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Exhibit 10.1
CHANGE OF CONTROL RETENTION AGREEMENT
This Change of Control Retention Agreement ("this Agreement") is
made as of the
day of
, 200_, between
Digimarc Corporation, a Delaware corporation, with its principal
offices at Beaverton, Oregon (hereinafter called the "Company"),
and
(hereinafter called "Executive").
It is made with reference to the following facts:
A.
The Board of Directors of the Company (the "Board")
believes it imperative that the Company and the Board be able to
rely upon Executive to continue in Executive’s position, and
that they be able to receive and rely upon Executive’s advice
as to the best interests of the Company and its shareholders,
without concern that Executive might be distracted or his or her
advice affected by the circumstances described in Section 1.2
below;
B.
Executive is willing to enter into this Agreement
for the purposes and on the terms and conditions described
herein;
NOW, THEREFORE, the parties hereto agree as follows:
1.
Definitions .
1.1
"Approved Group" shall mean any employee benefit
plan of the Company or of any subsidiary of the Company, or any
person or entity organized, appointed or established by the Company
for or pursuant to the terms of any such plan.
1.2
"Effective Date" shall mean the day preceding the
first to occur of the following events (the "Change of Control
Events"):
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(a)
Any Person (as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
other than the Approved Group or a broker, bank, or trust company
holding common stock of the Company for the account of customers
who are not members of a "group" (within the meaning of Section
13(d) of the Exchange Act), becoming the record or beneficial owner
of 50% or more of any class of the Company’s voting equity
securities, as disclosed by the Company’s stock records or in
any other way, including, without limitation, any filing with the
Securities and Exchange Commission or otherwise; or
(b)
Upon the purchase of 50% or more of any class of the
Company’s voting equity securities pursuant to any tender
offer or exchange offer for shares of the Company’s stock,
other than one made by the Company or the Approved Group;
or
(c)
Upon approval by the shareholders of the Company
(or, if later, approval by the shareholders of a third party) of
any merger, consolidation, reorganization or other transaction
providing for the conversion or exchange of more than fifty percent
(50%) of the outstanding shares of the Company’s stock
into
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securities of a third party, or cash, or
property, or a combination of any of the foregoing; or
(d)
The sale of substantially all of the assets of
either the Digital Watermarking Business or the ID Credentials
Business.
1.3
"Fiscal Year" shall mean the 12-month period ending
on December 31.
1.4
"Good Reason," when used with reference to a
voluntary termination by Executive of his or her employment with
the Company, shall mean:
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(a)
a substantial reduction in Executive’s level
of duties or responsibilities; provided , that (i) a change
in title or (ii) a change in title or status resulting from the
Company, or any affiliate of the Company by which Executive is then
employed, being a direct or indirect subsidiary of a parent company
following a Change of Control Event, with no corresponding
substantial reduction in Executive’s level of duties and
responsibilities, shall not, in and of itself, constitute Good
Reason;
(b)
a material reduction in Executive’s Minimum
Base Salary, benefits or total cash compensation (consisting of
base salary and target bonus), unless such reduction is part of an
overall reduction for all employees at the same level as
Executive;
(c)
the Company’s mandatory transfer of Executive
to another geographic location that is more than 35 miles from the
location where Executive was employed at the Effective Date, except
for required travel on the Company’s business to an extent
substantially consistent with Executive’s business travel
obligations immediately prior to the Effective Date
hereof;
(d)
the failure by the Company to obtain an assumption
of the obligations of the Company to perform this Agreement by any
successor to the Company, to the extent legally required;
or
(e)
the repudiation or failure by the Company or its
successor to acknowledge (upon Executive’s written request)
or to comply with any of its obligations under this
Agreement.
1.5
"Contract Period" shall mean the period commencing
on the Effective Date and ending on the first (1 st ) anniversary of the Effective
Date.
1.6
"Disability" shall mean a physical or mental
incapacity of Executive which entitles Executive to commence the
receipt of benefits under the long-term disability plan maintained
by the Company.
1.7
"Cause," when used in connection with the
termination of Executive’s employment by the Company, shall
mean (a) the willful engaging by Executive in misconduct which is
significantly injurious to the Company, monetarily or otherwise;
(b) any act by the
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Executive of fraud, dishonesty, embezzlement,
misrepresentation or theft of property of the Company; (c)
Executive’s conviction of or plea of no contest to a felony
or any crime involving moral turpitude; (d) Executive’s
breach of this Agreement or any other agreements with the Company;
(e) Executive’s unauthorized disclosure of the
Company’s proprietary or confidential information or breach
of any confidentiality/invention/proprietary information
agreement(s) with the Company; (f) Executive’s violation of
the Company’s Code of Ethics (if applicable), Code of
Business Conduct and Ethics or any other employment rule, code or
policy, as such policies currently exist or may be amended or
implemented during Executive’s employment with the Company;
(g) Executive’s failure or refusal to follow the lawful
instructions of the Company, if such failure or refusal continues
for a period of five (5) calendar days after the Company delivers
to Executive a written notice stating the instructions that
Executive has failed or refused to follow; (h) the entry by a court
of competent jurisdiction of an order, or the entering into by
Executive of a consent decree, barring Executive from serving as an
officer or director of a public company; or (i) Executive’s
failure to meet and sustain an acceptable level of performance of
Executive’s duties and obligations to the Company (other than
by reason of Disability), which failure continues thirty (30) days
after the Company has given written notice thereof to
Executive. For purposes of this definition, no act, or
failure to act, on Executive’s part shall be considered
"willful" unless done, or omitted to be done, by Executive in bad
faith and without reasonable belief that the action or omission was
in the best interests of the Company.
1.8
"Without Cause," when used in connection with the
termination of Executive’s employment by the company, shall
mean any termination of employment of Executive by the Company
which is not a termination of employment for Cause or for
Disability.
1.9
"Termination Date" shall mean the effective date as
provided in this Agreement for the termination of Executive’s
employment.
1.10
"Minimum Base Salary" shall mean salary at an annual
rate equal to Executive’s annual rate of salary on the
Termination Date.
1.11
"Current Compensation" shall mean one-twelfth
(1/12 th ) of the sum
of (a) the Minimum Base Salary, plus (b) the amount paid
to Executive with respect to the most recently completed fiscal
year under the Company’s annual incentive bonus cash
compensation program.
1.12
"Digital Watermarking Business" is the intellectual
property (patents, trade secrets and know-how), software and
related contracts, programs, customer relationships and other
assets concerning: (i) technology that allows users to
embed a digital code into audio, images, video and printed
documents and wherein such digital code is imperceptible during
normal use but readable by computers and software and
(ii) technology that allows conveying data or enabling access
to data applications or network resources including indicators of
permitted uses, copyright status and/or business terms as it
relates to a piece of content.
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1.13
"ID Credentials Business" is all assets of the
Company not included in the Digital Watermarking
Business.
2.
Scope of Agreement .
2.1
General . This Agreement shall apply
with respect to any termination of employment of Executive which
occurs during the Contract Period. It shall not apply to any
termination of employment of Executive which occurs other than
during the Contract Period. Notwithstanding any other
provision of this Agreement, any termination of Executive’s
employment shall not be subject to the terms of this Agreement (and
shall not be deemed a termination hereunder) if (a) such
termination occurs in connection with the closing of the sale of
substantially all of the assets of either the Digital Watermarking
Business or the ID Credentials Business, (b) Executive is
offered employment by the successor to such transferred business
upon initial terms that would not constitute Good Reason, and
(c) the successor to such transferred business assumes the
Company’s obligations under this Agreement.
2.2
Termination . This Agreement shall
terminate on December 31, 2009, if Executive is still in the employ
of the Company and a Change of Control Event has not occurred.
Except as otherwise provided herein in respect of payments to
beneficiaries, this Agreement shall terminate automatically upon
the death of Executive.
3.
Termination of Employment of Executive By the
Company During the Contract Period .
3.1
General . During the Contract
Period, the Company shall have the right to terminate
Executive’s employment hereunder for Cause, for Disability or
Without Cause upon following the procedures hereinafter
specified.
3.2
For Disability . Termination of
Executive’s employment for Disability shall become effective
on the date that disability benefits, payable to Executive in an
amount equal to at least sixty-five (65%) percent of
Executive’s then Minimum Base Salary commence under any
long-term disability plan maintained by the Company or on such
later date as the Company may specify in a written notice to the
Executive.
3.3
For Cause . Termination of
Executive’s employment for Cause shall become effective five
(5) days after a written notice of intent to terminate
Executive’s employment, specifying the particulars of the
conduct of Executive forming the basis for such termination, is
given to Executive by the Board.
3.4
Without Cause . The Company shall
have the absolute right to terminate Executive’s employment
Without Cause at any time. Termination of Executive’s
employment Without Cause shall be effective five (5) business days
after the date of the giving to Executive by the Board of a written
notice of termination, specifying that such termination is Without
Cause.
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3.5
Effect of Termination . Upon a
termination of Executive’s employment for Cause, or for
Disability as provided in Section 3.2 hereof, Executive shall have
no right to receive any compensation or benefits hereunder.
Upon a termination of Executive’s employment Without Cause,
Executive shall be entitled to receive the compensation and
benefits provided in Section 5 hereof.
4.
Termination of Employment by Executive During
Contract Period . During the Contract Period, the
Executive shall be entitled to terminate his or her employment with
the Company. The Executive shall give the Company written
notice of voluntary termination of employment, which notice need
specify only Executive’s desire to terminate his or her
employment and, if such termination is for Good Reason, set forth
in reasonable detail the facts and circumstances claimed by
Executive to constitute Good Reason. Any notice by Executive
pursuant to this Section shall be effective thirty (30) days after
receipt by the Company of such notice; provided , that an
Executive’s termination of employment shall not be for Good
Reason, if the Company has, within such thirty (30) days period,
corrected the circumstance that would otherwise result in Good
Reason for termination. If such termination is for Good
Reason, Executive shall be entitled to receive the compensation and
benefits in Section 5 hereof. If such termination is for
other than Good Reason, Executive shall have no right to receive
any compensation and benefits hereunder other than
Executive’s Minimum Base Salary and accrued vacation through
Executive’s termination date.
5.
Benefits Upon Termination by the Company Without
Cause or by Executive for Good Reason . Upon the
termination of the employment of Executive by the Company pursuant
to Section 3.4 or by Executive for Good Reason pursuant to Section
4 hereof, and if Executive executes and does not revoke a general
release of all claims in a form acceptable to the Company and
substantially similar to Exhibit A attached hereto (the
"General Release"), Executive shall be entitled to receive the
following compensation and benefits:
5.1
The Company shall pay to Executive (a) Minimum
Base Salary through the Termination Date, and (b) for the
period commencing on the Termination Date and continuing until the
first anniversary of the Termination Date, a monthly amount equal
to the Current Compensation; provided , however ,
that the Company’s obligation hereunder shall be reduced by
the amount of any compensation Executive receives from another
source for services rendered du
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