Exhibit
10.7
DIGIMARC
CORPORATION
2008 INCENTIVE
PLAN
SECTION 1. PURPOSE
The purpose of the Digimarc Corporation 2008
Incentive Plan is to attract, retain and motivate employees,
officers, directors, consultants, agents, advisors and independent
contractors of the Company and its Related Companies by providing
them the opportunity to acquire a proprietary interest in the
Company and to align their interests and efforts to the long-term
interests of the Company’s stockholders.
SECTION 2. DEFINITIONS
Certain capitalized terms used in the Plan have
the meanings set forth in Appendix A.
SECTION 3. ADMINISTRATION
3.1
Administration of the Plan
The Plan shall be administered by the Board or
the Compensation Committee, which shall be composed of two or more
directors, each of whom is a “non-employee director”
within the meaning of Rule 16b-3(b)(3) promulgated under
the Exchange Act, or any successor definition adopted by the
Securities and Exchange Commission, an “outside
director” within the meaning of Section 162(m) of
the Code, or any successor provision thereto.
3.2
Delegation
Notwithstanding the foregoing, the Board or the
Compensation Committee may delegate responsibility for
administering the Plan, including with respect to designated
classes of Eligible Persons, to different committees consisting of
one or more members of the Board, subject to such limitations as
the Board deems appropriate, except with respect to Awards to
Participants who are subject to Section 16 of the Exchange Act
or Awards granted pursuant to Section 16 of the Plan. Members
of any committee shall serve for such term as the Board may
determine, subject to removal by the Board at any time. To the
extent consistent with applicable law, the Board or the
Compensation Committee may authorize one or more officers of the
Company to grant Awards to designated classes of Eligible Persons,
within limits specifically prescribed by the Board or the
Compensation Committee; provided, however, that no such officer
shall have or obtain authority to grant Awards to himself or
herself or to any person subject to Section 16 of the Exchange
Act. All references in the Plan to the “Committee”
shall be, as applicable, to the Compensation Committee or any other
committee or any officer to whom the Board or the Compensation
Committee has delegated authority to administer the
Plan.
3.3
Administration and Interpretation by Committee
(a)
Except for the terms and conditions explicitly set forth in the
Plan and to the extent permitted by applicable law, the Committee
shall have full power and exclusive authority, subject to such
orders or resolutions not inconsistent with the provisions of the
Plan as may from time to time be adopted by the Board or a
Committee composed of members of the Board, to (i) select the
Eligible Persons to whom Awards may from time to time be granted
under the Plan; (ii) determine the type or types of Award to
be granted to each Participant under the Plan; (iii) determine
the number of shares of Common Stock to be covered by each Award
granted under the Plan; (iv) determine the terms and
conditions of any Award granted under the Plan; (v) approve
the forms of notice or agreement for use under the Plan;
(vi) determine whether, to what extent and under what
circumstances Awards may be settled in cash, shares of Common Stock
or other property or canceled or suspended; (vii) determine
whether, to what extent and under what circumstances cash, shares
of Common Stock, other property and other amounts payable with
respect to an Award shall be deferred either automatically or at
the election of the Participant, subject to Section 409A of
the Code and in accordance with Section 6.3 of the Plan;
(viii) interpret and administer the Plan and any instrument
evidencing an Award, notice or agreement executed or entered into
under the Plan; (ix) establish such rules and regulations
as it shall deem appropriate for the proper administration of the
Plan; (x) delegate ministerial duties to such of the
Company’s employees as it so determines; and (xi) make
any other determination and take any other action that the
Committee deems necessary or desirable for administration of the
Plan.
(b)
In no event, however, shall the Committee have the right, without
stockholder approval, to (i) cancel or amend outstanding
Options or SARs for the purpose of repricing, replacing or
regranting such Options or SARs with Options or SARs that have a
purchase or grant price that is less than the purchase or grant
price for the original Options or SARs except in connection with
adjustments provided in Section 15, or (ii) issue an
Option or SAR or amend an outstanding Option or SAR to provide for
the grant or issuance of a new Option or SAR on exercise of the
original Option or SAR.
(c)
The effect on the vesting of an Award of a Company-approved leave
of absence or a Participant’s working less than full-time
shall be determined by the Company’s chief human resources
officer or other person performing that function or, with respect
to directors or executive officers, by the Compensation Committee,
whose determination shall be final.
(d)
Decisions of the Committee shall be final, conclusive and binding
on all persons, including the Company, any Participant, any
stockholder and any Eligible Person. A majority of the members of
the Committee may determine its actions.
SECTION 4. SHARES SUBJECT TO THE
PLAN
4.1
Authorized Number of Shares
Subject to adjustment from time to time as
provided in Section 15.1, a maximum of 2,500,000 shares of
Common Stock shall be available for issuance under the
Plan.
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Shares issued under the Plan shall be drawn from
authorized and unissued shares or shares now held or subsequently
acquired by the Company as treasury shares.
4.2
Share Usage
(a)
Shares of Common Stock covered by an Award shall not be counted as
used unless and until they are actually issued and delivered to a
Participant. If any Award lapses, expires, terminates or is
canceled prior to the issuance of shares thereunder or if shares of
Common Stock are issued under the Plan to a Participant and
thereafter are forfeited to or otherwise reacquired by the Company,
the shares subject to such Awards and the forfeited or reacquired
shares shall again be available for issuance under the Plan. Any
shares of Common Stock (i) tendered by a Participant or
retained by the Company as full or partial payment to the Company
for the purchase price of an Award or to satisfy tax withholding
obligations in connection with an Award, or (ii) covered by an
Award that is settled in cash, or in a manner such that some or all
of the shares of Common Stock covered by the Award are not issued,
shall be available for Awards under the Plan. The number of shares
of Common Stock available for issuance under the Plan shall not be
reduced to reflect any dividends or dividend equivalents that are
reinvested into additional shares of Common Stock or credited as
additional shares of Common Stock subject or paid with respect to
an Award.
(b)
The Committee shall also, without limitation, have the authority to
grant Awards as an alternative to or as the form of payment for
grants or rights earned or due under other compensation plans or
arrangements of the Company.
(c)
Notwithstanding anything in the Plan to the contrary, the Committee
may grant Substitute Awards under the Plan. Substitute Awards shall
not reduce the number of shares authorized for issuance under the
Plan. In the event that an Acquired Entity has shares available for
awards or grants under one or more preexisting plans not adopted in
contemplation of such acquisition or combination, then, to the
extent determined by the Board or the Compensation Committee, the
shares available for grant pursuant to the terms of such
preexisting plan (as adjusted, to the extent appropriate, using the
exchange ratio or other adjustment or valuation ratio or formula
used in such acquisition or combination to determine the
consideration payable to holders of common stock of the entities
that are parties to such acquisition or combination) may be used
for Awards under the Plan and shall not reduce the number of shares
of Common Stock authorized for issuance under the Plan; provided,
however, that Awards using such available shares shall not be made
after the date awards or grants could have been made under the
terms of such preexisting plans, absent the acquisition or
combination, and shall only be made to individuals who were not
employees or directors of the Company or a Related Company prior to
such acquisition or combination. In the event that a written
agreement between the Company and an Acquired Entity pursuant to
which a merger or consolidation is completed is approved by the
Board and that agreement sets forth the terms and conditions of the
substitution for or assumption of outstanding awards of the
Acquired Entity, those terms and conditions shall be deemed to be
the action of the Committee without any further action by the
Committee, except as may be required for
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compliance with Rule 16b-3 under the
Exchange Act, and the persons holding such awards shall be deemed
to be Participants.
(d)
Notwithstanding the other provisions in this Section 4.2, the
maximum number of shares that may be issued upon the exercise of
Incentive Stock Options shall equal the aggregate share number
stated in Section 4.1, subject to adjustment as provided in
Section 15.1.
SECTION 5. ELIGIBILITY
An Award may be granted to any employee, officer
or director of the Company or a Related Company whom the Committee
from time to time selects. An Award may also be granted to any
consultant, agent, advisor or independent contractor for bona fide
services rendered to the Company or any Related Company that
(a) are not in connection with the offer and sale of the
Company’s securities in a capital-raising transaction and
(b) do not directly or indirectly promote or maintain a market
for the Company’s securities.
SECTION 6. AWARDS
6.1
Form, Grant and Settlement of Awards
The Committee shall have the authority, in its
sole discretion, to determine the type or types of Awards to be
granted under the Plan. Such Awards may be granted either alone or
in addition to or in tandem with any other type of Award. Any Award
settlement may be subject to such conditions, restrictions and
contingencies as the Committee shall determine.
6.2
Evidence of Awards
Awards granted under the Plan shall be evidenced
by a written, including an electronic, instrument that shall
contain such terms, conditions, limitations and restrictions as the
Committee shall deem advisable and that are not inconsistent with
the Plan.
6.3
Deferrals
The Committee may permit or require a
Participant to defer receipt of the payment of any Award if and to
the extent set forth in the instrument evidencing the Award at the
time of grant. If any such deferral election is permitted or
required, the Committee, in its sole discretion, shall establish
rules and procedures for such payment deferrals, which may
include the grant of additional Awards or provisions for the
payment or crediting of interest or dividend equivalents, including
converting such credits to deferred stock unit equivalents;
provided, however, that the terms of any deferrals under this
Section 6.3 shall comply with all applicable law,
rules and regulations, including, without limitation,
Section 409A of the Code.
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6.4
Dividends and Distributions
Participants may, if and to the extent the
Committee so determines and sets forth in the instrument evidencing
the Award at the time of grant, be credited with dividends paid
with respect to shares of Common Stock underlying an Award in a
manner determined by the Committee in its sole discretion. The
Committee may apply any restrictions to the dividends or dividend
equivalents that the Committee deems appropriate. The Committee, in
its sole discretion, may determine the form of payment of dividends
or dividend equivalents, including cash, shares of Common Stock,
Restricted Stock or Stock Units. Notwithstanding the foregoing, the
right to any dividends or dividend equivalents declared and paid on
the number of shares underlying an Option or Stock Appreciation
Right may not be contingent, directly or indirectly, on the
exercise of the Option or a Stock Appreciation Right, and an Award
providing a right to dividends or dividend equivalents declared and
paid on the number of shares underlying an Option or a Stock
Appreciation Right, the payment of which is not contingent upon, or
otherwise payable on, the exercise of the Option or a Stock
Appreciation Right, must comply with or qualify for an exemption
under Section 409A of the Code.
SECTION 7. OPTIONS
7.1
Grant of Options
The Committee may grant Options designated as
Incentive Stock Options or Nonqualified Stock Options.
7.2
Option Exercise Price
The exercise price for shares purchased under an
Option shall be at least 100% of the Fair Market Value of the
Common Stock on the Grant Date (and shall not be less than the
minimum exercise price required by Section 422 of the Code
with respect to Incentive Stock Options), except in the case of
Substitute Awards.
7.3
Term of Options
Subject to earlier termination in accordance
with the terms of the Plan and the instrument evidencing the
Option, the maximum term of an Option shall be ten years from the
Grant Date.
7.4
Exercise of Options
The Committee shall establish and set forth in
each instrument that evidences an Option the time at which, or the
installments in which, the Option shall vest and become
exercisable, any of which provisions may be waived or modified by
the Committee at any time.
To the extent an Option has vested and become
exercisable, the Option may be exercised in whole or from time to
time in part by delivery to or as directed or approved by the
Company
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of a properly executed stock option exercise
agreement or notice, in a form and in accordance with procedures
established by the Committee, setting forth the number of shares
with respect to which the Option is being exercised, the
restrictions imposed on the shares purchased under such exercise
agreement or notice, if any, and such representations and
agreements as may be required by the Committee, accompanied by
payment in full as described in Sections 7.5 and 13. An Option
may be exercised only for whole shares and may not be exercised for
less than a reasonable number of shares at any one time, as
determined by the Committee.
7.5
Payment of Exercise Price
The exercise price for shares purchased under an
Option shall be paid in full to the Company by delivery of
consideration equal to the product of the Option exercise price and
the number of shares purchased. Such consideration must be paid
before the Company will issue the shares being purchased and must
be in a form or a combination of forms acceptable to the Committee
for that purchase, which forms may include:
(a)
cash;
(b)
check or wire transfer;
(c)
having the Company withhold shares of Common Stock that would
otherwise be issued on exercise of the Option that have an
aggregate Fair Market Value equal to the aggregate exercise price
of the shares being purchased under the Option;
(d)
tendering (either actually or, so long as the Common Stock is
registered under Section 12(b) or 12(g) of the
Exchange Act, by attestation) shares of Common Stock owned by the
Participant that have an aggregate Fair Market Value equal to the
aggregate exercise price of the shares being purchased under the
Option;
(e)
so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, and to
the extent permitted by law, delivery of a properly executed
exercise agreement or notice, together with irrevocable
instructions to a brokerage firm designated or approved by the
Company to deliver promptly to the Company the aggregate amount of
proceeds to pay the Option exercise price and any withholding tax
obligations that may arise in connection with the exercise, all in
accordance with the regulations of the Federal Reserve Board (
i.e. , a “cashless” exercise); or
(f)
such other consideration as the Committee may permit.
7.6
Effect of Termination of Service
The Committee shall establish and set forth in
each instrument that evidences an Option whether the Option shall
continue to be exercisable, and the terms and conditions of such
exercise, after a Termination of Service, any of which provisions
may be waived or modified
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by the Committee at any time; provided, however,
that any such waiver or modification shall satisfy the requirements
for exemption under Section 409A of the Code.
If the exercise of the Option following a
Participant’s Termination of Service, but while the Option is
otherwise exercisable, would be prohibited solely because the
issuance of Common Stock would violate either the registration
requirements under the Securities Act or the Company’s
insider trading policy, then the Option shall remain exercisable
until the earlier of the Option Expiration Date and the expiration
of a period of three months (or such other period of time as
determined by the Committee in its sole discretion) after the
Participant’s Termination of Service during which the
exercise of the Option would not be in violation of the Securities
Act or the Company’s insider trading policy
requirements.
SECTION 8. INCENTIVE STOCK OPTION
LIMITATIONS
Notwithstanding any other provisions of the
Plan, the terms and conditions of any Incentive Stock Options shall
in addition comply in all respects with Section 422 of the
Code, or any successor provision, and any applicable regulations
thereunder.
SECTION 9. STOCK APPRECIATION
RIGHTS
9.1
Grant of Stock Appreciation Rights
The Committee may grant Stock Appreciation
Rights to Participants at any time on such terms and conditions as
the Committee shall determine in its sole discretion. A SAR may be
granted in tandem with an Option or alone (“
freestanding ”). The grant price of a tandem
SAR shall be equal to the exercise price of the related Option. The
grant price of a freestanding SAR shall be established in
accordance with procedures for Options set forth in
Section 7.2. A SAR may be exercised upon such terms and
conditions and for the term as the Committee determines in its sole
discretion; provided, however, that, subject to earlier termination
in accordance with the terms of the Plan and the instrument
evidencing the SAR, the maximum term of a freestanding SAR shall be
ten years, and in the case of a tandem SAR, (a) the term shall
not exceed the term of the related Option and (b) the tandem
SAR may be exercised for all or part of the shares subject to the
related Option upon the surrender of the right to exercise the
equivalent portion of the related Option, except that the tandem
SAR may be exercised only with respect to the shares for which its
related Option is then exercisable.
9.2
Payment of SAR Amount
Upon the exercise of an SAR, a Participant shall
be entitled to receive payment in an amount determined by
multiplying (a) the difference between the Fair Market Value
of the Common Stock on the date of exercise over the grant price of
the SAR by (b) the number of shares with respect to which the
SAR is exercised. At the discretion of the Committee as set forth
in the instrument evidencing the Award, the payment upon exercise
of an SAR may be in cash, in shares, in some combination thereof or
in any other manner approved by the Committee in its sole
discretion.
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9.3
Post-Termination Exercise
The Committee shall establish and set forth in
each instrument that evidences a freestanding SAR whether the SAR
shall continue to be exercisable, and the terms and conditions of
such exercise, after a Termination of Service, any of which
provisions may be waived or modified by the Committee at any time;
provided, that any such waiver or modification shall satisfy the
requirements under Section 409A of the Code.
9.4
Waiver of Restrictions
Subject to Section 18.5, the Committee, in
its sole discretion, may waive any other terms, conditions or
restrictions on any SAR under such circumstances and subject to
such terms and conditions as the Committee shall deem appropriate;
provided, that any such waiver shall satisfy the requirements under
Section 409A of the Code.
SECTION 10. STOCK AWARDS, RESTRICTED STOCK
AND
STOCK UNITS
10.1
Grant of Stock Awards, Restricted Stock and Stock Units
The Committee may grant Stock Awards, Restricted
Stock and Stock Units on such terms and conditions and subject to
such repurchase or forfeiture restrictions, if any, which may be
based on continuous service with the Company or a Related Company
or the achievement of any performance goals, as the Committee shall
determine in its sole discretion, which terms, conditions and
restrictions shall be set forth in the instrument evidencing the
Award.
10.2
Vesting of Restricted Stock and Stock Units
Upon the satisfaction of any terms, conditions
and restrictions prescribed with respect to Restricted Stock or
Stock Units, or upon a Participant’s release from any terms,
conditions and restrictions of Restricted Stock or Stock Units, as
determined by the Committee, and subject to the provisions of
Section 13, (a) the shares of Restricted Stock covered by
each Award of Restricted Stock shall become freely transferable by
the Participant, and (b) Stock Units shall be paid in shares
of Common Stock or, if set forth in the instrument evidencing the
Awards, in cash or a combination of cash and shares of Common
Stock. Any fractional shares subject to such Awards shall be paid
to the Participant in cash.
10.3
Waiver of Restrictions
Subject to Section 18.5, the Committee, in
its sole discretion, may waive the repurchase or forfeiture period
and any other terms, conditions or restrictions on any Restricted
Stock or Stock Unit under such circumstances and subject to such
terms and conditions as the Committee shall deem
appropriate.
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SECTION 11. PERFORMANCE
AWARDS
11.1
Performance Shares
The Committee may grant Awards of Performance
Shares, designate the Participants to whom Performance Shares are
to be awarded and determine the number of Performance Shares and
the terms and conditions of each such Award. Performance Shares
shall consist of a unit valued by reference to a designated number
of shares of Common Stock, the value of which may be paid to the
Participant by delivery of shares of Common Stock or, if set forth
in the instrument evidencing the Award, of such property as the
Committee shall determine, including, without limitation, cash,
shares of Common Stock, other property, or any combination thereof,
upon the attainment of performance goals, as established by the
Committee, and other terms and conditions specified by the
Committee. Subject to Section 18.5, the amount to be paid
under an Award of Performance Shares may be adjusted on the basis
of such further consideration as the Committee shall determine in
its sole discretion.
11.2
Performance Units
The Committee may grant Awards of Performance
Units, designate the Participants to whom Performance Units are to
be awarded and determine the number of Performance Units and the
terms and conditions of each such Award. Performance Units shall
consist of a unit valued by reference to a designated amount of
property other than shares of Common Stock, which value may be paid
to the Participant by delivery of such property as the Committee
shall determine, including, without limitation, cash, shares of
Common Stock, other property, or any combination thereof, upon the
attainment of performance goals, as established by the Committee,
and other terms and conditions specified by the Committee. Subject
to Section 18.5, the amount to be paid under an Award of
Performance Units may be adjusted on the basis of such further
consideration as the Committee shall determine in its sole
discretion.
SECTION 12. OTHER STOCK OR CASH-BASED
AWARDS
Subject to the terms of the Plan and such other
terms and conditions as the Committee deems appropriate, the
Committee may grant other incentives payable in cash or in shares
of Common Stock under the Plan.
SECTION 13. WITHHOLDING
The Company may require the Participant to pay
to the Company the amount of (a) any taxes that the Company is
required by applicable federal, state, local or foreign law to
withhold with respect to the grant, vesting or exercise of an Award
(“ tax withholding obligations ”) and
(b) any amounts due from the Participant to the Company or to
any Related Company (“ other obligations
”) to the extent such amounts are not “deferred
compensation” within the meaning of Section 409A. The
Company shall not be required to issue any shares of
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Common Stock or otherwise settle an Award under
the Plan until such tax withholding obligations and other
obligations are satisfied.
The Committee may permit or require a
Participant to satisfy all or part of the Participant’s tax
withholding obligations and other obligations by (a) paying
cash to the Company, (b) having the Company withhold an amount
from any cash amounts otherwise due or to become due from the
Company to the Participant, (c) having the Company withhold a
number of shares of Common Stock that would otherwise be issued to
the Participant (or become vested, in the case of Restricted Stock)
having a Fair Market Value equal to the tax withholding obligations
and other obligations, or (d) surrendering a number of shares
of Common Stock the Participant already owns having a value equal
to the tax withholding obligations and other obligations. To the
extent required to avoid adverse financial accounting consequences
to the Company, the value of the shares so withheld or tendered may
not exceed the employer’s minimum required tax withholding
rate.
SECTION 14. ASSIGNABILITY
No Award or interest in an Award may be sold,
assigned, pledged (as collateral for a loan or as security for the
performance of an obligation or for any other purpose) or
transferred by a Participant or made subject to attachment or
similar proceedings otherwise than by will or by the applicable
laws of descent and distribution, except to the extent permitted by
the Company, the Participant may designate one or more
beneficiaries on a Company-approved form who may exercise the Award
or receive payment under the Award after the Participant’s
death. During a Participant’s lifetime, an Award may be
exercised only by the Participant. Notwithstanding the foregoing
and to the extent permitted by Section 422 of the Code, the
Committee, in its sole discretion, may permit a Participant to
assign or transfer an Award subject to such terms and conditions as
the Committee shall specify.
SECTION 15. ADJUSTMENTS
15.1
Adjustment of Shares
In the event, at any time or from time to time,
a stock dividend, stock split, spin-off, combination or exchange of
shares, recapitalization, merger, consolidation, distribution to
stockholders other than a normal cash dividend, or other change in
the Company’s corporate or capital structure results in
(a) the outstanding shares of Common Stock, or any securities
exchanged therefor or received in their place, being exchanged for
a different number or kind of securities of the Company or
(b) new, different or additional securities of the Company or
any other company being received by the holders of shares of Common
Stock, then the Committee shall make proportional adjustments in
(i) the maximum number and kind of securities available for
issuance under the Plan; (ii) the maximum number and kind of
securities issuable as Incentive Stock Options as set forth in
Section 4.2; (iii) the maximum number and kind of
securities set forth in Section 4.3; (iv) the maximum
numbers and kind of securities set forth in Section 16.3; and
(v) the number and kind of securities that are subject to any
outstanding Award and the per share price of such securities,
without any change in
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the aggregate price to be paid therefor. The
determination by the Committee, as to the terms of any of the
foregoing adjustments shall be conclusive and binding.
Notwithstanding the foregoing, the issuance by
the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or
property, or for labor or servi
