

 

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

 

3.3                                 The
amount which BIS is required to pay Digimarc for the [**] incurred in
performing the [**] and [**] in calendar year 1999 will not be greater than
[**].  The amount which BIS is required
to reimburse Digimarc for the [**] incurred in performing [**], respectively,
will not be greater than the estimates for that Work accepted by BIS pursuant
to the provisions of clause 2.4.  

 

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

 

 

Digimarc shall complete all relevant work notwithstanding that it is
unable to recover [**] incurred in relation thereto due to the operation of the
limits set out in this clause 3.3.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

4.                                    PROJECT
MANAGEMENT

 

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

 

4.2                               The
DLA Project Manager shall be responsible for coordinating fulfilment by BIS of
its obligations under this Agreement including the provision of all the general
information about [**] that Digimarc may reasonably require in order to perform
its obligations under this Agreement. 
The DLA Project Manager shall have no authority to amend this Agreement,
approve payments or approve or accept Deliverables or other Work or Proposals
on behalf of BIS, all of which actions shall be within the exclusive authority
of BIS.

 

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

 

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

 

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

 

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

 

(b)                               its
Project Manager.

 

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

 

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

 

4.7                               Digimarc
represents that all personnel assigned to do the Work will be employees of
Digimarc. Digimarc shall not engage any subcontractor other than the
subcontractors identified by Digimarc in writing to BIS before this Agreement
was executed to do any part of the Work without first obtaining the prior
written consent of the DLA Project Manager, who may give or 

 

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

 

 

withhold such consent in his or her sole discretion.  Digimarc undertakes that it shall obtain from
each subcontractor prior to permitting that subcontractor to do any part of the
Work a written undertaking that all Intellectual Property Rights in any Work
created by that subcontractor vest absolutely in Digimarc upon the date of
creation. Digimarc hereby warrants and represents that it has obtained such
undertakings from all subcontractors engaged in relation to the Work prior to the
date of execution of this Agreement.

 

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

 

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

 

5.                                      RESPONSIBILITIES
OF BIS

 

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

 

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

 

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

 

6.                                    CHANGES
TO THE WORK

 

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

 

6.2                                 On
making such a request or within three (3) Business Days after receiving
such a request from the DLA Project Manager, Digimarc shall inform the DLA
Project Manager of the amount, 

 

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

 

 

if any, which Digimarc intends to invoice BIS to investigate whether
the change can be made and the effect the change will have on the Statement of
Work and the [**] for [**].

 

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

 

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

 

6.5                                 Digimarc
shall not implement any change to the Work until the change is authorized in
writing by the DLA Contract Authority on behalf of BIS.

 

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

 

7.                                    APPROVAL
OF DELIVERABLES

 

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

 

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

 

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

 

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

 

8.                                    INTELLECTUAL
PROPERTY MATTERS

 

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

 

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

 

 

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

 

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

 

8.4                               Digimarc
hereby grants to BIS, effective upon the date specified in clause 8.5, the [**]
the Digimarc Technology and the Project Technology, and all Improvements
thereto, and the Technical Information pertaining to the Digimarc Technology,
the Project Technology and such Improvements, and to sublicense the use of the
Digimarc Technology and the Project Technology and such Improvements and
Technical Information to other Persons, for the purposes of [**] the System and
any such component thereof, and making the System and any component available
to others solely for [**].  On the
effective date of the grant of the license referred to above, BIS [**] copy and
use the Escrowed Materials for the purpose of exercising all rights granted
under the license and the Escrow Agent shall be deemed authorized to release
the Escrowed Materials to BIS.  The
expressions “[**]” as used in this clause 8.4, shall be deemed to refer to
[**].

 

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

 

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

 

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

 

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

 

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

 

8.6                               Digimarc
hereby grants to BIS, effective on the date specified in this clause, the [**]
the Digimarc Technology and the Project Technology and all Improvements
thereto, and the Technical Information pertaining to the Digimarc Technology,
the Project Technology and such 

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

9.                                    SECURITY

 

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

 

(a)                                [**]
BIS [**] BIS [**], BIS [**] BIS [**]

 

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

 

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

 

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

 

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

 

 

(a)                                  [**];
and

 

(b)                                 [**]

 

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

 

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

 

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

 

9.4                               For
the purposes of clauses 9.2 and 9.3:

 

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

 

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

 

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

 

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

 

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

 

(b)                                 has
granted a license as requested by the DLA Contract Authority under clause 2.8
or 2.9 in respect of, or has used, or permitted or suffered to be used, or
proposes to use or permit 

 

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

 

 

or suffer to be used, the [**] or the
Technical Information pertaining thereto subject of the license for any purpose
other than as permitted by this Agreement,

 

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

 

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

 

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

 

10.                             REPRESENTATIONS
AND WARRANTIES OF DIGIMARC

 

10.1                         Digimarc
represents, warrants and undertakes to BIS that from and after the Effective
Date:

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

10.2                         Digimarc
represents, warrants and undertakes to BIS that:

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

10.3                         Digimarc
represents, warrants and undertakes to BIS that:

 

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

 

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

 

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

 

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

 

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

 

11.                             REPRESENTATIONS
AND WARRANTIES OF THE BIS

 

11.1                         BIS
represents and warrants to Digimarc that:

 

(a)                                BIS
has full power and authority to enter into this Agreement;

 

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

 

 

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

 

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

 

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

 

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

 

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

 

12.                             CONFIDENTIALITY

 

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

 

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

 

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

 

12.4                         A
Recipient may, on a need to know basis, and only for the purposes described in
clause 12.1, give the other party’s Confidential Information to the Recipient’s
employees, authorized subcontractors or representatives provided that such
employee, subcontractor or representative shall have entered into a
non-disclosure agreement in respect of such Confidential Information in 

 

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

 

 

favour of the Discloser on terms materially similar to the provisions
of this clause 12.  For greater
certainty, BIS’ representatives shall include the DLA Contract Authority, the
DLA Project Manager and all representatives of members of [**].

 

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

 

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

 

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

 

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

 

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

 

The fact that Confidential Information, or any part thereof, can be
linked together by a search of publications and other information, followed by
a selection of a series of such items of knowledge from unconnected sources,
and fitting together those items of knowledge so as to duplicate or recreate
any item of Confidential Information, shall not be deemed to cause the
Confidential Information, or any part thereof, to be included within exceptions
(a), (b) or (c), above.

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

12.11                   General
attributes of the CDS may be disclosed in connection with promotion of the CDS
to the [**], and to customers or prospects in related markets; information
relating to the [**] Technology and the [**] Technology may be disclosed to [**]
and vendors of [**] subject to a nondisclosure agreement but in all such cases
Digimarc shall not disclose any information relating to the [**].  The existence and terms of this Agreement may
be disclosed to the parties’ professional advisors, to members of the[**], and
to Digimarc’s present shareholders, institutional and corporate investors, and
commercial and investment bankers, who have a reasonable need to know such
information subject to a non-disclosure agreement.

 

13.                             AUDIT
AND INSPECTION

 

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

 

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

 

 

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

 

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

 

14.                             DISPUTE
RESOLUTION

 

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

 

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

 

15.                             TERM
AND TERMINATION

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

(g)                               Digimarc
ceases or threatens to cease business.

 

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

 

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

 

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

 

15.4                         Notwithstanding
the foregoing, BIS has no right to terminate this Agreement for breach under
clause 15.3 if the breach consists of a failure by Digimarc to perform a
particular task the performance of which proves to be technically infeasible
provided that the DLA Project Manager has agreed with the Digimarc Project
Manager in writing before the task is commenced that the task may be
technically infeasible.

 

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

 

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

 

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

 

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

 

 

16.                             INTELLECTUAL
PROPERTY INDEMNIFICATION

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

17.                             FORCE
MAJEURE

 

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

 

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

 

18.                             NOTICES

 

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

 

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

 

	
  Mr. Bruce Davis

  President and CEO

  Digimarc Corporation

  One Centerpointe Drive

  Suite 500

  Lake Oswego, Oregon 97035 USA

  FAX: (503) 968-0219

  	
   

  	
  Mr. William Y. Conwell

  Klarquist, Sparkman, Campbell,

  Leigh & Whinston

  121 SW Salmon Street

  Suite 1600

  Portland, Oregon 97204 USA

  FAX: (503) 228-9446

  

 

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

 

	
  [**]Bank for International Settlements[**] 

  	
   

  	
  [**] 

  

 

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

 

 

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

 

19.                             MISCELLANEOUS PROVISIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

(a)                                any
wholly owned subsidiary of BIS;

 

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

 

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

 

(d)                               [**].

 

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

 

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

 

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

 

19.11                   Disclaimer of Agency. 
Nothing contained in this Agreement is intended or will be interpreted
so as to constitute the parties to this Agreement as partners or joint
venturers or as agents of each other. Neither party will have any express or
implied right or authority to assume or create any obligations on behalf of or
in the name of any other party or to bind any other party 

 

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

 

 

in any contract, agreement or undertaking with any third party. No
employee of a party shall be deemed or considered to be an employee of the
other party or of both parties.

 

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

 

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

 

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

 

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

 

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

 

	
  BANK FOR INTERNATIONAL

  SETTLEMENTS

  	
   

  	
  DIGIMARC CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature 

  	
   

  	
  Signature 

  
	
  Name: 

  	
   

  	
  Name:

  	
  Bruce Davis 

  
	
  Title: 

  	
   

  	
  Title:

  	
  President & CEO 

  
	
  Date

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature 

  	
   

  	
   

  
	
  Name: 

  	
   

  	
   

  
	
  Title: 

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  

 

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

 

 

AMENDMENT TO COUNTERFEIT DETERRENCE SYSTEM

DEVELOPMENT AND LICENSE AGREEMENT

 

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

 

Between

 

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

 

and

 

BANK FOR INTERNATIONAL SETTLEMENTS, created pursuant to the Hague Agreements of
January, 1930, having its head office at Centralbahnplatz 2, CH-4051 Basle,
Switzerland ( “BIS”)

 

Recitals

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

	
  BANK FOR INTERNATIONAL

  SETTLEMENTS

  	
   

  	
  DIGIMARC CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature 

  	
   

  	
  Signature 

  
	
  Name: 

  	
   

  	
  Name:

  	
  Scott Carr

  
	
  Title: 

  	
   

  	
  Title:

  	
  Vice President and General Manager,

  
	
  Date

  	
   

  	
   

  	
  Government and Bank Programs

  
	
   

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature 

  	
   

  	
   

  
	
  Name: 

  	
   

  	
   

  
	
  Title: 

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  

 

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

 

 

AMENDMENT NUMBER TWO TO THE COUNTERFEIT
DETERRENCE SYSTEM

DEVELOPMENT AND LICENSE AGREEMENT

 

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

 

Between

 

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

 

and

 

BANK FOR INTERNATIONAL SETTLEMENTS,
created pursuant to the Hague Agreements of January, 1930, having its head
office at Centralbahnplatz 2, CH-4051
Basel, Switzerland ( “BIS”)

 

Recitals

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

	
  BANK FOR INTERNATIONAL

  SETTLEMENTS

  	
   

  	
  DIGIMARC CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature 

  	
   

  	
  Signature 

  
	
  Name: 

  	
   

  	
  Name:

  	
  Scott Carr

  
	
  Title: 

  	
   

  	
  Title:

  	
  Vice President and General Manager,

  
	
  Date

  	
   

  	
   

  	
  Government and Bank Programs

  
	
   

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature 

  	
   

  	
   

  
	
  Name: 

  	
   

  	
   

  
	
  Title: 

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  

 

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

 

 

AMENDMENT NUMBER THREE TO THE
COUNTERFEIT DETERRENCE SYSTEM

DEVELOPMENT AND LICENSE AGREEMENT

 

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

 

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

 

and

 

BANK FOR INTERNATIONAL SETTLEMENTS,
created pursuant to the Hague Agreements of January, 1930, having its head
office at Centralbahnplatz 2, CH-4051
Basle, Switzerland (“BIS”)

 

Recitals

 

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

 

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

 

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

 

1.                                    DEFINITIONS
AND PRINCIPLES OF INTERPRETATION

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

Add new Definitions to clause 1.1 as follows:

 

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

 

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

 

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

 

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

 

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

 

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

 

1.2                             Interpretation:

 

Clause 1.2.5 shall be replaced with:

 

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

 

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

 

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

 

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

 

 

c)                                    the Schedules; and

 

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

 

Add
new clause 1.2.9 as follows:

 

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

 

1.4                             Schedules

 

In clause 1.4,

 

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

 

Add the following new schedules:

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

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

Schedule X described as [**] Expenditures.

 

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

 

2.                                    SCOPE
OF THE WORK

 

Add new clauses to clause 2 as follows:

 

2.17                         BIS
has accepted Digimarc’s Offer to perform the Phase [**] Work in accordance with
the “Phase [**] Statement of Work.” 
Digimarc shall perform the Phase [**] Work 

 

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

 

 

in accordance with the “Phase [**] Statement of Work.”
BIS has no right to terminate this Agreement during Phase [**], unless BIS
terminates this Agreement under clause 15 before Digimarc completes the Phase
[**] Work.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

3.                                    PRICE
AND PAYMENT

 

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

 

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

 

Add new clauses to clause 3 as follows:

 

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

 

3.12.1                Unless BIS terminates this Agreement
under clause 15 before Digimarc completes the Phase [**] Work or terminates
[**] before Digimarc completes [**] Phase [**] (as 

 

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

 

 

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

 

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

 

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

 

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

 

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

 

3.16                         During the [**]-month period
after notice under clause 3.14, or, if clause 3.18 applies, BIS may request,
(but it is not obliged to do so) and Digimarc will, if requested by BIS, (a) at
BIS’s sole discretion, cease or reduce the scope of the Work and/or Services
remaining to be completed at the date of BIS giving notice and/or, (b) if
reasonably possible, provide services relating to Work and/or Services, including
work or services 

 

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

 

 

relating to the wind down or transfer of the Work and/or Services to
BIS and/or any replacement provider as reasonably directed by the DLA Project
Manager, commensurate with the payment obligations of the BIS in accordance
with clause 3.14.  Such requested work or
services will be deemed to form part of the Work under this Agreement and/or Services
under the [**] Agreement, as applicable. 
If, when operating under this clause, BIS requests Digimarc to cease or
reduce the scope of the Work and/or Services remaining to be completed, BIS’
payment obligations under clauses 3.12.1, 3.14 or 3.18, as applicable, will
still be due.  Sums due under such
obligations will be invoiced monthly in arrears.

 

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

 

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

 

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

 

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

 

3.20                         Unless authorized in this
Agreement, [**] or otherwise agreed in writing by BIS, the [**] under this
Agreement and the [**] Agreement shall not be greater than an amount equal to
the amount listed in Schedule X and the [**] under this Agreement and the [**]
Agreement shall not be greater than an amount equal to the amount listed in
Schedule X.  Such [**] limitations of
this clause 3.20 do not apply to costs or charges 

 

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

 

 

identified in clauses 3.8, 3.21, 6.5, 8.6 and 8.8 of this Agreement or
in clauses 3.6, 6.5, 8.2, 15.7 and 19 of the [**] Agreement.  The [**] limitations of this clause may, in
some cases, not apply to costs or charges identified in clauses 5.3 and 13.1 of
this Agreement or in clauses 5.3 and 13.1 of the [**] Agreement.

 

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

 

5.                                    RESPONSIBILITIES
OF BIS

 

Clause 5.3 shall be replaced as follows:

 

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

 

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

 

 

clause 5.3 will have on the applicable [**] Plans or Statements of
Work. If after Digimarc describes the effect the costs and delay under this
clause 5.3 will have on the applicable [**] Plans or Statements of Work, the
DLA Contract Authority requests such a change, Digimarc will implement such
change in [**] Plans and Statements of Work so that Digimarc remains within the
[**] limitations.  This clause 5.3 sets
forth Digimarc’s only remedy for a delay by BIS in complying with any such
obligation.

 

6.                                    CHANGES
TO THE WORK

 

Clause 6 shall be replaced as follows:

 

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

 

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

 

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

 

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

 

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

 

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

 

 

commensurate relief in the manner and to the
extent as specified in the authorized change from prior commitments under the
Statements of Work and/or the [**] Plans.

 

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

 

8.                                    INTELLECTUAL
PROPERTY MATTERS

 

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

 

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

 

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

 

8.8                               From
time to time during the Term, on no less than five (5) Business Days prior
written notice by the DLA Project Manager, Digimarc shall, at Digimarc’s
premises, present representatives of the Escrow Agent with all the material, in
any form, in 

 

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

 

 

Digimarc’s possession or control which contains or
describes the Technical Information pertaining to the Digimarc Technology and
the Project Technology.  The
representatives may identify any or all of such material and Digimarc shall arrange,
at the expense of BIS, for a complete, accurate and up-to-date copy of the
selected material to be made and sent to the Escrow Agent within five (5) Business
Days of the selection being made for deposit under the terms of the Escrow
Agreement.

 

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

 

Add new clauses to clause 8 as follows:

 

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

 

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

 

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

 

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

 

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

 

8.19                         Digimarc
hereby confirms and agrees that any [**] to BIS pursuant to clause 8.6 applies,
without any additional payments over and above that in clauses 8.6 and 8.18, to
Digimarc Technology and the Project Technology and all Improvements thereto,
and the 

 

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

 

 

Technical Information pertaining to the Digimarc
Technology, the Project Technology and such Improvements created between January 1,
[**] and the earlier of the completion of the Phase [**] Work and the
termination of this Agreement. The [**] confirmed by this clause 8.19 is
effective when both the [**] under clauses 8.6 and 8.17 take effect.

 

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

 

10.                             REPRESENTATIONS
AND WARRANTIES OF DIGIMARC

 

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

 

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

 

11.                               REPRESENTATIONS
AND WARRANTIES OF THE BIS

 

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

 

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

 

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

 

12.                             CONFIDENTIALITY

 

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

 

12.4                         A
Recipient may, on a need to know basis, and only for the purposes described in
clause 12.1, give the other party’s Confidential Information to the Recipient’s
employees, authorized subcontractors or representatives provided that such
employee, subcontractor 

 

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

 

 

or representative shall have entered into a
non-disclosure agreement in respect of such Confidential Information in favour
of the Discloser on terms requiring at least [**] years of confidentiality from
the date of disclosure of such Confidential Information but that are in all
other respects materially similar to the provisions of this clause 12.  For greater certainty, BIS’ representatives
shall include the DLA Contract Authority, the DLA Project Manager and all
representatives of members of [**].

 

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

 

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

 

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

 

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

 

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

 

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

 

 

13.                               AUDIT
AND INSPECTION

 

                                                Clause
13.1 shall be replaced as follows:

 

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

 

14.                               DISPUTE
RESOLUTION

 

                                                Clause
14.2 shall be replaced as follows:

 

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

 

15.                               TERM
AND TERMINATION

 

                                                Clauses
15.6 and 15.7 shall be replaced as follows:

 

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

 

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

 

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

 

 

18.                               NOTICES

 

                                                Clause
18.2 shall be replaced as follows:

 

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

 

	
  Mr. Scott Carr

  	
   

  	
  or

  	
   

  	
  Mr. William Y. Conwell

  
	
  Vice President and General Manager,

  	
   

  	
   

  
	
  Government and Bank Programs

  	
   

  	
  Vice President, Intellectual Property

  
	
  Digimarc Corporation

  	
   

  	
  Digimarc Corporation

  
	
  19801 SW 72nd Avenue

  	
   

  	
  19801 SW 72nd Avenue

  
	
  Suite 100

  	
   

  	
  Suite 100

  
	
  Tualatin, Oregon 97062 USA

  	
   

  	
  Tualatin, Oregon 97062 USA

  
	
  FAX: (503) 885-9880

  	
   

  	
  FAX: (503) 885-9880

  
	
   

  	
   

  	
   

  

19.                               MISCELLANEOUS
PROVISIONS

 

                                                Clause
19.15 shall be replaced as follows:

 

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

 

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

 

	
  BANK FOR INTERNATIONAL

  SETTLEMENTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature 

  	
   

  	
  Signature 

  
	
  Name:

  	
   

  	
  Name: 

  
	
  Title: 

  	
   

  	
  Title: 

  
	
  Date

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  DIGIMARC CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature 

  	
   

  	
   

  
	
  Name:

  	
  Paul Gifford 

  	
   

  	
   

  
	
  Title:

  	
  President 

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  	
   

  

 

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

 

 

AMENDMENT NUMBER FOUR TO THE
COUNTERFEIT DETERRENCE SYSTEM

DEVELOPMENT AND LICENSE AGREEMENT

 

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

 

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

 

and

 

BANK FOR INTERNATIONAL SETTLEMENTS,
created pursuant to the Hague Agreements of January, 1930, having its head
office at Centralbahnplatz 2, CH-4051 Basel, Switzerland (“BIS”)

 

Recitals

 

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

 

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

 

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

 

1.                                      DEFINITIONS AND PRINCIPLES OF INTERPRETATION

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Delete “Work” and replace with “Services” means the services required to be performed by
Digimarc as authorized by BIS in the Planning Process set out in Section 2.  Digimarc shall provide all development,
maintenance and [**] services related to the 

 

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

 

 

CDS, including (a) acting as [**] the BIS; (b) any tasks
required to be performed to complete and deliver the [**] (c) any task to
be performed by Digimarc for and any item to be delivered by Digimarc to [**]
as such tasks and items are identified in the [**] Plan for that [**]; and (d) other
services reasonably necessary to comply with its obligations under this
Agreement.

 

Add new definitions to clause 1.1 as follows:

 

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

 

[**]

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“[**]

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

“[**]” means the
[**]; and

 

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

 

Section 1.2                                   Interpretation

 

Clause 1.2.5 shall be replaced with:

 

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

 

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

 

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

 

c)                                      the
Schedules excluding the [**] Plans;

 

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

 

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

 

Replace clause 1.2.9 as follows:

 

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

 

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

 

 

(b)  The changes in this Fourth Amendment are referenced by the
clauses as they appear in the Agreement and such changes shall not apply to the
interpretation of any part of the Agreement relating to any events, acts or
omissions occurring prior to 1 January [**] unless such events, acts or
omissions are relevant to any event, act or omission occurring on and after
that date.  Unless expressly modified,
superseded or replaced by this Fourth Amendment, each term of the Agreement as
amended by the First, Second or Third Amendment remains in full force and
effect.

 

1.3                               Applicable
Law

 

Clause 1.3 shall be replaced as follows:

 

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

 

1.4                               Schedules

 

                                                In
clause 1.4,

 

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

 

Add the following new schedules:

Schedule Y, described as [**] Plan;

Schedule Z, described as [**] Team;

Schedule AA, described as [**] Personnel;

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

Schedule CC, described as Project Indicators.

 

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

 

2.                                      SCOPE
AND DURATION OF THE SERVICES

 

                                                Clause 2.15 shall be replaced as follows:

 

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

 

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

 

 

Add new clauses to clause 2 as follows:

 

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

 

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

 

2.28                           In the event that the [**] and Digimarc are unable to mutually agree on
the pricing of a given task(s) proposed in a Statement of Work or [**]
Plan, the matter will be escalated as
follows:  (1) to the [**] Project Director and the President of
Digimarc Watermarking Solutions, (2) to the [**] and the President of Digimarc Corporation,
and (3) ultimately to an agreed upon third party expert who is qualified
by education and training to pass upon the particular matter to be
decided.  The dispute resolution process 

 

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

 

 

provided for in this clause 2.28 is
non-binding.  If the parties do not
accept the expert’s decision, either party may initiate the arbitration process
in accordance with Clause 14.

 

2.29 
Phase [**] shall
commence on 1 January 2009 unless
BIS notifies Digimarc in writing
on or before 31 December 2007 that it is not exercising its option for
Phase [**] or unless Phase [**] is
terminated prior to 31 December 2008.  Assuming that BIS exercises its
option for Phase [**] Phase [**] shall commence on 1 January 2012 unless
BIS notifies Digimarc in writing on or before 31 December 2010 that it is
not exercising its option for Phase [**] or unless Phase [**] is terminated
prior to 31 December 2011.

 

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

 

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

 

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

 

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

 

 

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

 

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

 

3.                                      PRICE
AND PAYMENT

 

Replace clause 3.7 as follows:

 

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

 

Add new clauses to clause 3 as follows:

 

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

 

3.23                           If BIS terminates this Agreement in accordance with Clause 15, Digimarc shall be
reimbursed for all Services performed through the date of termination and for
any transition services provided after the date of termination in accordance
with Clause 2.32.  For greater certainty,
BIS’s obligation to pay the [**] for a given year (as determined in 

 

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

 

 

accordance with the Planning Process) is
subject to Digimarc having performed all of its obligations under this
Agreement relating to the performance of Services.

 

4.                                      PROJECT
MANAGEMENT

 

                                                Replace Section 4 as follows:

 

4.1                                 The [**] Project Director shall be responsible for coordinating fulfillment by BIS
of its obligations under this Agreement
including the provision of all the general information about [**] that Digimarc
may reasonably require in order to perform its obligations under this Agreement
and directing Digimarc in respect of prioritizing effort and timing of Services
in relation to any [**] in
accordance with the agreed upon [**] Plans and changes thereto.  The [**]
Project Director shall have no
authority to amend this Agreement, approve payments or approve or accept
Deliverables or other Services or proposals on behalf of BIS, all of which action shall be within the
exclusive authority of the BIS.

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

(a)                                  any employee of Digimarc or its authorized
subcontractors assigned to do any part of the Services if the employee or
subcontractor is critical to completion of the Services by Digimarc in
accordance with this Agreement or the applicable [**] Plan.  “Critical”
means that the applicable Services cannot be completed by Digimarc without such
person; or

 

(b)                                 its Project Director.

 

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

 

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

 

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

 

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

 

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

 

 

Director shall immediately bring the issue to
the attention of the other party’s Project Director.

 

5.                                      RESPONSIBILITIES
OF BIS

 

Clauses 5.1 and 5.3 shall be replaced as
follows:

 

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

 

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

 

6.                                      CHANGES
TO THE SERVICES

 

Clause 6.1 shall be replaced as follows:

 

6.1                                 BIS
or Digimarc may request a change to the
Statements of Work or the [**] Plans
from time to time by submitting a request in writing to the other party’s
Project Director.  Such changes directed
by BIS may include allocating
personnel other than the 

 

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

 

 

Project Director to provide development
and/or [**] Services in
accordance with clause 4.5.  Any such
request will indicate the nature of the new work to be performed, and indicate
the desired number and optimum skill set of the personnel to be redirected, in
a form sufficient for Digimarc to investigate the effect of the change.

 

7.                                      PERFORMANCE
OF SERVICES

 

                                                Add new clauses to clause 7 as follows:

 

7.3                                 If any part of the [**] Services have not been performed in
accordance with this Agreement and Digimarc receives a [**] Problem Report from the [**] Project Director, Digimarc shall at its own
cost and expense, without charge to BIS[**] and in the fastest time reasonably practicable, but no later than sixty
(60) days after receipt of a [**] Problem Report from the [**] Project Director, ensure, by taking all steps reasonably necessary, that
the relevant part of the Services is re-performed or corrected in compliance
with this Agreement.

 

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

 

8.                                      INTELLECTUAL
PROPERTY MATTERS

 

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

 

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

 

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

 

8.17                           Digimarc
hereby confirms and agrees that a) [**] to BIS by clause 8.4 applies, effective
upon the date specified in clause 8.18, to Digimarc Technology and the Project
Technology and all Improvements, and the Technical Information pertaining to
the Digimarc Technology, the Project Technology and such Improvements, created
between January 1, [**] and December 31, [**] and to Digimarc
Technology and the Project Technology and all Improvements, and the Technical
Information pertaining to the Digimarc Technology, the Project Technology and
such Improvements, created on an on-

 

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

 

 

going basis under any subsequent Statement of Work or [**] Plan
approved under clause 2.26; and b) the expressions [**] as used in clause 8.4,
shall be deemed to include [**].

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

Add new clauses to clause 8 as follows:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

10.                               REPRESENTATIONS
AND WARRANTIES OF DIGIMARC

 

Add new subclauses to clause 10.1 as follows:

 

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

 

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

 

11.                               REPRESENTATIONS
AND WARRANTIES OF THE BIS

 

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

 

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

 

12.                               CONFIDENTIALITY

 

Clause 12.9 shall be replaced as follows:

 

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

 

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

 

 

Clause 12.11 shall be replaced as follows:

 

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

 

15.                               TERM AND TERMINATION

 

Clause 15.6 shall be replaced as follows:

 

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

 

18.                               NOTICES

 

Clause 18.2 shall be
replaced as follows:

 

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

 

	
  Mr. J. Scott Carr

  	
   

  	
  Mr. Robert Chamness

  
	
  President, Digimarc Watermarking

  	
   

  	
  Vice President and General Counsel

  
	
  Solutions

  	
   

  	
  Digimarc Corporation

  
	
  9405 SW Gemini Drive

  	
   

  	
  9405 SW Gemini Drive

  
	
  Beaverton, Oregon 97008 USA

  	
   

  	
  Beaverton, Oregon 97008 USA

  
	
  FAX: (503) 469-4777

  	
   

  	
  FAX: (503) 469-4777

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Digimarc Project Director

  	
   

  	
   

  
	
  Digimarc Corporation

  	
   

  	
   

  
	
  9405 SW Gemini Drive

  	
   

  	
   

  
	
  Beaverton, Oregon 97008 USA

  	
   

  	
   

  
	
  FAX: (503) 469-4777

  	
   

  	
   

  

 

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

 

 

Clause 18.3 shall be replaced as follows:

 

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

 

Bank for International
Settlements                                                           [**]

 

With a copy to:

 

[**]

 

Clause 18.4 shall be replaced as follows:

 

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

 

19.                               MISCELLANEOUS PROVISIONS

 

Clause 19.12 shall be replaced as follows:

 

19.12                     The
parties agree that from time-to-time it will be beneficial to both parties to
issue press releases and other public announcements concerning benefits arising
from the [**] of the CDS.  Each party
agrees to submit such releases or announcements for prior approval by the other
party if the name of the other party is mentioned, which approval may be
withheld by the other party in its sole discretion.  Any Digimarc press releases and public
announcements that mention CDS or [**] must be pre-approved by the [**] Project
Director.

 

Clause 19.15 shall be replaced as follows.

 

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

 

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

 

 

20.                               INTELLECTUAL
PROPERTY INDEMNIFICATION [**]

 

Add new clause 20 as follows:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

b)                                     BIS has the
option, at its sole discretion, to terminate the IP Indemnification obligations
of Digimarc under this clause 20 effective June 30, [**] by providing
Digimarc with written notice by March 31, [**].   Upon termination of this clause 20, Digimarc
shall [**] BIS [**] and BIS shall arrange for [**] covered by this clause 20
except that if [**], in accordance with clause 20, [**].

 

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

 

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

 

BANK
FOR INTERNATIONAL SETTLEMENTS

 

	
  Signature:

  	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  Date:

  

 

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

 

 

DIGIMARC
CORPORATION

 

	
  By:

  	
   

  	
   

  

 

	
  Name:

  	
  J. Scott Carr

  
	
   

  	
   

  
	
  Title:

  	
  President, Digimarc Watermarking Solutions

  
	
   

  	
   

  
	
  Date:

  	
   

  

 

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

 

 

SCHEDULE “A”

 

DIGITAL COUNTERFEIT DETERRENCE SYSTEM
DESCRIPTION

 

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

 

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

 

[**]

 

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

 

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

 

2.0                               FUNCTIONAL
DESCRIPTION OF THE CDS

 

                                                The
CDS is comprised of the following three subsystems:

 

1.                                       [**]

2.                                       [**]

3.                                       [**]

 

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

 

2.1                               [**]

2.1.1                     [**]

 

1.                                       [**]

 

2.                                       [**]

 

3.                                       [**]

 

4.                                       [**]

 

2.1.2                     [**]

 

1.                                       [**].

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  OMITTED SECTIONS 2.1 THROUGH 7 CONSIST OF TWO
PAGES OF TEXT.

 

 

2.                                       [**]

 

3.                                       [**]

 

4.                                       [**]

 

5.                                       [**]

 

2.1.3                     [**]

 

1.                                       [**]

 

2.2                               [**]

 

1.                                       [**]

 

2.                                       [**]

3.                                       [**]

 

4.                                       [**]

 

(a)                                  [**]

(b)                                 [**]

(c)                                  [**]

 

5.                                       [**]

 

6.                                       [**]
BIS [**]

 

7.                                       [**]

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  OMITTED SECTIONS 2.1 THROUGH 7 CONSIST OF TWO
PAGES OF TEXT.

 

 

SCHEDULE “B”

 

[**]

 

1. 0                            DESCRIPTION
OF [**]

 

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

 

1.1                               [**]
Study

 

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

 

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

 

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

 

1.2                               [**]
Study

 

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

 

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

 

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

 

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

 

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

 

4.                                       [**].

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.4                               Acceptance Procedures

 

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

 

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

 

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

 

 

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

 

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

 

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

 

1.5                               Implementation of [**]

 

1.5.1                     Digimarc shall implement [**] as follows:

 

1.                                       [**]

 

1.6                               Training Program

 

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

 

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

 

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

 

2.0                               DESCRIPTION OF,
AND REQUIREMENTS FOR, VERSIONS 1.0

 

2.1                               [**]

 

                                                [**]:

 

2.1.1                     [**]

 

1.                                       [**].

 

2.                                       [**].

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  OMITTED SECTIONS 2.1 THROUGH 7(c) CONSIST OF THREE
PAGES OF TEXT.

 

 

3.                                       [**].

 

4.                                       [**].

 

5.                                       [**].

 

6.                                       [**].

 

2.1.2                     [**]

 

1.                                       [**].

 

2.                                       [**].

 

2.1.3                     [**]

 

1.                                       [**].

 

2.                                       [**].

 

3.                                       [**].

 

4.                                       [**].

 

5.                                       [**].

 

6.                                       [**].

 

2.2                               [**]

 

2.2.1                     [**]:

 

1.                                       [**].

 

2.                                       [**]:

 

(a)                                  [**]

 

(b)                                 [**].

 

3.                                       [**].

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  OMITTED SECTIONS 2.1 THROUGH 7(c) CONSIST OF THREE
PAGES OF TEXT.

 

 

4.                                       [**].

 

5.                                       [**].

 

6.                                       [**].

 

7.                                       [**]:

 

(a)                                  [**].

 

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

 

(c)                                  [**].

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  OMITTED SECTIONS 2.1 THROUGH 7(c) CONSIST OF THREE
PAGES OF TEXT.

 

 

Attachment 1

 

BASELINE, EXTENDED BASELINE, AND OPTIONAL TESTS

 

1.0                               [**]

 

                                                1.1                               [**]

 

                                                                                                1.1.1                     [**]

                                                                                                1.1.2                     [**]

                                                                                                1.1.3                     [**]

                                                                                                                                                1.1.3.1           [**]

                                                                                                                                                1.1.3.2           [**]

                                                                                                                                                1.1.3.3           [**]

 

                                                1.2                               [**]

 

                                                                                                1.2.1                     [**]

                                                                                                1.2.3                     [**]

                                                                                                1.2.4                     [**]

                                                                                                1.2.5                     [**]

 

[**]

 

2.0                               [**]

 

                                                2.1                               [**]

 

                                                                                                2.1.1                     [**]

                                                                                                2.1.2                     [**]

                                                                                                2.1.3                     [**]

                                                                                                2.1.4                     [**]

                                                                                                2.1.5                     [**]

                                                                                                2.1.6                     [**]

                                                                                                2.1.7                     [**]

                                                                                                2.1.8                     [**]

 

                                                2.2                               [**]

 

                                                                                                2.2.1                     [**]

                                                                                                2.2.2                     [**]

                                                                                                2.2.3                     [**]

                                                                                                2.2.4                     [**]

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  OMITTED SECTIONS 1.0 THROUGH 3.2.3 CONSIST OF
1.5 PAGES OF TEXT.

 

 

3.0                               [**]

 

                                                3.1                               [**]

 

3.2                               [**]

 

                                                3.2.1                     [**]

 

                                                3.2.2                     [**]

 

                                                3.2.3                     [**]

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  OMITTED SECTIONS 1.0 THROUGH 3.2.3 CONSIST OF
1.5 PAGES OF TEXT.

 

 

Attachment 2

 

CDS PHASE 1 DELIVERY SCHEDULE

 

[**]

 

	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  BIS [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  BIS [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

[**]

 

	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  BIS [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  BIS [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

[**]

 

	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  BIS [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  BIS [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  OMITTED TABLES ARE TWO PAGES IN LENGTH.

 

 

[**]

 

	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  BIS [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  OMITTED TABLES ARE TWO PAGES IN LENGTH.

 

 

Attachment 3

 

DEVICE VENDORS

 

[**]

 

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

 

 

SCHEDULE “B,” 
AMENDED ATTACHMENT 3

 

[**]

 

[**]

 

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

 

 

AMENDED SCHEDULE “C”

 

PHASE [**] STATEMENT OF WORK

 

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

 

1.0                               [**]

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.2                               Acceptance Procedures

 

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

 

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

 

 

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

 

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

 

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

 

1.3                               [**]

 

1.3.1                     Digimarc
shall [**] as follows:

 

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

 

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

 

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

 

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

 

2.1                               [**]

 

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

 

2.2                               New
[**]

 

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

 

2.3                               [**]

 

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

 

2.3.1                     [**] Requirements

 

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

 

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

 

 

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

 

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

 

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

 

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

 

2.3.2                     [**] Improvements

 

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

 

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

 

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

 

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

 

2.3.3                     [**]

 

Digimarc shall build
and [**]:

 

1.                                       Digimarc shall [**].

 

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

 

2.4                               [**]
and [**]

 

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

 

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

 

 

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

 

2.5          [**] Study

 

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

 

2.5.1                     [**]

 

Digimarc
shall work [**] BIS [**] as follows:

 

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

 

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

 

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

 

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

 

2.5.2                     [**]
Characterization

 

Digimarc
shall:

 

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

 

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

 

3.             [**].

 

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

 

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

 

2.6          [**]

 

2.6.1       [**]
in [**] Applications

 

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

 

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

 

 

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

 

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

 

3.             Digimarc shall [**] BIS [**].

 

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

 

2.6.2                     [**]
and [**]

 

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

 

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

 

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

 

b)
To [**]CDS.

 

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

 

3.             Digimarc shall [**].

 

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

 

5.             BIS [**].

 

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

 

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

 

2.7                               [**] Study

 

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

 

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

 

 

2.8                               [**]

 

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

 

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

 

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

 

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

 

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

 

 

Attachment 1

 

CDS PHASE [**] DELIVERY SCHEDULE

 

[**]

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Days

  	
   

  	
  Completion Date

  
	
  [**]-1

  	
   

  	
  Detailed [**] specification delivered

  	
   

  	
  [**]

  	
   

  	
  1.1

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  28 Feb [**]

  
	
  [**]-2

  	
   

  	
  [**] specification signoff

  	
   

  	
  [**]

  	
   

  	
  1.2

  	
   

  	
  [**]-1

  	
   

  	
  11

  	
   

  	
  9 Mar [**]

  
	
  [**]-3

  	
   

  	
  Detailed [**] specification update – [**]

  	
   

  	
  [**]

  	
   

  	
  1.1

  	
   

  	
  [**]-3
  [**]-2

  	
   

  	
  30

  	
   

  	
  13 Apr [**]

  
	
  [**]-4

  	
   

  	
  [**] specification signoff

  	
   

  	
  [**]

  	
   

  	
  1.2

  	
   

  	
  [**]-3

  	
   

  	
  11

  	
   

  	
  18 Apr [**]

  
	
  [**]-5

  	
   

  	
  [**]
  Approved

  	
   

  	
  [**]

  	
   

  	
  2.3.1.4

  	
   

  	
  [**]-2

  	
   

  	
  82

  	
   

  	
  1 Jun [**]

  
	
  [**]-6

  	
   

  	
  [**] Test Set change

  deadline

  	
   

  	
  [**]

  [**]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1 Jun [**]

  
	
  [**]-7

  	
   

  	
  Delivery [**]

  	
   

  	
  [**]

  	
   

  	
  1.4

  	
   

  	
  [**]-4

  	
   

  	
  97

  	
   

  	
  8 Sep [**]

  
	
  [**]-8

  	
   

  	
  [**] acceptance of [**]

  	
   

  	
  [**]

  	
   

  	
  1.5

  	
   

  	
  [**]-5

  	
   

  	
  41

  	
   

  	
  5 Oct [**]

  
	
  [**]-9

  	
   

  	
  Delivery of the  [**]

  	
   

  	
  [**]

  	
   

  	
  1.6

  	
   

  	
  [**]-6

  	
   

  	
  42

  	
   

  	
  1 Dec [**]

  
	
  [**]-10

  	
   

  	
  [**] acceptance of final [**]

  	
   

  	
  [**]

  	
   

  	
  1.7

  	
   

  	
  [**]-7

  	
   

  	
  27

  	
   

  	
  28 Dec [**]

  

 

[**]  and [**]

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Days

  	
   

  	
  Completion Date

  
	
   

  	
   

  	
  [**] Study with [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  15 Feb [**]

  
	
  [**]-1

  	
   

  	
  [**] report delivered

  	
   

  	
  [**]

  	
   

  	
  2.4

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  15 Feb [**]

  
	
  [**]-2

  	
   

  	
  [**] evaluation of [**]

  	
   

  	
  [**]

  	
   

  	
  2.4

  	
   

  	
  [**]-1

  	
   

  	
  43

  	
   

  	
  28 Mar [**]

  
	
  [**]-3

  	
   

  	
  [**] determined

  	
   

  	
  [**]

  	
   

  	
  2.4

  	
   

  	
  [**]-2

  	
   

  	
  —

  	
   

  	
  28 Mar [**]

  

 

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

 

 

[**]

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Days

  	
   

  	
  Completion Date

  
	
  [**]-1

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  2.5.1.1

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  17 Jan [**]

  
	
  [**]-2

  	
   

  	
  [**].

  	
   

  	
  [**]

  	
   

  	
  2.5.1.2

  	
   

  	
  [**]-1

  	
   

  	
  21

  	
   

  	
  8 Feb [**]

  
	
  [**]-3

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  2.5.1.3

  	
   

  	
  [**]-2

  	
   

  	
  23

  	
   

  	
  15 Mar [**]

  
	
  [**]-4

  	
   

  	
  [**] reported and Phase

  [**]

  	
   

  	
  [**]

  [**]

  	
   

  	
   

  	
   

  	
  [**]-3

  	
   

  	
  23

  	
   

  	
  13 Apr [**]

  

 

[**] Study

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Days

  	
   

  	
  Completion

  Date

  
	
  [**]-1

  	
   

  	
  [**] study plan delivered

  	
   

  	
  [**]

  	
   

  	
  2.5.2.3

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  28 Feb [**]

  
	
  [**]-2

  	
   

  	
  BIS [**] Study plan

  signoff

  	
   

  	
  [**]

  	
   

  	
  1.2

  	
   

  	
  [**]-1

  	
   

  	
  11

  	
   

  	
  9 Mar [**]

  
	
  [**]-1

  	
   

  	
  [**]
  Analysis [**]

  delivered

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-2

  	
   

  	
  103

  	
   

  	
  8 Sep [**]

  
	
  [**]-2

  	
   

  	
  Draft report delivered

  	
   

  	
  [**]

  	
   

  	
  2.5.2.5

  	
   

  	
  [**]-1

  	
   

  	
  103

  	
   

  	
  8 Sep [**]

  
	
  [**]-3

  	
   

  	
  [**] evaluation of draft

  report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-2

  	
   

  	
  20

  	
   

  	
  6 Oct [**]

  
	
  [**]-4

  	
   

  	
  Final report delivered

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-3

  	
   

  	
  41

  	
   

  	
  4 Dec [**]

  
	
  [**]-5

  	
   

  	
  [**] evaluation of the

  final report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-4

  	
   

  	
  20

  	
   

  	
  29 Dec [**]

  
	
  [**]-1

  	
   

  	
  [**]
  Study draft report

  delivered

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-2

  	
   

  	
  75

  	
   

  	
  1 Aug [**]

  
	
  [**]-2

  	
   

  	
  [**] evaluation of draft

  report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-1

  	
   

  	
  28

  	
   

  	
  29 Aug [**]

  
	
  [**]-3

  	
   

  	
  Final report delivered

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-2

  	
   

  	
  41

  	
   

  	
  25 Oct [**]

  
	
  [**]-4

  	
   

  	
  [**] evaluation of the final

  report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-3

  	
   

  	
  20

  	
   

  	
  21 Nov [**]

  
	
  [**]-1

  	
   

  	
  [**]
  Study draft report

  delivered

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-2

  	
   

  	
  60

  	
   

  	
  30 May [**]

  
	
  [**]-2

  	
   

  	
  [**] evaluation of draft 

  report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-1

  	
   

  	
  40

  	
   

  	
  25 Jul [**]

  
	
  [**]-3

  	
   

  	
  Final report delivered

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-2

  	
   

  	
  41

  	
   

  	
  20 Sep [**]

  
	
  [**]-4

  	
   

  	
  [**] evaluation of the final

  report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]-3

  	
   

  	
  20

  	
   

  	
  17 Oct [**]

  

 

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

 

 

Verification Test ([**])

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Days

  	
   

  	
  Completion Date

  
	
  [**]-1

  	
   

  	
  Proposed [**] program

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  28 Jul [**]

  
	
  [**]-2

  	
   

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

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-1

  	
   

  	
  30

  	
   

  	
  24 Aug [**]

  
	
  [**]-3

  	
   

  	
  Final verification test [**] signoff

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-2

  	
   

  	
  25

  	
   

  	
  7 Sep [**]

  
	
  [**]-4

  	
   

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

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-3

  	
   

  	
  13

  	
   

  	
  21 Sep [**]

  

 

[**]  Tests

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Days

  	
   

  	
  Completion Date

  
	
  [**]-1

  	
   

  	
  Proposed [**] test program

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  28 Apr [**]

  
	
  [**]-2

  	
   

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

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-1

  	
   

  	
  40

  	
   

  	
  25 May [**]

  
	
  [**]-3

  	
   

  	
  Final [**] test program
  signoff

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-2

  	
   

  	
  35

  	
   

  	
  8 Jun [**]

  
	
  [**]-4

  	
   

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

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]-3

  	
   

  	
  13

  	
   

  	
  22 Jun [**]

  

 

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

 

 

AMENDED SCHEDULE “D”

 

PHASE [**] STATEMENT OF WORK

 

1.0              DESCRIPTION OF PHASE
[**] WORK

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7.               Within
fifteen (15) calendar days after receiving the final release under 6, the DLA
Project Manager shall notify the Digimarc Project Manager in writing whether or
not the final release 

 

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

 

 

meets the Specifications with details of any
non-compliance. Within thirty (30) calendar days after receiving any notice of
rejection, Digimarc shall rectify all [**] BIS for approval as provided above.

 

1.2                       Acceptance Procedures

 

1.2.1                        [**]

 

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

 

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

 

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

 

1.2.2                        [**]

 

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

 

1.        Digimarc shall deliver or make
available the [**] to the DLA Project Manager in a suitably modified [**] from
a [**] for [**] on compliance with the Specification.

 

2.        Digimarc shall deliver into
escrow and review with the BIS a detailed description of how the [**] was [**],
as well as copies of the [**].  This
excludes deposit into escrow of any [**] proprietary data or information for
the design and operation of the [**].

 

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

 

2.1                       [**]

 

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

 

2.1.1                        [**] requirements

 

[**] will meet the following requirements:

 

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

 

2                  [**] shall be capable of [**] shall be conditional upon Digimarc
[**] Digimarc and the BIS to intellectual property [**] in order to [**].

 

3.               Digimarc
shall [**] needed for replacement of the [**] with a suitably designed
alternative [**].

 

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

 

 

4.               Detailed
requirements for [**] will be specified in a Specification delivered in
accordance with the Delivery Schedule outlined in Attachment 1.

 

2.2                       [**]

 

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

 

1.        Digimarc
shall make [**] changes to the [**] necessary for [**].

 

2.        Digimarc
shall develop [**] needed to implement an [**]. 
Digimarc will engage one or more [**] in this effort [**] during the
[**] phase.

 

3.        Digimarc
shall work with one [**] to implement the [**] of the [**] a selected
[**].  The implementation will be used to
demonstrate that the [**] functions properly when [**].

 

4.        Digimarc
shall deliver or make available the [**] for assessment by the BIS.

 

5.        Digimarc
shall deliver a detailed technical report on the findings of the Work and
recommendations for any future work including requirements to add [**].

 

The detailed requirements for the [**] will be specified in a
Specification delivered in accordance with the Delivery Schedule outlined in
Attachment 1.

 

2.3                       [**]

 

2.3.1                        Implementation of [**]

 

Digimarc shall implement the [**] as follows:

 

1.               Digimarc
shall [**] to [**] with [**] from the list of such [**] attached to Schedule B
as Attachment 3 or such other [**] as may be agreed to between the parties’
respective project managers.  Digimarc
shall deliver and [**].

 

2.               Digimarc
shall [**] to [**] attached to Schedule B as Attachment 3 or such other [**] as
may be agreed to between the parties’ respective project managers.  Digimarc shall deliver and [**].

 

3.               Digimarc
shall [**] to [**] attached to Schedule B as Attachment 3 or such other [**] as
may be agreed to between the parties’ respective project managers.

 

2.3.2                        Support for [**]

 

Digimarc shall support [**] that [**] as
follows:

 

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

 

 

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

 

2.               Digimarc
shall administer the certification program approved by BIS for the ongoing
review and certification of [**].

 

3.               BIS
may, at its option, evaluate the [**] each [**].  The DLA Project Manager shall identify to
Digimarc any concerns that BIS may have relating to [**]. Digimarc shall make a
proposal to the [**] Project Manager to address those concerns for approval by
the [**] Project Manager.

 

2.3.3                        [**]

 

Digimarc shall operate, maintain and improve the [**] as follows:

 

1.               Digimarc
shall operate the [**] making it available at [**].

 

2.3.4                        [**] and [**] research

 

1.               Digimarc
shall develop, in cooperation with the DLA Project Manager, a program of
activities to enhance [**] and [**]. This program will provide detailed
strategies and plans. The focus will be on [**] and [**]. The program will
support [**] initiatives to motivate [**] of [**].

 

2.               The
DLA Contract Authority will authorize use of an additional [**] upon successful
completion by May 15, [**] of the [**] specified in the program described
in 2.3.4.1.

 

3.               Digimarc
shall deliver to the [**] and provide training for [**].

 

4.               Digimarc
shall track and summarize for BIS [**] and [**] trends that affect the CDS [**]
and development strategy.

 

5.               BIS
shall support in-person meetings with [**] as needed to promote support for the
[**] of the CDS.

 

6.               Digimarc
shall manage [**].

 

2.3.5                        [**]

 

1.               Digimarc
shall [**] the [**] to [**] and their [**], including administration of [**].

 

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

 

 

3.0            Representations and
Warranties.

 

For the avoidance of doubt, with the exception of the conditions in Section 2.1.1.2
of Amended Schedule D, Digimarc represents, warrants and undertakes that the
performance of its obligations under Amended Schedule D are covered by Section 10
of the Agreement.

 

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

 

 

Amended Schedule D

Attachment 1

 

CDS PHASE [**] DELIVERY SCHEDULE

 

[**] for [**]

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Days

  	
   

  	
  Completion Date

  
	
  [**]-1

  	
   

  	
  Detailed [**] specification delivered

  	
   

  	
  [**]

  	
   

  	
  1.1.2

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  15 Jan [**]

  
	
  [**]-2

  	
   

  	
  BIS [**] specification signoff

  	
   

  	
  [**]

  	
   

  	
  1.1.3

  	
   

  	
  [**]-1

  	
   

  	
  15

  	
   

  	
  31 Jan [**]

  
	
  [**]-3

  	
   

  	
  [**] Approved

  	
   

  	
  [**]

  	
   

  	
  2.1

  	
   

  	
  [**]-2

  	
   

  	
  28

  	
   

  	
  1 Mar [**]

  
	
  [**]-4

  	
   

  	
  [**] of the [**]  evaluation release

  	
   

  	
  [**]

  	
   

  	
  1.1.4

  	
   

  	
  [**]-2

  	
   

  	
  161

  	
   

  	
  7 Sept [**]

  
	
  [**]-5

  	
   

  	
  [**] acceptance of [**]

  	
   

  	
  [**]

  	
   

  	
  1.1.5

  	
   

  	
  [**]-4

  	
   

  	
  30

  	
   

  	
  19 Oct [**]

  
	
  [**]-6

  	
   

  	
  [**] of the [**]

  	
   

  	
  [**]

  	
   

  	
  1.1.6

  	
   

  	
  [**]-5

  	
   

  	
  28

  	
   

  	
  3 Dec [**]

  
	
  [**]-7

  	
   

  	
  [**] acceptance of [**]

  	
   

  	
  [**]

  	
   

  	
  1.1.7

  	
   

  	
  [**]-6

  	
   

  	
  28

  	
   

  	
  31 Dec [**]

  

 

[**]

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Para Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Days

  	
   

  	
  Completion Date

  
	
  [**]-1

  	
   

  	
  [**] Specification

  	
   

  	
  [**]

  	
   

  	
  1.1.2

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  15 Jan [**]

  
	
  [**]-2

  	
   

  	
  BIS [**] Specification signoff

  	
   

  	
  [**]

  	
   

  	
  1.1.3

  	
   

  	
  [**]-1

  	
   

  	
  15

  	
   

  	
  31Jan [**]

  
	
  [**]-3

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  1.1.6

  	
   

  	
  [**]-2

  	
   

  	
  213

  	
   

  	
  3 Dec [**]

  
	
  [**]-4

  	
   

  	
  Deliver [**] Report

  	
   

  	
  [**]

  	
   

  	
  1.1.6

  	
   

  	
  [**]-2

  	
   

  	
  213

  	
   

  	
  3 Dec [**]

  
	
  [**]-5

  	
   

  	
  [**] acceptance of [**] and report

  	
   

  	
  [**]

  	
   

  	
  1.1.7

  	
   

  	
  [**]-3, [**]-4

  	
   

  	
  28

  	
   

  	
  31 Dec [**]

  

 

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

 

 

DLA: SCHEDULE “E”

 

ARBITRATION
AGREEMENT

 

An Agreement dated June 21, 1999, hereby
amended effective as of January 1, [**], by and among the Parties (as
defined below) to submit for final and binding resolution by international
arbitration all Disputes (as defined below) arising out of or otherwise
connected to a project relating to the development and potential licensing,
marketing and servicing of a Counterfeit Deterrence System (as defined in the
Development and License Agreement identified below) and the services of
Digimarc (as defined below) in relation to the project.

 

WHEREAS, Digimarc Corporation, a corporation
existing under the laws of the State of Delaware, USA, is developing, [**] and
referred to in the Development and License Agreement (identified below) as
[**]), technology [**] (the “Counterfeit Deterrence System” or “CDS” as defined
in the Development and License Agreement identified below);

 

WHEREAS, the [**] has asked the Bank for
International Settlements, an international organisation created as a result of
the Hague Agreements of January 1930 (the “BIS”), to provide it with
limited assistance in connection with the development and potential subsequent
licensing of the CDS as set out in a Development and License Agreement (the “DLA”)
effective from January 1, [**] and [**] Agreement effective January 1,
[**];

 

WHEREAS, in performance of the DLA, the BIS
and Digimarc will enter into a contract with [**], which will act as escrow
agent for certain purposes pursuant to an Escrow Agreement (the “Escrow
Agreement”) which is attached as Schedule M to the DLA;

 

WHEREAS, in the course of performance of the
DLA, Digimarc may be directed to issue licenses to certain [**] in accordance
with standard forms of license agreement which are attached at Schedules K-1,
K-2, L-1 and L-2 to the DLA all as amended;

 

WHEREAS, in the course of performance of the
DLA, Digimarc may enter into System Support Services Agreements, a form of
which is attached at Schedule O to the DLA, with licensees;

 

WHEREAS, in the course of performance of the
DLA, Digimarc may provide consulting and programming services to a [**] on the
terms described in Schedule P to the DLA to assist [**] to ensure that a [**]
(as defined in the DLA) [**];

 

WHEREAS, [**], pursuant to an  Indemnity
Agreement (as amended from time to time) of or of approximately the same date
as this Arbitration Agreement (the “Indemnity Agreement”), agreed to compensate
and to indemnify and hold harmless the BIS in respect of any liability
in connection with the project;

 

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

 

 

WHEREAS, given the international nature of
the Agreements (as defined below), all the Parties (as defined below) to the
Agreements (as defined below) are desirous to avoid recourse to national courts
and the potential expense and delay of prosecuting connected Claims (as defined
below) in more than one proceeding and also to exclude the risk of having to
apply contradictory or inconsistent fact-findings, conclusions, judgments or
awards for any Dispute (as defined below) which may arise between or among the
Parties (as defined below) and instead wish to resort to international
arbitration as the exclusive means of resolving in a final, binding and
consistent manner all Disputes (as defined below) arising in connection with
the Agreements (as defined below) for the CDS and of establishing through this
Arbitration Agreement a mechanism to these ends.

 

The Parties agree as follows:

 

1.                                      The meaning of the following terms
in this Arbitration Agreement shall be as set out below:

 

(a)                                  “Agreements” shall mean all
agreements, contracts, schedules or other arrangements in connection with the
development or licensing or marketing or servicing of the CDS as listed in
Schedule B, as amended from time to time.

 

(b)                                 “Appointing Authority” shall mean
the [**].

 

(c)                                  “Arbitrating Party” or “Arbitrating
Parties” shall mean (i) any and all Parties which have become involved in
any arbitration under this Arbitration Agreement as Claimants or Respondents or
(ii) which have been otherwise joined to any arbitration under this
Arbitration Agreement or (iii) the BIS, Digimarc, any [**] or any licensed
[**] in the aforementioned circumstances or when it or they has or have
exercised their right of Intervention in any arbitration under this Arbitration
Agreement.

 

(d)                                 “Claim” shall include without
limitation any claim or counterclaim or crossclaim made by an Arbitrating
Party.

 

(e)                                  “Claimant” or “Claimants” shall mean
any Party which, either separately or together with any other Party or Parties,
initiates an arbitration under this Arbitration Agreement.

 

(f)                                    “Dispute” shall mean any dispute,
difference, controversy or claim except only for an Excluded Dispute (as
defined below) between or among the parties arising out of or relating to or in
connection with this Arbitration Agreement or any of the Agreements listed in
Schedule B, including, but not limited to, their signature, validity,
interpretation, performance, amendment, breach, termination and
post-termination obligations.

 

(g)                                 “Excluded Dispute” shall mean only a
dispute between the BIS and Digimarc as described in clause 6.4 of the Escrow
Agreement as to the occurrence of a Release Event as defined in clause 6.1 of
the Escrow Agreement. Any such dispute shall be referred to an expert

 

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

 

 

appointed by the Managing
Director of the Escrow Agent (as defined in the Escrow Agreement) and any
decision rendered by such an expert pursuant to clause 6.4 of the Escrow
Agreement shall be accorded res judicata
effect by any arbitral tribunal appointed under this Arbitration Agreement.

 

(h)                               “Intervention” shall mean the right
of any of the BIS, Digimarc, any [**] or any licensed [**] to intervene into a
particular arbitration as an Arbitrating Party even when it is not a Claimant
or Respondent and has not been joined into any arbitration by an Arbitrating
Party.

 

(i)                                   “Notice of Arbitration” shall mean
the document given when initiating recourse to arbitration or to join any Party
as an Arbitrating Party as well as to initiate recourse in arbitration against
any Party which is already an Arbitrating Party.

 

(j)                                   “Party” or “Parties” shall mean any
of the signatories to this Arbitration Agreement and those parties listed in
Schedule A as amended from time to time.

 

(k)                                “Respondent” or “Respondents” shall
mean any Party which, either separately or together with any other Party, is
named as a Respondent in an arbitration by any Claimant or Claimants.

 

(l)                                   In interpreting this Arbitration
Agreement, singular shall be read for plural where appropriate to reflect the
multi-party nature of any arbitration.

 

2.             Any Dispute shall be finally settled by arbitration
under the [**] as in force at the date of commencement of this Arbitration
Agreement except as the [**] Rules are modified in the body and
Schedule C of this Arbitration Agreement and to the exclusion of any
provisions of the [**] Rules as are inconsistent with the express
provisions of this Arbitration Agreement or with the multi-party nature of an
arbitration under this Arbitration Agreement.

 

3.             The language used in any arbitration shall be English.
All documents submitted into any arbitration shall be in English or submitted
with a complete English translation. Oral evidence may be submitted in a
language other than English provided that the Arbitrating Party submitting the
oral evidence makes provision for its simultaneous interpretation into English.
The cost of any translation or interpretation into English shall be borne
entirely by the Arbitrating Party on whose behalf the non-English document or
oral evidence is submitted and shall not be included among the “costs of
arbitration” apportioned pursuant to Article 40 of the [**]

 

4.             The place of Arbitration shall be [**].

 

5.             Arbitration pursuant to this Arbitration Agreement shall
be the sole and exclusive means for resolving any Dispute.

 

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

 

 

6.             No entity shall become a Party unless that entity has
become a Party to this Arbitration Agreement by executing a counterpart of this
Arbitration Agreement.

 

7.             No Party shall enter into any contract or agreement
which alters or amends in any material respect any of the rights or obligations
of any Party under any Agreement unless the contract or agreement shall contain
the clause set out in Schedule D.  Each
Party to this Arbitration Agreement hereby expressly accepts the addition of
new parties to Schedule A and of new contracts or agreements to Schedule
B.  Any Party which fails to act in
conformity with this Article 7 shall be fully liable for any loss, injury
or damage whatsoever resulting therefrom to any other Party.

 

8. (a)                      Any Claimant or Claimants shall
initiate recourse to arbitration by giving to each Respondent a Notice of
Arbitration and statement of claim which specify, inter alia,
the Agreement or Agreements involved in the Dispute. Any Claimant or Claimants
shall also at the same time send a copy of the same Notice of Arbitration and
statement of claim to all other Parties and to the [**]. An arbitration shall
be deemed to commence upon receipt of the Notice of Arbitration and statement
of claim by the [**].

 

(b)                                 Within thirty (30) days of the date
on which each Respondent received the Notice of Arbitration, a Respondent may
give a third party Notice of Arbitration in order to join into the arbitration
any Party or Parties as an Arbitrating Party or Arbitrating Parties. The
Respondent shall also at the same time send a copy of any third party Notice of
Arbitration to all other Parties and to the [**].

 

(c)                                  Any third party joined as an
Arbitrating Party may, within thirty (30) days of receipt of any third party
Notice of Arbitration, give fourth party Notices of Arbitration in order to
join any Party or Parties as an Arbitrating Party or Arbitrating Parties. The
third party shall also at the same time send a copy of any fourth party Notice
of Arbitration to all other Parties and to the [**].

 

(d)                                 Parties may be joined as further
additional Arbitrating Parties by any Arbitrating Party or Arbitrating Parties
until such time as thirty (30) days have elapsed without a new Arbitrating
Party being joined into the arbitration.

 

(e)                                  The BIS, Digimarc, any [**], and any
licensed [**], whether or not joined as a Respondent or as a further additional
Arbitrating Party, shall each have the right to intervene in any arbitration by
giving a Notice of Arbitration to each of the Arbitrating Parties within thirty
(30) days after receipt of the copy of a Notice of Arbitration from the last
Arbitrating Party to be joined or from the last Party to intervene. The BIS,
Digimarc, any [**], and any licensed [**] shall also at the same time send a
copy of the Notice of Arbitration to the [**] and to all other Parties.

 

(f)                                    The arbitral tribunal, once
constituted and after affording the Arbitrating Parties and all other Parties a
reasonable period of time in which to comment, shall have the authority to

 

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

 

 

require by an
order that any Party or Parties which is not or are not an Arbitrating Party or
Arbitrating Parties shall nonetheless be joined into the arbitration as an Arbitrating
Party or Arbitrating Parties should the arbitral tribunal determine that: (a) the
absence of said Party or Parties from the pending arbitration would prevent the
according of complete relief in regard to the Claims of the Arbitrating
Parties; or (b) that the Party or Parties has or have a real and
significant interest in the Agreement or Agreements out of or in connection
with which the Disputes involved in the pending arbitration have arisen and
that the absence of said Party or Parties would significantly impede its or
their ability to protect that interest. Any such order issued by the arbitral
tribunal shall be final and binding upon the Parties.

 

(g)                                 Any Arbitrating Party may join into
a pending arbitration any Dispute which presents issues of law or fact common
with those in the Dispute or Disputes already in the pending arbitration by
issuing, within 30 days of its receipt of a Notice of Arbitration, a Notice of
Arbitration and a statement of claim which specify, inter alia,
the Agreement or Agreements involved in the Dispute and sets out the issues of
law or fact it alleges are common with those in the Dispute or those Disputes
already in the pending arbitration.

 

(h)                                 The arbitral tribunal shall
determine by an order, which shall be final and binding upon the Parties, any
issue raised by an Arbitrating Party as to whether or not a Dispute joined into
any pending arbitration did, in fact, at the time it was joined into the
arbitration, present issues of law or fact common with those presented in other
Disputes in the pending arbitration. Any Dispute which is found not to have
presented common issues of law or fact shall be dismissed without prejudice
from the pending arbitration.

 

(i)                                     Joinder of any Party or Parties or
of any Dispute or Disputes to any arbitration pursuant to this Arbitration
Agreement shall be permitted only when made in accordance with the provisions
of this Arbitration Agreement, including, without limitation, the strict time
limits and no joinder or Intervention other than those provided for shall be
permitted.

 

(j)                                     Any multi-party arbitration arising
as a result of there being more than two Arbitrating Parties will be conducted
as a single arbitration involving all Arbitrating Parties.

 

(k)                                  Any Arbitrating Party giving any Notice
of Arbitration or sending any copy of a Notice of Arbitration shall send to
each recipient according to the provisions set out above a full copy of the
document by international
courier or other appropriate means of ensuring rapid and certain delivery and,
when required to send documents to several recipients, the Arbitrating Party
shall send all documents on the same day.

 

(l)                                     Any advances deemed necessary to
cover the costs of any arbitration shall be made in equal shares by all
Arbitrating Parties, provided that multiple Claimants or multiple Respondents
shall be deemed to constitute one Arbitrating Party for purposes of this
subparagraph only, and provided further that should any Arbitrating Party fail
to advance its share (a “Defaulting Arbitrating Party”), it shall be the responsibility
of the Arbitrating

 

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

 

 

Party which gave the Notice of
Arbitration against the Defaulting Arbitrating Party or Defaulting Arbitrating
Parties to advance the share due from the Defaulting Arbitrating Party or
Defaulting Arbitrating Parties. Any Claim brought by a Defaulting Arbitrating Party
shall be dismissed without prejudice. However, the recipient of any Notice of Arbitration
given by a Defaulting Arbitrating Party shall continue to be an Arbitrating
Party if it has itself given any Notice of Arbitration, unless it withdraws any
such Notice of Arbitration. Should any Defaulting Arbitrating Party commence
arbitration in order to reassert any Claim which has been dismissed pursuant to
this subparagraph, that Claim shall be deemed to be connected to the pending
arbitration from which it was dismissed for the purposes of Article [**]
of the [**] Arbitration Act, 1986 and the Defaulting Arbitrating Party shall be
required to cover the costs of the arbitration as though its Claim had not been
dismissed.

 

9.             If any Dispute arises whilst an arbitration is
pending in accordance with the provisions of this Arbitration Agreement, but
one or more of the Arbitrating Parties to that Dispute cannot be joined to the
pending arbitration in accordance with the provisions of Article 8 of this
Arbitration Agreement, the Dispute and the Arbitrating Parties thereto shall
nonetheless be joined into the pending arbitration at the request of a Party
which is an Arbitrating Party in both the pending arbitration and the Dispute
which has arisen so that the Disputes may be resolved in the same arbitration,
provided the arbitral tribunal decides that the later Dispute presents issues
of law or fact common with those in the pending arbitration and that joinder
under these circumstances would not result in undue delay for the pending
arbitration.

 

10.           Each Party agrees that neither an arbitral
tribunal established pursuant to this Arbitration Agreement nor the Parties
shall be authorised to take or seek from any arbitral tribunal or judicial
authority any interim measure or any pre-award relief against the BIS, any
provision of the [**] Rules notwithstanding. Nothing in this Arbitration
Agreement shall operate or be regarded as a waiver, renunciation or other
modification of the [**] BIS [**], of whatever nature and wherever situated,
under international convention or under any applicable law. Except as otherwise
provided in this Article 10 with regard to the BIS, each Party irrevocably
agrees that, to the extent that it or any of its assets has or hereafter may
acquire any right of immunity, whether characterized as sovereign immunity or
otherwise, from any legal proceedings, whether in [**] or elsewhere, to enforce
or collect upon any obligation of that Party in connection with the transaction
contemplated under any Agreement, including, without limitation, immunity from
jurisdiction of any arbitral tribunal, immunity from service of process,
immunity from execution of judgment and immunity of any of its property from
attachment prior to the rendering of an arbitral award under this Arbitration
Agreement or entry of judgment, it hereby expressly and irrevocably waives all
such immunity.

 

11. (a)                Any Dispute, regardless of the number of
Arbitrating Parties, shall be submitted to an arbitral tribunal of three (3) arbitrators
appointed by the Appointing Authority.

 

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

 

 

(b)                                 The arbitral tribunal shall be
appointed by the Appointing Authority once the time has terminated during which
any Party is entitled to give a Notice of Arbitration to join any other Party
or the BIS, Digimarc, any [**] or any licensed [**] is entitled to intervene.

 

(c)                                  The presiding arbitrator of the
arbitral tribunal shall be a British national and shall have been admitted to
practice as a barrister or solicitor in England and shall also have significant
expertise in the resolution of disputes in international commercial matters.
All arbitrators shall have a full command of the English language.

 

(d)                                 The arbitrators appointed in
accordance with this Arbitration Agreement shall be remunerated in accordance
with the provisions of the Rules of the [**] in effect at the time [**].

 

12.           Awards shall be final and binding as from the date the
awards are made. The Parties undertake to carry out all awards without delay
and waive their right to any form of appeal or recourse to a court of law or
other judicial authority, insofar as any such waiver may validly be made. All
awards may if necessary be enforced by any court having jurisdiction in the
same manner as the judgment of any such court.

 

13.           Each Party explicitly agrees hereby that it shall
recognise any arbitral award rendered in an arbitration under this Arbitration
Agreement as final and binding upon it unless a competent arbitral tribunal or
a competent judicial authority determines that said Party never received notice
of the pendency of the arbitration in which the award was rendered.

 

14.           Any arbitral award rendered under this Arbitration
Agreement shall be accorded res judicata
effect by any arbitral tribunal appointed under this Arbitration Agreement in
regard to those Parties which are bound by an award pursuant to Article 13.

 

15.           The obligations of the Parties to the Agreements shall not
be altered or suspended by reason of any arbitration being conducted during the
life of any Agreement.

 

16.           Any Agreement in regard to which a Dispute has arisen
shall be governed by the applicable law as specified in that Agreement.

 

17.           This Arbitration Agreement shall bind and inure to the
benefit of the respective successors and permitted assigns of the Parties,
subject to all Parties respecting Articles 6 and 7 hereto.

 

18.           This Arbitration Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

 

19.           Any provision of this Arbitration Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or

 

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

 

 

unenforceability, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

 

20.           This Arbitration Agreement shall enter into full force and
effect on the date first written above and shall continue in full force and
effect indefinitely, unless it is terminated by mutual written consent of all
of the Parties.

 

21.           This Arbitration Agreement shall be governed by and
construed in all respects in accordance with the laws of England, to the
exclusion of its rules of conflicts of law.

 

                The Parties have caused this Arbitration
Agreement to be executed in multiple copies, with effect from January 1,
1999.

 

[Signatures]

 

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

 

 

Schedule A
to Arbitration Agreement

 

The following, together with their assigns or
successors are Parties to the Arbitration Agreement. Each Party has the
obligation to advise every other Party of any change in address and each Party
expressly agrees that any notice delivered to that Party at the listed address
or to any duly notified change of address shall be deemed to be valid notice
and that any notice shall be deemed to have been received on the day it is so
delivered:

 

BIS,

Digimarc,

[**]

 

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

 

 

Schedule B
to Arbitration Agreement

 

The following are considered to
be Agreements:

 

1.               Development and License Agreement

2.               Indemnity Agreement

3.               Escrow Agreement

4.               [**] License Agreements – [**]

5.               [**] License Agreements – [**]

6.               [**] License Agreements – [**]

7.               [**] License Agreements – [**]

8.               System Support Services Agreements

9.               [**] Agreement

 

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

 

 

Schedule C
to Arbitration Agreement

 

In accordance
with Article 1.1 of the [**] Rules, in addition to such other modifications
of the [**] Rules as are contained in this Arbitration Agreement, the
Parties to this Arbitration Agreement and to the Agreements modify the [**] Rules as
follows:

 

(a)                                           Notwithstanding
Article 3.1 of the [**] Rules, a Notice of Arbitration may be given by any
Arbitrating Party to any Party or Parties so as to join said Party or Parties
into any pending arbitration and this Arbitration Agreement shall allow for
multi-party arbitration involving third parties, fourth parties and any further
additional parties.

 

(b)                                          Notwithstanding
Article 3.2 of the [**] Rules, arbitral proceedings under this Arbitration
Agreement shall be deemed to commence on the date on which the Claimant’s
Notice of Arbitration is received by the [**].

 

(c)                                           Notwithstanding
Article 3.3(g), Article 3.4(a) and Article 3.4(b) of
the [**] Rules, the Notice of Arbitration shall not contain a proposal as to
the number or appointment or the notification of the appointment of arbitrators
(and, if made, any such proposal shall be disregarded).

 

(d)                                          Notwithstanding
Article 19.3 of the [**] Rules, any Arbitrating Party must make any
counter-claim or claim for the purpose of set-off in its statement of defence
and not at a later stage of the arbitral proceedings.

 

(e)                                           Notwithstanding
Article 20 of the [**] Rules, the arbitral tribunal shall, in considering
whether it is appropriate to allow a party to amend or supplement a written
communication (given the interests of economy, efficiency and the desire to
avoid the risk of inconsistent awards), have particular regard to the
multi-party nature of any arbitration proceeding, the consequences in terms of
delay and the objective of resolving related Claims in a single arbitration
involving all relevant Parties.

 

(f)                                             Notwithstanding
Article 23 of the [**] Rules, in considering whether an extension of a
time-limit for the communication of written statements is justified, the
arbitral tribunal shall have particular regard to the multi-party nature of any
arbitration proceeding and the consequences in terms of delay.

 

(g)                                          Notwithstanding
Article 26 of the [**] Rules, no interim measures shall be sought or
applied against the BIS in connection with any Dispute by either an arbitral
tribunal established pursuant to this Arbitration Agreement or any judicial
authority.

 

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

 

 

Schedule D
to Arbitration Agreement

 

Standard
language to be inserted in each Agreement.

 

“[Article No:
and heading (e.g., Settlement of Disputes), if applicable]

 

Any Dispute (as defined in the Arbitration
Agreement) shall be finally settled by arbitration in accordance with the
Arbitration Agreement as amended from time to time.

 

“[Article No:
and heading (e.g., Governing Law), if applicable]

 

This [Agreement] shall be governed by and construed
in all respects in accordance with the laws of [INSERT], to the exclusion of
[INSERT]’s rules of conflicts of law.”

 

[E – Arbitration Agreement]

 

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

 

 

SCHEDULE “F”

 

OTHER BIS TECHNOLOGY

 

 

1.             Techniques for [**].

 

2.             Copyright in the [**].

 

3.             The above technology is partially
described in the following UK patent applications:

 

UK
Patent Application Nos:              [**]

 

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

 

 

SCHEDULE “G”

 

DIGIMARC TECHNOLOGY

 

The
Digimarc Technology includes [**].

 

This
technology is partially described in the following issued U.S. patents:

 

US
5,850,481

US
5,832,119

US
5,809,160

US
5,768,426

US
5,748,763

US
5,745,604

US
5,721,788

US
5,710,834

US
5,636,292[**]

 

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

 

 

SCHEDULE “H”

 

PROJECT TECHNOLOGY

 

The
Project Technology shall include:

 

1.                                       The
modification of techniques for using the Digimarc and BIS Technologies in the
[**].

 

2.                                       The effects and
behaviours of [**] when used in [**].

 

3.                                       The effects of
various types [**].

 

4.                                       Improvements to
Digimarc’s testing and certification processes used in testing and certifying
[**].

 

5.                                       The improvement
of [**].

 

6.                                       The use of
[**].

 

7.                                       Detailed
techniques [**]

 

8.                                       [**]

 

9.                                       Intellectual
Property Rights that: a) [**] under Section 8 of this Agreement; b) were
developed by or on behalf of Digimarc under this Agreement; and c) were
developed by or on behalf of Digimarc after 1 January [**].

 

10.                                 Examples of
Project Technology include the following:

 

[**]

 

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

 

 

SCHEDULE “I”

 

ALLOWABLE COSTS

 

1.                                       For the
purposes of this Schedule I:

 

	
   

  	
  [**]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [**]

  
	
   

  	
  [**]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  [**]
  BIS [**] BIS [**]. [**]

  	
   

  	
   

  

 

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

 

 

SCHEDULE “J”

 

SECURITY REQUIREMENTS

 

1.             Digimarc shall implement the “Security
Measures” normally followed by a [**] and distributor comparable to Digimarc in
number of employees and revenue engaged in the development and distribution of
[**] and maintain such Security Measures in effect at all times throughout the
Term. The Security Measures will include but not be limited to :

 

1.1           Electronic security for protection of
the network and protection of the CDS software products that are under
development.

 

(a)           Network protection which will ensure
that unauthorized users will not get access to design information, sensitive
test data, proprietary information, released software products or software
documentation that is hosted on the network. This protection will include:

 

(i)            erecting
barriers to prevent hackers, whether inside or outside the Digimarc facility,
from accessing the secure network; and

 

(ii)           the
customizing of developmental and operational procedures for the software
development team that maximize security while not impeding the team’s ability
to work efficiently and effectively.

 

1.2
          Physical Security, including the
following:

 

(a)           the Digimarc facility at which the
Work will be performed will be secure from unauthorized visitors;

 

(b)           the software development laboratory
and the computer network employed in the Work shall be secure;

 

(c)           all personnel authorized to have
access to sensitive CDS information, data and designs including but not limited
to the employees of authorised Subcontractors will be properly screened; and

 

(d)           production and handling of interim
and final versions of the Deliverables will be carefully controlled, monitored
and audited.

 

2.             Within sixty (60) days after the
Agreement is last signed, BIS shall conduct an audit, at its own expense, of
the Security Measures.

 

3.             Following the audit, the DLA
Project Manager shall submit a “Security Plan” to Digimarc which will prescribe
the actions which Digimarc must take, if any, to improve the Security 

 

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

 

 

Measures
to be followed by Digimarc until the end of Phase 3 and the dates by which
Digimarc shall take them.

 

4.             Within twenty (20) Business Days
after receipt of the Security Plan, Digimarc shall notify the DLA Project
Manager of the cost to implement the Plan. Within ten (10) Business Days after
receipt of the notice, the DLA Project Manager shall notify Digimarc which
aspects of the Security Plan to implement and Digimarc shall implement them in
accordance with the Plan.

 

5.             Any cost incurred providing
security required by the Security Plan, beyond what is reasonable and customary
for a similarly-situated [**] company in the Portland area, will be an
Allowable Cost and compensated by BIS accordingly. Digimarc has budgeted [**]. Costs
required in excess of this amount may require an adjustment to the [**] and/or
Statement of Work.

 

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

 

 

SCHEDULE”K-1”

 

[**] LICENSE AGREEMENT - [**]

 

This
[**]  LICENSE
AGREEMENT (the “Agreement”) is made

 

BETWEEN

 

<<[**] and Address>> (“[**]”)

 

- AND -

 

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

 

[**]

 

Digimarc has expertise in,
and owns extensive intellectual property, including patents, patent
applications, copyrights and trade secrets related to digital watermarks,
counterfeit deterrence, copyright protection, and device control (the  ̈Digimarc
IPR”);

 

The Bank for International
Settlements (“BIS”) possesses or will possess intellectual property rights
related to the application of such intellectual property to the detection and
deterrence of bank note counterfeiting;

 

Digimarc and [**] have
cooperated in the development of means, using such intellectual property, to
detect and deter the counterfeiting of bank notes [**] (the “Counterfeit
Deterrence System” or “CDS”);

 

[**] desires to obtain a
license to certain components of the CDS so it can [**] which include the CDS
counterfeit deterring [**].

 

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

 

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

 

 

 

I.              DEFINITIONS  AND PRINCIPLES OF INTERPRETATION

 

1.1           Definitions

 

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

 

“Arbitration
Agreement” means the Arbitration Agreement entered into
between the parties and others and effective 1 January 1999, as amended
from time to time;

 

“Attachment” means a
document specified as being attached to this Agreement;

 

[**]”BIS” refers to Bank
for International Settlements, created pursuant to the Hague Agreements of
January, 1930, and having its head office at Centralbahnplatz 2, CH-4051 Basle,
Switzerland;

 

[**]”BIS IPR” [**] BIS [**] the CDS;[**]”BIS License”
[**] BIS [**] BIS [**]

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

 

“Confidential
Information” means information disclosed before or during the
Term of this Agreement in any form which, if disclosed in tangible form, is or
was labeled “Confidential”, “Proprietary” or with a similar legend, or if
disclosed orally, is or was information that by its nature would be understood
to be confidential to the Discloser. For greater certainty, the Confidential
Information of Digimarc includes the Digimarc IPR and the [**];

 

[**]”Counterfeit
Deterrence System” (or “CDS” or “System”) [**]

“Digimarc
IPR” means Intellectual Property Rights owned by Digimarc, now or during
the Term of this Agreement, to the extent that same specifically relates to or
forms part of the CDS;

 

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

 

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

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

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

4.             slight changes to [**]; or

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

 

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

 

“DLA
Contract Authority” means the individual appointed as such under the
BIS License;

 

[**]

“Effective
Date” means the date on which this Agreement is last signed by the parties;

 

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

 

 

[**]

“Field
of Use” means the field of [**]

 

“Improvement” means an
improvement provided to BIS under clause 2.14 of the BIS License;

 

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

 

[**]

[**]

“[**]
License” means Schedule L-1 to the BIS License;

 

[**]

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

 

“Services” means the
Verification Tests and any other service performed by Digimarc under this
Agreement;

 

“Term” means the
period commencing on the Effective Date and ending on the earlier of 31 December [**]
or the date of termination of this Agreement; and

 

“Verification
Test” means a test or tests developed under the BIS License to determine
[**]

 

1.2           Interpretation - In this Agreement:

 

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

 

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

 

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

 

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

 

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

 

 

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

 

(a)                                  this Agreement,
excluding Attachments, and

 

(b)                                 the
Attachments;

 

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

 

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

 

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

 

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

 

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

 

	
  Attachment

  	
   

  	
  Description

  
	
  Attachment
  “1”

  	
   

  	
  [**]

  
	
  Attachment
  “2”

  	
   

  	
  Problem
  Report

  
	
  Attachment
  “3”

  	
   

  	
  Payment
  for Services

  
	
  Attachment
  “4”

  	
   

  	
  [**]

  
	
  Attachment
  “5”

  	
   

  	
  [**]

  

 

2.             GRANT OF RIGHTS  AND SERVICES

 

2.1           Subject to the terms of this
Agreement, Digimarc hereby grants to [**], a no charge, non-exclusive,
non-transferable license under the Digimarc IPR and the BIS IPR, in the Field
of Use only, [**]

 

2.2           [**] acknowledges and agrees that the
Digimarc IPR, and any technology developed by Digimarc during the course of its
forthcoming and prior work with [**], is the property of Digimarc and that [**]
has no right to sublicense it. [**] acknowledges that a [**] may not [**]

 

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

 

 

2.3                                 [**]
acknowledges and agrees that the BIS IPR is the property of its owner and that
[**] has no right to sublicense it.

 

2.4                                 Nothing
in this Agreement shall be construed to grant, by implication or otherwise, any
broader rights than those specifically granted herein.

 

2.5                                Commencing
no later than ten (10) Business Days after every written request made
during the Term by [**], Digimarc shall make an irrevocable offer, which offer
shall remain open for acceptance within sixty (60) days of receipt [**]

 

2.6                                Commencing
no later than twenty (20) Business Days after every written request made by
[**] during the Term, Digimarc shall conduct Verification Tests of specified
[**] on a date or dates agreed between Digimarc and [**] for the charges
specified in clause 3.

 

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

 

3.                                     SERVICE
FEES

 

3.1                                [**]
shall pay to Digimarc a fee for the 
Services as detailed below.  The
fee for Services provided pursuant to any prior agreements between the parties
referenced herein shall be as set forth therein.  Otherwise, the fee for Services provided:

 

(a)                                 on
or before 31 December [**], is as set out in Attachment 3;

 

(b)                                after
31 December [**], will be no greater than the fee then paid to Digimarc
for similar services by Digimarc’s most favoured customer.

 

3.2                                Shipments
of [**], [**] and related documentation shall be by air, Cost, Insurance &
Freight (C.I.F.) closest major airport (i.e., Digimarc shall be responsible for
transportation and insurance to this port of entry).  Except as otherwise expressly provided in
this Agreement, [**] shall pay Digimarc all sales, use, goods and services or
other similar taxes levied by any government in the United States or the
country of the [**] principal place of business which Digimarc is obliged to collect
and remit to such government(s) in connection with any amount paid by [**]
to Digimarc under this Agreement.

 

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

 

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

 

 

4.                                      NUMBER NOT USED

 

5.                                      [**]
RESPONSIBILITIES

 

5.1                                 [**]
shall make every reasonable effort, including obtaining a legally binding
commitment from all [**], to ensure that the [**] do not use the BIS IPR or the
Digimarc IPR, or permit or suffer the BIS IPR or the Digimarc IPR to be used,
for any purpose other than [**].

 

5.2                                 If
[**] learns, or has reasonable cause to believe, that any [**] has used, or
permitted or suffered to be used, or proposes to use or permit or suffer to be
used, the BIS IPR or the Digimarc IPR except as expressly authorised herein,
[**] shall immediately notify Digimarc and the DLA Contract Authority, and [**]
shall use all reasonable efforts, at its own expense,  to prevent any further such use including
exercising whatever legal remedies (including, without limitation, an application
for injunctive relief) are available to [**]. 
[**] shall, immediately on notice by Digimarc, assign to Digimarc any
right of action which [**] may have to prevent any further such use. Following
such assignment, [**] shall cooperate with Digimarc to achieve the successful
prosecution, or, if elected by Digimarc, settlement, of any such action.

 

5.3                                 [**]
shall promptly report to Digimarc every instance which comes to its attention
of:

 

(i)                                     a
failure of the [**] to meet the specifications established under the BIS
Agreement in the form of the Problem Report attached as Attachment 2; or

 

(ii)                                  unauthorised
access to the [**] in the possession of a [**]; or

 

(iii)                               failure
of any [**] or [**] provided by Digimarc to [**] in response to the attempted
[**].

 

5.4                                 [**]
shall inform Digimarc within thirty (30) days after the end of each calendar
quarter during the Term  of all
improvements  relating to (i) Digital
Watermarks [**]; (ii) the technology for [**] Digital Watermarks [**], and
(iii) the technology for [**] Digital Watermarks [**] (iv) any other
part of the CDS, which improvements [**] has made, or caused or permitted to be
made, as a result of access to and use of the Digimarc Confidential
Information. The first such information shall be provided to Digimarc within
thirty (30) days after the first calendar quarter following said access, and
shall cover improvements made from the date the [**] first learned of the
Digimarc Confidential Information. 
Following the provision of the information under this clause 5.4, [**]
shall provide to Digimarc within a reasonable period of time following request,
the Technical Information for those improvements requested by Digimarc in
writing.

 

5.5                                 [**]
hereby grants to Digimarc a royalty-free, non-exclusive, sub-licensable,
worldwide license to use the improvements described in clause 5.4 and in any
patents thereon owned or otherwise licenseable by [**].

 

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

 

 

5.6                                 Such
license shall continue until this Agreement expires or is terminated, or until
[**] has no further rights to Digimarc IPR, whichever occurs last.

 

5.7                                 For
greater certainty, the obligations set out in clauses 5.4, 5.5 and 5.6 shall
not apply to any such improvement which the [**] can demonstrate would have
been made irrespective of access to the Digimarc Confidential Information.

 

5.8                                 [**]
(or Digimarc if [**] so designates), shall conduct Verification Tests on
representative samples of [**] the BIS. 
A report detailing the results of the Tests shall be prepared and
promptly provided to BIS.

 

5.9                                 If
[**] designates Digimarc to conduct the tests:

 

(i)                                     on
or before December 31, [**], [**] shall pay Digimarc the fees set out
in  Attachment 3;

 

(ii)                                  after
December 31, [**], [**] shall pay Digimarc the fees then paid to Digimarc
for similar services by Digimarc’s most favoured customer.

 

5.10                           In
the event that said Tests do not indicate, to [**] satisfaction, that [**]
standards detailed in the Verification Tests, [**] will require the [**] to
immediately take whatever corrective action(s) [**] considers appropriate.

 

5.11                           [**]
shall advise Digimarc in writing in advance of any changes which [**] may, at
its sole discretion, make from time to time to the information set forth in
Attachments 4 and 5.

 

6.                                      CONFIDENTIALITY

 

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

 

6.2                                 The
Recipient shall protect the Confidential Information of the Discloser from

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

 

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

 

6.4                                 A
Recipient may, on a need to know basis, and only for the purposes  described in clause 6.1, give the other
party’s Confidential Information to the Recipient’s employees or

 

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

 

 

authorized subcontractors provided that such employee or subcontractor
shall have entered into a non-disclosure agreement in respect of such
Confidential Information in favour of the Discloser on terms materially similar
to the provisions of this clause 6.

 

6.5                                 The
obligations set out in this clause 6 will not apply to any Confidential
Information that:

 

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

 

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

 

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

 

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

 

Notwithstanding the foregoing, the fact that Confidential Information,
or any part thereof, can be linked together by a search of publications and
other information, followed by a selection of a series of such items of
knowledge from unconnected sources, and fitting together those items of
knowledge so as to duplicate or recreate any item of Confidential Information,
shall not be deemed to cause the Confidential Information, or any part thereof,
to be included within exceptions (a), (b) or (c), above.

 

6.6                                 [**]
shall not make any disclosure of Digimarc Confidential Information to [**]
which is not licensed by Digimarc, except as expressly and previously
authorized in writing by Digimarc. 
Disclosure to [**] shall only be made if and to the extent reasonably
necessary for [**] to fulfill its obligations to [**].

 

6.7                                 The
obligations of the parties under this clause 6 will survive the Term or sooner
termination of this Agreement and will remain in full force and effect
regardless of the cause of any termination.

 

6.8                                 Nothing
in this Agreement shall be construed to require [**] to disclose any
information which is confidential to a third party including for greater
certainty [**].

 

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

 

 

7.                                      INTELLECTUAL
PROPERTY INDEMNIFICATION

 

7.1                                 [**]
shall provide Digimarc with prompt written notice of any claim, demand or
action against [**] based on an allegation that the  Digimarc IPR or any part thereof, infringes
any Intellectual Property Right of any person (referred to below as a “Claim”).

 

7.2                                 Subject
to the limitations set out in clauses 7.3 to 7.6 inclusive, Digimarc shall, at
its own expense:

 

(a)                                  
negotiate the resolution of any such Claim;

 

(b)                                 pay
all costs associated with the Claim; and

 

(c)                                  defend
any action based on the Claim.

 

7.3                                 [**]
shall, at Digimarc’s expense, comply with all reasonable requests by Digimarc
for assistance from [**] in connection with the settlement or defence of the
Claim.

 

7.4                                 Notwithstanding
any other provision of this Agreement to the contrary, but subject to the
limitations in this clause 7, Digimarc shall indemnify [**]  against and save [**] harmless from all loss,
costs, liabilities including an award of damages, and expenses, including legal
fees, arising from each Claim first notified to Digimarc prior to 31 December [**].  The obligation set out in this clause 7 shall
not apply in respect of any settlement made by [**] without the consent of
Digimarc.

 

7.5                                 For
the purposes of clauses 7.2 through 7.4 inclusive, “Claim” shall mean any
Claim, other than a Claim for patent infringement which Digimarc can
demonstrate occurred without Digimarc acting recklessly or negligently.

 

7.6                                 The
provisions of this Section 7 shall apply to any prior Agreements between
the parties referenced herein as if fully set forth therein.

 

8.                                      REPRESENTATIONS
AND WARRANTIES OF DIGIMARC

 

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

 

(a)                                  the
Services provided under this Agreement will be of professional quality
conforming to generally accepted practices for like services and will be
performed at all times in a timely and cost effective manner and, for greater
certainty Digimarc shall employ the standard of care in performing the
Services  that would be expected of an
expert [**] of the same or similar type as the [**] which comprises the [**];

 

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

 

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

 

 

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

 

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

 

(e)                                  Digimarc
will at all material times have the right to grant the licenses to the Digimarc
IPR as required by this Agreement.

 

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

 

(a)                                  incorporated
as part of its [**];

 

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

 

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

 

(ii)                                  require
action or intervention by Digimarc or any other person to allow properly trained
and authorized persons to use the [**];

 

(c)         the source code for the
[**] will support the year 2000 and neither performance nor functionality will
be affected by dates prior to, during and after the year 2000, and for greater
certainty, the [**] will switch to 1 January 2000 on 1 January 2000,
and the year 2000 will be recognized as a leap year.

 

9.                                     REPRESENTATIONS
AND WARRANTIES OF [**]

 

9.1                              [**]
represents and warrants to Digimarc that:

 

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

 

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

 

9.2                                 [**]
makes no representations, warranties or undertakings that [**] has any right to
grant the licenses required to be granted by clause 5.5 and Digimarc shall be
solely responsible for

 

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

 

 

determining that such improvements are suitable for the intended use
and for the consequences of any use of the same whether by Digimarc or others,
and [**] hereby disclaims all liability in connection therewith.

 

10.                               TERM
AND TERMINATION

 

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

 

10.2                           Either
party may terminate this Agreement if the other party breaches any of its
obligations under this Agreement and fails to remedy such breach within thirty
(30) days after receiving written notice of such breach from the other party.

 

10.3                           Upon
termination of this Agreement:

 

(a)                                  all
rights granted to [**] under this Agreement will immediately terminate.  No interest in any such rights will
thereafter remain with [**],except that [**] that have already been produced
will continue to be licensed, but no further production of [**] for [**] shall
be permitted; and

 

(b)                                 each
party shall return, or certify the destruction of, to the Discloser, all
originals and copies of the  Discloser’s
Confidential Information in the party’s possession or control which the party
does not need to retain in order to exercise any rights acquired by this
Agreement.

 

10.4                           No termination of this
Agreement will in any manner release, or be construed as releasing, any party from
any liability arising out of or in connection with that party’s breach of or
failure to perform any covenant, duty or obligation contained herein prior to
the date of such termination.

 

10.5                           Upon
termination of the BIS License by Digimarc for cause, the rights of the [**]
hereunder to use the Digimarc IPR shall be deemed to be restricted to the [**]
as of the date of such termination.

 

11.                             DISPUTE
RESOLUTION

 

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

 

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

 

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

 

 

continue to perform services which are the subject matter of the
proceedings and Digimarc shall act in accordance with those instructions,
subject to payment under clause 3.1.

 

12.                              MISCELLANEOUS
PROVISIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  Name 1

  	
   

  	
  Name 2

  
	
  Address 1

  	
   

  	
  Address 2

  

 

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

 

	
  Mr. Robert Chamness

  	
   

  	
  Mr. Scott Carr

  
	
  Vice President and General Counsel

  	
   

  	
  President, Digimarc Watermarking

  Solutions

  
	
  Digimarc Corporation

  	
   

  	
  Digimarc Corporation

  
	
  9405 SW Gemini Drive

  	
   

  	
  9405 SW Gemini Drive

  
	
  Beaverton, OR 97008

  	
   

  	
  Beaverton, OR 97008

  
	
  Fax: (503) 469-4777

  	
   

  	
  Fax: (503) 469-4777

  

 

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

 

 

12.5                           A
copy of every notice sent by either party shall be sent to: [**] Bank for
International Settlements,[**].

 

12.6                           A
party may change its address for notice by notice to the other party in
accordance with the foregoing provisions.

 

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

 

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

 

12.9                           Entire Agreement. 
With the exception of any prior agreements between the parties
referenced herein, this Agreement is intended by the parties to be the final
expression of their agreement and constitutes and embodies the entire agreement
and understanding between the parties hereto and constitutes a complete and
exclusive statement of the terms and conditions thereof, and will supersede any
and all prior correspondence, conversations, negotiations, agreements or
understandings relating to the same subject matter.  In case of a conflict of any prior agreements
between the parties referenced herein and this Agreement, the latter shall
control.

 

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

 

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

 

12.12                     Assignment and Successors.   
This Agreement may not be assigned by [**] without Digimarc’s consent,
which consent shall not be unreasonably withheld or delayed. This Agreement and
all of its terms, conditions and covenants are intended to be fully effective
and binding, to the extent permitted by law, on the successors and permitted
assigns of the parties hereto.

 

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

 

 

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

 

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

 

12.15                     Publicity.   The
parties agree that from time-to-time it will be beneficial to both parties to
issue press releases and other public announcements concerning benefits arising
from the CDS. Each party agrees to submit for approval by the other party any
press release that involves the other party, which approval shall not
unreasonably be withheld.

 

12.16                     Effectiveness.  This
Agreement shall not be effective until it is signed by both of the parties.

 

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

 

12.18                     Survival.    All
clauses of this Agreement which expressly or by implication are intended to
survive the termination of this Agreement will do so and, for greater certainty
and notwithstanding any provision in this Agreement to the contrary, the
provisions of clauses 3.2, 3.3, 5.1, 5.2, 5.5, 5.6, 6, 7,11, and 12 of this
Agreement shall survive termination of this Agreement by either party for any
reason.

 

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

 

	
  DIGIMARC CORPORATION

  	
   

  	
  << [**]>>

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  

 

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

 

 

ATTACHMENT 1

 

[**]

 

[**] will cause the following [**] to take
place:

 

(a)                                  [**]

[**](b)           [**]

[**](c)            [**]

 

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

 

 

ATTACHMENT 2

 

PROBLEM REPORT

 

Each problem report will contain all information necessary to reproduce
or demonstrate the occurrence of the problem. 
Problem reports will be in English and will be delivered electronically
in a format to be provided by Digimarc.

 

Problem reports will contain:

 

·                  Date
problem was encountered

·                  Detailed
description of the problem, including the frequency with which the problem
occurs

·                  Name and version number of
the program / system component that exhibits the problem

·                  Step by step instructions to
reproduce the problem

·                  All data files required to
reproduce the problem

·                  [**]Manufacturer and Model

·                  CPU type and speed

·                  Amount of memory

·                  Operating System and Version

·                  Disk Configuration (number
of drives, total space per drive, free space per drive)

·                  Display Adapter Model,
Resolution, Number of colors

·                  Peripheral configuration
(where applicable)[**]TWAIN driver and version number

·                  [**]

·                  Severity of problem

·                  Contact information for
person to contact for further information (name, phone number, FAX number, email
address)

 

[**] agrees to work with Digimarc to provide reasonable additional
information and perform reasonable additional tests, as requested by Digimarc,
to assist Digimarc in resolution of the problem.

 

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

 

 

ATTACHMENT 3

 

PAYMENT FOR SERVICES

 

Digimarc shall bill [**] for services in one hour increments at the
following hourly rates:

 

	
  Technical/Design Consultant

  	
   

  	
  [**]

  
	
  Senior Engineer

  	
   

  	
  [**]

  
	
  R&D/Engineering Executive

  	
   

  	
  [**]

  
	
  Project Manager

  	
   

  	
  [**]

  
	
  Administrator/Scheduler

  	
   

  	
  [**]

  

 

Fees for services will be invoiced on the earlier of 1) the last day of
the month or 2) the completion of the Services. 
Invoices are due thirty (30) days from the date of receipt of a correct
invoice.  A late charge of 1.5% per month
will be charged on any late payments. 
All fees are due and payable in US funds.

 

[**] will reimburse Digimarc for all out-of-pocket expenses reasonably
and necessarily incurred in providing the Verification Tests and other
services.  Expenses will be itemized and
reported by category.  Out-of-pocket
expenses will not be “marked up” by Digimarc. 
Costs include, but are not limited to, reasonable travel and lodging
expenses, telephone and fax charges, postage and overnight deliveries, and
charges for rental equipment or materials purchased specifically to be used in
providing the Verification Tests and other services.  All invoices for out-of-pocket expenses will
be issued monthly in arrears and are due thirty (30) days from the date of
receipt of a correct invoice.  Supporting
receipts and vouchers will be available for review at Digimarc’s offices.  A late charge of 1.5% per month will be
charged on any late payments. Payments will additionally include Value Added
taxes and other tariffs and fees that may be imposed by any governments other
than the United States of America.

 

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

 

 

ATTACHMENT 4

 

IDENTIFICATION OF [**]

 

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

 

 

ATTACHMENT 5

 

[**]

 

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

 

 

SCHEDULE “K-2”

 

[**] LICENSE AGREEMENT - [**]

 

This [**] LICENSE AGREEMENT
(the “Agreement”) is made

 

BETWEEN

 

<name and address of [**]> (“[**]”)

 

- AND -

 

DIGIMARC CORPORATION,
a corporation incorporated under the laws of Delaware and having its head
office at 9405 SW Gemini Drive, Beaverton, OR 97006 (“Digimarc”)

 

RECITALS

 

Digimarc has expertise in, and owns extensive intellectual property,
including patents, patent applications, copyrights and trade secrets related to
digital watermarks, counterfeit deterrence, copyright protection, and device
control (the “Digimarc IPR”); and

 

The Bank for International Settlements (“BIS”) possesses or will
possess intellectual property rights related to the application of such
intellectual property to the detection and deterrence of bank note
counterfeiting; and

 

Digimarc and [**] have cooperated in the development of means, using
such intellectual property, to detect and deter the counterfeiting of bank
notes [**] (the “Counterfeit Deterrence System” or “CDS”); and

 

[**] desires to obtain a license to certain components of the CDS so it
can have [**] which include the CDS counterfeit deterring [**].

 

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

 

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

 

 

I.                                         DEFINITIONS
AND PRINCIPLES OF INTERPRETATION

 

1.1                                 Definitions

 

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

 

“Arbitration
Agreement” means the Arbitration Agreement entered
into between the parties and others effective 1 January 1999, as amended
from time to time;

 

“Attachment”
means a document specified as being attached to this Agreement;

 

[**]”BIS”
refers to Bank for International Settlements, created pursuant to the Hague
Agreements of January, 1930, and having its head office at Centralbahnplatz 2,
CH-4051 Basle, Switzerland;

 

[**]”BIS IPR” [**] BIS [**] the CDS;[**]”BIS License” [**] BIS [**] BIS [**]

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

 

“Confidential Information” means information disclosed before or during the
Term of this Agreement in any form which, if disclosed in tangible form, is or
was labelled “Confidential”, “Proprietary” or with a similar legend, or if
disclosed orally, is or was information that by its nature would be understood
to be confidential to the Discloser.  For
greater certainty, the Confidential Information of Digimarc includes the
Digimarc IPR and [**];

 

[**]”Counterfeit
Deterrence System” (or “CDS” or “System”) [**]

 

“Digimarc IPR” means Intellectual Property
Rights owned by Digimarc,
now or during the Term of this Agreement, to the extent that same specifically
relates to or forms part of the CDS;

 

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

 

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

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

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

4.                                       slight
changes to [**]; or

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

 

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

 

“DLA Contract Authority” means the individual appointed as such under the BIS License;

 

[**]

 

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

 

 

[**]

[**]

[**]

“Effective Date” means the date on which this
Agreement is last signed by the parties;

 

[**]

“Field of Use” means the field of [**];

 

“Improvement” means an improvement provided to
BIS under clause 2.14 of the BIS License;

 

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

 

[**]

[**]

“[**] License” means Schedule L-2 to the BIS License;

 

[**]

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

 

“Services” means the Verification Tests and
any other service
performed by Digimarc under this Agreement;

 

“Term” means the period commencing on the
Effective Date and
ending on the earlier of 31 December [**] or the date of termination
of this Agreement; and

 

“Verification Test” means a test or tests developed
under the BIS License  to determine if a
[**].

 

1.2                                 Interpretation - In this
Agreement:

 

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

 

1.2.2                        the use of words in the singular
or plural, or with a
particular gender, shall not limit the scope or exclude the application of any
provision of this Agreement to such person or persons or circumstances as the
context otherwise permits;

 

1.2.3                        whenever a provision of this
Agreement requires an approval or consent by a party to this Agreement and
notice of such approval or consent is not delivered within the applicable time, then the party shall be
conclusively deemed to have withheld the consent or approval;

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

1.2.4                        unless otherwise specified, the
number of days within or following which any payment is to be made or act is to
be done shall be interpreted  to be continuous and shall be calculated by excluding the day on
which the period commences and including the day which ends the period and by
extending the period to the next Business Day if the last day of the period is
not a Business Day;

 

1.2.5                        unless otherwise specified, the
order of precedence
for interpreting this Agreement shall be:

 

(a)                                  this Agreement, excluding
Attachments, and

 

(b)                                 the Attachments;

 

1.2.6                        for greater certainty, a party or representative to which this Agreement grants
the right to make a decision or determination in the sole discretion of the
party or representative is not required to act reasonably in making the
decision or determination and no such decision or determination may be
challenged by the other party under the Arbitration Agreement or otherwise;

 

1.2.7                        the words “includes” or “including”
will be construed as meaning “included without limitation” and “including
without limitation” as the case may be; and

 

1.2.8                        a clause or Attachment, unless the
context requires otherwise, is a reference to a clause to, an Attachment of, or
a paragraph of an Attachment to, this Agreement, as amended from time to time
in accordance with this Agreement.

 

1.3                                 Applicable Law - This Agreement
shall be construed in accordance with the laws of England to the exclusion of
its rules of conflicts of laws.

 

1.4                                 Attachments - The attachments to
this Agreement, listed below, are an integral part of this Agreement:

 

	
  Attachment

  	
   

  	
  Description

  
	
  Attachment “1”

  	
   

  	
  [**]

  
	
  Attachment “2”

  	
   

  	
  Opinion of Counsel

  
	
  Attachment “3”

  	
   

  	
  Problem Report

  
	
  Attachment “4”

  	
   

  	
  Payment for Services

  
	
  Attachment “5”

  	
   

  	
  [**]

  
	
  Attachment “6”

  	
   

  	
  [**]

  

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

2.                                      GRANT OF RIGHTS  AND
SERVICES

 

2.1                                 Subject to the terms of this
Agreement, Digimarc hereby grants to [**], a no charge,  non-exclusive, non-transferable  license
under the Digimarc IPR and the BIS IPR, in the Field of Use only, [**].

 

2.2                                 [**] acknowledges and agrees that
the Digimarc IPR, and any technology developed by Digimarc during the course of
its work [**], is the property of Digimarc and that [**] has no right to
sublicense it. [**] acknowledges that [**] may not [**].

 

2.3                                 [**] acknowledges and agrees that
the BIS IPR is the property of its owner and that [**] has no right to
sublicense it.

 

2.4                                 Nothing in this Agreement shall be
construed to grant, by implication or otherwise, any broader rights than those
specifically granted herein.

 

2.5                                 Commencing no later than ten (10) Business
Days after every written request made during the Term by [**], Digimarc shall
make an irrevocable offer, which offer shall remain open for acceptance within
sixty (60) days of receipt [**]

 

2.6                                 Commencing no later than twenty
(20) Business Days after every written request made by [**] during the Term,
Digimarc shall conduct Verification Tests of specified [**] on a date or dates
agreed between Digimarc and [**] for the charges specified in clause 3.

 

2.7                                 Digimarc shall obtain at its own
expense all licenses or permits required to be obtained from the Government of
the United States in order for Digimarc to comply with its obligations under
this Agreement including, without limitation, to deliver the [**], and grant
the foregoing license to [**].

 

3.                                      SERVICE FEES

 

3.1                                 [**] shall pay to Digimarc a fee
for the Services as detailed below.  The
fee for Services provided:

 

(a)                                  on or before 31 December [**],
is as set out in Attachment 4;

 

(b)                                 after 31 December [**], will
be no greater than the fee then paid to Digimarc for similar services by
Digimarc’s most favoured customer.

 

3.2                                 Shipments of [**], [**] and
related documentation shall be by air, Cost, Insurance and Freight (C.I.F.)
closest major airport (i.e., Digimarc shall be responsible for transportation
and insurance to this port of entry). 
Except as otherwise expressly provided in this Agreement, [**] shall pay
Digimarc all sales, use, goods and services or other similar taxes levied by
any government in the United States or the country of the [**] principal place
of business which Digimarc is obliged to collect and remit to such government(s) in
connection with any amount paid by [**] to Digimarc under this Agreement.

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

3.3                                 Digimarc is responsible for, and
shall indemnify [**] against, and hold [**] harmless from, the payment of all
taxes levied by any government on or in respect of Digimarc’s income and any
amounts required by law to be paid in respect of social benefits for Digimarc’s
employees relating to or arising out of the performance of the Services. If
required by law, [**] shall deduct all such taxes and amounts from the amounts
otherwise payable to Digimarc and remit them to the appropriate authorities.

 

4.                                      OPINION OF
COUNSEL

 

4.1                                 Before introducing [**] shall
obtain and forward to Digimarc a written opinion of counsel substantially in
the form attached as Attachment 2 that confirms:

 

(a)                                  the validity and enforceability of
the terms of this Agreement, under the laws of the jurisdiction where [**]
resides; and

 

(b)                                 the legality of each [**] under
the laws of the jurisdiction where [**] resides.

 

4.2                                 Digimarc shall not unreasonably
withhold its consent to any qualifications which [**] counsel may require to be
made to such opinion.

 

5.                                      [**]
RESPONSIBILITIES

 

5.1                                 [**] shall make every reasonable
effort, including obtaining a legally binding commitment from all [**], to
ensure that the [**] do not use the BIS IPR or the Digimarc IPR, or permit or
suffer the BIS IPR or the Digimarc IPR to be used, for any purpose other than
[**].

 

5.2                                 If [**] learns, or has reasonable
cause to believe, that any [**] has used, or permitted or suffered to be used,
or proposes to use or permit or suffer to be used, the BIS IPR or the Digimarc
IPR except as expressly authorised herein, [**] shall immediately notify
Digimarc and the DLA Contract Authority, and [**] shall use all reasonable
efforts, at its own expense,  to prevent
any further such use including exercising whatever legal remedies (including,
without limitation, an application for injunctive relief) are available to
[**].  [**] shall, immediately on notice
by Digimarc, assign to Digimarc any right of action which [**] may have to
prevent any further such use. Following such assignment, [**] shall cooperate
with Digimarc to achieve the successful prosecution, or, if elected by
Digimarc, settlement, of any such action.

 

5.3                                 [**] shall promptly report to
Digimarc every instance which comes to its attention of:

 

(i)                   a failure of the [**] to meet the
specification established under the BIS [**] in the form of the Problem Report
attached as Attachment 3; or

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

(ii)                unauthorised access to the [**] in the
possession of a [**]; or

 

(iii)             failure of any [**] or [**] provided by
Digimarc to [**] in response to the attempted  [**].

 

5.4                                 [**] shall inform Digimarc within
thirty (30) days after the end of each calendar quarter during the Term  of all improvements  relating to (i) Digital Watermarks [**];
(ii) the technology for [**] Digital Watermarks [**], and (iii) the
technology for [**] Digital Watermarks [**] and (iv) any other part of the
CDS, which improvements [**] has made, or caused or permitted to be made, as a
result of access to and use of the Digimarc Confidential Information. The first
such information shall be provided to Digimarc within thirty (30) days after
the first calendar quarter following said access, and shall cover improvements
made from the date [**] first learned of the Digimarc Confidential
Information.  Following the provision of
the information under this clause 5.4, [**] shall provide to Digimarc within a
reasonable period of time following request, the Technical Information for
those improvements requested by Digimarc in writing.

 

5.5                                 [**] hereby grants to Digimarc a
royalty-free, non-exclusive, sub-licensable, worldwide license to use the
improvements described in clause 5.4 and in any patents thereon owned or
otherwise licenseable by [**].

 

5.6                                 Such license shall continue until
this Agreement expires or is terminated, or until [**] has no further rights to
Digimarc IPR, whichever occurs last.

 

5.7                                 For greater certainty, the
obligations set out in clauses 5.4, 5.5 and 5.6 shall not apply to any such
improvement which the [**] can demonstrate would have been made irrespective of
access to the Digimarc Confidential Information.

 

5.8                                  [**] (or Digimarc if [**] so
designates), shall conduct Verification Tests on representative samples [**]
the BIS.  A report detailing the results
of the Tests shall be prepared and promptly provided to BIS.

 

5.9                                 If [**] designates Digimarc to
conduct the tests:

 

(i)                   on or before December 31,
[**], [**] shall pay Digimarc the fees set out in  Attachment 4;

 

(ii)                after December 31, [**], [**] shall pay
Digimarc the fees then paid to Digimarc for similar services by Digimarc’s most
favoured customer.

 

5.10                           In the event that said Tests do
not indicate, to [**] satisfaction, that [**] standards detailed in the
Verification Tests, [**] will require the [**] to immediately take whatever
corrective action(s) [**] considers appropriate.

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

5.11                           [**] shall advise Digimarc in
writing in advance of any changes which [**] may, at its sole discretion, make
from time to time to the information set forth in Attachments 5 and 6.

 

6.                                      CONFIDENTIALITY

 

6.1                                 Except as otherwise expressly
permitted by this Agreement, a Recipient shall not use,  reproduce or disclose the Confidential
Information of the Discloser for any 
purpose other than as reasonably necessary to comply with its
obligations under this Agreement or to exercise any rights or licenses granted
to it under or pursuant to this Agreement.

 

6.2                                 The Recipient shall protect the
Confidential Information of the Discloser from disclosure by using the same
degree of care, which shall be no  less
than a reasonable degree of care, as the Recipient uses to protect its own
confidential information.

 

6.3                                 On written request from the
Discloser, the Recipient shall return, or certify the destruction of, all
originals and copies of the Discloser’s Confidential Information in the
Recipient’s possession or control which the Recipient does not need to retain
in order to perform any obligations imposed, or exercise any rights acquired,
by this Agreement.

 

6.4                                 A Recipient may, on a need to know
basis, and only for the purposes 
described in clause 6.1, give the other party’s Confidential
Information to the Recipient’s employees or 
authorized subcontractors provided that such employee or subcontractor
shall have entered into a non-disclosure agreement in respect of such
Confidential Information in favour of the Discloser on terms materially similar
to the provisions of this clause 6.

 

6.5                                 The obligations set out in this
clause 6 will not apply to any Confidential Information that:

 

(a)                                  is or becomes publicly available
other than through the fault of the Recipient;

 

(b)                                 was known to the Recipient prior
to disclosure as shown by documentation sufficient to establish such knowledge;

 

(c)                                  was or is lawfully disclosed to
the  Recipient by a third party who did
not breach any obligation of confidence by such disclosure and who made the disclosure
without restriction on further disclosure all of which is shown by
documentation sufficient to establish same; or

 

(d)                                 is required by law to be
disclosed  provided, however, that the
Recipient shall first give written notice to the Discloser before the
disclosure so that the Discloser may seek an appropriate protective order.

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

Notwithstanding the foregoing,
the fact that Confidential Information, or any part thereof, can be linked
together by a search of publications and other information, followed by a
selection of a series of such items of knowledge from unconnected sources, and
fitting together those items of knowledge so as to duplicate or recreate any
item of Confidential Information, shall not be deemed to cause the Confidential
Information, or any part thereof, to be included within exceptions (a), (b) or
(c), above.

 

6.6                                 [**] shall not make any disclosure
of Digimarc Confidential Information to [**] which is not licensed by Digimarc,
except as expressly and previously authorized in writing by Digimarc.  Disclosure [**] shall only be made if and to
the extent reasonably necessary for [**] to fulfill its obligations to [**].

 

6.7                                 The obligations of the parties
under this clause 6 will survive the Term or sooner termination of this
Agreement and will remain in full force and effect regardless of the cause of
any termination.

 

6.8                                 Nothing in this Agreement shall be
construed to require [**] to disclose any information which is confidential to
a third party including for greater certainty [**].

 

7.                                      INTELLECTUAL
PROPERTY INDEMNIFICATION

 

7.1                                 [**] shall provide Digimarc with
prompt written notice of any claim, demand or action against [**] based on an
allegation that the Digimarc IPR or any part thereof, infringes any
Intellectual Property Right of any person (referred to below as a “Claim”).

 

7.2                                 Subject to the limitations set out
in clauses 7.3 to 7.7 inclusive, Digimarc shall, at its own expense:

 

(a)                                   negotiate the resolution of any
such Claim;

 

(b)                                 pay all costs associated with the
Claim; and

 

(c)                                  defend any action based on the
Claim.

 

7.3                                 [**] shall, at Digimarc’s expense,
comply with all reasonable requests by Digimarc for assistance from [**] in
connection with the settlement or defence of the Claim.

 

7.4                                 Notwithstanding any other
provision of this Agreement to the contrary, but subject to the limitations in
this clause 7, Digimarc shall indemnify [**] and all of  the [**] against and save [**] and all [**]
harmless from all loss, costs, liabilities including an award of damages, and
expenses, including legal fees, arising from each Claim first notified to
Digimarc prior to 31 December [**]. 
The obligation set out in this clause 7 shall not apply in respect of
any settlement made by [**] without the consent of Digimarc.

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

7.5                                 The liability of Digimarc under
clause 7.4 of this Agreement and under the equivalent clause of every other
licence or consulting agreement entered into between Digimarc and [**] and [**]
pursuant to the provisions of the BIS License will not exceed the Indemnity
Limit as defined in clause 7.6 below.

 

7.6                                 The Indemnity Limit shall be [**],
or such higher amount as notified by Digimarc from time to time.

 

7.7                                 For the purposes of clauses 7.2
through 7.6 inclusive, “Claim” shall mean any Claim, other than a Claim for
patent infringement which Digimarc can demonstrate occurred without Digimarc
acting recklessly or negligently.

 

7.8                                 The provisions of this Section 7
shall apply to any prior Agreements between the parties referenced herein as if
fully set forth therein.

 

8.                                      REPRESENTATIONS
AND WARRANTIES OF DIGIMARC

 

8.1                                 Digimarc represents, warrants and
undertakes to [**] that from and after the Effective Date:

 

(a)                                  the Services provided under this
Agreement will be of professional quality conforming to generally accepted
practices for like services and will be performed at all times in a timely and
cost effective manner and, for greater certainty Digimarc shall employ the
standard of care in performing the Services 
that would be expected of an expert [**] of [**] of the same or similar
type as the [**] which comprises the [**];

 

(b)                                 Digimarc is duly incorporated and
organized and is validly subsisting under the laws of the State of Delaware,
U.S.A. or some other state in the United States with full corporate power and
authority to enter into this Agreement;

 

(c)                                  to the best of its knowledge,
neither this Agreement nor the Services will contravene, breach, or result in
any default under any agreement, permit, by-law, or law or regulation to which
Digimarc is subject or by which it is bound including, for greater certainty
any laws or regulations in effect in the United States governing export;

 

(d)                                 this Agreement when executed and
delivered by Digimarc shall constitute a valid and binding agreement with
Digimarc enforceable against Digimarc according to its terms; and

 

(e)                                  Digimarc will at all material
times have the right to grant the licenses to the Digimarc IPR as required by
this Agreement.

 

8.2                                 Digimarc represents, warrants and
undertakes to [**] that:

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

(a)                                  incorporated as part of [**];

 

(b)                                 [**] shall contain no lock, clock,
timer, counter, copy protection feature, replication device or intentional
defects (including but not limited to “viruses” or “worms” as such terms are
commonly used in the computer industry), CPU serial number reference, or other
device which might:

 

(i)                                     lock, disable or erase the [**] or
any data which is loaded on the [**] so as to prevent full use of the [**] by
authorized persons; or

 

(ii)                                  require action or intervention by
Digimarc or any other person to allow properly trained and authorized persons
to use the [**];

 

(c)                                  the source code for the [**] will
support the year 2000 and neither performance nor functionality will be
affected by dates prior to, during and after the year 2000, and for greater
certainty, the [**] will switch to 1 January 2000 on 1 January 2000,
and the year 2000 will be recognized as a leap year.

 

9.                                      REPRESENTATIONS
AND WARRANTIES OF [**]

 

9.1                               [**] represents and warrants to
Digimarc that:

 

(a)                                  [**] has full power and authority
to enter into this Agreement; and

 

(b)                                 this Agreement when executed and
delivered by [**] shall constitute a valid, binding and enforceable obligation
of [**].

 

9.2                                 [**] makes no representations,
warranties or undertakings that [**] has any right to grant the licenses
required to be granted by clause 5.5 and Digimarc shall be solely responsible
for determining that such improvements are suitable for the intended use and
for the consequences of any use of the same whether by Digimarc or others, and
[**] hereby disclaims all liability in connection therewith.

 

10.                               TERM AND
TERMINATION

 

10.1                           This Agreement will take effect on
the Effective Date and will remain in force throughout the Term unless sooner
terminated as provided herein.

 

10.2                           Either party may terminate this
Agreement if the other party breaches any of its obligations under this
Agreement and fails to remedy such breach within thirty (30) days after
receiving written notice of such breach from the other party.

 

10.3                           Upon termination of this
Agreement:

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

(a)                                  all rights granted to [**] under
this Agreement will immediately terminate. 
No interest in any such rights will thereafter remain with [**], except
that [**] that have already been produced will continue to be licensed, but no
further production of [**] for [**] shall be permitted; and

 

(b)                                 each party shall return, or
certify the destruction of, to the Discloser, all originals and copies of
the  Discloser’s Confidential Information
in the party’s possession or control which the party does not need to retain in
order to exercise any rights acquired by this Agreement.

 

10.4                           No termination of this Agreement will
in any manner release, or be construed as releasing, any party from any
liability arising out of or in connection with that party’s breach of or
failure to perform any covenant, duty or obligation contained herein prior to
the date of such termination.

 

10.5                           Upon termination of the BIS
License by Digimarc for cause, the rights of the [**] hereunder to use the
Digimarc IPR shall be deemed to be restricted to the [**] as of the date of
such termination.

 

11.                             DISPUTE
RESOLUTION

 

11.1                           Any Dispute (as defined in the
Arbitration Agreement) shall be finally settled by arbitration in accordance
with the Arbitration Agreement.

 

11.2                           Unless otherwise agreed between
the parties or unless the subject matter of the dispute resolution proceedings
is a party’s right to terminate this Agreement, the Services shall continue
during the dispute resolution proceedings and payments due to Digimarc shall
not be withheld on account of such proceedings unless that particular services
or payment is the subject matter of the proceedings.  Notwithstanding the foregoing, [**] may in
its sole discretion instruct Digimarc to continue to perform services which are
the subject matter of the proceedings and Digimarc shall act in accordance with
those instructions, subject to payment under clause 3.1.

 

12.                               MISCELLANEOUS
PROVISIONS

 

12.1                           Remedies
Cumulative -
Except as otherwise expressly set out in this Agreement:

 

(a)                                  each and every right, power and
remedy of a party will be considered to be cumulative with and in addition to
any other right, power and remedy which such party may have at law or in equity
in the event of breach of any of the terms of this Agreement;

 

(b)                                 the exercise or partial exercise
of any right, power or remedy will neither constitute the exclusive election
thereof nor the waiver of any other right, power or remedy available to such
party; and

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

(c)                                  a party terminating this Agreement
in accordance with the provisions of the Termination clause will have no
liability or obligation to the other as a result of or with respect to the
termination.

 

12.2                           Notices.  
All notices under this Agreement shall be delivered by fax or recognized
international courier service.  The notice
shall be deemed effective as of the date of delivery to the address of the
party specified below, as evidenced by a delivery receipt or the addressee’s
registry of incoming correspondence. 
Unless otherwise expressly set out in this Agreement, all notices to a
party will be sent to the party’s authorized representative identified below
and all notices from a party will be sent by the party’s authorized
representative identified below.

 

12.3                           Any notice to [**] shall be sent
to both of, and any notice from [**] shall be sent by either:

 

	
  Name1

  	
  Name2

  
	
  Address1

  	
  Address2

  

 

12.4                           Any notice to Digimarc shall be
sent to both of, and any notice from Digimarc shall be sent by either:

 

	
  Mr. Robert Chamness  

  	
   

  	
  Mr. Scott Carr  

  
	
  Vice President and General
  Counsel  

  	
   

  	
  President Digimarc  

  
	
  Digimarc Corporation  

  	
   

  	
  Watermarking Solutions

  
	
  9405 SW Gemini Drive

  	
   

  	
  Digimarc Corporation  

  
	
  Beaverton, OR 97008  

  	
   

  	
  9405 SW Gemini Drive  

  
	
  Fax: (503) 469-4777

  	
   

  	
  Beaverton, OR 97008

  
	
   

  	
   

  	
  Fax: (503) 469-4777

  

 

12.5                           A copy of every notice sent by
either party shall be sent to: [**], Bank for International Settlements,[**].

 

12.6                           A party may change its address for
notice by notice to the other party in accordance with the foregoing
provisions.

 

12.7                           Severability. 
If any part of this Agreement is held by an arbitral tribunal appointed
pursuant to the Arbitration Agreement or other competent authority to be void
or unenforceable, the parties agree that such determination will not result in
the nullity or unenforceability of the remaining parts of this Agreement, which
will continue in force to the fullest extent permitted by law. The parties
further agree to replace such void or unenforceable part of this Agreement with
a valid and enforceable provision that will achieve, to the extent legally
permissible, the economic, business and other purposes of the void or
unenforceable part.

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

12.8                           Counterparts. 
This Agreement may be executed in separate counterparts, and by
facsimile, each of which will be deemed an original, and when executed,
separately or together, will constitute a single original instrument, effective
in the same manner as if the parties had executed one and the same instrument.

 

12.9                           Entire Agreement. 
This Agreement is intended by the parties to be the final expression of
their agreement and constitutes and embodies the entire agreement and
understanding between the parties hereto and constitutes a complete and exclusive
statement of the terms and conditions thereof, and will supersede any and all
prior correspondence, conversations, negotiations, agreements or understandings
relating to the same subject matter.

 

12.10                     Amendments.  
 No change in, modification of or addition to the terms and
conditions contained herein will be valid as between the parties unless set
forth in a writing that is signed by an authorized representative of each of
the parties and which specifically states that it constitutes an amendment to
this Agreement.

 

12.11                     Waiver.   No waiver of any term, provision, or condition
of this Agreement will be effective unless in a written document signed by the
waiving party and no such waiver in any one or more instances, will be deemed
to be, or be construed as, a further or continuing waiver of that term,
provision or condition or any other term, provision or condition of this
Agreement.

 

12.12                     Assignment and
Successors.    This Agreement may not be assigned by [**]
without Digimarc’s consent, which consent shall not be unreasonably withheld or
delayed. This Agreement and all of its terms, conditions and covenants are
intended to be fully effective and binding, to the extent permitted by law, on
the successors and permitted assigns of the parties hereto.

 

12.13                     Captions.  
Captions are provided in this Agreement for convenience only and they
form no part, and are not to serve as a basis for interpretation or
construction, of this Agreement, nor as evidence of the intention of the
parties hereto.

 

12.14                     Disclaimer of
Agency.   Nothing contained in this Agreement is
intended or will be construed so as to constitute the parties to this Agreement
as partners or joint venturers or as agents of each other. Neither party will
have any express or implied right or authority to assume or create any
obligations on behalf of or in the name of any other party or to bind any other
party in any contract, agreement or undertaking with any third party.  No employee of a party shall be deemed or
considered to be an employee of the other party or of both parties.

 

12.15                     Publicity.   The parties agree that from time-to-time it
will be beneficial to both parties to issue press releases and other public
announcements concerning benefits arising from the

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

CDS. Each party agrees to
submit for approval by the other party any press release that involves the
other party, which approval shall not unreasonably be withheld.

 

12.16                   Effectiveness.  This Agreement shall not be effective until it
is signed by both of the parties.

 

12.17                   Ambiguities.   Each party and its counsel have participated
fully in the review and revision of this Agreement. Any rule or
construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in interpreting this Agreement.

 

12.18                   Survival.    All clauses of this Agreement which expressly
or by implication are intended to survive the termination of this Agreement
will do so and, for greater certainty and notwithstanding any provision in this
Agreement to the contrary, the provisions of clauses 3.2, 3.3, 5.1, 5.2, 5.5,
5.6, 6, 7, 11, and 12 of this Agreement shall survive termination of this
Agreement by either party for any reason.

 

IN WITNESS WHEREOF, this Agreement has been executed
and delivered by the parties hereto as of the Effective Date.

 

	
  DIGIMARC CORPORATION

  	
   

  	
  <[**]>

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

ATTACHMENT 1

 

[**]

 

The [**] will cause the
following [**] to take place:

 

(a)                                  [**]

 

(b)                                 [**]

 

(c)                                  [**]  by {date TBD}  [**]

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

ATTACHMENT 2

 

DRAFT OPINION OF COUNSEL

 

Digimarc Corporation

9405 SW Gemini Drive

Beaverton, OR 97008

USA

 

Attention:

President and CEO

 

Dear:

 

In connection with your
proposal to grant a license to <[**]> to use the Counterfeit Deterrence
System and for no other purpose, we confirm that:

 

(a)                                  each provision of this Agreement
is valid and enforceable against <[**]> under the laws of <name of
jurisdiction>; and

 

(b)                                 none of the [**] described below,
at the time of writing, contravenes any law, regulation, policy, principle, or
doctrine in effect in the jurisdiction of the <principal place of
business/head office> of <[**]>.

 

<[**]>

 

Yours truly,

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

ATTACHMENT 3

 

PROBLEM REPORT

 

Each problem report will
contain all information necessary to reproduce or demonstrate the occurrence of
the problem.  Problem reports will be in
English and will be delivered electronically in a format to be provided by Digimarc.

 

Problem reports will contain:

 

·                  Date problem was encountered

·                  Detailed
description of the problem, including the frequency with which the problem
occurs

·                  Name and version number of the
program / system component that exhibits the problem

·                  Step by step instructions to reproduce the problem

·                  All data files required to reproduce the problem

·                  [**]Manufacturer and Model

·                  CPU type and speed

·                  Amount of memory

·                  Operating System and Version

·                  Disk Configuration (number of drives, total space per
drive, free space per drive)

·                  Display Adapter Model, Resolution, Number of colors

·                  Peripheral configuration (where applicable)[**]TWAIN
driver and version number

·                  [**]

·                  Severity of problem

·                  Contact information for person to contact for further
information (name, phone number, FAX number, email address)

 

Licensee agrees to work with
Digimarc to provide reasonable additional information and perform  reasonable additional tests, as requested by
Digimarc, to assist Digimarc in resolution of the problem.

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

ATTACHMENT 4

 

PAYMENT FOR SERVICES

 

Digimarc shall bill [**] for
services in one hour increments at the following hourly rates:

 

	
  Technical/Design Consultant

  	
  [**]

  
	
  Senior Engineer

  	
  [**]

  
	
  R&D/Engineering Executive

  	
  [**]

  
	
  Project Manager

  	
  [**]

  
	
  Administrator/Scheduler

  	
  [**]

  

 

Fees for services will be
invoiced on the earlier of 1) the last day of the month or 2) the completion of
the Services.  Invoices are due thirty
(30) days from the date of receipt of a correct invoice.  A late charge of 1.5% per month will be
charged on any late payments.  All fees
are due and payable in US funds.

 

[**] will reimburse Digimarc
for all out-of-pocket expenses reasonably and necessarily incurred in providing
the Verification Tests and other services. 
Expenses will be itemized and reported by category.  Out-of-pocket expenses will not be “marked up”
by Digimarc.  Costs include, but are not
limited to, reasonable travel and lodging expenses, telephone and fax charges,
postage and overnight deliveries, and charges for rental equipment or materials
purchased specifically to be used in providing the Verification Tests and other
services.  All invoices for out-of-pocket
expenses will be issued monthly in arrears and are due thirty (30) days from
the date of receipt of a correct invoice. 
Supporting receipts and vouchers will be available for review at
Digimarc’s offices.  A late charge of
1.5% per month will be charged on any late payments. Payments will additionally
include Value Added taxes and other tariffs and fees that may be imposed by any
governments other than the United States of America.

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

ATTACHMENT 5

 

IDENTIFICATION OF [**]

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

ATTACHMENT 6

 

[**]

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

SCHEDULE “L-1”

 

[**] LICENSE AGREEMENT - [**]

 

This [**] LICENSE AGREEMENT (the “Agreement”) is made

BETWEEN

 

<name and address of Licensee>
(“Licensee”)

 

- AND -

 

DIGIMARC CORPORATION,
a corporation incorporated under the laws of Delaware and having its head
office at 9405 SW Gemini Drive, Beaverton, Oregon. U.S.A.  97006 (“Digimarc”)

 

“[**]”

 

RECITALS

 

Digimarc has expertise in, and owns extensive intellectual property,
including patents, patent applications, copyrights and trade secrets related to
digital watermarks, counterfeit deterrence, copyright protection, and device
control;

 

The Bank for International Settlements (“BIS”) possesses or will
possess intellectual property rights related to the application of such
intellectual property to the detection and deterrence of bank note
counterfeiting; and

 

Digimarc and BIS have cooperated in the development of means, using
such intellectual property, to detect and deter the counterfeiting of bank
notes[**] and [**] (the “Counterfeit Deterrence System” or “CDS”); and

 

Digimarc is licensing its CDS [**] authorized by a duly licensed [**],
and

 

Licensee, having been authorized by a duly licensed [**], desires
access to such technology so that Licensee can include Digimarc’s [**];

 

In consideration of these premises,
the covenants set out in this Agreement and for other good and valuable
consideration, the receipt and adequacy of which are acknowledged by each of
the parties, the parties agree as follows:

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

1.                                      DEFINITIONS
AND PRINCIPLES OF INTERPRETATION

 

In this Agreement:

 

“Agreement” means these articles of agreement,
including the Attachments, and those documents as specified or referenced in
this Agreement as forming part of the Agreement, all as may be amended from
time to time;

 

“Arbitration Agreement” means the Arbitration
Agreement entered into between the parties and others effective 1 January 1999,
as amended from time to time;

 

“Attachment” means a document specified as being
attached to this Agreement;

 

[**]”BIS” refers to Bank for International
Settlements, created pursuant to the Hague Agreements of January, 1930, and
having its head office at Centralbahnplatz 2, CH-4051 Basle, Switzerland;

 

[**]”BIS Agreement” [**] BIS [**] BIS
[**]”BIS IPR” [**] BIS [**] the CDS;

 

“Business Day” means a day on which both
Digimarc and Licensee are open for business at their respective addresses noted
above;

 

“Confidential Information” means information
disclosed before or during the Term of this Agreement in any form which, if
disclosed in tangible form, is or was labeled “Confidential”, “Proprietary” or
with a similar legend, or if disclosed orally is or was information that by its
nature would be understood to be confidential to the Discloser. For greater
certainty, the Confidential Information of Digimarc includes the Digimarc IPR
and the [**]

 

[**]”Counterfeit Deterrence System” (“CDS” or “System”) [**]

 

“Consulting Services” means the Integration
Support and all other services that Digimarc provides to Licensee regarding
[**], and such other matters as Licensee may request and Digimarc agrees to
provide, pursuant to this Agreement;

 

“Digimarc IPR” means Intellectual Property
Rights owned by Digimarc, now or during the Term of this Agreement, to the
extent that same specifically relates to or forms part of the CDS;

 

“Digital Watermark”
refers to [**] (including [**]) that are [**] from [**] by [**] of [**], which
[**] of [**] and yet do not significantly [**] from the aesthetics of the [**]
or [**] thereby.  Examples include, but
are not limited to:

 

1.                                       generally
imperceptible changes to [**] or placement in [**];

2.                                       [**]
of a substrate, where the [**] substantially uniform to human touch;

3.                                       slight
localized changes to [**] or [**] of a printed document;

4.                                       slight
changes to [**]; or

5.                                       [**]
of substantially [**];

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

“Discloser” means a party that has disclosed
or otherwise made available its Confidential Information to the other party;

 

[**]

 

“Effective Date” means the later of the date
on which this Agreement is last signed by the parties and the date on which
Digimarc receives written notice from the [**] that the Licensee is authorized
to [**];

 

[**]

 

“Field of Use” means the field of [**];

 

“Improvement” means an improvement provided to
BIS under clause 2.14 of the BIS Agreement;

 

“Installation” means installation of the
Digimarc [**] in accordance with in the design work flow of the Licensee.

 

“Integration Support” means the consulting and
programming services to be provided by Digimarc to Licensee to assist Licensee
to [**];

 

“Intellectual Property Rights” or “IPR” means all intellectual property rights existing now
and in the future including, without limitation, trade secrets, copyright,
database rights, know-how, topographies, patents and patent applications;

 

“[**]” means the [**] named above;

 

[**]

 

“Recipient” means the party to which the
Confidential Information of the other party has been disclosed or otherwise
made available;

 

“Services” means Installation, the
Verification Tests, the Training, and the Consulting Services, or any of them;

 

“Term” means the period commencing on the
Effective Date and ending on the earlier of 31 December [**] or the
date of termination of this Agreement;

 

“Training” means the training in the use of
the [**] described in Attachment 6; and

 

“Verification Test” means a test or tests
developed under the BIS Agreement to determine [**].

 

1.2                                 Interpretation - In this
Agreement:

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

1.2.1                        unless otherwise specified, all
references to money amounts are to the currency of the United States of
America;

 

1.2.2                        the use of words in the singular
or plural, or with a particular gender, shall not limit the scope or exclude
the application of any provision of this Agreement to such person or persons or
circumstances as the context otherwise permits;

 

1.2.3                        whenever a provision of this
Agreement requires an approval or consent by a party to this Agreement and
notice of such approval or consent is not delivered within the applicable time,
then, the party shall be conclusively deemed to have withheld the consent or
approval;

 

1.2.4                        unless otherwise specified, the
number of days within or following which any payment is to be made or act is to
be done shall be interpreted to be continuous and shall be calculated by
excluding the day on which the period commences and including the day which
ends the period and by extending the period to the next Business Day if the
last day of the period is not a Business Day;

 

1.2.5                        unless otherwise specified, the
order of precedence for interpreting this Agreement shall be:

 

(a)                                  this Agreement, excluding
Attachments, and

 

(b)                                 the Attachments;

 

1.2.6                         for greater certainty, a party or
representative to which this Agreement grants the right to make a decision or
determination in the sole discretion of the party or representative is not
required to act reasonably in making the decision or determination and no such
decision or determination may be challenged by the other party under the
Arbitration Agreement or otherwise;

 

1.2.7                        the words “includes” or “including”
will be construed as meaning “included without limitation” and “including
without limitation” as the case may be; and

 

1.2.8                        a clause or Attachment, unless the
context requires otherwise, is a reference to a clause to, an Attachment of, or
a paragraph of an Attachment to, this Agreement, as amended from time to time
in accordance with this Agreement.

 

1.3                                 Applicable Law - This Agreement
shall be construed in accordance with the laws of England to the exclusion of
its rules of conflicts of laws.

 

1.4                                 Attachments - The attachments to
this Agreement, listed below, are an integral part of this Agreement:

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

	
  Attachment

  	
   

  	
  Description

  
	
  Attachment”1”

  	
   

  	
  [**]

  
	
  Attachment “2”

  	
   

  	
  Problem Report

  
	
  Attachment “3”

  	
   

  	
  Payment for Services

  
	
  Attachment “4”

  	
   

  	
  [**]

  
	
  Attachment “5”

  	
   

  	
  [**]

  
	
  Attachment “6”

  	
   

  	
  Training

  

 

2.                                      GRANT OF RIGHTS

 

2.1                                 Subject to the terms of this
Agreement, Digimarc hereby grants to Licensee a no charge non-exclusive, non-transferable license in the Field of Use to use the [**],
the Digimarc IPR and the BIS IPR at the Facilities to:

 

(a)                                  [**];

 

(b)                                 [**];

 

(c)                                  [**]; and

 

(d)                                 [**] to [**].

 

2.2                                 For greater certainty, the
foregoing license applies [**].

 

2.3                                 Licensee shall not use the [**],
the Digimarc IPR or the BIS IPR at, or transfer the Digimarc IPR or BIS IPR to,
any place other than the Facilities.

 

2.4                                 Licensee acknowledges and agrees
that the Digimarc IPR, and any technology developed by Digimarc during the
course of its work with Licensee under this Agreement is the property of
Digimarc and that, except as otherwise expressly set out in this Agreement,
Licensee has no right to sublicense it. Licensee acknowledges that it may [**]
unless and until, and only during such period, that [**] is licensed therefore
by Digimarc.

 

2.5                                 Licensee acknowledges and agrees
that the BIS IPR is the property of its owner and that Licensee has no right to
sublicense it.

 

2.6                                 Nothing in this Agreement shall be
construed to grant, by implication or otherwise, any broader rights than those
specifically granted herein.

 

2.7                                 Digimarc shall obtain at its own
expense all licenses or permits required to be obtained from the Government of
the United States in order for Digimarc to comply with its obligations under
this Agreement including, without limitation, to deliver [**], and grant the
associated licenses to Licensee.

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

2.8                                 Digimarc shall inform Licensee
within thirty (30) days after the end of each calendar quarter during the Term
of all Improvements relating to [**] which Improvements Digimarc has made, or
caused or permitted to be made, during the course of its work with Licensee
under this Agreement.  Following the
provision of the information under this clause 2.8, Digimarc shall provide to
Licensee within a reasonable period of time following request, the Technical
Information for those Improvements requested by Licensee in writing.

 

2.9                                 Digimarc hereby grants to Licensee
a royalty-free, non-exclusive, sub-licenseable worldwide license to use the
Improvements described in clause 2.8 and in any patents thereon owned or
otherwise licenseable by Digimarc.  Such
license shall continue until this Agreement expires or is terminated or until
Licensee has no further rights to Digimarc IPR, whichever occurs last.

 

2.10                           For greater certainty, the
obligations set out in clauses 2.8 and 2.9 shall not apply to any such
Improvements which Digimarc can demonstrate would have been made irrespective
of Digimarc’s work with Licensee under this Agreement.

 

3.                                      SERVICES

 

3.1                                 Digimarc shall ship [**] to the
Licensee within ten (10) Business Days after the Effective Date or after
instructions from the [**] whichever is later. The shipment shall be by air,
Cost, Insurance and Freight (C.I.F.) closest major airport (i.e., Digimarc
shall be responsible for transportation and insurance to this port of entry).

 

3.2                                 Digimarc shall provide
Installation of the [**] at Licensee’s [**] for the fees described in clause
4.  The Installation will take no more
than ten (10) person days, provided the site is prepared according to a
site preparation guide to be provided to Licensee by Digimarc reasonably prior
to Installation.

 

3.3                                 Digimarc shall provide the
Training to Licensee within ten (10) Business Days after  completion of installation of the [**] or at
such other time as the parties may agree for the fees described in clause
4.  The [**] training will be designed to
be delivered by one trainer in five days for up to two trainees, provided the
trainees [**].

 

3.4                                 No later than sixty (60) Business
Days after every written request made by Licensee during the Term, Digimarc
shall provide Integration Support to Licensee on a date or dates agreed between
Digimarc and the Licensee for the fees described in clause 4.

 

3.5                                 Commencing no later than twenty
(20) Business Days after every written request made by Licensee during the
Term, Digimarc shall conduct Verification Tests of [**] on a date or dates
agreed between Digimarc and Licensee for the fees described in clause 4.

 

3.6                                 Commencing no later than five (5) Business
Days after every written request therefore made by Licensee during the Term,
Digimarc shall schedule Consulting Services, which Services

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

shall commence not less than
thirty (30) Business Days after the written request or at such other time
agreed between Digimarc and Licensee.

 

3.7                                 Digimarc shall periodically
apprise Licensee of Improvements which Digimarc makes to the [**].  Rights to employ such Improvements shall
automatically be granted to Licensee pursuant to the terms of clause 2 at no
additional charge to Licensee.

 

4.                                      FEES

 

4.1                                 Licensee shall pay to Digimarc a
fee for the Services as detailed below. 
The fee for Services provided:

 

(a)                                  on or before 31 December [**],
is as set out in Attachment 3;

 

(b)                               after 31 December [**], will
be no greater than the fee then paid to Digimarc for similar services by
Digimarc’s most favoured customer.

 

4.2                                 Except as otherwise expressly
provided in this Agreement, Licensee shall pay Digimarc all sales, use, goods
and services or other similar taxes levied by any government in the United
States or the country of the Licensee’s principal place of business which
Digimarc is obliged to collect and remit to such government(s) in
connection with any amount paid by Licensee to Digimarc under this Agreement.

 

4.3                                 Digimarc is responsible for, and
shall indemnify Licensee against, and hold Licensee harmless from, the payment
of all taxes levied by any government on or in respect of Digimarc’s income and
any amounts required by law to be paid in respect of social benefits for
Digimarc’s employees relating to or arising out of the performance of the
Services. If required by law, Licensee shall deduct all such taxes and amounts
from the amounts otherwise payable to 
Digimarc and remit them to the appropriate authorities.

 

5.                                      NUMBER NOT USED

 

6.                                      LICENSEE RESPONSIBILITIES

 

6.1                                 Licensee shall promptly report to
Digimarc every instance which comes to its attention of:

 

(i)                                     [**] to meet the specifications established
under the  BIS Agreement in the form of
the Problem Report attached as Attachment 2;

 

(ii)                                  unauthorised access to the [**] in
the possession of  Licensee; or

 

(iii)                               [**]

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

6.2                                 Licensee shall inform Digimarc
within thirty (30) days after the end of each calendar quarter during the Term
of all improvements relating to (i) Digital Watermarks [**]; (ii) [**]
Digital Watermarks [**], (iii) [**] Digital Watermarks [**] and (iv) any
other part of the CDS, which improvements Licensee has made, or caused or
permitted to be made, as a result of knowledge of Digimarc Confidential
Information.  The first such information
shall be provided to Digimarc within thirty (30) days after the Effective Date
and shall cover improvements made from the date Licensee first learned of  the Digimarc Confidential Information.
Following the provision of the information under this clause 6.2, Licensee
shall provide to Digimarc within a reasonable period of time following request,
the Technical Information for those improvements requested by Digimarc in
writing.

 

6.3                                 Licensee hereby grants to Digimarc
a royalty-free, non-exclusive, sub-licenseable worldwide license to use the improvements
described in clause 6.2 and in any patents thereon owned or otherwise
licenseable by Licensee.

 

6.4                                 Such license shall continue until
this Agreement expires or is terminated, or until Licensee has no further
rights to Digimarc IPR, whichever occurs last.

 

6.5                                 For greater certainty, the
obligations set out in clauses 6.2, 6.3, and 6.4 shall not apply to any such
improvement which the Licensee can demonstrate would have been made
irrespective of knowledge of the Digimarc Confidential Information.

 

6.6                                 Licensee shall, as directed by
[**], cooperate fully with [**] and/or Digimarc in all matters concerning
testing of [**] to confirm that they pass the Verification Tests.

 

7.                                      REPRESENTATIONS AND
WARRANTIES OF DIGIMARC.

 

7.1                                General - Digimarc represents,
warrants and undertakes to Licensee that from and after the Effective Date:

 

(a)                                  the Services provided under this
Agreement will be of professional quality conforming to generally accepted
practices for like services and will be performed at all times in a timely and
cost effective manner and, for greater certainty Digimarc shall employ the
standard of care in performing the Services that would be expected of an expert
[**] of the same or similar type as the [**] which comprises the [**];

 

(b)                                 Digimarc is duly incorporated and
organized and is validly subsisting under the laws of the State of Delaware,
U.S.A. or some other state in the United States with full corporate power and
authority to enter into this Agreement;

 

(c)                                  to the best of its knowledge, neither
this Agreement nor the Services will contravene, breach, or result in any
default under any agreement, permit, by-law, or law or regulation to which
Digimarc is subject or by which it is bound including, for greater certainty
any laws or regulations in effect in the United States governing export;

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

(d)                                 this Agreement when executed and
delivered by Digimarc shall constitute a valid and binding agreement with
Digimarc enforceable against Digimarc according to its terms; and

 

(e)                                  Digimarc will at all material
times have the right to grant the licenses to the Digimarc IPR as required by
this Agreement.

 

7.2                                 Digimarc represents, warrants and
undertakes to Licensee that:

 

(a)                                  [**] provided to Licensee
hereunder will, for a period of one hundred eighty (180) days following the
date on which the production of the [**] first commences, meet the
specifications for that version of [**] accepted by BIS;

 

(b)                                 until the last day of the Term,
[**]; and

 

(c)                                  incorporated as part of its
installation and integration practices and procedures are those measures and
security procedures commercially and reasonably available on the date for
delivery of a component of [**] to search for, detect and eliminate software
viruses in [**] that could interfere with the use of [**] or corrupt, interfere
with or damage any data;

 

(d)                                 the [**] shall contain no lock,
clock, timer, counter, copy protection feature, replication device or intentional
defects (including but not limited to “viruses” or “worms” as such terms are
commonly used in the computer industry), CPU serial number reference, or other
device which might:

 

(i)                                     lock, disable or erase  [**] or
any data which is loaded on [**] so as to prevent full use of [**] by
authorized persons; or

 

(ii)                                  require action or intervention by
Digimarc or any other person to allow properly trained and authorized persons
to use [**];

 

(e)                                  the source code for [**] will
support the year 2000 and neither performance nor functionality will be
affected by dates prior to, during and after the year 2000, and , for greater
certainty, the [**] will switch to 1 January 2000 on 1 January 2000,
and the year 2000 will be recognized as a leap year.

 

7.3                                 If [**] fails to meet the relevant
Specifications then Digimarc shall, within thirty (30) days after receipt of
written notice of the failure from Licensee, on the form  attached as Attachment 2, rectify the failure
and provide a [**] to Licensee.

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

8.                                      REPRESENTATIONS AND
WARRANTIES OF LICENSEE

 

8.1                                 Licensee represents and warrants
to Digimarc that:

 

(a)                                  Licensee has full power and
authority to enter into this Agreement; and

 

(b)                                 this Agreement when executed and
delivered by Licensee shall constitute a valid, binding and enforceable
obligation of Licensee.

 

8.2                                 Licensee makes no representations,
warranties or undertakings that Licensee has any right to grant the licenses
required to be granted by clause 6.3 and Digimarc shall be solely responsible
for determining that such improvements are suitable for the intended use and
for the consequences of any use of the same whether by Digimarc or others, and
Licensee and hereby disclaims all liability in connection therewith.

 

9.                                      CONFIDENTIALITY

 

9.1                                 Except as otherwise expressly
permitted by this Agreement, a Recipient shall not use,  reproduce or disclose the Confidential
Information of the Discloser for any 
purpose  other than as reasonably
necessary to comply with its obligations under this Agreement or to exercise
any rights or licenses granted to it under or pursuant to this Agreement.

 

9.2                                 The Recipient shall  protect the Confidential Information of the
Discloser from disclosure by using the same degree of care, which shall be
no  less than a reasonable degree of
care, as the Recipient uses to protect its own confidential information.

 

9.3                                 On written request from the
Discloser, the Recipient shall return, or certify the destruction of, all
originals and copies of the Discloser’s Confidential Information in the
Recipient’s possession or control which the Recipient does not need to retain
in order to perform any obligations imposed, or exercise any rights acquired,
by this Agreement.

 

9.4                                 A Recipient may, on a need to know
basis, and only for the purposes described in clause  9.1, give the other party’s Confidential
Information to the Recipient’s employees or authorized subcontractors provided
that such employee or subcontractor shall have entered into a non-disclosure
agreement in respect of such Confidential Information in favour of the
Discloser on terms materially similar to the provisions of this clause  9.

 

9.5                                 The obligations set out in this
clause 9 will not apply to any Confidential Information that:

 

(a)                                  is or becomes publicly available
other than through the fault of the Recipient;

 

(b)                                 was known to the Recipient prior
to disclosure as shown by documentation sufficient to establish such knowledge;

 

(c)                                  was or is lawfully disclosed to
the  Recipient by a third party who did
not breach any obligation of confidence by such disclosure and who made the
disclosure without

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

restriction on further disclosure all of which is shown by
documentation sufficient to establish same; or

 

(d)                                 is required by law to be disclosed
provided, however, that the Recipient shall first give written notice to the
Discloser before the disclosure so that the Discloser may seek an appropriate
protective order.

 

Notwithstanding the foregoing,
the fact that Confidential Information, or any part thereof, can be linked
together by a search of publications and other information, followed by a
selection of a series of such items of knowledge from unconnected sources, and
fitting together those items of knowledge so as to duplicate or recreate any
item of Confidential Information, shall not be deemed to cause the Confidential
Information, or any part thereof, to be included within exceptions (a), (b) or
(c), above.

 

9.6                                 The obligations of the parties
under this clause 9 will survive the Term or sooner termination of this
Agreement and will remain in full force and effect regardless of the cause of
any termination.

 

9.7                                 Nothing
in this Agreement shall be construed to require Licensee to disclose any
information which is confidential to a third party including for greater
certainty a Licensed [**]

 

10.                                  INTELLECTUAL PROPERTY INDEMNIFICATION

 

10.1                           Licensee shall provide Digimarc
with prompt written notice of any claim, demand or action against Licensee
based on an allegation that the Digimarc IPR or any part thereof, infringes any
Intellectual Property Right of any person (referred to below as a “Claim”).

 

10.2                           Subject to the limitations set out
in clauses 10.3 to 10.7 inclusive, Digimarc shall, at its own expense:

 

(a)                                   negotiate the resolution of any
such Claim;

 

(b)                                 pay all costs associated with the
Claim; and

 

(c)                                  defend any action based on the
Claim.

 

10.3                           Licensee shall, at Digimarc’s
expense, comply with all reasonable requests by Digimarc for assistance from
Licensee in connection with the settlement or defense of the Claim.

 

10.4                           Notwithstanding
any other provision of this Agreement to the contrary, but subject to the
limitations in this clause 10, Digimarc shall indemnify Licensee against and
save Licensee harmless from all loss, costs, liabilities including an award of
damages, and expenses, including legal fees, arising from each Claim first
notified to Digimarc prior to 31 December [**].  The

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

obligation set out in this clause 10 shall not apply in respect of any
settlement made by Licensee without the consent of Digimarc.

 

10.5                           The
liability of Digimarc under clause 10.4 of this Agreement and under the
equivalent clause of every other licence or consulting agreement entered into
between Digimarc and [**] and [**] pursuant to the provisions of the BIS
Agreement will not exceed the Indemnity Limit as defined in clause 10.6 below.

 

10.6                           The
Indemnity Limit shall be [**], or such higher amount as notified by Digimarc
from time to time.

 

10.7                           For
the purposes of clauses 10.2 through 10.6 inclusive, “Claim” shall mean any
Claim, other than a Claim for patent infringement which Digimarc can
demonstrate occurred without Digimarc acting recklessly or negligently.

 

11.                               TERM
AND TERMINATION

 

11.1                           This Agreement will take effect on
the Effective Date and will remain in force throughout the Term unless sooner
terminated as provided herein.

 

11.2                           Either party may terminate this
Agreement if the other party breaches any of its obligations under this
Agreement and fails to remedy such breach within thirty (30) days after
receiving written notice of such breach from the other party.

 

11.3                           Upon termination of this
Agreement:

 

(a)                                  all rights granted to Licensee
under this Agreement will immediately terminate. No interest in any such rights
will thereafter remain with Licensee, except that [**], but no further [**]  Licensee
shall be permitted; and

 

(b)                                 each party shall return, or
certify the destruction of, to the Discloser, all originals and copies of the
Discloser’s Confidential Information in the party’s  possession or control which the party does
not need to retain in order to exercise any rights acquired by this Agreement.

 

11.4                           No termination of this Agreement
will in any manner release, or be construed as releasing, any party from any
liability arising out of or in connection with that party’s breach of or
failure to perform any covenant, duty or obligation contained herein prior to
the date of such termination.

 

11.5                           Upon termination of the BIS
Agreement by Digimarc for cause, the rights of Licensee hereunder to use the
Digimarc IPR shall be deemed to be restricted to the [**] as of the date of
such termination.

 

** CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

 

 

11.6         Termination
of the license between Digimarc and [**] shall automatically act to terminate
this Agreement.

 

12.          DISPUTE
RESOLUTION

 

12.1         Any
Dispute (as defined in the Arbitration Agreement) shall be finally settled by
arbitration in accordance with the Arbitration Agreement.

 

12.2         Unless
otherwise agreed between the parties or unless the subject matter of the
dispute resolution proceedings is a party’s right to terminate this Agreement,
the Services shall continue during the dispute resolution proceedings and
payments due to Digimarc shall not be withheld on account of such proceedings
unless that particular services or payment is the subject matter of the
proceedings.  Notwithstanding the
foregoing, Licensee may in its sole discretion instruct Digimarc to continue to
perform such services which are the subject matter of the proceedings and
Digimarc shall act in accordance with those instructions, subject to payment
under clause 4.1.

 

13.          MISCELLANEOUS PROVISIONS

 

13.1                          Remedies Cumulative - Except as otherwise expressly set out in this
Agreement:

 

(a)                                  each and every right, power and remedy of a party
will be considered to be cumulative with and in addition to any other right,
power and remedy which such party may have at law or in equity in the event of breach
of any of the terms of this Agreement;

 

(b)                                 the exercise or partial exercise of any right, power
or remedy will neither constitute the exclusive election thereof nor the waiver
of any other right, power or remedy available to such party; and

 

(c)                                  a party terminating this Agreement in accordance with
the provisions of the Termination clause will have no liability or obligation
to the other as a result of or with respect to the termination.

 

13.2                           All notices under this Agreement shall be delivered
by fax, or recognized international courier service.  The notice shall be deemed effective as of
the date of delivery to the address of the party specified below as evidenced
by a delivery receipt or the addressee’s registry of incoming
correspondence.  Unless otherwise
expressly set out in this Agreement, all notices to a party will be sent to the
party’s authorized representative identified below and all notices from a party
will be sent by the party’s authorized representative identified below.

 

13.3         Any
notice to Licensee shall be sent to both of, and any notice from Licensee shall
be sent by either:

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

	
  Name 1

  	
   

  	
  Name 2

  
	
  Address 1

  	
   

  	
  Address 2

  

 

 

13.4         Any
notice to Digimarc shall be sent to both of, and any notice from Digimarc shall
be sent by either:

 

	
  Mr. Robert Chamness

  	
   

  	
  Mr. Scott Carr

  
	
  Vice President and General Counsel

  	
   

  	
  President Watermarking Solutions

  
	
  Digimarc Corporation

  	
   

  	
  Digimarc Corporation

  
	
  9405 SW Gemini Drive

  	
   

  	
  9405 SW Gemini Drive

  
	
  Beaverton, OR 97008

  	
   

  	
  Beaverton, OR 97008

  
	
  Fax: (503) 469-4777

  	
   

  	
  Fax: (503)
  469-4777

  

 

13.5         A
copy of every notice sent by either party shall be sent to: [**], Bank for
International Settlements, [**].

 

13.6         A
party may change its address for notice by notice to the other party in
accordance with the foregoing provisions.

 

13.7         Severability.  If any
part of this Agreement is held by an arbitral tribunal appointed pursuant to
the Arbitration Agreement or other competent authority to be void or
unenforceable, the parties agree that such determination will not result in the
nullity or unenforceability of the remaining parts of this Agreement, which
will continue in force to the fullest extent permitted by law.  The parties further agree to replace such
void or unenforceable part of this Agreement with a valid and enforceable
provision that will achieve, to the extent legally permissible, the economic,
business and other purposes of the void or unenforceable part.

 

13.8         Counterparts.   This
Agreement may be executed in separate counterparts, and by facsimile, each of
which will be deemed an original, and when executed, separately or together,
will constitute a single original instrument, effective in the same manner as
if the parties had executed one and the same instrument.

 

13.9         Entire Agreement.              This
Agreement is intended by the parties to be the final expression of their
agreement and constitutes and embodies the entire agreement and understanding
between the parties hereto and constitutes a complete and exclusive statement
of the terms and conditions thereof, and will supersede any and all prior
correspondence, conversations, negotiations, agreements or understandings
relating to the same subject matter.

 

13.10       Amendments.   No change
in, modification of or addition to the terms and conditions contained herein
will be valid as between the parties unless set forth in a writing that is
signed by an authorized representative of each of the parties and which
specifically states that it constitutes an amendment to this Agreement.

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

13.11       Waiver.    No
waiver of any term, provision, or condition of this Agreement, will be
effective unless in a written document signed by the waiving party and no such
waiver in any one or more instances, will be deemed to be, or be construed as,
a further or continuing waiver of that term, provision or condition or any
other term, provision or condition of this Agreement.

 

13.12       Assignment and Successors.  
This Agreement may not be assigned by Licensee without Digimarc’s
consent, which consent shall not be unreasonably withheld or delayed.  This Agreement and all of its terms,
conditions and covenants are intended to be fully effective and binding, to the
extent permitted by law, on the successors and permitted assigns of the parties
hereto.

 

13.13       Captions.   Captions
are provided in this Agreement for convenience only and they form no part, and
are not to serve as a basis for interpretation or construction, of this
Agreement, nor as evidence of the intention of the parties hereto.

 

13.14       Disclaimer of Agency.   
Nothing contained in this Agreement is intended or will be construed so
as to constitute the parties to this Agreement as partners or joint venturers
or as agents of each other. Neither party will have any express or implied
right or authority to assume or create any obligations on behalf of or in the
name of the other party or to bind any other party in any contract, agreement
or undertaking with any third party.  No
employee of a party shall be deemed or considered to be an employee of the
other party or of both parties.

 

13.15       Publicity.   The
parties agree that from time-to-time it will be beneficial to both parties to
issue press releases and other public announcements concerning benefits arising
from the CDS.  Each party agrees to
submit for approval by the other party any press release that involves the other
party, which approval shall not unreasonably be withheld.

 

13.16       Effectiveness.   This
Agreement shall not be effective until it is signed by both of the parties.

 

13.17       Ambiguities.  Each
party and its counsel have participated fully in the review and revision of
this Agreement. Any rule or construction to the effect that ambiguities
are to be resolved against the drafting party shall not apply in interpreting
this Agreement.

 

13.18       Survival.   All
clauses of this Agreement which expressly or by implication are intended to
survive the termination of this Agreement will do so and, for greater certainty
and notwithstanding any provision in this Agreement to the contrary, the
provisions of clause 2.9, 4.2, 4.3, 6.1, 6.3, 6.4, 7.2(b), 9, 10, 12 and 13 of
this Agreement shall survive termination of this Agreement by either party for
any reason.

 

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto
as of the Effective Date.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

	
  DIGIMARC CORPORATION

  	
   

  	
   

  	
  <Licensee>

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT 1

 

[**]

 

[**] will cause the following [**] to take
place:

 

(a)                                  [**]

 

(b)                                 [**]

 

(c)                                  [**] a date TBD [**]

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT 2

 

PROBLEM REPORT

 

Each problem report will contain all information
necessary to reproduce or demonstrate the occurrence of the problem.  Problem reports will be in English and will
be delivered electronically in a format to be provided by Digimarc.

 

Problem reports will contain:

 

·                                          Date problem was encountered

·                                          Detailed description of the problem, including the
frequency with which the problem occurs

·                                          Name and version number of the program / system
component that exhibits the problem

·                                          Step by step instructions to reproduce the problem

·                                          All data files required to reproduce the problem

·                                          [**]Manufacturer and Model

·                                          CPU type and speed

·                                          Amount of memory

·                                          Operating System and Version

·                                          Disk Configuration (number of drives, total space per
drive, free space per drive)

·                                          Display Adapter Model, Resolution, Number of colors

·                                          Peripheral configuration (where applicable)[**]TWAIN
driver and version number

·                                          [**]

·                                          Severity of problem

·                                          Contact information for person to contact for further
information (name, phone number, FAX number, email address)

 

Licensee agrees to work with Digimarc to
provide reasonable additional information and perform reasonable additional
tests, as requested by Digimarc, to assist Digimarc in resolution of the
problem.

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT 3

 

PAYMENT FOR SERVICES

 

	
  Digimarc shall bill Licensee for Services in
  one hour increments at the following hourly rates:

  
	
  Technical/Design Consultant

  	
   

  	
  [**]

  
	
  Senior Engineer

  	
   

  	
  [**]

  
	
  R&D/Engineering Executive

  	
   

  	
  [**]

  
	
  Project Manager

  	
   

  	
  [**]

  
	
  Administrator/Scheduler

  	
   

  	
  [**]

  

 

Fees for Services will be invoiced on the
earlier of 1) the last day of the month or 2) the completion of the
Services.  Invoices are due thirty (30)
days from the date of receipt of a correct invoice.  A late charge of 1.5% per month will be
charged on any late payments.  All fees
are due and payable in US funds.

 

Licensee will reimburse Digimarc for all
out-of-pocket expenses reasonably and necessarily incurred in providing the
Services.  Expenses will be itemized and
reported by category.  Out-of-pocket
expenses will not be “marked up” by Digimarc. 
Costs include, but are not limited to, reasonable travel and lodging
expenses, telephone and fax charges, postage and overnight deliveries, and
charges for rental equipment or materials purchased specifically to be used in
providing the Service.  All invoices for
out-of-pocket expenses will be issued monthly in arrears and are due thirty (30)
days from the date of receipt of a correct invoice. Supporting receipts and
vouchers will be available for review at Digimarc’s offices.  A late charge of 1.5% per month will be
charged on any late payments.  Payments
will additionally include Value Added taxes and other tariffs and fees that may
be imposed by any government other than the United States of America.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT 4

 

[**]

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT 5

 

IDENTIFICATION OF [**]

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT 6

 

TRAINING

 

1.0                                 As part of the [**], Digimarc shall develop a program
of training acceptable to the [**]  Project Director (as defined in the BIS Agreement) in the [**].

 

2.0                                 Digimarc shall deliver the Training as follows:

 

2.1                                 Digimarc shall provide the Training to up to two (2) people
simultaneously.  The trainees will be
experienced in digital design system operation.

 

2.2                                 Digimarc shall conduct the Training at the facilities
of Licensee or, at the request of Licensee, at Digimarc’s facilities or at some
other place agreed between Digimarc and Licensee.

 

2.3                                 Digimarc shall give Licensee reasonable notice
concerning the equipment which Digimarc will require in order to conduct the
Training.  Licensee shall provide all
such equipment at its own expense.  If
the parties are unable to agree on the equipment to be provided either party
may refer the matter for decision to the DLA Contract Authority (as defined in
the BIS Agreement).

 

2.4                                 Digimarc shall conduct the Training using the [**].

 

2.5                                 Digimarc shall provide a training manual in English
to every trainee.  Any translation or
interpretation which the trainees may require will be provided by Licensee at
its own expense.

 

2.6                                 Digimarc shall provide each trainee with a
certificate of training at the completion of the Training session.

 

2.7                                 Digimarc shall conduct the Training in English.

 

** CONFIDENTIAL PORTION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE “L-2”

 

[**] AGREEMENT [**]

 

This
[**]  LICENSE AGREEMENT (the “Agreement”)
is made

 

BETWEEN

 

                                <name
and address of Licensee> (“Licensee”)

 

- AND -

 

                                                                                                DIGIMARC CORPORATION, a corporation incorporated
under the laws of Delaware and having its head office at 9405 SW Gemini Drive,
Beaverton, Oregon. U.S.A.  97006 (“Digimarc”)

 

[**]

RECITALS

 

                Digimarc has expertise in, and
owns extensive intellectual property, including patents, patent applications,
copyrights and trade secrets related to digital watermarks, counterfeit
deterrence, copyright protection, and device control;

 

                The Bank for International
Settlements (“BIS”) possesses or will possess intellectual property rights
related to the application of such intellectual property to the detection and deterrence
of bank note counterfeiting; and

 

                Digimarc and BIS have cooperated
in the development of means, using such intellectual property, to detect and
deter the counterfeiting of bank notes [**] (the “Counterfeit Deterrence System”
or “CDS”); and

 

                Digimarc is licensing its CDS
[**] authorized by a duly licensed [**]; and

 

                Licensee, having been authorized
by a duly licensed [**], desires access to such technology so that Licensee can
include Digimarc’s [**].

 

                In consideration of these premises, the covenants set out in
this Agreement and for other good and valuable consideration, the receipt and
adequacy of which are acknowledged by each of the parties, the parties agree as
follows:

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

1.             DEFINITIONS  AND PRINCIPLES OF INTERPRETATION

 

In
this Agreement:

 

“Agreement” means these
articles of agreement, including the Attachments, and those documents as
specified or referenced in this Agreement as forming part of the Agreement, all
as may be amended from time to time;

 

“Arbitration Agreement” means the
Arbitration Agreement entered into between the parties and others effective 1 January 1999,
as amended from time to time;

 

“Attachment” means a
document specified as being attached to this Agreement;

 

[**]”BIS” refers to Bank
for International Settlements, created pursuant to the Hague Agreements of
January, 1930, and having its head office at Centralbahnplatz 2, CH-4051 Basle,
Switzerland;

[**]”BIS Agreement”
[**] BIS [**] BIS [**]”BIS IPR” [**]
BIS [**] CDS;

 

“Business Day” means a day on
which both Digimarc and Licensee are open for business at their respective
addresses noted above;

 

“Confidential Information” means
information disclosed before or during the Term of this Agreement in any form
which, if disclosed in tangible form, is or was labeled “Confidential”, “Proprietary”
or with a similar legend, or if disclosed orally is or was information that by
its nature would be understood to be confidential to the Discloser. For greater
certainty, the Confidential Information of Digimarc includes the Digimarc IPR
and the [**]

 

[**]”Counterfeit Deterrence System”
(“CDS” or “System”)[**]

 

“Consulting Services” means the
Integration Support and all other services that Digimarc provides to Licensee
regarding [**], and such other matters as Licensee may request and Digimarc
agrees to provide, pursuant to this Agreement;

 

“Digimarc IPR” means
Intellectual Property Rights owned by Digimarc, now or during the Term of this
Agreement, to the extent that same specifically relates to or forms part of the
CDS;

 

“Digital Watermark” refers to [**]
(including [**]) that are [**] from [**] by [**] of [**], which [**] of [**]
and yet do not significantly [**] from the aesthetics of the [**] or [**]
thereby.  Examples include, but are not
limited to:

 

1.             generally imperceptible changes to
[**] or placement in [**];

2.                                       [**] of a
substrate, where the [**] substantially uniform to human touch;

3.             slight localized changes to [**] or
[**] of a printed document;

4.             slight changes to [**]; or

 

** CONFIDENTIAL PORTION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

5.                       [**] of substantially [**];

 

“Discloser” means a party
that has disclosed or otherwise made available its Confidential Information to
the other party;

 

[**]

 

“Effective Date” means the later
of the date on which this Agreement is last signed by the parties and the date
on which Digimarc receives written notice from the [**] that the Licensee is
authorized to [**]

 

[**]

 

“Field of Use” means the
field of [**];

 

“Improvement” means an
improvement provided to BIS under clause 2.14 of the BIS Agreement;

 

“Installation” means
installation of the Digimarc [**] in accordance with in the design work flow of
the Licensee.

 

“Integration Support” means the
consulting and programming services to be provided by Digimarc to Licensee to
assist Licensee to [**];

 

“Intellectual Property Rights” or “IPR” means all intellectual property
rights existing now and in the future including, without limitation, trade
secrets, copyright, database rights, know-how, topographies, patents and patent
applications;

 

“[**]” means the [**]
named above;

 

[**]

 

“Recipient” means the party
to which the Confidential Information of the other party has been disclosed or
otherwise made available;

 

“Services” means the
Installation, Verification Tests, the Training, and the Consulting Services, or
any of them;

 

“Term” means the
period commencing on the Effective Date and ending on the earlier of 31 December [**]
or the date of termination of this Agreement;

 

“Training” means the
training in the use of the [**] described in Attachment 7; and

 

“Verification Test” means a test
or tests developed under the BIS Agreement to determine [**].

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

1.2           Interpretation
- In this Agreement:

 

1.2.1                        unless otherwise specified, all references to money
amounts are to the currency of the United States of America;

 

1.2.2                        the use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the application of any
provision of this Agreement to such person or persons or circumstances as the
context otherwise permits;

 

1.2.3                        whenever a provision of this Agreement requires an
approval or consent by a party to this Agreement and notice of such approval or
consent is not delivered within the applicable time, then, the party shall be
conclusively deemed to have withheld the consent or approval;

 

1.2.4                        unless otherwise specified, the number of days within
or following which any payment is to be made or act is to be done shall be
interpreted to be continuous and shall be calculated by excluding the day on
which the period commences and including the day which ends the period and by
extending the period to the next Business Day if the last day of the period is
not a Business Day;

 

1.2.5                        unless otherwise specified, the order of precedence
for interpreting this Agreement shall be:

 

(a)           this
Agreement, excluding Attachments, and

 

(b)           the
Attachments;

 

1.2.6                        for greater certainty, a party or representative to
which this Agreement grants the right to make a decision or determination in
the sole discretion of the party or representative is not required to act
reasonably in making the decision or determination and no such decision or
determination may be challenged by the other party under the Arbitration
Agreement or otherwise;

 

1.2.7                        the words “includes” or “including” will be construed
as meaning “included without limitation” and “including without limitation” as
the case may be; and

 

1.2.8                        a clause or Attachment, unless the context requires
otherwise, is a reference to a clause to, an Attachment of, or a paragraph of
an Attachment to, this Agreement, as amended from time to time in accordance
with this Agreement.

 

1.3                                 Applicable Law - This Agreement shall be construed in
accordance with the laws of England to the exclusion of its rules of
conflicts of laws.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

1.4                                 Attachments - The attachments to this Agreement,
listed below, are an integral part of this Agreement:

 

	
  Attachment

  	
   

  	
  Description

  	
   

  
	
  Attachment “1”

  	
   

  	
  [**]

  	
   

  
	
  Attachment “2”

  	
   

  	
  Opinion of Counsel

  	
   

  
	
  Attachment “3”

  	
   

  	
  Problem Report

  	
   

  
	
  Attachment “4”

  	
   

  	
  Payment for Services

  	
   

  
	
  Attachment “5”

  	
   

  	
  [**]

  	
   

  
	
  Attachment “6” 

  	
   

  	
  [**]

  	
   

  
	
  Attachment “7”

  	
   

  	
  Training

  	
   

  

 

2.                                      GRANT OF RIGHTS

 

2.1                                 Subject to the terms of this Agreement, Digimarc
hereby grants to Licensee a no charge non-exclusive, non-transferable license
in the Field of Use to use the [**], the Digimarc IPR and the BIS IPR at the Facilities  to:

 

(a)                                  [**]

 

(b)                                 [**]

 

(c)                                  [**]; and

 

(d)                                 [**] to [**].

 

2.2                                 For greater certainty, the foregoing license applies
[**]

 

2.3                                 Licensee shall not use the  [**], the Digimarc IPR or the BIS  IPR at, or transfer the Digimarc IPR or BIS  IPR to, any place other than the Facilities.

 

2.4                                 Licensee acknowledges and agrees that the Digimarc
IPR, and any technology developed by Digimarc during the course of its work
with Licensee under this Agreement is the property of Digimarc and that, except
as otherwise expressly set out in this Agreement, Licensee has no right to
sublicense it.  Licensee acknowledges
that it may [**]  unless and until, and only during such period, that [**]  is licensed therefore by Digimarc.

 

2.5                                 Licensee acknowledges and agrees that the BIS  IPR is the property of its owner and that Licensee
has no right to sublicense it.

 

2.6                                 Nothing in this Agreement shall be construed to
grant, by implication or otherwise, any broader rights than those specifically
granted herein.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

2.7                                 Digimarc shall obtain at its own expense all licenses
or permits required to be obtained from the Government of the United States in
order for Digimarc to comply with its obligations under this Agreement
including, without limitation, to deliver [**], and grant the foregoing
licenses to Licensee.

 

2.8                                 Digimarc shall inform Licensee within thirty (30)
days after the end of each calendar quarter during the Term of all Improvements
relating to [**]  which Improvements Digimarc has made, or caused or permitted to be
made, during the course of its work with Licensee under this Agreement.  Following the provision of the information
under this clause 2.8, Digimarc shall provide to Licensee within a reasonable
period of time following request, the Technical Information for those
Improvements requested by Licensee in writing.

 

2.9                                 Digimarc hereby grants to Licensee a royalty-free,
non-exclusive, sub-licenseable worldwide license to use the Improvements
described in clause 2.8 and in any patents thereon owned or otherwise
licenseable by Digimarc.  Such license
shall continue until this Agreement expires or is terminated or until Licensee
has no further rights to Digimarc IPR, whichever occurs last.

 

2.10                           For greater certainty, the obligations set out in
clauses 2.8 and 2.9 shall not apply to any such Improvements which Digimarc can
demonstrate would have been made irrespective of Digimarc’s work with Licensee
under this Agreement.

 

3.                                      SERVICES

 

3.1                                 Digimarc shall ship [**]  to the Licensee within ten (10) Business Days
after the Effective Date or after instructions from the [**]  whichever is later. The shipment shall be by air,
Cost, Insurance and Freight (C.I.F.) closest major airport (i.e., Digimarc
shall be responsible for transportation and insurance to this port of entry).

 

3.2                                 Digimarc shall provide Installation of the [**] at
Licensee’s [**]  for the fees described in clause 4. 
The Installation will take no more than ten (10) person days,
provided the site is prepared according to a site preparation guide to be
provided to Licensee by Digimarc reasonably prior to Installation.

 

3.3                                 Digimarc shall provide the Training to Licensee
within ten (10) Business Days after 
completion of installation of the [**]  or at such other time as the parties may agree for
the fees described in clause 4.  The [**]  training will be designed to be delivered by one
trainer in five days for up to two trainees, provided the trainees [**].

 

3.4                                 No later than sixty (60) Business Days after every
written request made by Licensee during the Term, Digimarc shall provide
Integration Support to Licensee on a date or dates agreed between Digimarc and
Licensee for the fees described in clause 4.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

3.5                                 Commencing no later than twenty (20) Business Days
after every written request made by Licensee during the Term, Digimarc shall
conduct Verification Tests of [**]  on a date or dates agreed between Digimarc and Licensee for the fees
described in clause 4.

 

3.6                                 Commencing no later than five (5) Business Days
after every written request made by Licensee during the Term, Digimarc shall
schedule Consulting Services, which Services shall commence not less than
thirty (30) Business Days after the written request or at such other time
agreed between Digimarc and Licensee.

 

3.7                                 Digimarc shall periodically apprise Licensee of
Improvements which Digimarc makes to the  [**].  Rights
to employ such Improvements shall automatically be granted to Licensee pursuant
to the terms of clause 2 at no additional charge to Licensee.

 

4.                                      FEES

 

4.1                                 Licensee shall pay to Digimarc a fee for the Services
as detailed below.  The fee for Services
provided:

 

(a)                                  on or before 31 December [**], is as set out in
Attachment 4;

 

(b)                               after 31 December [**], will be no greater than
the fee then paid to Digimarc for similar services by Digimarc’s most favoured
customer.

 

4.2                                 Except as otherwise expressly provided in this
Agreement, Licensee shall pay Digimarc all sales, use, goods and services or
other similar taxes levied by any government in the United States or the
country of the Licensee’s principal place of business which Digimarc is obliged
to collect and remit to such government(s) in connection with any amount
paid by Licensee to Digimarc under this Agreement.

 

4.3                                 Digimarc is responsible for, and shall indemnify
Licensee against, and hold Licensee harmless from, the payment of all taxes
levied by any government on or in respect of Digimarc’s income and any amounts
required by law to be paid in respect of social benefits for Digimarc’s employees
relating to or arising out of the performance of the Services. If required by
law, Licensee shall deduct all such taxes and amounts from the amounts
otherwise payable to Digimarc and remit them to the appropriate authorities.

 

5.                                      OPINION OF COUNSEL

 

5.1                                 Before producing [**], Licensee shall obtain and
forward to Digimarc a written opinion of counsel substantially in the form
attached as Attachment 2 that confirms:

 

(a)                                   the validity and enforceability of the terms of this
Agreement under the laws of the jurisdiction of Licensee’s principal place of
business; and

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

(b)                                 the legality of each of the [**]  under the laws of the jurisdiction of Licensee’s principal
place of business.

 

5.2                                 Digimarc shall not unreasonably withhold its consent
to any qualifications which Licensee’s counsel may require to be made to such
opinion.

 

6.                                      LICENSEE RESPONSIBILITIES

 

6.1                                 Licensee shall promptly report to Digimarc every instance
which comes to its attention of:

                                                (i)                                     [**]  to
meet the specifications established under the 
BIS Agreement in the form of
the Problem Report attached as Attachment 3;

 

                                                (ii)           unauthorised
access to the [**]  in the possession of Licensee; or

 

                                                (iii)          [**]

 

6.2                                 Licensee shall inform Digimarc within thirty (30)
days after the end of each calendar quarter during the Term of all improvements
relating to (i) Digital Watermarks [**];  (ii) [**] Digital Watermarks [**]  (iii) [**] Digital Watermarks [**]  and (iv) any other part of the CDS, which
improvements Licensee has made, or caused or permitted to be made, as a result
of knowledge of Digimarc Confidential Information.  The first such information shall be provided
to Digimarc within thirty (30) days after the Effective Date and shall cover
improvements made from the date Licensee first learned of the Digimarc
Confidential Information.  Following the
provision of the information under this clause 6.2, Licensee shall provide to
Digimarc within a reasonable period of time following request, the Technical
Information for those improvements requested by Digimarc in writing.

 

6.3                                 Licensee hereby grants to Digimarc a royalty-free,
non-exclusive, sub-licenseable worldwide license to use the improvements
described in clause 6.2 and in any patents thereon owned or otherwise
licenseable by Licensee.

 

6.4                                 Such license shall continue until this Agreement
expires or is terminated, or until Licensee has no further rights to Digimarc
IPR, whichever occurs last.

 

6.5                                 For greater certainty, the obligations set out in
clauses 6.2, 6.3, and 6.4 shall not apply to any such improvement which the
Licensee can demonstrate would have been made irrespective of knowledge of the
Digimarc Confidential Information.

 

6.6                                 Licensee shall, as directed by  [**], cooperate fully with [**]  and/or Digimarc in all matters concerning testing of
[**] to confirm that they pass the Verification Tests.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

7.                                      REPRESENTATIONS
AND WARRANTIES OF DIGIMARC.

 

7.1                                 General - Digimarc represents, warrants and
undertakes to Licensee that from and after the Effective Date:

 

(a)                                  the Services provided under this Agreement will be of
professional quality conforming to generally accepted practices for like
services and will be performed at all times in a timely and cost effective
manner and, for greater certainty Digimarc shall employ the standard of care in
performing the Services that would be expected of an [**] of the same or
similar type as the [**]  which comprises the [**];

 

(b)                                 Digimarc is duly incorporated and organized and is
validly subsisting under the laws of the State of Delaware, U.S.A. or some
other state in the United States with full corporate power and authority to
enter into this Agreement;

 

(c)                                  to the best of its knowledge, neither this Agreement
nor the Services will contravene, breach, or result in any default under any
agreement, permit, by-law, or law or regulation to which Digimarc is subject or
by which it is bound including, for greater certainty any laws or regulations
in effect in the United States governing export;

 

(d)                                 this Agreement when executed and delivered by
Digimarc shall constitute a valid and binding agreement with Digimarc
enforceable against Digimarc according to its terms; and

 

(e)                                  Digimarc will at all material times have the right to
grant the licenses to the Digimarc IPR as required by this Agreement.

 

7.2                                 Digimarc represents, warrants and undertakes to
Licensee that:

 

(a)                                  [**]  provided to Licensee hereunder will, for a period of one hundred eighty
(180) days following the date on which the production of the [**] first
commences, meet the specifications for that version of [**] accepted by BIS;

 

(b)                                 until the last day of the Term, [**]; and

 

(c)                                  incorporated as part of its installation and
integration practices and procedures are those measures and security procedures
commercially and reasonably available on the date for delivery of a component
of [**]  to
search for, detect and eliminate software  viruses in [**]  that could interfere with the use of [**]  or corrupt, interfere with or damage any data;

 

(d)                                 [**]  shall contain no lock, clock, timer, counter, copy protection feature,
replication device or intentional defects (including but not limited to “viruses”
or “worms” as such terms are commonly used in the computer industry), CPU
serial number reference, or other device which might:

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

(i)                                     lock, disable or erase [**]  or any data which is loaded on [**]  so as to prevent full use of [**]  by authorized persons; or

 

(ii)                                  require action or intervention by Digimarc or any other person to allow
properly trained and authorized persons to use [**];

 

(e)                                  the source code for [**]  will support the year 2000 and neither performance
nor functionality will be affected by dates prior to, during and after the year
2000, and, for greater certainty, the [**]  will switch to 1 January 2000 on 1 January 2000,
and the year 2000 will be recognized as a leap year.

 

7.3                                 If [**]  fails to meet the relevant Specifications then Digimarc shall, within
thirty (30) days after receipt of written notice of the failure from Licensee,
on the form attached as Attachment 3, rectify the failure and provide a [**]  to Licensee.

 

8.                                      REPRESENTATIONS AND WARRANTIES OF
LICENSEE

 

8.1                                 Licensee represents and warrants to Digimarc that:

 

(a)                                  Licensee has full power and authority to enter into
this Agreement; and

 

(b)                                 this Agreement when executed and delivered by
Licensee shall constitute a valid, binding and enforceable obligation of
Licensee.

 

8.2                                 Licensee makes no representations, warranties or
undertakings that Licensee has any right to grant the licenses required to be
granted by clause 6.3 and Digimarc shall be solely responsible for determining
that such improvements are suitable for the intended use and for the
consequences of any use of the same whether by Digimarc or others, and Licensee
and hereby disclaims all liability in connection therewith.

 

9.                                      CONFIDENTIALITY

 

9.1                                 Except as otherwise expressly permitted by this
Agreement, a Recipient shall not use, 
reproduce or disclose the Confidential Information of the Discloser for
any  purpose other than as reasonably
necessary to comply with its obligations under this Agreement or to exercise
any rights or licenses granted to it under or pursuant to this Agreement.

 

9.2                                 The Recipient shall 
protect the Confidential Information of the Discloser from disclosure by
using the same degree of care, which shall be no  less than a reasonable degree of care, as the
Recipient uses to protect its own confidential information.

 

9.3                                 On written request from the Discloser, the Recipient
shall return, or certify the destruction of, all originals and copies of the
Discloser’s Confidential Information in the Recipient’s 

 

** CONFIDENTIAL PORTION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

possession or control which
the Recipient does not need to retain in order to perform any obligations
imposed, or exercise any rights acquired, by this Agreement.

 

9.4                                 A Recipient may, on a need to know basis, and only
for the purposes described in clause 
9.1, give the other party’s Confidential Information to the Recipient’s
employees or authorized subcontractors provided that such employee or
subcontractor shall have entered into a non-disclosure agreement in respect of
such Confidential Information in favour of the Discloser on terms materially
similar to the provisions of this clause 
9.

 

9.5                                 The obligations set out in this clause  9 will not apply to any Confidential
Information that:

 

(a)                                  is or becomes publicly available other than through
the fault of the Recipient;

 

(b)                                 was known to the Recipient prior to disclosure as
shown by documentation sufficient to establish such knowledge;

 

(c)                                  was or is lawfully disclosed to the  Recipient by a third party who did not breach
any obligation of confidence by such disclosure and who made the disclosure
without restriction on further disclosure all of which is shown by
documentation sufficient to establish same; or

 

(d)                                 is required by law to be disclosed provided, however,
that the Recipient shall first give written notice to the Discloser before the
disclosure so that the Discloser may seek an appropriate protective order.

 

Notwithstanding the foregoing, the fact that
Confidential Information, or any part thereof, can be linked together by a
search of publications and other information, followed by a selection of a
series of such items of knowledge from unconnected sources, and fitting
together those items of knowledge so as to duplicate or recreate any item of
Confidential Information, shall not be deemed to cause the Confidential
Information, or any part thereof, to be included within exceptions (a), (b) or
(c), above.

 

9.6                                 The obligations of the parties under this clause 9
will survive the Term or sooner termination of this Agreement and will remain
in full force and effect regardless of the cause of any termination.

 

9.7                                 Nothing in this
Agreement shall be
construed to require Licensee to disclose any information which is confidential
to a third party including for greater certainty a Licensed [**].

 

** CONFIDENTIAL PORTION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

10.          INTELLECTUAL PROPERTY INDEMNIFICATION

 

10.1                           Licensee shall
provide Digimarc with prompt written notice of any claim, demand or action
against Licensee based on an
allegation that the Digimarc IPR or any part thereof, infringes any Intellectual
Property Right of any person (referred to below as a “Claim”).

 

10.2                           Subject to the limitations set out in clauses 10.3 to
10.7 inclusive, Digimarc shall, at its own expense:

 

(a)                                   negotiate the
resolution of any such Claim;

 

(b)                                 pay all costs
associated with the Claim; and

 

(c)                                  defend any
action based on the Claim.

 

10.3                           Licensee shall,
at Digimarc’s expense, comply with all reasonable requests by Digimarc for
assistance from Licensee in connection with the settlement or defence of the
Claim.

 

10.4                           Notwithstanding
any other provision of this Agreement to the contrary, but subject to the
limitations in this clause 10, Digimarc
shall indemnify Licensee against and save Licensee harmless from all loss,
costs, liabilities including an award of damages, and expenses, including legal
fees, arising from each Claim first notified to Digimarc prior to 31 December [**].
The obligation set out in this clause 10 shall not apply in respect of any
settlement made by Licensee without the consent of Digimarc.

 

10.5                           The liability
of Digimarc under clause 10.4 of this Agreement and under the equivalent clause
of every other licence or consulting agreement entered into between Digimarc
and [**] and [**] pursuant to the provisions of the BIS Agreement will not
exceed the Indemnity Limit as defined in clause 10.6 below.

 

10.6                           The Indemnity Limit shall be [**], or such
higher amount as notified by Digimarc from time to time.

 

10.7                           For the
purposes of clauses 10.2 through 10.6 inclusive, “Claim” shall mean any Claim,
other than a Claim for patent infringement which Digimarc can demonstrate
occurred without Digimarc acting recklessly or negligently.

 

11.           TERM AND TERMINATION

 

11.1                           This Agreement will take effect on the Effective Date
and will remain in force throughout the Term unless sooner terminated as
provided herein.

 

11.2                           Either party may terminate this Agreement if the
other party breaches any of its obligations under this Agreement and fails to
remedy such breach within thirty (30) days after receiving written notice of
such breach from the other party.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

11.3                          Upon termination of this Agreement:

 

(a)                                  all rights granted to Licensee under this Agreement
will immediately terminate.  No interest
in any such rights will thereafter remain with Licensee, except that [**], but
no further [**]  Licensee shall be permitted; and

 

(b)                                 each party shall return, or certify the destruction
of, to the Discloser, all originals and copies of the Discloser’s Confidential
Information in the party’s  possession or
control which the party does not need to retain in order to exercise any rights
acquired by this Agreement.

 

11.4                           No termination of this Agreement will in any manner
release, or be construed as releasing, any party from any liability arising out
of or in connection with that party’s breach of or failure to perform any
covenant, duty or obligation contained herein prior to the date of such
termination.

 

11.5                           Upon termination of the BIS Agreement by Digimarc for cause, the rights of
Licensee hereunder to use the Digimarc IPR shall be deemed to be restricted to
the [**]  as
of the date of such termination.

 

11.6                           Termination of the license between Digimarc and [**]  shall automatically act to terminate this Agreement.

 

12.          DISPUTE RESOLUTION

 

12.1                           Any Dispute (as defined in the Arbitration Agreement)
shall be finally settled by arbitration in accordance with the Arbitration
Agreement.

 

12.2                           Unless otherwise agreed between the parties or unless
the subject matter of the dispute resolution proceedings is a party’s right to
terminate this Agreement, the Services shall continue during the dispute
resolution proceedings and payments due to Digimarc shall not be withheld on
account of such proceedings unless that particular services or payment is the
subject matter of the proceedings. 
Notwithstanding the foregoing, Licensee may in its sole discretion
instruct Digimarc to continue to perform such services which are the subject
matter of the proceedings and Digimarc shall act in accordance with those
instructions, subject to payment under clause 4.1.

 

13.          MISCELLANEOUS PROVISIONS

 

13.1                           Remedies Cumulative - Except as otherwise expressly set out in this
Agreement:

 

(a)                                  each and every right, power and remedy of a party
will be considered to be cumulative with and in addition to any other right,
power and remedy which such party may have at law or in equity in the event of
breach of any of the terms of this Agreement;

 

** CONFIDENTIAL PORTION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

(b)                                 the exercise or partial exercise of any right, power
or remedy will neither constitute the exclusive election thereof nor the waiver
of any other right, power or remedy available to such party; and

 

(c)                                  a party terminating this Agreement in accordance with
the provisions of the Termination clause will have no liability or obligation
to the other as a result of or with respect to the termination.

 

13.2                           All notices under this Agreement shall be delivered
by fax, or recognized international courier service.  The notice shall be deemed effective as of
the date of delivery to the address of the party specified below as evidenced
by a delivery receipt or the addressee’s registry of incoming correspondence.  Unless otherwise expressly set out in this
Agreement, all notices to a party will be sent to the party’s authorized
representative identified below and all notices from a party will be sent by
the party’s authorized representative identified below.

 

13.3                           Any notice to Licensee shall be sent to both of, and
any notice from Licensee shall be sent by either:

 

	
  Name1

  	
  Name2

  
	
  Address1

  	
  Address2

  

 

13.4                           Any notice to Digimarc shall be sent to both of, and
any notice from Digimarc shall be sent by either:

 

	
  Mr. Robert Chamness

  	
   

  	
  Mr. Scott
  Carr

  
	
  Vice
  President and General Counsel

  	
   

  	
  President

  
	
  Digimarc
  Corporation

  	
   

  	
  Digimarc
  Watermarking Solutions

  
	
  9405
  SW Gemini Drive

  	
   

  	
  9405
  SW Gemini Drive

  
	
  Beaverton,
  OR 97008

  	
   

  	
  Beaverton,
  OR 97008

  
	
  Fax:
  (503) 469-4777

  	
   

  	
  Fax:
  (503) 469-4777

  

 

13.5                           A copy of every notice sent by either party shall be
sent to:  [**], Bank for International
Settlements, [**]

 

13.6                           A party may change its address for notice by notice
to the other party in accordance with the foregoing provisions.

 

13.7                           Severability.  If any part of this Agreement is held by an arbitral tribunal appointed
pursuant to the Arbitration Agreement or other competent authority to be void
or unenforceable, the parties agree that such determination will not result in
the nullity or unenforceability of the remaining parts of this Agreement, which
will continue in force to the fullest extent permitted by law.  The parties further agree to replace such
void or 

 

** CONFIDENTIAL PORTION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

unenforceable part of this
Agreement with a valid and enforceable provision that will achieve, to the
extent legally permissible, the economic, business and other purposes of the
void or unenforceable part.

 

13.8                           Counterparts.   This Agreement may be executed in separate
counterparts, and by facsimile, each of which will be deemed an original, and
when executed, separately or together, will constitute a single original
instrument, effective in the same manner as if the parties had executed one and
the same instrument.

 

13.9                           Entire Agreement.                                         This Agreement is intended by the parties to be the
final expression of their agreement and constitutes and embodies the entire
agreement and understanding between the parties hereto and constitutes a
complete and exclusive statement of the terms and conditions thereof, and will
supersede any and all prior correspondence, conversations, negotiations,
agreements or understandings relating to the same subject matter.

 

13.10                     Amendments.   No change
in, modification of or addition to the terms and conditions contained herein
will be valid as between the parties unless set forth in a writing that is
signed by an authorized representative of each of the parties and which
specifically states that it constitutes an amendment to this Agreement.

 

13.11                     Waiver.    No waiver of
any term, provision, or condition of this Agreement, will be effective unless
in a written document signed by the waiving party and no such waiver in any one
or more instances, will be deemed to be, or be construed as, a further or
continuing waiver of that term, provision or condition or any other term,
provision or condition of this Agreement.

 

13.12                     Assignment and Successors.   This
Agreement may not be assigned by Licensee without Digimarc’s consent, which
consent shall not be unreasonably withheld or delayed.  This Agreement and all of its terms,
conditions and covenants are intended to be fully effective and binding, to the
extent permitted by law, on the successors and permitted assigns of the parties
hereto.

 

13.13                     Captions.   Captions are
provided in this Agreement for convenience only and they form no part, and are
not to serve as a basis for interpretation or construction, of this Agreement,
nor as evidence of the intention of the parties hereto.

 

13.14                     Disclaimer of Agency.    Nothing
contained in this Agreement is intended or will be construed so as to
constitute the parties to this Agreement as partners or joint venturers or as
agents of each other. Neither party will have any express or implied right or
authority to assume or create any obligations on behalf of or in the name of
the other party or to bind any other party in any contract, agreement or
undertaking with any third party.  No
employee of a party shall be deemed or considered to be an employee of the
other party or of both parties.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

13.15                     Publicity.   The parties
agree that from time-to-time it will be beneficial to both parties to issue
press releases and other public announcements concerning benefits arising from
the CDS.  Each party agrees to submit for
approval by the other party any press release that involves the other party,
which approval shall not unreasonably be withheld.

 

13.16                     Effectiveness.   This Agreement shall not be effective until it is signed by both of the
parties.

 

13.17                     Ambiguities.  Each party
and its counsel have participated fully in the review and revision of this
Agreement. Any rule or construction to the effect that ambiguities are to
be resolved against the drafting party shall not apply in interpreting this
Agreement.

 

13.18                     Survival.   All clauses
of this Agreement which expressly or by implication are intended to survive the
termination of this Agreement will do so and, for greater certainty and
notwithstanding any provision in this Agreement to the contrary, the provisions
of clause 2.9, 4.2, 4.3, 6.1, 6.3, 6.4, 7.2(b), 9, 10, 12 and 13 of this
Agreement shall survive termination of this Agreement by either party for any
reason.

 

IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the Effective Date.

 

	
  DIGIMARC CORPORATION

  	
   

  	
   

  	
  <Licensee>

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT
1

 

[**]

 

The [**]  will cause the following [**]  to take place:

 

(a)                                  [**]

 

(b)                                 [**].

 

(c)                                  [**] <<a date TBD>> [**].

 

** CONFIDENTIAL PORTION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT 2

 

DRAFT
OPINION OF COUNSEL

 

Digimarc Corporation

9405 SW Gemini Drive

Beaverton, OR 97062

USA

 

Attention:

President and CEO

 

Dear:

 

In connection with your proposal to grant  a license to <name of Licensee> to
use  the Counterfeit Deterrence System  and for no other purpose, we confirm that:

 

(a)                                  each provision of this Agreement is valid and
enforceable against <name of Licensee> under the laws of <name of
jurisdiction>; and

 

(b)                                 none of the [**]  described below, at the time of writing, contravenes
any law, regulation, policy, principle, or doctrine in effect in the
jurisdiction of the <principal place of business/head office> of <name
of Licensee>.

 

[**]

Yours truly,

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT 3

 

PROBLEM
REPORT

 

Each problem report will contain all
information necessary to reproduce or demonstrate the occurrence of the
problem.  Problem reports will be in
English and will be delivered electronically in a format to be provided by Digimarc.

 

Problem reports will contain:

 

·                  Date problem was encountered

·                  Detailed description of the problem, including the
frequency with which the problem occurs

·                  Name and version number of the program / system
component that exhibits the problem

·                  Step by step instructions to reproduce the problem

·                  All data files required to reproduce the problem

·                  [**]Manufacturer
and Model

·                  CPU
type and speed

·                  Amount
of memory

·                  Operating
System and Version

·                  Disk
Configuration (number of drives, total space per drive, free space per drive)

·                  Display Adapter Model, Resolution, Number of colors

·                  Peripheral configuration (where applicable)[**]TWAIN
driver and version number

·                  [**]

·                  Severity of problem

·                  Contact information for person to contact for further
information (name, phone number, FAX number, email address)

 

Licensee agrees to work with Digimarc to
provide reasonable additional information and perform reasonable additional
tests, as requested by Digimarc, to assist Digimarc in resolution of the
problem.

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT  4

 

PAYMENT
FOR SERVICES

 

Digimarc shall bill Licensee for Services in
one hour increments at the following hourly rates:

 

	
  Technical/Design Consultant

  	
   

  	
  [**]

  
	
  Senior Engineer

  	
   

  	
  [**]

  
	
  R&D/Engineering Executive

  	
   

  	
  [**]

  
	
  Project Manager

  	
   

  	
  [**]

  
	
  Administrator/Scheduler

  	
   

  	
  [**]

  

 

 

Fees for Services will be invoiced on the
earlier of 1) the last day of the month or 2) the completion of the
Services.  Invoices are due thirty (30)
days from the date of receipt of a correct invoice.  A late charge of 1.5% per month will be
charged on any late payments.  All fees
are due and payable in US funds.

 

Licensee will reimburse Digimarc for all
out-of-pocket expenses reasonably and necessarily incurred in providing the
Services.  Expenses will be itemized and
reported by category.  Out-of-pocket
expenses will not be “marked up” by Digimarc. 
Costs include, but are not limited to, reasonable travel and lodging
expenses, telephone and fax charges, postage and overnight deliveries, and
charges for rental equipment or materials purchased specifically to be used in
providing the Service.  All invoices for
out-of-pocket expenses will be issued monthly in arrears and are due thirty (30)
days from the date of receipt of a correct invoice. Supporting receipts and
vouchers will be available for review at Digimarc’s offices.  A late charge of 1.5% per month will be
charged on any late payments.  Payments
will additionally include Value Added taxes and other tariffs and fees that may
be imposed by any government other than the United States of America.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT
5

 

[**]

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT
6

 

IDENTIFICATION
OF [**]

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT
7

 

TRAINING

 

1.0                                 As part of the  [**], Digimarc shall develop a program of training
acceptable to the [**] Project
Director(as defined in the BIS Agreement) in the [**]

 

2.0                                 Digimarc shall deliver the Training as follows:

 

2.1                                 Digimarc shall provide the Training to up to two (2) people
simultaneously.  The trainees will be
experienced in digital design system operation.

 

2.2                                 Digimarc shall conduct the Training at the facilities
of Licensee  or,
at the request of Licensee , at Digimarc’s facilities  or at some other place agreed between Digimarc and
Licensee.

 

2.3                                 Digimarc shall give Licensee reasonable notice
concerning the equipment which Digimarc will require in order to conduct the
Training. Licensee shall provide all such equipment at its own expense.  If the parties are unable to agree on the
equipment to be provided either party may refer the matter for decision to the
DLA Contract Authority (as defined in the BIS Agreement).

 

2.4                                 Digimarc shall conduct the Training using the [**]

 

2.5                                 Digimarc shall provide a training manual in English
to every trainee.  Any translation or
interpretation which the trainees may require will be provided by Licensee at
its own expense.

 

2.6                                 Digimarc shall provide each trainee with a
certificate of training at the completion of the Training session.

 

2.7                                 Digimarc shall conduct the Training in English.

 

** CONFIDENTIAL PORTION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE M

 

ESCROW AGREEMENT

 

DATED:

 

Between:

 

(1)                                  DIGIMARC
CORPORATION whose head office is at One Centerpointe Drive, Suite 500,
Lake Oswego, Oregon. U.S.A.  97035-8615 (“Digimarc”);

 

(2)                                  BANK FOR
INTERNATIONAL SETTLEMENTS whose head office is at Centralbahnplatz 2, CH-4051
Basle, Switzerland (BIS); and

 

(3)                                  [**] whose
registered office is at [**]

 

Each
of the parties to this Agreement acknowledges that the considerations for their
respective undertakings given under it are the undertakings given under it by
each of the other parties.

 

It
is agreed that:

 

1.                                      Definitions

 

In
this Agreement the following terms shall have the following meanings:

 

1.1                                 “Arbitration Agreement” means the Arbitration
Agreement entered into between the parties and others effective 1 January 1999.

 

1.2                                 “Business Day” means a day on which each of BIS, Digimarc, and
[**] is open for business at their respective addresses noted above;

 

1.3                                 “Intellectual Property Rights” means copyright, trade
secret, patent, and all other rights of a similar nature;

 

1.4                                 “Licence Agreement” means the Counterfeit Deterrence System
Development and License Agreement entered into between Digimarc and BIS,
effective 1 January 1999.

 

1.5                                 “Material” means the “Escrowed Materials” as that term is
defined in the Licence Agreement; and

 

1.6                                 “Technology” means the CDS Technology as defined in the Licence
Agreement.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

2.                                      Owner’s Duties and Warranties

 

2.1                                 Digimarc shall:

 

2.1.1                        deliver a copy
of the Material to [**] within thirty (30) days of the date of this Agreement;

 

2.1.2                        make available
to [**] at Digimarc’s premises a copy of the Material in accordance with its
obligations under Clause 8.8 of the Licence Agreement; and

 

2.1.
3                     deliver to [**]
a replacement copy of the Material within twenty (20) Business Days of receipt
of a notice served upon it by [**] under the provisions of Clause 4.1.5.

 

2.2                                 Digimarc  warrants to [**] that Digimarc has
sufficient rights in the Intellectual Property Rights in the Material to enter
into this Agreement, and that it has authority to enter into this Agreement.

 

3.                                      BIS’ Responsibilities

 

                                                It shall be the
responsibility of BIS to notify [**] of any change to the Technology that
necessitates a replacement deposit of the Material.

 

4.            [**]’s Duties

 

4.1                                 [**] shall:

 

4.1.1                        hold the
Material in a safe and secure environment;

 

4.1.2                        notify Digimarc
and BIS of the receipt of any copy of the Material;

 

4.1.3                        in accordance
with the terms of Clause 9 perform the Verification Process from time to time;

 

4.1.4                        at all times
retain a copy of the latest verified deposit of the Material;

 

4.1.5                        notify Digimarc
and BIS if it becomes aware at any time during the term of this Agreement that
the copy of the Material held by it has been lost, damaged or destroyed; and

 

4.1.6                        upon receipt
and verification of a new version of the Material, return all prior versions of
the Material to Digimarc with ten (10) Business Days.

 

4.2                                 [**] shall not
be responsible for procuring the delivery of the Material in the event of
failure by Digimarc to deliver it.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

5.             Payment

 

[**]’s
fees are payable in accordance with Schedule 1.

 

6.             Release Events

 

6.1                                 For the
purposes of this Agreement any of the following events shall be considered to
be a “Release Event”:

 

(a)                                  the date on
which the license referred to in Clause 8.4 of the Licence Agreement takes
effect in accordance with Clause 8.5 of that Agreement;

 

(b)                                 the date on
which the license referred to in Clause 8.6 of the Licence Agreement takes effect.

 

6.2                                 BIS must notify
[**] of the occurrence of a Release Event by delivering to [**] a statutory or
notarized declaration (“the Declaration”) made by an officer of BIS attesting
that such event has occurred and that the Licence Agreement was still valid and
effective up to the occurrence of such event and exhibiting:

 

6.2.1                        such
documentation in support of the Declaration as [**] shall reasonably require;
and

 

6.2.2                        a copy of the
Licence Agreement.

 

6.3                               Upon receipt of
a Declaration from BIS claiming a Release Event under Clause 6.1:

 

6.3.1                        [**] shall send
a copy of the Declaration to Digimarc by courier and fax; and

 

6.3.2                        unless within
fourteen (14) days after the date of delivery Digimarc delivers to [**] a
counter-notice signed by a duly authorized officer of Digimarc stating that no
such Release Event has occurred

 

then
[**] will release the Material to an authorized officer of BIS upon receipt of
the release fee stated in Schedule 1.

 

6.4                                 Where there is
any dispute as to the occurrence of any of the events set out in Clause 6.1,
such dispute will be referred at the request of either Digimarc or BIS to the
Managing Director for the time being of [**] (or the equivalent officer of any
new custodian appointed pursuant to Clause 11.2 or 11.3) for the appointment of
an expert who shall give a decision on the matter within fourteen (14) days of
the date of referral or as soon as practicable thereafter.  The expert’s decision shall be final and
binding as between Digimarc and BIS except in the case of manifest error.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

6.5                                 If the expert’s
decision is that a Release Event has occurred, [**] shall immediately release
the Material to an authorized officer of BIS upon receipt of the release fee
stated in Schedule 1.

 

7.                                      Confidentiality

 

7.1                                 The Material
shall remain the confidential property of Digimarc and in the event that [**]
provides a copy of the Material to BIS, BIS shall be permitted to use and
sublicence the Material only in accordance with the terms set forth in the
License Agreement.

 

7.2                                 [**] agrees to
maintain all information and/or documentation coming into its possession or to
its knowledge under this Agreement in strictest confidence and secrecy.  [**] further agrees not to make use of such
information and/or documentation other than for the purposes of this Agreement
and will not disclose or release it other than in accordance with the terms of
this Agreement.

 

7.3                                 Termination of
this Agreement will not relieve [**] or its employees, or BIS or its employees,
from the obligations of confidentiality contained in this Clause 7.

 

8.                                      Intellectual Property Rights

 

                                                The release of
the Material to BIS will not act as an assignment or license of any Intellectual
Property Rights that Digimarc possesses in the Material except as specifically
provided in the Licence Agreement.

 

9.                                      Verification

 

9.1                                 Subject to the
provisions of Clauses 9.2 and 9.3, [**] shall bear no obligation or
responsibility to any person, firm, company or entity whatsoever to determine
the existence, relevance, completeness, accuracy, effectiveness or any other
aspect of the Material.

 

9.2                                 Upon the
Material being lodged with [**] from time to time under Clause 2.1, [**] shall
perform tests in accordance with its standard verification service applying
from time to time and shall provide a copy of the test report to BIS and
Digimarc.  Additionally, at BIS’ request
and expense, [**] shall perform the Verification Process detailed in clause 9.3
below.

 

9.3                                 Verification
Process.  [**] shall inspect, audit and
verify any or all of the Material for accuracy, completeness and
sufficiency.  Such verification process
may include, at BIS’s option, assembling and/or compiling the source code into
executable object code.  Digimarc agrees
to make reasonably available, at its standard consulting rates as in effect
from time to time, technical and support personnel reasonably necessary for
[**] to perform verification of the Material, and further agrees to give [**]
reasonable access to Digimarc’s facilities, including its computer systems, for
the purpose of such verification at no additional charge.  Digimarc hereby grants [**] permission to
release to BIS directory lists and/or tables of contents of computer 

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

media,
manuals, and other materials comprising the Material.  Digimarc and BIS shall be entitled to have a
representative present at all times to observe such verification by [**].  Any report prepared by [**] shall be provided
to all parties hereto.

 

10.                               [**]’s
Liability

 

10.1                           [**] shall not
be liable for any loss caused to Digimarc or BIS either jointly or severally
except for loss of or damage to the Material to the extent that such loss or
damage is caused by the negligent acts or omissions of [**], its employees,
agents or sub-contractors and in such event [**]’s total liability in respect
of all claims arising under or by virtue of this Agreement shall not (except in
the case of claims for personal injury or death) exceed the sum of five hundred
thousand pounds (£500,000).

 

10.2                           [**] shall in
no circumstances be liable to Digimarc or BIS for indirect or consequential
loss of any nature whatsoever whether for loss of profit, loss of business or
otherwise.

 

10.3                           [**] shall be
protected in acting upon any written request, waiver, consent, receipt or other
document furnished to it pursuant to this Agreement, not only in assuming its
due execution and the validity and effectiveness of its provisions but also as
to the truth and acceptability of any information contained in it, which [**]
in good faith believes to be genuine and what it purports to be.

 

11.                               Termination

 

11.1                           [**] may
terminate this Agreement after failure by BIS to comply with a 30 day written
notice from [**] to pay any outstanding fee.

 

11.2                           [**] may
terminate this Agreement by giving sixty (60) days written notice to Digimarc
and BIS.  In that event Digimarc and BIS
shall appoint a mutually acceptable new custodian on terms similar to those
contained in this Agreement.

 

11.3                           If a new
custodian is not appointed within 30 days of delivery of any notice issued by
[**] in accordance with the provisions of Clause 11.2, Digimarc or BIS shall be
entitled to request the President for the time being of the British Computer
Society to appoint a suitable new custodian upon such terms and conditions as
he shall require.  Such appointment shall
be final and binding on all parties.

 

11.4                           If the rights
of all parties to use the Technology under or pursuant to the Licence Agreement
have expired or have been lawfully terminated this Agreement will automatically
terminate on the same date.

 

11.5                           BIS may
terminate this Agreement at any time by giving written notice to Digimarc and
[**].

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

11.6                           Digimarc may
only terminate this Agreement with the written consent of BIS.

 

11.7                           This Agreement
shall terminate upon release of the Material to BIS in accordance with Clause
6.

 

11.8                           Upon
termination under the provisions of Clauses 11.4, 11.5 or 11.6 [**] will
deliver the Material to Digimarc.  If
[**] is unable to trace Digimarc, [**] will destroy the Material. Upon
termination under the provisions of Clause 11.2 [**] will deliver the Material
to the new custodian agreed under Clause 11.2 or appointed under Clause 11.3.

 

11.9                           Upon
termination under the provisions of Clause 11.1 the Material will be available
for collection by Digimarc from [**] for thirty (30) days from the date of
termination.  After such thirty (30) day
period [**] will destroy the Material.

 

12.                               General

 

12.1                           This Agreement
shall be governed by and construed in accordance with the laws of England to
the exclusion of its rules of conflicts of laws.

 

12.2                           This Agreement
represents the whole agreement relating to the escrow arrangements between the
parties for the Material and supersedes all prior arrangements, negotiations
and undertakings.

 

12.3                           Except as
otherwise provided, all notices to be given to the parties under this Agreement
shall be served by hand, by internationally-recognized courier service, or by
registered post (return receipt requested), addressed to the signatories hereto
at the addresses given above or, for companies based in the UK, at the
registered office.  Facsimile may not be
used except as a supplement to one of the foregoing.  Notices shall be deemed to have been duly
given or made when delivered, as evidenced by delivery receipt or customary
courier delivery notification.

 

12.4                           Any “Dispute”,
as the term is defined in the Arbitration Agreement, shall be finally settled
by arbitration in accordance with the Arbitration Agreement.

 

Signed
on behalf of

 

BANK FOR INTERNATIONAL SETTLEMENTS

 

 

	
   

  	
   

  
	
  Signature

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
  (Authorized
  Signatory)

  
	
  Date

  	
   

  

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

	
   

  	
   

  
	
  Signature

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
  (Authorized
  Signatory)

  
	
  Date

  	
   

  

 

DIGIMARC CORPORATION

 

 

	
   

  	
   

  
	
  Signature

  	
   

  
	
  Name:

  	
  Bruce
  Davis

  	
   

  
	
  Title:

  	
  President &
  CEO

  	
  (Authorized
  Signatory)

  
	
  Date

  	
   

  

 

 

[**] ESCROW INTERNATIONAL LIMITED

 

 

	
   

  	
   

  
	
  Signature

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
  (Authorized
  Signatory)

  
	
  Date

  	
   

  

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE 1

 

[**]’s
Fees (St£)

 

	
  DESCRIPTION

  	
   

  	
  FEE

  	
   

  	
  DIGIMARC

  	
   

  	
  BIS

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Initial
  Fee

  	
   

  	
  £700

  	
   

  	
  NIL

  	
   

  	
  100%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Annual
  Fee

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (payable
  on completion of this

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Agreement
  and on each

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  anniversary
  thereafter)

  	
   

  	
  £385

  	
   

  	
  NIL

  	
   

  	
  100%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Update
  Fee

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (per
  update after the first 4 updates

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  per
  annum)

  	
   

  	
  £100

  	
   

  	
  NIL

  	
   

  	
  100%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Storage
  Fee

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (an
  additional annual fee may be

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  payable
  for deposits in excess

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  of
  one cubic foot)

  	
   

  	
  TBA

  	
   

  	
  NIL

  	
   

  	
  100%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  Liability
  Fee

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (£100
  per £500,000 of liability

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  exceeding
  £500,000, per annum)

  	
   

  	
  Not
  Applicable

  	
   

  	
  NIL

  	
   

  	
  Not

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Applicable

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  Release
  Fee

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (plus
  [**]’s reasonable expenses)

  	
   

  	
  £500

  	
   

  	
  NIL

  	
   

  	
  100%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Verification
  Fee

  	
   

  	
  £700
  per day

  	
   

  	
  NIL

  	
   

  	
  100
  %

  
	
   

  	
   

  	
  (plus
  [**]’s reasonable expenses)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

1.               All fees are
subject to VAT where applicable*

2.               All fees are
reviewed by [**] from time to time

 

*  only applicable to countries
within the EU.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

SCHEDULE “N”

 

PROGRESS REPORTS AND PROJECT REVIEWS

 

1.                                      TASK
STATUS

 

Within
fifteen (15) Business Days after the end of every calendar month [**] Digimarc
shall deliver reports to the [**] Project Director in accordance with Sections
8 to 10 herein as agreed in the current Program Work Plan.

 

2.                                      PROBLEM
REPORT

 

Digimarc
shall report to the [**] Project Director on problems that impact technical or
schedule performance. Each problem will be reported in a problem list that
includes the following information:

 

Problem
title

Date
reported

Task
or Service affected

Task
or Service impact

Proposed
corrective action

Current
status

Date
closed

 

Red
Flag reports (see paragraph 7) will be included on the problem list. A problem
will remain on the list until closed or otherwise resolved.

 

3.                                      PROGRESS
REVIEWS

 

Digimarc
shall provide materials, information and documentation in support of progress
review meetings with the BIS once every three (3) months on average
throughout the period during which Phase [**] Services are being performed and
will attend progress review meetings as requested by the [**] Project Director.
The objective of each meeting is to review the: status of each major task and
Service; status of deliverable items; [**] progress for each [**]; each parties’
proposed plans concerning [**] including intended outcome during the Term of
this Agreement and during the period until the next meeting under this
Schedule; [**]; a summary of the financial status; contractual and
administrative matters; contract changes and amendments, as necessary;
technical reports or data; market and user factors and marketing activities;
and other topics as necessary and relevant.

 

Each
meeting that Digimarc is requested to attend will last no more than 2 days
unless otherwise agreed upon in advance. Attendees will include management,
technical and administrative representatives from Digimarc and [**], including
the parties’ respective Project Directors or suitable designees. To ensure
meeting effectiveness, [**] will be limited to ten (10) 

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

or fewer persons
including any outside vendors or consultants deemed necessary by agreement of
the parties’ respective Project Directors to be necessary to ensure an
effective meeting.

 

In
between the quarterly meetings described above, the technical representatives
of Digimarc and [**] shall hold technical review meetings at least six (6) times
per year or as otherwise agreed by the parties to review technical, and
resource matters. Each such meeting will last no more than 2 days unless
otherwise agreed upon in advance and will be held at a mutually agreeable date
and location. At least half of the reviews will be held at Digimarc’s
facilities.

Digimarc
will provide a presentation for the [**] on development and [**] progress at
least once per year if requested by the [**] Project Director.

 

4.                                      AGENDA

 

An
agenda will be prepared by Digimarc and sent to the [**] ten (10) days in
advance of each progress review and technical review meeting for review and
comment or approval.

 

5.                                      MEETING
MATERIALS

 

Progress
review and technical review meeting materials will consist of power point
presentations, technical data, marketing white papers, studies, technical specifications
analyses and other reports. Meeting materials will be delivered to the [**].

 

6                                         REPORT

 

Within
five (5) Business Days after the progress review or technical review
meeting, Digimarc shall prepare and deliver to the [**] a report summarizing
the essential topics discussed including the action items assigned during the
meeting. Meeting materials will be appended to the report.

 

7.                                      RED
FLAG REPORT

 

Digimarc
shall prepare and deliver to the [**] Project Director a “Red Flag” report when
a problem requiring the immediate attention of BIS is required.  Red Flag reports may be informative; e.g., a
report about a [**] delinquency that will impact a critical version release
date.  They may also report on problems
whose correction requires immediate consideration or action from [**] or
another organization external to Digimarc. Red Flag reports on development or
[**] problems will contain the following information:

 

·                  A summary describing the development or [**]
problem and background information that may be necessary to understand the
development or [**] problem.

·                  A description of the impact of the problem on
the development project(s) or [**] plan(s).

·                  The date by which
a resolution is required.

·                  A description of
the recommended next action.

·                  The action requested
of the [**] Project Director.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

8.                                      PROJECT
REPORTING GENERAL

 

Monthly
activities reports will be provided that include a report for each of the [**]
areas: Development, Maintenance, [**] and Program Wide.

 

a.               DEVELOPMENT
DETAIL

 

1.               Project Objectives –
Statement of the objectives for the project

2.               Major project risks or
unknowns – Project Directors view of the major risks and unknowns as of the current
month

3.               Accomplishments in the
current month – List of major tasks completed and milestones reached in the
current month

4.               Changes to plan – Changes to
the project plan made during the current month

5.               Next month’s tasks and
milestones – List of the major tasks and the milestones that are expected to be
reached in the next month

6.               Current project Gantt chart –
Updated Gantt chart project with all project changes to date

7.               Utilized resources – List of
staff utilized on the project during the current month

8.               Monthly labor hours by type
of labor – Summary of labor hours by job class for the current month

9.               Monthly Utilization – Actual
monthly Allowable Costs, forecast to end of scope of work, and comparison to
estimated Allowable Costs projection.

 

b.               MAINTENANCE
DETAIL

 

1.               Project Objectives –
Statement of the objectives for the project

2.               Major project risks or
unknowns – Project Directors view of the major risks and unknowns as of the
current month

3.               Accomplishments in the
current month – List of major tasks completed and milestones reached in the
current month

4.               Changes to plan – Changes to
the project plan made during the current month

5.               Next month’s tasks and
milestones – List of the major tasks and the milestones that are expected to be
reached in the next month

6.               Current project Gantt chart –
Updated Gantt chart project with all project changes to date

7.               Utilized resources – List of
staff utilized on the project during the current month

8.               Monthly labor hours by type
of labor – Summary of labor hours by job class for the current month

 

** CONFIDENTIAL PORTION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

9.               Monthly Utilization – Actual
monthly Allowable Costs, forecast to end of scope of work, and comparison to
estimated Allowable Costs projection.

 

c.               [**]
DETAIL

 

1.               Project Objectives –
Statement of the objectives for the project

2.               Major project risks or
unknowns – Digimarc Project Director’s view of the major risks and unknowns as
of the current month

3.               Accomplishments in the
current month – List of major tasks completed in the current month

4.               Changes to plan – Changes to
the project plan made during the current month

5.               Next month’s tasks – List of
the major tasks that are expected to be accomplished in the next month

6.               Utilized resources – List of
staff utilized on the project during the current month

7.               Monthly labor hours by type
of labor – Summary of labor hours by job class for the current month

8.               Monthly Utilization – Actual
monthly Allowable Costs, forecast to end of scope of work, and comparison to
estimated Allowable Costs projection.

 

d.               PROGRAM
WIDE DETAIL

 

1.               Project Objectives –
Statement of the objectives for the project

2.               Accomplishments in the
current month – List of major tasks completed in the current month

3.               Changes to plan – Changes to
the project plan made during the current month

4.               Next month’s tasks – List of
the major tasks that are expected to be accomplished in the next month

5.               Utilized resources – List of
staff utilized on the project during the current month

6.               Monthly labor hours by type
of labor – Summary of labor hours by job class for the current month

7.              Monthly Utilization – Actual
monthly Allowable Costs, forecast to end of scope of work, and comparison to
estimated Allowable Costs projection.

 

** CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

9.                                      PROJECT
MANAGEMENT UPDATES

 

1.               Digimarc and the [**] will
conduct weekly project management updates to review progress on [**] plans and
coordinate [**] work to be undertaken over the next period.

2.               Digimarc will be responsible
for the issuance of minutes for each project management update and also
maintain a register of changes in process and approved.

3.               Digimarc will update the
[**] activity report once per month.

 

10.                               [**]
REPORTS

 

1.               Digimarc will
provide [**] reports on the status of the [**] and related [**] twice per year –
in March and September.  The [**]
will reimburse to Digimarc the cost of providing additional [**] reports as
requested by the [**] Project Director.

 

2.             Digimarc will provide reports to the [**] on the
specific [**] identified in the [**] Plans once per quarter if requested by the
[**] Project Director.

 

** CONFIDENTIAL PORTION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE “O”

 

THIS SYSTEM SUPPORT SERVICES AGREEMENT (the “Agreement”)  is  made

 

BETWEEN

 

<name and address of licensee> (“Licensee”)

 

- AND -

 

DIGIMARC CORPORATION, a corporation incorporated
under the laws of Oregon and having its head office at One Centerpointe, Suite 500
Drive, Lake Oswego, Oregon. U.S.A. 
97035-8615 (“Digimarc”)

 

Licensee
entered into one or more license agreements with Digimarc for the license of
the [**] a counterfeit deterrence system (the “CDS”);

 

Licensee
now wishes to engage Digimarc to maintain and support [**];

 

In consideration of these premises, the covenants
set out in this Agreement and for other good and valuable consideration, the
receipt and adequacy of which are acknowledged by each of the parties, the
parties agree as follows:

 

 

1.             DEFINITIONS
AND PRINCIPLES OF INTERPRETATION

 

1.1           Definitions - Whenever
used in this Agreement, the following words and terms shall have the meanings
set out below:

 

“Arbitration Agreement” means the Arbitration
Agreement entered into between the parties and others effective 1 January 1999;

 

“Agreement” means these articles of
agreement, including the Attachments, and those documents as specified or
referenced in this Agreement as forming part of the Agreement, all as may be
amended from time to time;

 

“BIS Agreement” means
Counterfeit Deterrence System Development and License Agreement entered into
between Bank for International Settlements (“BIS”) and Digimarc effective 1 January 1999;

 

“Business Day” means a day on which both
Licensee and Digimarc are open for business at their respective addresses noted
above;

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

“Confidential Information” means
information disclosed during the Term of this Agreement in any form which, if
disclosed in tangible form, is labelled “Confidential”, “Proprietary” or with a
similar legend, or if disclosed orally is information that by its nature would
be understood to be confidential to the Discloser;

 

“Core Hours” means 7:00 a.m. to
7:00 p.m. Monday through Friday, United States Pacific time zone,
excluding statutory holidays observed by Licensee at its Site;

 

“Discloser” means a party which has
disclosed or otherwise made available its Confidential Information to the other
party;

 

“Effective Date” means the date on which this
Agreement is last signed, or the Effective Date of the License Agreement,
whichever is later;

 

[**]

 

“Hot-line” means a single dedicated
telephone line provided by Digimarc to Licensee for the reporting of problems
with [**];

 

“License Agreement” means, collectively, all
license agreements entered into between the parties pursuant to which Licensee
acquired a license to use [**];

 

“Person” means any individual or
other legal entity, including without limitation sole proprietorship,
partnership, unincorporated association, unincorporated syndicate,
unincorporated organization, trust, body corporate, or  a natural person in the capacity of trustee,
executor, administrator or other legal representative;

 

“Recipient” means a party to which the
Confidential Information of the other party has been disclosed or otherwise
made available;

 

“Services” means the services
described in clauses 2 and 3 below, or any of them;

 

“Severity Level One Software Problem” means a
Software Problem which causes the [**] to cease operating or which causes the
computer system running [**] to crash;

 

“Severity Level Two Software Problem” means a
Software Problem which causes the [**] to cease operation in accordance with
its Specifications or which produces substantially incorrect data;

 

“Severity Level Three Software Problem” means a
Software Problem which is not a Severity Level Two Problem or a Severity Level
One Problem;

 

“Site” means the [**] of Licensee at which a Software
Problem is encountered;

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

“Software Problem” means  a circumstance where [**] does not function
in accordance with its Specifications, produces substantially incorrect data,
or causes a computer running [**] to crash, or other problem with [**] and
which can be reproduced by Digimarc, at Digimarc’s facility, based on
information provided to Digimarc by Licensee in a Software Problem Report;

 

“Software Problem Report” means a written report in
the form attached as Attachment 1;

 

“Specifications” has the meaning given to it
by the BIS Agreement;

 

“System Documentation” means the documentation for
[**] provided by Digimarc to Licensee under a License Agreement;

 

“Training Manual” means the training manual
which relates to the use of [**] provided by Digimarc to Licensee under a
License Agreement; and

 

“Work” means the tasks that are required to be
performed by Digimarc in order to comply with its obligations under this
Agreement.

 

1.2           Interpretation - In this
Agreement:

 

1.2.1        unless
otherwise specified, all references to money amounts are to the currency of the
United States of America;

 

1.2.2        the use of words in the
singular or plural, or with a particular gender, shall not limit the scope or
exclude the application of any provision of this Agreement to such Person or
Persons or circumstances as the context otherwise permits;

 

1.2.3        whenever a provision of this
Agreement requires an approval or consent by a party to this Agreement and
notice of such approval or consent is not delivered within the applicable time,
then the party shall be conclusively deemed to have withheld the consent or
approval;

 

1.2.4        unless otherwise specified,
the number of days within or following which any payment is to be made or act
is to be done shall be interpreted to be continuous and shall be calculated by
excluding the day on which the period commences and including the day which
ends the period and by extending the period to the next Business Day if the
last day of the period is not a Business Day;

 

1.2.5        unless otherwise specified,
the order of precedence for interpreting this Agreement shall be:

 

(a)           this Agreement, excluding
the Attachments,

 

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

(b)           the Attachments;

 

If this
Agreement conflicts in substance with a License Agreement entered into between
the parties, the License Agreement shall control;

 

1.2.6         for greater certainty, a
party or representative to which this Agreement grants the right to make a
decision or determination in the sole discretion of the party or representative
is not required to act reasonably in making the decision or determination and
no such decision or determination may be challenged by the other party under
the Arbitration Agreement or otherwise;

 

1.2.7        the words “includes” or “including”
will be construed without limitation to the generality of the preceding words;

 

1.2.8        a clause, Schedule or Attachment
unless the context requires otherwise, is a reference to a clause, a Schedule
or Attachment of, or a paragraph of a Schedule or Attachment of, this
Agreement, as amended from time to time in accordance with this Agreement; and

 

1.2.9        any due date or time
period prescribed by this Agreement may be changed by written agreement between
the parties’ respective representatives identified in clauses 5.1 and 5.2.

 

1.3           Applicable
Law  - This Agreement shall be
construed in accordance with the laws of England to the exclusion of its rules of
conflicts of laws.

 

1.4           Attachments - The
attachment to this Agreement, listed below, is an integral part of this
Agreement:

 

                Attachment 1 Software
Problem Report

 

2.             SCOPE OF
THE WORK

 

2.1           Digimarc shall provide
the  Services described in this clause 2
as required to ensure that [**] will conform to and operate in accordance with
the Specifications.

 

2.2           Problem
Resolution.  Digimarc shall resolve every Software
Problem in [**] reported by Licensee as follows:

 

2.2.1        Digimarc shall provide and
maintain in effect throughout the Term:

 

(a)           a Hot-line which Licensee
representative shall use to report Software Problems, and;

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

(b)           a paging service by which
Licensee can communicate with Digimarc when Licensee is unable to communicate
with Digimarc using the Hot-line.

 

Licensee
will follow-up each such communication with a Software Problem Report.

 

2.2.2        Both Digimarc and Licensee
shall log each Software Problem reported by Licensee.

 

2.2.3        Upon receipt by Digimarc of
a report from Licensee of a Software Problem, Digimarc shall respond as
provided below in accordance with the level of severity of the Software Problem
identified by Licensee.  Digimarc may
respond to the report of a Software Problem by telephone or in writing.

 

2.2.4        Digimarc shall file a “Resolution
Report” with Licensee for each Software Problem reported by Licensee which will
include a description of the cause of the Software Problem and the means by
which the Software Problem was resolved.

 

2.2.5        Digimarc shall use its best
efforts to respond to a Software Problem Report of a Severity Level One
Software Problem made during Core Hours and resolve the identified Software
Problem within two (2) Business Days of receipt of the Software Problem
Report.  The resolution of the Software
Problem may include a work-around to the Software Problem acceptable to
Licensee in the form of an amendment to [**] on an interim basis if a permanent
resolution is provided within a further twenty (20) Business Days. If:

 

(a)           Digimarc fails to provide a
permanent resolution of the Software Problem within twenty (20) Business Days
after Digimarc provides the work-around, or

 

(b)           Digimarc fails to provide a
work-around to the Software Problem within two (2) Business Days after
receipt of a report from Licensee of the Software Problem,

 

Licensee
may, at its option, reduce the monthly charge for the Services by [**] for each
Business Day after the first Business Day which elapses until Digimarc provides
the required temporary or permanent resolution to that Software Problem.

 

2.2.6        Digimarc shall use commercially reasonable efforts
to respond to a Software Problem Report of a Severity Level Two Software
Problem within ten (10) Business Days of receipt and resolve the
identified Software Problem within a further ten (10) Business Days of
receipt.  If Digimarc fails to resolve
the Software Problem within the twenty (20) Business Day period, Licensee may,
at its option, designate the Software Problem as a Severity Level One Software
Problem.

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

2.2.7        Digimarc will accept reports
for Severity Level Three Software Problems and will consider them for
resolution in a future release.

 

2.2.8        The period for resolution of
any Software Problem identified under Clause 2.2.5 and 2.2.6 shall commence
with the receipt by Digimarc of the information necessary to reproduce the
reported Software Problem if the resolution of that Problem requires such
reproduction.

 

2.3           Application
Support.   Digimarc shall, using the Hotline,
answer questions from  Licensee related
to the use of [**] and resolve problems with [**] which do not require changes
to [**].

 

2.4           Documentation
Updating.   Digimarc shall
update both the hard copy and the electronic versions of the Training Manuals
as required to reflect changes in [**] which result from the provision by
Digimarc of the Services.

 

2.5           Digimarc shall provide the
Services during the Core Hours.  If
Licensee  notifies Digimarc that the
provision of the Services during Core Hours will have a noticeable impact on Licensee’s
normal operations, Digimarc shall provide the Services outside of Core Hours at
a time or times and for the charges to be agreed with Licensee.

 

2.6           Changes to the [**] other
than changes to redress a Software Problem shall be made by Digimarc only at
the direction of the DLA Contracting Authority, pursuant to the terms of the
BIS Agreement.

 

2.7           All Services required to be
provided as a result of :

 

(a)           use by Licensee of [**] other than in accordance
with the Training Manual supplied by Digimarc under a License Agreement; or

 

(b)           failure of the computer system on which [**] is
installed to operate in accordance with the applicable manufacturer’s
specifications;

 

will
be for the account of Licensee.

 

3.             [**]
UPDATES

 

3.1           No Licensee shall be
compelled to incorporate [**].

 

3.2           Digimarc shall continue to
provide the Services to Licensee for the two (2) versions of [**] which
immediately preceded the then current version of [**] or for all versions of
[**] released within twenty-four (24) months of the date of issue of the [**],
whichever is the greater, at no additional cost to  Licensee.

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

4.             PURCHASE
PRICE AND PAYMENT

 

4.1           The fee for the Services is
[**] for each year during the Term. Licensee shall pay the fee in equal monthly
installments on or before the first day of the calendar month.

 

4.2           Except as otherwise
expressly provided in this Agreement, Licensee shall pay Digimarc all sales,
use, goods and services or other similar taxes levied by any government in the
United States or the country of Licensee’s principal place of business which
Digimarc is obliged to collect and remit to such government(s) in
connection with any amount paid by Licensee to Digimarc under this Agreement.

 

4.3           Digimarc is responsible for,
and shall indemnify Licensee against, and hold Licensee harmless from, the
payment of all taxes levied by any government on or in respect of Digimarc’s
income and any amounts required by law to be paid in respect of social benefits
for Digimarc’s employees relating to or arising out of the services performed
under this Agreement by Digimarc.  If
required by law, Licensee shall deduct all such taxes and amounts from the
amounts otherwise payable to Digimarc and remit them to the appropriate
authorities.

 

4.4           Licensee may set off against
any amount which Licensee owes Digimarc under or in connection with  this Agreement any amount which Digimarc owes
Licensee under or in connection with this Agreement, and vice versa.

 

5.             SERVICES
COORDINATION

 

5.1           Digimarc shall designate a
responsible individual with adequate authority and competence as a services
representative whose responsibilities, in addition to those expressly set out
in this Agreement, shall be to serve as primary interface with Licensee.

 

5.2           Licensee shall designate a
responsible individual with adequate authority and competence to serve as
primary interface with Digimarc.

 

5.3           Either party’s
representative may from time to time appoint one or more Persons to represent
him or her on prior written notice to the other party’s representative.

 

5.4           Digimarc shall replace
within a reasonable time under the circumstances any of its employees or
authorized subcontractors engaged in fulfilling its obligations under this
Agreement, including its services representative, whose removal is required by
Licensee, provided that Licensee specifies reasonable cause for such removal in
writing.

 

5.5           Digimarc represents that all
personnel assigned to do the Work will be employees of Digimarc. Digimarc shall
not engage any subcontractor to do any part of the work without first obtaining
the prior written consent of Licensee, which consent will not unreasonably be
withheld.

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

6.             LICENSEE’S
RESPONSIBILITIES

 

6.1           Unless otherwise expressly
set out in this Agreement, Licensee shall respond in writing within ten (10) Business
Days to every written request for consent required by this Agreement received
from Digimarc.

 

6.2           If Licensee is delayed in
complying with any of its obligations under clause 6.1 for any reason not
attributable to Digimarc, and such delay is the cause of  a delay in the compliance by Digimarc with
any of its obligations under this Agreement, then the time for completion and
the deadlines dependent thereon will be extended automatically  by one day for each day of delay by Licensee
or such other period as may be agreed in writing between the parties’
respective representatives.  If Digimarc
reasonably incurs any costs as a result of the delay, other than a delay due to
a force majeure event, such costs will, at Digimarc’s option, be borne by
Licensee.  If the delay is due to a force
majeure event, such costs shall be borne equally by Licensee and Digimarc.  This clause 6.2 sets forth Digimarc’s only
remedy for a delay by Licensee in complying with such obligation.

 

7.             INTELLECTUAL
PROPERTY MATTERS

 

7.1           Licensee acknowledges that
Digimarc is the owner of all changes to [**] made by Digimarc under this
Agreement and all such changes shall be considered for all purposes of a
License Agreement as forming part of [**] licensed thereunder.

 

8.             REPRESENTATIONS
AND WARRANTIES OF DIGIMARC

 

8.1           General - Digimarc
represents, warrants and undertakes to Licensee that from and after the
Effective Date:

 

(a)           the Services will be of professional quality
conforming to generally accepted software product development practices and
will be performed at all times in a timely and cost effective manner and, for
greater certainty Digimarc shall employ the standard of care in performing the
work that would be expected of an [**] of the same or similar type as [**]
which comprises the CDS Technology;

 

(b)           Digimarc is duly incorporated and organized and is
validly subsisting under the laws of the State of Oregon, U.S.A. or some other
state in the United States with full corporate power and authority to enter
into this Agreement;

 

(c)           to the best of its knowledge, neither this Agreement
nor the Services will contravene, breach, or result in any default under any
agreement, permit, by-law, or law or regulation to which Digimarc is subject or
by which it is bound including, for greater certainty any laws or regulations
in effect in the United States governing export; and

 

(d)           this Agreement when executed and delivered by
Digimarc shall constitute a valid and binding agreement with Digimarc
enforceable against Digimarc according to its terms.

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

9.             REPRESENTATIONS
AND WARRANTIES OF LICENSEE

 

9.1
          Licensee
represents and warrants to Digimarc that:

 

(a)           Licensee has full power and
authority to enter into this Agreement; and

 

(b)           this Agreement when executed
and delivered by Licensee shall constitute a valid, binding and enforceable
obligation of Licensee.

 

10.          CONFIDENTIALITY

 

10.1         Except as otherwise
expressly permitted by this Agreement, a Recipient shall not use, reproduce or
disclose the Confidential Information of the Discloser for any  purpose other than as reasonably necessary to
comply with its obligations under  this
Agreement or to exercise any rights or licenses granted to it under or pursuant
to this Agreement.

 

10.2         The Recipient shall  protect the Confidential Information of the
Discloser from disclosure by using the same degree of care, which shall be
no  less than a reasonable degree of
care, as the Recipient uses to protect its own confidential information.

 

10.3         On written request from the
Discloser, the Recipient shall return, or certify the destruction of, all
originals and copies of the Discloser’s Confidential Information in the
Recipient’s possession or control which the Recipient does not need to retain
in order to perform any obligations imposed, or exercise any rights acquired,
by this Agreement.

 

10.4         A Recipient may, on a need
to know basis, and only for the purposes 
described in clause 10.1, give the other party’s Confidential
Information to the Recipient’s employees, authorized subcontractors or
representatives provided that such employee, subcontractor or representative
shall have entered into a non-disclosure agreement in respect of such
Confidential Information in favour of the Discloser on terms materially similar
to the provisions of this clause 10.

 

10.5         The obligations set out in
this clause 10 will not apply to any Confidential Information that:

 

(a)           is or becomes publicly
available other than through the fault of the Recipient;

 

(b)           was known to the Recipient prior to disclosure as
shown by documentation sufficient to establish such knowledge;

 

(c)           was or is lawfully disclosed to the  Recipient by a third party who did not breach
any obligation of confidence by such disclosure and who made the disclosure
without restriction on further disclosure all of which is shown by
documentation sufficient to establish same; or

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

(d)           is required by law to be disclosed provided,
however, that the Recipient shall first give written notice to the Discloser
before the disclosure so that the Discloser may seek an appropriate protective
order.

 

The
fact that Confidential Information, or any part thereof, can be linked together
by a search of publications and other information, followed by a selection of a
series of such items of knowledge from unconnected sources, and fitting
together those items of knowledge so as to duplicate or recreate any item of
Confidential Information, shall not be deemed to cause the Confidential
Information, or any part thereof, to be included within exceptions (a), (b) or
(c), above.

 

10.6         Each party hereby consents
to any court order sought by the other party to enjoin non-compliance, or to
require compliance, by the party with any of the party’s obligations under this
clause 10.

 

10.7         Nothing in this Agreement
shall be construed to require Licensee or any representative of Licensee to
disclose any information which is confidential to a third party including for
greater certainty an [**].

 

11.          DISPUTE
RESOLUTION

 

11.1         Any Dispute as the term is defined in the
Arbitration Agreement shall be finally settled by Arbitration in accordance
with the Arbitration Agreement.

 

11.2         Unless otherwise agreed
between the parties or unless the subject matter of the dispute resolution
proceedings is a party’s right to terminate this Agreement, the Services shall
continue during the dispute resolution proceedings and payments due to Digimarc
shall not be withheld on account of such proceedings unless that particular
Services or payment is the subject matter of the proceedings.  In the latter case, Digimarc may suspend
continued provision of the disputed Services until the dispute resolution
proceeding is concluded unless Licensee instructs Digimarc to continue the
provision of the disputed Services, in which case Digimarc shall act in
accordance with such instructions, subject to payment of the fees due for such
Services.

 

12.          TERM

 

12.1         This Agreement shall take
effect on the Effective Date and shall remain in force for one (1) year
thereafter (the “Term”) unless sooner terminated as provided herein.  [**], Licensee may in its sole discretion
renew the Agreement for one (1) or more successive one (1) year Terms
on no less than sixty (60) days notice prior to the last day of a Term.

 

12.2         Either party may terminate
this Agreement if the other party breaches any of its obligations under this
Agreement and fails to remedy such breach within thirty (30) days after
receiving written notice of such breach from the other party.

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

12.3         Upon termination of this
Agreement each party shall return or certify the destruction of, to the
Discloser, all originals and copies of the 
Discloser’s Confidential Information in the party’s possession or
control which the party does not need to retain in order to exercise any rights
acquired by this Agreement.

 

12.4         No termination of this
Agreement will in any manner release, or be construed as releasing, any party
from any liability arising out of or in connection with that party’s breach of
or failure to perform any covenant, duty or obligation contained herein prior
to the date of such termination.

 

13.          FORCE MAJEURE

 

13.1
        If the
performance by either party of any of its obligations under this Agreement is
prevented or delayed by any circumstance of force majeure (which shall mean
fire, flood, earthquakes, war, riots, or insurrection) the party shall
immediately notify the other party.

 

13.2         The time period within which
the party delayed is obliged to perform its obligations will be delayed during
the period such circumstance exists. 
During the period of delay the party delayed shall use its best efforts
to make alternate arrangements satisfactory to the other party to

avoid
delay or resume performance.

 

14.          NOTICES

 

14.1         All notices under this Agreement
shall be delivered by fax, certified mail, return receipt requested, or
recognized international courier service. 
The notice shall be deemed effective as of the date of delivery to the
address of the party specified below as evidenced by a delivery receipt or the
addressee’s registry of incoming correspondence.  Unless otherwise expressly set out in this
Agreement, all notices to a party will be sent to the party’s authorized
representative identified below and all notices from a party will be sent by
the party’s authorized representative identified below.

 

14.2         Any notice to DIGIMARC shall
be sent to both of, and any notice from Digimarc shall be sent by either:

 

Mr. Bruce Davis

President and CEO

Digimarc Corporation

One Centerpointe Drive

Suite 500

Lake Oswego, Oregon 97035 USA

FAX: (503) 968-0219

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

Mr. William Y. Conwell

Klarquist, Sparkman,  Campbell,

Leigh & Whinston

121 SW Salmon Street

Suite 1600

Portland, Oregon 97204USA

FAX: (503) 228-9446

 

14.3         Any notice to Licensee shall
be sent to both of, and any notice from Licensee shall be sent by:

 

TBD

 

TBD

 

14.4         A party may change its
address for notice by notice to the other party in accordance with the
provisions of this clause 14.

 

14.5         A copy of every notice sent
by either party shall be sent to: [insert BIS contact].

 

15.          MISCELLANEOUS
PROVISIONS

 

15.1         Remedies
Cumulative - Except as otherwise expressly set out in this
Agreement:

 

(a)                                  each and every right, power
and remedy of a party will be considered to be cumulative with and in addition
to any other right, power and remedy which such party may have at law or in
equity in the event of breach of any of the terms of this Agreement;

 

(b)                                 the exercise or partial
exercise of any right, power or remedy will neither constitute the exclusive
election thereof nor the waiver of any other right, power or remedy available
to such party; and

 

(c)                                  a party terminating this
Agreement in accordance with the provisions of the Termination clause will have
no liability or obligation to the other as a result of or with respect to the
termination.

 

15.2         Severability - If any part
of this Agreement is held by an arbitral tribunal appointed pursuant to the
Arbitration Agreement or by any other competent authority to be void or
unenforceable, the parties agree that such determination will not result in the
nullity or unenforceability of the remaining parts of this Agreement, which
will continue in force to the fullest extent permitted by law.  The parties further agree to replace such
void or unenforceable part of this Agreement with a valid and enforceable
provision that will achieve, to the extent legally permissible, the economic,
business and other purposes of the void or unenforceable part.

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

15.3         Counterparts.  This Agreement may be executed in separate
counterparts, and by facsimile, each of which will be deemed an original, and
when executed, separately or together, will constitute a single original
instrument, effective in the same manner as if the parties had executed one and
the same instrument.

 

15.4         Entire
Agreement.  This
Agreement is intended by the parties to be the final expression of their
agreement and constitutes and embodies the entire agreement and understanding
between the parties hereto and constitutes a complete and exclusive statement
of the terms and conditions thereof, and will supersede any and all prior
correspondence, conversations, negotiations, agreements or understandings
between the parties relating to the same subject matter.

 

15.5         Amendments.  No change in, modification of or addition to
the terms and conditions contained herein will be valid as between the parties
unless set forth in a writing that is signed by an authorized representative of
each party and which specifically states that it constitutes an amendment to
this Agreement.

 

15.6         Waiver.  No waiver of any term, provision, or condition
of this Agreement will be effective unless in a written document signed by the
waiving party and no such waiver in any one or more instances will be deemed to
be, or be construed as, a further or continuing waiver of that term, provision
or condition or any other term, provision or condition of this Agreement.

 

15.7         Assignment
and Successors.      This Agreement may
not be assigned by Licensee without the prior written consent of the Digimarc,
which consent may be withheld or given, with or without conditions at Digimarc’s
sole discretion.  This Agreement and all
of its terms, conditions, and covenants are intended to be fully effective and
binding, to the extent permitted by law, on the successors and permitted
assigns of the parties hereto.

 

15.8         Captions.     Captions
are provided in this Agreement for convenience only and they form no part, and
are not to serve as a basis for interpretation, of this Agreement, nor as
evidence of the intention of the parties.

 

15.9         Disclaimer
of Agency.  Nothing contained
in this Agreement is intended or will be interpreted so as to constitute the
parties to this Agreement as partners or joint venturers or as agents of each
other. Neither party will have any express or implied right or authority to
assume or create any obligations on behalf of or in the name of any other party
or to bind any other party in any contract, agreement or undertaking with any
third party. No employee of a party shall be deemed or considered to be an
employee of the other party or of both parties.

 

15.10       Effectiveness.  This Agreement shall be effective only after
it is signed by both of the parties.

 

15.11       Ambiguities.  Each party and its counsel
have participated fully in the review and revision of this Agreement.  Any rule or construction to the effect
that ambiguities are to be resolved against the drafting party shall not apply
in interpreting this Agreement.

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

15.12       Survival.  All clauses of this Agreement which expressly
or by implication are intended to survive the termination of this Agreement
will do so and, for greater certainty and notwithstanding any provision in this
Agreement to the contrary, the provisions of clauses 4.2, 4.3, 4.4, 10, 11, 14
and 15 of this Agreement shall survive termination of this Agreement by either
party for any reason.

 

IN WITNESS WHEREOF, this Agreement has been
executed and delivered by the parties hereto as of the Effective Date.

 

TBD

 

 

	
   

  	
   

  
	
  Signature

  
	
  Name:

  
	
  Title:

  
	
  Date

  

 

DIGIMARC
CORPORATION

 

 

	
   

  	
   

  
	
  Signature

  
	
  Name:

  
	
  Title:

  
	
  Date:

  

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT 1

 

SOFTWARE
PROBLEM REPORT

 

Each
problem report will contain all information necessary to reproduce or
demonstrate the occurrence of the problem. 
Problem reports will be in English and will be delivered electronically
in a format to be provided by Digimarc.

 

Problem
reports will contain:

 

Date
problem was encountered

Detailed
description of the problem, including the frequency with which the problem
occurs

Name
and version number of the program / system component that exhibits the problem

Step
by step instructions to reproduce the problem

All
data files required to reproduce the problem

[**]

Manufacturer
and Model

CPU
type and speed

Amount
of memory

Operating
System and Version

Disk
Configuration (number of drives, total space per drive, free space per drive)

Display
Adapter Model, Resolution, Number of colors

Peripheral
configuration (where applicable)

[**]

TWAIN
driver and version number

[**]

Severity
of problem

Contact
information for person to contact for further information (name, phone number,
FAX number, email address)

 

Licensee
agrees to work with Digimarc to provide reasonable additional information and
perform reasonable additional tests, as requested by Digimarc, to assist
Digimarc in resolution of the problem.

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE “P”

 

FEES FOR INTEGRATION SUPPORT AND VERIFICATION TESTING

 

	
  Digimarc
  shall bill [**] for Services in one hour increments at the following hourly
  rates:

  	
   

  
	
   

  
	
  Technical/Design
  Consultant

  	
  $[**]

  	
   

  
	
   

  	
   

  	
   

  
	
  Senior
  Engineer

  	
  $[**]

  	
   

  
	
   

  	
   

  	
   

  
	
  R&D/Engineering
  Executive

  	
  $[**]

  	
   

  
	
   

  	
   

  	
   

  
	
  Project
  Manager

  	
  $[**]

  	
   

  
	
   

  	
   

  	
   

  
	
  Administrator/Scheduler

  	
  $[**]

  	
   

  
				

 

Fees
for Services will be invoiced on the earlier of 1) the last day of the month or
2) the completion of the Service. 
Invoices are due thirty (30) days from the date of receipt of a correct
invoice.  A late charge of 1.5% per month
will be charged on any late payments. 
All fees are due and payable in US funds.

 

The
[**] will reimburse Digimarc for all out-of-pocket expenses reasonably and
necessarily incurred in providing the Services. 
Expenses will be itemized and reported by category.  Out-of-pocket expenses will not be “marked up”
by Digimarc.  Costs include, but are not
limited to, reasonable travel and lodging expenses, telephone and fax charges,
postage and overnight deliveries, and charges for rental equipment or materials
purchased specifically to be used in providing the Services.  All invoices for out-of-pocket expenses will
be issued monthly in arrears and are due thirty (30) days from the date of
receipt of a correct invoice. Supporting receipts and vouchers shall be
available for review at Digimarc’s offices. A late charge of 1.5% per month
will be charged on any late payments. 
All out-of-pocket expenses will be billed and payable in US funds.
Payments will additionally include Value Added taxes and other tariffs and fees
that may be imposed by any government other than the United States.

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE “Q”

 

TRAINING

 

1.0           As part of [**], Digimarc
shall develop a program of training acceptable to the DLA Project Manager in
[**].

 

2.0           Digimarc shall deliver the
Training as follows:

 

2.1           Digimarc shall provide the
Training to up to two (2) people simultaneously.  The trainees will be experienced in digital
design system operation.

 

2.2           Digimarc shall conduct the
Training at the facilities of [**] or, at the request of the [**], at Digimarc’s
facilities or at some other place agreed between Digimarc and the [**].

 

2.3           Digimarc shall give the [**]
reasonable notice concerning the equipment which Digimarc will require in order
to conduct the Training.  The [**] shall
provide all such equipment at its own expense. 
If the parties are unable to agree on the equipment to be provided
either party may refer the matter for decision to the DLA Contract Authority.

 

2.4           Digimarc shall conduct the
Training using the [**].

 

2.5           Digimarc shall provide a
training manual in English to every trainee. 
Any translation or interpretation which the trainees may require will be
provided by [**] at its own expense.

 

2.6           Digimarc shall provide each
trainee with a certificate of training at the completion of the Training
session.

 

2.7           Digimarc shall conduct the
training in English.

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE “R”

 

SOFTWARE PROBLEM REPORT

 

Each
problem report will contain all information necessary to reproduce or
demonstrate the occurrence of the problem. Problem reports will be in English
and will be delivered electronically in a format to be provided by Digimarc.

 

Problem
reports will contain:

 

·                                          Date problem
was encountered

·                                          Detailed
description of the problem, including the frequency with which the problem occurs

·                                          Name and
version number of the program / system component that exhibits the problem

·                                          Step by step
instructions to reproduce the problem

·                                          All data files
required to reproduce the problem

·                                          PC
configuration

·              Manufacturer
and Model

·              CPU type and
speed

·              Amount of
memory

·              Operating
System and Version

·              Disk
Configuration (number of drives, total space per drive, free space per drive)

·              Display Adapter
Model, Resolution, Number of colors

·                                          Peripheral
configuration (where applicable)

·              Scanner
Manufacturer and Model

·              TWAIN driver
and version number

·                                          Scanning
resolution

·                                          Severity of
problem

·                                          Contact
information for person to contact for further information (name, phone number,
FAX number, email address)

 

BIS
agrees to work with Digimarc to provide reasonable additional information and
perform reasonable additional tests, as requested by Digimarc, to assist
Digimarc in resolution of the problem.

 

**
CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

DLA: SCHEDULE “S”

 

PROFORMA INVOICE

MONTH, YEAR

CDS DEVELOPMENT SERVICES

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Add columns

  	
   

  	
   

  	
   

  	
  Program 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Project 1

  	
   

  	
  Project 2

  	
   

  	
  as necessary

  	
   

  	
  Sub-total

  	
   

  	
  Wide

  	
   

  	
  Total

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineering
  Labor

  	
   

  	
  Hourly Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Director

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Engineering
  Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Engineer - SW
  Development

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Engineer -
  R&D

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  QA Engineer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Business
  Team Labor

  	
   

  	
  Hourly Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Project Director

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Lawyer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Account Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  [**] Engineer

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Technical Writer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Labor

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Expenses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consulting

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name consultant 1

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Name consultant 2

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Add names as
  necessary

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sub-total:
  Consulting

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equipment

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Equipment - BIS

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Security costs

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Postage and
  shipping

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Communications

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Internet

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  [**] Research

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Travel

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Other
  authorized expenses under Schedule I

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Description 1

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Description 2

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Total
  Due

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note: A 15% charge is included in the Expenses.

 

Wiring Instructions:

Payable to Digimarc Corporation, General Account.

 

Note: A change to the wiring instructions on this invoice is deemed to
be a duly authorized change by Digimarc.

 

	
  DLA:
  Schedule “S”

  	
  27
  February [**]

  

DLA: SCHEDULE “S”

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

PROFORMA INVOICE

MONTH, YEAR

CDS DEVELOPMENT SERVICES

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Add columns

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Project 1

  	
   

  	
  Project 2

  	
   

  	
  as necessary

  	
   

  	
  Sub-total

  	
   

  	
  Program Wide

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Total

  	
   

  
	
  Engineering Labor

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Director

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Engineering Manager

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Engineer - SW Development

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Engineer - R&D

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  QA Engineer

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Business Team Labor

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Project Director

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Lawyer

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Account Manager

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product Manager

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  [**] Engineer

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Technical Writer

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Labor

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consulting

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name consultant 1

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Name consultant 2

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Add names as necessary

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total: Consulting

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  

 

	
  DLA: Schedule “S”

  	
  27 February [**]

  

 

DLA: SCHEDULE “S”

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

PROFORMA
INVOICE

MONTH, YEAR

CDS [**]
SERVICES

 

	
   

  	
   

  	
   

  	
   

  	
  Summary of

  	
   

  	
  Summary of

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  all [**]

  	
   

  	
  all [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  including [**]

  	
   

  	
  including [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Research

  	
   

  	
  Research

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineering Labor

  	
   

  	
  Hourly
  Rate

  	
   

  	
   

  	
   

  	
  Hours

  	
   

  
	
  Executive

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Director

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineering Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineer - SW Development

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Engineer - R&D

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  QA Engineer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Business Team Labor

  	
   

  	
  Hourly
  Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project Director

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Lawyer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Account Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Product Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**] Engineer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Technical Writer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Labor

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Expenses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consulting

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name consultant 1

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Name consultant 2

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Add names as necessary

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total: Consulting

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equipment

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Equipment - BIS

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Security costs

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Postage and shipping

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Communications

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Internet

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  [**] Research

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Travel

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Other authorized expenses under Schedule I

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Description 1

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Description 2

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Due

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  

 

	
  DLA: Schedule “S”

  	
   

  	
   

  	
   

  	
  27
  February [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DLA: SCHEDULE “S”

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

PROFORMA INVOICE

MONTH, YEAR

CDS [**] SERVICES

 

	
   

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Research

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Activities

  	
   

  	
  Maintenance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineering
  Labor

  	
  Hourly Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Director

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineering
  Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineer - SW
  Development

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Engineer -
  R&D

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  QA Engineer

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Business
  Team Labor

  	
  Hourly Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project Director

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Lawyer

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Account Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Product Manager

  	
   

  	
  $

  	
  999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**] Engineer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Technical Writer

  	
   

  	
  $

  	
  999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Labor

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Expenses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consulting

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name consultant 1

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Name consultant 2

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Add names as
  necessary

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total:
  Consulting

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equipment

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Equipment - BIS

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Security costs

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Postage and
  shipping

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Communications

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Internet

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**] Research

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Travel

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Other
  authorized expenses under Schedule I

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Description 1

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Description 2

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  	
  $

  	
  999,999.99

  	
   

  

 

[**]

 

	
  DLA:
  Schedule “S”

  	
  27
  February [**]

  

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

PROFORMA INVOICE

MONTH, YEAR

CDS [**] SERVICES

 

	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Research

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  Activities

  	
   

  	
  Maintenance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineering Labor

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  	
  Hours

  	
   

  
	
  Executive

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Director

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineering Manager

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Engineer - SW Development

  	
   

  	
   

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Engineer - R&D

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  QA Engineer

  	
   

  	
   

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
   

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Business Team Labor

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project Director

  	
   

  	
   

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Lawyer

  	
   

  	
   

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Account Manager

  	
   

  	
   

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Product Manager

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**] Engineer

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Technical Writer

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Labor

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Expenses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consulting

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name consultant 1

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Name consultant 2

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Add names as necessary

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  
	
  Sub-total: Consulting

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  	
  999,999.99

  	
   

  

 

	
  [**]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DLA: Schedule “S”

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  27
  February [**]

  	
   

  	
   

  	
   

  

 

** CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE “T”

 

AGREED FORM  DEED OF ADHERENCE

 

THIS DEED is made on
[                                                                         
]

 

BY [NAME OF SUBSTITUTE] (“Substitute”) of [INSERT ADDRESS]

 

WHEREAS

 

(A)                              At
the request of the Bank for International Settlements (“BIS”), the Substitute
is willing to become a party to the Counterfeit Deterrence System Development
and License Agreement of [                                        ], 1999
(“DLA”) between the BIS and Digimarc Corporation (“Digimarc”) in substitution
for and to the exclusion of the BIS.

 

(B)                                The
Substitute is permitted so to become a party to the DLA pursuant to clause 19.8
of the DLA.

 

NOW THIS DEED WITNESSES
that with effect from (and including) the date of this Deed, the Substitute
agrees with Digimarc to become a party to the DLA in substitution for and to
the exclusion of the BIS so that the Substitute, and not the BIS, shall have
the benefit of, and be subject to the obligations of, the BIS under the DLA,
whether arising before, on or after the date of this Deed.

 

Executed as a deed and delivered on the date written at the start of
this Deed by

 

[Substitute]

 

acting by

 

[duly authorized signatory]

 

[second duly authorised signatory (where necessary)]

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE “U”

 

COMFORT LETTER

 

From:                  Bank
for International Settlements

 

To:                              Digimarc
Corporation

 

Dear Sirs:

 

                                                We
refer to the Development and License Agreement (“DLA”) entered into between us
on                                                       ,
1999.

 

                                                We
hereby exercise our right of substitution under clause 19.8(a) of the DLA
in favour of [Substitute]; and attach a Deed of Adherence in the form of
Schedule “T” to the DLA duly executed by the Substitute.

 

                                                We
are writing to confirm that [Substitute]:

 

1.                                       Is
lawfully organized and existing;

 

2.                                       Is
fully qualified, legally and otherwise, to assume the rights and obligations of
the BIS under the DLA, pursuant to the Deed of Adherence; and under the Escrow
Agreement; and

 

3.                                       Has
access to and the benefit of all the facilities previously available to the BIS
for the exercise of its obligations under the DLA and the Escrow Agreement.

 

	
   

  	
  Yours faithfully,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Bank for International Settlements

  

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

DLA SCHEDULE “V”

PHASE [**] STATEMENT OF WORK

 

DESCRIPTION OF PHASE
[**] WORK

 

Digimarc shall perform
the following Work during Phase [**]. (The specific responsibilities to be
discharged by BIS during Phase [**] are also described below.)

 

[**] Of The Phase [**]

 

Digimarc shall [**] for
acceptance by BIS the Phase [**] according to the following process:

 

1.               By
the date set out in the Delivery Schedule outlined in Attachment 1, Digimarc
shall develop a detailed Specification for [**] described in Schedule A of the
[**] as relates to Phase [**] and the additional requirements for [**], if any,
specified below.

 

2.               Digimarc
shall deliver the Specifications to the DLA Project Manager by the dates set
out in the Delivery Schedule for BIS review, comment and acceptance or
rejection.

 

3.               Within
thirty (30) calendar days after receiving them under 2, the DLA Project Manager
shall notify the Digimarc Project Manager in writing whether or not BIS
approves the Specifications and if not, why not. Within fifteen (15) calendar
days after receiving notice of rejection, Digimarc shall change the
Specifications [**] BIS and redeliver them to BIS for approval as provided
above.

 

4.               Upon
notice of approval under 3, Digimarc shall [**] will meet the approved
Specifications and deliver [**] BIS [**] against specification requirements.

 

5.               Within
thirty (30) calendar days after receiving [**] under 4, the DLA Project Manager
shall notify the Digimarc Project Manager in writing whether or not [**] meets
the Specifications with details of any non-compliance.   Any problems shall be detailed using, to the
extent appropriate, the [**] Problem Report form attached as Schedule “R.”

 

6.               By
the date set out in the Delivery Schedule, Digimarc shall develop [**]
incorporating any changes required [**] with the Specifications and any other
modifications agreed in writing between the parties’ respective project
managers and deliver [**] to BIS [**] and acceptance.

 

7.               Within
thirty (30) calendar days after receiving [**] under 6, the DLA Project Manager
shall notify the Digimarc Project Manager in writing whether or not [**] meets
the Specifications with details of any non-compliance. Within thirty (30)
calendar days after receiving any notice of rejection, Digimarc shall rectify
all [**] BIS for approval as provided above.

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

1.2                     Acceptance
Procedures

 

1.2.1                        [**]

 

The
acceptance procedures for the [**] will be the following:

 

1.               Digimarc
shall deliver or make available the [**] to the [**] Project Manager in a [**]
that Digimarc will develop based on [**]. 
The [**] will allow the BIS to conduct [**] and [**] as set forth in the
Specification.

 

2.               Digimarc
shall deliver into escrow and review with the BIS a detailed description of how
the [**] was [**] and the techniques used to [**].

 

1.2.2                        [**]

 

The acceptance procedure for
any improvements to the [**] will be the following:

 

1.               Digimarc
shall deliver the [**] for [**] to the [**] Project Manager in an example [**]
that Digimarc will develop to allow the BIS to [**] and [**].

 

2.               Digimarc
shall deliver or make available the [**] for [**] to the [**] Project Manager
in an example [**] that Digimarc will develop based on [**].  The example [**] will allow the BIS to [**]
and [**].

 

3.               Digimarc
shall deliver the [**] Project Manager in an example [**] that Digimarc will
develop based on [**] or other [**].  The
example [**] will allow the BIS [**].

 

4.               Digimarc
shall deliver into escrow and review with the BIS a detailed description of how
the [**] was [**] and the techniques used to [**].

 

1.2.3                        [**]

 

The acceptance procedure for
any improvements to the [**] will be the following:

 

1.               Digimarc
shall deliver the [**], [**], and the [**] to the [**] Project Manager to allow
[**] BIS [**] with the Specifications.

 

2.               Digimarc
shall deliver updated [**] and training materials to the [**] Project Manager
to allow the BIS to review the materials for acceptance.

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

DESCRIPTION OF, AND REQUIREMENTS FOR, PHASE
[**]

 

2.1                       [**]

 

Digimarc
shall develop the [**] according to the following requirements:

 

2.1.1                        [**]

 

Digimarc
shall develop [**] to [**].  [**] shall
meet the following requirements:

[**]1.  [**] for [**] shall be capable of
being [**].

 

2.  [**] for [**] shall be capable of [**] and
shall meet all the requirements of the Specification for [**]. In addition, the
[**] shall meet the performance criteria as determined in the Specification for
[**] for [**] and in addition shall meet or exceed the actual performance of
[**] as specified in the [**] Specification.

 

3.  [**] shall be capable of [**] and shall meet
all the requirements of the Specification for [**] for [**]. In addition, [**]
shall meet the performance criteria as determined in the Specification for [**]
and in addition shall meet or exceed the actual performance of [**]
Specification.  Delivery of such [**]
shall be conditional upon Digimarc [**] Digimarc and the BIS to intellectual
property held [**] in order to [**].

 

4.   Digimarc shall publish the [**] needed for
replacement of the [**] with a suitably designed alternative [**].

 

5.   Detailed requirements for [**] will be
specified in a Specification delivered in accordance with the Delivery Schedule
outlined in Attachment 1.

 

2.1.2                        [**]

 

At
the end of [**] will be [**] in [**]:

 

[**]
As such, the [**] must be [**].

 

1.               Digimarc
shall develop [**].

 

2.               Detailed
requirements for [**] will be specified in a Specification delivered in
accordance with the Delivery Schedule outlined in Attachment 1.

 

2.1.3                        [**]

 

During the course of the year,
[**] activities will result in the need to improve the [**], either to [**]
needs or to respond to [**], such as [**] or in response to [**].   To ensure delivery of [**] in September [**]
and a [**] in December [**], a detailed Specification for the project must
be completed by February 28, [**].

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

2.2                       [**]

 

2.2.1                        [**]

 

The
[**] Digimarc shall [**] the [**] to add [**] for the following [**]:

 

·                  [**]

 

·                  [**]

 

1.               Digimarc
shall make technology changes to the [**] necessary to operate [**].

 

2.               Digimarc
shall make changes to the [**] as necessary to operate [**].

 

3.               Upon
BIS acceptance, Digimarc shall release the updated version of the [**] to [**].

 

4.               The
[**] documentation will be [**] to reflect [**].

 

2.3                       [**]

 

2.3.1                        Digimarc
shall maintain and operate the [**] and make it available at [**].

 

[**]

 

2.4.1                        Digimarc
shall [**] the [**] to [**].

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE “W”

 

PHASE [**] STATEMENT OF WORK

 

1.                   DESCRIPTION
OF PHASE [**] WORK

 

Digimarc shall perform the following Work during Phase [**]. (The
specific responsibilities to be discharged by BIS during Phase [**] are also
described below.)

 

1.1                     [**] of the
Phase [**]  Deliverables

 

Digimarc shall [**] for acceptance by BIS the Phase [**] Deliverables
according to the following process:

 

1.                                       By
the date set out in the Delivery Schedule outlined in Attachment 1, Digimarc
shall develop a detailed Specification for each [**].

 

2.                                       Digimarc
shall deliver the Specifications to the DLA Project Manager by the dates set
out in the Delivery Schedule for BIS review, comment and acceptance or
rejection.

 

3.                                       Within
thirty (30) calendar days after receiving [**] under 2, the DLA Project Manager
shall notify the Digimarc Project Manager in writing whether or not BIS
approves the Specifications and if not, why not. Within fifteen (15) calendar
days after receiving notice of rejection, Digimarc shall change the
Specifications to [**] BIS and redeliver [**] to BIS for approval as provided
above.

 

4.                                       Upon
notice of approval under 3, Digimarc shall [**] that will meet the approved
Specifications.

 

5.                                       By
the date set out in the [**] Schedule, Digimarc shall [**] that will meet the
approved Specifications.

 

6.                                       Within
thirty (30) calendar days after receiving [**] under 5, the [**] Project
Manager shall notify the Digimarc Project Manager in writing whether or not
[**] meets the Specifications with details of any non-compliance. Any problems
shall be detailed using, to the extent appropriate, the [**] Problem Report
form attached as Schedule R.

 

7.                                       Within
thirty (30) calendar days after receiving any notice of rejection, Digimarc shall
rectify all non-compliance and redeliver [**] BIS for approval as provided
above.

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

1.2                     Acceptance
Deliverables

 

1.2.1                        [**]

 

1.                                       Digimarc
will deliver the [**] for [**] in the [**] to allow the BIS to [**].

 

2.                                       Digimarc
will deliver or make available the [**] that Digimarc will [**].  The example [**] BIS [**].

 

3.                                       Digimarc
will deliver the [**] for [**].  The
example [**] BIS [**].

 

1.2.2                        [**]

 

1.                                       Digimarc will provide the findings of the study
to investigate the [**] BIS [**].

 

1.2.3                        [**]

 

1.               Digimarc will provide the findings of the study
to investigate the [**] BIS [**].

 

2.              DESCRIPTION OF, AND
REQUIREMENTS FOR, PHASE [**]

 

Digimarc will develop the [**] according to the requirements described
below.

 

2.1                     [**] for
Applications and [**]

 

Digimarc shall [**] to meet the following requirements:

 

1.               [**]
shall be capable of [**].

 

2.               [**]
shall substantially [**].

 

3.               Detailed
requirements for [**]

 

2.2                     [**] Study

 

Digimarc shall investigate [**] that meet the following requirements:

 

1.               [**],
which may include [**].

 

2.               Technology
that could be [**], which may include a [**].

 

3.               Assessment
of the current [**].

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

4.               Provide
a strategy for how [**].

 

5.               Detailed
requirements for [**] outlined in Attachment 1.

 

6.               Provide a technical report of the
findings in accordance with the [**] outlined in Attachment 1.

 

2.3                     [**] Study

 

1.               Digimarc
shall investigate [**]:

 

2.               [**].  The requirements [**].

 

3.               The
costs to [**] to make the [**]

 

4.               Detailed
requirements for [**] will be written in a Specification delivered in
accordance with the Delivery Schedule outlined in Attachment 1.

 

5.               Provide
a technical report of the findings in accordance with the Delivery Schedule
outlined in Attachment 1.

 

2.4                     [**]

 

2.4.1.                     Digimarc shall maintain and operate the [**] and [**]

 

2.5                     [**]

 

2.5.1                        Digimarc
shall [**] the [**] to [**] and [**], including administration of the [**].

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

ATTACHMENT 1:
DELIVERY SCHEDULES

 

[**]

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  SOW Sec,

  Par. Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Completion

  Date

  
	
  D-1

  	
   

  	
  [**] Draft Specification delivered

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  [**]

  
	
  D-2

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  [**]

  
	
  D-3

  	
   

  	
  [**] specification signoff

  	
   

  	
  [**]

  	
   

  	
  1.1.4

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  D-4

  	
   

  	
  First Progress Update PowerPoint Summary

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  D-5

  	
   

  	
  Changes to the [**]

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  D-6

  	
   

  	
  Second Progress Update and Development
  Status Technical Report

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  D-7

  	
   

  	
  Third Progress Update / [**]

  	
   

  	
  [**]

  	
   

  	
  —

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  D-8

  	
   

  	
  Delivery of [**]

  	
   

  	
  [**]

  	
   

  	
  1.1.5

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  D-9

  	
   

  	
  [**] acceptance of [**]

  	
   

  	
  [**]

  	
   

  	
  1.1.6

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

[**] Study

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Par.

  Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Completion

  Date

  
	
  DSE-1

  	
   

  	
  Send out Study Plan

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [**]

  
	
  DSE-2

  	
   

  	
  [**] feedback

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  DSE-3

  	
   

  	
  Signoff of Study Plan

  	
   

  	
  [**]

  	
   

  	
  1.1.4

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  DSE-4

  	
   

  	
  First Project Update

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  DSE-5

  	
   

  	
  Second Project Update

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  DSE-6

  	
   

  	
  Deliver Final Report

  	
   

  	
  [**]

  	
   

  	
  1.1.5

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  DSE-8

  	
   

  	
  Final Report Acceptance

  	
   

  	
  [**]

  	
   

  	
  1.1.6

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

[**] Study

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Par.

  Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Completion

  Date

  
	
  CLP-1

  	
   

  	
  Send out Study Plan

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [**]

  
	
  CLP-2

  	
   

  	
  [**] feedback

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  CLP-3

  	
   

  	
  Signoff of Study Plan

  	
   

  	
  [**]

  	
   

  	
  1.1.4

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  CLP-4

  	
   

  	
  Notification of [**] Participation

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

	
  Num.

  	
   

  	
  Deliverable

  	
   

  	
  Owner

  	
   

  	
  Sec/Par.

  Ref.

  	
   

  	
  Depends

  On

  	
   

  	
  Completion

  Date

  
	
  CLP-5

  	
   

  	
  First Project Update

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  CLP-6

  	
   

  	
  Deliver Final Report

  	
   

  	
  [**]

  	
   

  	
  1.1.5

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  CLP-7

  	
   

  	
  Final Report Acceptance

  	
   

  	
  [**]

  	
   

  	
  1.1.6

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE X:

 

[**] EXPENDITURES

 

Unless authorized in this Agreement, the [**] Agreement or otherwise
agreed in writing by BIS,

 

the [**] Expenditure under this Agreement and the [**] Agreement shall
not be greater than an amount equal to [**]; and

 

the [**] Expenditure under this Agreement and the [**] Agreement shall
not be greater than an amount equal to [**].

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

Schedule “Y”

 

[**]

[**] PLAN

 

 

 

 

PROVIDED TO

 

[**]

 

 

 

 

[date]

 

 

 

 

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

	
  SITUATION ANALYSIS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  DEPENDENCIES

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  WORK TO BE PERFORMED AS OF JANUARY [**]

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  TASK: 1.

  	
   

  	
  [**]

  	
   

  	
  3

  
	
  TASK: 2.

  	
   

  	
  [**] COMPLETION

  	
   

  	
  4

  
	
  TASK: 3.

  	
   

  	
  [**] COMPLETION

  	
   

  	
  4

  
	
  TASK: 4.

  	
   

  	
  [**] COMMITMENT TO
  [**]

  	
   

  	
  5

  
	
  TASK: 5.

  	
   

  	
  [**] IN PLACE

  	
   

  	
  5

  
	
  TASK: 6.

  	
   

  	
  [**]

  	
   

  	
  6

  
	
  TASK: 7.

  	
   

  	
  [**]

  	
   

  	
  6

  
	
  TASK: 8.

  	
   

  	
  [**]

  	
   

  	
  7

  
	
  TASK: 9.

  	
   

  	
  [**]

  	
   

  	
  7

  
	
  TASK: 10.

  	
   

  	
  [**]

  	
   

  	
  8

  

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

Situation
Analysis

[One paragraph overview of [**] &
current status]

 

[**]:

[Input all relevant [**] details associated
with the situation analysis]

·

 

Technical Context

[Input all relevant technical details
associated with the situation analysis]

·

 

Primary  Contacts

[Input all major contact names and titles
[**]]

 

Name – title

Name – title

Name – title

Name – title

 

Current barriers [**]

[Input all [**] or technical [**] barriers]

·

 

Current roles of [**] and Digimarc with
relation to [**]:

[**]

BIS
Tasks

 

BIS agrees to complete tasks upon which any part of the Services is
dependent. The dependencies include all tasks identified in this plan as a BIS
Task and approval and acceptance by [**] the CDS.

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

2

 

Work to Be Performed
in [input year]

[Input the major task names &
durations]

 

	
   

  	
   

  	
  Jan

  	
   

  	
  Feb

  	
   

  	
  Mar

  	
   

  	
  Apr

  	
   

  	
  May

  	
   

  	
  Jun

  	
   

  	
  Jul

  	
   

  	
  Aug

  	
   

  	
  Sep

  	
   

  	
  Oct

  	
   

  	
  Nov

  	
   

  	
  Dec

  	
   

  
	
  Task Number & Name

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Task Number & Name

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Task Number & Name

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Task Number & Name

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Task Number & Name

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Tasks will not necessary follow the order
provided below.

 

Task: 1                                                       [**]

 

1.1                               Completion

·                  [**]

 

1.2                               Work

·                  [List tasks to be completed to achieve the objective]

 

1.3                               Assumptions

·                  [List any assumptions made that could affect the work needed to
complete the task]

 

1.4                               BIS Tasks

·                  [List deliverables needed from [**] to complete the task]

 

1.5                               Dependencies

·                  [List dependencies that could affect work needed to achieve the
objective or Digimarc’s ability to achieve the objective]

 

1.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

3

 

Task: 2                                                       [**] Completion

 

2.1                               Completion

·                  [**]

·                  [**]

 

2.2                               Work

·                  [List tasks to be completed to achieve the objective]

 

2.3                               Assumptions

·                  [List any assumptions made that could affect the work needed to
complete the task]

 

2.4                               BIS Tasks

·                  [List deliverables needed from [**] to complete the task]

 

2.5                               Dependencies

·                  [List dependencies that could affect work needed to achieve the
objective or Digimarc’s ability to achieve the objective]

 

2.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 3                                                       [**] Completion

 

3.1                               Completion

·                  [**]

·                  [**]

·                  [**]

·                  Digimarc
conveys these results to the appropriate [**] representatives

 

3.2                               Work

·                  [List tasks to be completed to achieve the objective]

 

3.3                               Assumptions

·                  [List any assumptions made that could affect the work needed to
complete the task]

 

3.4                               BIS Tasks

·                  [List deliverables needed from [**] to complete the task]

 

3.5                               Dependencies

·                  [List dependencies that could affect work needed to achieve the
objective or Digimarc’s ability to achieve the objective]

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

4

 

3.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 4                                                       [**] commitment to [**]

 

[**]

 

4.1                               Completion

·                  [**]

 

4.2                               Work

·                  [List tasks to be completed to achieve the objective]

 

4.3                               Assumptions

·                  [List any assumptions made that could affect the work needed to
complete the task]

 

4.4                               BIS Tasks

·                  [List deliverables needed from [**] to complete the task]

 

4.5                               Dependencies

·                  [List dependencies that could affect work needed to achieve the
objective or Digimarc’s ability to achieve the objective]

 

4.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 5                                                       [**] in Place

 

5.1                               Completion

·                  [**]

 

5.2                               Work

·                  [List tasks to be completed to achieve the objective]

 

5.3                               Assumptions

·                  [List any assumptions made that could affect the work needed to
complete the task]

 

5.4                               BIS Tasks

·                  [List deliverables needed from [**] to complete the task]

 

5.5                               Dependencies

·                  [List dependencies that could affect work needed to achieve the
objective or Digimarc’s ability to achieve the objective]

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

5

 

5.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 6                                                       [**]

 

6.1                               Completion

·                  [**]

 

6.2                               Work

·                  [List tasks to be completed to achieve the objective]

 

6.3                               Assumptions

·                  [List any assumptions made that could affect the work needed to
complete the task]

 

6.4                               BIS Tasks

·                  [List deliverables needed from [**] to complete the task]

 

6.5                               Dependencies

·                  [List dependencies that could affect work needed to achieve the
objective or Digimarc’s ability to achieve the objective]

 

6.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 7                                                       [**]

 

7.1                               Completion

 

·                  [**]

 

7.2                               Work

·                  [List tasks to be completed to achieve the objective]

 

7.3                               Assumptions

·                  [List any assumptions made that could affect the work needed to
complete the task]

 

7.4                               BIS Tasks

·                  [List deliverables needed from [**] to complete the task]

 

7.5                               Dependencies

·                  [List dependencies that could affect work needed to achieve the
objective or Digimarc’s ability to achieve the objective]

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

6

 

7.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 8                                                       [**]

 

8.1                               Completion

 

·                  [**]

 

8.2                               Work

·                  [List tasks to be completed to achieve the objective]

 

8.3                               Assumptions

·                  [List any assumptions made that could affect the work needed to
complete the task]

 

8.4                               BIS Tasks

·                  [List deliverables needed from [**] to complete the task]

 

8.5                               Dependencies

·                  [List dependencies that could affect work needed to achieve the
objective or Digimarc’s ability to achieve the objective]

 

8.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

Task: 9                                                      [**]

 

9.1                               Completion

 

·                  [**]

 

9.2                               Work

·                  [List tasks to be completed to achieve the objective]

 

9.3                               Assumptions

·                  [List any assumptions made that could affect the work needed to
complete the task]

 

9.4                               BIS Tasks

·                  [List deliverables needed from [**] to complete the task]

 

9.5                               Dependencies

·                  [List dependencies that could affect work needed to achieve the
objective or Digimarc’s ability to achieve the objective]

 

9.6                               Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

7

 

Task: 10                                                [**]

 

10.1                        Completion

 

·                  [**]

 

10.2                        Work

·                  [List tasks to be completed to achieve the objective]

 

10.3                        Assumptions

·                  [List any assumptions made that could affect the work needed to
complete the task]

 

10.4                        BIS Tasks

·                  [List deliverables needed from [**] to complete the task]

 

10.5                        Dependencies

·                  [List dependencies that could affect work needed to achieve the
objective or Digimarc’s ability to achieve the objective]

 

10.6                        Available
Budget

[List information about the approved budget
for this task or a reference to the approved budget for this task]

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

8

 

SCHEDULE “Z”

 

[**] TEAM

 

Engineer [**]
Development:  A total of [**] FTE of [**]
Engineering time is allocated.  In
addition to meeting Digimarc’s requirements as a professional [**] developer,
the [**] engineers assigned to the [**] Team must, as a collective group, have
skill and experience in the following:

·                  [**]

 

QA Engineer:  A total
of [**] FTE of Quality Assurance Engineering time is allocated. In addition to
meeting Digimarc’s requirements as a professional [**] development QA Engineer,
the QA Engineers assigned to the [**] Team must, as a collective group, have
skill and experience in the following:

·                  [**]

 

Account Manager:  A total
of [**] FTE of Account Management time is allocated. In addition to meeting
Digimarc’s requirements for an Account Manager, the account managers assigned
to the [**] team must have skills in the following:

·                  [**]

 

Attorney:  A total
of [**] FTE of Attorney (Lawyer) time is allocated. Legal staff assigned to the
[**] must have experience [**].

 

[**] Engineer:  A total
of [**] FTE of [**] Engineering time is allocated. In addition to meeting
Digimarc’s requirements as a [**] Engineer, the [**] Engineer assigned to the
[**]
Team must have experience providing [**] research for the [**].

 

Technical
Writer:  A total of [**] FTE of Technical
Writer time is allocated. In addition to meeting Digimarc’s requirements as a
professional Technical Writer, the Technical writers assigned to the [**] Team
must have experience in the development of technical documentation targeted at
[**].

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE “AA”

 

KEY [**] PERSONNEL

 

 

Following are the names and positions of Key [**] Personnel required as
per clause 4.6 of this Agreement:

 

- Digimarc Project Director - [**]

- Business Team - [**]

- [**] Development - [**]

- R&D Engineering - [**]

- QA Engineering - [**]

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE “BB”

 

[**] PROBLEM REPORT

 

                                                Each
[**] Problem Report will contain all information necessary to reproduce or
demonstrate the occurrence of the problem. 
[**] Problem Reports will be in English and will be delivered
electronically in a format to be provided by Digimarc.

 

[**] Problem Reports will contain:

                                                Name
of [**]

                                                [**]                          Date
problem was encountered

Detailed description of the problem,
including the frequency with which the problem occurs

                        Severity
of problem

                        Impact
on [**] schedules and other [**] activities

                        Cost
and budget impact

                        Recommended
solution and estimated cost of implementation

Contact information for person to contact for
further information (name, phone number, FAX number, email address)

 

If the problem involves [**]:

                                                Name
[**] that exhibits the problem

                                                Step by
step instructions to reproduce the problem

                                                All
[**] required to reproduce the problem

                                                [**]

                                                [**]

                                                [**]
type and speed

                                                Amount
of [**]

                                                [**]                          [**]                          [**]                          [**]                          [**]                          [**]                          [**]

 

BIS agrees to work with Digimarc to provide reasonable additional
information [**], as requested by Digimarc, to assist Digimarc in resolution of
the problem.

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

SCHEDULE “CC”

 

CDS PROJECT INDICATORS

 

The project indicators established shall be used as a communications
and planning tool that will allow the [**] and Digimarc to assess the overall
health of the project, and to help identify potential problems.  The agreed upon project indicators may
change, new ones may be added or some deleted. 
Such changes shall be agreed to by the parties.  Both parties shall work co-operatively to
interpret the results of the project indicators. The project indicators shall
not be used to assess penalties.

 

The parties shall establish at each June’s planning meeting which
project indicators will be measured that year. 
A report shall be prepared by the end of March the following year and
shall be discussed at the strategic planning meeting held approximately two
months prior to the June meeting. 
The parties shall agree on what, if any, corrective measures need to be
taken.

 

Among the project indicators which may be measured are the following:

 

1.                                       [**]
Survey – [**] and Digmarc shall develop a joint survey to assess the level of
[**] satisfaction with the CDS project and the [**] Services;

 

2.                                       [**]
Survey – [**] and Digmarc shall develop a joint survey to assess the level of
[**] satisfaction with the CDS project and the [**] provided by Digimarc;

 

3.                                       Budget
performance – the parties shall track Allowable Costs and Expenses under the
Agreement to the established budgets;

 

4.                                       Help
Desk Calls – Digimarc shall monitor and report on the calls from [**] to
Digimarc’s help desk; and

 

5.                                       Number
of [**] and Number of [**] – Digimarc shall report on the number and [**]
containing the CDS [**] and the number of [**]

 

Each party shall share equally any [**] costs associated with
developing, implementing and carrying out the project indicators.  Services performed in developing and
reporting on project indicators that is performed as part of normal operational
reporting shall be an Allowable Cost. 
The parties shall determine in advance if work in addition to normal
operational reporting shall be required and whether the costs of such work will
be an Allowable Cost.

 

** CONFIDENTIAL PORTION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00148-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00148-of-00352.parquet"}]]