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”):
(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:
(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 during the
period
